"There has been a change in development financing which has led to financing by development banks being placed increasingly in the foreground rather than direct state subsidies," said MFB's chief economist Peter Gal.
The bank expects assets to grow strongly this year, although its profit from core activities may fall before rising again in 2006. The bank will maintain its current dividend policy and expects to reap benefits from a shift in development financing from the state to the banking sector. The MFB's most successful loan product continues to be subsidized enterprise development loans.
The bank's net assets are expected to come in at HUF 797–800 bln this year, well above an initially planned HUF 672 bln. The improved figures are due to government motorway-financing projects acquired throughout the year. Net assets are expected to rise to HUF 818 bln next year.
Although extraordinary gains from the release of provisions related to agricultural loans will push the bank's pre-tax income up to HUF 25–25.5 bln this year, income from core activities without provisions looks set to fall from HUF 12.8 bln in 2004 to HUF 9.5 bln in 2005.
