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Hungarian savings ratio rises to 4.9% of GDP in four quarters ending Q3

The net financing capacity of households, or net household financial savings, reached HUF 1,317 billion or 4.9% of GDP in the four quarters ending Q3, the National Bank of Hungary (MNBH) said in its quarterly report based on national accounts data.

The ratio rose from 4.5% in the four quarters ending Q2 2010, and reached its highest level since Q1 2002. The ratio rose from a low 1.4% in 2008 to 3.5% of GDP in 2009.

Transfers made from private pension funds on behalf of those opting to return to the state pension system - an option temporarily offered in 2009 to those near retirement age - reduced net savings of the four quarters ending Q3 2010 by HUF 98 billion or 0.36% of GDP (and improved the general government's financing position by a similar amount).

In Q3 alone, net savings totaled HUF 236 billion or 3.4% of the quarter's GDP. The seasonally adjusted ratio was 5.7% in Q3 last year, down from an extraordinarily high 8.5% in Q2 but still the highest adjusted ratio since Q2 2001.

More than one third of net savings in Q3 last year came from a HUF 103 billion reduction of liabilities, mainly net loan repayments, as forint borrowing did not make up for the HUF 200 billion net repayment of foreign currency loans. The appreciating forint cut the value of liabilities by another HUF 282 billion.

Households saved gross HUF 133 billion in Q3, and they gained another HUF 224 billion, most of it on rising share and investment fund unit prices. They reduced both forint and foreign currency deposits by a combined HUF 110 billion, and invested HUF 63 billion in bank securities and slightly more in investment fund units. Their private pension fund receivables rose the most, by HUF 129 billion, in the quarter.

Households had HUF 28,104 billion gross household financial assets against HUF 10,975 billion gross liabilities at the end of September 2010

At the end of September HUF 2,138 billion or less than 8% of gross household financial assets was in cash and another HUF 7,523 billion was in bank deposits, including HUF 1,428 billion in foreign currency deposits. Households held HUF 676 billion in bank deposits and HUF 722 billion in Hungarian government securities.

Almost a third of the total was invested in ownership stakes at the end of September, including HUF 7,501 billion in company stakes and shares, and an additional HUF 2,272 billion in investment fund units.

Households’ assets in private pension funds - to be eliminated as a result of recently approved legislation - totaled HUF 3,962 billion or 14% of gross savings at the end of September. Assets in various insurance policies totaled just a little less than HUF 2,000 billion.

Hungary's traditionally low savings ratio jumped from a seasonally adjusted 0.5% of GDP in Q3 2008 to 4.1% in Q4 2008 as the crisis pushed back borrowing and boosted savings. The annual net financial savings ratio bottomed out at 0.1% in 2003, rose to 4.3% of GDP in 2005, and fell in the following years to reach 1.4% in 2008 before rising in 2009. (MTI – Econews)