UKRAINIAN INDEX
OF EFFECTIVE INTEREST RATES
ON CONSUMER LOANS FOR INDIVIDUALS
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Study: What lenders are expected by business companies in the nearest months?

In the nearest months, the Ukrainian business expects easing of credits for legal entities. While the credit demand is growing, the share of companies planning to attract loans for business purposes has decreased.

The regular quarterly survey of business managers’ opinion on the current and future business activity, inflation and exchange rate expectations, and changes of the economic situation in Ukraine was conducted in the 1st quarter of 2012. It showed that business leaders are expecting a loan demand increase within the next three months. The number of businessmen planning to take bank loans has slightly decreased. Among them, the prevailing number is planning to take bank loans in UAH.

Polled businessmen levelled down their estimates of tightened lending conditions in the future. Expectations of the growing loan demand within the next three months have sharpened; however, the amount of top managers planning to get bank credits has slightly decreased (to 40.8% compared to 42.7% respondents last quarter). The share of businessmen complaining of delayed and incomplete cash transactions within banking accounts has decreased to 3.5% compared to 4.1% last quarter.

Businessmen’s opinions on the demand for loans to finance activities of their companies have increased for the last three months (the balance of responses reached 32.4% compared to 28% in the fourth quarter of 2011). The share of managers who predict the increased demand for loans has grown by 3.6 percentage points (p. p.), to 37%.

The demand for loans higher than the average level throughout the economy is demonstrated by:

agricultural companies (the response balance is 48.6%), processing industry (34.5%), as well as electricity generating and distributing companies, gas and water suppliers (34,6%). Within the next three months, the loan demand has significantly increased from the part of construction (by 16.5 p. p.), agricultural (by 14.9 p. p.), and processing companies.

industrial companies (by 12.0 p. p.). The future loan demands below the average are specific for other economic activities (21.6%), transport and communications (26.2%), as well as trade companies (27.9%).

The highest expectations for growing loan demands were expressed by the medium businesses (the balance of responses is 36.8%), as well as companies involved in the export operations only (the balance of responses is 42%).

At the regional level, all polled businessmen and managers are expecting a growing demand for loans, except for companies from Kirovohrad Oblast which do not see any changes in loan demands. High expectations were demonstrated by business representatives from Zakarpattia Oblast (53.8% responses), Zaporizhia and Odesa Oblasts (48.6%), Sumy (46.2%) and Ternopil’ Oblasts (45.5%).

In the 1st quarter of 2012, top managers levelled down their estimates of tightened lending conditions (the balance of responses decreased to 29.5% compared to 31.2% in the previous quarter).

At the level of economic activities, mostly the managers of extractive enterprises (the balance of responses is 40%) and trade (38.6%), agricultural (30.6%) and construction companies (29.7%) expressed their opinion on tightened lending conditions.

If classifying the respondents by the size, activity and the form of property, the highest number of complains of the tightened lending conditions comes from the export companies, small and medium businesses.

At the regional level, the toughest lending conditions were mentioned by representatives of the companies from Vinnytsia, L’viv, Donets’k, Zakarpattia and Kharkiv Oblasts, as well as the Autonomous Republic of Crimea. No changes in lending conditions were mentioned by representatives of the companies from Ternopil’ Oblast. At the same time, representatives of the companies from Zhytomyr Oblast stressed easing of the lending conditions.

A share of businessmen planning to take bank credits has decreased to 40.8% compared to 42.7% in the 4th quarter of 2011.

At the level of economic activities, the highest share was represented by top managers planning to take credits for processing industry (53.0%), agricultural (48.6%), trade (44.1%), and extraction companies (41.5%). A significantly lower loan demand was expressed by companies involved in other economic activities (17%), transport and communications (29.2%), as well as construction companies (36.7%). These are mainly large-scale companies involved in export and import operations.

At the regional level, the companies planning to take credits in the nearest future are mainly represented by business entities from L’viv (59.3%), Volyn’ (56.5%), Poltava (54.4%), and Zhytomyr Oblasts (50%).

The vast majority of polled companies (93.1%) are not planning to meet their loan demand by means of foreign lending. The businesses aiming to take foreign loans mainly include: electricity generating and distributing companies, gas and water suppliers (12.5%), and processing companies (12.3%). Those are primarily large-scale companies involved in export and import operations.

Distribution of expectations by the type of currency is as follows: UAH is still the most popular currency - - 80.5%, which is 2 p. p. lower than in the previous survey.

If classifying the respondents by economic activity, loan taking in the national currency is mainly planned by construction companies (96.6% responses), entities involved in other economic activities (92.3%), agricultural (90.7%) and trade companies (88.9%).

Transport and communications companies (29.8% responses) and processing enterprises (28.8%) are planning to take foreign credits most frequently.

At the regional level, the situation is as follows: top managers from three Oblasts are planning to take credits (Vinnytsia, Sumy, and Kherson).

Volyn’ Oblast respondents are the ones planning to receive the next loan in the foreign currency (46.2%).

At the level of economic activities, all companies are planning to take the next loan mainly in UAH. Most frequently, these are enterprises running their activity in the domestic market.

Most often companies involved in export and import operations (29.4% compared to 30.5% in the previous quarter) are planning to take the next loan in the foreign currency.

If classifying the respondents by the size and forms of property, the foreign currency loans are mainly planned by large-scale companies (26.1% compared to 22.3% in the previous quarter), and companies with the state-owned and communal property and the equity capital of over 25% (33.3% of respondents).

The share of companies complaining of delayed and incomplete cash transactions within banking accounts has decreased, just like the previous quarter, and made up 3.5% (compared to 4.1% last quarter).

Most frequent problems were faced by construction companies (7.3% of responses) and electricity generating and distributing companies, gas and water suppliers (5.4%).

Business expectation index is an aggregated index of expected development of businesses for the next 12 months. It’s estimated based on the balance of respondents’ feedback as for the changes in the financial and economic state of the companies and their future economic activity. Presented results just reflect opinions of respondents (managers of the Ukrainian businesses) and are not estimations of the National Bank of Ukraine. This survey is based on responses of 1,249 enterprises from all the regions of Ukraine. These businesses represent key economic activities, forms of property, size, and the amount of staff.

Information source: National Bank of Ukraine

 
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