The percentage of classified loans in Hungary's retail lending sector rose from 2.7% to 3.3% last year and to 4.2% by the end of March, István Rácz, chief economist at Hungary's financial market watchdog PSzÁF said.
The marked deterioration presents a big risk for Hungary's financial system, PSzÁF said.
Banks' return on equity (ROE) will continue to decline this year, PSzÁF senior official Csaba Varga said. ROE in the entire financial sector fell from 18.3% to 14.9% last year, and from 17.9% to 14.3% for banks alone, he said.
Financial service providers hold sufficient capital reserves, exceeding the required level by 50% on average, Varga said, adding that even more could be necessary in the current risk-laden environment. (MTI – Econews)