Czech bank credit market was stable in the fourth quarter of 2013 with banks making no major changes in rules for corporate and household credits, while demand for loans increased, the Czech National Bank's (CNB) quarterly Bank Lending Survey showed on January 20 . In line with expectations, banks kept unchanged their credit standards for approving loans to companies in Q4, with only a negligible part of the credit market easing rules for loans to large corporations and for long-term loans. The easing of standards was fostered by increased competition within the banking sector and by competition from market financing (issuance of corporate bonds). Rules for approving loans for home purchases and consumer loans also stayed unchanged in Q4 compared to the previous quarter and all the factors monitored had a neutral effect. Banks project credit standards to remain unchanged for corporate loans in the first quarter of 2014 but to ease for home purchase loans and to tighten for consumer loans. Demand for corporate loans continued to increase in Q4 supported by higher interest by large corporations to finance their M&A activity and working capital needs. Demand for home purchase loans also increased in Q4 but growth was recorded for a considerably smaller part of the credit market than in the previous period. Higher household demand for these credits was supported by a more favourable outlook for the residential property market and improved consumer confidence. On the other hand, demand for consumer loans kept on shrinking as consumers resorted to other means of financing such as savings and non-banking loans. For the first quarter of 2014 demand for corporate loans is expected to continue rising, for home purchase credits to remain virtually unchanged but to further decline for consumer loans.
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