Budapest, 23 May 2019 – In the first quarter of 2019, lending to the corporate and household sectors continued to rise. The stocks of loans to the corporate, SME and household sectors, respectively, grew by 14 per cent, 13 per cent and 8 per cent year on year. Growth in outstanding lending was accompanied by unchanged credit conditions and buoyant demand. The FGS fix, launched in January, and the debt cap rules and the Certified Consumer-Friendly Housing Loans, provide funds to companies and households with instalments predictable over a long period.
In the first quarter of 2019, the stock of borrowing by non-financial corporations from credit institutions grew by HUF 203 billion as a result of transactions. The bulk of this was accounted for by an increase in forint-denominated lending, within which the volume of loans with maturity over 5 years grew significantly, as the FGS fix continued to spread gradually. One-off transactions also contributed to broad-based growth across sectors. Over the past year, disbursements exceeded repayments by HUF 963 billion, representing an annual growth of 14 per cent. The rate of growth in lending to the SME sector rebounded in the first quarter following a temporary slowdown in the fourth quarter: based on preliminary data, the loan portfolio increased by 13 per cent on an annual basis. Within this, the stocks of loans to micro, small and medium-sized enterprises increased by 22 per cent, 7 per cent and 10 per cent, respectively. The total volume of new contracts in the quarter was HUF 644 billion, excluding money market transactions. As a result, disbursements in the last 12 months exceeded those in the previous year by 3 per cent.
According to the responses by banks participating in the Lending Survey, credit conditions did not change significantly in any of the corporate size categories in the first quarter. Based on the responses, price competition may have been less intense during the period under review compared with previous years, although economic activity and the current level of market competition were also factors contributing to an easing. In net terms, 22 per cent of the respondent banks tightened lending standards for commercial real estate loans, mainly due to the increased risk of overvaluation of property prices. After stagnating temporarily at the end of 2018, the vast majority of banks again perceived a pick-up in demand for long-term loans in the first quarter. The FGS fix, launched in January, played a role in this, with long-term fixed rate contracts amounting to over HUF 100 billion by mid-May.
The stock of household loans increased by HUF 73 billion in the first quarter. As a result, disbursements exceeded repayments by nearly HUF 490 billion in the last 12 months. This brought the annual growth rate of lending to the sector to 8 per cent. In the first quarter, the volume of newly contracted loans reached HUF 377 billion, which means that disbursements increased by one-third in one year. In a breakdown by product type, housing loans and personal loans continued to be dominant, with their new volume over the past 12 months exceeding the amount of disbursements in the previous year by 27 and 44 per cent, respectively. Credit conditions were unchanged in the housing and consumer loan segments; and banks are not planning to ease in the next half year. Nevertheless, the majority of banks reported continued growth in demand for housing loans. By contrast, demand in the consumer segment was unchanged.
As a result of the modification to debt cap rules and the range of Certified Consumer-Friendly Housing Loan (CCHL) products in October 2018, the role of housing loans with floating interest rates became marginal. In the first quarter of 2019, only 5 per cent of newly contracted loans had an interest rate fixation period of up to 1 year, while two-thirds of disbursements were over 5 years. The share of CCHL products in the latter category was 55 per cent in the quarter. Overall, disbursements of new housing loans contributed to a reduction in interest rate risk of the stock of loans.
The MNB will publish the next Trends in Lending report in August 2019. The objective of the publication is to present a detailed picture of the latest trends in lending and to facilitate the appropriate interpretation of these developments. To this end, the report 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: