The Magyar Nemzeti Bank has published the results of its 2011 Q2 survey of bank lending practices. The survey, conducted in the first half of July, found that banks had not tightened credit conditions for household loans and did not expect any material change during the next six months, except in the case of unsecured consumer loans, where they expected some easing.

In the corporate segment, banks reported that they had not changed credit conditions significantly, after tightening in previous quarters. However, developments in 2011 Q2 should not be regarded as a turning point, as banks expect a further tightening in credit conditions for the corporate sector (mainly in the premium on riskier loans) in second half of 2011, indicating their continued risk aversion.

Banks’ risk-sensitivity increased further in financing the municipal segment in 2011 Q2, with banks almost unanimously continuing to tighten credit conditions. Many banks experienced a deterioration in the quality of their outstanding municipal loan and bond portfolios, which resulted in a higher need for restructuring. Based on the responses, banks restructured 1 per cent of their total portfolio of loans to municipalities until the end of 2011 H1. However, this ratio may reach 10 per cent by the end of 2011 according to banks active in the municipal sector.

The lending survey was conducted between 1 and 18 July 2011. Considering the market turbulence since the end of July, the forward-looking responses should be interpreted with caution.

The Magyar Nemzeti Bank launched its questionnaire-based survey in the spring of 2003. The survey, conducted on a quarterly basis, gathers information on Hungarian commercial banks’ lending practices. It aims to present banks’ assessments regarding domestic market credit conditions. The latest survey is based on the questionnaires completed by banks in the first half of July 2011: it reflects their responses to backward-looking questions relating to 2011 Q2 and their expectations for 2011 H2.