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.
Trends in corporate lending remained positive in 2014 Q1 compared with previous years. Based on transaction data (the balance of disbursements and repayments), total outstanding corporate loans shrank by 1.3 per cent at the end of Q1, declining at a far slower rate compared to the 3-4 per cent average annual rate of contraction from previous years. Similar to the trend in the previous quarters, this decline affected foreign currency lending first and foremost, while the volume of forint loans expanded in the past year, with long-term forint corporate lending continuing to gain ground.The estimated transaction-based annual growth rate between 2013 Q1 and 2014 Q1 was positive in the SME segment, at 0.5 per cent. The corporate survey conducted by the MNB in March and April corroborates the significant impact of the Funding for Growth Scheme on developments in lending, with half of the respondents which took out new loans under the FGS stating they would not have done so in the absence of the FGS. New, primarily investment loans play an even more pronounced role in the second phase of the FGS: by the end of May, new business volume amounted to nearly HUF 175 billion, the larger part of which, HUF 132 billion, consisted of new investment loans. New loans in the SME segment in 2012 featured an average maturity of 2.3 years, whereas the loans extended to SMEs under the FGS feature far longer average maturities, at 6.5 years.
Corporate forint lending rates fell further, and the policy rate cuts have passed through quickly and to a large extent in the lending rates. The average quarterly interest rate on new forint loans below EUR 1 million fell significantly, from 6.1 per cent to 5.5 per cent in Q1. The responses to the lending survey revealed that banks left credit conditions unchanged in the first quarter, after having tightened them significantly since the outset of the crisis. The responses to the corporate survey also point to tight credit supply constraints: of the respondents, nearly half of the micro and small-sized enterprises and 21 and 25 per cent of the medium-sized and large enterprises which have debt and face financing constraints identified these constraints as being a severe problem.
The volume of outstanding lending to households by credit institutions continued to fall in Q1, but new lending rose by over 25 per cent relative to the same period of the previous year. The annual percentage rate (APR) decreased from 8.8 per cent in the previous quarter to 7.9 per cent on new housing loans following the reductions in the central bank policy rate. Although the interest rate spread on housing loans declined, it is still high in a regional comparison. The lending survey revealed that banks are mainly easing non-price terms on unsecured consumer loans.
The objective of the publication ‘Trends in Lending’ is to present a detailed picture of the latest trends in lending and to facilitate appropriate interpretation of these developments. To this end, it 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:
MAGYAR NEMZETI BANK