Hungarian Bankholding: more and more clients are leaving the loan repayment moratorium
The loan portfolio of the member banks of the banking group decreased by over 18 percent in six months
The aggregate loan portfolio of the repayment moratorium of the three member banks of Hungarian Bankholding – Budapest Bank, MKB Bank and the Takarékbank – fell by almost HUF 261 billion between January and June 2021. About 2% of the retail and corporate clients of the three financial institutions who are currently in moratorium requested an extension of the repayment since 1 October, mainly due to parenting and loss of income. The experts of the banking group recommend staying in the moratorium only to those who are experiencing serious financial difficulties.
While the loan portfolio increased, the number of the clients remaining in the moratorium decreased
In the first six months of 2021, the total retail and corporate loan portfolio of Hungarian Bankholding increased by almost 6%, by HUF 298 billion. The retail portfolio of Budapest Bank, MKB Bank and Takarékbank grew by 6.2%, while the corporate loan portfolio of the member banks – together being market leaders – shows an increase of 5.3%. In parallel with the growth of the loan portfolio of member banks, the number of the clients remaining in the moratorium continuously decreased, as did the proportion of the total moratorium loan portfolio of the financial institutions.
At the end of 2020, 41.6% of the retail loans provided by the three member banks were subject to deferred payment, while this value had fallen to 33.3% by the end of June 2021. A similar change can be seen in the case of corporate loans: while at the end of 2020, 28.4% of companies took the opportunity of the deferred payment, only 21.8% of businesses remained in the repayment moratorium by the end of July 2021.
The moratorium loan portfolio of the member banks of Hungarian Bankholding decreased by a total of HUF 261 billion between 1 January and 30 June 2021. Due to the amended eligibility conditions, which will take effect on November 1, the experts of the banking group expect a further decrease in both areas.
It is advisable to restart paying the installments to anyone who is able to do so
Since October 1, only two percent of clients have applied for the deferred payment at the member banks, in particular retail clients requesting an extension of the moratorium, mainly due to parenting and loss of income. The experts of Hungarian Bankholding advise the extension of the moratorium only for those who are experiencing serious financial difficulties, as the moratorium only means postponing the repayment of the loan while the accumulated interest must be paid after the moratorium expires.
"In the post-moratorium period, the accumulated debt will have to be paid off, which will increase the amount to be repaid and, in some cases, the monthly installment. To prevent this, we recommend that, if the financial situation of our clients allows, they continue to pay the installments in accordance with the terms of the original loan agreement.”
Conditions for extending the moratorium have changed
The repayment moratorium will be available until 30 June 2022 with amended eligibility conditions, on a reliance basis as defined in the relevant government decree, which may be requested by eligible clients in a separate statement.
Retail clients such as pensioners, families raising children, the unemployed, public workers, and people whose household incomes have fallen permanently, will continue to be eligible for the moratorium. The companies whose net sales from their activities have decreased by at least 25% in the last 18 months preceding the application and have not entered into a soft recovery loan or a new loan agreement between 18 March 2020 and the date of the application, may also use the deferred payment option.
Hungarian Bankholding Ltd.
Hungarian Bankholding Ltd. is a domestically owned financial holding company, which aims to implement the merger of Budapest Bank Zrt., MKB Bank Nyrt. and Takarék Group. The company commenced its effective operation on 15 December 2020, after MNB (acting as the central bank of Hungary) approved the merger of three credit institutions, and the shares of the key owners were transferred to the joint holding company. By transferring the in-kind contributions, the second largest banking group in Hungary has been established.
In March 2021, the Board of Directors and the Supervisory Board of the Hungarian Bankholding approved their five-year strategy for the merger of the member banks, based on which the fusion of the three credit institutions is planned to be concluded in 2023. The aim of the emerging large bank is to be the most modern bank in Hungary, which will introduce flexible, internationally leading digital solutions.The new large bank will serve the full market spectrum and all customer segments in the future, with a significant emphasis on the provision of new, modern range of products and services to retail, micro, small and medium-sized enterprise and agricultural customers.