A further tightening of standards is expected for all corporate loans, notably for small and medium enterprises, as well as for housing loans, and a further reduction is also expected in demand for long term loans, according to a Croatian National Bank (HNB) survey on lending in the first quarter of 2013 and expectations of Q2.
The further tightening of standards is the result of particularly unfavourable predictions of general economic trends, industry and corporate prospects and, to a lesser extent, collateral risk, while the deterioration of terms is the result of stricter requirements for collateral and higher interest margins on riskier loans, according to HNB analysts.
Corporate demand for borrowing in the first quarter went up, with the highest growth in demand recorded among big companies and for long term loans.
Most banks said debt restructuring was the main reason for the higher demand for corporate loans, followed by borrowing for current assets, while demand for investing in fixed capital declined.
Banks expect no significant changes in demand for corporate loans in Q3.
The unfavourable demand for retail loans continued in Q1 and is expected in Q2 as well, as a result of household expenses, prospects on the real estate market and consumer trust.