Patai: No major growth in corporate lending expected in 2016

MNB

Corporate lending at banks in Hungary is not expected to grow next year without additional incentives apart from the National Bank of Hungaryʼs Funding for Growth Scheme (FGS), Hungarian Banking Association head Mihály Patai said yesterday, according to Hungarian news agency MTI.

The government will probably take steps to improve corporate lending in the coming months, but no major growth is expected, and even avoiding a fall in lending stock could be considered an achievement, added Patai.

In the current environment, there is no room for quick and spectacular growth in corporate lending. A decrease of lending stock is independent of the banking system and is tied to cyclical economic changes, Patai said at the end-of-the-year press conference of the association.

Patai called for patience when it comes to corporate lending as it is not solely a question of whether banks want to lend or not.

The association head said they are still carrying out consultations with the government on the reduction of the bank levy. They have reached an agreement, but given that the European Union has raised objections, the deal still needs to be finalized.

The banks and the government have also come to an understanding regarding compensation for the clients of failed brokerage Quaestor, but Patai is leaving it to the government to announce the details.

Speaking about retail non-performing loans, Patai noted that Hungary has a bad debtor and repayment culture, meaning credit outlays in Budapest carry four times as much risk as in Belgrade or Bucharest. Even so, it is likely that retail lending will expand in 2016.

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