"Banks are conscious of the increasing demand of business credit for financing working capital, investment, mergers, acquisitions and restructuring. According to them, the improving outlook for the housing market and increasing consumer confidence in the last half-year gradually increased the demand for housing loans," comments Virgilijus Rutkauskas, chief economist of the Macroprudential Analysis Division of the Financial Stability Department at the Bank of Lithuania, on the most recent results of the Bank of Lithuania's survey.
The surveyed banks expect the loan and deposit portfolio growth rates this year to be similar - about 3 per cent on average. The trends close to this year's are likely to persist in 2015; however, the loan portfolio growth rates will be somewhat weaker.
For the second consecutive year part of the surveyed banks have been claiming that the credit conditions for business are eased by the following: loans to businesses are granted for a longer term, the amounts of loans or credit lines are increased. The survey results suggest that a contribution to that stemmed from the improving expectations for the general economic situation, the increasing competition among banks and growth in the amounts of money in banks. About half of the total surveyed banks, however, were cautious in their assessment of the issuance of riskier loans and, according to them, the margins applicable to such loans have increased somewhat.
Part of the surveyed banks claimed having also eased the standards for housing loans, by decreasing margins on average loans. Most of the respondents expect the demand for housing loans and other household loans in the next half-year to increase slightly; the standards for granting such loans are expected to remain unchanged though.
