In the third quarter of 2019, banks have tightened lending criteria for small and medium-sized enterprises (SMEs), as well as regarding consumer and housing loans, the report published on Monday by the National Bank of Poland (NBP) stated.
For the framework of the report, the NBP did a survey among 24 banks in Poland, which indicated they would tighten some of the criteria and conditions of lending for SMEs, without any significant changes in the policy regarding big companies or in the demand for credit.
Banks have slightly increased the loan margin and the required credit collateral. The banks which tightened their credit policies explained their decision by citing the possibility of a worsening of the current or the expected situation of: the bank, the biggest borrowers and the entire economy. They also indicated such factors as the increase of the risk in the given sector and the increase in the proportion of non-performing loans in their portfolio.
For the last quarter of 2019 a further tightening of loan policy for SMEs and no momentous changes in credit demand are expected.
Housing loans demand may drop
Demand for housing loans grew even although the criteria were tightened. In the opinion of those polled, the increase in that demand might have been caused by the buoyant forecast for the housing market, the improvement in household wealth and several other factors, for example, the better state of the country’s economy.
The tougher lending policies will be continued in the fourth quarter of 2019, although the demand for housing loans will likely drop, according to the NBP. However, the NBP points out that predictions regarding demand for housing credit have relatively low accuracy.
In terms of consumer loans for households, banks tightened their criteria, and, slightly, the conditions for granting them. The decision was motivated, most notably, by the increase in the share of non-performing loans in consumer credit, an increased risk related to housing deposits, and the worsening of the bank’s current and predicted capital situation.
As the NBP noted, no bank was able to explain why they decided to ease their credit policy.
In the fourth quarter of this year, banks predict even higher increases, tightening their credit policies, and the further growth in demand for consumer loans.
The NBP stressed in its report that the criteria for granting loans are understood as the minimum creditworthiness standards set by the bank that the borrower must meet to be granted a loan. On the other hand, the conditions for granting loans are the features of a loan agreement agreed between the bank and the borrower, including the interest margin, non-interest loan costs, the maximum loan amount, the required collateral and the maximum loan period.