January Bank Lending Survey for Germany

According to the results of the latest Bank Lending Survey for Germany, credit supply conditions eased somewhat, depending on the risk, in the fourth quarter of 2010.

Credit standards barely changed in the case of loans to enterprises; only for small and medium-sized enterprises were they eased slightly. The still favourable general economic outlook, as well as firm and sector-specific factors, had an alleviating effect. Margins on average loans to enterprises remained unchanged, while they widened somewhat for riskier borrowers. At the same time, the surveyed banks reported an overall marked increase in credit demand from enterprises in the reporting quarter, primarily because they needed significantly more funding for fixed investment, inventories and working capital.

Credit standards in lending to households remained virtually unchanged in the case of loans for house purchase, while standards for consumer credit were eased somewhat for the first time since the beginning of the financial crisis. At the same time, the banks taking part in the survey stated that they had narrowed margins on average loans significantly in some cases and increased them somewhat for riskier exposures. In addition, the surveyed banks observed a sharp rise in demand for loans for house purchase, which they attribute to the improved prospects on the housing market and increased consumer confidence as well as to low interest rates. Demand for consumer loans remained unchanged on balance, however.

For the first quarter of 2011, the survey participants envisage a slight easing overall of credit standards for enterprises, while they expect hardly any adjustments in lending to households.

As expected, lending conditions in the euro area as a whole developed slightly more restrictively compared with the German results, although for the first time since the onset of the crisis there was no further tightening of credit standard for loans to enterprises at the European level. In particular, the risk assessment of European survey participants, in contrast to those in Germany, opposed an easing of credit standards.

The January survey again contained additional questions on the impact of the financial crisis on the wholesale funding, capital costs and lending behaviour of the participating banks. The German institutions stated that their access to wholesale funding on the money and capital markets had changed little compared with the previous quarter. The percentage of bank managers reporting an impairment of their lending as a result of higher capital costs rose somewhat in the reporting quarter to 24% compared with 21% in the preceding three-month period.

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