News from 2023-08-17 / KfW Research
KfW Credit Market Outlook August 2023
New lending to businesses has stagnated
Following record growth in the previous year, new lending from German banks to enterprises and self-employed persons in the first quarter remained just barely below the level of the same quarter last year. Available data already indicates stagnation for the second quarter. Banks remain cautious in their lending practices but an end to the tightening of lending criteria appears to be in sight.
Credit demand is restrained, crisis-related liquidity requirements have largely decreased. High interest rates and a weak economic outlook are dampening the appetite for investment finance.
For the third quarter we expect new lending to be 10% lower than in the extraordinarily strong third quarter of last year. However, if investment activity by businesses turns out weaker than we expect, lending could contract even more sharply.