The operating environment for banks in Hungary has improved, due to positive developments in the economy and the government’s intention to facilitate a gradual normalisation of the banking business environment, Fitch Ratings has said. Its peer review of Hungarian banks said the government’s commitment is reflected in the memorandum signed with the European Bank for Reconstruction and Development in February, in which the government pledged to refrain from implementing new onerous banking legislation and to reduce the bank levy in 2016 and 2017. The banking system is likely to be profitable in 2015 after a record loss in 2014. However, prospects for the sector remain weak due to muted appetite for new credit in the economy, substantial legacy problem loans and thin margins in light of low interest rates, Fitch said. Banks were unlikely to return to pre-crisis profitability because previous results were inflated by rapid growth and relaxed lending standards, and the regulatory environment had become much more restrictive, including increased capital requirements.
-
Display
