Fitch Ratings has maintained a negative outlook on Hungary’s banking sector citing high non-performing loans, muted credit demand, a sluggish economy and subdued performance, the rating agency said in a report on CEE banking sector.
The sector returned to a profit in the first nine months of 2013 after two consecutive annual losses but profits were mainly concentrated at six banks while the other lenders or either around breakeven of suffered heavy losses, Fitch said adding that it expects this trend to continue in 2014. Stable interest income and lower funding costs helped margins held up in Jan-Sep. Credit demand is likely to stay weak as borrowers are wary of an uncertain operating environment, according to the ratings agency. Asset quality is likely to remain under pressure in 2014 due to high legacy exposures mainly concentrated in the construction sector and retail FX mortgages.
Fitch sees a possible M&A activity on the Hungarian banking sector, as foreign parents are scaling down their unprofitable subsidiaries and revising their strategic presence on the local market.
The rating agency expects the government’s unorthodox measures to weight on the banks’ performance in 2014. An aggressive solution regarding the ease of repayment of FX mortgages would cause large losses for the banking sector and consequently may drive some foreign owners to contemplate exit strategy from Hungary, Fitch said.
Hungary's MOL announced on July 20 that it has struck licensing deals with Germany's Evonik Industries and Thyssenkrupp that will be essential in its plan to roll out a $1.9bn investment in ... more
Evolution Equity Partners announced on 17 July the final closing of a new fund with total capital commitments of $125mn to make investments in cybersecurity and next generation enterprise software ... more
Budapest has signed a deal with Russia's Gazprom to link Hungary with the under-construction Turkish Stream ... more