Hungarian banks achieve HUF 163 bln pre-tax profit in Q1-Q3

MNB

Hungarian credit institutions had a combined pre-tax profit of HUF 163.1 billion in the first three quarters of 2015 compared to a HUF 314.5 bln loss in the same period last year, fresh data released by the National Bank of Hungary (MNB) today show, according to Hungarian news agency MTI.

Interest revenue of the sector was down 18% at HUF 587.8 bln in the first nine months. Revenue from commissions and fees grew 3.4% to HUF 346.94 bln.

Operating costs were down about 0.4% at HUF 500.6 bln.

Write-offs and provisions resulted in a HUF 669 bln burden in the first three quarters of 2014, but the use of these provisions generated HUF 546.2 bln extra income in H1 2015. This was offset by extraordinary losses jumping from HUF 64.1 bln to HUF 580.87 bln.

Earlier, there were significant changes in provisions and one-off items for lenders due to the program mandating conversion of FX mortgage loans to forints.

Lenders had combined total assets of HUF 32,128.9 bln at the end of September, down 1.89% from the end of 2014. Stock of loans edged down about 5.5% to HUF 14.928 trillion during the period. Stock of deposits decreased 0.6% to HUF 15.907 trillion.

The ratio of non-performing loans – those past 90 days due – to gross loans fell to 18.4% from 18.9% in the retail sector and fell to 13.4% from 13.9% in the corporate sector from the end of 2014 to the end of September 2015.

The changes in the ratio of loans 90 days past due among retail loans indicates that the settlement with clients under 2014 debtor relief legislation improved the quality of banksʼ retail loan portfolio only temporarily, as the NPL ratio which temporarily fell to 15.8% at the end of March had risen to 16.2% at the end of June, then to 18.4% at the end of September.

The refunds banks had to make to clients under the debtor relief law reduced debtorsʼ arrears, starting with the oldest arrears, thus reclassifying some debtors into the duly paying category. Most of the improvement, however, has proved one-off, as clientsʼ ability/willingness to pay was little changed and the arrears were rebuilt, by July-August, the National Bank of Hungary (MNB) said in its fresh Financial Stability Report.

The Tier One full capital adequacy ratio of the system was a preliminary 20.5% at the end of September, up from 19.3% at the end of last year.

Based on calculations using new methodology, the share of financial institutions owned by domestic actors rose to 57.2% at the end of September from 54.7% at the end of 2014.

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