ADVERTISEMENT

Fitch augurs improvement in Hungaryʼs lending portfolio

Awards

The quality of Hungarian banksʼ loan portfolios is set to improve further, after a 26% drop in the stock of non-performing loans in 2015, Fitch Ratings said today, according to Hungarian news agency MTI.

The sectorʼs NPL ratio, at a “still high” 11.7% of gross loans at the end of 2015, is expected to improve as a “supportive operating environment” stalls new NPLs and newly introduced regulations give banks incentives to clean up their commercial real estate portfolios, Fitch said. 

It noted that the National Bank of Hungary (MNB) had announced the introduction of a systemic risk capital buffer, effective from 2017, that will require banks to hold additional capital against their distressed exposure to commercial real estate. It added that Hungarian Reorganization and Receivables Management Company (MARK), set up by the MNB to buy bad commercial real estate loans and properties from banks, “could provide a useful mechanism” for banks to move NPLs off their balance sheets. 

The corporate NPL ratio for Hungaryʼs banking sector stood at 7.9% at the end of last year. Much of the NPLs are linked to commercial real estate projects impaired in the aftermath of the financial crisis, Fitch said. 

The NPL ratio for retail loans was 17.5% at the end of 2015. Fitch said the quality of Hungarian banksʼ retail portfolios “is likely to remain weak for an extended period” as the recent conversion of FX mortgages into forints is not a cure-all and foreclosures procedures “are largely ineffective”.

ADVERTISEMENT

Average age of coronavirus patients declining Analysis

Average age of coronavirus patients declining

Parl't votes to phase out savings coops integration framewor... Parliament

Parl't votes to phase out savings coops integration framewor...

Roche Szolgáltató appoints P&C business partner lead Appointments

Roche Szolgáltató appoints P&C business partner lead

Budapest airport shuttle bus service expanded City

Budapest airport shuttle bus service expanded

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.