Banks' accounting of FX conversion lifts retail lending stock in MNB stats

MNB

Hungarian banks' retail lending stock jumped by HUF 378.1 bln to HUF 7.104 trillion in January from the previous month as lenders recorded the difference between a conversion rate for FX loans stipulated under the law and the central bank's official exchange rate, a monthly report by the National Bank of Hungary (MNB) shows.

Hungarian lawmakers earlier mandated the conversion of retail FX loans into forints at fixed rates. The rate for loans denominated in Swiss francs, once the most popular retail lending currency in Hungary, was locked in at 256.5 forints, a far more favorable rate to borrowers than the 296.7 official central bank exchange rate on January 30.

The MNB explained in a methodological note attached to the fresh data that banks are allowed to book FX loans affected by the mandatory conversion at the rate set by lawmakers "at their own discretion", but they must continue to calculate forint values of FX loans, including those affected by the conversion, at the MNB's official end-of-month mid-rates, in line with past practices.

Banks' stock of retail deposits fell by HUF 89.4 bln to HUF 6.805 trillion in January. The MNB noted that the sharp decline, due to transactions, followed a big increase at the end of December as some employers brought forward payroll transfers due to variations in working days early in January.

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