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Households forex repayments continue to exceed borrowing in forints in December

Households repaid more foreign currency loans than they borrowed in forints in December 2010, the same as in each of the previous ten months, the National Bank Of Hungary (MNB) said in its monthly report on Monday.

Households repaid more foreign currency loans than they borrowed in forints in December 2010, the same as in each of the previous ten months, the National Bank Of Hungary (MNB) said in its monthly report on Monday.

Due to differing composition, the forint's exchange rate movements boosted the forint value of the retail lending stock and reduced that of the deposits.

Except for January 2010, households have made net loan repayments on a seasonally- and exchange rate-adjusted basis since September 2009. They started to borrow in net terms in forints in January 2009 and became net foreign currency borrowers in the spring of 2009.

Unadjusted MNB figures show that banks net lent just HUF 8.9 billion in forints to households in December. Together with a similar reduction because of revaluation or other changes, retail forint lending stock reached HUF 2,818 billion at the end of December, hardly changed from the previous month and up HUF 168.8 billion from the end of 2009.

Households repaid net HUF 44.7 billion in loans denominated in foreign currency, but the weakening of the forint against the Swiss franc, earlier the most popular currency among retail borrowers, added HUF 61 billion to the forint value of their stock of such loans. As a result, the stock of retail foreign currency-denominated loans rose HUF 16.3 billion in a month to HUF 5,765 billion at the end of December. The stock rose HUF 570 billion on the year.

Households placed net HUF 184 billion in forint deposits in December, raising their forint deposit stock to HUF 6,220 billion. The stock fell HUF 122 billion in one year.

There were net withdrawals worth HUF 20.1 billion from retail foreign currency deposits in December, and the stock fell another HUF 28.6 billion on revaluation effects (retail foreign currency deposits are mostly in euros or dollars). The forint value of the stock fell to HUF 1,156 billion at the end of December, and was down HUF 83 billion from the end of December 2009.

The forint strengthened 2% against the euro and 4.6% against the US dollar but weakened 1.7% against the Swiss franc from the end of November and the end of December. It weakened 2.9% against the euro, 10.9% against the US dollar and 22.2% against the Swiss franc in the twelve months to the end of 2010. (Econews)