Budapest, 1 March 2019 – In 2018, the total corporate loan portfolio increased by about 14 per cent, and the loan portfolio of the SME segment grew by nearly 12 per cent. In addition to the easing of non-price credit conditions, the rise in demand for long-term loans in the fourth quarter has been halted, which can be explained by the wait for the NHP fixed construction. Household loans grew by 7 per cent over the year, along with a dynamic rise in newly disbursed housing and personal loans. New housing loans were almost exclusively issued with over one year interest rate fixation, but the share of loans with a fixation for over 5 years also rose above 60 per cent in the last quarter thanks to central bank measures.
In the last quarter of 2018, transaction-based corporate credit growth fell short of the level observed in previous quarters, due to one-off and temporary factors. Three-quarters of the expansion amounting to approximately HUF 180 billion was linked to the SME sector. Corporate credit increased by HUF 892 billion year-on-year as a result of transactions, which represents a 13.6 per cent annual growth rate. This surge is exceptional in the region on the one hand, and the highest rate in the past 10 years in Hungary on the other. According to preliminary data, loans to the SME sector rose by nearly 12 per cent year-on-year, within which the micro segment expanded the most, with an increase of roughly 21 per cent in annual terms. The transaction-based growth was driven not only by SME borrowing but also by several one-off and large-scale transactions conducted by large enterprises. The volume of new contracts in 2018 amounted to HUF 3,400 billion, close to the figure from the previous year.
Based on the banks’ responses to the Lending Survey, credit conditions were eased for all corporate size categories in the fourth quarter, which mainly affected non-price conditions. Respondents primarily cited the increasing competition among banks as the reason for the easing. The growing demand for longer-term loans seen last year halted in the last quarter. However, the temporary nature of this is confirmed by the fact that all banks expect renewed growth in credit demand in the first half of 2019. This is presumably influenced by some companies postponing their investments to 2019, to use the fixed-rate, long-term loans available under the FGS fix scheme from January.
Household credit grew by HUF 108 billion during the quarter, and by HUF 424 billion over the whole year on account of credit transactions. As a result, outstanding loans increased by 7.3 per cent in 2018. Housing loan disbursement expanded by 31 per cent year-on-year as compared to 2017, amounting to HUF 850 billion, reaching the 2008 level in nominal terms. Nevertheless, in contrast to the period before the 2008 global financial crisis, the debt cap rules in the present credit cycle prevent households becoming over-indebted. The annual disbursement of personal loans rose one and a half times relative to 2017, which was influenced by the falling interest rates and the rising of the maximum contract size, which made this product competitive even for housing purposes.
Credit conditions did not change much in either the housing or the consumer loan segment, and banks do not plan to ease lending standards in the first half of 2019. Demand varied in the two segments: banks observed an upswing in housing loans and a small dip in consumer segment. According to the institutions surveyed, this drop is temporary, and they expect a renewed uptick for the first half of 2019.
By the end of the year, banks disbursed new housing loans almost exclusively with the interest rate fixed for over one year, and the share of loans with a fixation of over 5 years rose to more than 60 per cent in Q4. Beside the central bank programmes to reduce bank funding costs, the rising market share of Certified Consumer-Friendly Housing Loans also contributed to the expansion of housing loans with an interest rate fixation for over 5 years. The maintenance of the sound structure of lending is supported by the payment-to-income ratio differentiated by interest rate fixation period, effective since 1 October 2018.
The objective of the publication ‘Trends in Lending’ 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: