The results of the Lending Survey conducted by the National Bank of Ukraine in Q4 2015 suggest that Ukrainian banks expect lending to recover in 2016.

Banks project an improvement in the quality of corporate loans and an increase in the portfolio of corporate loans over the next 12 months.  The percentage of banks expecting higher growth in their corporate loan portfolios rose to 57% from 45% at the end of October 2015. Fifty-four percent of banks project an improvement in their loan portfolio quality (vs. 39% of banks in Q3 2015).

At the same time, the survey results indicate an increase in the percentage of banks expecting a recovery in retail lending, yet most banks are still pessimistic about a lending revival. In Q3 2015, only 17% of respondents expressed optimism regarding the growth in their loan portfolios to households. At the end of 2015, optimistic expectations were reported by 27% of polled banks. Fifty-eight percent of banks expect an improvement in the quality of loans to households (vs. 40% of banks in Q4 2015).

For the first time in the past two years, banks reported softening in price conditions for approval of loan applications. Accordingly, lower interest rates pushed up the demand for loans from business entities and households. Forty-one percent of banks reported growing demand for corporate loans (vs. 19% of banks in Q3 2015). The increase in demand was recorded for loans to small and medium-sized enterprises, short-term loans, and loans in domestic currency.  Banks also forecast an increase in demand for consumer loans.

For reference. In order to produce the lending survey, credit managers at 50 banks were polled. Survey answers were provided by 48 banks, accounting for 91% of the banking system’s total assets. The survey results only reflect the opinions of the respondents, and shall not be considered as NBU forecasts or estimates.