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Trends in lending, August 2015

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Outstanding lending to non-financial corporations by credit institutions contracted significantly in the second quarter, but overall developments in corporate lending during the period under review were characterised by two distinct trends depending on corporate size categories. Although lending to the SME sector expanded on the whole, there was a substantial decline in outstanding loans to large corporations, and the transaction-based annual growth rate of outstanding borrowing by non-financial corporations dropped to -3.4 per cent. The decline in outstanding borrowing was attributable to a few large-volume corporate transactions. These included transactions to replace bank finance with direct financing provided by the parent company. At the same time, lending to SMEs expanded by around 1.8 per cent in annual terms in the period under review, with the FGS continuing to play a substantial role in this regard. The aggregated volume of contracts concluded within the FGS in 2015 Q2 was 15.6 per cent higher on a year-on-year basis.

Credit conditions generally eased during the quarter, accompanied by a drop in financing costs. Banks participating in the lending survey also reported growth in demand, which may strengthen further in the next half year, supported by the drawdown of EU funds. Actual figures for the annual growth rate still fall substantially short of the 6-7 per cent – or in the case of SME lending, 10 per cent – necessary for sustainable growth, in which continuing tight supply constraints play a substantial role.

Lending to households continued to recover: the volume of gross new loans extended to households by credit institutions increased by 9 per cent year-on-year. Based on the lending survey, banks generally eased their credit conditions during the quarter, while they reported an increase in demand for both housing and consumer loans. The recovery in the volume of new household loans may also be attributable to the drop in the annual percentage rate of charge.