Demand for hryvnia corporate loans increased in Q3, as did demand for retail loans, with the majority of banks expecting further growth in their corporate and retail loan portfolios over the next 12 months. This is according to the quarterly Bank Lending Survey.
According to the banks, the largest growth in demand in the corporate segment was observed from large companies. In the retail segment, demand rose the most for mortgages (it has been growing for four quarters straight). In Q4, the banks expect demand to grow for both corporate and retail loans.
The quality of loans will not change according to the survey, but some large players noted a deterioration in the quality of retail loans.
Respondents expect funding volumes to keep growing. The banks have been counting on inflows of retail deposits for the fifth quarter in a row.
The banks estimate that the debt burden of small and medium-sized enterprises and large companies has been declining towards a moderate level for two consecutive quarters. At the same time, the debt burden of households was slightly below average.
The level of corporate loan approvals increased in Q3, primarily for loans to small and medium-sized enterprises, short-term loans, and FX loans. Approvals of retail loan applications continued to grow, mostly for consumer loans.
Lending standards for businesses remained unchanged in Q3 for the first time since the start of the full-scale invasion, following a long period of tightening. One in five respondents even noted a certain easing of standards. In Q4, the banks plan to slightly ease their lending standards for all types of loans, except for FX loans.
Lending standards for retail clients have been eased for the third quarter in a row. The banks plan to continue to ease standards for consumer loans, while leaving them unchanged for mortgages.
The financial institutions reported a slight increase in credit risk in Q3. In the next quarter, credit and interest rate risks are projected to rise, and the largest growth is expected in FX risk.
The Bank Lending Survey was held among credit managers of the banks between 15 September and 6 October 2023. The answers were provided by 25 respondents, which jointly accounted for 96% of the banking system’s total assets. The survey’s 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 Q1 2024 will be published in January 2024.