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Loan Officers Survey Indicates Continued Caution

Analysis

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A quarterly survey of loan officers by the National Bank of Hungary (MNB) shows continued caution, among lenders and borrowers, on the credit market, according to a report by news agency MTI.

The survey, conducted on April 1-20, shows net 19% of banks tightened their corporate credit conditions in the first quarter, citing a deterioration in economic prospects and industry-specific risks. The tightening conditions were reflected in closer monitoring, higher collateral requirements, and increased spreads.

Over a six-month horizon, net 9% of banks expect corporate credit conditions to tighten further.

Net 8% of lenders perceived a decline in demand for corporate credit in Q1, although mainly for forint loans and long-term loans. The survey results show a 61% rise in demand for FX loans and a 37% increase in demand for short-term loans and suggest that the rise is set to continue.

Net 53% of lenders see the fall in demand for forint loans continuing and net 48% expect the same for long-term loans.

Around one-third of banks tightened conditions for commercial real estate loans in Q1. Net 40% of lenders signaled declining demand for commercial real estate credit for residential projects and 50% pointed to a decline in demand for loans for shopping centers. Net 42% said demand had risen for credit for logistics projects and 7% reported a pickup in demand for office investments, but lenders augured a drop in demand for all commercial property credit in the coming six months.

Net 14% of banks tightened conditions for home loans in Q1, while 76% reported a decline in demand. Looking ahead, net 27% of banks expect demand to increase, and 9% project a fall in spreads.

Net 11% of banks tightened conditions on consumer loans in Q1, reflected mainly in wider spreads. Net 32% augured a further tightening. Net 42% of banks said demand for consumer credit had risen in Q1.

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