Banks expect further growth in corporate and retail lending - NBU survey

Demand for corporate hryvnia loans increased in Q3, as did demand for consumer loans, and most banks expect further growth in corporate and retail loan portfolios in the next 12 months.

This is evidenced by the results of a quarterly survey of banks on lending conditions, Ukrainian News Agency reports.

The largest increase in demand in the corporate segment, according to banks, is observed from the side of large enterprises, in the retail segment - for mortgages (growth for four quarters in a row).

In Q4, banks expect an increase in demand for both corporate and retail loans.

The quality of loans, according to the survey, will not change, but some major players have noted a deterioration in the quality of loans to households.

Funding volumes, according to respondents, will continue to grow, and for the fifth quarter in a row, banks are counting on an inflow of funds from the public.

The debt burden of small and medium-sized enterprises and large companies, according to banks' estimates, has decreased to an average level for two consecutive quarters.

At the same time, the debt load of households is somewhat lower than the average.

The level of approved applications for business loans increased in Q3, primarily for loans to small and medium-sized enterprises, short-term and foreign currency loans.

In the future, the level of approved applications for retail loans will continue to grow, mostly for consumer loans.

Business credit standards were unchanged in Q3 for the first time since the start of the full-scale invasion after a long period of tightening.

Every fifth respondent even mentioned a certain easing of standards.

In Q4, banks plan to slightly relax credit standards for all types of loans, except foreign currency loans.

Credit standards for households eased for the third quarter in a row.

Banks plan to further relax the standards for consumer loans, while keeping them unchanged for mortgages.

Financial institutions reported a slight increase in credit risk during Q3.

During the next quarter, an increase in credit and interest risks is expected, and most of all - currency risks.

The "survey about bank lending conditions" was conducted from September 15 to October 6, 2023 among bank credit managers.

Answers were provided by 25 financial institutions, whose share in the total assets of the banking system is 96%.

The results of the survey reflect the opinion of the respondents and are not estimates or forecasts of the National Bank.

As Ukrainian News Agency earlier reported, the volume of the net retail hryvnia loan portfolio in Q2 of the current year increased for the first time since the beginning of the full-scale invasion - by 4.5% - primarily as a result of the recovery of card lending.