Bank lending to the private sector rose by 11.9% y/y as of end-March and its growth accelerated from 10.8% y/y for the previous month, the National Bank of Hungary (NBH) reported. The pick-up was mostly on account of the retail loan portfolio while the growth of corporate lending was mostly flat during the month. In particular, retail loan growth strengthened to 7.7% y/y in March while corporate lending picked up negligibly to 15.0% y/y. The pick-up of retail lending stemmed from all segments, including consumer and housing credits as well as other loans. We think the figures showed that the upward trend in retail lending was only partly due to the government’s housing support program and also reflected the households’ strong purchasing appetite.
In real, transaction-based terms, retail lending growth still levelled off slightly, which we relate to fading base effects from the introduction of the government’s housing program. We nevertheless expect that retail lending will continue to recover in the next months, especially since interest rate on retail loans were either flat or continued to trend down in March.
Real growth of corporate lending slowed down slightly to 10.1% y/y in March due to both forint and forex-based loans. There was some uptick in small corporate loans during the month while rates on large loans declined m/m but remained mostly stable.
Money supply growth decelerated in March, regarding all monetary aggregates. The growth of the narrowest, monetary aggregate M1 slowed down to 12.1% y/y for the month. Money supply also slowed down in seasonally-adjusted annualized terms but we think that money supply figures in general suggested stable economic growth in Q1.