The April 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 21 U.S. branches and agencies of foreign banks.

The survey results generally indicated that banks’ policies regarding lending to businesses eased over the past three months and demand increased, on balance. In particular, a relatively large fraction of domestic respondents reported having eased standards on C&I loans, and moderate to large net fractions of such respondents reportedly eased many terms on C&I loans to firms of all sizes. Banks that eased their C&I lending policies generally cited increased competition for such loans as an important reason for having done so.

According to the survey, a very large fraction of respondents indicated that they had decreased spreads on C&I loan rates over their bank’s cost of funds for firms of all sizes. Moderate to large net fractions of banks again reported having reduced the cost of credit lines and decreased the use of interest rate floors for all firm sizes. In addition, about one-half of large domestic banks reported having eased loan covenants for large and middle-market firms in the April survey, up from 30% in the January survey.

Of the domestic respondents that reported having eased either standards or terms on C&I loans over the past three months, all but one cited more-aggressive competition from other banks or nonbank lenders as an important reason for having done so. About 40% of respondents that had eased their C&I loan policies cited a more favorable or less uncertain economic outlook as a somewhat important or very important reason. As in the previous survey, no other reasons were broadly cited by banks as being important for easing their C&I lending policies.

To read the entire Senior Loan Officer Opinion Survey for April,
click here.