Budapest, 17 September 2020 - Due to the negative economic effects of the coronavirus pandemic, the corporate loans outstanding declined in the second quarter of 2020 compared to the end of the previous quarter. Consequently, the annual growth dynamics of the corporate loans decelerated to 8 per cent. Loans outstanding of micro, small and medium-sized enterprises rose by 9 per cent in year-on-year terms, which was substantially supported by the FGS Go! scheme, under which disbursements were made in the amount of HUF 160 billion in the quarter. The annual growth rate of retail loans outstanding accelerated to almost 20 per cent, which was primarily supported by the reduced repayments resulting from the moratorium on instalments and the dynamic disbursement of the prenatal baby support loans. At the end of June, prenatal baby support loans already accounted for 10 per cent of total household loans outstanding. Due to the significance of the product, the MNB conducted a questionnaire-based survey among the prenatal baby support loan debtors, in order to examine their characteristics and main credit purposes.
Due to the negative economic consequences of the coronavirus pandemic, the loans outstanding of the corporate sector declined during the second quarter of 2020 compared to the previous quarter, while an increase of HUF 700 billion was registered in year-on-year terms, corresponding to an annual growth of 8.4 per cent. The moratorium on instalments, introduced in March, facilitated slower amortisation of the loan portfolio, while new contracts were supported by the loan programmes of the central bank and the government, which were launched to mitigate the economic impacts of the coronavirus. During the quarter, corporations concluded new loan contracts in the amount of roughly HUF 640 billion, which falls 18 per cent short of the new loans disbursed in the same quarter of last year. The loans outstanding of micro, small and medium-sized enterprises rose by 9.3 per cent last year. Lending to SMEs was strongly supported by both the outgoing FGS fix scheme and the FGS Go! scheme, which was launched in April. Under these schemes, the new loan contracts concluded in the amount of HUF 190 billion were responsible for 60 per cent of all SME loan contracts in the second quarter of 2020.
Based on banks’ responses to the Lending Survey and the interviews conducted with lending managers, credit supply conditions were significantly tightened and demand for long-term loans decreased. The banks participating in the survey plan further tightening in all corporate size categories and also in the conditions of loans granted for commercial real estate in the second half of the year; however, in parallel with this, they already anticipate a pick-up in demand.
Retail loans outstanding grew by HUF 232 billion due to transactions in the second quarter of 2020, resulting in annual growth of 19.6 per cent. This growth was primarily supported by the dynamic disbursement of the prenatal baby support loans and lower amortisation resulting from the moratorium on instalments. In the second quarter, credit institutions concluded prenatal baby support loans in the amount of HUF 142 billion, as a result of which the product already accounted for 10 per cent of total retail loans outstanding at the end of June, and based on our survey, three-quarters of the debtors used it for housing purposes. During the quarter, the volume of new loan disbursements decreased: the largest decline was registered in personal loans, where disbursements were 63 per cent lower than the value in the same period of last year. The number and volume of contracts concluded under HPS both declined within the applications related to the construction of new homes, while rural HPS was still characterised by dynamic disbursement. The spread of loans with interest rate fixation for a longer term continued: three-quarters of the housing loans concluded during the quarter have an interest-rate fixation period of at least 10 years or until the end of maturity, and 73 per cent of the housing loans are Certified Consumer-friendly Housing Loans.
The banks participating in the Lending Survey tightened credit conditions on both housing loans and consumer loans during the quarter, which was justified by the worsening economic prospects and deterioration in customers’ creditworthiness. However, in net terms, 16 per cent of the banks held out the prospect of easing in the case of both products in the second half of the year. During the quarter, almost all respondent institutions perceived a decline in demand for housing loans and consumer loans; however, half of the banks expect demand for the former to normalise in the second half of 2020. Household credit conditions became stricter not only in Hungary, but also in the euro area and in the region as well, which is primarily attributable to the more uncertain economic environment resulting from the coronavirus.
The objective of the publication ‘Trends in Lending’ is to present a detailed picture of the latest trends in lending and to facilitate the appropriate interpretation of these developments. To this end, the report elaborates on the developments in credit aggregates, demand for loans perceived by banks and credit conditions, based on the Lending Survey, and the balance sheet and interest rate statistics of the banking system. Detailed results and the figures of the Lending Survey are available on the MNB’s website at the following link: