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Banks’ Estimates of Lending Indicators and Prospects Slightly Improve – Bank Lending Survey

Banks’ Estimates of Lending Indicators and Prospects Slightly Improve – Bank Lending Survey

In Q4, the banks somewhat improved their estimates of lending indicators: the respondents reported growth in demand for corporate loans and, for the first time in 2022, a recovery in household demand for mortgages. At the same time, the survey participants noted a tightening of lending standards across all types of loans and a decrease in approval rates for loan applications, excluding mortgages. The banks continue to expect moderate growth in demand for corporate loans and mortgages, and predict an increase in all types of risk.

Demand for loans remains moderate, while lending standards continue to tighten

In October–December 2022, corporate borrowers were most interested in hryvnia short-term loans and SME loans. In contrast, demand for long-term and FX loans kept shrinking. High interest rates and the absence of capital investment continued to restrain demand for corporate loans.

For four quarters running, most banks said that they had tightened their corporate lending standards. For the most part, these were standards for long-term and FX loans.

Downbeat consumer sentiment dampened household demand for consumer loans. At the same time, for the first time from the start of 2022, the banks reported a recovery in household demand for mortgages, in part driven by more lucrative interest rates. The banks have tightened their retail lending standards for four quarters in a row.

The respondents noted a significant increase in interest rate, FX, and operational risks in Q4 2022. On the other hand, liquidity risk has declined for the first time in four quarters.

The banks forecast the dynamics of corporate and retail lending to be mixed, funding to grow, and risks to rise

In the next 12 months, the respondents expect the dynamics of corporate lending to improve moderately and the retail loan portfolio to continue shrinking.

The banks count on an increase in funding in the next 12 months, predicting deposit inflows from both households and businesses.

The majority of financial institutions expect a deterioration in loan portfolio quality, but the share of such banks decreased compared to the previous survey.

In the coming three months, the banks anticipate that all types of risk will intensify, but the share of such respondents decreased somewhat.

For reference

The NBU publishes the Bank Lending Survey on a quarterly basis. The purpose of the survey is to deepen the understanding of credit market conditions and trends by the NBU and banking sector participants. It provides general assessments and forecasts of changes in lending standards and conditions for the corporate sector and households, fluctuations in lending demand, and more.

The latest survey of the credit managers of 27 banks was conducted between 16 December 2022 and 12 January 2023. These banks account for 97% of the banking system’s total assets. The survey results reflect the views of respondents and are not assessments or forecasts by the NBU.

The next survey of bank lending conditions regarding expectations for Q2 will be published in April 2023.

The NBU highly appreciates the banks’ participation in the survey under conditions of martial law.


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