Banks tightened the conditions for both retail and business loans further in the third quarter but will not continue do so in the upcoming six months, the National Bank of Hungary’s quarterly lending survey shows.
Demand for retail loans continued to fall and lending conditions severed further in Q3, except for housing loans where demand fell but conditions were on the whole unchanged, the bank said.
Similar to the previous quarter, banks reported a deterioration of their retail loan portfolio and expect the worsening to continue.
Banks surveyed do not plan to tighten their retail lending conditions further and several said they would ease them in the six months ahead.
A larger number of banks said they tightened the conditions of their corporate loans than in the previous survey, citing industry-specific problems and the vulnerability of the domestic economy as reasons. At the same time banks felt growing demand for loans from businesses, mainly to finance stocks and receivables.
The quality of the business loan portfolios worsened in Q3 and the majority of the respondent banks expected the deterioration to continue in the next half year.
Local councils’ demand for loans rose in Q3 from the low levels reported in the previous survey. The pickup partly reflects the self-funding needs of EU programmes and partly current financing needs. Banks tightened conditions of their lending to municipalities further, the survey showed.