Hungary's second-biggest lender MBH Group closed the first half with HUF139bn (€350mn) in after-tax profit, down 2.2% y/y, due to lower revenues and higher costs in Q2. The first half earnings still translate into a 26% return on equity, according to the bank's statement. MBH booked HUF30bn in bank and windfall tax during the period, below the HUF46bn paid a year earlier.

Due to the change in the yield environment, net interest income slipped 6% to HUF267.4bn despite the expanding loan portfolio, and net fee and commission income rose 14.6% to HUF49.3bn. Operating expenses rose by close to 10% to HUF137bn, driven by the acquisition of home savings bank Fundamenta.

The bank's NPL portfolio stood at HUF171bn at the end of June, or 2.9% of the lending stock. MBH booked HUF16.1bn risk cost, reflecting the impairment charges on loans affected by the interest rate cap extended until the end of 2024.

MHB had total assets of HUF11.7 trillion, up 6% from the end of 2023.

The stock of client loans rose 14% to HUF5 trillion and deposits climbed 10% to HUF7.6 trillion, spurred by the retail segment.

Gross retail lending surged 33% to HUF2.25 trillion, and deposits expanded by 29% to HUF3.2 trillion.

In the corporate segment, the loan and deposit portfolio grew by 7.3% and 26.7% respectively.

The 19.3% capital adequacy and 17.8% CET1 ratio at the end of Q2 were significantly above the regulatory requirement, it added.

MBH Group's market-leading leasing unit with 25% of the market had HUF578.5bn in assets at the end of the first half, up 8% y/y. The main objective of MHB is to simplify the portfolio with more uniform products to foster digital transformation, according to the investor presentation.

MBH Bank completed the three-way tie-up between three mid-sized banks in April 2023 to create a Hungarian-owned national champion in the sector. The merger of MKB Bank, Takarekbank and Budapest Bank, spanning more years, enjoyed headwind from regulators and the state. Hungary’s richest man, Viktor Orban’s childhood friend Lorinc Meszaros, has a minority stake in Magyar Bankholding, which owns 98.9% of the shares.