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Stock of retail loans drops in February

Hungarian households repaid more foreign currency loans than they borrowed in forints in February 2011 as they have every month since January 2010, the National Bank of Hungary (MNB) said in its monthly report on Monday.

Households borrowed net HUF 234 billion in forints while they repaid net HUF 448 billion of foreign currency -denominated loans in the twelve months ending February, MNB figures on retail loan transactions show.

The combined stock of retail loans fell HUF 37 billion in a month but was up HUF 380 billion in a year, reflecting net borrowing in forints as well as an increase in the stock of foreign currency-denominated lending stock due to exchange rate changes.

Unadjusted MNB figures show that banks lent just net HUF 8.6 billion in forints to households in February after lending net HUF 17.6 billion in January. Including a slight HUF 3.5 billion reduction in revaluation or other changes, retail forint lending stock reached HUF 2,833 billion at the end of February, up HUF 5.1 billion from the previous month and HUF 176 billion higher than one year earlier.

The stock of foreign currency-denominated loans fell by HUF 42.7 billion from January mainly as a result of net repayments of HUF 38.4 billion. Although households have been net repayers of foreign loans every month since March 2009, the stock of HUF 5,428 billion at the end of February was still up HUF 204 billion from a year earlier due to exchange rate changes, including a more than 15% weakening of the forint against the Swiss franc, the main currency for retail loan stock.

Even after the introduction of tighter conditions on borrowing in foreign currency and a ban on foreign currency-denominated home mortgages last summer, the share of foreign currency denominated loans in the total was still 65.7% at the end of February, down just 1.5 percentage point from a year earlier. The ratio peaked at over 69% in the first quarter of 2009.

On a seasonally- and exchange rate-adjusted basis, households made net loan repayments every month since September 2009. On a seasonally-adjusted basis, they have been net borrowers in forints since January 2009 and became net foreign currency borrowers in the spring of 2009.

Households placed net HUF 18.6 billion in forint deposits in January, raising their forint deposit stock to HUF 6,211 billion at the end of February. The stock rose HUF 14 billion in one year.

Net placements in retail foreign currency deposits came to HUF 17.5 billion in February, similar to the amount place in forint deposits. Including some revaluation effect, the stock rose HUF 11.8 billion in a month to HUF 1,165 billion. The forint value of the stock fell HUF 90 billion from a year earlier.

The forint strengthened 0.4% against the euro and firmed 1.6% against the US dollar while weakening a slight 0.1% against the Swiss franc between the end of January and February. It weakened 0.8% against the euro, firmed 0.9% against the US dollar and slipped 15.2% against the Swiss franc in the twelve months to the end of February 2011.