Senior loan officer survey on bank lending practices

Summary of the aggregate results of the survey for 2011 Q3November 2011

Senior loan officersurvey on bank lendingpractices

Summary of the aggregate results of the survey for 2011 Q3November 2011

Published by the Magyar Nemzeti Bank

Publisher in charge: dr. András Simon

8−9 Szabadság tér, H-1850 Budapest

www.mnb.hu

HU ISSN 2060-9612 (online)

Senior loan officer survey on bank lending practices

Summary of the aggregate results of the survey for 2011 Q3

(November 2011)

Analysis prepared by: Gergely Fábián, Dániel Homolya

(Financial Stability)

sENIOR LOAN OFFICER sURVEY ON BANK LENDING PRACTICEs • NOVEmBER 2011 33

The lending survey facilitates the analysis of how major banks perceive and evaluate market developments and how they develop their respective strategies, in particular their lending policies. Aggregating individual answers, weighted by banks’ market shares, helps researchers draw conclusions regarding likely changes in the directions and trends in the credit market. The conclusions of this analysis always present the answers provided by senior bank officers; however in certain cases additional background information might be presented so that the user could easily oversee the tendencies. The survey was conducted between 1 and 18 October 2011.

The results of the survey are presented below in the form of a descriptive analysis and by means of charts illustrating the answers. Annex 1 contains the charts pertaining to the individual segments. The methodological background is described in details in Annex 2. Numerical data on the market shares can be found in Annex 3, and answers to the questions are presented in detail in Annexes 4, 5 and 6 (Annexes 3, 4, 5 and 6 are attached as a separate Excel file). The retrospective questions in the questionnaire relate to changes in 2011 Q3, while the forward-looking questions ask respondents for their views about changes they expect over the next six-month period, i.e. in 2011 Q4 and 2012 Q1. Questions focus on changes perceived relative to the previous quarter: the base period is 2011 Q2 for retrospective questions and 2011 Q3 for forward-looking questions.

In the case of the household segment, a total of 14 banks were involved in the interviews. 10 banks responded to questions related to housing loans, while 14 banks and 6 financial enterprises questions on consumer loans. Based on data from the end of 2011 Q3, the surveyed institutions accounted for 94% of the banking sector both in the housing loans and consumer loans segment. The corporate questionnaire was completed by 7 banks, with a total market share of 80% and 96% of the corporate loan and commercial real estate loan markets, respectively. A total of 7 banks were interviewed on the subject of loans extended to municipalities. Based on data from the end of 2011 Q3, the institutions surveyed covered 97% of total municipal exposure by banks.


Decreasing credit availability and slightly tighter credit conditions point to tightening credit supply in the corporate

segment 6

Tighter interest rate conditions on household loans 8

Annex 1: Charts on developments in loan portfolios and answers to the questionnaire 9

Lending to households 9

Lending to the corporate sector 17

Lending to municipalities 29

Annex 2: Methodological notes 31

Contents

MAGYAR NEMZETI BANK

sENIOR LOAN OFFICER sURVEY ON BANK LENDING PRACTICEs • NOVEmBER 20116

The interest rate on HUF-denominated corporate loans has stagnated around 8.5 percentage points for a long time; there is strong asymmetry, however, as the rate mainly reflects conditions for customers with excellent scoring. Due to the tight credit conditions, the range of the creditworthy borrowers has narrowed significantly, and thus borrowers financing at higher interest rates have no access to credit. Small and medium-sized enterprises which still have access to credit are able to borrow at rates higher than the average, at above 10 per cent.

The decreasing number of creditworthy borrowers can be attributed to declining risk appetite and the recent deterioration in lending ability (weaker capital and liquidity position). Since publication of the previous lending survey, the global economic outlook has deteriorated, the sovereign debt crisis has escalated, and risks in the euro-area banking sector have risen. These developments have resulted in a deteriorating lending capacity of the euro-area banking sector, leading to tighter credit conditions and stagnation in corporate lending, which had expanded dynamically in previous quarters. The economic outlook in Hungary has deteriorated, and contagion risks via parent banks have risen significantly. As a result, the non-price conditions of micro- and small firms and commercial real estate lending were reported to have tightened.

As regards the household segment, there was no material change in lending in the third quarter, while banks reported a broad-based tightening, mainly through increasing mortgage lending rates, over the next six months.

Table 1

Summary table on developments in supply and perceived demand by banks

Segments

Supply Perceived demand

2011 Q32011 Q4−2012 Q1

(e.)2011 Q3

2011 Q4−2012 Q1 (e.)

HouseholdHousing → ↓ ↓ →

Consumer → ↓ → ↓

Corporate ↓ → → →

Note: The up-arrow denotes an increase and the down-arrow a decrease.

DeCreASiNg CreDiT AvAilAbiliTy AND SlighTly TighTer CreDiT CoNDiTioNS PoiNT To TighTeNiNg CreDiT SuPPly iN The CorPorATe SegMeNT

In net terms,1 19 per cent of the respondent banks reported that they had tightened their credit conditions in the

corporate segment. This tightening affected micro- and small-sized firms, while there was no change in the terms of large

and middle-sized firms (Chart 19). The collateral requirements, loan covenants, interest rates and the level of

creditworthiness of micro- and small-sized firms were reported to have tightened over the past three months. Looking

forward, an overall net 6 per cent of the banks expected easing, which is the combined outcome of net tightening in the

case of large and middle-sized firms and easing in the case of micro- and small-sized businesses. It is important to stress,

however, that such forward-looking plans for easing were not realised in previous quarters, as pointed out in previous

surveys. Thus, their materialisation remains uncertain. Banks cited lending ability (weaker capital and liquidity position)

and decreasing risk appetite as factors contributing to tightening (Chart 30).

Overall, the banking system was characterised by two trends in the period up to Q3: banks which would have increase

credit availability would have done so without easing their credit conditions, while some banks curtailed lending and

adjusted their terms accordingly. Hungary’s economy was hit by significant external shocks in Q3 as a result of the

deteriorating global economic outlook, escalation of the sovereign debt crisis and rising risks in the banking sector of the

euro area. As a result, for the first time in a long time banks indicated lower willingness to lend (Chart 18), but − compared

to the deterioration in the economic outlook − only relatively few banks tightened their corporate lending conditions.

1 Weighted by the market share of the difference in tightening and easing banks. The ratio does not reflect the extent of tightening/easing.


However, it is important to note that Hungary cannot remain unaffected by the existing tensions in the euro-area banking

system.

The earlier trend in perceived demand for loans continued in 2011 Q3: in net terms (20 per cent in Q3), banks reported

that they had perceived an increase in demand for short-term corporate loans. By contrast, a net 11 per cent had perceived

weaker demand for long-term (mainly investment) loans relative to Q2. There was, however, a significant change in the

forward-looking answers, similar to housing loans, as banks’ optimism had disappeared. This was the first time since early

2010 that in their forward-looking answers for the next six months the respondents did not expect any rebound in demand

for long-term loans; on the contrary: a net 23 per cent of the respondents anticipated a further decline (Chart 32).

As regards commercial property loans, a net 40 per cent of the banks − a considerably higher proportion than in the

previous survey − reported that they had tightened credit conditions (Chart 19). Banks expected widespread tightening in

all of the segments of commercial real estate lending (residential, offices, industrial (logistics) and retail) to continue over

the next six months (Chart 35). Their responses reveal that the external shocks that materialised in Q3 mainly affected

commercial real estate lending. Most banks cited their capital position as the main reason for tightening and thus, in

addition to the prevailing low willingness to lend, deteriorating lending ability has also become an obstacle to financing

large-volume commercial real estate projects.

Due to the escalating Eurozone sovereign debt crisis and its spill-over into the banking system, a net 16 to 20 per cent of

banks, i.e. a higher number than in the previous quarters, reported that they had tightened their credit conditions and

expected further tightening over the next three months. Tightening also contributed to a halt in corporate lending, which

had started to gather momentum earlier this year. All of this suggests that the sovereign debt crisis has started to affect

the real economy adversely through the banking system as well, which poses a downside risk to the euro-area economy.

By contrast, the pick-up in lending continued in the Central and Eastern European region, aside from the Baltic countries

and Hungary, where the loans outstanding essentially stagnated in the third quarter.

Special topic: interest rate spread on corporate loans

As regards corporate loans, the interest rate spread on the benchmark interbank rate has been stagnating around 2.5 percentage points

for a long time both in the case of HUF-denominated and EUR-denominated loans, which means an 8.5 per cent and 4 per cent interest

rate, respectively. Taking into account high cost of provisioning, above 2.5 percentage points, on the whole, the resulting interest rate

spread can be considered low. This is especially true in the case of EUR-denominated lending, as external domestic FX funding has

become much more expensive. These facts imply that the interest spread primarily reflects the interest rate conditions granted to more

creditworthy corporate clients, which have access to credit under more favourable conditions.

Based on corporate size, as expected, large enterprises are able to borrow at the most favourable conditions, at around 2 percentage

points spreads. As regards, small- and medium-sized enterprises, on average they can borrow at a 1.5 percentage points higher,

approaching a 4 percentage points interest rate spread (Table 2). The interest rate spread of HUF-denominated loans is at around 2.5

percentage points, while that of the FX-denominated loans is 0.5-1 percentage point higher, given the higher external funding costs.

Table 2Average interest rate spread on corporate loans

Percentage points

huF FX

huF FXlarge

enterprises

Small and medium-

sized enterprises

(SMe)

large enterprises

SMelarge

enterprisesSMe

Average spread

H1 1.7 3.6 2.6 4.1 2.6 3.1 2.1 3.9

Q3 1.5 3.4 2.7 4.3 2.5 3.1 2.1 3.9

Note: The spread above the 3-month benchmark interbank rate.Source: MNB.

MAGYAR NEMZETI BANK


At the same time, it must be taken into account that the scope of the creditworthy borrowers has narrowed significantly, and thus the

table reflects only the interest rate conditions of this narrower portfolio of borrowers. Riskier clients can borrow at a markedly higher

rate above the 4 percentage point spread. However, demand for loans may be subdued at such a high rate.

TighTer iNTereST rATe CoNDiTioNS oN houSeholD loANS

Based on banks’ responses, there was no major change in the credit conditions of households in Q3. However, a net 65

per cent of the banks expected to tighten credit conditions for housing loans, and 16 per cent for consumer loans (Chart

4). The tightening was planned in the lending rates, but a few banks also expected the tightening even of the loan-to-value

ratio, maturity and the payment-to-income ratio (Charts 5-6). Rising interest rates may be attributed to surging funding

costs, but with this step banks may also wish to reduce the losses incurred by the final repayment of foreign currency

mortgage loans. The final repayment scheme incurs not just one-off losses to banks through principal write-offs, but over

the longer term, banks may also lose highly profitable interest income stemming from highly creditworthy customers, i.e.

those with the lowest probability of default. This also affects long-term profitability negatively. Tightening banks may

offset these negative effects through higher HUF interest rates. Hence, higher interest rates deter customers from

refinancing their foreign currency loans, resulting in smaller one-off losses incurred by the principal repayment.2 The

planned tightening of credit conditions on consumer loans would affect each segment based on banks’ responses. A net

41 per cent of the respondents (banks and leasing companies) expected to tighten credit conditions for vehicle loans,

21 per cent for home equity loans and 8 per cent for unsecured consumer loans over the period of 2011 Q4 and 2012 Q1

(Chart 12).

As regards loan demand, a net 52 per cent of the banks reported that they had perceived declining demand for housing

loans, while demand for consumer loans was reported to have remained broadly unchanged in Q3 (Chart 8). As a result of

the escalating sovereign debt crisis in Q3 and the bleaker economic outlook, banks’ forward-looking optimism, which had

been prevailing since the end of 2009, disappeared, as they did not expect any rebound in demand over the next six

months.

Changes in domestic lending practices differed from those in the region and the euro area in the third quarter. The

escalating sovereign debt crisis in Q3 marred the lending ability of euro-area banks, halting the expansion in lending seen

in recent quarters. In the euro area, a net 18 per cent of banks reported that they had tightened further their credit

conditions3 for housing loans and 10 per cent for consumer loans (as opposed to unchanged conditions in the domestic

banking sector). This ratio is significantly higher than the one in the previous quarters. Banks expected tightening to

continue until the end of this year. However, these tensions did not yet spill over into the Central and Eastern European

banking sectors in Q3. While a gradual deleveraging of households’ foreign currency debt continued in Hungary against a

background of lacklustre demand for loans, lending to households continued to expand, with the exception of the Baltic

States, across the region.

2 For further details regarding final repayment, see Magyar NeMzeti BaNk (2011): Report on Financial Stability. November. http://english.mnb.hu/Kiadvanyok/mnben_stabil/mnben-stab-jel-201111.

3 Based on the ECB lending survey: http://www.ecb.int/stats/pdf/blssurvey_201110.pdf?389721afeee528d5ac87b8165fa25605.


leNDiNg To houSeholDS

Annex 1: Charts on developments in loan portfolios and answers to the questionnaire

Chart 1outstanding amount of housing loans and the market share of banks completing the questionnaire

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Per centBillion HUF

Total housing loan portfolioHousing loan portfolio of the respondentsMarket share of the respondents (right-hand scale)

Note: The number and scope of banks varied during the half-year periods under review (e.g. as a result of mergers and the inclusion of new banks). From 2009, stock data also include those for credit institutions and branches.

MAGYAR NEMZETI BANK


Chart 2outstanding amount of consumer loans and the market share of banks completing the questionnaire

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Per centBillion HUF

Total consumer loan portfolioConsumer loan portfolio of the respondentsMarket share of the respondents (right-hand scale)

Note: The number and scope of banks varied during the half-year periods under review. The chart only plots market shares of the banks surveyed; it does not plot market shares of financial enterprises. From 2009, stock data also include those for credit institutions and branches.

Chart 3Willingness of banks to extend housing loans and consumer loans

(net percentage balance of respondents reporting increased/decreased credit availability weighted by market share)

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Per cent

Housing loansConsumer loans

INCREA

SED

ECREA

SE


ANNEX 1

Chart 5Credit conditions in the housing loan market − non-price conditions

(net percentage balance of respondents tightening/easing credit conditions weighted by market share)

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Maximum maturity Maximumloan-to-value

ratio

Maximum monthlyinstallment to

income

Requiredcredit score

Per cent

Note: The magnitude of tightening/easing is not shown in the chart.

Chart 4Credit conditions in the housing loan and consumer loan markets

(net percentage balance of respondents tightening/easing credit standards weighted by market share)

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Housing loans Consumer loans

Per centTIG

HTEN

ING

LOO

SEN

ING


MAGYAR NEMZETI BANK


Chart 7Factors contributing to changes in credit conditions in the case of housing loans

(net percentage balance of banks indicating a contribution of individual factors to tightening or easing weighted by market share

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2009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32012 Q1 (e.)

Chart 6Credit conditions in the housing loan market − price conditions


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Spread on average loans Premiumon riskier

loans

Loan origination fees

Per cent



ANNEX 1

Chart 9Credit conditions in the consumer loan market − non-price conditions


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Maximummaturity

Minimumdownpayment

Maximumloan-to

value ratio

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Requiredcreditscore

Per cent


Chart 8Perceived demand for loans in the household segment

(net percentage balance of respondents reporting increase/decrease in demand weighted by market share)

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Housing loans Consumer loans

Per centST

RO

NG

ERW

EAKE

R

MAGYAR NEMZETI BANK


Chart 11Factors contributing to changes in credit conditions in the case of consumer loans

(net percentage balance of banks indicating a contribution of individual factors to tightening or easing weighted by market share)

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2009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32012 Q1 (e.)

Chart 10Credit conditions in the consumer loan market − price conditions


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Spread on average loans Premiumon riskier

loans

Loan origination fees

Per cent



ANNEX 1

Chart 13Credit conditions for different consumer loan products in 2011 Q3


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Home equity loans

OtherVehicle-financing loans

TIG

HTEN

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LOO

SENIN

G


Chart 12Willingness to lend and credit conditions for different consumer loan products

(net percentage balance of respondents weighted by market share)

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−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

Creditavailability

2011 Q3

Creditavailability(expected)till 2012 Q1

Creditconditions2011 Q3

Creditconditions(expected)till 2012 Q1

Per centPer cent

Home equity loans


INCREA

SED

ECREA

SETIG

HTEN

ING

LOSSEN

ING


MAGYAR NEMZETI BANK


Chart 15Default rate of loans to households and loss given default

(net percentage balance of banks reporting increase or decrease weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Default rate in2011 Q3

Default rateanticipation till

2012 Q1

Loss given defaultin 2011 Q3

Loss given defaultanticipation till

2012 Q1

Per cent

DET

ERIO

RATIO

NIM

PRO

VEM

ENT

Housing loansConsumer loansHome equity loans


Chart 14Demand for different consumer loan products

(net percentage balance of banks reporting increase or decrease weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Perceived demand in 2011 Q3 Anticipated demand till 2012 Q1

Per cent

Home equity loans


INCREA

SED

ECREA

SE


ANNEX 1

Chart 17outstanding amount of commercial real estate loans and the market share of banks completing the questionnaire

02 H

2

03 H

1

03 H

2

04 H

1

04 H

2

05 H

1

05 H

2

06 H

1

06 H

2

07 H

1

07 H

2

08 H

1

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

Total commercial real estate loan portfolioCommercial real estate loan portfolio of the respondentsMarket share of the respondents (right-hand scale)

80

82

84

86

88

90

92

94

96

98

100

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000Per centBillion HUF

Note: From 2009, stock data also include those for credit institutions and branches. From 2011 the data includes loans for commercial real estate purchase, not just for development.

Chart 16outstanding amount of corporate loans and the market share of banks completing the questionnaire

0

10

20

30

40

50

60

70

80

90

100

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,00002

H2

03 H

1

03 H

2

04 H

1

04 H

2

05 H

1

05 H

2

06 H

1

06 H

2

07 H

1

07 H

2

08 H

1

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

Per centBillion HUF

Total corporate loan portfolioCorporate loan portfolio of the respondentsMarket share of the respondents (right-hand scale)

Note: From 2009, stock data also include those for credit institutions and branches.

leNDiNg To The CorPorATe SeCTor

MAGYAR NEMZETI BANK


Chart 19Credit conditions by corporate category and for commercial real estate loans

(net percentage balance of respondents reporting tightening/easing weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

Non-financial corporations Small and micro-sizedenterprises

Commercial real estate

Per centPer cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 18Willingness of banks to extend corporate loans

(net percentage balance of respondents reporting increased/decreased credit availability weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

02 H

2

03 H

1

03 H

2

04 H

1

04 H

2

05 H

1

05 H

2

06 H

1

06 H

2

07 H

1

07 H

2

08 H

1

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

12 Q

1 (e

.)

Per centIN

CREA

SED

ECREA

SE

Non-financial corporationsLarge and medium-sized enterprisesSmall and micro-sized enterprisesCommercial real estate


ANNEX 1

Chart 21Maximum maturities by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

Non-financial corporations Large andmedium-sized

enterprises

Small and micro-sizedenterprises

Per cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 20Credit conditions in the corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

Max

imum

mat

urit

y

Max

imum

siz

eof

cre

dit

line

Cos

ts o

f cr

edit

lin

e

Spre

ad

Prem

ium

s ch

arge

don

ris

kier

loa

ns

Loan

cov

enan

ts

Col

late

ral

requ

irem

ents

Min

imum

req

uire

dcr

edit

sco

re

Mon

itor

ing/

data

repo

rtin

g re

quir

emen

t

Per cent

2011 Q3Till 2012 Q1 (e.)

TIG

HTEN

ING

LOO

SENIN

G


MAGYAR NEMZETI BANK


Chart 23Fee(s) charged for extending loans/credit lines by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 22Maximum size of loans/credit lines by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per centTIG

HTEN

ING

LOO

SEN

ING



ANNEX 1

Chart 25Premium on riskier loans by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 24Spread between lending rates and cost of funds by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per centTIG

HTEN

ING

LOO

SEN

ING


MAGYAR NEMZETI BANK


Chart 27Collateral requirements by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 26Covenant requirements by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per centTIG

HTEN

ING

LOO

SEN

ING



ANNEX 1

Chart 29Monitoring/reporting requirements by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per cent

TIG

HTEN

ING

LOO

SEN

ING


Chart 28Minimum required credit score by corporate category


−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)


enterprises


Per centTIG

HTEN

ING

LOO

SEN

ING


MAGYAR NEMZETI BANK


Chart 31Perceived demand for corporate loans


−100

−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

04 H

205

H1

05 H

206

H1

06 H

207

H1

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

Non-financialcorporations


Commercial real estate

Per centPer cent

STRO

NG

ERW

EAKE

R

Chart 30Factors contributing to changes in credit conditions on corporate loans

(net percentage balance of banks indicating a contribution of individual factors to tightening or easing weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100Per cent

Con

trib

utin

gto

tig

hten

ing

Con

trib

utin

gto

eas

ing

Cha

nges

in

bank

’scu

rren

t or

exp

ecte

dca

pita

l po

siti

on

Cha

nges

in

bank

’scu

rren

t or

exp

ecte

dliqu

idit

y po

siti

on

Econ

omic

out

look

Indu

stry

-spe

cifi

cpr

oble

ms

Com

peti

tive

situ

atio

n w

ith

othe

rba

nks

or n

on-b

ank

lend

ers

Cha

nges

in

risk

tole

ranc

e

Mar

ket

shar

e go

als

2009 Q32009 Q2

2009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32012 Q1 (e.)


ANNEX 1

Chart 33Factors contributing to corporations ‘demand for loans based on banks’ perceptions

(net percentage balance of banks indicating a contribution of individual factors to increase or decrease weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100Per cent

Con

trib

utin

g to

stro

nger

dem

and

Con

trib

utin

g to

wea

ker

dem

and

Cha

nge

in c

usto

mer

inve

ntor

y fi

nanc

ing

need

s

Cha

nge

in c

usto

mer

acco

unts

rec

eiva

ble

fina

ncin

g ne

eds

Cha

nge

in c

usto

mer

inve

stm

ent

in p

lant

or

equi

pmen

t

Cha

nge

in c

usto

mer

'sow

n liab

ilit

ies

Cha

nge

ofat

trac

tive

ness

of

othe

rba

nk o

r no

n-ba

nkcr

edit

sou

rces

Cha

nge

in t

he lev

elof

int

eres

t ra

tes

2009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32012 Q1 (e.)

Chart 32Perceived demand for corporate loans by maturity


−100

−80

−60

−40

−20

0

20

40

60

80

100

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

12 Q

1 (e

.)

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

12 Q

1 (e

.)

Short term loans Long term loans

Per centST

RO

NG

ERW

EAKE

R

MAGYAR NEMZETI BANK


Chart 35Credit availability (Willingness to lend) and credit conditions in the commercial real estate segment

(net percentage balance of respondents reporting an increase/decrease and tightening/easing weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Credit availability2011 Q3

Credit availability(expected)

2012 Q1

Credit conditions2011 Q3

Credit conditions(expected) for

2012 Q1

Per cent

ResidentialLogisticsRetail (shopping centres)Offices

INCREA

SED

ECREA

SETIG

HTEN

ING

LOO

SENIN

G


Chart 34Changes in loan portfolio quality by sector

(net percentage balance of respondents reporting improvement/deterioration weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100Per cent

DETERIO

RATION

IMPRO

VEMEN

T

Agri

cult

ure,

fore

stry

and

fish

ery

Man

ufac

turi

ng

Ener

gy,

publ

icse

rvic

es

Con

stru

ctio

n

Who

lesa

le a

ndre

tail

trad

e, r

epai

r

Cat

erin

g se

rvic

es

Tran

spor

t, s

tora

ge,

post

and

tel

com

m.

IT,

com

mun

icat

ion

Fina

ncia

lin

term

edia

tion

Real

est

ate

and

busi

ness

ser

vice

s

2009 Q22009 Q32009 Q42010 Q12010 Q22010 Q32010 Q42011 Q12011 Q22011 Q32012 Q1 (e.)


ANNEX 1

Chart 37Developments in perceptions of risk associated with corporate loans based on answers provided on default rate and loss given default

(net percentage balance of respondents reporting increased/decreased risk weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Default rate in2011 Q3

Loss givendefault in2011 Q3

Default rateforecast till

2012 Q1

Loss given defaultforecast till

2012 Q1

Per cent

Non-financial corporationsLarge and medium-sized enterprisesSmall and micro-sized enterprises

DET

ERIO

RATIO

NIM

PRO

VEM

ENT

Chart 36Demand for loans in specific segments of the commercial real estate market

(net percentage balance of respondents reporting an increase/decrease in demand weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Perceived demandin 2011 Q3

Anticipated demandtill 2012 Q1

Per cent

ResidentialLogisticsRetail (shopping centres)Offices

INCREA

SED

ECREA

SE

MAGYAR NEMZETI BANK


Chart 38Changes in the quality of the commercial real estate loan portfolio

(net percentage balance of respondents reporting improvement/deterioration weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

Commercialreal estate

Residential Logistics Retail (shoppingcentres)

Offices

Per cent

2011 Q3Till 2012 Q1 (e.)

DET

ERIO

RATIO

NIM

PRO

VEM

ENT


ANNEX 1

leNDiNg To MuNiCiPAliTieS

Chart 40Perceived demand for loans and credit conditions in lending to municipalities


−100

−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

Perceiveddemand in2011 Q3

Anticipateddemand till

2012 Q1

Creditconditions in

2011 Q3

Creditconditions(expected)till 2012 Q1

Per centPer cent

INCREA

SED

ECREA

SETIG

HTEN

ING

LOO

SENIN

G


Chart 39Total exposure to municipalities and the share of banks completing the questionnaire

70

75

80

85

90

95

100

0

200

400

600

800

1,000

1,20006

H2

07 H

1

07 H

2

08 H

1

08 H

2

09 Q

1

09 Q

2

09 Q

3

09 Q

4

10 Q

1

10 Q

2

10 Q

3

10 Q

4

11 Q

1

11 Q

2

11 Q

3

Per centBillion HUF

Municipal exposure of the banking sectorMunicipal exposure of the respondentsMarket share of the respondents (right-hand scale)

Note: From 2009, stock data also include those for credit institutions and branches.

MAGYAR NEMZETI BANK


Chart 41Credit availability (Willingness to lend) and portfolio quality in lending to municipalities

(net percentage balance of respondents reporting an increase/decrease and deterioration/improvement weighted by market share)

−100

−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

Creditavailability

2011 Q3

Creditavailability(expected)till 2012 Q1

Portfolioquality2011 Q3

Anticipatedportfolio

quality till2012 Q1

Per centPer centIN

CREA

SED

ECREA

SED

ETER

IORATIO

NIM

PRO

VEM

ENT

Chart 42Credit availability (Willingness to lend) and credit conditions in lending to municipalities since 2007 h2


−100

−80

−60

−40

−20

0

20

40

60

80

100

−100

−80

−60

−40

−20

0

20

40

60

80

100

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

07 H

208

H1

08 H

209

Q1

09 Q

209

Q3

09 Q

410

Q1

10 Q

210

Q3

10 Q

411

Q1

11 Q

211

Q3

12 Q

1 (e

.)

Demand Credit conditions

Per centPer cent

INCREA

SED

ECREA

SETIG

HTEN

ING

LOO

SENIN

G



In terms of methodology − starting from January 2010 − the survey consists of the standard questionnaire in each segment,

and we might also ask ad hoc questions of current concerns related to the lending segment. The retrospective questions

in the questionnaire refer to the previous quarter year (previous quarter in the past), (e.g. to 2011 Q3 in October 2011),

whereas forward-looking questions contain projections for the upcoming half year (e.g. for 2011 Q4−2012 Q1 in October

2011), relative to the trends of the previous quarter year (previous half year in the past).

To indicate changes, the survey used the so-called net change indicator, expressed as a percentage of respondents. This

indicator is calculated as follows: market share-weighted ratio of respondents projecting a change (tightening/increasing/

strengthening) minus market share-weighted ratio of respondents projecting a change in the opposite direction (easing/

decreasing/weakening).

The standard part of the questionnaire asked respondents for changes in willingness to lend (volume of loans), credit

standards and credit/disbursement conditions, as well as changes in demand (observed in the last quarter and, as

expected for the next half year, seasonally adjusted changes in new credit applications) and in portfolio quality as

perceived by the respondent, and changes in the risk assessment of different sectors in the case of the corporate

questionnaire. The survey applied a five-step scaling to assess changes in the willingness to lend, demand, standards/

conditions, risk parameters, however on the charts we only show the direction, excluding magnitude:

• A rating of 1 reflects a considerable increase in demand and in willingness to lend, a considerable tightening in credit

standards/credit conditions, a considerable increase in housing prices and risk parameters and, in the case of the risk

assessment of sectors, a score of 1 indicates a considerable increase in risk perception relative to the half year preceding

the survey, or relative to the current half year or for the upcoming half year in the case of a forecast.

• A rating of 3 indicates an unchanged assessment, both for the current half year and for the forecast pertaining to the

upcoming half year.

• A rating of 5 reflects a considerable decrease in demand and in willingness to lend, a considerable loosening of credit

standards/credit conditions, a considerable decline in housing prices and risk parameters and, in the case of the risk

assessment of sectors, a rating of 5 indicates a significantly safer climate relative to the half year preceding the survey,

or relative to the current half year or for the upcoming half year in the case of a forecast.

Ratings of 2 and 4 allow for an intermediate assessment between two extremes (e.g. demand increasing to some extent).

Keywords used for the purposes of the questionnaire are defined as follows:

Credit availability (willingness to lend) reflects the respondent’s intention to expand and increase its portfolio in the

specific segment.

In terms of credit conditions4, there is a distinction between price-related and non-price related factors. Non-price

related credit conditions (such as collateralisation requirements, loan covenants, maximum size of loans/credit lines, etc.)

represent specific contractual terms; the bank will not disburse the loan unless these conditions are met. Regarding the

non-price related factors, the survey queried respondents on items such as the spread between the interest rate level and

the cost of funds, and risk premium.

Annex 2: Methodological notes

3 As credit standards and credit conditions are interrelated concepts, we surveyed overall changes in credit conditions and standards, followed by a separate query on individual credit conditions.

Senior loan officer survey on bank lending practices

Summary of the aggregate results of the survey for 2011 Q3

November 2011

Print: D-Plus

H–1037 Budapest, Csillaghegyi út 19−21.

Senior loan officer survey on bank lending practices

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Transcript of Senior loan officer survey on bank lending practices