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PSzÁF head sees ratio of problem loans growing further in 2010

The ratio of problem loans could increase further this year within the Hungarian bank sector's outlays; lending portfolios will not improve before economic recovery begins, chairman of the Hungarian financial market regulator PSzÁF Ádám Farkas said.

He emphasized that the ratio of problem loans almost tripled in the Hungarian banks' lending portfolio last year. The ratio of non-performing loans, that is loans with payments overdue by more than 90 days was around 10% for corporate loans and 7.6% for retail loans in 2009, Farkas said.

He added that the loan/deposit ratio reflecting banks' vulnerability now shows a downward trend, but that is not a result of growing deposits, but of restrained lending.

Farkas emphasized that the bank sector's liquidity shows a reassuring picture, which he attributed to the fact that the Hungarian banks' parent banks are backing their subsidiaries with financing.

The PSzÁF chairman emphasized that the Hungarian bank sector continues to be profitable, although profitability is deteriorating; the number of loss-making banks rose to nine last year from six in the previous year.

Answering a question concerning the leasing market, Farkas said vehicle leasing grew quickly in recent years due to forex-based financing, just like home lending. However, the decline was bigger in this segment because if clients had to make a choice they stopped repayments on their car financing, trying to continue home repayments as long as possible, the PSzÁF head said. (MTI – Econews)