The MNB today published its latest lending survey

The Magyar Nemzeti Bank released the results of its latest lending survey. The survey, which was conducted in April, found that the credit supply remains subdued, meanwhile demand seems to be stronger.

The Magyar Nemzeti Bank launched it questionnaire-based survey in the spring of 2003 with the objective of gaining a deeper insight into Hungarian commercial banks’ lending practices. The survey, conducted on a quarterly basis, presents senior loan officers’ assessment over the loan market. The latest published survey is based on questionnaires returned by lenders in April 2010, and presents their answers to retrospective questions relating to 2010 Q1 and as well as to forward-looking questions asking for their expectations for the next six months.

As regards the household sector, overall banks eased interest rate conditions and the fees charged on home equity and personal loans. In the case of housing loans, banks reported to have tightened the maximum loan-to-value ratio slightly. Compared to the previous quarter, a significantly larger net balance of banks perceived an increase in demand for forint-denominated mortgage loans.

In the corporate lending market, most banks continue to maintain tight credit conditions; moreover there was still a bank that tightened further. Over the next half-year none of the banks expect further tightening. Although, the tightening cycle, started in 2007, seems to come to an end in this quarter, the maintained tight conditions do not support the economic recovery. That is especially true in the case of investment loans, where banks perceive increasing demand. 

Banks continue to restructure loans so as to manage delinquent and potentially endangered customers. At the end of 2010 Q1 the restructured loans accounted for 3.5% of the loan portfolio in the corporate segment, and nearly 5% of the household loan portfolio. Based on banks’ responses, at the end of 2010 Q1, the delinquency rate (more than 30 days) within restructured loans was 3.5% in the case of large-sized enterprises, and about 9% in the case of the SME sector. By contrast, in the household sector this ratio reached 20%, which is a significant deterioration compared to 2009 Q4.

The full survey is accessible on the MNB’s website in the ‘Financial Stability’ section under ‘Lending Survey’.

Magyar Nemzeti Bank

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