SME loans increased by 12 per cent in 2016Print
Developments in credit institutions’ lending were characterised by general improvement in 2016 Q4. In 2016, total corporate loans grew by 4 per cent, a rate unseen since the crisis. Improvement in SME-lending took place amidst growing demand and easing credit constraints on the supply side, as SME loans grew by 8 per cent in annual terms, while the growth rate was approximately 12 per cent when the self-employed are also taken into account. Banks complied with 150 per cent of their commitments in the Market-Based Lending Scheme, in which 15 banks have exceeded their commitments. Household loans did not change last year as a result of the disbursements and payments, due to the significant pick-up in new lending. Primarily, housing loans supported by the Home Purchase Subsidy Scheme for Families expanded, but an increase in unsecured consumer lending could also be observed.
Budapest, 03 March 2017: ‘Trends in Lending’, a quarterly publication of The Magyar Nemzeti Bank, presents a comprehensive, descriptive analysis of the most important indicators of developments in lending.
In 2016, corporate lending grew by more than 4 per cent on a transaction basis, i.e. disbursements exceeded repayments by HUF 240 billion during the year. The growth in loans was primarily attributable to an increase in the volume of HUF loans, and – in addition to FGS-loans – there was also a significant increase in market-based HUF lending. Lending to SMEs continued to grow, expanding at an annual rate of 8 per cent. Loans to the self-employed also grew dynamically during the quarter, in which borrowing related to the sale of state lands played a major role. The annual growth rate of loans to the SME sector including the self-employed was approximately 12 per cent in 2016. The Market-Based Lending Scheme also contributed significantly to the recovery in SME lending: banks made commitments to increase their loans to small and medium-sized enterprises by HUF 195 billion, and these commitments were overfulfilled at the sectoral level.
Based on the banks’ responses to the Lending Survey, there were no significant changes in the conditions of corporations’ access to credit in 2016 Q4. However, one quarter of banks eased credit conditions for small and micro enterprises, and this easing was primarily related to price conditions. This was explained with intensifying competition, and improvements in terms of liquidity and economic prospects by the banks. During the quarter, banks registered a rise in demand for loans, which they expect to continue for the next six months as well. The average financing cost of new corporate HUF loans decreased further during the quarter.
Household loans did not change last year as a result of the disbursements and payments, due to the significant pick-up in new lending. Overall the volume of new housing and consumer loan contracts increased by 50 per cent on an annual average. Within the total volume, new housing loans increased by 42 per cent and new personal loans by 61 per cent over the past year. 17 per cent of the volume of new housing loans is linked to the Home Purchase Subsidy Scheme for Families (HPS).
Based on the banks’ responses to the Lending Survey, conditions on housing loans did not change significantly, while the conditions on consumer loans were eased further in Q4. Additionally, a wide range of banks experienced growth in credit demand in both product groups. The banks expect demand to increase further over the next six months and plan to ease credit conditions in both groups. The average APR on new housing loans decreased, while the average interest rate spread remained unchanged, due to the increased financing of riskier customers.
Based on the Financial Conditions Index, which summarises lending developments in the corporate and household segments, through its lending activity the banking system exerted an approximately neutral impact on the annual growth of the real economy.
The objective of the publication ‘Trends in Lending’ is to present a detailed picture of the latest trends in lending and to facilitate the appropriate interpretation of these developments. To this end, the report elaborates on the developments in credit aggregates, demand for loans perceived by banks and credit conditions, based on the Lending Survey, and the balance sheet and interest rate statistics of the banking system. Detailed results and the figures of the Lending Survey are available on the MNB’s website at the following link:
MAGYAR NEMZETI BANK