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Hungarian SMEs still undertake foreign currency risk

Hungarian enterprises' sentiment towards loans changed positively due to the "Funding for Growth Scheme" of the National Bank of Hungary (MNB), but investment rate will grow only in the longer term, experts of Raiffeisen Bank said on Tuesday.

The MNB is making a combined HUF 750 billion of financing available for banks to support SME lending and the conversion of foreign exchange-denominated loans until the end of August. The full HUF 64 billion credit line offered by Raiffeisen Bank were subscribed.
"Even if the program was succcessful, time frame was too short for banks and enterprises to prepare, so this first program's experiences will be instructive for a possible next action from the MNB," György Dercsényi, Raiffeisen's head of SME division said.
Loan applications from the "Funding for Growth Scheme" enjoyed exceptional attention, so the average lead time was 20-25 days. The assets were shared between SME lending (HUF 30 billion) and replacement of previous foreign currency loans (HUF 34 billion). "The interest towards the latter was surprisingly low, even if the whole amount of available resources was subscribed. Part of Hungarian enterprises still undertake foreign currency risk," Dercsényi said.
However, according to conservative estimates, only 20-30% could be a completely new loan, most of the available amount went to replacement of previous loans. "The psychologic effect of the MNB program is significant as those who were afraid of loans might take the risk of investing again. Maybe this winter or next spring enterprises' loan portfolio might rise again after so many years of decreasing," Zoltán Kiss, head of enterprises and municipalities division at Raiffeisen, said. "Even if there's no more lending program from the MNB, there are many subsidized loan program for SMEs," he added.