The euro area bank lending survey - Third quarter of 2026

In the bank lending survey (BLS) for the third quarter of 2026, euro area banks reported a further net tightening of credit standards for loans or credit lines to firms (net percentage of banks of 9%; see Chart 1 and Overview table).[1]The October 2026 BLS was conducted between 21 September and 6 October 2026. The net tightening was slightly higher than in the second quarter (7%) and larger than expected by the banks (5%), standing slightly above the historical average (8%). Heightened risk perceptions and lower risk tolerance remained the main drivers of tighter credit standards, with some banks reporting tightening pressure stemming from geopolitical uncertainty and energy developments. Across the largest euro area countries, banks in France and Germany reported tighter credit standards for firms, while credit standards eased in Italy and remained unchanged in Spain. For the fourth quarter of 2026, banks expect a further net tightening of credit standards for loans to firms (7%). In a dedicated question on the importance of new lending to finance firms’ adoption or development of artificial intelligence (AI), banks indicated that they are still adapting their lending practices to the growing use of these technologies. Most reported that they had not yet introduced specific criteria for assessing AI-related lending within their credit standards. A small number noted that AI adoption and its associated risks increasingly feature in qualitative borrower assessments, with IT firms subject to the closest scrutiny. Banks reported broadly unchanged credit standards for housing loans and a further net tightening of credit standards for consumer credit (net percentages of 0% and 14% respectively; see Chart 8, Chart 12 and Overview table). Banks’ lower risk tolerance and heightened risk perceptions had a tightening impact on housing loans and consumer credit. Across the largest euro area countries, credit standards for housing loans eased in Germany and remained unchanged in Spain, France and Italy. For consumer credit, credit standards in Germany remained unchanged, while they tightened in France, Italy and Spain. For housing loans, banks had expected a small net tightening (2%) which did not materialise, while the tightening of credit standards for consumer credit exceeded banks’ expectations (11%). For the fourth quarter of 2026, banks expect credit standards to tighten significantly for housing loans (10%) and consumer credit (16%), which would be the highest since the third quarter of 2023 if realised. Banks reported a net decrease in loan demand for firms in the third quarter of 2026 (net percentage of -6%; see Chart 6 and Overview table). The net decline stood in contrast to banks’ expectations of an increase (4%) and followed the small net increase in the second quarter (3%). Loan demand was primarily dampened by the impact of the general level of interest rates. Weaker demand for fixed investment among small and medium-sized enterprises (SMEs) and the shift towards alternative sources of finance also weighed slightly on loan demand. Some banks reported that uncertainty about geopolitical and energy developments is still weighing on corporate loan demand. Demand for inventories and working capital continued to exert upward pressure on loan demand, while financing related to debt refinancing and restructuring also made a small positive contribution. Demand for loans to firms declined across all the largest euro area countries. For the fourth quarter of 2026, banks expect loan demand to be broadly unchanged (-1%). In response to a dedicated question on the significance and impact of the adoption of AI, several banks indicated that they expect a gradual but sustained increase in loan demand to finance digital infrastructure, particularly data centres. Banks also reported that their current and prospective AI-related lending is more likely to target infrastructure providers than software developers or firms adopting AI, with this focus expected to become sharper over the coming months. Banks reported a strong net decrease in demand for housing loans, which was more pronounced than in the previous quarter, whereas demand for consumer credit decreased slightly (net percentages of -27% and -2% respectively; see Chart 11, Chart 14 and Overview table). For housing loans, the reported net decrease was the most pronounced since the third quarter of 2023 and was stronger than banks had expected (-12%). The decrease was mainly driven by developments in interest rates, followed by diminishing consumer confidence and worsening housing market prospects. Consumer credit demand declined slightly further, primarily reflecting the higher level of interest rates and lower consumer confidence, as well as weaker spending on durable goods. Banks had anticipated unchanged demand for consumer credit in the second quarter (0%). For the fourth quarter of 2026, banks expect a further, stronger net decline in demand for housing loans (-36%) and consumer credit (-14%). Euro area banks’ overall credit terms and conditions tightened for loans to firms, housing loans and consumer credit, driven mainly by higher interest rates. Margins on average loans narrowed across all segments, reflecting the increase in market reference rates. For loans to firms and consumer credit, the net tightening was driven also by wider margins on riskier loans. Collateral requirements, maturity, loan size and covenants also contributed to a slight tightening of terms and conditions for loans to firms. Banks reported a net increase in the share of rejected loan applications for all counterparts. The net increase in the share was higher for consumer credit (10%) than for firms and housing loans (5%). The October 2026 BLS contained the following ad hoc questions: Latest BLS results for the largest euro area countries (net percentages of banks reporting a tightening of credit standards or an increase in loan demand) Notes: “Avg” refers to averages calculated over the period since the beginning of the survey, excluding the most recent round. Owing to the different sample sizes across countries, which broadly reflect the differences in the national shares in lending to the euro area non-financial private sector, the size and volatility of the net percentages cannot be directly compared across countries. The BLS is addressed to senior loan officers at a representative sample of euro area banks, representing all euro area countries and reflecting the characteristics of their respective national banking structures. The main purpose of the BLS is to enhance the Eurosystem’s knowledge of bank lending conditions in the euro area.[2] Detailed tables and charts based on the responses provided can be found in Annex 1 for the standard questions and Annex 2 for the ad hoc questions. In addition, BLS time series data are available on the ECB’s website through theECB Data Portal– see also the notes to charts throughout this report. Detailed explanations on the BLS questionnaire, the aggregation of banks’ replies to national and euro area BLS results, the BLS indicators and information on the BLS series keys are available on the ECB’s website in theBLS user guide. A copy of theBLS questionnaire with the standard questionsand aglossary of BLS termscan also be found on theECB BLS webpage. Euro area banks reported a further tightening of credit standards for loans or credit lines to firms in the third quarter of 2026 (net percentage of banks of 9%; see Chart 1 and Overview table).[3]The October 2026 BLS was conducted between 21 September and 6 October 2026. The net tightening was slightly higher than in the second quarter (7%) and larger than expected by the banks (5%), standing slightly above the historical average (8%) and well above the average since 2014 (3%).[4]Across the largest euro area countries, banks in France and Germany reported tighter credit standards for firms in the third quarter, while credit standards remain