The retail and corporate lending growth remained stable in Q3, the National Bank of Hungary (NBH) said in its latest bank loan survey. The cyclical position of the banking sector turned neutral, according to the survey, i.e. the trend of growth-restraining impact of banks’ lending activity from the previous quarters was completely halted.
Corporate loan growth picked up to 9% y/y in Q3 and remained in the target 5-10% range for the second consecutive quarter, the NBH noted. Lending to SMEs, including loans to self-employed, rose by 13%. The loan expansion was accompanied by gradual easing of lending conditions for both large companies and SMEs. Increasing competition and favorable economic outlook were the main factors for the looser lending standards, the survey showed. Accordingly, further easing of conditions was expected in the quarter ahead. The average interest rate spread on corporate loans, however, did not change significantly in Q3, either in Hungary or in the region, the NBH pointed out.
Corporate loan demand increased more than expected in Q3, the NBH said. Demand for commercial property loans was partly behind the positive surprise, it said. Some banks expected corporate borrowing demand to persist in H1’18. Demand for property loans was specifically projected to pick up because of the strong development of the commercial real estate market.
Household lending increased further by 3.6% y/y in Q3, the NBH said. Net household borrowing in terms of transactions was positive at HUF83bn in Q3 and HUF 211bn on a four-quarter rolling basis. Both new housing and personal loans showed dynamic growth during the quarter, according to the report. The expansion of retail lending seemed to be mainly on account of rising demand as banks on average did not change lending conditions. Many banks, however, reported lower credit spreads on both housing and consumer loans, the NBH said. Demand in both the housing and consumer loan segments continued to grow in Q3. Part of the growth was related to the government housing benefit scheme – loans under the scheme accounted for 17% of the newly disbursed housing loans during the quarter.