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The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
The financial books of Hungary
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The financial books of Hungary

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  • 1. Dávid Németh chief economist Eat what you cook
  • 2. dependence on foreigners 2
  • 3. vulnerable countries before the crisis 3 Net foreign liabilities (% of GDP, 2007) Forrás: IMF
  • 4. increasing national banks 4 0 5 10 15 20 25 30 35 jan.07 jan.13 jan.07 jan.13 jan.07 jan.13 MérlegfőösszegTotal Forgalomban lévő készpénz Értékpapírok Központi Bankok mérlegfőösszege (GDP %-ban) Federal ReservesBank ECB Bank of Japan Bank of England Forrás: IMF, K&H Total assets of central banks (% of GDP) Total assets Cash in circulation Securities
  • 5. cost of monetary easing 5Forrás: IMF
  • 6. footprint of stock exchange 6 S&P index (peak=100) Forrás: BLOOMBERG, K&H 10 20 30 40 50 60 70 80 90 100 110 1 2 3 4 5 6 7 1929-1954 1968-1972 1973-1980 1987-1989 2000-2007 2007- Bear Stearns F Mea Lehman Mar 09 End of QE1 Start of QE2 End of QE2 Start of QE3
  • 7. footprint of stock exchange 7 Dax index (peak=100) Forrás: BLOOMBERG, K&H 20 30 40 50 60 70 80 90 100 110 120 1 2 3 4 5 6 7 1969-1983 1987-1989 1998-1999 2000-2007 2007-
  • 8. footprint of stock exchange 8 NKY index (peak=100) Forrás: BLOOMBERG, K&H 0 20 40 60 80 100 120 1 2 3 4 5 6 7 1973-1978 1990- 2000-2007 2007-
  • 9. cost effectiveness 9
  • 10. development of wages 10 real wage increase (% YoY) USA & China wage dynamic
  • 11. wage cost 11 Wage cost per hour (€, % change between 2008 and 2012, without agriculture and public sector)
  • 12. 600 650 700 750 800 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Employees (excl. fostered workers) Fostered workers -40,0 -30,0 -20,0 -10,0 0,0 10,0 20,0 30,0 40,0 50,0 60,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0 11,0 12,0 13,0 48,0 49,0 50,0 51,0 52,0 53,0 54,0 55,0 56,0 57,0 58,0 Employment rate % Activity rate% UR% (rhs) labur market Number of employees in public sector (thausand) Labur market (%) Employment by sector (2012 vs. 2010, thousand) Forrás: KSH, K&H
  • 13. sectoral breakdown of Hungary’s external short-term debt Forrás: NBH, HCSO, K&H 0 5 10 15 20 25 30 35 40 0 5 10 15 20 25 30 35 40 2006Q1 Q2 Q3 Q4 2007Q1 Q2 Q3 Q4 2008Q1 Q2 Q3 Q4 2009Q1 Q2 Q3 Q4 2010Q1 Q2 Q3 Q4 2011Q1 Q2 Q3 Q4 2012Q1 Q2 Q3 Q4 EUR BnEUR Bn Banks Government Corporate sector Short-term external debt
  • 14. deleveraging in bank sector Forrás: NBH, HCSO, K&H -40 -30 -20 -10 0 10 20 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Households' net position in bank sector (% of GDP) FX loans (% of GDP) HUF loans (% of GDP) FX deposits (% of GDP) HUF deposits (% of GDP) Net balance
  • 15. deleveraging in bank sector Forrás: NBH, HCSO, K&H -40 -30 -20 -10 0 10 20 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Corporate's net position in bank sector (% of GDP) FX loans (% of GDP) HUF loans (% of GDP) FX deposits (% of GDP) HUF deposits (% of GDP) Net balance
  • 16. corporate lending Decomposition of the cumulative decline in corporate lending into supply and demand effects (relative to 2008 Q3) Forrás: NBH, HCSO, K&H -25 -20 -15 -10 -5 0 5 -25 -20 -15 -10 -5 0 5 2008Q4 2009Q1 Q2 Q3 Q4 2010Q1 Q2 Q3 Q4 2011Q1 Q2 Q3 Q4 2012Q1 Q2 Q3 Q4 percentage pointpercentage point Demand effect Supply effect
  • 17. corporate lending by sectors Decomposition of the change in new loan volumes into supply and demand effects by industries (2007 - 2011) Forrás: NBH, HCSO, K&H -100 -80 -60 -40 -20 0 20 40 60 -140 -120 -100 -80 -60 -40 -20 0 20 40 60 80 Demand(%) Supply (%) Real estate Transport Construct. Prof., admin. activities Trade, repair Manufact. Electricity Hotels, restaurants Agriculture
  • 18. relative level of outstanding FC household loans (Dec2008=100) Forrás: NBH, HCSO, K&H 10 20 30 40 50 60 70 80 90 100 110 120 10 20 30 40 50 60 70 80 90 100 110 120 2005Q1 Q2 Q3 Q4 2006Q1 Q2 Q3 Q4 2007Q1 Q2 Q3 Q4 2008Q1 Q2 Q3 Q4 2009Q1 Q2 Q3 Q4 2010Q1 Q2 Q3 Q4 2011Q1 Q2 Q3 Q4 2012Q1 Q2 Q3 Q4 per centper cent Loans outstanding to households Loans outstanding to households (adj. for exchange rate)
  • 19. utilisation of the exchange rate cap Forrás: NBH, HCSO, K&H 0 5 10 15 20 25 30 35 40 45 50 0 150 300 450 600 750 900 1 050 1 200 1 350 1 500 Jan-12 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-13 Jan Feb Mar Apr May per centHUF Bn Outstanding amount Percentage of eligible FX-denominated mortgage loans (right-hand scale)
  • 20. why interst rate of loans will be forced to decrease Forrás: NBH, HCSO, K&H 0 100 200 300 400 500 600 700 800 900 1 000 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 7,0 7,5 8,0 Feb-05 Apr Jun Aug Oct Dec Feb-06 Apr Jun Aug Oct Dec Feb-07 Apr Jun Aug Oct Dec Feb-08 Apr Jun Aug Oct Dec Feb-09 Apr Jun Aug Oct Dec Feb-10 Apr Jun Aug Oct Dec Feb-11 Apr Jun Aug Oct Dec Feb-12 Apr Jun Aug Oct Dec basis pointper cent Housing loans Home equity loans Five-year CDS spread of Hungary (right-hand scale) Interest rates of Swiss franc housing loans, home equity loans and five- year CDS spread of Hungary
  • 21. 0 10 20 30 40 50 60 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 FRA FIN GRE SLO AUS ITA NET EU15 HUN POR UK GER SPA POL CZE ROM EST LAT SLK BUL Generalpublic expenditures Health Education Socialprotection Other stagnating redistribution State expenditures (% of GDP, 2008 és 2011) Forrás: Eurostat, K&H
  • 22. 22
  • 23. stagnating redistribution Forrás: Eurostat, K&H 0 2 4 6 8 10 12 14 Greece Hungary Italy Portugal Finland EU15 Austria France Slovenia Germany Slovakia Poland Spain Netherlands UnitedKingdom Romania CzechRepublic Latvia Bulgaria Estonia 2008 2011 General central expenditures (% of GDP) 0 1 2 3 4 5 6 7 8 9 Netherlands France UnitedKingdom CzechRepublic Austria Finland EU15 Italy Germany Slovenia Portugal Spain Greece Slovakia Estonia Hungary Poland Bulgaria Latvia Romania 2008 2011 Healthcare expenditures (% of GDP) 0 1 2 3 4 5 6 7 Slovenia Estonia UnitedKingdom Finland Portugal France Netherlands Latvia Austria Poland EU15 Hungary CzechRepublic Spain Germany Italy Greece Romania Slovakia Bulgaria 2008 2011 0 5 10 15 20 25 France Finland Austria Italy Greece EU15 Germany Slovenia Portugal UK Netherlands Hungary Spain Poland Romania CzechRepublic Estonia Bulgaria Latvia Slovakia 2008 2011 Education expenditures (% of GDP) Social expenditures (% of GDP)
  • 24. subdued production where is the miracle of car production? Forrás: National sources,, K&H Contribution by secto to the growth (% év/év) -8,0 -6,0 -4,0 -2,0 0,0 2,0 4,0 6,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Industry Services Construction Agriculture GDP
  • 25. weak domestic demand development of households consumption in Hungary Forrás: KSH, K&H -10 -5 0 5 10 15 20 -10,0 -5,0 0,0 5,0 10,0 15,0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Consumption (YoY%) Net real wage (YoY%, rhs)
  • 26. 26
  • 27. -8,0 -6,0 -4,0 -2,0 0,0 2,0 4,0 6,0 8,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Goods Food Trade gds Free services -6,0 -4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Alcohol, tobacco vs.CPI -9,0 -4,0 1,0 6,0 11,0 16,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Regulated prices vs CPI Inflation development government’s help in the year of sneak Forrás: HCSO, NBH, K&H Market priced goods & services vs. CPI Alcohol, tobacco vs. CPI Regulated prices vs. CPI 0,0 2,0 4,0 6,0 8,0 10,0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Inflation evolution (YoY %) CPI (YoY %) MNB Core (YoY %) CPI adjusted for tax changes Inlation target K&H Forecast
  • 28. Global bond supply (end-2012) 28
  • 29. Forrás: AKK, BLOOMBERG, K&H financing need Bond and loan redemption (€bn) 0 0,5 1 1,5 2 2,5 09/2013 10/2013 11/2013 12/2013 01/2014 02/2014 03/2014 04/2014 05/2014 06/2014 07/2014 08/2014 09/2014 10/2014 11/2014 12/2014 HGB REPHUN
  • 30. distribution of households' government securities 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 0 200 400 600 800 1 000 1 200 1 400 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 per centHUF Bn Distribution and interest rate of households' government securities Interest Bearing Treasury Bills Hungarian Government Bond Discount Treasury Bill Treasury Savings Bill Premium Hungarian Government Bond Interest rate of deposits with maturity up to 1 year (right-hand scale) Interes rate of interest bearing Treasury Bills (right-hand scale) Source: MNB.
  • 31. Investment tickets and ETF; 46 Equities; 80 Mortgage and corporate bond; 10 Pension Reform and Debt Reduction Fund 31 HUF denominated (HUFbn) FC denominated (HUFbn) Forrás: AKK, K&H Investment tickets and ETF; 68 Equities; 22 Mortgage and corporate bond; 5 Cash; 83
  • 32. NBH’s account (end-July, HUFbn) 32 Forrás: MNB Assets External assets 10390 Currency in circulation 2942 Remaining assets 503 Deposits of other MFIs 662 Deposits of central government 1457 Two-week MNB bills held by residents 3699 Two-week MNB bills held by non residents 371 External liabilities 738 Remaining liabilities 1025 Total assets 10894 Total liabilities 10894 Liabilities
  • 33. opinion polls Forrás: Gallup, Tárki, Szondaipsos, Századvég, Medián, Nézőpont Intézet, K&H 5 10 15 20 25 30 35 40 45 50 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 % Parliamentary election MSZP (former governing party) 22% FIDESZ (governing party) 48% LMP (new green party) 3% Jobbik (far right-wing party) 14% DKP 3% Együtt 2014 (new party) 9% Other 1%
  • 34. support of eurozone 34
  • 35. market environment Return of currencies (2008 Jan 1=0) Forrás: K&H , Bloomberg -40,0 -20,0 0,0 20,0 40,0 60,0 80,0 08-jan. 08-júl. 09-jan. 09-júl. 10-jan. 10-júl. 11-jan. 11-júl. 12-jan. 12-júl. 13-jan. 13-júl. EURHUF TRY ZAR BRL
  • 36. real interest rate (%) Forrás: K&H , Bloomberg -8 -6 -4 -2 0 2 4 6 8 10 01/08 07/08 01/09 07/09 01/10 07/10 01/11 07/11 01/12 07/12 01/13 07/13 Turkey South Africa Hungary Brazil
  • 37. market environment Hungary’s 5-year CDS vs. region Forrás: K&H , Bloomberg -400 -300 -200 -100 0 100 200 300 400 500 600 2007 2008 2009 2010 2011 2012 2013 Czech Poland Romania
  • 38. market environment Forrás: K&H , Bloomberg correlation of 5-year CDS & EURHUF 230 243 256 269 282 295 308 321 0 100 200 300 400 500 600 700 2008 2009 2010 2011 2012 2013 Hungary EURHUF (rhs)
  • 39. market environment and expectations
  • 40. market environment and expectations Forrás: NBH. K&H, Bloomberg 3 4 5 6 7 8 9 10 11 12 220 240 260 280 300 320 2006 2007 2008 2009 2010 2011 2012 2013 2014 EUR/HUF Base rate (rhs, %) K&H Forecast

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