Bank of Lithuania

Although banks plan to ease some lending conditions to businesses, the majority of enterprises further intend to perform their business expansion without bank loans. Such trends were revealed by the surveys of non-financial enterprises and commercial banks.

Almost one-fifth (18%) of commercial bank employees in management positions that participated in the survey of the Bank of Lithuania indicated that in the coming six months lending conditions to businesses will be eased. Nine per cent of respondents plan to tighten lending conditions.

According to the latest survey, the majority (91%) of banks stated that they did not change lending conditions in the last six months, whereas 9 per cent responded that they slightly tightened lending conditions. The majority of respondent banks indicated that in the last six months their lending to hotels and restaurants, real estate and construction sectors was the most cautious one.

In the nearest time, banks are most inclined to ease lending conditions to small and medium-sized businesses. At the same time, they believe that this is exactly that segment where borrowing appetite of enterprises will grow the most.

The growth in the loan demand is expected by almost every second bank, whereas the total loan portfolio will grow by 2–6 per cent this year according to bank forecasts.

“The surveys show that credit institutions are inclined to increase lending to businesses, however, the enterprises themselves do not rush to assume obligations. The majority of them state that they will not submit applications for loans in the nearest time, since they do not see any need for that, have internal resources or consider borrowing to be too expensive”, said Mr. Virgilijus Rutkauskas, Chief Economist of the Macroprudential Analysis Division of the Financial Stability Department of the Economics and Financial Stability Service.

According to the data of the latest survey, the share of enterprises intending to use the services provided by credit institutions in the nearest time declined in the last six months from 38.6 per cent to 32.0 per cent.

Compared to the results of the Survey of Non-Financial Enterprises on Business Financing of October 2011, the share of enterprises that satisfy all business financing needs from their internal financing sources only, declined only slightly and made up almost three-fourths of respondents that participated in the survey.

The possibilities for obtaining new loans and their lending standards were most optimistically assessed by trade enterprises, whereas construction and services enterprises assessed them as poorer. According to the data of the latest survey, industrial and trade enterprises will use the services provided by credit institutions most actively in the first six months of 2012. Same as in the previous periods, enterprises intend to use borrowed funds to purchase equipment, machinery, vehicles, commodities and materials.

In order to assess the changes in lending conditions and business trends, the Bank of Lithuania surveyed the management staff of seven commercial banks and four foreign bank branches, while the company “Spinter tyrimai” conducted the survey of managers and financiers of 500 non-financial enterprises.

The comprehensive overview of the Bank Lending Survey and the Survey of Non-Financial Enterprises on Business Financing is available on the website of the Bank of Lithuania.