October results of the Bank Lending Survey (BLS) in Germany
There was little overall change to banks’ credit supply policy in Germany in the third quarter of 2015. This is revealed by the responses of the 34 banks domiciled in Germany that were interviewed for the latest Bank Lending Survey. For loans to enterprises credit standards and margins on riskier exposures remained largely unchanged. The institutions saw a need for adjustment only in the case of margins for average-risk loans, which were tightened markedly on balance. According to the information supplied by the banks, this was due chiefly to intense competition in providing finance to enterprises. Loans to households for house purchase underwent a slight tightening of credit standards on balance during the reporting period. At the same time, banks reduced their margins on average-risk exposures. Margins on riskier loans as well as the other surveyed credit conditions remained largely unchanged. In the case of consumer loans, neither credit standards nor credit conditions showed any significant adjustments.
The German banks stated that demand for credit showed a further increase in all the surveyed lines of business, although growth rates across the various credit segments differed in terms of their size. Positive stimuli came mainly from households’ demand for loans for house purchase. Moreover, demand for consumer credit showed a considerable increase on balance. In comparison, the rise in demand for loans to enterprises was somewhat smaller.
The survey conducted in October contained ad hoc questions on credit institutions' financing conditions and on the impact of the ECB’s expanded asset purchase programme (EAPP). The German banks once again reported that, given the situation in the financial markets, their funding situation showed very little overall change compared with the preceding quarter. The banks stated that the EAPP had brought some improvement to their liquidity position. According to the survey, the additional liquidity, which was used inter alia for lending, came almost exclusively from higher customer deposits with very little stemming from the sale of marketable assets by the banks themselves. The German banks taking part in the survey also reported on a broad front that the programme was exerting pressure on their net lending margins and thus placing a considerable strain on their profitability, but that it was having no significant impact on their lending policies.
The aggregated results of the Bank Lending Survey for the euro area as a whole show a marginal easing of European institutions’ lending standards for loans to enterprises and for consumer credit. However, credit standards for loans to households for house purchase showed a marginal tightening. The third quarter of 2015 saw a further increase in demand for loans to euro-area enterprises. However, it was still lagging behind the dynamic growth in households’ demand for credit, which was driven principally by demand for loans for house purchase.
According to banks in the euro area, the funding situation continued to improve. The EAPP has met with considerably greater interest in the rest of the euro area to date than in Germany. The banks reported a considerable improvement to their liquidity position. The additional liquidity was used mainly for lending, resulting in an easing of the surveyed banks’ credit conditions. In the euro area as whole, the EAPP did not place a strain on credit institutions’ profitability on balance, as banks in some countries benefited from profits from the sale of marketable assets.