April results of the Bank Lending Survey in Germany and the euro area

According to the most recent bank lending survey, the surveyed banks in Germany changed their lending policy only slightly in the first quarter of 2014. While credit standards for business with non-financial corporations remained largely unaltered, margins were adjusted to varying degrees depending on the borrowers’ creditworthiness. The margin for average-risk loans to enterprises contracted slightly on the quarter, while the margin for riskier loans was widened to a minor extent. Banks made somewhat sharper adjustments to their credit standards for loans to households for house purchase, tightening them slightly on the whole. At the same time, the institutions taking part in the BLS narrowed their margins markedly for average-risk loans in this line of business. The margins for riskier loans were widened minimally by contrast. However, banks did not make any significant adjustments to their credit standards for consumer credit. For the second quarter of 2014, banks are not planning to make any changes overall to their credit standards for loans to households. While they want to relax their credit standards for loans to small and medium-sized enterprises on balance, the standards for loans to large enterprises are to be tightened slightly on the whole.

The surveyed banks reported that demand for loans in the first quarter was more dynamic than before. The decline in demand for loans to non-financial corporations in the previous three-month period did not continue on the whole in the first quarter. Moreover, households’ demand for funds increased markedly on the quarter, notably on account of the significant rise in financing needs for loans for house purchase.

The April survey contained a number of ad hoc questions about banks' funding conditions, the impact of the sovereign debt crisis on funding and on lending policy as well as – for the first time – about the level of the credit standards.  The surveyed German institutions reported a slight overall improvement in their funding environment. As in the previous quarters, the sovereign debt crisis had only a marginal impact on funding conditions, while it did not affect their lending policy. In reply to the question concerning the levels of the credit standards, the surveyed banks reported that they consider their standards for lending to enterprises to be comparatively tight at present, adding that the mid-point in the range of standards implemented since the escalation of the sovereign debt crisis serves as the reference value. By contrast, for both loans for house purchase and consumer credit the banks reported that their present standards in lending to households are only marginally more restrictive on balance than the respective reference value.

The aggregate results of the Bank Lending Survey for the euro area show that banks in the euro area as a whole did not make any perceptible changes on balance to their credit standards for loans to enterprises or for consumer credit. There was scarcely any change to financing needs in these categories either. By contrast, the standards for loans for house purchase were eased slightly, and households’ demand for loans for house purchase picked up somewhat.

According to banks in the euro area, the funding situation improved slightly on the whole. Once again, there was scarcely any change in the impact of the sovereign debt crisis on banks’ funding or their lending policy. Banks in the euro area currently assess their credit standards as being relatively tight in the various lending segments compared with the levels recorded since the escalation of sovereign debt crisis.