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UniCredit Bankʼs corporate lending stock climbs 7% in 2015

UniCredit Bank, Hungaryʼs second-largest commercial bank, saw its corporate lending stock rise 7% last year, Chairman-CEO Mihály Patai said in an interview published in Hungarian economic daily Világgazdaság today.

“In a manner without equal on the market, our corporate lending stock rose by 7%,” Patai told the paper.

He added that stock of client deposits had climbed and deposits of banks and insurers were also up.

“From 2016, we expect the decline in corporate lending stock in Hungary to come to a halt, which will be a great achievement. At UniCredit Bank, we expect corporate lending stock to rise around 5%. But this canʼt be projected for the whole market, as the makeup of our clients deviates from the average,” Patai said.

Multinationals and mid-sized Hungarian companies each make up about 40% of UniCreditʼs loan portfolio, he said. Financial institutions account for 15% and big Hungarian companies for 5%, he added.

Patai noted that UniCreditʼs non-performing loan ratio has long been well under the market average.

“At the end of 2015, UniCreditʼs NPL ratio reached 9%, while the ratio for the whole market was 13-14% ... By the end of this year, we expect our ratio to fall to 8%, while the NPL ratio at sector level could drop to 11-12%,” he said.

Patai said UniCredit had re-evaluated its retail business and decided that its existing network of 55-60 branches “creates the right conditions”.

“In the recent period, we have made important decision about further developing our service model, adjusting it to changed banking practices: The stress is on strengthening digital banking channels and scaling back the branch network. At the same time, we have turned our attention to high-income clients, and we donʼt wish to change this in the next 5-10 years,” he said.

“Ten years ago, we strived to compete with the marketʼs biggest players, in the economic and market conditions at the time. In the meantime, for one, economic conditions have changed; secondly, the cost structure of the sector has completely changed, mainly because of the bank levy and the duty on financial transactions. Thirdly, Hungarian householdsʼ repayment capacity turns out to be significantly worse than we expected as well as worse than in neighboring countries,” Patai said.