Small and medium-sized enterprises (SMEs) in Hong Kong viewed bank credit conditions more positively in the third quarter, while a smaller share of new-credit applicants with known outcomes reported success.
The Hong Kong Monetary Authority (HKMA) released the survey Nov. 6. Among respondents who expressed an opinion, 83% considered banks’ approval stance similar to or easier than six months earlier, compared with 78% in the second quarter. Seventeen percent said it had become more difficult, down from 22%. In the third quarter, 77% described the stance as similar and 6% as easier.
New-credit applicants showed a different pattern. Two percent of SMEs in the survey applied for bank credit during the quarter. Among applicants who knew the result, 78% said their requests were fully or partly successful, compared with 85% in the second quarter. Tables from the Hong Kong Productivity Council (HKPC) show fully successful applications at 71%, partly successful ones at 7% and unsuccessful ones at 22%. In the prior quarter, the respective shares were 65%, 20% and 15%.
Among SMEs with existing credit lines, 2% reported that banks had tightened terms, compared with 4% in the previous quarter. The HKMA’s examples of tightening include shorter repayment periods, additional collateral demands, higher interest charges or smaller credit limits.
Existing credit-line holders represented 18% of surveyed firms, while new applicants represented 2%. The HKMA cautioned that findings from the two respondent groups can shift widely between quarters. It appointed HKPC to conduct the quarterly poll, which began in the third quarter of 2016 and covers about 2,500 SMEs per survey. The questions ask companies how they perceive changes in access to bank borrowing, rather than measure the scale of any change. The HKMA said perceptions can also be affected by media coverage, business conditions and views shared by relatives or friends. It said the poll began amid concern about potential funding difficulties for SMEs.
