Although Hungarian banks have not tightened lending conditions further, they remained "overly cautious" because of the unfavourable outlook, the National Bank of Hungary said on Thursday, summarising a fresh survey of loan officers.
The survey, conducted in January, showed credit conditions for companies were unchanged. Although banks' capital and liquidity positions warranted easing conditions, their risk tolerance and the unfavourable economic and sector-specific outlook pointed to tightening, the MNB said.
Banks expect corporate lending conditions to ease in the coming six months, citing favourable liquidity positions and competition for creditworthy clients. Net 11% of banks expect to ease their corporate credit conditions - mainly as relate to credit scores, collateral and the size of credit lines available to big and medium-sized companies - in the coming six months.
The MNB noted that "steady and marked easing" is needed for a turnaround in corporate lending activity. Corporate credit conditions have eased just once in the past three years, in Q2 2011, the MNB added.
The survey showed a decline in perceived demand for long-term corporate loans and a steady rise in demand for short-term loans, indicating that "credit supply constraints may be more pronounced". Net 61% of banks said they perceived in Q4 2012 lower demand for long-term loans, which is the highest relative ratio since the start of the crisis, senior MNB analyst Gergely Fábián told reporters. Net 11% said they saw higher demand for short-term loans.
The interviews with the loan officers showed corporate clients showed "an almost completed lack of demand" for investment loans "with no material change expected" for 2013.
Looking ahead, net 32% of banks expect a further increase in demand for short-term loans, while 7% expect lower demand for long-term loans.
Fábián noted that banks will probably be more ready to take risks regarding corporate loans as the quality of the corporate loan portfolio improved in Q4 after a long period of deterioration, and the share of non-performing loans in the segment fell in Q4 for the first time in six years.
The loan officers said retail lending conditions eased further, but they saw no rebound in demand. Looking ahead, they see rising demand for retail credit, particularly for home loans supported by changes to a state interest subsidy scheme, and expect further easing in credit conditions for consumer loans.
In net terms 14% of banks eased conditions on consumer loans in the last quarter of 2012, and net 22% plan further easing over the coming six months. Net 15% of banks reported lower demand for home loans during the quarter and just net 7% said there was stronger demand for consumer loans.
In the previous survey of loan officers, conducted three months earlier, banks had expected an upturn in demand for both home and consumer loans. Similarly, net 75% of banks in the fresh survey expected stronger demand for home loans net 39% see a pickup in demand for consumer loans.