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Loan stock of Hungarian businesses and households drop further in March

The loan stock of both Hungarian businesses and households fell further in March as both segments repaid more foreign currency loans than they borrowed in forints, the National Bank of Hungary said in a monthly report on Friday.

The trends were similar to those in the previous months, although on a seasonally-adjusted basis net forint borrowing of businesses exceeded net foreign exchange repayments. In real terms, Hungarian businesses borrowed 7.6% less in March than a year earlier, and borrowing by households fell 6.8% in a year.

Transaction-based figures of the bank show that domestic banks' lending to businesses has fallen steadily in real terms since February 2009, with forint lending dropping since September 2008 and foreign exchange lending falling since September 2009.

Net household borrowing has fallen in real terms year-on-year since September 2009 as borrowing in foreign currency-denominated loans started to decline. Household borrowing in forints has been up year-on-year in real terms since last July after steady declines from May 2006.

In March businesses borrowed net HUF 33.9 billion in forint loans and repaid net HUF 73.8 billion of foreign exchange loans, thus repaying a combined net HUF 39.9 billion. Businesses have been net payers of bank loans every month since last September.

Seasonally-adjusted figures show net corporate borrowing of a combined HUF 15.2 billion in March, the first significant adjusted-term net borrowing since early 2010, apart from a small HUF 2.3 billion in December and HUF 15.5 billion in August.

The stock of bank loans to the business sector fell HUF 157.3 billion from the end of February or by HUF 38.5 billion excluding revaluation and volume changes. The stock stood at HUF 7,224 billion at the end of March 2011, down HUF 309.7 billion or 4.1% in one year, unadjusted figures show. Practically all of the drop was in FX loans which fell 7.1% in forint terms in one year to HUF 3,925 billion.

Households repaid net HUF 28.3 billion of bank loans in March as they borrowed net HUF 12.5 billion in forints and repaid net HUF 40.8 billion of foreign currency-denominated loans. Seasonally-adjusted figures also revealed combined net repayments of a little under HUF 20 billion in March.

Households have been net payers of loans since the autumn of 2009 as foreign currency loan repayments gathered pace, and a shift towards borrowing in forints failed to fill the gap.

Household loan stock fell HUF 242.3 billion in March. About HUF 214 billion of the drop reflected exchange rate and other revaluation changes. Including the exchange rate effect, the stock rose HUF 130.5 billion or 1.7% in a year to HUF 8,018 billion at the end of March.

The stock of households' forint loans was up HUF 176.1 billion or 6.6% in a year to HUF 2,842.2billion. In spite of the continued net repayments, the stock of their foreign currency-denominated loans fell only HUF 45.5 billion or 0.9% in forint terms due to exchange rate and other revaluation effects. Households' foreign exchange-denominate loan stock stood at HUF 5,176 billion or 64.6% of all retail loans at the end of March.