Hungary Banking System Outlook Stays Negative, Moody’s Says

Hungarian banks’ asset quality will deteriorate further and profitability will remain “weak” over the next 12 to 18 months as the operating environment remains “uncertain,” Moody’s Investors Service said.

“The large amount of foreign-currency lending to households underpins the rating agency’s expectation that asset quality will deteriorate further as these borrowers’ ability to service their debt has weakened significantly, following a more than 30 percent depreciation of the forint against the Swiss Franc in recent years,” Simone Zampa, a Moody’s vice president, wrote in a report today.