The banks maintain an upbeat outlook on lending indicators, highlighting further growth in the demand for corporate and consumer loans and expecting loan portfolio to grow in the next 12 months. This is according to the quarterly Bank Lending Survey.
Demand for corporate loans grew in Q4 2024 and throughout 2024, the survey showed. The respondents reported their highest estimates of loan demand from large enterprises since 2021. Lower interest rates and businesses’ needs for capital investment and working capital stimulated the appetite for loans. In Q1 2025, the respondents anticipate an increase in the demand for all types of business loans, except short-term ones.
Household demand for consumer loans was also growing in Q4 and over the course of 2024, driven by better consumer sentiment and higher spending on durable goods. Brighter prospects for the real estate market and lower interest rates fueled the demand for mortgages. In Q1, the respondents project no change in the demand for consumer loans, and a decrease in that for mortgages.
The debt burden remained moderate for businesses and low for households.
There was no change overall in the lending standards for businesses. Competition between the banks picked up, incentivizing them to ease their lending standards for corporations. The banks also slightly relaxed their lending requirements for SMEs. For FX loans, however, the financial institutions tightened their standards. In Q1, the banks plan to ease their lending standards for large enterprises and short-term and hryvnia loans, while making the standards tighter for FX loans.
The approval rate for business loan applications increased for all types of loans except FX ones.
Faced with intense competition from non-bank financial institutions, the banks loosened their lending standards for mortgages and consumer loans. The improved outlook for the real estate market provides an additional boost to the easing of mortgage standards. In Q1, the respondents expect to relax their lending standards for consumer loans and to tighten them for mortgages.
The approval rate for consumer loans increased, while for mortgages it declined, primarily at some of the large financial institutions.
The respondents reported moderate growth in credit, operational, and currency risks at the end of 2024 and are projecting an uptick in all types of risk, except operational one, in Q1 2025.
Loan managers of banks participated in the Bank Lending Survey, which was held between 16 December 2024 and 10 January 2025. The answers were provided by 26 financial institutions, which together held 96% of the banking system’s total assets. The survey’s results reflect the views of the respondents and are not the NBU’s assessments or forecasts. A survey featuring expectations for Q2 will be released in April 2025.