The growth of loans to the private sector increased by 3.2% y/y as of end-August, speeding from 2.7% y/y rise in the previous month, monetary statistics by the National Bank of Hungary (NBH) showed. Lending activity has been on a consistent upward trend in the past few months with clear improvement in both retail and corporate lending. Retail lending increase sped further to 1.3% y/y in August remaining on the rise for the fourth consecutive month. This confirms our belief that a new upward cycle in borrowing and consumption might have started. Corporate loan growth also sped, to 6.5% y/y for the month. Lending to the companies has been rising in all months this year.
In real, transaction-based terms, retail loan growth slowed down though, to some 0.7% y/y from 1.0% in the month before and so did corporate loan growth – to 5.8% from 6.2% y/y in July. The data confirmed the headline figures for a gradual pick-up in lending activity, in our view. Households borrowed net HUF 23.0bn of new loans in terms of seasonally-adjusted transactions in August, and we note that the amount is one of the highest monthly volumes of new borrowing in the post-crisis period along with figures in the previous two months. Corporate net borrowing also improved in August compared to the previous months but the HUF 74bn in seasonally-adjusted transactions is still far from the months, in which post-crisis highs have been recorded.
Loan interest rates continued to trend down, declining m/m for both housing and consumer segments. Loan rates on corporate forint loans decreased m/m in August but rates on EUR corporate loans increased.
Money supply growth, in terms of the narrowest M1 monetary aggregate, sped up to 25.3% y/y in August following decelerating increases in the previous two months. The wider M2 and M3 aggregates rose at an accelerating rates during the month as well. Seasonally-adjusted monetary aggregate data has also shown some acceleration in annualized growth, which might be indicating continuing strong economic activity in the summer months.