Lending in Germany stabilizes at low level

New lending from banks to businesses and self-employed persons, excluding residential construction and finance institutions, in Germany is expected to have dropped just a bit in the second quarter of 2016, according to KfW Research. On a year-on-year basis, new lending is expected to have dropped 0.7 percent. This hints at an end to the most recent decline.

However, the reduced downward momentum is greatly a consequence of the already weak reference quarter in 2015. Since the new lending business has stabilized at the 2013 level. The sideways movement is likely to continue until the end of 2016. Considerable increases in corporate financing are not expected. On the supply side, potential for additional improvements to financing conditions appear to be greatly exhausted, and the credit demand side is also generating insufficient stimulus, added KfW Research.