MNB: Hungary-based banks profitable thus far in 2013

Revenue from commissions and fees rose 46% to HUF 242.7 billion, suggesting banks may be passing on to clients the cost of a financial transaction duty introduced at the start of the year. The “other interest revenue” line of the MNB’s record of banks’ profits and losses showed negative HUF 343.7 billion in Q1-Q3, an improvement over negative HUF 405.6 billion in the base period. The line includes payment of the bank levy as well as changes to risk provisions for financial services.

Hungarian banks limited by shares racked up a combined after-tax loss of HUF 164 billion in 2012. The data show the banks had combined total assets of HUF 25,710.7 billion on September 30, down 1.3% from twelve months earlier.

Corporate lending stock inched up 0.3% to HUF 5.8455 trillion during the period. Foreign currency-denominated loans accounted for 53% of the total stock at the end of Q3. Retail loan stock fell 3% to HUF 6.1357 billion. Forex-based loans made up 58% of the total. The ratio of non-performing loans in the combined portfolio rose to 14.5% at the end of Q3 from 13.8% twelve months earlier. The ratio for corporate loans fell to 16.9% from 18.3%, while the ratio for retail loans rose to 18.3% from 15.5%.

The banks set aside net risk provisions for lending losses of HUF 158.2 billion in Q1-Q3. In the base period, they freed up provisions of HUF 16.8 billion on loans repaid as part of an early payback scheme that wound up early in 2012. Borrowers who participated in the scheme could repay their FX loans in one go at discounted exchange rates.

The segment’s average return on assets in the four quarters ending Q3 was still a negative 0.2% but improved from minus 1.1% in the four quarters ending Q3 2012. Year-on-year, average return on equity improved to minus 1.6% from minus 11.6%.

The data exclude profits and losses of the Hungarian Development Bank (MFB), Eximbank and clearing house KELER. Not included in the data are savings cooperatives and the Hungarian branches of foreign-owned banks.

Profit of foreign bank branches jumps…
Hungarian banks limited by shares had combined pre-tax profit of HUF 11.3 billion in Q1-Q3, nearly ten times of the HUF 2.0 billion pre-tax profit posted a year earlier, according to new data from the MNB.

Profits rose despite the decrease of net interest revenue and higher tax expenses with the introduction of the financial transaction duty at the start of 2013 as income from commissions and fees rose steeply, provisioning fell and the branches cut on operating expenses. Portfolio quality worsened due to a rise in non-performing retail loans.

Net interest income fell HUF 11.3 billion or 18% in one year to HUF 51.2 billion, but the branches posted non-interest income of HUF 13.9 billion against HUF 1 billion loss one year earlier. Their operating expenses fell 2.9% in one year to HUF 43.9 billion. The MNB’s continued easing cycle affected the branches’ lending rates less than their deposit rates, the figures indicate.

January-September gross interest revenue fell 25% while gross interest expenses dropped 34%. Meanwhile, the gross lending stock fell 15% in the twelve months to the end of September while clients’ deposits rose 11.2%. Net income from commissions and fees rose nearly 60% or HUF 7.1 billion, probably reflecting higher fees charged to clients with the introduction, and a mid-year rise, of the transaction duty.

…while savings co-op profit halved in 2013
Hungary’s savings cooperatives had combined after-tax profit of HUF 3.6 billion through the first three quarters of the year, down from HUF 7.7 billion in the same period a year earlier.

Interest income fell 7% y.o.y. to HUF 50.6 billion, parallel with an easing cycle by the central bank. But revenue from commissions and fees jumped 48% to HUF 23.6 billion, suggesting savings cooperatives may be passing on to clients the cost of a financial transaction duty introduced at the start of the year.

The “other interest revenue” line of the MNB’s record of savings cooperatives’ profits and losses showed negative HUF 23.6 billion in Q1-Q3, worsening from negative HUF 7.3 billion in the base period. The line includes payment of the bank levy as well as changes to risk provisions.

MNB data show savings cooperatives had total assets of HUF 1.79 trillion on September 30, up 7% from twelve months earlier. Stock of loans was practically unchanged at HUF 731.8 billion. Corporate lending stock was up 12% at HUF 334.1 billion, but retail loans were down 7% at HUF 382.7 billion.

The ratio of non-performing loans in the combined portfolio fell to 18.5% at the end of Q3 from 19.2% twelve months earlier. The ratio fell to 23.0% from 25.7% in the corporate portfolio but rose to 15.9% from 15.5% among retail loans.