2006-05-09
The Bank of Lithuania published commercial bank survey data on borrowing conditions conducted for the first time. The purpose of the survey was to get information on non-interest borrowing terms set by the banks (such as the loan/collateral ratio, average/maximum loan maturity, minimum income/property requirements, etc.), the views of the banks towards risks, borrowing costs and expectations.
The survey shows that during the period from October 2005 until April 2006 commercial banks slightly softened their lending terms. The main quoted reasons were competition and expectations linked to the general economic situation in the country. According to bank assessments, demand for loans to small and medium businesses and demand for long-term loans in terms of maturity increased most during the period. Such demand was determined by increased need for company capital investment and financing of working capital. With respect to housing loans, banks continued to reduce the average loan margin and increase the loan to collateral ratio.
In terms of expectations, participating banks indicated that they expected further growth of demand for loans over the coming semester (May 2006 - October 2006), especially long-term loans and loans to small and medium businesses. Demand for housing loans should also increase, yet demand for consumer loans should see fastest growth. Concerning the changes in lending terms, most banks indicated that the terms for companies would remain relatively unchanged, with only a few banks intending to soften the terms of housing loans, while most banks intended to soften the terms for consumer loans.
Banks were also asked to provide answers to several additional questions, such as indicating the causes for interest rate differences on equivalent loans in litas and euro, real estate company risk, the average loan to collateral ratio, foreign borrowing, possibilities of the further decline of interest rate margins, restrictions on crediting certain economic activities and the number of problematic clients or clients with late payments.
In the future such surveys will be conducted twice annually in April and October.
For more detailed information about the lending survey please contact Mr. Mindaugas Leika, Head of the Financial Stability Division of the Economics Department of the Bank of Lithuania, tel. 268 01 38, e-mail tl.bl@akielm.