More modern theories that strongly dispute that assertion. And certainly the money needed to pay compound interest on the loan has not been created. (Apparently it's expected that borrowers will materialize it.)

"Banks first lend and then cover their reserve ratios: The decision whether or not to lend is generally independent of their reserves with the central bank or their deposits from customers."

[https://en.wikipedia.org/wiki/Money_creation#Credit_theory_o...]