Enterprises showing far stronger demand for loans
On balance, 56.25% of the German banks surveyed as part of the Bank Lending Survey (BLS) reported that demand among non-financial corporations for new loans or credit lines had risen in the second quarter of 2020. Never since the BLS was launched in 2003 have so many banks reported an increase in demand for loans of this type. This quarterly survey is conducted by the Bundesbank among 34 German banks.
Banks reported that high financing needs for inventories and working capital were the main factor propelling demand for loans. This category is also likely to include bridging loans which enterprises needed to respond to the liquidity shortages brought on by the coronavirus crisis. A sharp rise in demand in this segment was also observed during the financial and sovereign debt crisis. Some respondents furthermore made a point of mentioning the government support programmes and their positive impact on demand.
Demand for loans was softened, on the other hand, by the lower financing needs for fixed investment. Banks last reported that this factor had had such a dampening effect on demand five years ago. Demand was also weakened by the declining funding requirements for mergers and acquisitions.