The growth of loans to the private sector picked up to 2.8% y/y as of end-June, compared to 2.5% y/y for 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 strengthened further to a 0.6% y/y growth in June, which was the second consecutive month with growth – the first such development since 2011. We think the data showed that the household deleveraging has been also completed and a new upward cycle in borrowing and consumption has started. Corporate loan growth slowed down to 3.9% y/y for the month.
In real, transaction-based terms, retail loan growth also picked up to 0.7% y/y while corporate loan growth slowed down slightly to still-strong 5.0% y/y. The data confirmed the headline figures for a gradual pick-up in lending activity, in our view. Households borrowed net HUF 24.5bn of new loans in terms of seasonally-adjusted transactions in June, which was one of the highest monthly volumes of new borrowing in the post-crisis period. Corporate net borrowing was not that impressive in June with seasonally-adjusted transactions amounting to net HUF 18.8bn for the month.
Loan interest rates continued to trend on the downside, declining m/m in most retail loan segments. Loan rates on corporate forint loans increased slightly m/m in June but were in general on a downward trend, in line with the fall of the interbank BUBOR rate following the unorthodox loosening by the NBH. Corporate interest rates on EUR loans were down m/m in June.