In Q3, a record share of the respondents, since early 2022, expected loans to businesses to grow in the next 12 months, while a slightly smaller percentage projected an increase in loans to households. Meanwhile, the financial institutions anticipated a certain worsening of loan portfolio quality going forward. This is according to the quarterly Bank Lending Survey.
Households’ demand for loans had been on the rise for three consecutive quarters, while the extended increase in demand from businesses was the highest since 2021, the survey showed.
Although demand rose for all types of corporate loans, it grew the fastest for hryvnia-denominated long-term SME loans. Financial institutions expect an increase in demand for all types of hryvnia corporate loans in Q4.
Demand from households for loans grew for three straight quarters. In Q3, most of this increase was due to rising demand for consumer loans fueled by better consumer sentiment and lower interest rates. In Q4, the financial institutions expect a rise in demand for all types of retail loans.
The debt burden on SMEs and large businesses remained moderate, while that on households continued to be low, the banks estimate.
For the first time since 2021, the banks eased their lending standards for businesses, for all types of corporate loans except FX ones. The lending standards for SME loans, as well as for short-term and hryvnia ones, were loosened the most. In Q4, the banks plan to ease their credit standards for all types of corporate loans.
The corporate-loan application approval rate went up, primarily for hryvnia, short-term, and SME loans.
The financial institutions continued to ease their lending standards for households, mainly thanks to more intense competition. In Q4, the banks plan to relax their criteria for consumer loans and tighten them for mortgages.
The application approval rate for consumer loans increased, while that for mortgages declined. At the same time, the banks reduced the cost of loans to households.
FX, credit, and operational risks increased moderately in Q3, and interest rate risk rose a bit less, the banks assessed. In Q4, the financial institutions expect growth in all types of risks, most notably in liquidity and credit risks.
The Bank Lending Survey was held among credit managers of the banks between 16 September and 7 October 2024. The answers were provided by 26 financial institutions, which together held 96% of the banking system’s total assets. The survey’s results reflect the views of the respondents and are not the NBU’s assessments or forecasts. The survey on expectations for Q1 2025 will be published in January 2025