Speaking at a press conference on August 29, Hungary’s Minister for National Economy Mihály Varga confirmed earlier reports that his ministry supports the idea of establishing an independent state secretariat for tax affairs, Hungarian news agency MTI reported. Ruling Fidesz-friendly economic daily Napi Gazdaság reported last week that Hungary’s National Tax and Customs Authority (NAV) could be transformed into a state secretariat and operated under the aegis of a ministry. Varga said that he is planning to hand in a proposal to Prime Minister Viktor Orbán on whether to establish a state secretariat within the ministry. The economy minister noted that all European countries have tax state secretariats that operate independently within ministries. The minister added that there was already a candidate in place to head the secretariat, however, when asked about press speculation as to whether András Tállai was that person, the minister gave an evasive answer, MTI reported.
Hungarian credit institutions had a combined pre-tax profit of HUF 155 billion in the first half of 2015 compared to a HUF 294.1 bln loss in the same period last year, fresh data released by the National Bank of Hungary (MNB) on August 28 reveals, according to Hungarian news agency MTI. Interest revenue of the sector was down 20.7% to HUF 380.7 bln in the first six months. Revenue from commissions and fees grew 7% to HUF 236.6 bln. Operating costs were down about 0.5% at HUF 334.4 bln. In H1 there were significant changes in provisions and one-off items for lenders because of the program mandating conversion of FX mortgage loans to forints. Write-offs and provisions resulted in a HUF 468 bln burden in the first half of 2014, but the use of these provisions gave HUF 547.1 bln extra income in H1 2015. This was offset by extraordinary losses jumping from HUF 22.3 bln to HUF 530.6 bln. Lenders had combined total assets of HUF 32.778 trillion at the end of June, up 1% from the end of 2014. Stock of loans edged down about 3.5% to HUF 15.256 tln during the period. Stock of deposits decreased 2.3% to HUF 15.583 tln. The ratio of non-performing loans – those past 90 days due – to gross loans fell to 16.6% from 19.4% in the retail sector and grew to 13.9% from 13.8% in the corporate sector from the end of 2014 to the end of June 2015. The NPL ratio was 16.1% for the retail sector and 13.7% in the corporate sector at the end of 2015 Q1. MNB said the lower ratio for the retail sector in Q1 could be attributed to a one-off effect of converting FX loans to forints, which was proven to be unsustainable.
About 10,000 cases related to settlement of borrowers’ relief have been brought before the Financial Arbitration Body for mediation, Hungarian economy daily Napi Gazdaság reported. Approximately 1,500 of the cases have already been settled, the body’s spokesperson, Tünde Kardos-Nagy, told the paper. Borrowers who believe their lenders failed to compensate them sufficiently for overcharges in foreign exchange loans may bring their cases to the board.
Industrial producer prices in Hungary saw a year-on-year growth of 0.3% in July, with domestic industrial sales prices falling 1.8% and export prices rising 1.5%, Hungary’s Central Statistical Office (KSH) reported on August 31. In y.o.y. terms, factory gate prices in the manufacturing sector edged up 0.7%, prices of the transport equipment segment inched up 0.3%, and prices in the computer, electronic and optical products segment rose 5%, KSH reported. Prices in the food, beverages and tobacco segment fell 1.8%, while prices in the gas, electricity and steam supply segment were down 1.6%, KSH added. In month-on-month terms, producer prices saw a decrease of 0.7% as domestic prices edged down 0.5% and export prices inched down 0.7%, data by KSH reveals. Producer prices in the manufacturing sector edged down 0.8%, prices in the transport equipment segment fell 1.4%, and prices in the computer, electronic and optical products segment were down 0.6%, KSH reported. Prices in the food, beverages and tobacco segment edged up 0.2%, prices in the gas, electricity and steam supply segment inched up 0.3% in a month, the KSH report added.
Hungary’s Investment volume saw a year-on-year rise of 5.7% in the second quarter of this year after falling 4.5% in the first quarter, with investments amounting to HUF 1.287 trillion at current prices, in absolute terms, Hungary’s Central Statistical Office said on August 31. Data by KSH suggest that construction investments grew by 10.1% and investments in machinery, equipment and vehicles were up by 0.5%. The volume of investments in transportation and storage rose by 45%, due to significant growth in railway and motorway construction, city transport networks as well as vehicle fleets, KSH said. Investments increased significantly in electricity, gas and steam supply by 37%, water supply, sewerage and waste management by 25% and education by 21%. Investment performance was 15.3% higher in public administration and defense as well as compulsory social security, while investments in manufacturing, accounting for one-quarter of investments, were reduced by 7.1%, KSH said. Of the sections representing relatively low shares, investments were substantially reduced in agriculture by 29%, financial and insurance activities by 22%, professional, scientific and technical activities by 21% as well as wholesale and retail trade by 7.2%.
The European Industrial and Logistics market experienced record levels of investment in Q2 2015 with the total volume reaching €6.1 billion and more transactions taking place in Hungary in the first half of 2015 than in the past couple of years, according to a press release issued by global real estate advisor CBRE. “The demand has also increased for empty buildings,” says Gergely Baka, head of industrial agency at CBRE Budapest. “In our experience, the ‘Funding for Growth Program’ of the Hungarian National Bank also improved the enthusiasm for real estate investments by small- and medium-sized enterprises. The types of most sought-after properties are diverse: City logistics parks, big box buildings, as well as individual production facilities,” says Baka, adding, “We hope that trend continues and the demand will increase according to our expectations.”
Approximately 25,000 troubled borrowers could take advantage of Hungary’s new personal bankruptcy law in the short-term, and the legislation could affect some 40,000 families in the long-term, according to top officials of the Hungarian Banking Association, Hungarian news agency MTI reported. Levente Kovács, the association’s chief secretary, said the introduction of personal bankruptcy had been “hurried and unduly substantiated”, but he added that the banking association was committed to continuing its cooperation with the government and had taken an active role in establishing the framework for personal bankruptcy in Hungary. Kovács said it could only be hoped that the system would function well considering the tight deadline to prepare for its introduction, and he conceded that changes might have to be made in the future. András Becsei, the association’s deputy head, said the body supports the concept of personal bankruptcy, citing several international examples of cooperation between clients and creditors. Parliament approved legislation introducing personal bankruptcy late in June. The personal bankruptcy rules will come into force from September 1, 2015 for Hungarians whose homes could be repossessed. The rules will become universal from October 1, 2016.