Results of the April 2015 Bank Lending Survey in Germany
According to the results of the latest round of the Bank Lending Survey, German credit institutions only marginally adjusted their lending policies in all three surveyed lines of business in the first quarter of 2015.
On the whole, the institutions surveyed left their credit standards for loans to enterprises virtually unchanged. At the same time, they moderately tightened their margins on average-risk loans in this line of business on balance, while they ultimately saw no considerable need to adjust their margins on riskier loans. With respect to the other surveyed conditions – including collateral requirements, covenants and non-interest-rate charges – the banks only marginally or moderately relaxed their credit terms and conditions across the board.
On balance, credit standards on loans to households for house purchase also remained virtually unchanged. In this line of business, respondents stated having moderately tightened only the margins on average-risk loans, while the margins on riskier loans and the other surveyed credit terms and conditions were, in effect, unadjusted.
In addition, the credit standards in the consumer credit segment remained unchanged on balance. At the same time, greater adjustments were made to margins in this line of business when compared with loans to enterprises and loans to households for house purchase. The institutions tightened their margins on average-risk loans in net terms considerably, while moderately tightening their margins on riskier loans. The other surveyed conditions, however, were not adjusted.
While demand for loans to enterprises remained unchanged on balance, demand for loans to households for house purchase grew substantially, exceeding the expectations expressed by bank managers in the previous quarter. Positive stimuli also came from the consumer credit segment, where there was a marked increase in credit requirements.
The survey conducted in April contained additional questions on participating banks' financing conditions, on the level of credit standards, and on the impact of the ECB's expanded asset purchase programme (EAPP). In view of the current situation on the financial markets, German banks once again reported that their funding situation had improved slightly compared with the preceding quarter. Relative to the midpoint of the range covering their credit standards from the second quarter of 2010 until now, the surveyed banks perceive their current credit standards on loans to both enterprises and households to be comparatively tight. However, on the whole, the level was perceived to be even tighter a year ago. According to participating banks, the EAPP improves their financing conditions but also places a significant strain on their profitability. Hardly any of the German banks participating in the survey intend to sell marketable assets under the programme. However, owing to a rise in customer deposits, an increase in liquidity is anticipated, which is expected to be used for lending purposes, amongst other things. The banks are not expecting the programme to have any impact on their credit standards.
The aggregate results of the Bank Lending Survey for the euro area as a whole show that banks have slightly eased their credit standards on loans to enterprises and on consumer credit to households. Credit standards on loans to households for house purchase remained virtually unchanged. There was only a slight increase in demand for loans to euro-area enterprises in the first quarter of 2015. By contrast, households' credit requirements experienced renewed, dynamic growth. Demand for loans to households for house purchase was up considerably in this segment, while the increase in demand for consumer credit was somewhat lower by comparison.
According to banks in the euro area, the funding situation continued to improve. The euro-area banks see the current level of their credit standards in the various loan segments as being relatively strict, but like in Germany, they felt conditions were even tighter a year ago.
The EAPP has met with considerably greater interest in the rest of the euro area to date than in Germany. By their own account, participating banks in the euro area wish to use the liquidity gained primarily for lending to enterprises. In addition, they are also planning to ease credit terms and conditions, in particular, over the course of the programme.