According to the latest results of the Bank Lending Survey for Germany, there was a perceptible easing of credit supply conditions in the first quarter of 2011.

The survey respondents reported a marked easing of credit standards in lending to both enterprises and households. Furthermore, the margins on average-risk loans were narrowed significantly in some cases. Riskier borrowers, too, benefited from significantly lower margins in consumer credit, whereas margins for riskier loans to enterprises and loans for house purchase remained virtually unchanged. This development was driven by the institutions’ optimistic perception of risk. The surveyed banks expect little change in credit standards for the second quarter.

At the same time, they observed a clear increase in demand for funds from the private sector; owing to increased fixed asset investment and currently low interest rates, this concerned mainly long-term loans.

Compared with the results for Germany, lending conditions in the euro area as a whole in the first quarter of 2011 were, as expected, more restrictive. Credit standards were tightened further in all surveyed lines of business during the past quarter. The participating European banks cited bank-related factors as the main reason for this, although cyclical factors also played a role.

The April survey again contained one additional question on the impact of the financial crisis on the wholesale funding of the participating banks. According to the bank managers surveyed in Germany, there was little change in access to wholesale funding on the money and capital markets compared with the previous quarter. This assessment is largely endorsed by their colleagues in other European countries.

The aggregate survey results for Germany may be found at http://www.bundesbank.de/volkswirtschaft/vo_veroeffentlichungen.en.php.