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Full Report (PDF)
EXECUTIVE SUMMARY
The results of the Senior Loan Officers’ Survey conducted for the period January to June 2010 showed that, on net, domestic credit conditions in the ECCU continued to deteriorate. Overall lending terms and conditions for all types of loans tightened; continuing the downward trend evident since the first half of 2008. The tightening in the overall lending terms and conditions for all loans - except loans to small/medium sized businesses and for mortgages -was more pronounced than that reported in the last half of 2009. Risk related to the general economic conditions and the deterioration in asset quality were cited as the main factors that contributed to the tightening in lending conditions for loans. In terms of demand, the results showed that for all types of household and business loans - with the exception of commercial real estate loans - the extent of the decrease was greater than that reported in the July to December 2009 survey. The banks cited change in consumer/business confidence as the key factor underlying the further weakening in demand.
Amongst the territories of the ECCU, Saint Lucia and Anguilla reported the greatest tightening in lending terms and conditions for all the categories of business loans. Tightening in overall lending terms and conditions for both categories of loans to households was also most pronounced in Anguilla and Saint Lucia. The extent of tightening in Anguilla increased over the survey period while for Saint Lucia it declined. Whereas lending terms and conditions for all types of household loans were reported to have remained the same in Dominica, Grenada and Montserrat, they were reported to have tightened in the other territories. On the demand side, Anguilla was the only territory where further decrease in demand for all categories of business loans and loans to households was reported. The level of the decrease was greater than that reported for the survey period July to December 2009. A further decrease for all loan types except mortgages was reported in Saint Lucia. Noteworthy is Dominica - the only territory where increase in demand for short term loans to small/medium sized businesses was reported for two consecutive survey periods. Demand for loans to households also decreased in Dominica following an increase in demand reported for the period July to December 2009.
At the ECCU level, the outlook for the second half of 2010 showed that banks expect lending policies to tighten further for all categories of loans except short-term loans to large businesses. However, the degree of tightening is expected to be less than what materialised in the review period. In regard to demand, the expectation is for demand to continue to decrease for all loans to households and for all types of business loans except short-term loans. The banks’ expectations were largely shaped by concerns over the fragile and uncertain recovery in the global and domestic economies and its implications for the domestic environment.
At the country level, Saint Lucia is the only territory that expects overall lending conditions for all types of business loans (except commercial real estate loans) to ease for the second half of 2010. In regard to lending terms and conditions for loans to households, the majority of the territories expect terms and conditions to remain the same. Noteworthy is St Vincent and the Grenadines where the expectation is for lending policies to ease for mortgages and remain the same for other consumer loans. On the demand side, Dominica and St Vincent and the Grenadines expect demand to increase for all categories of business loans except commercial real estate while Anguilla expects demand to increase for all categories of business loans except commercial real estate loans and long term loans to large businesses. With the exception of Saint Lucia, where demand is expected to remain the same for all categories of business loans, all other territories expect demand to decrease. In terms of demand for household loans, St Kitts and Nevis and St Vincent and the Grenadines expect demand for mortgages to increase. All the other territories, expect Anguilla, Dominica and Montserrat where demand is expected to remain the same, forecast decrease in demand for both categories of household loans. | 
