Budapest, 30 November 2020 — Corporate loans outstanding rose by HUF 250 billion in 2020 Q3, and thus annual growth in lending amounted to nearly 8 per cent. Based on preliminary data, lending to the SME sector rose by over 10 per cent year on year. A key contributing factor to this was the volume of new loan contracts, which amounted to HUF 570 billion under the FGS Go! scheme during the quarter. The increase of nearly HUF 300 billion in household loans outstanding in the third quarter resulted in annual growth of 16 per cent, with the steady disbursement of prenatal baby support loans playing a significant role in this. State-subsidised credit facilities provide support for both retail and corporate lending even during the pandemic. In addition, the moratorium on payments, which applied to 41 per cent of eligible corporate loans and 57 per cent of household loans in September, continued to contribute significantly to maintaining loans outstanding. Banks participating in the Lending Survey tightened their corporate credit conditions during the quarter, while they also reported a rise in demand for corporate and household loans.
Corporate loans outstanding rose by HUF 250 billion due to transactions in 2020 Q3. Over the past one year, loans outstanding increased by HUF 650 billion, reflecting annual growth of 7.8 per cent. The moratorium on payments, introduced in March, which applied to 41 per cent of corporate loans outstanding, moderated the decline in loans outstanding by reducing repayments. Furthermore, the central bank and government lending schemes that were launched to mitigate the adverse economic effects of coronavirus had a positive effect on new contracts. During the quarter, companies concluded new loan contracts in the amount of HUF 830 billion, up 29 per cent compared to 2019 Q3. Based on preliminary data, loans outstanding to micro, small and medium enterprises rose by over 10 per cent between 2019 Q3 and 2020 Q3. With a total of more than HUF 1,000 billion contracted, the FGS Go! scheme provided significant support for SME lending as the HUF 570 billion in contracts concluded under the programme in the third quarter of 2020 accounted for 69 per cent of corporate lending and the majority of new SME loan contracts.
Based on the responses to the Lending Survey, 31 per cent of banks tightened corporate credit conditions in the third quarter, with the majority of banks raising collateral requirements. The majority of institutions indicated industry-specific problems, deterioration in the economic outlook and changes in risk tolerance as factors contributing to tightening. Respondent institutions also reported a pick-up in demand for short and long maturities relative to the second quarter. The banks participating in the Survey plan further tightening in all corporate size categories and in conditions for commercial real estate loans in 2020 Q4 and 2021 Q1; however, they expect a further rise in demand.
Household loans outstanding rose by nearly HUF 300 billion in the quarter due to disbursements and repayments. As a result, the annual growth rate fell to 15.6 per cent from 19.6 per cent in the second quarter. The decline in instalments due to the moratorium, affecting 57 per cent of household loans outstanding, contributed in large part to the increase in the stock of loans. The economic normalisation following the first wave of coronavirus resulted in a pick-up in new loan disbursement, which also had a favourable effect. In 2020 Q3, credit institutions concluded household loans in the amount of HUF 522 billion, which was 35 per cent lower than in 2019 Q3. This was largely due to the base effect of the high volume of new prenatal baby support loans disbursed last year in the months after the programme was launched, in addition to effects arising from coronavirus. After the lockdown measures were lifted, the housing loan market gradually recovered, and disbursements during the quarter were 9 per cent above the prior-year level; however, the personal loan market was significantly smaller than it was before the onset of coronavirus. State-subsidised credit facilities support household lending even during the pandemic: due to steady demand for prenatal baby support loans, their stock account for 12 per cent of the entire household loans outstanding. Within the HPS programme, rural HPS, which were extended in large numbers despite COVID-19, account for one half of disbursements. Two thirds of the housing loans concluded during the quarter have an interest-rate fixation period of at least 10 years or until the end of maturity. The share of Certified Consumer-friendly Housing Loans, which offer predictable instalments to borrowers over the long term, was 66 per cent.
Based on the responses to the Lending Survey, in net terms, 15 per cent of banks eased housing credit conditions in 2020 Q3 in order to reach their market share targets. Looking ahead to 2020 Q4 and 2021 Q1, banks do not wish to modify their housing loan standards. Banks did not change consumer credit conditions during the quarter, and looking ahead, no changes are planned due to the deterioration in the economic outlook and clients’ creditworthiness. As the housing market normalised, a net 84 per cent of banks saw a pick-up in demand for housing loans in 2020 Q3, and 10 per cent of them expect a further increase over the next six months. Overall, the responding institutions did not perceive any change in demand for consumer loans, but looking ahead to the next six months, weighted by market share, 29 per cent of the banks expect a rise in demand.
The MNB will publish the next Trends in Lending report in March 2021. 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 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: