For the first time in last two years majority of banks expect speed-up in lending to households over the following 12 months. It was stated by 88% of financial institutions that were surveyed by the National Bank of Ukraine from 22 March to 7 April 2017 compared with 46% in the previous quarter. Also, 61% of banks expect an increase in corporate lending portfolio. Such are the results of the regular Lending Survey (April 2017), which contains the Q1 results and outlook for Q2 of the current year and the following 12 months.
From mid-2015 banks have been constantly expecting the quality of corporate and household lending portfolio to increase. Such expectations were expressed by 57% and 50% of respondents respectively.
Demand for corporate and household lending continued to grow in Q1 2017.
- Respondents indicated lower interest rates and higher needs of enterprises for current assets as the key factors in the corporate segment.
- Increased demand for household lending was driven by the following factors: lower interest rates, increased expenditures on durable goods, and consumer confidence.
Banks expect the demand for hryvnia lending to grow in both corporate and household sectors in Q2 2017.
Consumer lending standards have been easing since mid-2015 according to 48% of respondents (12% in the previous quarter). In Q1 2017, standards for all types of corporate lending became tougher, especially for long-term FX loans to large enterprises.
- In Q2 2017, banks expect the standards for corporate loan application approval to become more stringent.
- Mortgage lending standards may become more stringent too while standards for consumer lending should be eased.
Most respondents expect an increase in deposits, preserving their optimism since the beginning of 2015.
At the same time, expectations for increased inflows in the corporate sector exceed expectations for deposit growth (76% against 67%, respectively).
The NBU publishes the Lending Survey Analytical Report quarterly. The report summarizes the results of a survey conducted by the NBU among commercial banks on lending in the reporting quarter, its prospects for the next quarter and the 12 subsequent months.
In the survey carried out from 22 March 2017 through 7 April 2017, credit managers of 70 banks participated (the share of these banks is 97% of the total assets in the banking system).
To calculate the balance of responses each response is assigned a score based on the respondent's answers and their weight in the total sample. A positive balance of responses indicates expectations of growth for the respective indicator for the system as the whole. Detailed information is provided in the annex to the report (page 8).