In the third quarter of 2015, outstanding lending to non-financial corporations by credit institutions increased by HUF 28 billion, i.e. by 0.5 per cent, in quarter-on-quarter terms. However, corporate lending processes were characterised by two distinct trends depending on corporate size categories. While outstanding loans to large corporations contracted by almost HUF 46 billion, the outstanding borrowing of the SME sector increased significantly, i.e. by HUF 74 billion, and thus the annual growth rate of lending to SMEs reached 3.5 per cent by the end of the quarter. However, due to the continued contraction of lending to large corporations, total outstanding lending still shows a downward trend in annual terms, and the portfolio's annual rate of decrease was 4.4 per cent in September 2015.
The Funding for Growth Scheme made a substantial contribution to the expansion of the SME sector's outstanding borrowing in the third quarter as well. In October, the programme gained new momentum as a result of utilisation of the FGS+ funds in pillar two. Based on the Lending Survey, banks generally eased their credit conditions during the quarter, which was accompanied by a fall in the financing costs of both small- and high-amount forint loans. The banks participating in the survey reported an increase in credit demand for long-term loans and expect further strengthening in this demand in the coming quarters.
In aggregate terms, outstanding lending to households fell by HUF 67 billion during the period under review. Thus in annual terms the rate of portfolio decline is close to 15 per cent, but disregarding the one-off effect of the settlement, the rate of decrease would be 4.5 per cent. However, the recovery in new loans continued; the volume of gross loans extended by credit institutions to households increased by 36 per cent year-on-year. Based on the Lending Survey, the banks did not change their lending conditions for housing loans during the quarter, and all banks reported a recovery of demand in this segment. Growth in demand for consumer credit is expected, particularly in the next half-year. The recovery in new household loans was also attributable to the low interest rate environment: during the quarter, credit costs and spreads decreased in both segments.