Page 53 - CE Outlook Regions 2023

25.1% to HUF52.47 trillion, while the stock of deposits increased by
22.2% to HUF66.22 trillion.

Tight lending conditions have already slowed lending in September
after dynamic growth in previous years, and more pain is to come from
borrowers if the government scales back state subsidies. New home
loans fell by 30% y/y in Q3 and by nearly 40% in September. Demand
for consumer loans fell 17% in the same period. With the successive
rate hikes by the MNB, mortgage rates have climbed over the
psychological 10%.

Among corporate news, the merger between MKB Bank, Takarekbank
and Budapest Bank has entered the final stage and will be completed in
the spring of 2023. The new bank under the MBH Bank brand has over
HUF10 trillion in total assets and around 2.3mn clients. While its
balance sheet will make it runner-up behind OTP, it will be the market
leader in the corporate lending and farm lending markets.

3.3.3 Industry

Hungary drew a record €6.5bn of investments in 2022 led by South
Korean companies. Investments in the electric and hybrid vehicle sector
accounted for 30% of the total and battery production for 43%.

In terms of output, Hungary is the third-largest producer of EV batteries,
even as the €7bn battery plant China's CATL will be counted in next
year's investments. The largest greenfield investment in the history of
Hungary is also one of the five largest in Europe in the past 10 years.

These investments signal the government's strategy to diversify
dependence on traditional vehicle manufacturing and make Hungary a
hub for EV battery production.

German carmaker BMW Group also announced the doubling of the
value of its investment to €2bn by building a 140,000 sqm high-voltage
battery assembly plant next to its e-vehicle production base under
construction, also in Debrecen.

Adapting to the energy crisis will be a major challenge for the sector in
the short-run, but the sector's outlook is rather bullish with new
capacities coming to stream. The government provided subsidies to
energy-intensive companies and raised the subsidised credit schemes
and extended a freeze on lending rates to SMEs.

3.3.4 Energy & power

Earlier in December, Hungary’s parliament approved the extension of
the lifespan of four existing blocks at the Russian-built reactors of the
Paks nuclear power plant, greenlighting the government's plans of
operating them for 20 more years from the current timeline of
2032-2037. The move signals that the government is drawing up plan
“B” should the expansion of the power plant suffer further delays.

53 CE Outlook 2023 www.intellinews.com