Banking sector profitable in 2016 after losses in 2015

Provisions plunged 75% during the period, from HUF 478.1 bln to HUF 118.3 bln.

Net interest income rose 5.7% to HUF 835.4 bln by the end of the year, as interest revenue fell 11% from the end of 2015 but interest expenditures dropped at an even faster rate, declining by 32%.

Non-interest income was up 336% at HUF 275.52 bln on basically unchanged commissions revenue, higher dividends and a 514% jump in income from financial and investment services.

The “other non-interest income”, which includes the bank levy, was negative HUF 410.2 bln, an improvement over the negative HUF 498.8 bln in the base period.

Operating costs fell by 2.1% to HUF 693.96 bln.

In a statement released with the data, the MNB said that of the 111 credit institutions over which it has regulatory authority, 76 were profitable and 35 were loss making at the pre-tax level. Combined pre-tax profit of the banks in the black came to HUF 527.2 bln, while those in the red had losses of HUF 17 bln.

The sectorʼs 12-month rolling average return on assets rose to 1.5% at the end of December from 0.1% a year before. The rolling average return on equity climbed to 15.4% from 1.1%.

Total assets of the banking sector stood at HUF 34.185 tillion at the end of December, up about 4% from 12 months earlier.

Gross lending stock of banks was up 9.1% to HUF 17.841 tln. Net loans rose 13.4% to HUF 16.707 tln.

The ratio of non-performing loans – those past 90 days due – was 6.4%, down from 8.1% at the end of Q3 2016 and down from 10.6% at the end of 2015. In the retail segment it stood at 12.7%, in the corporate segment at 5.4%.

The capital adequacy ratio of the banking system decreased to 20.1% at the end of December from 20.4% at the end of September, but was up from 19.9% at the end of 2015.

Domestically owned institutions held 54.7% of the banking systemʼs total assets at the end of the year, down from 55.5% from a year earlier.