Moody's keeps negative outlook on Hungary's banking system.

By bne IntelliNews August 6, 2013

Moody's Investors Service has maintained its negative outlook on Hungary's banking system citing continued downside risks for local banks from the weak operating environment, which will result in pressures on asset quality and capitalisation. According to Moody’s, Hungarian banks continue to be heavily exposed to wholesale and FX funding, as well as parental support constraints in a system that is predominantly foreign-owned.

Moody's expects Hungarian banks to continue deleveraging their balance sheets over the outlook period, as the challenging operating environment results in subdued supply and demand for loans.

The ratings agency also noted that the weak asset quality and pressure on capitalisation will remain major credit challenges for the Hungarian banking system over the next 12-18 months. The deterioration in asset quality will be driven by the weak economy, high unemployment and the sizeable amount of FX loans in the system, which renders the banks' loan books vulnerable to external currency market dynamics. Many of the foreign-owned banks rely on short-term FX funding facilities from their parent banks to fund their FX portfolios, thus exposing them to significant rollover risk in the current challenging funding environment, Moody's said.

Read in IntelliNews Pro
Get IntelliNews Pro

Related Articles

UniCredit sees modest growth and fiscal overshoot for Hungary in 2024

Hungary’s economic rebound will be modest this year, around 2%, and the return to potential growth is set to be postponed to 2025 with GDP expanding around 3.2%, according to UniCredit bank's ... more

Raiffeisen Bank profit rises over €260mn in Hungary

more

Intesa Sanpaolo’s Hungarian unit closes record year in 2023

CIB realised a record HUF64bn (€160mn) in after-tax profit, up from HUF36.1bn a year ago, which translates to a robust 21.5% ROE, the Hungarian unit of Intesa Sanpaolo said on March 26.  ... more

Follow Us On

Most Read

  1. Ukraine's birth rate plummets to 300-year low as country’s population collapses
    6 days ago
  2. Fresh evidence suggests that the April 2022 Istanbul peace deal to end the war in Ukraine was stillborn
    6 days ago
  3. Russia’s war economy boosted by rising oil prices
    7 days ago
  4. Russia’s $13.4bn current account surplus in March second highest since 2007
    6 days ago
  5. EU finally boosts defence investment into arms production as Ukraine runs out of ammo
    1 month ago
  1. Russia could pay off its entire external debt tomorrow, in cash
    24 days ago
  2. Speculation swirls of “Men in Blue” in Crocus City Hall terrorist attack linked to FSB
    28 days ago
  3. Albanians campaign on social media to keep bus bridge created in freak accident
    1 year ago
  4. BRICS announce a blockchain-based payment system to create a common currency
    26 days ago
  5. UBN: Russia could take the Baltic states in 48 hours
    1 month ago

Reports

Dismiss