Further decline in new lending business despite corporate investments increasing slightly

Frankfurt (ots) -

- Drop in banks' new business with enterprises and self-employed
professionals has slowed down
- Corporate investments have seen a slight increase again for the
first time in five quarters; KfW is expecting a 5% increase for
2014
- New lending business is expected to grow in the second half of
2014

Corporate investment activity in Germany is finally picking up
speed again, but this is not yet being reflected in growing demand
for credit. This is the key finding of the current KfW Credit Market
Outlook.

During the fourth quarter of 2013, corporate investments recorded
slight growth for the first time in five quarters according to KfW
estimates. This may well have been driven by commercial construction,
which recorded increasing investments over the unusually mild winter.
KfW is expecting corporate investments to grow by 5% for 2014 as a
whole.

However, banks' and savings banks' new lending business with
enterprises will be largely unaffected by this during the first
quarter of 2014, shrinking by a further 1.9%. But the pace of the
decline has slowed down. In the fourth quarter of 2013 new lending
still fell by 3.6%.

"Growth in the new lending business has bottomed out," remarked Dr
Jörg Zeuner, Chief Economist of the KfW Group. "We are finally seeing
a reversal in the trend for corporate investments too, which saw a
slight increase in the closing quarter of 2013 for the first time in
more than a year." Dr Zeuner is of the opinion that the increase in
investment activity is still too cautious for it to be reflected in
much greater demand for credit. He believes that investors are still
largely investing using their own funds. "But the 2% economic upturn
we expect this year should prompt a considerable increase in
enterprises' capacity utilisation by the end of the year. Investors
will then need to make bigger investments that will have to be
financed more by means of loans. I expect that banks' and savings
banks' new lending business will increase again during the second
half of the year," added Dr Zeuner, before going on to explain that
there are, however, still downside risks for the credit market. These
mainly relate to the threat of economic downturns in Germany and the
euro zone. At the present time, these downturns are most likely to
stem from some emerging markets, especially Russia.

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

The main results of the current KfW credit market outlook
summarizes KfW Chief Economist Dr. Jörg Zeuner together in a video
quote (http://ots.de/Z6McB)in German.

Contact:
KfW, Palmengartenstr. 5 - 9, 60325 Frankfurt
Kommunikation (KOM), Christine Volk,
Tel. +49 (0)69 7431 3867, Fax: +49 (0)69 7431 3266,
E-Mail: presse@kfw.de, Internet: www.kfw.de