Moodyʼs: CEE bank CFOs expect rising credit demand

Competition

Chief financial officers at Central and East European banks expect a benign operating environment this year will support continued credit growth, as well as stable loan performance and capital levels, says Moodyʼs Investors Service in a new report, summarized in a press release sent to the editor of the Budapest Business Journal.

Over 70% of CFOs expect rising credit demand this year, says the report. Banks in Hungary and Slovenia, which have experienced significant lending contraction in the past several years, are the most optimistic regarding credit growth. However, 90% of respondents characterized lending competition as high.

"Almost all the CFOs that we surveyed expect business confidence to remain either unchanged, or to improve, an indication of rising credit demand," said Armen Dallakyan, a vice president and senior analyst at Moodyʼs.

Despite their optimism, 38% of CFOs cited economic factors as a key element constraining their business. For example, the prevailing low interest rate environment is constraining banksʼ revenues, whilst rising wages are exerting pressure on banksʼ operating expenses.

Regulatory changes are adding uncertainty to banksʼ operations, according to 38% of respondents, and most CFOs expect banking regulations to tighten. This will mainly be driven by credit growth in local markets as well as EU rules. Moodyʼs also expects that planned new European rules on capital adequacy, loss absorption capacity and financial reporting will result in additional costs.

"Financial technology (FinTech) is changing the banking landscape, increasing competition and prompting the restructuring of business models, presenting both challenges and opportunities," said Dallakyan.

Most respondents see FinTech affecting retail banking and payment services the most. Also, 74% of CFOs said they expect the EUʼs Payment Services Directive (PSD2) to have a slightly or moderately negative effect on banking revenues.

The report, entitled "Banks: Poland, Czech Republic, Slovakia, Hungary, Slovenia: CFOs bullish on growth; regulatory, technological changes pose challenges," can be accessed by subscribers via the Moodyʼs website.

ADVERTISEMENT

Varga puts 2021 GDP growth at 7-7.5% Analysis

Varga puts 2021 GDP growth at 7-7.5%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

New managing director at the helm of Wolt Hungary Appointments

New managing director at the helm of Wolt Hungary

Budapest bike-sharing scheme boasts record ridership City

Budapest bike-sharing scheme boasts record ridership

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.