MNB: Lending dynamics in the SME segment improve in Q3 2015

MNB

In the third quarter of 2015, the outstanding borrowing of the SME sector increased by HUF 74 billion, and the annual growth rate of lending to SMEs reached 3.5% by the end of the quarter, the National Bank of Hungary (MNB) said in its “Trends in Lending” report released today.

The MNB contrasted the growth in SME lending with lending trends for larger corporations as outstanding loans to large corporations contracted by almost HUF 46 bln.

In Q3 2015, total outstanding lending to non-financial corporations by credit institutions increased by HUF 28 bln, or 0.5% in quarter-on-quarter terms but due to the continued contraction of lending to large corporations, total outstanding lending still showed an annual decrease of 4.4% in September 2015.

Forint loan transactions increased by HUF 106 bln, while foreign currency loan transactions decreased the total outstanding borrowing of corporations by HUF 78 bln. The ratio of foreign currency loans within the total outstanding portfolio decreased to 47% at the end of September.

Earlier data by the MNB showed that corporate lending stock of Hungarian banks was HUF 6.253 trillion in September.

Unused credit lines available for corporations continued to increase in the reporting period, rising by HUF 179 bln. The volume of credit lines can be deemed high compared to the average of previous periods, suggesting that some companies may be postponing their borrowing decisions.

The gross volume of new corporate lending by the credit institution sector amounted to HUF 519 bln in Q3, a 7% fall compared to Q3 2014. Forint loans amounted to almost HUF 328 bln and euro loans to HUF 190 bln. In the third quarter of 2015 HUF 161 bln in contracts were signed under the MNBʼs Funding for Growth Scheme.

According to answers from banks in net terms, about 31% of them eased corporate lending conditions. Market share objectives, the intensification of competition, the favorable liquidity and capital position of banks, as well as the change in risk tolerance and improving economic prospects contributed to easing. A quarter of the banks reported that they would further ease credit conditions in the next six months.

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