Banks report modest profit

As two-thirds of banks in Hungary report a profit in 2013 after two years of losses, a conservative columnist points out that contrary to the predictions of left-wing critics of the government, taxes levied on banks have not undermined their profitability. The leading left-wing daily, on the other hand, warns of the low volume of lending.

Hungarian banks reported a total of 62 billion Forints in profits for 2013 after two years of losses. Two-thirds of the banks are in the black, while they have also increased their capital adequacy ratios and volumes of provisions. The number of non-performing household credits, however, has further increased and now amounts to 20 per cent of all loans.

In the light of the latest figures, Anna Szabó finds it strange – in Magyar Nemzet (print edition) – that the left-wing parties plan to abolish the extra taxes levied on banks if they win the imminent elections. Such a move, Szabó believes, would only help banks to report even higher profits. The conservative columnist recalls that left-wing critics of the targeted taxation of financial operations feared that a series of banks would close down, but this has not happened. Szabó acknowledges that the volume of credit available is still low, but she believes that this is the result of non-performing loans which forces banks to keep lending low. She hopes that the cheap credit programme launched by the National Bank (see BudaPost September 16, 2013) will boost lending.

Népszabadság, on the other hand, considers Central Banker Matolcsy’s cheap loan program a failure. The left-wing daily reports that since October, banks have so far used only 50 billion Forints of the 2,000 billion Forints offered by the Central Bank at a favorable interest rate. According to Népszabadság, these figures show that banks are unwilling to finance the Hungarian economy.

Tags: banks, credit, loan, Matolcsy, National Bank