Banks Tighten Conditions for Obtaining Loans

After a two-year hiatus, banks have recently resumed exchanging data on client obligations to assess their creditworthiness, which could further complicate obtaining loans, writes Jutarnji list on Friday.

Due to general uncertainty and reduced income for a large number of citizens due to the coronavirus crisis, some banks have already tightened the conditions for loan approval. The reduction in monthly income, as explained by OTP Bank, often relates 'precisely to various salary supplements', so they have introduced temporary measures that exclude additional income such as bonuses, rental income, or income from tourism from creditworthiness, as well as certain salary supplements like transportation allowances, field allowances, and similar. 

When it comes to interest rates, they emphasize that there have been no changes. Other banks contacted by Jutarnji list avoid discussing the tightening of business conditions, at least not as openly as OTP Bank. At Addiko Bank, for example, they only state that the assessment of a client’s credit risk is subject to 'an internal model' which includes a range of elements 'such as, for example, data on the regularity and repayment of existing and settled obligations, the ability to meet existing and future obligations, but also other internal models aimed at providing better service for clients and ensuring a safer portfolio for the bank'.

What is certain is that in assessing credit risk, all banks analyze 'prescribed parameters' and changes in clients’ income will inevitably affect the dynamics of lending. However, in deciding whether someone will receive a loan and under what conditions, an individual approach to clients will still play an important role. A renewed insight into the credit register will certainly help them in terms of understanding the clients’ indebtedness and how reliably they have been debtors in the past. 

But for a more concrete answer regarding credit policy, notes a banker at a medium-sized bank, we will have to wait until autumn, when we will have a better insight into the extent of the crisis, writes Jutarnji list on Friday.

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