Loan interest rates for corporate customers in Germany are falling dramatically towards the zero line. According to the Barkow Consulting Corporate Credit Index, the interest rate on new loans with a five-year fixed interest period is now only 0.93%. On 4th of August it was still 1.08%, in May it was still 1.43%. This means that the value is currently reaching a record low! And if, as generally expected, the ECB cuts interest rates in September, this trend in corporate lending rates should accelerate further. Towards zero at record speed?
This is likely to be a dramatic development, especially for Commerzbank, which is strong in financing German SMEs. Interest income for CoBa is likely to fall significantly, more than has happened in recent years anyway! What does this mean for CoBa, Deutsche Bank, savings banks etc? Dramatically shrinking earnings from corporate banking! Associations of Volksbanks and Savings Banks recently warned that, for example, negative interest rates on deposits with the ECB will soon be passed on to private customers. And what about the eroding loan interest rates for companies? More profit earners will break away. And the situation for the German banks will probably become even more dramatic.