Lending in Germany: Where is the growth compared to the EU?
Lending in Germany: Where is the growth compared to the EU?
In Germany, not much is happening at the moment when it comes to lending. Despite all efforts, such as the investment programs, growth in the loan area is strongly behind expectations. In May 2025, the annual growth rate was just 1.9 percent-hardly more than the inflation rate, such as Barkow consulting reported.
Especially the corporate loans are under pressure and almost fully stagnate. While credit growth has been doing better over a year in the rest of the European Union, Germany clearly draws the loser here. The growth difference is currently about 1.5 percentage points in favor of the EU. This is a clear signal that the German economy is more difficult than the rest of Europe.
fluctuating lending
The development of corporate loans in Germany is reminiscent of a roller coaster ride. After a noticeable upward movement until October 2022, when loan growth reached almost 14 percent, a drastic decline occurred from the fourth quarter, which has now almost reached zero. The Bundesbank explains that this decline concerns all banking groups and business sectors. Companies are increasingly relying on internal financing, which dampens the demand for new loans.
At the same time, we also see a recent increase in credit rates through the banks that react to the high inflation rates and the uncertain economic environment. This means that despite a certain revitalization of the credit market, the banks draw on the reins and act more restrictively when it comes to lending. However, an outlook from the Bundesbank gives hope: For the second half of 2024, a revival of credit growth is predicted if the economic framework is stabilized. However, the Bafin warns of further deterioration of the situation by increasing non-performance insins.
economic challenges
The economic framework is anything but rosy. In 2024, a decline was recorded in the economy of 0.2 percent and the economic performance in 2023 was also 0.3 percent. A slight improvement is expected for 2025, with growth of 0.4 percent. The problems are diverse: high energy costs in particular apply the chemical and processing industry, while geopolitical tensions and structural change in retail also put a strain on the export-dependent companies.
In addition, the low equity equipment of many banks is an additional danger. A stress test showed that small and less significant institutes in particular are more threatened with credit cases. In the fourth quarter of 2023, rising value corrections from banks were recorded in commercial property loans - an indication of increasing credit risks.
The current situation is a large test stone for the German economy. The next few months will have to show how the lending policy of banks adapts to the changing economic conditions and whether the Bundesbank's forecasts can also be met through gradual recovery.
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