The recent upswing in corporate loan growth in Austria – a first risk assessment

Andreas Greiner, Katharina Steiner () and Walter Waschiczek ()
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Katharina Steiner: Oesterreichische Nationalbank, Foreign Research Division
Walter Waschiczek: Oesterreichische Nationalbank, Economic Analysis Division

Financial Stability Report, 2019, issue 38, 56-73

Abstract: With Austrian banks having significantly expanded their lending to domestic nonfinancial corporations in 2017 and 2018, we are witnessing the fifth period of significant loan growth since 1982. While the recent rise in loan growth rates was broadly in line with past increases in magnitude, the year-to-year variation was generally much higher. This paper provides stylized facts on the latest increase in loan growth and a first assessment of potential systemic risks for the Austrian banking system. Developments in the real economy in 2017–2018 broadly followed those during past periods of loan growth – only investment grew at a stronger pace. Bank loans were losing importance in the financing mix of nonfinancial corporations and in banks’ balance sheets throughout the review period. The most recent upturn started from historically low levels and has been more pronounced in some banking sectors as banks have been adjusting their business models following the financial crisis. A potential deterioration in loan quality would especially hit banks with currently high lending rates that have structurally low margins and weaker risk bearing capacity. From an industry-level perspective, the main borrowers were industries with high value-added growth, high profitability and low insolvency rates, yet with a concentration on real estate activities. Such a concentration on real estate business may pose risks given the ongoing buoyancy of the Austrian real estate market.

Keywords: bank lending; corporate finance; industry structure; credit quality; financial stability (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2019
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