October results of the Bank Lending Survey (BLS) in Germany Credit standards in all loan categories tightened

• The German banks responding to the Bank Lending Survey (BLS)tightened their credit standards for loans to enterprises and loans to households in the third quarter of 2025. Increased credit risk and - in the loan category of consumer credit and other lending to households - lower risk tolerance were the reasons given for the tightening.

• The surveyed banks made their credit terms and conditions for loans to enterprises and loans to households for house purchase more restrictive as well. In the loan category of consumer credit and other lending to households, the banks loosened their credit terms and conditions marginally on balance.

• Loan demand increased further in all loan categories, but by less than in the previous quarter.

• The non-performing loan (NPL)ratio and other credit quality indicators had a restrictive impact on banks' credit standards, terms and conditions for loans to enterprises as well as consumer credit and other lending to households.

• The ECB Governing Council's past and expected key interest rate decisions adversely affected net interest income, thereby contributing to a deterioration in the banks' profitability in the 2025 summer half-year. The banks are expecting key interest rate decisions to have a negative impact on their net interest income and profitability in the 2025-26 winter half-year as well.

The BLS covers three loan categories: loans to enterprises, loans to households for house purchase, and consumer credit and other lending to households. On balance, the surveyed banks tightened their credit standards (i.e. their internal guidelines or loan approval criteria) for loans to enterprises and loans to households. The net share of banks that tightened their standards stood at + 10 % for loans to enterprises (compared with + 3 % in the previous quarter). Credit standards for loans to enterprises were tightened mainly for large enterprises. The banks tightened their credit standards for loans to households for house purchase by + 4 % in net terms (compared with + 11 % in the previous quarter) and for consumer credit and other lending to households by + 7 % in net terms (compared with + 11 % in the previous quarter). Tighter credit standards for loans to enterprises were not what the banks had originally been planning in the previous quarter, when they had been expecting to ease them. The tightening of credit standards in business with households, meanwhile, was in line with what the banks had been planning.

The banks reported that they had tightened their credit standards for loans to enterprises mainly in response to increased credit risk. This was due in particular to industry-specific and firm-specific factors, but also to the gloomier economic situation and outlook. Increased credit risk was also the main reason reported by the banks for tightening their credit standards for loans to households. The general economic situation and outlook as well as a decline in households' creditworthiness were relevant factors here. In the loan category of consumer credit and other lending to households, banks were furthermore less prepared to tolerate risk. For the fourth quarter of 2025, the banks have no plans to adjust their credit standards for loans to enterprises. In business with households, they are expecting to have to tighten their credit standards again.

Changes in credit standards for loans to enterprises and contributing factors

On balance, the banks tightened their credit terms and conditions (i.e. the terms and conditions actually approved as laid down in the loan contract) for loans to enterprises and for loans to households for house purchase. The restrictive adjustments in both loan categories are the outcome of higher lending rates and an increase in margins irrespective of credit ratings. In the loan category of loans to households for house purchase, the banks also reduced the average loan-to-value ratio. Credit terms and conditions for loans to enterprises were tightened primarily in response to an increase in credit risk, the banks reported. As regards loans to households for house purchase, the banks reported that they had tightened their credit terms and conditions in particular due to weaker competition. In the loan category of consumer credit and other lending to households, the banks eased their terms and conditions overall by lowering the lending rate and margins on riskier loans, reporting that this was due to an improvement in their market financing conditions.

The surveyed banks assessed that demand for bank loans in Germany had risen on balance in all loan categories in the third quarter of 2025, but by less than in the previous quarter, especially in the case of loans to households for house purchase. In addition, demand for loans to enterprises increased by significantly less than the banks had been expecting in the last survey round. In business with households, the increase was roughly on a par with what the banks had been expecting in the previous quarter. The banks attributed the brisker demand for loans to enterprises primarily to the lower general level of interest rates. This contrasts with the previous quarter, when financing needs for fixed investment had been instrumental in boosting loan demand. The banks reported that demand for loans for house purchase had increased because households perceived an improvement in the housing market prospects and because lending rates, despite rising recently, were still lower than they had been between 2023 and mid-2024. The reduced consumer confidence, meanwhile, had dampened demand again for the first time since the fourth quarter of 2023. The brisker demand for consumer credit and other lending to households was mainly attributed to an increase in purchases of durable consumer goods. The loan rejection rate for loans to enterprises rose again, increasing by more than it had in the previous two quarters. The rejection rate was up in business with households as well, rising for the first time in six quarters for loans for house purchase. For the fourth quarter of 2025, the banks are expecting to see demand increase further for loans to enterprises and loans to households for house purchase, but decline for consumer credit and other lending.

Change in demand for loans to enterprises and contributing factors

The October survey round contained ad hoc questions on participating banks' financing conditions and the impact of the ECB Governing Council's past and expected key interest rate decisions. It also contained questions about the impact of the Eurosystem's monetary policy asset portfolios and of non-performing loans (NPLs)and other credit quality indicators on the institutions' credit standards, terms and conditions.

Against the backdrop of conditions in financial markets, German banks reported virtually no change in their financing situation compared with the previous quarter. The ECB Governing Council's past and expected future key interest rate decisions lowered banks' profitability overall over the past six months. After the series of interest rate cuts since June 2024 initially had positive effects on banks' profitability, banks now assessed the impact as being negative for the second time in succession. Forthe 2025-26 winter half-year, the banks are once again expecting key interest rate decisions to have a negative impact on their net interest income and profitability. Over the past six months, the reduction in the Eurosystem's monetary policy asset portfolio played a part in the increase in the stocks of euro area government bonds held by banks in Germany. The banks reported that the reduction in the size of the Eurosystem's portfolio had not impacted notably on their financing conditions, profitability or capital ratio.

In the third quarter of 2025, the NPL ratio (the stock of gross NPLs on the bank's balance sheet as a percentage of the gross carrying amount of loans) and other credit quality indicators had restrictive effects, because of their levels, on the credit standards, terms and conditions for loans to enterprises and for consumer credit and other lending to households. For the fourth quarter of 2025, the banks are expecting credit quality in all loan categories to have a restrictive effect on their credit standards, terms and conditions.

The Bank Lending Survey, which is conducted four times a year, took place between 19 September and 7 October 2025. In Germany, 33 banks took part in the survey, with a response rate of 100 %.

Changes in credit standards for loans for households for house purchase and contributing factors Changes in demand for loans to households for house purchase and contributing factors

Time series credit standards

Loans to enterprises

Loans to households for house purchase

Consumer credit and other lending to households