Hungary's mortgage reform to cost its banks $490 mln each year

MBH Jelzalogbank Nyrt

17/11/2014 14:49

BUDAPEST, Nov 17 (Reuters) - Hungary's relief scheme for 
mortgage borrowers and new loan regulations could cost its banks 
120 billion forints ($490.18 million) each year, the local unit 
of Belgian lender KBC  KBC.BR  said.  
    The country's banking sector has faced a raft of punitive 
taxes and charges since the financial crisis. Prime Minister 
Viktor Orban wants to eliminate the originally low-interest 
foreign currency loans, most of them denominated in Swiss 
francs, which many Hungarian families took out prior to 2008, 
when exchange rates were more favourable.  ID:nL6N0SU4SM  
    Hungary passed a law in September forcing banks to refund 
household borrowers up to 1 trillion forints. Shrinking loan 
books and lower interest rates will also eat into banks' 
earnings.  ID:nL6N0RU2BZ  
    "Our interest income would decrease by a little bit more 
than 10 percent," said Hendrik Scheerlinck, chief executive of 
KBC's Hungarian unit, K&H. 
    K&H reported a net profit of 7.9 billion forints in the 
third quarter. But for the first nine months, it was still in 
the red, largely due to provisions for the settlement of 
household mortgages. 
    The central bank said last week lenders in Hungary would see 
profitability decline further as a result of the new regulations 
governing how banks can modify interest rates and other 
conditions of their loans. 
(1 US dollar = 244.81 Hungarian forint) 
 
 (Reporting by Gergely Szakacs, editing by Louise Heavens) 
 ((gergely.szakacs@thomsonreuters.com; +36 1 327 4748; Reuters 
Messaging: gergely.szakacs.thomsonreuters.com@reuters.net)) 
 
Keywords: KBC GROUPE HUNGARY/