The structure of lending

There was a pick-up in annual total credit growth in 2004. The trend, however, differed across the individual branches of the economy. (see Table 1).

Table 1 Growth in loans varied across the individual branches
(end-of-month stocks; annual percentage changes)

The main contributors to the growth were loans granted to non-financial corporations in manufacturing, loans to the trade, sales, maintenance and repairs category, loans for renting of machinery and equipment and loans to other branches, accounting for 73% of loans to households (see Chart 1).

Chart 1 The branches that contributed most to the growth in loans were also the main sources of GDP growth
(percentage points)

The above branches were also the main sources of fixed capital formation in 2004 Q1-Q3. The contributions of the other branches to the annual growth in lending were less significant or caused a decrease in loans. The less significant branches, which, however, recorded relatively high growth rates, included agriculture, electricity, gas and water supply, and construction. By contrast, financial intermediation, comprising inter alia financial leasing institutions, fostered a decline in lending. Following a sizeable decline in past years, loans to manufacturing staged a recovery in 2004, rising by 3.7% year on year in November and accounting for 14.8% of total loans, the second largest figure within the classification of loans by branch. The biggest increases in loans to non-financial corporations were recorded in the manufacture of rubber and plastic products, the manufacture of basic metals and fabricated metal products, the manufacture of machinery and equipment and the manufacture of electrical and electronic equipment (see Chart 2). These branches, together with the manufacture of transport equipment (financed primarily from internal and other external funds), had the largest share of direct export sales in sales from industrial activity and increased their tangible and intangible fixed assets. Besides loans, non-financial manufacturing corporations last year increased their equity, which was up by 12.1% in 2004 Q3 on a year earlier. However, its volume was still low relative to external funds (at 0.88%), indicating the significance of external funds in the financing of these corporations.

Chart 2 Within manufacturing, loans grew in branches with a high share of direct export sales in sales from industrial activity

Last year also saw an upswing in loans provided to the trade, sales, maintenance and repairs category, which rose by 7% year on year in November. These include loans to wholesale and retail trade, loans for maintenance and repair of motor vehicles, etc. The growth in credit to this industry was accompanied by a pick-up in corporate equity growth (11.1%). Its share of external funds amounted to 0.53% in 2004 Q3. Loans provided for the renting of machinery and equipment grew by 30.8% in November, up by almost 50% on the start of 2004. These include loans sought by non-financial corporations primarily for financing the renting of cars, light delivery vehicles and other vehicles (trucks etc.). In the category of renting of machinery and equipment, the credit growth was accompanied by a lower rate of growth of corporate equity (7.4%). In Q3, the share of equity in external funds thus fell somewhat, to 0.65% year on year.

The credit structure suggested that the pick-up in credit growth recorded for non-financial corporations differed across the individual branches and was not always accompanied by higher equity formation. Loans recorded an upturn chiefly in branches which were significant in 2004 Q1-Q3 with respect to GDP formation. These were mostly branches with a higher proportion of external funds in their liabilities structure, which, in the given phase of the business cycle, manifested itself in demand for credit.