The economic slowdown in Germany has now also reached the lending business. The extremely dynamic growth of banks‘ customer loans has slowed recently. From the end of September 2018 to the end of September 2019, loans to companies, private households and the state rose by 4.0 percent to EUR 2,928.2 billion. The strongest growth was again recorded in corporate loans. However, the increase slowed compared to the middle of the year. On the other hand, growth in private housing loans remained stable at a high level.
The economic environment, which is characterised by a weakening industry, but a persistently good construction sector, is also reflected in the expectations of banks for the coming months. Most of them expect demand for corporate loans to fall and are planning to tighten their credit guidelines for these customers. The banks are more optimistic about the demand for credit from private households, for whom hardly any changes to credit guidelines are planned.
With the gradual slowdown in growth in the lending business, fears of an overheating of the markets are likely to diminish. While interest rates for the bank deposits of „normal savers“ have virtually frozen just above the 0% line, the decline in lending rates has accelerated again in recent months. As a result, the difference between lending and deposit rates has collapsed without any sign of a „bottom formation“. The shrinking interest margin increases the pressure on the banks to make further cost reductions through branch closures and rationalisation in the back office.