July results of the Bank Lending Survey in Germany
On the whole, the credit standards of German credit institutions for lending to non-financial corporations remained unchanged in the second quarter of 2013. This was revealed by the latest Bank Lending Survey conducted by the Deutsche Bundesbank. However, the surveyed institutions widened their margins for loans or credit lines to enterprises on balance. This applied, first and foremost, to riskier lending to small and medium-sized enterprises.
Banks reported a moderate tightening of their credit standards for loans for house purchase, whereas their standards for consumer credit remained virtually unchanged. Margins on loans for house purchase remained constant. By contrast, credit institutions narrowed their margins on consumer loans, which benefited borrowers with a good credit rating in particular. For the third quarter of 2013, banks are not planning to make any substantial changes to their credit standards for those credit categories that are assessed in the Bank Lending Survey.
According to the surveyed banks, developments in the demand for loans or credit lines in the individual segments were mixed. Whereas enterprises demanded perceptibly fewer loans, the demand for loans to households for house purchase and consumer credit picked up substantially. The rise in the demand for housing loans was less marked than in previous quarters, however.
The July survey round also contained a number of ad hoc questions on banks’ funding conditions, as well as on the impact of the sovereign debt crisis and the stricter capital regime. In this connection, the surveyed institutions reported a slight overall improvement in their funding environment. They also stated that, as in the previous quarter, the sovereign debt crisis did not have any adverse effects on their funding conditions or lending policy. German banks reduced their risk-weighted assets in the first half of 2013 in preparation for the stricter capital requirements pursuant to CRR / CRD IV and strengthened their capital position by retaining profits and issuing capital instruments. In lending business, the new capital requirements were reflected in tighter credit standards and higher margins, especially in the case of loans to large enterprises.
The results of the Bank Lending Survey aggregated for the euro area as a whole show that the banks in the euro area have moderately tightened their credit standards for loans and credit lines to enterprises and loans for house purchase. This was due not only to the deterioration in the economic outlook, but also to borrower-side risks for lending to enterprises and to the outlook on the housing market for private housing loans. According to the data supplied by European banks, enterprises demanded discernibly fewer loans and credit lines in the second quarter of 2013. Households’ demand for loans also declined slightly during this period. The development of credit standards and the demand for loans and credit lines was once again very heterogeneous across the individual euro-area countries.
According to the euro-area banks, the funding conditions improved in most markets. The sovereign debt crisis had virtually no impact on banks’ funding or their lending policies. At the European level, banks prepared for the introduction of the stricter capital conditions by decreasing their risk-weighted assets and strengthening their capital position. In this connection, they also moderately tightened their credit standards and widened their margins.