Survey: the financial position of enterprises has improved; their appetite for borrowing has been increasing

“The survey shows that many enterprises are financially viable and, little by little, there arises the appetite for borrowing — primarily leasing and bank loans,” says Darius Kulikauskas, Head of the Macroprudential Analysis Division of the Financial Stability Department at the Bank of Lithuania.

According to the Survey data, 61 per cent of enterprises planning development intend to attract external financing sources. This is 7 per cent more than half a year ago and 22 per cent more than a year ago.

The most often indicated external financing sources included leasing (41%), credit lines (33%), trade credits (28%) and bank loans (27%).

The survey has also revealed that the financial position of enterprises kept improving despite the challenges that existed over the past half-year, for example, export restriction to Russia. Most of the surveyed entrepreneurs (60%) have also reported that the events in Ukraine would not affect the financial position of the enterprises they represent and their possibilities to repay debts.

For more than half of the surveyed enterprises their income increased; a fair part of them are planning development in the future as well. Most often it was the income of enterprises involved in construction (59%) activities, while most rarely — of those involved in trade activities (48%).

Over half of the surveyed enterprises have also reported that they did not have any monetary liabilities to credit institutions in the second half of 2014. In addition, there was an increase in enterprises that were able to ease the burden of their liabilities. 27 per cent of respondents claimed that their liabilities decreased in the second half of 2014. As compared to the previous survey, their share expanded by 7.5 p. p.

For most of the enterprises (61%), which had applied to credit institutions to borrow or change the terms of current liabilities, the entire amount requested was borrowed.  On the other hand, the share of requests rejected has been increasing for the second consecutive half-year; it amounted to almost a fifth of total requests. Over 60 per cent of participants who applied to credit institutions believed that the possibilities for borrowing remained almost unchanged over the half-year, while for a fourth of the enterprises — improved. Most of the respondents indicated that the possibilities for borrowing were more favourable due to decreased interest.

The purpose of the Survey of Non-Financial Enterprises, initiated by the Bank of Lithuania, is to assess the demand for financial resources, development in borrowing from credit institutions and in credit standards. The study also aims to gather information on the financial condition and changes in the activities of enterprises. Commissioned by the Bank of Lithuania, the Survey was conducted by the company BERENT Research Baltic. The non-financial enterprises were surveyed in February–March 2015; responses were received from 501 enterprises operating in Lithuania. The detailed Survey of Non-Financial Enterprises on Business Financing is available on the website of the Bank of Lithuania.

Financial stability