Hungarian Banking Association announces interest rate cut on the Széchenyi Card loans

This allows businesses to access new loans at half the inter-bank reference rates. The measure could provide the financial basis for this to grow further, they said, stressing that the banking sector's best-known core task is to finance sustainable economic development, which it can best provide in a competitive market, the announcement reads.

The sale of the various Széchenyi Card credit schemes is carried out by the banks participating in the programme, under the conditions set out in the KAVOSZ regulations established by the National Association of Entrepreneurs and Employers (VOSZ) and the Hungarian Chamber of Commerce and Industry (MKIK) for the professional management of the Széchenyi Card credit scheme and for the performance of coordination tasks, on the basis of its pre-screening and mediation, by Garantiqa Credit Guarantee Ltd. and under the guarantee of the Agricultural Business Credit Guarantee Foundation (AVHGA).

In order to ensure that the growth of newly disbursed Széchenyi Card overdrafts, tourism loans, investment loans, agricultural investment loans, liquidity loans and leasing transactions continues, the participating banks and KAVOSZ, in line with the government's previous plans (that under the Demján Sándor Programme, from 1 November 2024, the investment-type Széchenyi Card credit products are available at an interest rate of 3.5%), will ensure that

the interest rates on the detailed loan products can be reduced by a uniform 0.5 percentage points from 1 March 2025,

the announcement points out.

This reduction can be covered by the participating banks by paying a fee of 0.4% and KAVOSZ 0.1%.They are doing this in order to increase the credit volume of relevant businesses. According to the statement, the even more favourable pricing is another opportunity for Hungarian micro, small and medium-sized enterprises to make new investments, improve their efficiency and competitiveness, increase and improve their production and/or reduce their energy consumption.

Minister of National Economy Márton Nagy recently announced that intervention is expected in cooperation with banks in corporate lending. It seems that this has now arrived.

Cover photo (for illustration purposes only): Portfolio