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Hungarian non-financial companies remain net lenders in 2010

Hungary's non-financial companies remained net lenders in 2010 and their net financing capacity reached 1.7% of full-year GDP, falling only slightly from 2.0% of GDP in 2009, national accounts data published by the National Bank of Hungary (MNB) reveal.

In contrast with the previous year, Hungarian companies reduced their net foreign loan exposure in 2010, making large -- mainly foreign currency -- loan repayments. But the companies received net foreign capital in the form of equity.

Companies' net savings in 2010 rose from 1.3% in the previous four quarters ending Q3 2010. Hungarian businesses were net lenders for the fifth four-quarter period in a row.

Net financing capacity in the fourth quarter of 2010 totaled HUF 53 billion or 0.7% of GDP for the period. The net lender position widened from 0.3% in Q3 (revised back from a 1.3% financing requirement) and contrasted with an exceptional net borrowing of 1% of GDP in Q4 2009. Apart from this exception, Hungarian companies have been net lenders every quarter since Q2 2009.

The seasonally-adjusted Q4 position was worse, showing high net financing capacity of 2.9% of GDP, up from revised net savings of 0.7% in Q3 and 3.2% in Q2. On a seasonally-adjusted basis, Hungarian companies have been net lenders each quarter, with the exception of Q4 2009, since Q1 2009.

In nominal terms, businesses' net financing capacity fell HUF 68 billion from 2009 to HUF 460 billion in 2010. Excluding revaluation effects and other changes, companies raised their assets by HUF 304 billion, well under the HUF 1,366 billion increase in 2009, and they cut their liabilities by HUF 156 billion, instead of raising them by HUF 838 billion in 2009.

Companies placed HUF 432 billion in deposits in 2010 after withdrawing about HUF 100 billion in 2009. A little less than HUF 200 billion of the total went into foreign currency deposits. At the same time, companies sold HUF 36 billion of government securities, about a third of what they sold in 2009.

Exposure to foreign loans fell by almost HUF 500 billion in 2010 after increasing by HUF 751 billion in 2009 as companies repaid HUF 585 billion of foreign loans and reduced their foreign loan outlays by HUF 94 billion. In 2009, they borrowed as much as HUF 2,125 billion from abroad, but granted almost HUF 1,3740 billion in foreign loans, likely re-channeling funding from foreign parents to units in other countries.

In total, companies repaid HUF 1,071 billion of long-term loans (repaying a little more on foreign currency loans) and borrowed HUF 87 billion in short-term loans in 2010. About half of the repayments went to foreign lenders.

Loans granted by Hungarian businesses fell HUF 88 billion last year, slightly less than their foreign loan outlays did: companies cut long-term loan outlays by HUF 470 billion and raised their short-term outlays by around HUF 380 billion in 2010. In 2009, they cut short-term lending by HUF 100 billion but granted almost HUF 1,500 billion, mostly foreign loans.

Companies' foreign currency loan exposure fell by HUF 1,082 billion in 2010 as they repaid HUF 1,150 billion of foreign currency-denominated loans and reduced foreign currency outlays by HUF 68 billion. Foreign currency-denominated loan repayments to Hungarian banks reached HUF 317 billion of the total, somewhat less than in 2009. At the same time, companies borrowed in forints about net HUF 111 billion from Hungarian banks and another HUF 79 billion from other financial intermediaries.

Foreign owners invested HUF 741 billion in Hungarian businesses in 2010 after withdrawing HUF 604 billion of capital in 2009. Capital investments by domestic entities came to a meager HUF 43 billion in 2010 after reaching HUF 20 billion in 2009, the MNB figures reveal.