In the fourth quarter of 2015, outstanding lending to non-financial corporations by credit institutions decreased by HUF 50 billion. Thus, the rate of decrease in credit institutions' corporate loan portfolio was 6.7 per cent in annual terms at the end of the period under review. However, beyond the underlying processes, corporate lending growth was also influenced by one-off items and the base effect. After adjusting for these, the corporate loan portfolio's rate of decline is lower, at 2 per cent. The aforementioned one-off items impacted primarily the outstanding borrowing of large enterprises, and thus the dual trends depending on corporate size categories, presented earlier, continued to be a key element of corporate lending. During the period under review, the outstanding borrowing of the SME sector increased by 3.6 per cent in annual terms, with a substantial contribution from the Funding for Growth Scheme. Before closing the second phase of the scheme, enterprises concluded new contracts for an exceptionally high value, i.e. HUF 338 billion. Thus, together with the FGS+ contracts, in the second phase of the scheme contracts were concluded for a total amount of HUF 1,425 billion. Based on the Lending Survey, lending conditions were generally eased during the quarter, which was also accompanied by a decline in the average cost of finance for forint loans. The banks participating in the survey reported an increase in credit demand for long-term loans, which may be followed by a pick-up in demand for short-term loans as well.
The main instrument of the Market-based Lending Scheme (MLS) is the interest rate swap conditional on lending activity (LIRS), the first two tenders of which resulted in an implicit commitment of banks to boost their SME lending by HUF 180 billion in 2016. This is equivalent to a 5 percent increase in the SME portfolio. In addition to the MLS, the third phase of the FGS will also support the expansion of the portfolio.
In the fourth quarter of 2015, the outstanding loans of credit institutions to households declined by about HUF 111 billion, with the conversion of personal and car purchase FX-loans contributing to this by HUF 22 billion. The portfolio contracted by 15.1 per cent in total in annual terms, which also contains the impact on the portfolio of the settlement and the FX conversion in 2015. Nevertheless the volume of new household loan contracts increased by 27 per cent in year-on-year terms. Based on the banks’ responses to the Lending Survey, conditions on housing loans remained generally unchanged in the fourth quarter, while conditions on consumer loans were eased. About half of the respondent banks reported a pick-up in the demand for housing loans, while looking forward almost all banks anticipate an expansion in demand. The APR and the interest rate spread on new, fixed-rate housing loans decreased, while those on the variable-rate loans increased.