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Tightening of credit conditions not as broad as expected, MNB said

Credit conditions for corporate and retail clients of Hungarian lenders were reported to have tightened in the first quarter, according to a fresh survey of loan officers by the National Bank of Hungary (MNB), but the share of tightening banks "declined significantly" from the previous survey, the central bank said on Thursday.

Credit conditions for households were expected to ease over the next six months, pointing to some correction in the stricter terms which arose during an early foreign currency-denominated mortgage repayment scheme that ran from the end of September until the end of February, the MNB said.

 In the corporate sector, further tightening was expected by lenders over the next six months. The MNB noted the results were nuanced by the fact that in the previous survey, most of the banks had expected tightening in the corporate segment for the beginning of 2012, but in the end substantially fewer banks changed their conditions, mainly due to the effect of the European Central Bank's 3-year loan tenders.

"It is important to note that a credit crunch can emerge not only as a result of a sudden substantial tightening of credit conditions in the entire banking sector, but also as a result of maintaining the current strict conditions which have evolved since the onset of the crisis," the MNB said in its presentation of the survey.

Banks mainly cited factors related to risk aversion as contributing to the tightening in credit conditions, while substantially fewer banks cited lending capacity than in the previous survey. Based on the cumulation of the proportion of respondents citing the different factors since the onset of the crisis, 73% of the tightening can be attributed to risk aversion, 13% to liquidity constraints and 9% to capital constraints.