Page 56 - CE Outlook Regions 2022

3.3.2 Banks

The government’s loan moratorium launched in the spring of
2020 remains in force, but only for vulnerable corporate and retail
borrowers. Around 5% of lenders' retail portfolio is in the
conditional repayment moratorium, although 23% were eligible to
participate. The figure for corporate clients is 2%, while 5% of the
lending stock was eligible for participation.

The central bank does not expect the phase-out next summer to
have a major impact on NPLs. A report on the health of the sector
showed that its shock-absorbing capacity was strong, while
almost all institutions would be able to comply with liquidity and
capital regulatory requirements. Net profit of Hungary's banking
sector rose 111% y/y HUF642bn (€1.7bn) in Q1-Q3 as
impairment and provisions dropped to HUF95bn compared to
HUF296bn in the base period.

Hungary’s loan market expanded dynamically in Q3 2021,
although credit penetration remains low.

Subsidised lending programmes of the central bank and the
government are expected to boost household lending by
double-digits in 2021 and 2022. Home loans have hit a historic
high in 2021. The MNB’s green retail mortgage loan scheme with
a HUF200bn upper cap and a maximum 2.5% rate could become
the next big attraction in 2022 with a 3-4pp discount compared to
market-priced mortgage loans.

3.3.3 Industry

Hungary’s car industry, the biggest manufacturing component,
saw a 30% y/y fall in output in October as a result of reduced
shifts on the back of the global chip shortage. The global
shortage directly affected the three top players in the industry,

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