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Hungarian banking system sound, S&P says

The Hungarian banking system is one of the most sound and developed within Central and Eastern Europe, benefiting from the diversified and growing economy, Standard&Poor's Ratings Services noted in a report published on Wednesday entitled "Bank Industry Risk Analysis: Hungary". Hungarian banks exhibit a stable and somewhat advanced profile, supported by strong foreign shareholders, the report said.  

"The main challenge to the creditworthiness of Hungarian banks is posed by the rapid lending growth, particularly in mortgages, consumer, and SME loans in foreign currencies, particularly Swiss francs. Hungarian interest and exchange rates are vulnerable to external imbalances and shifts in investor sentiment," said S&P's credit analyst Annette Ess.


Hungary's growth prospects are forecast to remain good, provided that confidence in macroeconomic stability is maintained, exports and investment remain strong, and large external and fiscal deficits are addressed, S&P said in a press release on the report.