July Bank Lending Survey for Germany

The results of the latest Bank Lending Survey for Germany show that credit supply conditions remained largely unchanged in the second quarter of 2010; in some cases, they appear to have eased slightly.

In the case of loans to enterprises, credit standards remained, on balance, unchanged. The improvement in the outlook for general economic activity and the continued positive liquidity situation of the surveyed institutions had a perceptibly alleviating effect. At the same time, for the first time since the third quarter of 2007, margins were not expanded any further but, in some cases, slightly tightened again. In the reporting quarter, the surveyed banks saw an overall marked increase in demand for loans to enterprises, primarily because more funding was needed for inventories and working capital.

Standards in lending to households, too, remained virtually unchanged, and margins for loans for house purchase and consumer loans were tightened again for the first time since the second quarter of 2008; margins for average loans were tightened more strongly than those for riskier loans. At the same time, the surveyed banks observed a sharp rise in demand for loans for house purchase, for which increased risk aversion among households and low interest rates, among other factors, are likely to be responsible. Demand for consumer loans rose much less strongly.

For the forthcoming third quarter of 2010, the survey participants expect no further adjustments to their standards for lending to enterprises and for consumption purposes but perceptibly relaxed standards for loans for house purchase.

The July survey round again contained additional questions on the impact of the financial crisis on the wholesale funding, capital costs and lending behaviour of the participating banks. According to the institutions, access to wholesale funding on the money and capital markets was somewhat more difficult than in the previous quarter. As before, just over one-third German bank managers observed higher capital costs in the wake of the financial crisis, which in part also impacted on their lending.

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