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

Author

Listed:
  • Andreas Greiner
  • Katharina Steiner

    (Oesterreichische Nationalbank, Foreign Research Division)

  • Walter Waschiczek

    (Oesterreichische Nationalbank, Economic Analysis Division)

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.

Suggested Citation

  • Andreas Greiner & Katharina Steiner & Walter Waschiczek, 2019. "The recent upswing in corporate loan growth in Austria – a first risk assessment," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 38, pages 56-73.
    • Handle: RePEc:onb:oenbfs:y:2019:i:38:b:3
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    bank lending; corporate finance; industry structure; credit quality; financial stability;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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