25% of banks provide stricter business credit terms

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Net 25% of Hungarian banks plan to tighten business lending conditions in the second and third quarters, according to a survey of loan officers conducted by the National Bank of Hungary (MNB), according to a report by the news wire MTI status.

Loan officers said the tightening would mainly involve higher spreads as well as higher self-funding and collateral rates amid an uncertain economic outlook and industry-specific issues.

The survey results show that demand for business credit remained stable in the first quarter, as the impact of rising interest rates was offset by companies’ increased need to finance their working capital. Looking ahead, 14% of loan officers anticipate a drop in demand for SME credit and a 17% drop in demand for long-term loans over the next six months.

Net 36% of banks tightened terms for commercial real estate loans in the first quarter due to industry-specific issues and lower risk tolerance, and 29% foresee further tightening. A net 65% predict a tightening for residential projects as financing and construction costs rise and some government support approaches are phased out.

In the retail segment, lender terms for home loans remained unchanged in the first quarter, with nearly half of banks reporting lower spreads as the pass-through of higher funding costs was delayed. About the same proportion of loan officers expect spreads to increase in the second and third quarters.

Net 60% of loan officers said demand for home loans increased in the first quarter, supported by NBH’s Green Home program, but net 55% expected loan demand to decline in the second and third quarters.

Loan officers said demand for consumer loans was flat in the first quarter, but expected demand to decline over the next six months. Net 10% of banks tightened credit conditions in Q1 and net 45% expect a tightening in Q2 and Q3.

MNB on Friday released the results of the loan officer survey, conducted from April 1-20.


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