After five years of visible decline, corporate FX borrowing has started to grow significantly! The Growth Loan Program has been completed and the proportion of foreign currency loans in the company sphere is increasing.
Of course, this is not the case with retail lending as there is virtually no foreign currency borrowing in this segment. According to the MNB, retail loans are showing a slight increase and further growth is expected due to the proliferation of qualified consumer-friendly loans. Existing home loans have increased by 32% in one year, while personal loans have grown by 41%.
According to the MNB’s recent announcement, the banking sector disbursed a total of HUF 109 billion of new retail contracts in September 2017, very similar to last year’s figures.
- home loans increased by 31% to HUF 57 billion,
- and personal loans increased by 41% to HUF 29 billion compared to September last year.
Home loans and personal loans make up the largest part of retail loans
Therefore, these can be called the two main driving springs in this segment. Compared to 2012, which was a low point in retail lending, home loans increased sixfold, personal loans quadrupled by September this year.
The volume of loans granted to households last year reached HUF 1,270 billion, which we have not seen since 2009.
In this respect, the opinion of market financial experts is as follows:
“In Hungary, the population is a net borrower, which means that in the past few months more loans have been issued in the amount of HUF 20-40 billion than we have repaid. In terms of transaction volume, this is staggering in recent years. ”
According to our calculations, the retail loan portfolio grew by 3.7% last year. Compared to 2016, the loan portfolio of the population increased by 1.5%.
- The average APR on new home loans was 4.7%, down 88 basis points,
- and personal loans were 14.9% in September, down 138 basis points over the year.
- The average APR and interest rates on home loans also increased. This phenomenon is also caused by the spread of consumer-friendly loans, which, although cheaper than non-qualifying home loans, are concluded for a longer term at a fixed interest rate, which distorts their comparison with, and analysis of, variable-rate home loans.
The rate of 3-year fixed loans stagnating in September cannot be attributed to the spread of fixed-rate loans.
BUBOR has declined, but floating rate home loans have become more expensive on average, as banks are trying to compensate for the decline in the spread on consumer-friendly home loans here.
Retail deposits do not show much change, although the depreciation of the forint, ie the appreciation of the euro, led to a slight withdrawal of deposits by foreign currency depositors.
The deposit portfolio of the population grew by 8% in one year
Fixed-term deposits continued to decline by 12%, bringing the demand for overnight deposits from 55% to 62% compared to the previous year.
Corporate Loans Status:
- Growth continues to be significant! In 2016, companies raised $ 514 billion, an 8.8% increase in transactions. Overall, corporate loans increased by 7.7% last year.
Corporate deposits soared much higher, with growth of nearly 20%
The amount of EU funding already disbursed but not yet used contributed significantly to this. Taking a closer look at corporate credit growth in less than 1 year, 75% of foreign currency loans are the reason.
This is due to the very low interest rates on the one hand and the expiry of the Growth Facility program on the other. Companies that qualify for credit assessment are currently in a much better position to take out foreign currency loans.
Foreign currency loans swelled to 44% from 42% last year, which is still a relatively slow growth. The result of the Growth Loan Program is the over 70% ratio, which by the last days of September was already 73%.
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