Budapest, 4 March 2020 – The corporate loan portfolio increased by 14 per cent year on year, despite moderate growth in 2019 Q4. Lending to the SME sector also increased by 14 per cent and lending to the household sector by 17 per cent in 2019. In the latter, a significant role was played by the prenatal baby support loans launched in July, amounting to HUF 470 billion in the second half of the year. Excluding these, annual growth would have been 9 per cent in the sector. The majority of prenatal baby support loans were used by customers with above-average income that are still not highly indebted; however, the significant volume of disbursements justifies continued monitoring of the product. The MNB does not consider the extent of credit expansion to be overheated, nor does it identify risks in its structure, taking into account developments in the real economy and the low level of loan penetration.
Corporate loan growth in the last quarter of 2019 was slower than in the previous quarters due to higher repayments in December, but still increased by more than HUF 1,000 billion during the year as a whole, in line with high corporate investment activity. The annual growth rate of 14 per cent continues to be outstanding internationally. According to preliminary data, the loan portfolio of micro, small and medium-sized enterprises increased by 14 per cent as well in 2019. Companies signed 9 per cent more new loan agreements in 2019 compared with the previous year, amounting to approximately HUF 2,800 billion. At the same time, broad-based credit expansion resulted in higher industrial and regional concentration. The healthier structure of SME lending in 2019 was also supported by the MNB's FGS fix scheme.
The double-digit increase was achieved with unchanged credit supply conditions and a further strengthening of demand, especially for long-term loans. Banks in the Lending Survey still do not plan to tighten their terms, but they remain cautious when financing commercial real estate, especially for housing projects. The rise in interest rates on large-value loans in the fourth quarter is mainly attributable to euro-denominated contracts in the real estate sector.
The portfolio of household loans increased by nearly HUF 300 billion in Q4, reaching an annual growth rate of 17 per cent. Prenatal baby support loans, launched in July, played a significant role in the dynamic expansion, although excluding these the expansion of the loan portfolio would have been 9 per cent. The issuance of prenatal baby support loans was not accompanied by markedly more subdued housing and personal loan issues, and therefore its additional impact is considered to be high for now. As a result, the annual value of new loans increased by more than 50 per cent compared with 2018, reaching a historical peak of HUF 2,300 billion in nominal terms. The interest rate risk of new housing loans is moderate, which is also supported by the continuously increasing share of Certified Consumer-Friendly Housing Loans, currently accounting for 72 per cent. Although, according to the responses of the banks participating in the Lending Survey, the conditions for access to credit did not change, average interest rate spreads increased throughout the year.
The increase in demand is also supported by the measures of the Family Protection Action Plan. With the change in the terms of the Home Purchase Subsidy scheme for families in July, the role of the programme in housing lending increased. Prenatal baby support loan disbursements amounted to HUF 470 billion in 2019; the risk of the portfolio is mitigated by the fact that more than one-third of the nearly 50 thousand contracts are subject to a repayment moratorium, i.e. the loan is free of interest for the customer until maturity. Among debtors, those in the higher-income quintiles with low indebtedness are over-represented.
The MNB does not consider the level of credit expansion to be overheated, nor does it identify risks in its structure, taking into account developments in the real economy and the low level of loan penetration. At the same time, the significant outflow of prenatal baby support loans justifies the ongoing monitoring of credit market risk developments.
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: