In early may, speaking to University professors, the Director of the financial stability Department of the NBU Vitaliy vavryshchuk noted that a key goal of banks today is the resumption of lending. He also said that the problems hindering lending. So, a lot of companies in the real sector are now akreditavimo, and their banks will not lend. Problem there is the high legal risks. “Non-performing loans are often not the result of financial difficulties of borrowers, and their unwillingness to repay loans. This is the problem of the judicial system and law enforcement. In Ukraine is very simply not to repay loans, withdraw the Deposit and cancel the bail.”
As for the attitudes of banks to lending, the NBU estimate, on a quarterly basis by conducting relevant surveys. The most recent of them took place from 22 March to 7 April, it was attended by credit managers 70 banks, whose share in the total assets of the banking system is 97%. The report provides an assessment of the credit market in the first quarter of 2017, the expectation for the second quarter and for the next 12 months. The results are presented on a consolidated basis as a balance of answers. (Balance of responses – the difference between the weighted proportions of respondents who report about the increase in some measure of its reduction. Balance can take values in the range of ± 100%. A positive balance indicates that respondents overall expect an increase of this indicator.)
We emphasize that the survey results reflect the opinions of the respondents and are not forecasts of the National Bank.
The average cost of loans according to the statistical reporting of banks
(average per day, %% p)
Date
Individuals, UAH
Entities
the hryvnia
currency
05.01.16
32,5
20,6
6,9
10.02.16
33,3
17,5
8,2
09.03.16
30,1
19,4
8,0
07.04.16
30,5
20,4
10,9
04.05.16
30,5
19,9
8,3
10.06.16
34,5
19,6
7,0
22.07.16
33,6
15,5
8,6
23.08.16
32,8
16,8
7,8
16.09.16
34,2
15,3
8,3
04.10.16
29,7
15,6
6,6
01.11.16
28,7
12,2
7,2
01.12.16
31,4
13,3
6,2
04.01.17
30,5
16,1
8,2
20.01.17
34,0
14,0
6,0
01.02.17
30,7
13,9
7,1
21.02.17
28,8
14,3
7,0
01.03.17
31,4
12,9
7,5
21.03.17
28,0
13,5
8,1
03.04.17
30,3
13,9
7,5
21.04.17
30,2
14,0
7,3
03.05.17
32,9
13,8
5,3
10.05.17
31,8
13,2
6,1
Source: NBU
Key indicators for the future
Banks optimistic about the prospects for development lending in the next 12 months. Growth of consumer lending expected 88% of banks surveyed, the recovery of corporate lending – 61%. Improving the quality of the loan portfolio of businesses and households predict about half of the respondents. For further inflow of funds of business are counting 76% of the surveyed banks increase in deposits expect 67%.
The corporate sector
The corporate sector demand for loans increases. Key factors that have not changed: the business need for working capital, the need to restructure existing debt and lower rates. The demand for foreign currency-denominated loans barely changed.
How to change the indicators of the corporate sector in your Bank over the next 12 months?, %
Figure
Reduced
Will not change
Will grow
Loan portfolio
32,6
6,4
61,0
Deposits
13,2
11,3
75,5
The quality of the loan portfolio
1,3
42,0
56,8
In the first quarter, the banks pointed to the tightening of lending standards in the corporate sector: the balance of responses changed from 2% in the fourth quarter of 2016 up to 33%. Such a change has occurred contrary to expectations of easing of standards (even for foreign currency lending), which have been observed throughout the last three quarters.
Increasingly, the standards intensified for long-term foreign currency loans to large enterprises. Less standards for short-term credit to SMEs in local currency. Respondents predict a tightening of standards in the second quarter for the first time in the last year. The key factors that led to tougher standards for approval of applications was collateral risks, exchange rate expectations and a decrease in capitalization of banks. The main mitigating factor for the internal standards and criteria by which banks are guided by the credit policy, was the strengthening of competition between banks.
At lower interest rates (balance of responses -41%), non-price conditions of approval applications have become tougher. Factors that restrained the growth of credit portfolios in the first quarter were internal requirements of banks: the credit agreements, credit as well as stricter collateral requirements.
How to change the standards for approval of applications for loans to the corporate sector during the second quarter of 2017?, %
Tougher
Will not change
Soften
In General
25,5
41,1
33,4
Loans to small and medium-sized enterprises
25,5
38,9
35,6
Loans to large enterprises
25,6
48,3
26,1
Short-term loans
25,2
54,0
20,8
Long-term loans
31,7
55,2
13,1
Loans in the national currency
25,2
41,2
33,5
Loans in foreign currency
27,4
72,4
0,2
In the first quarter continued increase in demand for corporate loans. The Bank estimates, the increase was less than in the previous quarter (balance of responses 9% vs 18%). Demand grew for all types of loans, except for currency.
The need of enterprises in working capital, the desire to restructure the debts and reduce interest rates are the main growth factors of credit demand at the beginning of 2017.
In the next quarter, banks expect a further growth in demand for all types of business loans.
In the first quarter of the respondents to the debt burden in the corporate sector as high (but the balance of responses decreased slightly for the quarter to 11% from 16%). The debt load of large enterprises remained high (the balance of responses 24%). The debt burden of SMEs, low (balance of responses -5%).
How to change the demand of the corporate sector on loans in the second quarter of 2017 without taking into account seasonal changes?, %
Reduced
Will not change
Will grow
In General
0,1
25.8% of
74,2
Loans to small and medium-sized enterprises
0,1
23.7% of
76,2
Loans to large enterprises
0
44,5%
55,5
Short-term loans
0,1
38.6% of
61,4
Long-term loans
4,4
34.5% of
61,1
Loans in the national currency
0,1
21,6%
78,3
Loans in foreign currency
12,7
52,5%
34,8
The household sector
Households have increased the demand for consumer and mortgage loans through cheaper credit, increased expenditure on durable goods and consumer confidence.
How to change the indicators of households at your Bank over the next 12 months?, %
Reduced
Will not change
Will grow
Loan portfolio
7,7
4,6
87,6
Deposits
14,8
17,9
67,3
The quality of the loan portfolio
5,8
43,8
50,4
In the first quarter of the standards in consumer lending softened (balance of responses -24%). This trend is observed from mid-2015. In mortgage lending standards for the second consecutive quarter softened (-7%), but the banks are predicting a gain in the second quarter However, the standards for consumer loans in the next quarter might be mitigated – this was stated by 67% of respondents.
The weakening of lending standards to households in the first quarter of the most influenced by positive expectations of a resumption of economic activity and the growth of competition and reduction of cost of resources for banks.
In the first quarter banks have increasingly approved applications for mortgage and consumer loans (balance of responses 7% and 22%, respectively). Consumer loans of households continued to fall in price, although some banks reported a slight increase in mortgage interest.
How to change the standards for approval of applications for household loans in the second quarter of 2017?, %
Tougher
Will not change
Soften
Mortgage
30,9
46,4
22,7
Consumer
2,2
30,7
67,1
The demand of households for loans continues to grow, the balance of responses amounted to 15% for mortgage lending and 22% for the consumer. The main factor for the increase in demand for mortgages was the lower interest rates on loans and a recovery in the real estate market. The increase in expenditure on durable goods, consumer confidence, together with lower interest rates were the main factors in the growth of demand for consumer loans.
In the second quarter and banks expect growth of demand for consumer loans and mortgage, the balance of responses 44% and 30% respectively.
In the first quarter, the debt burden on the household sector has not changed compared to the previous quarter and was average – this was stated by 81% of banks surveyed.
How to change the demand of households for loans in the second quarter of 2017 without taking into account seasonal changes?, %
Reduced
Will not change
Will grow
Mortgage
0
40,0
60,0
Consumer
0
11,7
88,3
Expectations of changes in the level of risk
In the first quarter of banks ‘ risks has varied in opposite directions. Credit and currency risks, according to respondents, remained high during the last two quarters. Despite the growth in the fourth quarter of 2016, interest rate risk and liquidity risk in the current quarter decreased and returned to normal low levels (-20% and -30%, respectively). Operational risk continued to grow.
Banks expect that credit and operational risks will continue to increase (32% and 24% respectively). In the second quarter reduced interest rate and currency risks, and liquidity risk to increase moderately, as reported by 21% of respondents.
How to change your risks for the Bank in the second quarter of 2017?, %
Reduced
Will not change
Will grow
Credit
19,8
47,9
32,4
Interest
27,5
60,8
11,7
Currency
27,9
61,0
11.1 V
Liquidity
1,0
77,5
21,5
Operating
0,9
74,4
24,7
