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Worsening of Hungarian banks' loan quality near halts in Q4

The former rapid deterioration of Hungarian banks' lending portfolio has slowed or nearly halted in the last quarter of 2010, financial market regulator PSzÁF spokesman István Binder told MTI.

Overall loan quality was near stagnation in the fourth quarter, and the quality of loans within 90 days overdue even improved, Binder said when asked to comment the preliminary 2010 figures published by PSzÁF.

The turnaround already happened in the business loan segment where the ratio of both non-performing loans (NPLs) -- those past 90 days overdue -- , and those with less than 90 days past due fell in Q4.

Business loan quality was hit first by the crisis and it also starts to improve first, Binder noted.

The ratio of non-performing retail loans still rose in Q4 last year but the former rapid rise slowed significantly, the PSzÁF spokesman said.

And the ratio of retail loans less than 90 days overdue has fallen markedly, Binder said. He noted, however, that part of that improvement reflects a significant increase in restructured loans.

The ratio of non-performing loans (NPLs) -- those past 90 days overdue -- in the portfolio of Hungarian banks limited by shares came to 8.1% at the end of Q4, up from 8.0% at the end of Q3, 7.1% at the end of Q2 and 6.3% at the end of Q1, Econews calculated.

The NPL ratio for loans to non-financial companies was 10.7% at the end of Q4. The ratio rose from 8.9% at the end of Q1 and peaked at 11.0% at the end of Q3 before a drop started.

Loans more than 90 days overdue made up 9.3% of banks' gross retail lending stock at the end of 2010. The ratio has still risen from quarter to quarter from 7.4% at the end of Q1 although the pace of growth slowed in the last quarter.