ANNUAL REPORT 2011 - Magyar Fejlesztési Bank Zrt.

❙ 8. MFB indiCator
investment plans. As funding terms continued to act as the
heaviest drag on developments in autumn 2011, the role of
internal funding resources (revenues) appreciated. Additionally,
the importance of various (e.g. environmental) regulations
increased since the spring 2011 survey. Expectations of growing
internal demand proved to be the investment driver that
weakened the most, followed by the motivation to develop
generated by the technological advancement of a specific sector.
Influences from foreign markets still have the capacity to add
dynamism to investments in certain (manufacturing) sectors,
but the overall perceived importance of this driver also fell from
the level noted six months earlier.
The value of the Financing Index produced a so far
unprecedented dive compared to the level reached in spring 2011.
The loss of 15 points emanated from the erosion of demand for
external funds among companies. That was in part due to the
low level of inspiration to invest, which derives also from the
motivation to borrow in an attempt to manage worsening corporate
liquidity positions rather than to invest (use of working capital
loans and overdrafts) and also to a clear move in several business
segments to operations without external funding.
The ratio of companies planning to raise funds during the
12 months after the autumn 2011 survey, dropped from 60%
in spring 2011 to 42%, i.e. a level close to that recorded in
summer 2009 with 44% of the respondents abandoning any plans
for raising external funds for a year after the survey, which is the
longest period in the history of the MFB INDICATOR. The ratio of
companies with definite fund raising plans ebbed to from 35%
(in spring 2011) to 21%, while the ratio of those definitely not
planning to raise any funds almost doubled (from 14% to 27%)
in autumn 2011. (Among fund raising objectives, financing
developments plummeted to about a third, as companies
were more interested in taking out working capital loans and
overdrafts.)
The financing position of respondent companies also
revealed a pronounced change: while the ratio of companies
having to resort to external funding to finance the running costs
of standard operations kept decreasing after summer 2009 (to
17% in spring 2011), the same rocketed to twice that level (30%)
according to the autumn 2011 survey. However, the responses
revealed that 27% of the companies needed no external funding
at all during the second half of 2011, that is to say some kind of
a split had started to develop in the corporate sector based
on financing position: a group of companies had settled for
operations without external funding, whilst the lack or inaccessibility
of funding seems to kill off lines of business in other
companies.
The perception of borrowing terms and conditions continued
to worsen compared to the previous survey. Respondent
companies selected the change of FX rates in the year preceding
the autumn 2011 survey as the most adverse factor due to the
high ratio of foreign currency loans and the severe depreciation of
the HUF exchange rate. The propensity of banks and other
financial intermediaries to lend also deteriorated substantially
along with interest rates charged (although the latter was the
single factor where the worsening perceived by companies was
less pronounced than in the spring survey. Companies face
increasingly severe collateral requirements set by financial
institutions, and banks tend to refrain from offering or offer
shorter periods of grace for repayment.
54 MFB ANNUAL REPORT 2011