The credit standards of German institutions for lending to non-financial corporations underwent very little change in the fourth quarter of 2013. This was revealed by the latest round of the Bank Lending Survey. On balance, the surveyed institutions did, however, widen their margins for loans to enterprises. This applied, first and foremost, to lending to small and medium-sized enterprises. The banks likewise made only minor changes to their standards in the case of loans for house purchase and consumer credit to households. With the exception of a moderate narrowing of margins in the case of average-risk loans for house purchase, there were no significant adjustments to margins. For the first quarter of 2014, banks are not planning to make any substantial changes to their credit standards for the credit categories assessed in the Bank Lending Survey.

According to the surveyed banks, developments in the demand for loans in the individual segments were mixed. While enterprises, especially large ones, took out perceptibly fewer loans, the demand for loans to households for house purchase and consumer credit stagnated. This brought an end to the persistent rise in demand for loans for house purchase since the second quarter of 2010.

The January survey contained a number of ad hoc questions on banks’ funding conditions, the impact of the sovereign debt crisis and on how the institutions’ lending policy will be affected by the new regulatory and supervisory activities, which include the forthcoming balance sheet assessment by the ECB. In general, the institutions reported an overall slight improvement in their funding environment in the fourth quarter of 2013. They also stated that, as in the previous quarter, the sovereign debt crisis did not have any effects on their funding conditions or lending policy. In the wake of the new regulatory and prudential activities, the banks reduced their risk-weighted assets in the second half of 2013 and strengthened their capital position by retaining profits and issuing capital instruments. Taken in isolation, the new regulations had a positive impact on the surveyed institutions’ funding conditions. In lending business, the changed regulatory and supervisory setting made itself felt merely in the form of slightly tighter credit standards for enterprises as well as somewhat narrower margins for consumer credit.

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 change on balance to their credit standards for loans to enterprises or to households. According to the data supplied by European banks, enterprises took out noticeably fewer loans in the fourth quarter of 2013. Households’ demand for funds remained nearly constant, however.

According to banks in the euro area, there was very little change in the funding situation. The sovereign debt crisis had virtually no impact on banks’ funding or their lending policies. In the wake of the new regulatory and supervisory activities, banks in the euro area as a whole ‒ as well as in Germany ‒ reduced their risk-weighted assets in the second half of 2013 and strengthened their capital position. In response to the altered setting, credit standards for loans to enterprises were tightened slightly, although it was not possible to identify the new regulations exerting a significant impact on margins or funding conditions.