Lenders' Sentiment Worsens in H1
Banks' economic sentiment deteriorated in the first half of the year, news agency MTI reports, citing a survey conducted by the National Bank of Hungary (MNB).
Lenders' perceived decline in demand for credit compared to the previous half was the biggest contributing factor to the worsening sentiment, but the uncertain macroeconomic environment, higher client risk, worsening profitability, and tighter availability of funds also impacted their assessments, the central bank and market regulator said. An increase in competition was the only positive factor lenders cited, it added.
Looking ahead, a growing number of banks expect a positive shift in the economy in H2 2023.
The survey shows a net 40% of banks had a negative assessment of the impact of the macroeconomic environment, compared to nearly all lenders in H2 2022. In the coming half, the indicator could turn positive for the first time in two years, MNB said.
Around 30% of banks said it was harder to access long-term funds for lending, while 14% said it was difficult to get short-term funds. In H2, 16% expect a deterioration in the availability of long-term funds and 22% said it would be harder to get short-term funds.
About 59% of lenders said retail borrowers' creditworthiness had deteriorated as real wages fell and the cost of living rose. Around 43% of banks said the creditworthiness of corporate borrowers had worsened because of the uncertain economic outlook and industry-specific risks.
Looking ahead, 51% of lenders see retail borrowers' creditworthiness continuing to decline and 41% said the same for corporate creditworthiness.
About 59% of banks said retail credit demand had fallen and 49% pointed to a drop in demand for corporate credit.
Approximately 22% of banks reported a deterioration in profitability before impairment and 68% said operating costs had increased.
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