27 February 2014, Budapest – ‘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.
Although corporate loans outstanding declined in Q4 2013 due to one-off and typical year-end seasonal effects amongst other things, on a yearly basis, a significant improvement was observed in corporate lending. Looking at transactional data only, i.e. the net balance of loan repayments and disbursements, corporate loans outstanding declined by only 1 per cent on a yearly basis, in contrast to the 3-4 per cent annual rate of decline seen in previous years. In the SME segment, the annual growth rate may have remained positive in the last quarter of 2013 as well. The Funding for Growth Scheme played a major role in the recovery of the corporate lending market, and may continue to support corporate lending this year, mainly from the second half of 2014 onwards.
Lending rates on forint loans continued to decline in parallel with central bank policy rate cuts, and consequently the quarterly average lending rates on new forint loans declined from 6 per cent in Q3 to 5.3 per cent. However, based on the surveys, the overwhelming majority of banks did not change their existing tight credit conditions, and thus the favourable interest rate conditions primarily reflect conditions offered to a narrow range of larger companies which banks consider to be creditworthy.
Loans outstanding continued to decline in the household segment, but one favourable development was that loan disbursements were higher compared to the same period of the previous year. In parallel with the decline in the reference rate, the annual percentage rate charge on transactions fell from 9.3 per cent in Q3 to 8.8 per cent in the case of new housing loans. Nonetheless, the interest rate spread on housing loans remains high in a regional comparison.
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
The primary statutory duty of the Magyar Nemzeti Bank is to achieve and maintain price stability. The MNB ensures the safe operation of the payment and settlement systems, safeguards the financial stability of the banking sector, manages the country’s foreign currency reserves, collects and publishes statistical data, and issues the forint, Hungary’s national legal tender.