Economy minister welcomes positive trends in banking sector

Budapest (MTI) – Economy Minister Mihály Varga said he welcomed positive trends in lending in Hungary and noted that last year banks started to post profits after suffering years of losses.

Addressing a meeting of the Banking Association on Friday, Varga said lending growth is mainly due to a rise in mortgages. New household loans rose by 34 percent last year, a statement from the economy ministry said.

Varga said tasks ahead included maintaining the pace of growth in the sector. To meet this aim, the government seeks to accelerate the take up of EU funding, encourage investments and home construction, and stimulate lending activity, the statement said. The banking tax on the sector was halved on Jan. 1 this year in accordance with an agreement with the European Bank for Reconstruction and Development (EBRD), and it will continue to diminish in 2017, it said.

Members of the association welcomed that the government started reducing the bank levy this year, but added that financial institutions remain among those who pay the highest taxes in Hungary.

Mihály Patai, head of the association, said the leaders of the banking sector have faith in the balanced development of the Hungarian economy, and can play an even more active part in its stimulation if granted the proper regulatory and social environment.

The Hungarian banking sector is an integral part of the economy, but with sectoral taxes at several hundred billion forints annually its profitability fails to reach the internationally required minimum level.

Relying on the government’s home purchase subsidy system for families with children, the banking sector is ready to finance the building of new homes with the traditional tools of credit institutions.

Looking ahead, the association expects small and medium-sized enterprise portfolio to grow significantly with increasing credit demand, aided by low interest rate levels, reduced credit margins and the new central bank schemes.

According to members, the uniform regulation of the European bank community raises competition, where capitalisation and cost efficiency will determine how the market changes. As a result members are against overregulation and promote the containment of excessive capital requirements and liquidity standards.

Photo: MTI

Source: http://mtva.hu/hu/hungary-matters