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Press Release from 2023-01-19 / Group, KfW Research

KfW Credit Market Outlook: Multiple shocks are driving record-high growth in new lending to businesses

  • Cost increases and energy crisis continue to generate strong financing requirements
  • New lending grew by 36.1% in the third quarter
  • Trend is expected to reverse at the start of the year

According the current KfW Credit Market Outlook, new lending from banks and savings banks in Germany to companies and self-employed persons increased by a record high 36.1% in the third quarter of 2022. New lending growth thus increased by another 15 percentage points on the previous quarter. Towards the end of the year, however, credit growth has likely started to weaken.

Much of the strong growth in lending was due to the high economic uncertainty that characterised the year and was primarily due to factors associated with high credit demand. For one thing, the need to accumulate higher stockpiles because of persistent supply chain issues is causing higher costs and creating increased financing requirements for many businesses. For another, the war in Ukraine is creating severe distortions and burdening vast parts of the business sector directly with substantially higher energy prices while also triggering indirect effects such as more expensive inputs. The loans guaranteed by the Federal Government to secure gas supplies through the state-owned promotional bank KfW also contributed again noticeably to the increase in new lending.

The sharp increase in new lending suggests that credit access for the corporate sector remains intact. In the coming quarters, however, banks will focus even more on the quality of borrowers. What is crucial is how strongly the economic slowdown in 2023 will impact on the creditworthiness of the corporate sector. It must also be expected that the ongoing monetary tightening will also be reflected in lending rates. The trend reversal in the credit market is thus likely to emerge primarily from the supply side. Current surveys already reflect this. The banks surveyed under the Bank Lending Survey (BLS) of October indicated that increasing fear of recession, the sector- or company-specific situation and a generally decreasing risk tolerance have had a significant effect on credit standards.

Dr Fritzi Köhler-Geib, Chief Economist of KfW, said: “Multiple shocks drove the record growth in new loans to businesses and self-employed persons in 2022. But new lending probably peaked in the third quarter. I expect growth rates to remain strong but slowly begin to weaken in the final quarter of 2022 and the first quarter of 2023. Lower investment activity due to subdued economic conditions and increased financing costs in particular are likely to dampen credit demand. Predictably tightening lending policies will slow the growth in new lending on the supply side as well. A major risk for this forecast is the development of the COVID-19 pandemic in China, which may lead to a renewed worsening of supply chain problems.”

Note: KfW Research calculates the quarterly KfW Credit Market Outlook exclusively for the German business newspaper Handelsblatt. The current edition is available at: