Lenders' losses approach HUF 334 bln in Q1-Q3 on borrowers' relief

Telco

Hungary's banking sector had a combined after-tax loss of HUF 333.7 bln in the first three quarters as a result of lenders making provisions for refunds to be paid under borrowers' relief legislation approved this summer, data released by the National Bank of Hungary (MNB) revealed today. Lenders reported to have set aside provisions of HUF 669.4 bln in the first three quarters, including HUF 221.7 bln in Q3 alone.

In line with the borrowers' relief legislation, lenders are obliged to compensate retail clients for using exchange rate margins when calculating repayments on foreign currency-denominated loans and for making unilateral changes to both FX and forint loan contracts. The refunds are expected to exceed HUF 1 trillion.

Data by the MNB reveals that banks’ revenues from interest was practically flat at HUF 716.3 bln in the first three quarters, while non-interest revenue jumped 64% to HUF 79.7 bln. Operating costs edged down 2% to HUF 502.5 bln with ROA and ROE being negative 0.9% and negative 9.0%, respectively.

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