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25% of banks plan tighter corporate lending conditions 

Banking

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Net 25% of Hungarian banks plan to tighten corporate lending conditions in the second and third quarters, a survey of loan officers conducted by the National Bank of Hungary (MNB) shows, according to a report by state news wire MTI.

The loan officers said tightening would involve mainly increased spreads as well as higher self-financing and collateral rates against the backdrop of uncertain economic prospects and industry-specific problems.

The survey results show demand for corporate credit was flat in Q1 as the impact of rising interest rates was offset by companies' increased need to finance working capital. Looking ahead, 14% of loan officers anticipate a fall in demand for SME credit and 17% weaker demand for long-term loans in the coming six months.

Net 36% of banks tightened conditions for commercial real estate loans in Q1 because of industry-specific problems and declining risk tolerance, and 29% augur additional tightening. Net 65% anticipate tightening for residential projects as funding and construction costs rise and the phase-out of some government support approaches.

In the retail segment, lenders' conditions for home loans were unchanged in Q1 as close to half of banks reported a fall in spreads as pass-through of higher funding costs was delayed. Around the same share of loan officers project an increase in spreads in Q2 and Q3.

Net 60% of loan officers said demand for home loans picked up in Q1, supported by the NBH's Green Home Program, but net 55% forecast a decline in demand for credit in Q2 and Q3. 

Loan officers said demand for consumer loans was steady in Q1 but projected a fall in demand in the coming six months. Net 10% of banks tightened conditions for the credit in Q1 and net 45% expect to tighten in Q2 and Q3.

MNB posted the results of the loan officer's survey, conducted on April 1-20, on Friday.

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