April results of the Bank Lending Survey (BLS) in Germany | Demand continued to rise in all loan categories

The German banks responding to the Bank Lending Survey (BLS) tightened their credit standards slightly for loans to enterprises in the first quarter of 2025, primarily based on risk considerations. By contrast, banks eased their credit standards for loans to households for house purchase. They did not see a need to adjust their credit standards for consumer credit and other lending to households. Banks tightened their credit standards for loans to enterprises to a lesser extent than they had planned in the previous quarter. They had originally intended to tighten their credit standards for loans to households. The banks that took part in the survey made credit terms and conditions for loans to enterprises and for consumer credit and other lending to households more restrictive on balance, whilst easing terms and conditions for loans to households for house purchase. Demand for loans continued to rise in all loan categories, with loans to households for house purchase increasing significantly.  The level of the non-performing loans (NPL) ratio and other indicators of credit quality had tightening effects on lending policies for loans to enterprises and for consumer credit and other lending to households over the past three months. The ECB Governing Council’s past and expected key interest rate decisions had a negative impact on net interest income, thereby contributing to a deterioration in banks’ profitability in the 2024-25 winter half-year. For the summer half-year, too,...