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RBI books big loss in Hungary on borrowers' relief legislation

Crops

Raiffeisen Bank International (RBI), the parent of Hungarian Raiffeisen Bank, booked a €301 mln loss at its business in Hungary in the first three quartrers, chiefly due to being bound to pay compensation to retail clients under borrowers' relief legislation approved in the summer, an earnings report published today reveals.

A provision of €272 mln was made for the compensation and booked on the "other results" line in the profit and loss statement , RBI said in its report.

Recent legislation requires all Hungarian lenders to compensate retail borrowers for using exchange rate margins when calculating repayments on foreign currency-denominated loans and for making unfair unilateral changes to both FX and forint loans.

RBI said that the net interest income of the Hungarian business fell 20.4% to €118m as a result of lower interest income from derivatives, reduced lending volumes and a lower market interest rate level. However there was an increase of 8.2% to €91 mln in net income from commissions and fees.

Net provisioning for impairment losses experienced a decline from €97 mln to €41 mln in the base period, attributable to both corporate and retail business, according to RBI. In Q3 alone, RBI booked a €202 mln loss on the Hungarian market. The compensation due under the borrowers' relief legislation had a €205 mln impact on the bottom line. "The market environment in Hungary continues to be difficult and is currently under closer observation," RBI said.

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