Austrian National Bank publishes Bank Lending Survey showing prolonged fall in corporate loan demand and tighter credit standards

The Austrian National Bank (OeNB) published the Austrian results of the euro area Bank Lending Survey, indicating that weak economic conditions continue to dampen bank lending, with corporate loan demand declining for more than two years and banks repeatedly tightening their lending stance due to higher perceived risks. Demand for private housing loans has picked up from a historic low since early 2024 following European Central Bank rate cuts, but remains subdued. For corporate loans, participating banks reported a further drop in demand in the fourth quarter of 2024 and expect a slight additional decline in the first quarter of 2025, mainly reflecting lower financing needs for fixed investment and, since the second quarter of 2024, reduced demand for inventory and working-capital financing. Banks’ risk assessments of the general economic outlook and corporate creditworthiness have deteriorated since 2022, feeding into tighter lending criteria and terms, most notably for loans to real estate companies; rejection rates have also tended to rise, more for small and medium-sized enterprises than for large firms. In housing finance, the survey points to a continued modest recovery in demand, supported by lower financing costs and higher real household incomes; OeNB monetary statistics show new housing lending falling from an average of around EUR 2.1bn per month in 2021 to EUR 0.7bn in January 2024, before rising to monthly levels of up to EUR 1.2bn by October 2024. A more detailed report on the Austrian results is to be published in the “OeNB Reports” series, while the euro area-wide results are published by the European Central Bank.