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Hungarian Corporate Credit Conditions Set to Ease, Survey Shows

Hungarian banks expect corporate lending conditions to improve for the first time in three years because of ample liquidity and deeper competition for “good” customers, the central bank said.

“A turnaround in corporate lending will require significant and continued softening in lending conditions,” the bank said in a quarterly lending survey published today. “The negative” economic and financial sector outlook is prompting banks to keep cautious lending activities, it said.

Hungary’s economy is battling its second recession in four years as the euro-area crisis hurts exports and government policies undermine investor confidence and banks’ willingness to lend. Investments in the economy have plunged, threatening the Cabinet’s efforts to lead the country out of recession.

Demand for short-term corporate loans is on the rise, while long-term credit demand is falling, according to the survey, which was conducted in January.

In the household segment, demand for credit remains subdued, even with banks easing lending conditions, the survey said.

The government wants an agreement with commercial lenders to help ease the burden of foreign-currency mortgage holders in exchange for lowering the bank tax, the highest in Europe, Gyula Pleschinger, state secretary at the Economy Ministry, said on Feb. 17.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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