The results of the Lending Survey for conducted by the National Bank of Ukraine in Q1 2016 suggest that Ukrainian banks expect an increase in loans and deposits over the next 12 months.
Most respondents expect the loan portfolio of business entities to increase over the second quarter of 2016 through the first quarter of 2017. The percentage of respondents who were optimistic as against those who were pessimistic rose to 60% to 62%. At the same time, the balance of responses on the expected change in the loan portfolio was negative (-12.2) due to the pessimistic expectations of some banks with large corporate loan portfolios.
In Q2 2016, banks expect a pick-up in demand for domestic currency loans from households and business entities, primarily large enterprises.
48% of polled banks (vs. 40% of banks in Q4 2015) expect an improvement in the quality of corporate loan portfolio. The balance of responses is 15.1 (vs. 13.2 in Q4 2015).
The share of banks that are optimistic about the increase in retail lending over the next 12 months rose to 44%, up from 33% in the previous survey period.
For the first time in the past two years, banks reported softening of credit standards for corporate loans. Credit standards eased most for loans in domestic currency, as well as loans to small and medium-sized enterprises (SMEs). Lending conditions remained tight for long-term loans and loans in foreign currency. The softening of lending standards for corporate loans can be attributed to the increase in banks' liquidity and tougher competition among financial institutions for solvent borrowers.
In Q1 2016, lending standards for consumer loans eased, albeit slightly.
Banks expect that lending standards for loans to SMEs and short-term corporate loans, as well as for consumer loans to ease in Q2 2016. At the same time, banks expect tightening of credit standards for loans to large enterprises.
Banks expect deposits to increase. Thus, 70% of polled banks (the balance of responses is 39.3) forecast growth of deposits of business entities over the next 12 months. 61% of polled banks (the balance of responses is 36.6) project household deposit growth to gain momentum. The banks’ more optimistic expectations point to the gradual recovery of confidence in the banking sector.
For reference
In order to produce the lending survey, the credit managers of 72 banks were polled. Survey answers were provided by 71 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.
In order to aggregate respondents’ replies, the NBU assesses every reply on the basis of the respondent’s reply and its percentage in the reference set. The positive balance of responses indicates the expectations of the growth of the respective indicator. More information is available in the Annex to the Lending Survey (p. 8).