Fewer loan commitments despite a pickup in investments

Frankfurt (ots) -

- Banks see further decline in new business with enterprises and
self-employed individuals
- Turnaround not expected until the end of the year

The German credit market continues to contract. In its latest
Credit Market Outlook, KfW expects that banks and savings banks will
see a year-on-year reduction of 6.8% in new lending business with
enterprises and self-employed individuals in Q3 2013 (compared to
4.7% in Q2). However, loans for the repair of damage caused by flood
water, which cannot be included in the estimation, might help to
cushion the decline.

The KfW Credit Market Outlook shows: The recovery of Germany's
economic growth in the second quarter and the cautious pickup in
investments have not yet been reflected in an increase in demand for
loans. The main reason for this persistent negative trend is the
ongoing weak demand from enterprises for financing. The modest
increase in corporate investments is mainly due to investments in
equipment and not in commercial construction. Enterprises tend to
finance investments in equipment themselves and not through loans.
The credit market will only experience growth again once there is a
marked increase in investments in commercial construction. This is
likely to be the case at the end of the year at the earliest.

"Demand for credit remains low in the third quarter. The economic
upturn has not yet been reflected in the credit market. The slight
increase in investment activity is being financed predominantly by
enterprises' own funds", comments Dr Jörg Zeuner, Chief Economist of
the KfW Group. According to Dr Zeuner, this is common in the early
stages of an economic upswing. "We expect a turnaround at the end of
the year at the earliest, followed by an increase in loan
commitments." However, the credit market is still faced with risks.
Here, Dr Zeuner points to the example of the US monetary policy and
its impact on interest rate movements.

KfW calculates its Credit Market Outlook exclusively for the
German newspaper Handelsblatt. You can find the latest issue of the
indicator at www.kfw.de/kreditmarktausblick.

The main findings of the latest KfW Credit Market Outlook are
summarised by KfW Chief Economist Dr Jörg Zeuner in a video citation
at www.kfw.de/newsroom

Pressekontakt:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM) Nathalie Drücke
Tel. +49 (0)69 7431 2098, Fax: +49 (0)69 7431 3266,
E-Mail: Nathalie.Druecke@kfw.de, Internet: www.kfw.de