The stock of household loans increased by 3.3% q/q to HUF6,066.5bn at end-Q2, data by the National Bank of Hungary (NBH) showed. Loan growth continued unabated since Q1/2018 but the level of loans still remained considerably below the pre-crisis levels, in our opinion confirming the central bank’s argument for low credit penetration and the related low risk for overheating of the credit market. Gross new retail borrowing amounted to HUF553.3bn in Q2, which was a very strong amount for the post-crisis period so far. Households mostly borrowed forint housing and personal loans, the NBH said. We think that the high loan growth was partly due to the government’s housing construction program but the strong increase in personal loans also suggests high consumer confidence and propensity to spend.
The quality of the retail loan portfolio continued to improve during the quarter. The volume of loans overdue by more than 90 days dropped by 8.0% q/q and its share in the total fell by 0.5pps q/q to 3.8% at end-Q2. Banks also continued to actively clean non-performing loans, selling a relatively high amount – HUF54.7bn, of receivables in Q2.