January results of the Bank Lending Survey in Germany
German banks adjusted their lending policies in the fourth quarter of 2017, chiefly with regard to credit terms and conditions, according to the Eurosystem’s latest Bank Lending Survey (BLS) among banks domiciled in Germany.
During the reporting period, credit standards for loans to enterprises and consumer loans remained virtually constant. By contrast, banks slightly eased their credit standards for loans to households for house purchase.
The changes in credit terms and conditions mainly affected margins: the banks narrowed their margins on average-risk loans to enterprises perceptibly, those on average-risk loans to households for house purchase considerably and those on higher-risk loans distinctly. They cited high competitive pressure as the main reason for narrowing margins.
According to German banks, there was a moderate rise in demand for loans to enterprises. By contrast, households’ demand for credit changed very little overall.
The January survey round contained ad hoc questions on participating banks’ financing conditions and on the impact of new regulatory and supervisory activities. The latter include the new capital requirements set forth in CRR/CRD IV and the requirements resulting from the comprehensive assessment. Looking at the situation in the financial markets, German banks reported that their financing conditions in the fourth quarter of 2017 were virtually unchanged from the previous quarter. With regard to new regulatory and supervisory activities, banks grew their risk-weighted assets in the second half of 2017 and once again strengthened their capital position, particularly by means of retaining earnings.
The surveyed institutions in the euro area made only minor changes overall to their credit standards for loans to enterprises and consumer loans, whereas they slightly eased their credit standards for loans to households for house purchase.
According to reporting institutions in the euro area, demand for loans to enterprises showed a marked increase in the fourth quarter of 2017, while the rise in demand for loans to households for consumption and for house purchase was somewhat more moderate.
Banks in the euro area as a whole reported that the funding situation had improved somewhat in the final quarter of 2017. In the wake of the new regulatory and supervisory activities, banks continued to strengthen their capital position in the second half of 2017.