The January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. This summary is based on responses from 68 domestic banks and 22 U.S. branches and agencies of foreign banks.

In the January survey, generally modest fractions of domestic banks reported having eased their standards across major loan categories over the past three months on net. Domestic respondents indicated that demand for business loans, prime residential mortgages, and auto loans had strengthened, on balance, while demand for other types of loans was about unchanged. U.S. branches and agencies of foreign banks, which mainly lend to businesses, reported little change in their lending standards, while demand for their loans was reportedly stronger on net.

On balance, small percentages of domestic respondents reported that lending standards on commercial and industrial (C&I) loans had been eased over the past three months and that many terms on such loans had also been loosened. In addition, moderate net fractions of domestic banks reported that demand for C&I loans from firms of all sizes had increased over the survey period.3 Small net fractions of domestic and foreign respondents indicated that commercial real estate (CRE) lending standards had been eased over the past three months, while significant percentages of both types of respondents reportedly experienced increased demand for such loans on net.

Business Lending

Modest fractions of domestic survey respondents, on net, indicated that their C&I lending standards had been eased somewhat for all firm sizes over the survey period. On balance, most loan terms were eased regardless of firm size. Moderate to large fractions of banks again reported having reduced spreads of loan rates over their banks' cost of funds, the use of interest rate floors, and the cost of credit lines for all firm sizes. Almost all respondents that reported having eased either standards or terms over the past three months cited more-aggressive competition from other banks or nonbank lenders as an important reason for having done so. As in the previous survey, no other reasons were broadly cited as important. Moderate fractions of domestic banks indicated stronger demand for C&I loans by firms of all sizes, on net, and cited their customers' increased investment in plant or equipment and increased need to finance mergers or acquisitions and accounts receivable as the main reasons for increased loan demand. In addition, several banks also noted that some firms had borrowed in part to fund payments to employees and investors ahead of anticipated changes to the tax code after year-end.

Read the full January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices.