Apr 11, 2016

Lending growth among most important factors in Hungary's competitiveness, says Minister Varga

A strong domestic financial sector can -- through lending -- significantly contribute to the improvement of economic competitiveness as well as to investment and employment growth, Minister for National Economy Mihály Varga said at the staff meeting of the Hungarian Banking Association.

It was in the best interest of every economic stakeholder to continue to work in a predictable environment, he added.

The Hungarian Banking Association has been a key partner of the Government in its efforts aiming to maintain the momentum of Hungary’s economic growth and assist families in improving their financial position, the Minister pointed out.

As he stressed, the Banking Association’s role in helping achieve these objectives together with the stakeholders of the domestic bank sector was getting more and more important. Government measures introduced last year, such as those aiming to mitigate the country’s risk exposure, improve the regulatory environment and fiscal balance also fostered confidence in our economic policy.

One of the most important guarantees of Hungary’s competitiveness is lending growth, he emphasised. This, he said, requires banks with adequate capital indicators and stable backgrounds. According to the minister, it was a good sign that banks’ profitability has improved and that more banks that had formerly been loss-making reported profits in 2015.

There have been several positive factors in lending, he said, such as the forint conversion of forex mortgages, after that the forint conversion of car and personal loans, while the volume of new household loans soared by 34 percent between 2014 and 2015.

Speaking of priorities, Minister Varga mentioned that the momentum of economic growth must be maintained. Therefore, the government has accelerated the disbursement of EU funds, it stimulates investment and the construction of new homes, and it also wants to be a partner in lending growth. Under the MoU concluded with the EBRD, the bank tax rate was halved as of 1 January 2016 and it is set to be reduced further in 2017.