April results of the Bank Lending Survey in Germany
The latest Bank Lending Survey revealed that the standards applied by banks when lending to non-financial corporations were relaxed to a moderate extent in the first quarter of 2013, but that the margins for these loans widened overall. Riskier loans were affected by this increase to a greater extent than loans to enterprises with good credit ratings.
The banks made no notable alterations to the standards applying to housing loans and to consumer lending. Here, too, the change in margins differed according to the risk involved: whilst the margins for lending to borrowers with a good credit rating trended downwards, the margins for riskier loans for house purchase rose slightly. The banks which took part in the survey are not planning any significant changes to credit standards for all loans in the second quarter of 2013, with the exception of loans to households for house purchase, which are to be subject to a distinct tightening in credit standards.
Looking at demand for loans, the picture conveyed by the banks was little changed on previous quarters: whilst the demand for corporate loans and consumer credit hardly altered, the demand for loans for house purchase rose significantly. The banks once again attributed this increase primarily to the healthy prospects for the housing market.
The April survey again included ad-hoc questions on banks’ funding conditions and on the impact of the sovereign debt crisis. The responses revealed that funding conditions for the institutions surveyed improved distinctly, as they had done in the fourth quarter of 2012, and that the sovereign debt crisis had no effect whatever on funding conditions or on credit standards.
In the euro area, banks tightened their credit standards overall, both for loans to enterprises and for lending to households. The main reason for this, according to the institutions surveyed, was the deterioration in the outlook for general economic activity. At the same time, the demand for loans in the euro area experienced a distinct decline in the first quarter. Trends in both credit standards and demand differed widely in some cases across the individual countries of the euro area. The survey once again gave no indication that small and medium-sized enterprises in the euro area as a whole were particularly affected by restrictions.
At the European level, the banks reported improvements in funding conditions in almost all markets. Against this backdrop, the more restrictive credit standards cannot be attributed to funding bottlenecks but are in fact explained by increased borrower credit risk, the ongoing pressure to reduce excessive balance sheet leverage, and tight capital positions.