Central bank report shows profits returning to bank sector
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Bouncing back from last year, when lenders blamed losses on high sectoral taxes and a new law forcing them to convert loans from foreign currency to forints, the countryʼs banking sector saw record profits in the second quarter, the Hungarian National Bank (MNB) reported today.
According to reports, the sectorʼs after-tax profits totaled HUF 152 billion in Q2, which follows a healthy first-quarter profit of HUF 191 billion in Q1, bringing the after-tax profits for the first half of the year to a total of HUF 343.4 bln. In a statement released with the data, the MNB said that, of the 127 credit institutions over which it has regulatory authority, 83 were profitable and 44 were loss-making at the pre-tax level.
Much of the difference between this year and last is due to the passage of the FX loan law, which forced banks in Hungary to write down big losses as they converted their hard-currency loans to forint loans. The provisions banks were forced to make dropped 87%, from HUF 547.1 bln to HUF 70.4 bln, in the first half of this year compared with the first half of last year.
At the same time, banking activity has been picking up, and costs have been dropping. Net interest income rose 9% to HUF 415.1 bln as interest revenue fell 13% but interest expenditures dropped at an even faster rate, declining by 37%.
Total assets of the banking sector stood at HUF 32.633 trillion at the end of June, down about 0.4% from 12 months earlier, according to the report.
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