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Both corporate and household lending expanded considerably in 2020 Q1, the coronavirus epidemic has not yet had a substantive effect


Both corporate and household lending expanded dynamically in the first quarter of this year. However, strong lending growth in international comparison is partly due to technical effects and partly to loan applications launched earlier. In line with the adverse economic effects of the coronavirus epidemic, banks plan to tighten lending conditions and expect a reduction in credit demand, which could lead to a significant decline in lending activity in the period ahead. However, state and central bank programmes can provide support for lending in both the corporate (e.g., FGS Go!) and household sectors (Home Purchase Subsidy Scheme for Families, Prenatal Baby Support Loans).

As a result of transactions, corporate loans outstanding increased by HUF 420 billion in 2020 Q1, largely due to the expansion of forint loans. The strong expansion is mainly attributable to one-off high-volume transactions on the one hand and to the technical effect of the moratorium on loan repayments introduced in order to mitigate the economic effects of the coronavirus epidemic on the other.[1] The annual growth rate of 16 per cent is still outstanding in international comparison, but looking ahead, lending activity may decline significantly in the coming months due to the global coronavirus epidemic. Based on preliminary data, the annual growth of the SME loan portfolio was 14 per cent. Excluding money market transactions, issuance of new corporate loans amounted to HUF 652 billion in the period under review, with new disbursements decreasing by 4 per cent on an annual average. As a result of increasing working capital financing, the share of short-term loans increased to 50 per cent in new issuance (this ratio was below 40 per cent in 2019). During the quarter, credit institutions concluded more than HUF 71 billion in forint contracts (of which HUF 46 billion with companies) under the FGS fix scheme. Utilisation of the scheme launched in 2019 totalled HUF 486 billion on 31 March 2020, two-thirds of which was attributed to corporations. From April 2020, lending to the SME sector will also be supported by the MNB's new scheme, the FGS Go!.

Based on the results of the Bank Sentiment Survey in the first quarter of 2020, banks experienced a deterioration in the external and internal economic situation and expect this to continue over the next six months, in line with the unfavourable effects of the coronavirus epidemic. Banks reported deteriorating creditworthiness of customers, mainly in the corporate segment. In addition to the decline in the profitability of several banks, risk appetite also declined significantly. In line with this, nearly one-third of banks surveyed in the Lending Survey tightened corporate lending standards during the quarter. Over the next six months, almost all of the banks are planning further tightening in every corporate size category, including, in particular, collateral requirements and required creditworthiness. Referring to industry-specific issues, the standards for commercial real estate lending also tightened, which may continue in the coming quarters. A small proportion of banks perceived a decline in corporate credit demand in the first quarter of 2020, and unlike euro-area banks, 40 per cent of them expect a decline in net terms over the next six months.

The loan portfolio of households increased by HUF 241 billion in the first quarter, bringing annual growth of the portfolio to 19 per cent. In addition to the dynamics of disbursements, the technical effect of the moratorium on loan repayments in the second half of March also contributed to the robust expansion in international comparison. However, the pace of expansion is expected to moderate substantially as a result of the coronavirus epidemic and the following decline in housing and consumer demand. The volume of new issues amounted to HUF 590 billion in the first quarter, which resulted in a 1.5 times annual increase. Lending for house purchase continued to be robust, but quarterly personal loan issuance declined slightly, partly due to a halt in product development caused by this year's maximisation of the cost of unsecured consumer loans (APR).

Government-supported loan programmes may provide support for household lending. The number and volume of contracts concluded within the framework of the Home Purchase Subsidy Scheme for Families (HPS) increased compared to the same period of the previous year for both used and newly built dwellings. 23 per cent of quarterly housing loan issuance was related to the HPS, which can be considered a historical high. Demand for prenatal baby support loans may remain strong despite the deteriorating economic environment, although its pace may slacken compared to last year, due to favourable product conditions, state guarantees and relatively high incomes among the beneficiaries of the scheme. Issuance of prenatal baby support loans totalled HUF 689 billion over the period from the start of the programme to 15 May 2020, which was related to 71,211 loan contracts.

Due to the deteriorating economic outlook caused by the coronavirus epidemic, declining risk tolerance and changes in customer creditworthiness, in net terms half of the banks participating in the Lending Survey tightened the terms of their housing and consumer loans, primarily at the minimum required creditworthiness level. Looking ahead, a significant number of institutions envisaged further tightening. Banks perceived a decline in demand for consumer loans during the quarter, and more than 80 per cent of them also expect a decline in demand for housing loans in the second and third quarter, in line with European trends.

The MNB will publish the next Trends in Lending report in September 2020. 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:

Lending survey


[1] The moratorium on loan repayments introduced in mid-March will result in a technically higher stock increase due to the temporary suspension of repayments. In addition, repayments in the second half of March fell sharply in the corporate sector due to protracted negotiations on the moratorium.

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