The results of the Bank Lending Survey for the fourth quarter of 2009 confirm the impression gained in the previous quarter that a turning point in the credit cycle has been reached. In Germany – much as in the euro area as a whole – there was hardly any further tightening of credit standards.

Specifically, credit standards for loans to enterprises remained virtually unchanged for the first time since the third quarter of 2008. It was only sector-specific and firm-specific factors that continued to generate more restrictive tendencies. Developments in margins, too, calmed to some extent, with, on balance, hardly any further expansion of margins for average loans. At the same time, BLS banks reported a renewed slight increase in the need for funding, which was due mainly to debt restructuring and restraint on the part of other institutions.

In credit business with households, standards for loans for house purchase likewise remained virtually unchanged, whereas there was isolated tightening in the case of consumer credit. For the first time since the third quarter of 2008, margins for average loans for house purchase were narrowed again slightly. By contrast, there was a widening of margins again for riskier housing loans and for loans to households for consumption purposes across all credit rating categories. At the same time, households’ funding requirements remained unchanged on balance in the final quarter of 2009.

For the first quarter of 2010, survey respondents expect no further adjustments to their standards for loans to enterprises and private housing construction but somewhat tighter standards for loans for consumption purposes.

The January survey round once again contained additional questions on the impact of the financial crisis on the participating banks’ wholesale funding and capital costs as well as, for the first time, their expected lending behaviour for the coming 12 months. The surveyed responses showed that government measures continue to have little impact on wholesale funding. Moreover, there was very little change in opportunities for refinancing in the money and capital markets in the past quarter. As before, half of the responding institutions observed higher capital costs in the wake of the financial crisis, which in part also impacted on lending.

For the next 12 months, banks are expecting somewhat tighter credit standards only for loans to large enterprises and consumer credit. According to information provided by the institutions, it is principally the continuing deterioration in the perception of risk that is responsible for this. For large enterprises, the situation is aggravated by the banks’ higher wholesale funding costs and balance sheet constraints.

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