Hungarian Central Bank Extends Funding For Growth Scheme
News : The central bank of Hungary has confirmed that it is to expand its Funding for Growth scheme through until at least the close of 2014, according to Bloomberg. The scheme was initially launched in an effort to fund efforts to stimulate the economy in the wake of the recession that hit Hungary in 2012. The extension will see the bank offer US$8.9bn in interest-free funding to commercial lenders. A condition of receiving funding is that i t must be subsequently lent at an interest not exceeding 2.5%.
BMI View: The Hungarian banking sector is facing further loan and asset contraction in 2013 and 2014, following the announcement that the government is looking to force FX loan losses onto banks rather than consumers. As such we have revised down our loan growth forecasts for 2013 and 2014 from -4.0% year-on-year (y-o-y) and 2.0% y-o-y, to -6.0% y-o-y and 0.0% y-o-y respectively.