14/01/2015 11:55
Bankers expect an increase in the demand for loans from households and businesses in the next few months, although the conditions for the money supply have not yet improved.
Based on the new bank lending survey of the Central Bank, the net demand for loans to businesses in Cyprus during the third quarter of 2014 remained unchanged, as expected based on the banks' expectations in the previous survey.
All factors that affect the net demand for loans remained unchanged, except for the fixed investments, the internal financing and loans from other banks, which moved negatively thereby pushing demand down.
On the other hand, the need for debt restructuring in the third quarter of 2014 contributed to the increase in demand for loans to businesses.
As for the fourth quarter of 2014, the demand for loans from businesses is expected to increase.
Demand for housing loans
Regarding the housing loans in Cyprus, the net demand remained basically unchanged, as expected based on the banks' expectations in the previous survey. As in the previous quarter, the consumer confidence had a negative effect on the net demand for such loans, and so did consumer spending which is not related to the housing market.
In the fourth quarter of 2014, banks in Cyprus expect an increase in net demand for mortgages from households.
Demand for consumer loans
Unlike the loans to households for housing purposes and despite expectations of the participating banks in the previous survey, the net demand for the consumer and other loans from households recorded a decrease. The factors of the expenditure for purchase of consumer durables and consumer confidence had a negative effect on the net demand, while other factors remained basically unchanged.
In the fourth quarter of 2014 in Cyprus, banks expect the demand for consumer and other loans from households to remain unchanged, while in the euro area demand for this category of loans is expected to increase.
Criteria do not change
The demand for loans is expected to increase at the same time that the criteria for lending do not change.
In the third quarter of 2014, the degree of stricter criteria for lending to businesses rose. The weighted net percentage of banks as to the intensity of responses that declared stricter criteria stands at 13%, as expected based on the expectations of the previous survey. As in the previous quarter, all factors contributed in introducing stricter criteria except those relating to competition and the ability to access financing through the market.
In relation to the terms and conditions of loans or credit limits to businesses, all terms of implementation that became stricter in the previous quarter remained unchanged this quarter, excluding the margin of banks for ordinary loans, which recorded a decrease.
Regarding the expectations for the fourth quarter of 2014, it is expected that the lending criteria to businesses will remain unchanged in Cyprus.
Housing loans
In Cyprus, the degree of introducing stricter criteria in mortgage loans to households recorded an increase to the same extent as the expectations of the participating banks as recorded in the previous survey. All factors that contributed to the strictness of the criteria in the previous quarter had the same effect on the third quarter of 2014.
Specifically, the cost of capital and the restrictions associated with the balance sheet, the banks' expectations on the general economic activity and the prospects of the housing market contributed to introducing stricter criteria while the factors associated with competition remained unchanged.
In relation to the terms and conditions for granting loans to households, all terms of implementation that became stricter in the previous quarter, had the same effect on the third quarter of 2014. The safety requirements, which rose in the third quarter of 2014 compared with the previous quarter, were an exception.
Regarding expectations for the fourth quarter of 2014, it is expected that the criteria of banks to finance mortgage loans in Cyprus will remain unchanged.
The lending criteria for consumer and other loans became stricter in the third quarter in Cyprus, while it is estimated to remain unchanged in the last quarter of 2014.
The criteria for granting consumer and other loans in Cyprus became stricter in the third quarter of 2014 to a lesser extent than in the previous quarter (from 38% to 13%), as expected based on the banks' expectations in the previous survey. With regard to the factors that contributed to the strictness of the criteria of these loans, they relate to the cost of capital and the limitations associated with the balance sheet, the expectations on the general economic activity, the creditworthiness of consumers and the risk on requested safety.
As for the terms and conditions of consumer and other loans to households, the safety requirements were the only term that became stricter. It is worth noting that after a period of more than two years during which the margins for both the ordinary and riskier loans recorded continuous increase, in the third quarter of 2014 they remained basically unchanged.
As for the fourth quarter of 2014 in Cyprus, banks expect that the criteria for granting consumer and other loans will remain unchanged.
Based on the new bank lending survey of the Central Bank, the net demand for loans to businesses in Cyprus during the third quarter of 2014 remained unchanged, as expected based on the banks' expectations in the previous survey.
All factors that affect the net demand for loans remained unchanged, except for the fixed investments, the internal financing and loans from other banks, which moved negatively thereby pushing demand down.On the other hand, the need for debt restructuring in the third quarter of 2014 contributed to the increase in demand for loans to businesses.
As for the fourth quarter of 2014, the demand for loans from businesses is expected to increase.
Demand for housing loans
Regarding the housing loans in Cyprus, the net demand remained basically unchanged, as expected based on the banks' expectations in the previous survey. As in the previous quarter, the consumer confidence had a negative effect on the net demand for such loans, and so did consumer spending which is not related to the housing market.
In the fourth quarter of 2014, banks in Cyprus expect an increase in net demand for mortgages from households.
Demand for consumer loans
Unlike the loans to households for housing purposes and despite expectations of the participating banks in the previous survey, the net demand for the consumer and other loans from households recorded a decrease. The factors of the expenditure for purchase of consumer durables and consumer confidence had a negative effect on the net demand, while other factors remained basically unchanged.
In the fourth quarter of 2014 in Cyprus, banks expect the demand for consumer and other loans from households to remain unchanged, while in the euro area demand for this category of loans is expected to increase.
Criteria do not change
The demand for loans is expected to increase at the same time that the criteria for lending do not change.
In the third quarter of 2014, the degree of stricter criteria for lending to businesses rose. The weighted net percentage of banks as to the intensity of responses that declared stricter criteria stands at 13%, as expected based on the expectations of the previous survey. As in the previous quarter, all factors contributed in introducing stricter criteria except those relating to competition and the ability to access financing through the market.
In relation to the terms and conditions of loans or credit limits to businesses, all terms of implementation that became stricter in the previous quarter remained unchanged this quarter, excluding the margin of banks for ordinary loans, which recorded a decrease.
Regarding the expectations for the fourth quarter of 2014, it is expected that the lending criteria to businesses will remain unchanged in Cyprus.
Housing loans
In Cyprus, the degree of introducing stricter criteria in mortgage loans to households recorded an increase to the same extent as the expectations of the participating banks as recorded in the previous survey. All factors that contributed to the strictness of the criteria in the previous quarter had the same effect on the third quarter of 2014.
Specifically, the cost of capital and the restrictions associated with the balance sheet, the banks' expectations on the general economic activity and the prospects of the housing market contributed to introducing stricter criteria while the factors associated with competition remained unchanged.
In relation to the terms and conditions for granting loans to households, all terms of implementation that became stricter in the previous quarter, had the same effect on the third quarter of 2014. The safety requirements, which rose in the third quarter of 2014 compared with the previous quarter, were an exception.
Regarding expectations for the fourth quarter of 2014, it is expected that the criteria of banks to finance mortgage loans in Cyprus will remain unchanged.
The lending criteria for consumer and other loans became stricter in the third quarter in Cyprus, while it is estimated to remain unchanged in the last quarter of 2014.
The criteria for granting consumer and other loans in Cyprus became stricter in the third quarter of 2014 to a lesser extent than in the previous quarter (from 38% to 13%), as expected based on the banks' expectations in the previous survey. With regard to the factors that contributed to the strictness of the criteria of these loans, they relate to the cost of capital and the limitations associated with the balance sheet, the expectations on the general economic activity, the creditworthiness of consumers and the risk on requested safety.
As for the terms and conditions of consumer and other loans to households, the safety requirements were the only term that became stricter. It is worth noting that after a period of more than two years during which the margins for both the ordinary and riskier loans recorded continuous increase, in the third quarter of 2014 they remained basically unchanged.
As for the fourth quarter of 2014 in Cyprus, banks expect that the criteria for granting consumer and other loans will remain unchanged.