UPDATE 1-Hungary bank 2009 loan losses to triple -cenbank

Wed Nov 4, 2009 10:21am GMT
 
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* Bank lending losses seen at 3 pct in 2009, rising in 2010

* Sector CAR seen above 11 pct through the end of 2010

* No additional capital needed under base case

(Updates with detail, background)

BUDAPEST, Nov 4 (Reuters) - Hungarian banks' loan losses will triple this year and will keep rising in 2010 but the sector has enough capital to handle the deterioration, the central bank said on Wednesday.

Barring unforeseen circumstances, the sector's capital adequacy ratio is seen running between 11.9 percent and 12.8 percent through the end of 2010, which means that none of the banks will need additional capital, the central bank said in its biannual Report on Financial Stability.

"The impending portfolio deterioration is mainly a consequence of economic recession," the bank said. "In 2009, the loan repayment ability has been impaired by increasing bankruptcy rates for companies and by sharply rising unemployment for households."

Hungary's economy is expected to shrink by 6.7 percent this year, and growth is not expected to return until 2011.

The central bank added that the capital adequacy ratio of every single bank of systemic significance was expected to be above 8 percent at the end of next year without additional capital measures.  Continued...

 

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