Banks improved their assessment of lending performance and prospects – NBU's survey

What happened? In October-December 2022, banks slightly improved their lending performance estimates. In a survey on bank lending conditions, respondents said that in 2023 they expect a moderate improvement in corporate lending dynamics and a further decline in the retail loan portfolio. 

Source. The press service of the National Bank.

Details. In Q4, banks noted a recovery in household demand for mortgage loans and an increase in credit demand from businesses. At the same time, according to the survey, the demand for long-term and foreign currency loans among corporate borrowers was declining. High interest rates and a lack of capital investment continued to restrain demand for business loans. Most banks reported tightening their corporate lending standards for the fourth consecutive quarter, mostly for long-term and foreign currency loans.

Instead, corporate borrowers were more interested in hryvnia and short-term loans during the mentioned period.

In the next 12 months, financial institutions expect a moderate improvement in corporate lending dynamics and a further reduction in the retail loan portfolio. Banks expect funding to increase over the next 12 months, predicting inflows from both households and businesses.

Compared to the previous survey, the number of respondents expecting a deterioration in loan portfolio quality and the build-up of all types of risks in the next three months has decreased. 

It is worth noting that the current survey was conducted from December 16, 2022, to January 12, 2023, among credit managers of 27 banks, which account for 97% of the total assets of the banking system.