- 19 Apr 2018 8:48 AM
- Hungary Matters
None of these factors can independently achieve sustainable convergence, he said. Hungarian banks’ total assets need to reach an annual growth rate of 11% by 2030, he said. Corporate lending should grow by an annual 12%, with SME lending climbing 13%; and retail lending has to grow by 15% a year, as the annual increase in home loans reaches 18%, he added.
To achieve this degree of growth, banks need to lend to a broader range of clients and offer cheaper products, Nagy said. Hungary’s economic growth rate must reach 4-4.5% a year by 2030 as productivity improves and the investment rate climbs to 23-25%. Internal savings need to grow and innovation must be placed at the forefront, he said.
By 2030, the banking sector’s total assets should rise to 160% of GDP from 95% at present. Stock of loans to the private sector should climb to 70% of GDP from 32% as home loan stock increases to 30% of GDP from 8%.
Nagy noted that Hungarian households and businesses are less indebted than their peers in neighbouring countries as well as the European Union as a whole. He added that the banking system’s low loan-to-deposit ratio is “unhealthy”.
Nagy urged banks to boost efficiency. Banking sector leaders participating in the conference projected more moderate growth for lenders than the NBH. They also questioned the possibility of lowering costs as long as they must pay the bank levy and the financial transaction duty as well as deal with overregulation.