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Dutch banks: “demand for loans to enterprises increased in late 2021”

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Demand for loans to enterprises increased in the second half of 2021 as firms became more willing to invest. This is what some Dutch banks report in the latest edition of the Bank Lending Survey (BLS), a quarterly survey in which Dutch commercial banks provide information on developments in lending. In addition, some banks reported that demand for residential mortgages fell towards the end of 2021 after successive increases.

Published: 01 February 2022

Hoogwerkers

The BLS is a quarterly survey in which seven Dutch-based banks look back on credit developments in the past quarter and look ahead to the next quarter. The participating banks, comprising the major banks and selected specialised banks, together account for over 80% of the financial assets of the Dutch domestic banking sector. The banks’ responses only reflect the direction of developments and expectations, but not their exact extent. The developments are expressed as a net percentage indicating the difference between the percentage of banks providing a positive answer and the percentage of banks providing a negative answer. The reference date of the latest BLS survey is 1 January 2022.

Demand for loans to enterprises up as activity expands

An increasing number of banks reported higher demand for loans to enterprises from the third quarter of 2021 onwards. This was attributed to increased investment in inventories and working capital. Demand for loans to enterprises was also fuelled by capital investment, such as the purchase of machinery for production purposes with a useful life of more than one year. Earlier in 2020 and 2021, the decline in capital investment had curbed demand for loans to enterprises. Such purchases – and a lack thereof – are important indicators of expectations about future production. Signs that such investment increased in the second half of 2021 point to an economic recovery. Banks expect demand for loans to enterprises to remain stable in the first quarter of 2022.

Source: DNB statistics

At De Nederlandsche Bank, we independently compile statistics on the Dutch financial sector and economy. This article is based on these statistics. More information on our statistics and all dashboards can be found on our Statistics homepage.

Credit standards for loans to enterprises stabilised

Credit standards for loans to enterprises stabilised in the second half of 2021. Before this period, banks had on balance tightened their standards for four consecutive quarters since the beginning of the pandemic. The main reason for this stabilisation is that banks saw a lessening impact of risks relating to both the general economic outlook and firm-specific creditworthiness in 2021, which is another factor signalling economic recovery. Looking ahead to the first quarter of 2022, none of the banks expect to adjust their credit standards.

Demand for residential mortgage loans from banks softens

On balance, banks reported a decline in demand for loans to households for house purchase in the second half of 2021. The BLS shows that this moderation in demand was due mainly to the waning impact of the persistently low interest rate environment and favourable housing market prospects. Throughout the first half of 2021, demand for mortgage loans had continued to rise during the pandemic. However, banks expected a net decrease in demand during the period from the second quarter of 2020 through the fourth quarter of 2020. The difference between these negative expectations and the positive retrospective data is likely due to uncertainty relating to the beginning of the pandemic. One bank expects to see a decrease in the demand for mortgage loans in the first quarter of 2022 relative to the fourth quarter of 2021.

Further information

The Bank Lending Survey dataset is published in Table 5.5 in the statistics section of our website.

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