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Companies borrow more in HUF than repay in FX in October

Net forint borrowing of Hungarian non-financial businesses exceeded net repayments in foreign currency in October, but their loan stock rose mainly because of the weaker forint, the National Bank of Hungary’s aggregated balance sheet of credit institutions published Wednesday shows.

Hungarian businesses were net borrowers for the first time since July and for the second time in the past twelve months. Excluding seasonal factors, businesses were net repayers, albeit to a small degree, each month since May.

Businesses were still net loan repayers in the twelve months ending October, repaying HUF 217.7bn in FX loans and borrowing just net HUF 12.8bn in the period.

Excluding revaluations and other changes, banks’ stock of forint corporate loans rose HUF 42.4bn in October and their FX loans to businesses fell HUF 9.1bn from the previous month.

Despite the net repayment, the FX loan stock rose by HUF 115.2bn in October and by HUF 256.4bn in twelve months to HUF 4,497bn, boosted by the weaker forint.

The stock of forint loans was up HUF 37.6bn in a month and fell HUF 53.3bn in a year to HUF 3 225bn.

The forint’s slip boosted the share of FX loans in all corporate loans to 58.2% of the total. The share rose 0.3 percentage point from the end of September and was up 1.8 percentage points from a year earlier.

Stock of bonds issued by the sector held by credit institutions fell by HUF 20bn due to transactions, but rose on revaluation changes to reached HUF 107bn at the end of October.

In aggregate, outstanding borrowing rose by HUF 13bn due to transactions.

Corporate deposits increased by HUF 25.7bn in October due to transactions to reach HUF 4,190bn at the end of the month. Net inflows into forint deposits came to HUF 53.1bn and net withdrawals from foreign currency deposits amounted to HUF 27.3bn.

The deposit stock rose more, by HUF 55.7bn, as the weaker forint more than offset withdrawals.

Foreign currency deposits made up HUF 1,333bn or 31.8% of the total stock at the end of October. The share fell 0.4 percentage point in a month and was down 2.5 percentage points in a year.

The forint weakened 3.0% both against the euro and the Swiss franc between the end of September and October, and it weakened 9.9% and 22.9%, respectively, in the twelve months to the end of October.