25 August PRESS RELEASE On credit institutions 1 based on supervisory reporting as at the end of Q2 2 In Q2 the balance sheet total of credit institutions rose by HUF 581.8 billion or 1.7% to reach HUF 35,168.3 billion by the end of June. The stock of net lending increased by 4.3% to HUF 17,783.2 billion in Q2. Within this, the gross stock of lending to resident non-financial corporations and households rose by 2.8% and 1.5%, respectively. The credit risk assessment of credit institutions on-balance sheet exposures improved further, with the ratio of non-performing loans to the total stock of lending to non-financial corporations and households, respectively, fell from 10.0% to 8.8% and from 14.9% to 12.9%. Within the stock of gross lending, the ratio of loans past due over 90 days decreased from 5.4% at the end of Q1 to 4.5%. In H1, credit institutions posted a total pre-tax profit of HUF 393.4 billion. The average total capital adequacy ratio was broadly unchanged in Q2, standing at 21.4% at the end of June. The ratio of the balance sheet total of credit institutions under domestic control relative to the balance sheet total of the entire sector was 54.4% at the end of Q2. At the end of H1, the sector s balance sheet total was 7.7% higher than at the end of H1, the stock of net lending increased by 12.2%. From uary, 14 credit institutions switched from Hungarian accounting standards to International Financial Reporting Standards (IFRS). The balance sheet total of institutions opting for the transition accounted for 56.5% the balance sheet total of the entire sector at the end of. Based on audited data, the balance sheet total and the stock of lending of institutions opting for IFRS were generally increased by the transition. This had an upward effect of 0.7% on the balance sheet total and one of 1.0% on the stock of net lending. The transition to the new accounting framework reduced the profit for of those opting for IFRS. As a result, the sector s aggregated audited profit was 4.5% lower under the IFRS than under the Hungarian accounting standards. In Q2 the balance sheet total of credit institutions rose by HUF 571.8 billion or 1.7% to HUF 35,168.3 billion at the end of H1. The balance sheet value of total outstanding lending rose by 4.3% to HUF 17,783.2 billion. Within this, net outstanding borrowing of resident non-financial corporations and households rose by 2.8% and 1.5%, respectively. The gross loan stock, excluding loans available for sale, amounted to HUF 18,592.5 billion at the end of June, 3.6% higher than at the end of Q1 (Table 1). The ratio of non-performing loans to the total stock of lending dropped from 8.9% to 7.6%. (Applying the Hungarian accounting standards to all credit institutions, this ratio was 10.8% at end of and 14.2% at the end of H1.) 1 s in the loan and deposit portfolios of credit institutions are described in the press release on the aggregated balance sheet of credit institutions issued at the end of the previous month and is accessible on MNB s website at https://www.mnb.hu/en/statistics/statisticaldata-and-information/statistical-releases-and-notes/aggregated-balance-sheet-of-credit-institutions/. 2 Credit institutions time series and this press release contain aggregated data reported by credit institutions by 16 August.
Table 1 Non-performing exposures of credit institutions (at gross value)** Total exposures (HUF billions) Ratio (%) * * Total loans 17,283 17,745 17,686 17,948 18,593 - - - - - o/w: non-performing 2,463 1,917 1,761 1,603 1,421 14.2 10.8 10.0 8.9 7.6 Non-financial corporations 5,904 5,919 5,877 5,987 6,096 - - - - - o/w: non-performing 941 765 751 597 539 15.9 12.9 12.8 10.0 8.8 Households 5,766 5,694 5,594 5,645 5,686 - - - - - o/w: non-performing 1,205 947 835 840 735 20.9 16.6 14.9 14.9 12.9 * In the case of credit institutions that changed over to IFRS, with start-of-year opening data under IFRS. ** From uary, the table presenting non-performing loans does not contain loans available for sale. Within loans, portfolio quality continued to improve in the non-financial corporate sector, with the ratio of nonperforming loans falling from 10.0% to 8.8% (applying Hungarian accounting standards to all credit institutions, this ratio was 12.9% at the end of and 15.9% at the end of H1). The ratio of non-performing loans to households also fell significantly, from 14.9% to 12.9% in Q2 (it stood at 20.9% at the end of H1). Within total gross domestic lending to households, the portfolio of past due loans fell by 8.0% to HUF 1,025.1 billion in Q2. Within this, the stock of loans past due over 90 days dropped by 12.2%. The stock of loans past due over 90 days fell by 45.9% to HUF 525.7 billion relative to the same period of the previous year. Within the stock of lending to households, the ratio of foreign currency loans continued to be very low at 0.7%, with their stock amounting to HUF 41.4 billion. Table 2 Gross household loans and delinquencies Household loans (HUF billions) * Jun / Jun Jun / Jun / Mar 1. Loans (2.+3.) 5,765.9 5,693.6 5 594.0 5 645.4 5 686.2-1.4% 1.6% 0.7% 1.1 o/w: past due 1,577.5 1,283.2 1 140.0 1 114.4 1 025.1-35.0% -10.1% -8.0% 1.1.1 o/w: over 90 days 972.3 722.9 607.1 598.7 525.7-45.9% -13.4% -12.2% * In the case of credit institutions that changed over to IFRS, with IFRS data. Gross outstanding borrowing of resident non-financial corporations increased by 1.8% in Q2. The portfolio of past due corporate loans fell by 11.2% within the total. As a result, past due corporate loans fell by 39.7% relative to the end of H1. Within the past due portfolio, the volume of loans past due over 90 days declined by 13.5% in Q2 and by 42.8% relative to a year earlier. The stock of forint loans to non-financial corporations was unchanged and that of foreign currency loans rose by 4.2%. The stock of past due forint and foreign currency loans both declined further in Q2, by 4.4% and 21.5%, respectively. Within the stock of loans past due over 90 days, both forint and foreign currency loans fell, by 10.5% and 18.0%, respectively. Within the stock of lending to the corporate sector, the ratio of foreign currency loans rose from 42.7% to 43.7% in Q2. 2
Table 3 Gross corporate sector loans and delinquencies Corporate loans (HUF billions) * Jun / Jun Jun / Jun / Mar 1. Loans (2.+3.) 5,903.6 5,919.0 5,877.3 5,986.8 6,096.0 3.3% 3.7% 1.8% 1.1 o/w: past due 675.3 547.1 510.3 458.8 407.2-39.7% -20.2% -11.2% 1.1.1 o/w: over 90 days 450.7 320.0 315.5 297.8 257.6-42.8% -18.3% -13.5% 2. Forint loans 3,297.9 3,399.3 3,376.7 3,432.5 3,434.1 4.1% 1.7% 0.0% 2.1 o/w: past due 364.1 331.2 307.0 276.0 263.7-27.6% -14.1% -4.4% 2.1.1. o/w: over 90 days 245.3 182.2 181.1 178.9 160.1-34.7% -11.6% -10.5% 3. Foreign currency loans 2,605.7 2,519.6 2,500.6 2,554.4 2,661.9 2.2% 6.5% 4.2% 3.1 o/w: past due 311.2 215.9 203.3 182.8 143.5-53.9% -29.4% -21.5% 3.1.1. o/w: over 90 days 205.4 137.8 134.3 118.9 97.5-52.5% -27.4% -18.0% Proportion of foreign 4. 44.1% 42.6% 42.5% 42.7% 43.7% currency loans * In the case of credit institutions that changed over to IFRS, with IFRS data. Within the gross stock of lending, the ratio of loans past due over 90 days, excluding loans available for sale, fell from 5.4% to 4.3% at the end of Q2 (it stood at 8.9% at the end of H1). Here, the ratio of household loans past due over 90 days to the total stock of loans to the household sector fell from 10.6% at the end of Q1 to 9.2%. The ratio of loans past due over 90 days to forint loans fell from 10.5% to 9.1% and that of loans past due over 90 days to remaining foreign currency loans (HUF 41.4 billion) improved from 25.0% to 23.4%. The ratio of corporate loans past due over 90 days to the total stock of corporate lending fell from 5.0% to 4.2% in Q2. The quality of outstanding forint and foreign currency lending to non-financial corporations improved further, with the ratio of forint loans past due over 90 days falling from 5.2% to 4.7% and that of foreign currency loans past due over 90 days from 4.7% to 3.7%. Table 4 Ratio of loans past due over 90 days within household and non-financial corporate loans (%) Households * Non-financial corporations * Total loans 16.9 12.7 10.9 10.6 9.2 7.6 5.4 5.4 5.0 4.2 Forint loans 16.7 12.6 10.7 10.5 9.1 7.4 5.4 5.4 5.2 4.7 FX loans 35.7 25.4 25.5 25.0 23.4 7.9 5.5 5.4 4.7 3.7 * In the case of credit institutions that changed over to IFRS, with IFRS data. In Q2, the stock of renegotiated loans fell by another 7.0% to HUF 845.4 billion at the end of Q2. The stock of renegotiated loans declined by 58.5% in one year, to which regulatory changes contributed significantly, in addition to portfolio cleaning. 3 The total stock of renegotiated loans amounted to HUF 845.4 billion at the end of Q2. The ratio of renegotiated loans to the gross stock of loans fell from 5.1% at the end of Q1 to 4.5%. The ratio of loans becoming past due again to the total stock of renegotiated loans fell by 6.1% in Q2 and by 57.5% relative to the same period of the previous year. 3 The concept of renegotiated loans changed from uary. Under the tighter regulation in effect prior to, this category included renegotiated exposures until their maturity (including buffer account loans and related foreign currency loans and those converted into forints as well). However, under MNB decree 39/ (X.11.) in effect from uary, credit institutions have the option, subject to certain conditions, to terminate the classification renegotiated. MNB decree 39/ (X.11.) is available at the following link: http://njt.hu/njtlink.php?njtcp=ee6eg1ed8em7er2ei5dx8cj9cy0bm7dw0eh3dv0eb9dw8cj1bx4cf9cd6cd1cb6cb7bm8en7dv8eh7dw2dx9cj2b y3f 3
Table 5 Total renegotiated loans of credit institutions Portfolio Ratio to total renegotiated loans HUF billions % % Jun / Jun Jun / Mar Total stock of loans (gross) 17,948.3 18,592.5 7.6 3.6 o/w: renegotiated loans 908.8 845.4-58.5-7.0 100.0 100.0 100.0 o/w: total past due 382.8 359.5-57.5-6.1 41.5 42.1 42.5 within 90 days 134.1 124.2-58.9-7.4 14.8 14.8 14.7 over 90 days 248.7 235.3-56.8-5.4 26.7 27.4 27.8 * From uary, the table presenting renegotiated loans does not include loans available for sale. Credit institutions posted a HUF 393.4 billion pre-tax profit in H1. This was 11.8% higher than profits under IFRS 4 (hereinafter: comparative data 5 ) prorated to H1. Of the 96 credit institutions, 59 credit institutions made a HUF 399.0 billion profit and 37 credit institutions made a HUF 5.6 billion loss in H1. Within this, branches of foreign credit institutions posted a HUF 23.6 billion pre-tax profit. Interest income of credit institutions rose by 1.0% in H1 and interest expenses by 7.0% relative to comparative data for H1. Due to the different classification of certain important items and the different valuation and realisation principles of the two accounting systems, the other profit and loss items are not comparable with those of the same period a year earlier. For example, operating expenses exceeded significantly those for H1, as these items were strongly influenced by the fact that the majority of credit institutions switching over to IFRS recorded the bank tax for among operating expenses, while other continued record it among other non-interest income. s in provisions set aside for expected losses contributed HUF 104.8 billion to credit institutions profit/loss in H1, i.e. there was a reversal of provisions at sector level. Table 6 Main items of the income statement of credit institutions Annual data Comparative Difference (%) H1 (Actual) Quarterly data H1 Comparative 4 (Est) H1 H1/ H1 Comparative (HUF bns) 1. Net interest income 834.9 779.2-6.7% 415.3 387.6 391.4 3.8 2. Non-interest income (net) 294.0 584.9 98.9% 220.5 438.5 331.9-106.7 2.1 of which: commissions and fees (net) 467.9 488.2 4.3% 229.4 239.4 256.1 16.7 2.2 of which: other noninterest income -394.0-127.1-67.7% -193.8-62.5-83.7-21.1 3. Operating expenditure -699.2-869.8 24.4% -337.8-420.2-441.2-21.0 4. in impairments and specific provisions 108.6 10.2-90.6% 70.5 6.6 104.8 98.2 5. Extraordinary profit/loss -23.1-0.9-96.2% -8.4-0.3 6.5 6.8 6. Pre-tax profit/loss (1+2+3+4+5) 515.2 503.6-2.3% 360.1 352.0 393.4 41.4 * Calculation of estimated data for H1: aggregated profit and loss for under IFRS and Hungarian accounting standards has been apportioned by the ratio of total profit and loss for H1 under Hungarian accounting standards and total profit and loss for. 4 In part under IFRS: Not all credit institutions switched over to IFRS; therefore, part of profit/loss is under IFRS, the other part being under Hungarian standards. 5 In part under IFRS. 4
Annual average return on assets (ROA) was unchanged relative to the end of the previous quarter (1.6%) and annual average return on equity (ROE) of credit institutions rose from 14.3% in the previous year to 15.2%. Credit institutions, total Table 7 Profitability of credit institutions (%) Return on assets (ROA) Return of equity (ROE) Q2 - Q1 Q3 - Q2 Q2 - Q1 Q3 - Q2 1.6 1.5 1.6 15.5 14.3 15.2 The capital adequacy of credit institutions was broadly unchanged in Q2. The average capital adequacy ratio stood at 21.4% at the end of Q2. During the quarter, credit institutions total risk exposure (RWA) rose by 1.5% and their own funds increased by 2.2%, due mainly to profits for. Within own funds, the ratio of common equity tier 1 capital, at 92.1%, continued to be very high at the end of H1. Table 8 Capital adequacy of credit institutions 30 Sep e 1 Own funds (HUF billions) 3,352.6 3,355.0 3,497.9 3,552.2 3,629.6 2 o/w Common Equity Tier 1 (CET 1) 2,928.5 3,023.2 3,173.3 3,251.9 3,311.6 3 Ratio of Common Equity Tier 1 (%) 87.4% 90.1% 90.7% 91.5% 91.2% 4 Total risk exposures (HUF billions) 16,057.0 16,458.6 16,557.1 16,674.9 16,929.4 5 Pillar I Total capital adequacy ratio (%) (1./4.) 20.9% 20.4% 21.1% 21.3% 21.4% 6 Pillar I CET 1 capital adequacy ratio (%) (2./4.) 18.2% 18.4% 19.2% 19.5% 19.6% Based on the time series presenting the ownership structure of credit institutions, the ratio of domestically controlled credit institutions balance sheet total to the banking sector s balance sheet total rose slightly, standing at 54.4% at the end of Q2. Ratio of domestically controlled credit institutions (%) Ratio of foreign controlled credit institutions (%) Table 9 Ownership structure of credit institutions based on control 2011 2012 2013 2014 2015 42.2 44.7 47.5 54.7 55.5 54.7 54,1 54,4 57.8 55.3 52.5 45.3 44.5 45.3 45,9 45,6 The time series have been complemented with audited data for the end of and comparative opening data consistent with them (plus two columns). As a result of the audit, interest income and commission income have remained broadly unchanged and non-interest income has increased by HUF 18 billion. In addition, operating expenses have risen slightly, by 0.7%. Write-back of provisions has fallen by 9.2%, which has reduced the profit for by HUF 11 billion. Extraordinary profit has increased slightly, by 0.7% (HUF 3.7 billion) relative to the preliminary pre-tax profit figure; however, tax liability has increased by HUF 17.9 billion relative to the preliminary data. As a result, audited pre-tax profit was HUF 14.2 billion lower than the preliminary figure. MAGYAR NEMZETI BANK DIRECTORATE STATISTICS 5
Detailed tables: Tables Methodology materials: Notes on methodology Contact information: Tel.: + 36 (1) 428-2750 Fax: + 36 (1) 429-8000 E-mail: info@mnb.hu 6