Foreign currency-denominated assets accounted for 40.5% of Hungarian banks’ combined total assets at the end of March, up from 33.7% a year earlier, according to a quarterly report on the sector by the State Financial Supervisory Authority (PSzÁF).
The PSzÁF noted in the report that the sector had “crossed a psychological barrier” with the increase. The percentage of foreign currency-denominated assets in total assets increased more than two percentage points in the first quarter alone. Foreign currency-denominated assets accounted for 33% of bank liabilities at the end of March.
The sector continued to grow at a fast pace in the first quarter: total assets increased 6.22% to Ft 18.659 billion from the end of 2005 to March 31, 2006, and rose 21.5% from twelve months earlier. Total assets increased 3% in the first three months of 2005, and were up 17.8% in the twelve months to March 31, 2005. In the same respective periods a year earlier, total assets rose 2.2% and 11.5%, PSzÁF noted.
The supervision attributed faster growth in Q1 2006 to the forint's weakening: the currency slipped 5% against the euro and 3.5% against the Swiss franc, in which the most popular forex lending products are denominated, during the period.
Banks’ total stock of loans to clients grew 5.3% from the end of 2005 to March 31, 2006, with retail loans increasing 6% and corporate loans up 3.2%. In the twelve months to March, the total stock of loans to clients increased 21.4%, with retail loans up 33.2% and corporate loans rising just 13.8%.
The PSzÁF noted that many forint loans are now being converted into foreign currency-denominated loans.