Moody’s has changed Hungary‘s outlook from positive to stable.
The ratings agency refined Hungary’s outlook amid banks completion of de-risking their balance sheets and further improvements in loan quality will be more limited in the next 12 to 18 months.
According to MTI, Moody’s Investors Service said that loan quality will continue to improve but at a slower pace.
Moody’s expects Hungarian banks’ non-performing loans to fall to around 5.5 percent of total loans by the end of 2019, from 6.2 percent in 2018 and around 15 percent in 2016. Household spending and both private and EU-backed investment are driving the economy.
Lending growth will remain strong over the next 12 to 18 months and primarily focused on domestic households, but will moderate afterwards.
Capital buffers and funding conditions are stable but profitability will weaken slightly as competition for loans keeps net interest margins tight and as provisioning costs normalize and operating costs rise.
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