HKMA announced the results of a survey on the credit conditions of small and medium-size enterprises (SMEs) for the second quarter of 2020. The survey solicits views from nearly 2,500 SMEs in ten major sectors about their perception on banks' credit approval stance relative to six months ago, views on banks' stance on existing credit lines, and analysis of results of new bank credit applications. The results of this survey are expected to help monitor the development of SMEs’ access to bank credit from a demand-side perspective.
Regarding the perception of SMEs on banks’ credit approval stance relative to six months ago, 64% perceived similar or easier credit approval stance in the second quarter of 2020, compared with 69% in the previous quarter. Nearly 36% perceived more difficult credit approval stance, compared with 31% in the previous quarter. The increase in the percentage was mainly contributed by SMEs who did not apply for or enquire about new credit during the quarter. Among those who applied for or enquired about new credit, the percentage of respondents perceiving more difficult credit approval stance remained stable. Therefore, the perception of more difficult credit approval stance may not necessarily reflect actual difficulties faced by SMEs in obtaining bank credit as the perception could be affected by a number of factors, such as media or news reports, business conditions, and opinions of relatives and friends.
Of the respondents with existing credit lines, 95% reported that banks’ stance on existing credit lines was easier or unchanged in the second quarter of 2020, up from 83% in the previous quarter. Nearly 5% of the respondents reported tightened banks’ stance on existing credit lines in the second quarter of 2020, down from 17% in the previous quarter. In this survey, tightened stance on existing credit lines denotes a range of possible measures or arrangements, such as reducing unused and used credit lines, raising the interest rate, imposing additional collateral requirements, or shortening loan tenor. Therefore, respondents’ indication of banks’ stance on existing credit lines may not directly reflect banks’ supply of credit to SMEs.
The survey also gauged the results of new credit applications from SMEs. Nearly 7% of the respondents reported that they had applied for new bank credit during the second quarter of 2020. Among the respondents who had already known their application outcomes, 90% reported fully or partially successful applications, up from 84% in the previous quarter. About 10% reported unsuccessful applications, down from 16% in the previous quarter.
Keywords: Asia Pacific, Hong Kong, Banking, SME, Credit Conditions Survey, Credit Risk, HKMA
Previous ArticleFSB Report Reviews Macro-Prudential Framework and Tools in Germany
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.
The Hong Kong Monetary Authority (HKMA) announced that the applicable jurisdictional countercyclical capital buffer (CCyB) ratio for Hong Kong remains unchanged at 1.0%
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.