Banks projecting moderate loan portfolio growth
Commercial banks surveyed by the Bank of Lithuania claim being conscious of the increasing demand for loans and indicate having eased their credit standards. Growth in the credit portfolios for business and residents this year is expected to be moderate.
“Banks are conscious of the increasing demand of business credit for financing working capital, investment, mergers, acquisitions and restructuring. According to them, the improving outlook for the housing market and increasing consumer confidence in the last half-year gradually increased the demand for housing loans,” comments Virgilijus Rutkauskas, chief economist of the Macroprudential Analysis Division of the Financial Stability Department at the Bank of Lithuania, on the most recent results of the Bank of Lithuania’s survey.
The surveyed banks expect the loan and deposit portfolio growth rates this year to be similar — about 3 per cent on average. The trends close to this year’s are likely to persist in 2015; however, the loan portfolio growth rates will be somewhat weaker.
For the second consecutive year part of the surveyed banks have been claiming that the credit conditions for business are eased by the following: loans to businesses are granted for a longer term, the amounts of loans or credit lines are increased. The survey results suggest that a contribution to that stemmed from the improving expectations for the general economic situation, the increasing competition among banks and growth in the amounts of money in banks. About half of the total surveyed banks, however, were cautious in their assessment of the issuance of riskier loans and, according to them, the margins applicable to such loans have increased somewhat.
Part of the surveyed banks claimed having also eased the standards for housing loans, by decreasing margins on average loans. Most of the respondents expect the demand for housing loans and other household loans in the next half-year to increase slightly; the standards for granting such loans are expected to remain unchanged though.
Changes in the supply of loans to enterprises
(a negative percentage difference shows the easing of the lending standards)
Sources: Bank of Lithuania Bank Lending Surveys and Bank of Lithuania calculations.
The surveyed banks best assessed the financial condition of agricultural, forestry, industrial undertakings and distribution businesses. Worst assessed was the financial condition of construction and real estate, transport companies as well as of hotels and restaurants, although, as compared to the results of the similar survey conducted half a year ago, this assessment has improved.
Lending surveys of commercial banks and foreign bank branches are conducted twice a year in order to obtain information on the non-interest related credit standards, borrowing costs and market expectations of financial institutions. For the comprehensive Bank Lending Survey (706.1 KB download icon) go to the Bank of Lithuania website.