October 2026 euro area bank lending survey

According to the October 2026 bank lending survey (BLS), euro area banks reported a further net tightening of credit standards – banks’ internal guidelines or loan approval criteria – for loans or credit lines to enterprises in the third quarter of 2026 (net percentage of 9% of banks; Chart 1). Banks reported unchanged credit standards for loans to households for house purchase (net percentage of 0%) and a further net tightening for consumer credit and other lending to households (net percentage of 14%). 

For firms, the net tightening surpassed the expectations reported by banks in the previous survey round (5%). Heightened risk perceptions and banks’ reduced risk tolerance remained the main drivers of tighter credit standards, with some banks reporting increasing pressure as a result of geopolitical uncertainty and energy developments. 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 quantitative 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. For housing loans, banks had expected a slight net tightening. Meanwhile, the tightening of credit standards for consumer credit exceeded banks’ expectations, owing mainly to lower risk tolerance and heightened risk perceptions. For the fourth quarter of 2026, banks expect credit standards to tighten further for firms and tighten significantly for both housing loans and consumer credit.

Banks’ overall terms and conditions – the actual terms and conditions agreed in loan contracts – tightened for all loan segments, driven mainly by higher interest rates.

Banks reported a net increase in the share of rejected loan applications for all borrower groups. The net increase in the share was higher for consumer credit than for loans to firms and housing loans.

In the third quarter of 2026, euro area banks reported a net decrease in demand for loans or credit lines to firms (net percentage of -6%; Chart 2). This net decline stood in contrast to banks’ expectations of an increase in the previous survey round (4%) and followed a small net increase in the second quarter (3%). Loan demand was primarily dampened by the general level of interest rates. Weaker demand for fixed investment among small and medium-sized enterprises and the move towards alternative sources of finance also weighed slightly on loan demand. Some banks reported that uncertainty regarding geopolitical and energy developments continued to suppress corporate loan demand, while upward pressure came from demand for inventories and working capital. When asked about the impact of AI adoption on demand, 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 more pronounced over the coming months.