‘Trends in Lending’, a quarterly publication of the Magyar Nemzeti Bank, presents a comprehensive, descriptive analysis of the most important indicators of trends in lending.
In Q3 2014, there was a substantial increase in the corporate sector’s loans outstanding from credit institutions, based on transactional data. Disbursements exceeded repayments by HUF 97 billion, with the expansion of loans outstanding almost fully attributable to growth in forint loans. By the end of Q3, the total volume of loans disbursed in the second phase of the Funding for Growth Scheme (FGS) increased to almost HUF 400 billion. The Monetary Council decided to increase the scheme’s limit to HUF 1,000 billion, and also extended the deadline for concluding loan contracts by one year, until the end of 2015. The transaction-based annual growth rate of corporate loans fell to -2 per cent, which is attributable to the strong base effect of the high volume of loan disbursements realised one year ago, during the first phase of FGS. During the period under review, the financing costs of new market-based corporate loans decreased further; consequently, in addition to the interest rate spread, even the nominal interest rate of new corporate loans can be deemed favourable by regional standards. However, it still holds true that only the enterprises deemed creditworthy by the banks can benefit from the favourable price conditions. Based on the responses given by banks in the lending survey, the conditions of corporate loans have not changed substantially and no considerable easing may be anticipated in the next half year either. However, according to the respondent banks demand for long-term loans may continue to increase, which may also reflect the impact of the FGS limit increase.
In the third quarter of 2014 the household loan portfolio of credit institutions decreased further, as repayments exceeded disbursements by HUF 26 billion. The contraction of the loan portfolio reflects the continued shrinking of foreign currency loans, while the aggregate forint lending was characterised by recovery. The disbursements of forint loans exceeded repayments by HUF 61 billion, while the volume of new household loans during the quarter amounted to HUF 160 billion, which is 32 per cent higher on an annual basis. Based on the responses given by banks in the lending survey, the terms and conditions of consumer loans eased in Q3, while there was no substantial change in those of housing loans; moreover, in their responses looking two quarters ahead a narrow range of banks indicated tightening in housing loan conditions. Based on the survey the banks reported recovery primarily in demand for housing loans, and in the next half-year they expect additional growth in demand for both product types. In Q3, the interest rate spread of new housing loans decreased, but it is still considered high by regional standards.