The number of retail debtors as well as the number of defaults registered in BISZ Zrt's Central Credit Information System (KHR) rose further in 2010. The main reasons behind the failure to pay are the weakening of the forint against the Swiss franc as well as the prolonged unemployment of debtors. As the Swiss franc is expected to remain strong and unemployment to remain high in 2011, bad loan portfolios will continue to hurt bank profits through rising provisions.
At the end of December 2010, 929,000 people were registered on the retail debtor blacklist, up 18% from 789,000 at the end of 2009. While the figures are alarming, the pace of the increase has considerably slowed down compared to earlier – the number of people on the blacklist rose almost 28% in 2009 and 27% in 2008. The number of defaults and fraud cases was up 27% to 1.77 million in 2010, within which outstanding defaults rose 33% to 1.39 million.
However, the number of retail debtors registered by the KHR is set to decline, as the system will preserve data for only one year as of January 1, 2011, instead of the previous five years. Defaults in the consumer subsystem are expected to decline by 13%–14% as a result of the amendment. The Hungarian Banking Association has already said that the amendment could lead to a further deterioration in credit repayment discipline, adding that this is a risk that will increase the banking costs of good debtors.
The KHR contains data on retail customers who have failed to meet their loan obligations to any financial institution for more than 90 days and whose debt exceeds the minimum wage. In order to be removed from the list, consumers must first settle their debt. Once the debt has been repaid, the problem event will remain on record for one year. Following expiry of the retention period, all data will be permanently deleted from the system. (Gabriella Lovas)