Many credit institutions have become more cautious in lending.
(Photo: dpa)
Frankfurt In the first half of the year, companies in Germany found it comparatively easy to get loans from banks and savings banks. However, the first leading indicators suggest that this will change in the coming months. Because already in the second quarter, the banks cautiously changed course.
One indication of this is the Bundesbank’s quarterly Bank Lending Survey, which was published in the second half of July. In it, a majority of banks indicated that they had slightly tightened their lending guidelines for corporate loans.
With the stricter internal award criteria that decide whether a company can receive a loan, the proportion of rejected loan applications has also increased slightly, reports the Bundesbank. The turnaround in credit conditions was even more noticeable: many banks then demanded higher credit margins and thus higher interest rates and more collateral from companies.
Financial institutions cited the poorer economic and economic outlook as the main reason for their growing caution. They make company bankruptcies more likely. This increases the risk for financial institutions that loans could burst.
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For example, Thomas Groß, head of Landesbank Hessen-Thüringen (Helaba), told the Bloomberg news agency: “I assume that given the more difficult economic environment and high inflation, we will see more defaults in the future.” However, he does not expect the peak already in the second half of the year, but rather in the years 2023 and 2024. According to its own information, Helaba itself has not tightened its credit policy so far.
Demand is related to crises
The trend reversal at the banks is hitting companies at an unfavorable time: Corporate demand for bank loans was extremely high well into the summer. According to estimates by the state development bank KfW, banks and savings banks granted significantly more new loans to German companies in the first half of the year than in the previous year.
The reason for the high demand from companies is closely related to the current crises: First and foremost, short-term loans were in demand, with which companies wanted to finance their warehousing and working capital. Among other things, the companies reacted to the higher purchase prices for preliminary products and to unstable supply chains, which motivated some companies to keep larger inventories.
“We are assuming a lull in new lending business. After a strong first half of the year, war, economic slack and borrowing costs will slow down new lending business in Germany in the second half of the year,” said KfW chief economist Fritzi Köhler-Geib recently to the Handelsblatt.
The banks are likely to play their part with an even stricter lending policy. Because according to the Bundesbank survey, the banks intend to further tighten their credit guidelines and conditions in the second half of the year.
More: “We are assuming a lull in new business” – The trend reversal is imminent on the credit market