October results of the Bank Lending Survey in Germany
German institutions eased their standards for lending to enterprises somewhat in the third quarter of 2014; credit standards were tightened slightly for household loans for house purchase and remained unchanged for consumer loans. This is shown by the latest Bank Lending Survey. Borrowing became easier overall for enterprises. Although credit standards for loans to enterprises remained almost constant on balance compared with the preceding quarter, margins were narrowed. Moreover, institutions eased the other surveyed credit conditions (collateral requirements, loan covenants and non-interest rate charges are among those covered), in some cases considerably. Large enterprises were the main beneficiaries of this. Banks showed themselves to more restrictive, however, in their loans to households for house purchase. Besides slightly tighter credit standards overall, banks widened their margins somewhat. Banks’ lending policy for consumer credit remained largely unchanged, with banks making no significant changes in either their credit standards or their margins.
The reporting quarter saw varying developments in demand for credit in the individual business segments. For the first time since the final quarter of 2011, the banks taking part in the survey noted a slight increase in enterprises’ demand for funds. This contrasted with hardly any change in demand for loans for house purchase, while there was a marked increase in demand for consumer loans.
The October survey round contained ad hoc questions on banks’ funding conditions, the impact of the sovereign debt crisis and participation in the targeted longer-term refinancing operations (TLTROs) from 2014 to 2016. The financial institutions reported a slight improvement in their funding environment compared with the previous quarter. They also stated that the sovereign debt crisis was having no more than minor effects on their funding conditions and no effects whatsoever on their lending policy during the reporting quarter. The surveyed institutions showed no more than slight interest in the TLTRO of September 2014. The predominant reason cited for this was that there were no funding constraints. There was not yet any certainty about participation in the TLTROs of December 2014 and in the following years, however. Those BLS banks which had already participated in one TLTRO or which are considering doing so in the future intend to use the provided funds chiefly for lending. They anticipate that taking part will lead to a slight improvement in their financial situation, but do not expect any effects on their credit standards.
The aggregate results of the Bank Lending Survey for the euro area as a whole show that banks in the euro area made scarcely any changes on balance to their credit standards for loans to enterprises or for loans to households for house purchase. By contrast, they eased their credit standards for consumer loans somewhat on the whole. There was a slight increase in demand for loans to enterprises in the third quarter. In comparison, households’ demand for credit was more dynamic with loans for house purchases, in particular, experiencing a marked rise in demand.
According to banks in the euro area, the funding situation continued to improve. Taken in isolation, developments on the European sovereign bond markets had the effect of slightly easing the funding situation and had hardly any impact on lending policy in the reporting quarter. The TLTROs met with significantly greater interest elsewhere in the euro area than they did in Germany. The surveyed banks in other euro-area countries likewise intend to use the funds received mainly for lending and anticipate a perceptible improvement in their financial situation from participating in the TLTROs.