NBP: Banks assume an increase in loan demand in all segments in Q2

Banks expect an increase in demand in all segments of the credit market in the second quarter of this year. and anticipate a slight easing of lending policy towards households and the SME sector, as well as the maintenance of the current criteria for large enterprises, according to a survey conducted by the National Bank of Poland (NBP).

"The current forecasts of changes in demand [in the SME sector] are more optimistic than those formulated in the previous quarter. A significant group of banks expect an increase in demand for short- and long-term loans for the SME sector and long-term loans for large enterprises. Some banks expect an increase in the interest of large enterprises taking a short-term loan "- according to the report entitled "Situation on the credit market - results of the survey to the chairmen of credit committees, Q2 2021"

In the second quarter of 2021, the banks again forecast a slight easing of lending policy in both segments of loans to the SME sector. However, they do not intend to introduce significant changes to the lending policy towards large enterprises.

"The first quarter of 2020 was another period of declining demand for loans to large enterprises, and no bank noticed an increase in demand for short- and long-term loans," the report states.

Banks slightly tightened the standards of granting short- and long-term loans to large enterprises in Q1. In the case of both types of loans to small and medium-sized enterprises, the net percentage was close to zero.

As indicated, the banks justified the tightening of lending policy in the first quarter of 2021 with the increased risk of enterprises operating in industries most exposed to the COVID-19 pandemic and the fear of the deterioration of the economic situation in the country and the expected capital situation of the bank. Individual banks indicated mainly the decline in demand for corporate loans as factors easing the lending policy.

The survey shows that the forecasts for changes in the criteria for granting housing loans in the second quarter of 2021 are varied, but the intention to ease the trend is dominant.

"As in the previous quarter, housing loan demand forecasts are more unambiguous, as the vast majority of banks expect its upward trend to continue," the report states.

The NBP reported that in the first quarter of 2021, in line with the expectations formulated in the previous quarter, the surveyed banks experienced an increase in demand for housing loans, with around 22% of the banks assessing it as a significant increase. They contributed to this, among others improvement of forecasts regarding the situation on the housing market and an easing of the terms and conditions of granting housing loans.

In the first quarter of 2021, a much larger number of banks than indicated in the previous quarter's predictions eased the standards of granting housing loans. Banks changed some terms of granting loans, including lowered the borrower's own contribution to the investment and the loan margin, and at the same time increased the margin for riskier loans, the report also said.

In the segment of consumer loans, in the second quarter of 2021, banks that are more optimistic than in the previous quarter, formulate forecasts of changes in lending policy criteria and predict their slight easing. Banks also expect an improvement in demand for consumer loans.

In the first quarter of 2021 - contrary to the previous quarter - banks observed an increase in demand for consumer loans. The main reasons for the increase in demand were identified by the banks as follows: the easing of the terms and standards of granting consumer loans and the increased demand for financing the purchase of durable goods. On the other hand, the decline in demand was influenced by the deterioration in the economic situation of households and greater use of alternative sources of financing, including savings.

The survey shows that banks eased their lending policy in the segment of consumer loans in Q1, despite the previously forecasted slight tightening. However, the decisions of individual banks participating in the survey varied.

The banks changed some terms of granting loans, including increasing the maximum loan amount, lowered the loan margin and reduced non-interest loan costs, including a significant increase of around 21%. At the same time, the banks increased the requirements for securing the loan repayment.

The survey was conducted at the beginning of April 2021 among 23 banks with a total share of claims on enterprises and households in the banking sector portfolio of around 88%.

Source: NBP and ISBnews