Corporate credit conditions little changed amid rising demand

MNB

MNB headquarters in Budapest.

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Conditions for corporate credit were little changed in the first quarter, while demand for both short- and long-term loans grew, state news wire MTI reports, citing a survey of loan officers by the National Bank of Hungary (MNB).

The survey shows lending conditions were "unchanged" during the quarter, with the exception of those for commercial property loans which can be attributed to sector-specific reasons, MNB said.

Lenders plan no tightening for corporate borrowers, regardless of size, in Q2 and Q3, while they augur a continued pickup in demand.

MNB noted that non-financial lenders were net borrowers of some HUF 190 billion in Q1, lifting corporate lending stock by 6% from the end of 2020.

Lenders signed around HUF 855 bln of new credit contracts with businesses in Q1, up 28% from the same period a year earlier.


Retail credit conditions loosened

Credit conditions were loosened for both home loans and consumer loans in Q1, against a backdrop of improved economic and home market trends, the loan officers survey showed. Fewer lenders plan further loosening for retail borrowers in Q2 and Q3, but they project strengthening demand for both home and consumer loans, driven in part by pre-financing for state-subsidized home renovations.

Households borrowed net HUF 213 bln in Q1. Prenatal baby loans accounted for 60% of that.

The government introduced unsecured, interest-free, general-purpose prenatal baby support loans up to HUF 10 million for families having children in July 2019. The loans are part of a package of family support measures designed to address the problem of depopulation and are available only until the end of 2022.

The annualized growth rate of the retail lending stock reached 13.7% at the end of Q1, continuing to climb at the fastest pace in the European Union. However, adjusting for the impact of a repayment moratorium that has been in place since the spring of 2020, growth was around 5%, MNB noted.

The repayment moratorium is set to expire at the end of August, followed by a transition period that the government and lenders are still hashing out.

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