Loan Officers Survey Indicates Increased Caution

Banking

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A quarterly survey of loan officers by the National Bank of Hungary (MNB) shows lenders, as well as borrowers, are approaching the credit market with a higher degree of caution, according to a report by state news wire MTI.

The survey, conducted in the first half of January, shows that a net 23% of banks tightened their corporate credit conditions in the fourth quarter, citing a deterioration in economic prospects and industry-specific risks. The tightening conditions were also reflected in closer monitoring, higher collateral requirements, and increased spreads.

Over a six-month horizon, net 29% of banks expect corporate credit conditions to tighten further.

Net 10% of lenders perceived a decline in demand for corporate credit in Q4, although mainly for forint loans and long-term loans. The survey results show a 70% rise in demand for FX loans and a 31% increase in demand for short-term loans and suggest that rise is set to continue.

Some net 73% of lenders see the fall in demand for forint loans continuing and net 44% expect the same for long-term loans.

Net 23% of banks tightened conditions for commercial real estate loans in Q4 because of funding costs and "multiple challenges" facing the market. Net 54% of lenders signaled declining demand for commercial real estate credit.

About net 17% of banks tightened conditions for home loans in Q4 as client creditworthiness deteriorated, and the same percentage envisaged a further tightening over the six-month horizon because of the uncertain economic outlook.

According to the survey, net 92% of lenders perceived a drop in demand for home loans and net 30% expect demand to fall further.

Net 27% of banks tightened conditions on consumer loans in Q4, reflected mainly in wider spreads, and net 19% augured a further tightening as creditworthiness declines.

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