In 2017 Q3, growth in lending to both the corporate and household sectors was stable. The annual growth rate of total corporate loans accelerated to 9 per cent. As a result, for the second consecutive quarter the expansion in corporate lending was within the 5–10 per cent band deemed desirable by the MNB. Lending to SMEs, including the self-employed sector, grew by 13 per cent in the period. Transaction-based growth in lending to households was also positive, with outstanding credit to the sector increasing by 3.6 per cent year on year.
Budapest, 29 November 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 2017 Q3, a further expansion was observed in the corporate segment, with corporate lending as a whole increasing by nearly 9 per cent year on year. Accordingly, for two consecutive quarters now the expansion in corporate lending was within the 5–10 per cent band deemed desirable by the MNB. Lending to the SME sector, including the self-employed, grew by a total of 13 per cent. In the period under review, the balance of transactions significantly exceeded that of the previous quarters, reaching a total of HUF 193 billion. As a result, total corporate loans outstanding increased by HUF 517 billion over the year to 2017 Q3 on a transaction basis. An expansion of nearly 10 per cent was recorded in the case of the narrow SME sector.
Based on banks’ responses to the Lending Survey, credit conditions at both large companies and SMEs eased, which the banks participating in the survey explained with increasing competition between banks and an improvement in economic prospects. Looking ahead, they expect these developments to continue in the next half year, holding out the prospect of further easing. During the quarter, enterprises’ credit demand increased to a degree that exceeded market expectations. The expansion in demand for commercial real estate loans also contributed significantly to the positive surprise. Some of the banks expect an increase in demand during the next half year and, in parallel with the improving prospects in the commercial real estate market, a further expansion in demand for related loans. The average interest rate spread on corporate loans did not change significantly in Hungary or the region.
Lending to households grew further in the quarter, rising by 3.6 per cent in annual terms over the year to September 2017. The annual value of loan transactions amounted to HUF 211 billion, with 2017 Q3 contributing HUF 83 billion. The annual average increase in the volume of new loans was 43 per cent. Within that, new housing loans and personal loans grew by 29 per cent and 46 per cent, respectively.
Based on the Lending Survey responses, banks, on the whole, did not change their lending conditions, although many respondents indicated a reduction in credit spreads in both the housing and consumer loan segments, similar to previous quarters. As perceived by banks, credit demand in both product groups kept growing, with a continued contribution by the Home Purchase Subsidy Scheme for Families: in 2017 Q3, 17 per cent of the volume of newly issued housing loans were related to the HPS. Partly as a result of slightly greater recourse to variable-rate products, which accounted for 44 per cent of disbursements in the quarter under review, the financing costs of new housing loans declined, although they remained significantly higher than the regional average.
Based on the Financial Conditions Index, which summarises the supply conditions of developments in lending, the cyclically restraining impact of the banking sector’s lending activity ceased completely. Accordingly, in terms of the annual expansion in the real economy, neither a cycle strengthening, nor a growth restraining behaviour is experienced.
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: