Hungarian bank lending shank for the ninth straight month in October, with lenders remaining cautious despite a government push to persuade them boost lending activity to stave off a slowdown in the economy.
Overall loans to households fell 10.6% y/y to HUF6tn (€19.3bn) in October. Still, the decrease was softer than September’s plunge of 11.1%. The decline came as consumer credit shrank 13.6% to HUF2.72tn and mortgage loans dropped 8.1% y/y to HUF3.04tn.
The annual drop in corporate lending also eased – to 4.9% from 7.5% in September. Total stock sat at HUF6.38tn at the end of October.
Bank lending has been struggling over the past few years, as the Orban government has pushed lenders into losses. The erratic policymaking has also made the banks wary of new lending. Bank credit shrank from 75% of GDP in 2009 to just 53% last year.
In a bid to boost credit to support the slowing economy, the government has pushed through a bill that will see the country's high banking tax gradually fall as of 2016. The government is also offering incentives for banks that increase lending.
The MNB launched a cheap loan programme in 2013 and has since taken on the role of the economy’s main lender. As it prepares to phase out the programme by the end of 2016, the central bank is preparing measures to push lenders into action.
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