Subsidised credit schemes resulted in major credit outflows in the second quarter

Budapest, 2 September 2022 — Trends in lending in the second quarter were shaped by contrasting effects. High new loan disbursements took place during the quarter, with the Széchenyi Card Programme Go! and the FGS Green Home Programme as contributors in the corporate and household segments, respectively. In parallel with that, most of the loan portfolio in the balance sheet of the credit institutions sector did not participate in the payment moratorium any longer. Consequently, the resumption of repayments reduce the growth rate of loans outstanding. As a result, corporate and household loan dynamics amounted to 15 per cent and 11 per cent, respectively. Nevertheless, lending may be more subdued in H2, as banks expect tightening credit conditions in the household and corporate segments alike, as well as a fall in credit demand in parallel with that.

Banks’ outstanding loans to non-financial corporations expanded by HUF 344 billion in 2022 Q2, corresponding to an accelerating annual growth rate of 15 per cent. Loans to the small and medium-sized enterprise sector rose by 12.9 per cent year on year. With its increasing share, the Széchenyi Card Programme Go! contributed significantly to the expansion in loans outstanding. Taking corporate bonds subscribed and purchased by banks into consideration as well, the loans and bonds of credit institutions outstanding to non-financial corporations increased by a total of HUF 514 billion in the second quarter, and thus the annual growth rate of the stock including bonds as well amounted to 22.1 per cent in June. During the quarter, the disbursements of corporate loans in total and of SME loans were slightly higher than in the same period of the previous year. At the same time, the share of loan contracts concluded on a market basis declined to 60 per cent within new loans in view of the increased demand for the Széchenyi Card Programme Go! (SCP Go!); this falls significantly short of the 79-per cent ratio in the first quarter. The average interest rate on SME loans extended on a market basis increased during the quarter, in parallel with the rise in the interest rate environment.

According to responses of the banks participating in the Lending Survey, corporate credit conditions remained broadly unchanged in 2022 Q2. A pick-up in demand for loans to SMEs as well as for long-term loans was seen in this period. Looking ahead, one third of the banks are planning to tighten standards in 2022 H2. In parallel with that, 45 per cent expect a fall in demand for longer-term loans, while 30 per cent foresee stronger demand for working capital loans. According to the Bank Sentiment Survey, 55 and 50 per cent of the responding institutions are planning to increase their total corporate loans and SME loans outstanding, respectively, in 2022 H2.

In 2022 Q2, new loans provided to households exceeded repayments by HUF 284 billion in the credit institutions sector, and thus the annual growth rate of loans outstanding reached 11 per cent in June. In June, only 5 per cent of the household loan portfolio took part in the payment moratorium, so this will only hold back repayments to a small extent. One major contributor to the very strong lending registered during the quarter was the record-setting volume of HUF 427 billion in housing loans, with a prominent role played by demand brought forward due to interest rate hikes as well as by the FGS Green Home Programme (GHP). During the quarter, the GHP accounted for 33 per cent within housing loan disbursements and 85 per cent within loans for new homes. As a result of the loan programme, the share of loans for new homes increased within housing loans, and the average contract size advanced by nearly HUF 6 million to HUF 22 million in a year in the case of this loan purpose. In the second quarter, the average spread on new housing loan contracts dropped to a new historical low, falling into negative territory in the case of Certified Consumer-friendly Housing Loans, as the rapid rise in reference interest rates was still not completely included by banks in their lending rates.

According to responses to the Lending Survey, banks tightened their housing loan standards in 2022 Q2, whereas looking ahead to the second half of the year, both in the housing and consumer segments 40–50 per cent foresaw tightening in view of the uncertain economic outlook. 83 per cent of the banks expect a fall in housing loan demand in 2022 H2, following the pick-up seen during the quarter. According to the Bank Sentiment Survey, banking sector participants perceived a further increase in competition in the household segment, and they are planning to increase their exposure in the mortgage loan market in 2022 H2. Nevertheless, the rise in the costs of living may exert pressure on debt servicing, pointing to a deterioration in portfolio quality.

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

Detailed results and the figures of the Bank Sentiment Survey are available on the MNB’s website at the following link:

Bank Sentiment Survey