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Banking sector profits down as costs rise, fewer provisions released

Combined first-quarter after-tax profits of Hungarian banks fell 16% year-on-year to HUF 135 billion as operating costs rose and fewer provisions were freed up, state news wire MTI reported, citing data released Friday by the National Bank of Hungary (MNB). 

Net interest revenue of banks edged up 2% to HUF 200 bln. Net revenue from commissions and fees increased 17% to HUF 142 bln.

At the same time, operating costs climbed 12% to HUF 307 bln.

Banks freed up just HUF 7 bln of provisions in Q1, compared to HUF 18 bln in the base period.

Total assets of the sector stood at HUF 40.486 trillion at the end of the quarter, up 9% from 12 months earlier.

The stock of client loans rose 14% to HUF 20.954 tln. The corporate lending stock was up 16% at HUF 7.314 tln, while the retail lending stock increased 10% to HUF 5.924 tln.

The ratio of non-performing loans (NPLs) over 90 days past due stood at 5.22% at the end of the quarter, down from 6.98% a year earlier. The NPL ratio in the retail portfolio fell to 9.21%, down from 12.43%. The ratio in the corporate portfolio dropped from 7.49% to 5.38%.

In absolute terms, the stock of NPLs over 90 days past due reached HUF 1.037 tln at the end of March.

The stock of client deposits climbed 8% to HUF 22.558 tln. Corporate deposits were up 9% at HUF 8.270 tln, while retail deposits rose 12% to HUF 8.893 tln.