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MNB estimates moratorium end is risk for over 10% of loans

MNB

Photo by Adriana Iacob/Shutterstock.com

The end of a repayment moratorium presents risk for 12% of corporate lending stock and 10% of the retail loan book, an executive director at the National Bank of Hungary (MNB) said at a conference organized by Portfolio.hu on Thursday.

Gergely Fábián told the conference that the quality of Hungarian lenders' credit portfolios is "much better" than before the 2008 crisis, thanks to policy intervention. Regulations introduced in 2015 limiting the amount households may borrow depending on income apply to about 70% of the retail lending stock, he added.

He said over half of participants in the repayment moratorium, which expires at the end of June, saw their incomes rise last year, databases reviewed by MNB show. The incomes of around 44% of borrowers fell, and one-third of those saw "significant" declines, he added.

Fábián said borrowers spent most of their savings from the moratorium on everyday expenses, adding that the ratio of borrowers able to set that money aside or invest it was low.

He suggested repayments for some troubled borrowers could be restarted gradually when the moratorium ends, but said extending the moratorium, considering its participation rate at present, would pose a serious moral hazard.

He said the MNB expects lenders' NPL ratios to remain "in the single digits" after the moratorium ends.

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