Loans to non-financial enterprises totaling 14 billion euros increased at the end of March 2023, based on the status, by 33.7 million euros or 0.2% on a monthly basis, while the annual growth rate slowed to 15.2% (+1.8 billion euros) compared to 20% in February and 21.5% in January 2023, according to an analysis by RBA analysts.
In the structure of loans to enterprises, the annual growth rate of loans for working capital slowed to 7.1% (+0.3 billion euros), which is 8.5 percentage points lower compared to the annual change in February and 13.5bp lower compared to January. On a monthly basis, a modest decline of one percent was recorded in March. At the end of March, loans for working capital amounted to 4.3 billion euros, accounting for 30.8% of total loans granted to non-financial enterprises.
At the same time, loans for investments recorded an increase of 0.7 billion euros compared to March last year, and their annual growth rate continued to slow for the fourth consecutive month, from 16.2% in February to 13.6% in March. On a monthly basis, investment loans increased by 0.9%, and with a total amount of 5.6 billion euros, they accounted for almost 40% of total loans granted to non-financial companies.
Other loans, amounting to 4.1 billion euros, recorded growth on both a monthly and annual basis. Compared to February, they increased by 0.7% (+27.8 million euros), while compared to March last year, they grew by 27.7% or 0.9 billion euros (compared to 31.1% achieved in February). Double-digit annual growth rates in this category have been ongoing since August 2022.
When viewed by the size of the non-financial company, the most pronounced growth in working capital loans was recorded in March among micro enterprises, at 21.4% annually and 4.4% monthly. On a monthly basis, small, medium, and large enterprises recorded a slight decline in this category. In terms of investment loans, the strongest annual growth was achieved by micro and large enterprises (both categories at 18.5%).
Continuation of the Slowdown in Loan Growth
On a monthly basis, modest growth in investment loans was recorded among micro (+0.7%), small (+0.3%), medium (+1.0%), and large (+1.4%) enterprises. In the category of other loans, large enterprises dominate in annual changes with a growth rate of as much as 67.5%, while the strongest growth in other loans compared to February is recorded by small enterprises (+1.5%).
When viewed by shares in total loans granted to non-financial enterprises, large enterprises account for 40.4%, followed by small enterprises (21.8%), medium enterprises (21%), and finally micro enterprises (15.6%). The remainder (1.2%) consists of unclassified loans. When viewed by the original maturity of loans, the largest share consists of loans with a maturity of over five years, accounting for almost 60% of total loans.
The slowdown in the annual growth rate of loans granted to non-financial enterprises is primarily the result of the base period effect, i.e., the already pronounced growth of loans to enterprises in the same period of the previous year. This year, we expect the continuation of the slowdown in the growth of observed loans.
According to HNB, the tightening of the ECB’s monetary policy continues to be more strongly transmitted to the financing costs of non-financial enterprises compared to households. Thus, the average interest rate on newly contracted loans to non-financial enterprises reached 3.9% in March, which is 22 basis points higher than in February (+196bp higher than in the period before the start of raising reference interest rates). The average increase in financing costs is visible among enterprises of all sizes, according to the RBA analysis.
