How is the banking sector?

The number of banks per HUF one million is between 3-4 in Hungary, which is around the international average. The leading seven banks (OTP, K&H, MKB, Erste Bank, CIB, Raiffeisen, UniCredit,) accounted for 70 per cent of total combined assets in the banking sector. The combined assets/GDP ratio of 60 per cent in 2006 has grown to almost 90 per cent by 2006. The total amount of financing increased by 17.9 per cent in 2006, with corporate financing showing a 11,5 per cent increase, while total loans in retail banking grew by 27.9 per cent. SME-s continued to increase their share within financing for businesses, achieving 54 per cent as opposed to 43 per cent in 2002. Whereas some SME-s have produced dynamic growth in recent years, many others still lack any access to financing from banks. Within retail financing, consumer loans show faster growth than the financing of homes as a result of stricter conditions introduced regarding government subsidies for the latter and also of the saturation of the market. The total volume of foreign exchange loans continued to grow in 2006, accounting for approximately 50 per cent of total loans. Although the total volume of financing has expanded at an incredible rate, the proportion of bad debts shows no increase, remaining at 1.9 per cent. Though interest margins have dropped somewhat, they remained high by international comparison in 2006, at 4 per cent.