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UniCredit Group committed to unit in Hungary, UniCredit Hungary CEO says

UniCredit Group is committed to maintaining its presence in Hungary on the long term , UniCredit Bank Hungary President-CEO Mihály Patai told MTI, noting that the group's CEO recently presented the significant development potential of the Hungarian unit to London-based investors active in the central and eastern European region.

“..we do not plan to make layoffs, and we will complete already started developments. Of course one cannot neglect that the Hungarian banking market is struggling with significant difficulties”, Patai said in an interview with MTI. He listed macroeconomic growth problems, large provisions necessary on bad loans and the high banking levy among the problems.

UniCredit Hungary has continued to implement developments aimed at improving customer service in spite of the government's extraordinary banking-sector tax, which he said “presents a serious impediment to larger-scale investments.”

Patai remarked that UniCredit Hungary's results have been among the best both within the UniCredit Group and among banks operating in Hungary, adding that the unit has delivered its after-tax profit target during the first nine months of this year, and return on equity could reach the 10% expected ratio.

Patai commented that the Hungarian banking-sector's results should improve following the switch to the planned European banking tax in 2012. Hungary's banking levy is five times higher than the 0.1% of total assets planned in other European countries, he noted.

Patai asserted that 2010 will be the Hungarian banking sector's worst year ever. Patai predicted that 10-15 banks in Hungary, one-third of those operating in the country, would finish 2010 in the black.

The CEO expects the proportion of bad loans on the sector to begin declining in 2011. He noted that 9.8% of the loans at UniCredit Hungary are more than 90 days past due, compared to 11.6% on the Hungarian banking-sector as a whole.

The corporate credit stock has practically stopped to deteriorate but the quality of retail loans is still heavily affected by the labor market situation and by foreign exchange movements, Patai said. He said he expected the forint to strengthen as soon as growth in Hungary starts. (MTI – Econews)