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Loan sales were down, but repayments were down in the second quarter as well, with personal loans just a third higher than in the first quarter. The quality of the portfolios still looks great, but the banks can’t rest easy, it’s just the silence before the storm.
Home loans are developing quite surprisingly during the coronavirus epidemic. Many people do not repay loans, the quality of loan portfolios continues to improve, and accumulated debt is only increasing, according to the latest data from the Magyar Nemzeti Bank (MNB).
By mid-2020, the household loan portfolio had grown to HUF 7643 billion, which is not yet a historical peak, as the household loan portfolio already exceeded HUF 8 billion before the final refund. However, the rate of growth is extremely fast, and this time it is not the strengthening of the Swiss franc that is causing the accumulation of debt, but the borrowing of new loans and the delay in the repayment of existing ones. Over the course of 12 months, the volume of retail loans in the banking sector increased by almost HUF 1.6 billion, or 26 percent. In the second quarter alone, despite a stagnant personal loan market, suspended credit card sales at many banks, and a decline in home loans, the loan portfolio grew by almost HUF 280 billion.
There is almost no bad credit on paper
The loans included in the credit moratorium, which took effect on March 19, are not considered doubtful, so, at least on paper, the portfolios are improving. Loans past due for more than 90 days barely reach 175,000 million HUF, which means a default rate of 2.29%. Banks know this is just the hush before the storm, though, if the moratorium expires next year and loans need to be repaid again, retail loan stocks could start to deteriorate rapidly. This is also due to the fact that a provision of almost HUF 250 billion was made for subsequent credit losses in the first half of the year.
Most of the florin loans were overdue mortgages and auto loans overdue for more than 90 days: for the former, 6.9 per cent of the shares and for the latter 12.5 percent of stocks exceeded 90-day backlog. This represents a decrease of 0.4 percentage points for free use mortgages and 2.5 percentage points for auto loans compared to the previous quarter. Within restructured loans, the rate of loans past due for more than 90 days was 21.5 percent, a decrease of 1.3 percentage points compared to the previous quarter.
Who does not pay?
In any case, principal write-offs fell in the second quarter. Households reduced their debts by just HUF 331.4 billion, less than three-quarters in the first quarter. Willingness to pay developed very differently for each type of loan. In the case of housing loans, it remained relatively high, but in the case of housing loans, this indicator was already below the average, that is, those who had it could take greater advantage of the possibility of a moratorium .
Auto loan holders pay as military officers, the amount of principal debts has decreased by only 24 percent, while those with personal loans, as banks have previously said, have benefited from the moratorium more than the average, paying just a third of the normal principal repayment on the second installment. trimester. The volume of new disbursements also exceeded their repayments during this period, so the stock of personal loans continued to grow.
Revolving loans, overdrafts, and card loans, on the other hand, are typically paid for by the population; In the second quarter, the latter saw record capital repayments, but overdraft principal repayments also increased. The moratorium may also play a role in this: Since the repayment of other loans did not reduce family income, checking accounts and credit card accounts did not go that far.
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