As shown in the Bank Lending Survey – February 2020, published by the National Bank of Romania on March 2nd, in the final quarter of 2019, credit standards for non-financial corporations changed marginally, both at aggregate level and by company size and loan maturity. Most of the factors that may have a bearing on credit standards did not impact the latter. The only elements that played a role in the tightening of credit standards were the current or expected capital position of the bank, as well as the NBR’s monetary policy decisions and prudential measures.
In the euro area, the ECB’s survey shows that credit standards for non-financial corporations were left broadly unchanged (a net percentage of +1 percent in 2019 Q4). Banks’ perception regarding the general economic situation acted towards a tightening of credit standards, yet this was offset by the pressure from bank competition that had an easing impact. The breakdown shows that credit standards for small- and medium-sized enterprises tightened somewhat. In 2019 Q4, demand for corporate loans in the euro area contracted (a net percentage of -8 percent) amid a drop-in loan applications from both large companies and small and medium-sized enterprises
In the closing quarter of 2019, credit standards for commercial mortgage-backed loans tightened somewhat. For 2020 Q1, banks envisage credit standards to tighten moderately for this type of financing.
In 2019 Q4, most of the credit terms and conditions associated with loans to non-financial corporations remained unchanged. Only two terms changed, posting opposite developments. Specifically, the spread between the average lending rate and IRCC/ROBOR eased moderately, while the premium demanded for riskier loans tightened by the same magnitude.
Similarly, to the previous survey, corporate demand for loans in 2019 Q4 saw a marginal increase at aggregate level. Behind this rise stood the pick-up in long-term financing needs by small- and medium-sized enterprises. In quarter-on-quarter comparison, large companies’ demand for loans held steady in 2019 Q4. For 2020 Q1, banks expect marginal growth in loan demand, irrespective of maturity, from both large companies and small- and medium-sized enterprises.
The corporate loan rejection rate increased moderately in 2019 Q4, amid the rise by the same magnitude in the loan rejection rate for short-term credit requested by large companies and for commercial real estate mortgage loans, respectively.
The risk by sector displayed mixed developments. Specifically, while in agriculture, trade, tourism, financial intermediation and other services risk stayed flat according to banks, in the energy sector the related risk went up significantly. Furthermore, for the companies operating in industry, construction and transport, credit risk advanced moderately, while in the real estate sector risk edged slightly higher.
For further information: Bank Lending Survey – February 2020