Hungarian Banking Sector Assets Value Up on Q2

At the end of 2023 Q3, the credit institution sector consisted of ten banking groups, eight solo credit institutions, two financial enterprises subject to prudential regulation affecting credit institutions, as well as nine branches. The decrease in the number of institutions included in the publication was caused by the consolidation of a single domestic credit institution by a domestic banking group. The sector's total assets stood at HUF 89,411 billion at the end of the quarter, which was 4.9% higher than the amount in the previous quarter and 8.2% above the value a year earlier, the National Bank of Hungary (MNB) reported this Tuesday.

The extent of the concentration was not affected significantly by the extension of the said consolidation group. In the reference quarter, the aggregate market share of the five

largest credit institutions rose only marginally to 73.6%. The share of the 10 largest credit institutions within total assets increased slightly to 92.6% in the reference quarter. The share of the resident 10 credit institutions accounted for two-thirds of total assets at the end of 2023 Q3.

Overall, total assets increased by HUF 4,190 billion in the quarter under review. More than 50% of this increase reflected a rise in outstanding borrowing, amounting to over HUF 50,000 billion at the end of 2023 Q3. The stock of loans, representing the largest share within total assets rose by 4.5% in the quarter, to a somewhat lesser extent as total assets, leaving its share broadly unchanged above 56% relative to the previous quarter. However, the stock of lending fell by 4.1% in annual terms.

Rising by 2% relative to the previous quarter, the stock of debt securities in the amount of HUF 18,667 billion accounted for more than 20% of the credit institution sector’s assets at the end of the reference period. At a 16% share, this is followed by cash, balances at central banks and other demand deposits amounting to HUF 14,879 billion. These assets were up by 10.7% compared to the previous quarter, more than doubling year on year.

At the end of the reference quarter, 60.9% of loans were provided to domestic customers. Within the total stock of loans, outstanding lending to foreign countries rose at a faster pace than the inland growth rate in the quarter, as a result, their share of the stock of lending rose to 39.1%. 65% of loans to foreign customers were extended within EEA member states. At the end of the quarter, 87% of outstanding lending to foreign countries was with banking groups, 9.9% with branches and 3.1% with individual credit institutions.