Equity 18 May 2021, 3:25pm

Hungarians keep saving up, records are being broken

Portfolio

Data provided by the National Bank of Hungary (MNB) shows no signs of households tapping their savings accumulated during the coronavirus pandemic. The structure of new savings, however, has been undergoing a gradual change. Out of every 100 forints households saved in the first quarter, 28 were invested in government securities, 27 were left on current accounts and 9 in currency holdings. Not only investment funds have regained strength, but new life insurances have also gained new momentum. The latter have not attracted as much new funds as in the first quarter since the end of 2007.

Hungary's central bank (MNB) has published its preliminary financial accounts statistics for the first quarter of 2021. At the end of March, households held gross financial assets of HUF 68,436 billion, and their liability-reduced (net) financial assets totalled HUF 56,655 bn.

Households' net financial assets grew by 10.9% year on year and by 2.4% over the fourth quarter of 2020. The latter figure is double of what we saw a year ago.

Net transaction data tell us where the new savings were directed: Out of every 100 newly saved forint 28 ended up in government securities, 27 on current accounts, and 9 in currency holdings. This also means that more than one third of new savings went elsewhere and the financial sector was able to actively attract savings more efficiently than before.

MNB statistics show that life insurances fared particularly well for themselves, with HUF 41 billion more invested in then withdrawn from them. This is the highest reading since Q4 2007. Owing to tax assisted pension insurances, self-reliance has gained importance despite the pandemic.

The Top3 most popular forms of savings, however, are government securities, current account deposits and currency. The stock of households' government security holdings grew by nearly tenfold since the previous financial crisis.

As for volumes, the biggest growth was logged in quoted securities this year (adjusted for revaluation), mainly as a result of favourable return opportunities on the capital market. Investment notes, current account deposits and government securities also had a great quarter, but (especially at the latter two) transactions rather than revaluations were the key drivers.

Overall, the balance was positive both in terms of savings transactions and revaluations in the first quarter, but the stock of savings was fuelled mainly by transactions, by HUF 1,117 bn to be exact. Let us say that households saved up all of what they did not have to spend thanks to the moratorium on loan repayments - some HUF 200 billion, according to Portfolio estimates. Even if that's true, the Q1 reading is outstanding compared to the first quarter of the previous years.