German banks tightened credit standards for loans to enterprises in the third quarter of 2026, according to the Bundesbank's October Bank Lending Survey. The net share of banks tightening stood at +6%, compared with +10% in the previous quarter. In total, 33 banks took part, a response rate of 100%, and the survey ran between 21 September and 6 October 2026.
The tightening was somewhat weaker than in the previous quarter but slightly stronger than banks had anticipated in the July 2026 survey. The banks justified it by a perceived increase in credit risk. On balance, they also made credit terms and conditions more restrictive for corporate loans and for consumer credit and other lending to households.
HOUSEHOLDS SEE LESS TIGHTENING, RISK TOLERANCE RISES
For loans to households for house purchase, the net share of banks tightening turned negative at -4%, compared with +7% in the previous quarter. For consumer credit and other lending to households, the figure was 0%, against +11% in the previous quarter.
The non-performing loan ratio and other indicators of credit quality had a tightening impact on credit standards owing to their levels, particularly for corporate loans. Given conditions in financial markets, banks reported a slight overall deterioration in their funding situation. For the first time in more than two years, they also reported a higher risk tolerance.
Over the past 12 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. According to the banks, digital assets have had no impact on their financial situation, business strategy or credit standards over the same period.
LOAN DEMAND FALLS IN EVERY CATEGORY
Demand for loans fell in all loan categories in the third quarter of 2026. For loans to enterprises, it was the first decline in more than two years, and it mainly concerned small and medium-sized enterprises and long-term loans.
The banks cited the higher general level of interest rates as the primary reason for the decline in demand. The loan rejection rate continued to rise in all three loan categories. In business with enterprises, banks expect demand to pick up in the fourth quarter of 2026.
COMPARISON WITH EARLIER QUARTERS AND THE EURO AREA
A year earlier, in the third quarter of 2025, the net share of German banks tightening corporate standards was +10%, up from +3% in the previous quarter. In the fourth quarter of 2025 it reached +16% for enterprises, with +11% for house purchase loans and +11% for consumer credit.
Across the euro area, banks reported a net tightening of corporate credit standards of 9% in the third quarter of 2026, according to the European Central Bank. That was higher than the 7% in the second quarter and the 5% banks had expected, and slightly above the historical average of 8%. Banks in France and Germany tightened, standards eased in Italy and were unchanged in Spain, while euro area banks reported a net decrease of -6% in corporate loan demand.
RATES AND ECONOMY FORM THE BACKDROP
The ECB raised its key interest rates with effect from 16 September 2026, setting the deposit facility rate at 2.50%, the main refinancing operations rate at 2.65% and the marginal lending facility rate at 2.90%. German inflation, measured by the Harmonised Index of Consumer Prices, rose to 3.3% in September from 2.9% in August.
The Bundesbank said in its Monthly Report that German economic output was likely to have stagnated in the third quarter of 2026. It added that the renewed rise in interest rates for building finance is likely to have a dampening effect going forward.