In Hungary growth of corporate loans reaches 7% y/y in Q2 2017

Growth of total corporate loans accelerated to 7% y/y in Q2 2017, according to a quarterly report released by the NBH on Friday. The corporate lending growth remains within the government target band of 5-10% annual lending growth, the bank noted. Corporate lending growth was stimulated primarily by economic growth and upbeat economic prospects, increased competition among banks for borrowers. Lending to SMEs, including the self-employed sector, expanded by 13% y/y in Q2 on the back of the closing government-funded Funding for Growth Scheme and was supported by the central bank’s lending scheme. Banks projected further easing of credit conditions in H2 2017 to be reflected mainly by a decline of interest rate spreads. Demand for corporate loans also grew over the first half of the year and this trend is expected to continue in H2 along with the improvement of borrowers’ risk profiles.

Household lending rose by 2.8% y/y in Q2 which is the fastest rate of growth since the outbreak of the global financial crisis. The annual average increase of household loans in volume terms was 46%, the central bank said, driven primarily by 51% y/y increase of consumer loans and 35% y/y rise of mortgages. Banks expect further expansion of mortgage loans in H2 2017 due to increased competition among banks, the spreading of Certified Customer Friendly Mortgage products and increased demand for loans, supported by the Home Purchase Subsidy Scheme for Families (HPS).

The central bank summarized that bank lending developments in the corporate and household sectors so far have exerted a nearly neutral impact on the business cycle.

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