The results of the latest Bank Lending Survey for Germany show that credit supply conditions remained largely unchanged in the third quarter of 2010.

In the case of loans to enterprises, credit standards were eased slightly for the first time since the outbreak of the financial crisis. The improvement in the outlook for general economic activity and the positive liquidity situation of the surveyed institutions had a perceptibly alleviating impact. Furthermore, the margins for average loans to enterprises remained unchanged, while there was a slight expansion of the margins for more risky loans. At the same time, the surveyed banks saw overall a perceptible increase in demand for loans to enterprises, mainly because more funding was needed for inventories and working capital.

Standards in lending to households remained virtually unchanged, while standards for consumer credit were tightened somewhat. At the same time, the banks taking part in the survey stated that they had narrowed their margins again slightly in most cases. In addition, the surveyed banks observed a perceptible increase in demand for loans for house purchase; in the view of the participating banks, this was due not only to the improved housing market prospects and the pick-up in consumer confidence, but also the flight into assets, and low interest rates. Demand for consumer loans remained unchanged, however.

For the forthcoming fourth quarter of 2010, the survey participants expect no further adjustments to their standards for lending to enterprises and for consumption purposes, although they do expect somewhat more expansionary standards for loans for house purchase.

The October 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, their access to wholesale funding on the money and capital markets had mostly improved somewhat compared with the previous quarter, in which it had deteriorated somewhat in the wake of the government debt crisis. The percentage of bank managers reporting an impairment of their lending as a result of higher capital costs fell somewhat and was 21% in the reporting quarter, compared with 28% 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.