Austrian banks improved their lending practices due to good economic conditions and stricter regulations. Expansive monetary policy led to more risk-taking by banks, while tighter capital requirements reduced the likelihood of default for customers. Smaller banks facing pressure from low interest rates took on more risks. The COVID-19 pandemic is expected to worsen credit quality in Austria, especially in industries directly impacted by the crisis. Overall, banks estimated their loan portfolios to have good credit quality before the pandemic hit.