Page 10 - BNE_magazine_10_2019 kolomoisky

10 I Companies & Markets bne October 2019
Record lending fuels Hungary's
banking sector growth
Levente Szilagyi in Budapest
Hungarian banks reported near-record profit in the first half spurred by an upswing in lending, but their branch networks continued to shrink, local media writes citing data from the Hungarian National Bank (MNB) on September 6.
Banks reported HUF322bn (€0.98bn) in after-tax profit in the first half, down 1% y/y. Net interest revenue continues
“Retail lending reached a record high in July as demand for personal loans soared”
to be the main source of profitability. It increased by 10%
to HUF617bn in H1, despite declining margins. Against the background of increasing lending, households and companies were net borrowers to the tune of HUF242bn HUF657bn respectively.
Retail lending reached a record high in July as demand for personal loans soared and the government’s new baby-loan scheme could lead to new outlays in the coming months.
Under the central bank’s funding for growth programme (NHP) SMEs signed HUF135bn worth of contracts, 13.5% of the available HUF1 trillion funding from the MNB.
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Net revenue from commissions and fees of banks grew by 9% to HUF361bn.
Banks' operating income reached HUF1.06 trillion, up 5% y/y, while operating costs increased by 10.6% to HUF713bn.
The rise in expenditures is linked to costly projects such as the implementation of the EU’s PSD2 regulatory requirements and investments related to the instant payment services,
the launch of which was postponed until March.
Hungarian banks increased their loan portfolio by more than 11% to HUF27.5 trillion. In spite of interest rates close to zero, deposits reached HUF35.2bn, some 80% of their total balance sheet total to HUF44.3 trillion. Debt securities, mostly bonds, accounted for the remaining 20% of banks’ liabilities. Equity was up 13% to HUF5 trillion.
The quality of the portfolios also improved as the non- performing loan (NPL) ratio was below 5%. The NPL rate for retail loans dropped to 8.27% from 11.72% during the period.
The NPL ratio for corporate loans declined to 5.25% from 7.18%. The MNB noted that the NPL ratio at 32 banks, or more than 90% of lenders, did not exceed 10%.
The capital adequacy ratio increased to 18.4% in H1. The number of bank branches fell below 2,000 by June 30 from 2,235 the end of 2018.