Banks predict revival of business lending - NBU survey
"For the next 12 months, banks expect a resurgence of lending to both business and the population. At the same time, they assessed the prospects for resuming corporate lending as the highest in the whole observation history - the response balance was 53%," the report reads.
It notes that the positive attitude of banks is reflected in all aspects of credit conditions, in particular, demand for loans, prospects for the inflow of deposits, the cost of loans, and internal conditions for the approval of applications.
"In July-September, banks saw an increase in the population's demand for consumer loans and companies' demand for short-term loans, as well as for loans to small and medium-sized enterprises (SMEs). This was mainly due to a decrease in the cost of borrowing, as first noted by banks since 2017," the NBU said.
The driver of demand for loans to businesses was businesses' need for working capital and investment funds.
At the same time, respondents noted high competition for corporate and individual borrowers from both banks and non-banking financial institutions and, consequently, soft lending standards for SME borrowers and a weakening of internal borrowing requirements and criteria in the consumer segment.
The survey showed banks' confidence in the prospects for lending growth: 74% of respondents predict an increase in corporate and retail loan portfolios.
The surveyed banks expect that foreign exchange risk may increase most significantly in the fourth quarter, while credit risk will decrease. Interest, operational and liquidity risks will not change.
The NBU publishes surveys of bank lending conditions on a quarterly basis. The present survey was conducted from September 19 to October 10, 2019, among credit managers of 50 banks, whose share in the total assets of the banking system is 99%. The results of the poll reflect the opinion of the respondents and are not estimates or forecasts of the National Bank of Ukraine, the NBU's press service said.
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