Banks fear a further decline in credit market activity in the second quarter of this year, predict a tightening of standards for granting loans to enterprises and households (most banks in the case of housing loans) and expect a large drop in demand, except for the loan segment short-term for large enterprises, according to a survey by the National Bank of Poland (NBP).
The aggression of the Russian Federation against Ukraine and its negative economic and social effects significantly limited the activity on the credit market in the first quarter of 2022. Banks tightened the standards of granting all types of loans and recorded a decrease in demand in most segments of the credit market, with the exception of short-term loans to large enterprises and The increase in interest rates was the second most frequently indicated reason for the tightening of lending policy, and the increase in the demand for financing working capital and the deterioration of the situation of households – to changes in demand, according to the report on “Situation on the credit market – results of the survey to the chairmen of credit committees, Q2 2022”
What draws attention in the forecasts for Q2 is a significant diversification of banks’ assessments with regard to future lending policy and demand in the segment of consumer loans, the report stated.
In the corporate loans segment, banks expect a further tightening of lending policy on a scale similar to that in Q1; a significant drop in demand for loans (especially long-term loans), except for short-term loans to large enterprises.
In Q2 2022, banks plan to tighten their lending policy towards enterprises on a scale similar to Q1 2022 (net percentages for short-term and long-term loans, for large enterprises and SMEs are in the range of 40-50%).
Banks’ forecasts regarding demand for long-term corporate loans are pessimistic (-74% for large enterprises, -72% for SMEs. Short-term loan for large enterprises is the only loan category for which banks expect demand to grow in Q2 2022 r. (58%).
In this sector, small changes in demand were observed in Q1 – mainly for loans to large enterprises: an increase in short-term as a result of a greater demand for financing current assets and a decrease in long-term loans, e.g. due to the increased risk associated with the war in Ukraine.
In the housing loans segment, the banks expect in Q2 2022: a more than twofold increase in the scale of the tightening of lending policy and a continuation of the decline in demand.
For the second quarter of 2022, the surveyed banks forecast a further tightening of the standards of granting housing loans (net percentage: -92%), including a significant decrease in 62% of banks and a deepening decline in demand for these loans (net percentage: -83%), including significant in 64% of banks.
In Q1, demand in the segment of housing loans decreased again as a result of, inter alia, changes in consumption expenditure, deterioration in the economic situation of households and forecasts for the situation in the housing market.
For the second quarter of 2022, the surveyed banks forecast a further tightening of the standards of granting housing loans (net percentage: -92%), including a significant decrease in 62% of banks and a deepening decline in demand for these loans (net percentage: -83%), including significant in 64% of banks.
In the consumer loans segment, banks, in anticipation of the second quarter of 2022, showed divided opinions as to the directions of changes in lending policy and demand, the net result close to zero.
Banks, similarly to the previous quarter, have divided opinions as to the directions of changes in the situation on the consumer loan market in the second quarter of 2022. The lending policy criteria are planned to be tightened by around 37% and loosened by 21% of the banks (net percentage: -6%, see Graph 9) Similarly, in the case of demand forecasts – around 31% of the banks expect it to increase and 25% to decline (net percentage: 6%).
In this segment, in Q1 the lending policy was characterized by multidirectional changes in the criteria of lending policy, motivated, inter alia, by an increase in interest rates and, on the other hand, a decline in demand for consumer loans. No significant changes in credit conditions were observed.
In the segment of consumer loans, banks observed in Q1 this year. multidirectional changes in demand caused, inter alia, by deterioration of the economic situation of households and the easing of lending policy in some banks.
The survey was conducted at the beginning of April 2022 among 23 banks with a total share of claims on enterprises and households in the banking sector portfolio of around 88%.
Source: Polish National Bank and ISBnews
