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MNB reports HUF 5.5 bln loss for 2008

The Hungarian Central Bank (MNB) had losses of HUF 5.5 billion in 2008, HUF 11.1 billion less than losses in the previous year, the bank's preliminary report shows.

MNB governor András Simor revealed many of the figures in the report after a rate-setter's meeting on Monday.

Net interest revenue rose by HUF 20 billion as net forint interest revenue fell HUF 11.7 billion, but net interest revenue on foreign reserves increased HUF 18.6 billion as reserves grew and the average yield rose.

Forint interest expenditures rose 88 bp on average in 2008 as the base rate rose and the stock of liabilities tied to the base rate - budget deposits, two-week zero-coupon bonds and mandatory reserves - grew.

The bank booked a gain of HUF 3.8 billion on sales and expiries of securities in its foreign reserves, compared to a loss of HUF 4.5 billion in 2007.

The MNB realized HUF 9.2 billion of exchange rate gain in 2008, practically level with realized gains in 2007.

Unrealized exchange rate gains rose HUF 186.4 billion to HUF 236.3 billion.

A HUF 5.7 billion combined increase of costs for bank operations and the issue of banknotes and coins was basically the result of a rise in risk reserves, the bank said. Reserves set aside for possible future losses, mainly those related to bond prices, raised risk reserves the most.

The MNB's operating costs rose a nominal 2.3% to HUF 14.9 billion, but fell 3.6%, adjusted for inflation. Personnel costs, at HUF 8.5 billion, remained unchanged with IT expenses rising the most, by 13.1%, to HUF 1.5 billion.

The bank's management decided at the beginning of 2008 to start a broad study of the bank's efficiency. In light of the results of the study, the bank aims to cut operating costs an annual HUF 1.7 billion over the coming years. The cost-saving measures affect headcount and compensation. The MNB plains to cut 91 staff - 14% of the total - in 2009-2010. Reducing headcount to 561 by the end of 2010 is expected to save HUF 111 million. (MTI – Econews)