Hungary saw the largest reduction in the volume of non-performing loans (NPLs) among the 17 Central and Eastern European economies, according to a report by the European Bank for Reconstruction and Development (EBRD).
The volume of non-performing loans decreased by 9.5% over the past 12 months, above the regional average, to €4.2bn by the end of June. This represents an NPL ratio of 3% of the gross loan portfolio, a 0.4pp improvement. The regional average NPL ratio hit a record low of 2.08%, a 0.1pp decline.
Hungary’s NPL coverage ratio increased to 59%, up 3.5pp, slightly below the regional average of 64.4%.
The lower NPL and higher coverage demonstrate a stronger financial position for Hungary’s banking sector within the region, analysts said.
The report chimes with the latest report by the Hungarian National Bank, which showed that the local banking sector’s resiliency is supported by high profitability, ample liquidity, robust capital adequacy, as well as a healthy loan portfolio.
Within the region, the highest coverage ratios were in Lithuania and Slovenia, at 117.7% and 99.9% respectively. Of the 17 countries surveyed by the EBRD, Ukraine had the highest NPL ratio, with 34.6%, down 4.4pp from 12 months ago.
According to the EBRD, stage 2 lending was 10.71% in the 12 months to June, falling from its peak of 12.15% in December 2022.
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