Economy 6 June 2019, 9:30am

Hungarian retail deposits hit HUF 9,000 bn record in April

Portfolio

The total value of retail deposits surpassed the HUF 9,000 billion mark in April, 72% of which were held in demand deposits, the National Bank of Hungary (MNB)'s latest loan and deposit statistics show. The introduction of a new, high-interest "super security" will likely squeeze out deposits from June. In April, both housing loans and personal loans performed well, but the biggest growth was in corporate lending, where forint loans gained considerable weight.

Housing loans and personal credit continue to drive domestic retail lending, with HUF 83 bn and HUF 49 bn in new contracts in April, respectively, for a combined 80% share of new retail loans.

Compared to last year, loans grew slightly slower, as Hungarians took out 21% more in new housing loans and 31% in personal loans in April than a year earlier.

Retail lending is now at approximately 80% of pre-crisis levels, as although housing loans now slightly exceed the spring 2008 amount, the role previously played by home equity loans has not been filled entirely by unsecured personal loans.

In the 12 months to April, banks signed retail loan contracts worth nearly HUF 1,750 bn, of which nearly HUF 900 bn were housing loans and HUF 710 bn consumer loans.

In April, Hungarian households borrowed HUF 47 bn more than they repaid, effectively unchanged from both a month and a year earlier.

The average interest rate on housing loans was 4.59%, 0.5pp higher than a year earlier, but this was largely due to the growth in fixed-interest loans that have become cheaper.

While the average annual percentage rate (APR) of housing loans was 4.9%, that of personal loans was 13.5%, which means the falling trend of recent months has come to a stop.

The total stock of retail loans rose 7.5% year on year to HUF 6,258 bn, including a 10.6% growth in housing loans and a whopping 36.7% increase in personal loans.

Meanwhile, retail deposits exceeded HUF 9,000 bn in April, a new record in Hungary. The total stock of deposit rose 11.2% year on year, including a 17.2% increase in demand and transferable deposits, which now account for 72% of the total.

As a result, do not need to launch deposit campaigns or to raise deposit rates. Forint deposits with maturity of less than 12 months has average interest rate of 0.20%, while those with maturity over 12 months had 0,66%.

At the same time, the growth of corporate deposits slowed, presumably as a result of increased investments and a the influx of EU funding, and was only 7.4% year on year. The stock of corporate loans grew 15.7% y/y, slightly higher than in recent months.

The increase in loan stock was due to businesses taking out loans worth 1,022 bn more than they repaid over the past year. Thanks to the Funding for Growth Scheme (NHP), forint loans have gained considerable share with total net transactions worth HUF 725 bn, while that of FX loans was only HUF 298 bn.