28 August 2023

Central Bank lending survey

The Central Bank conducts quarterly lending surveys among the four commercial banks. In the surveys, the banks are asked for their assessment of developments in credit supply and demand; the factors that, in their opinion, had a decisive impact on supply in the past three months; and their expectations for the coming six months. The results of the most recent survey, conducted during the period 1 July-14 August 2023, are based on the average of the commercial banks’ responses.

Highlights

The survey results indicate that the commercial banks’ supply of loans to households has been unchanged in the past three months but that the supply of residential mortgages and other loans will increase slightly in the coming six months.1  The results also suggest that household demand for mortgages and other loans has contracted in the past three months; however, the banks expect demand to remain broadly unchanged in the next six months. According to the banks’ responses, their lending rules for household loans have been unchanged in the past three months. Competition for loans to households is expected to increase slightly in the next six months, owing to lending by non-bank entities. Interest rates on both indexed and non-indexed household loans rose over the past three months, owing to the increase in the Central Bank’s key rate and to rising funding costs, and the banks expect non-indexed lending rates to keep climbing over the next six months.

The results indicate that the supply of credit to companies has shrunk marginally in the past three months but will remain virtually unchanged in the coming six months. Demand for business loans appears to have increased slightly in the past three months, and the survey suggests that further marginal growth is expected in the next six months. According to the commercial banks, their lending rules for loans to companies have not changed in the past three months and are not expected to change in the next six months. The banks expect competition for loans to small businesses to remain unchanged in the next six months, but they expect an increase in competition from other banks for loans to larger companies, and due to an increase in market funding. Interest rates and credit spreads on corporate loans have increased in the past three months, owing to developments in funding costs and a higher key interest rate, and the banks expect them to keep rising in the next six months for the same reasons.

More here: Lending Survey

1 In the survey, loans to households are divided into three categories: residential mortgages, motor vehicle loans, and other loans. Loans to businesses are classified as long-term or short-term loans. Furthermore, both households and businesses are asked about foreign-denominated loans.

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