CESEE Bank Lending Survey: positive trends in credit demand and supply are pushing banks to expand in the region

  Credit demand remains robust, driven by both corporate and retail sectors. Banks expect a slight improvement in credit supply conditions in the coming months. Two-thirds of cross-border banking groups aim to reinforce their operations in the region.   The Central, Eastern and South-Eastern Europe (CESEE) Bank Lending Survey is conducted twice per year by the European Investment Bank (EIB), covering around 15 international banking groups and 85 local subsidiaries or independent local banks. Together, they make up more than 50% of banking assets in most CESEE countries.   The EIB’s latest survey, conducted in the first half of 2025, indicates a positive trajectory for credit in Central, Eastern, and South-Eastern Europe, with strong demand from both corporate and retail sectors. It reveals that while credit demand has surged credit supply has lagged during the last three years. However, banks are expressing optimism for a slight easing in supply conditions over the next six months, especially regarding credit for small and medium-sized enterprises (SMEs). “This survey underscores the high market potential in Czechia, Bulgaria, Slovakia and Romania, with profitability being higher in the region when compared to banks overall group operations. CESEE banking sector is proving resilient, and the EIB will continue support the growth of the area”. said Kyriacos Kakouris, Vice President of the EIB. “We are encouraged by the improvements in the CESEE Banking sector over the past six months. However, banks must remain vigilant given the current global challenges”.   Key insights from the survey indicate a notable strength of credit demand, especially among SMEs. This demand is driven by businesses seeking financing for investments and operational costs, as well as individuals looking to invest in housing.   Debora Revoltella, Chief Economist at the EIB, said, “Improvements in the CESEE Banking sector outlook over the past six months are a sign of the system’ strength. However, the global environment suggests forthcoming structural adjustments in the real economy and re-direction of trade and investment flows. Banks will be challenged to provide the necessary flexibility for the economy to adjust”.   Furthermore, banks anticipate a slight improvement in credit supply conditions, suggesting that lending practices may become more favourable. This shift is significant, as it marks a reversal from previous trends of more restrictive lending, in place since the second part of 2021. High profitability expectations among cross-border banking groups also underscore their commitment to the region, indicating that banks see long-term growth potential despite past and present challenges.     Background information   The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. Built around eight core priorities, we finance investments that contribute to EU policy objectives by bolstering climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and bioeconomy, social infrastructure, the capital markets union, and a stronger Europe in a more peaceful and prosperous world.    The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89 billion in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security.