The board members of the savings banks believe that the companies are well prepared for the interest rate turnaround by the European Central Bank.
(Photo: dpa)
Frankfurt The board members of the German savings banks are looking to the future with more pessimism than they have since the peak of the corona pandemic. The current energy crisis, the associated fear of a recession and the uncertainty caused by the significantly stricter monetary policy course of the European Central Bank (ECB) have caused the S-Financial Climate Index, which has been collected since mid-2020, to drop to its lowest level since calculations began in the third quarter of 2022 to let.
At 58.4 points, the S financial climate at the beginning of the second half of the year was lower for the third time in a row. “The savings banks now consider the current inflation and energy crisis to be just as dangerous as the corona crisis in 2020,” says Ulrich Kater, chief economist at Dekabank, the securities service provider for the savings banks. So far, however, fears have dominated and not yet actual business slumps.
The Deka-S financial climate is a measure of the current situation in the German economy and on the financial markets from the point of view of the regional credit institutions in the savings banks finance group. It is a sentiment index that is based on a quarterly survey of the board members of the German savings banks and that the Handelsblatt will publish regularly in the future.
Despite the skeptical view of the economy, half of the savings bank board members surveyed believe that the companies in their business area are well prepared for the energy situation in the winter months. “This primarily reflects the significant energy savings that industrial companies are currently making in Germany,” explains Kater.
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This result supports the optimism that the third stage of the federal government’s gas emergency plan, the so-called natural gas shortage, can be avoided. The third stage would trigger rationing of gas supplies.
“Should private households save energy to a similar extent as industry, there will actually be no shortage of natural gas,” says the chief economist. According to the Savings Banks, the most likely scenario for this winter is less a natural gas shortage than a natural gas savings scenario.
slump in credit demand
The deterioration in economic prospects is already having a clear impact on the assessment of credit demand and supply. The balance of savings banks’ willingness to lend deteriorated again at the beginning of autumn to just 12.5 points. “The credit supply component thus decreased noticeably, after the willingness to lend had remained very stable in the past quarters,” says Kater.
>> Read here: The savings banks’ real estate business collapses abruptly – “demand collapsed from one day to the next”
With a balance of zero, the assessments of the savings bank board members, who see an improvement in the willingness to lend, would balance out exactly with those who see a deterioration. Overall, the savings banks’ willingness to lend is still positive. However, a year ago the value was still well over 40 points.
On the demand side, the S financial climate recorded an even more severe slump. This was the sharpest decline since the index began to be calculated.
According to Kater’s assessment, the extremely low value of minus 81.6 balance points for the demand for real estate loans clearly points to the real estate sector as the cause of the declining demand for loans. In the past few days, several prominent savings bank managers had reported a slump in real estate financing. “Demand collapsed from one day to the next. Many projects in the planning stage are being cancelled,” said Sparkasse President Helmut Schleweis in an interview with the Handelsblatt.
Support for ECB rate hikes
Although rapidly rising interest rates can also weigh heavily on the balance sheets of banks, the top managers of the savings banks support the stricter monetary policy course of the European Central Bank. According to the regional banks, companies can also cope with the higher interest rates.
The most recent sharp interest rate hikes by the ECB have met with broad approval from the savings banks – the institutes would like to see further increases in key interest rates, which could raise rates in the euro area to the range of 1.5 to 2 percent and even beyond.
Only a minority of just over 20 percent considers a pause in interest rate hikes to be necessary in view of the risk of an economic crisis. The savings banks were among the harshest German critics of the ECB’s long-standing policy of negative interest rates and had repeatedly vehemently called for a change of course.
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