Budapest, 31 May 2012 – The Magyar Nemzeti Bank has published the results of its 2012 Q1 survey of bank lending practices. The survey conducted in April found that the anticipated broad-based significant tightening in the corporate segment for early 2012 did not occur, and in the end substantially fewer banks actually changed their conditions. The MNB would draw attention that a credit crunch can emerge not only as a result of a sudden substantial tightening of credit conditions in the entire banking sector, but also as a result of maintaining strict conditions.
According to the results of the April survey, credit conditions in the household and corporate sector were reported to have tightened in 2012 Q1, but the share of tightening banks declined significantly relative to the previous survey. Credit conditions for households were expected to ease over the next six months, pointing to some correction in the stricter terms which arose during the early repayment scheme of foreign currency mortgages.
In the corporate sector, a turnaround cannot be expected: further tightening was expected by lenders over the next six months. The results are nuanced by the fact, that in the previous survey most of the banks had expected tightening in the corporate segment for the beginning of 2012, but in the end substantially fewer banks actually changed their conditions, mainly due to the effect of the ECB’s 3-year loan tenders. However, it is important to note that a credit crunch can emerge not only as a result of a sudden substantial tightening of credit conditions in the entire banking sector, but also as a result of maintaining the current strict conditions which have evolved since the onset of the crisis.
Banks mainly cited factors related to risk aversion as contributing to the tightening in credit conditions, while substantially fewer banks cited lending capacity than in the previous survey. Based on the cumulation of the proportion of respondents citing the different factors since the onset of the crisis, 73 per cent of the tightening can be attributed to risk aversion, and 13 per cent and 9 per cent to liquidity and capital constraints, respectively.
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 April 2012: it reflects their responses to backward-looking questions relating to 2011 Q1 and their expectations for 2012 Q2 and Q3.
MAGYAR NEMZETI BANK