Steady and marked easing is needed for a turnaround in credit supply

The Magyar Nemzeti Bank has today published the results of its latest lending survey. The survey conducted in January 2013 found that credit conditions for non-financial corporations had not been tightened further. Although banks’ capital and liquidity position called for an easing, they remained overly cautious in their lending policy, due to the unfavourable economic and sector-specific outlook.

According to the lending survey conducted in January 2013, credit conditions for the corporate segment were reported to have remained unchanged as a result of two opposing effects. Although banks’ capital and liquidity positions called for an easing, their risk tolerance and the unfavourable economic and sector-specific outlook pointed to tightening.

Looking ahead, banks expected easing in corporate credit conditions, which occurred only once in the past three years. Banks cited the favourable liquidity situation and competition for highly creditworthy clients, which may contribute to this loosening. However, steady and marked easing is needed for a turnaround in credit supply to non-financial corporations.
Banks perceived a decline in demand for long-term corporate loans and a steady rise in demand for short-term loans, which implies that credit supply constraints pose a lower risk in the former case, while a higher risk in the latter.

Credit conditions for households were reported to have eased further, while at the same time banks had not perceived a rebound in demand. Looking ahead, banks anticipated rising demand for household loans, particularly for housing loans, which is attributable to the amendments in the state interest subsidy scheme. The larger maximum loan amount, the changes in the gradual reduction in interest rate subsidy and the abolishment of obligations in relation to the declaration by the seller point to a significant easing in terms and conditions of the scheme.

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 January 2013: it reflects their responses to backward-looking questions relating to 2012 Q4 as well as their expectations for 2013 H1. 

Lending Survey