Banks Expect Record-High Growth in Lending – Findings of Bank Lending Survey

The banks are optimistic about the development of lending and plan to continue increasing their loan portfolios and easing lending standards in view of the stronger competition. This is according to the findings of the Bank Lending Survey for Q3.

According to the survey results, the banks expect corporate lending to grow: the balance of responses was the highest throughout the entire history of observations since 2015.

Demand for corporate loans increased slightly in Q3, and the respondents forecast it to keep growing in the next quarter for all types of business loans, except foreign currency ones.

Households’ demand for loans also increased, and the banks expect its further growth.

According to the respondents, businesses’ debt burden remains moderate, and that of households is low.

Lending standards for businesses were eased in Q3, mainly by large banks for long-term loans and loans to large enterprises. The banks plan to ease the standards somewhat in the next quarter as well, primarily for SMEs and short-term loans.

Lending standards for consumer loans were also eased, while they remained unchanged for mortgages. Going forward, the banks expect the standards to ease for both consumer loans and mortgages.

The approval rate increased overall for corporate loans, rose for mortgages in the retail segment, but remained almost unchanged for consumer loans.

According to the banks’ assessments, operational and credit risks rose during the quarter, while FX risk subsided for the first time since the start of 2021. In the next quarter, the respondents expect operational and credit risks to grow, FX risk to increase somewhat, and liquidity risk to decrease.