Budapest, 12 March 2021In the fourth quarter of 2020, growth was registered for both corporate and household loans outstanding, with government and central bank loan programmes continuing to play a significant role in this. At the end of 2020, 54 per cent of eligible retail loans and 39 per cent of eligible corporate loans were participating in the payment moratorium, which significantly reduced instalments.

Corporate loans outstanding grew at a rate of 9.4 per cent in year-on-year terms, while SMEs loans outstanding grew by 13 per cent, according to preliminary data. Contracts concluded under the FGS Go! programme provided strong support for corporate lending: since the outbreak of the coronavirus pandemic in Hungary, lending under the scheme has accounted for more than half and nearly 90 per cent of the disbursement of corporate loans and SME loans, respectively. Prenatal baby support loans played a significant role in the 14.5-per cent increase in household loans outstanding, which is a significant growth rate by international standards. This product represented 30 per cent of disbursements during the year and accounted for 13 per cent of household loans outstanding. As a sign of bank’s positive expectations, institutions expect a pick-up in demand for housing loans and personal loans as well as for corporate loans in the first half of 2021.

Despite the negative economic impacts of the coronavirus pandemic, corporate loans outstanding continued to grow in the fourth quarter of 2020 as well, expanding by roughly HUF 227 billion. Thus, on the whole, loan disbursements in 2020 exceeded the volume of loan repayments by HUF 780 billion, as a result of which banks’ corporate loans outstanding expanded by 9.4 per cent. The moratorium on payments introduced last March resulted in a fall in principal instalments due, while the central bank and state loan and guarantee schemes introduced to mitigate the economic impacts of the coronavirus exerted a favourable impact on new loans. In the fourth quarter, corporations concluded new loan contracts in the amount of roughly HUF 1,155 billion, which exceeded the volume of new loans disbursed in the fourth quarter of 2019 by 71 per cent. In 2020, based on preliminary data, the loan portfolio of micro, small and medium-sized enterprises rose by 13 per cent. Lending to SMEs was strongly supported by FGS Go!, with the new loan contracts concluded in the amount of HUF 660 billion accounting for 90 per cent of all SME loan contracts in the fourth quarter of 2020.

Based on the responses of the banks participating in the Lending Survey, apart from tightening related to commercial property financing due to sector-specific reasons, lending conditions did not change significantly in the fourth quarter, while there was a rise in demand both for short-term and long-term loans. The banks participating in the survey plan no further tightening in lending conditions in any enterprise size category in the first half of 2021, and in parallel with this they anticipate a further pick-up in demand.

In the fourth quarter of 2020, the household loans outstanding of the credit institution sector grew, primarily as a result of the dynamic disbursement of prenatal baby support loans and housing loans, as well as lower amortisation resulting from the moratorium on instalments. Loan disbursements exceeded the volume of instalments by HUF 257 billion. In December 2020, due to transactions, banks’ household loans outstanding exceeded the value registered one year earlier by 14.5 per cent. This annual growth rate is the highest among the Member States of the European Union, but according to our estimates, after adjustment for the effect of the moratorium on payments, the annual growth rate decreases to roughly 8 per cent. The volume of new loan contracts concluded during the quarter fell short of the year-on-year disbursements by 9 per cent, with this decline impacting all loan products with the exception of housing loans. One third of the disbursements during the quarter were subsidised loans. In December 2020, the volume of prenatal baby support loans outstanding already accounted for 13 per cent of the entire retail loan portfolio.

The banks participating in the Lending Survey did not change conditions on either housing loans or consumer loans during the quarter. However, in addition to rising demand, they anticipate easing in respect of the latter in the first half of 2021, in which the home improvement subsidy starting in January may also play a significant role.

Trends in Lending

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:

Lending Survey