Government Intervention Looms Over Hungarian Banks Amid Rising Fees
Economic Minister Márton Nagy signals potential governmental actions in response to significant increases in banking fees in Hungary.
Hungarian Economic Minister Márton Nagy raised concerns this week on social media regarding substantial fee increases banks implemented this year, asserting that such hikes are unjustifiable.
Addressing attendees at the recent EXIM Awards gala, he suggested the government may intervene in the banking sector if necessary.
He further proposed the creation of specific account packages aimed at seniors and families, advocating for affordable banking options for these groups while seeking cooperation from the Hungarian Banking Association.
Although concrete measures have yet to be established, there is growing certainty that the government will enact policies related to the rising account fees.
Research indicates that while the Hungarian banking sector anticipated record profits in 2024, numerous discounts and benefits are currently available to clients.
According to financial expert Péter Gergely, several of these benefits have been mandated by the state, making many services free or discounted.
For all retail customers, card payments in stores and online are free, alongside payment requests and cash withdrawals up to 150,000 HUF, as stipulated by law.
Additionally, QR code transactions and cash withdrawals up to 40,000 HUF per month are also provided at no charge by participating merchants.
Many banks offer free transfer options up to 50,000 HUF, with unlimited or discounted transfers available as well.
However, many customers remain in outdated account packages that may no longer be advantageous.
Across various age demographics, banking services are notably affordable or free.
For individuals aged 14-18, banks such as Gránit, MBH, and OTP have eliminated key fees, including monthly account management and annual card fees, while offering free card payments.
Withdrawal at ATMs and post offices is also available for those aged 16 and up.
OTP and Raiffeisen banks have implemented coupon discount programs specifically for this age group.
Students generally qualify for student accounts until the age of 26, which often feature lower fees compared to standard adult accounts, and banks do not usually charge annual card fees during the first year.
Borrowers receiving student loans may access a specialized Diákhitel Account, which provides most services for free under legal regulations across multiple banking institutions.
Young adults entering the workforce and opting out of further education can access accounts that afford similar benefits to student accounts until the age of 35. For instance, OTP offers automatic fee discounts for account management if account holders are under 28. The prior lower income threshold for discounted account management fees has largely become irrelevant as minimum wages have increased, maintaining a nominal distinction.
Upon reaching 65, retirees can avail themselves of a 50% discount on account management fees from CIB Bank if they join as a family group.
Former specific accounts for retirees with favorable monthly fees and additional services, such as medical advice lines, remain accessible to existing clients.
There are several additional discount strategies available to adult customers, which could effectively reduce the costs associated with expensive banking services.
An example of such is the basic account offering, a service mandated by the European Union with fees tied to the minimum wage, currently at approximately 1,334 HUF monthly, which includes certain free transactions such as cash withdrawals and electronic transfers.
Major banks like Erste, Gránit, MBH, OTP, and Raiffeisen provide discounted currency exchange services and offer consistent digital coupon opportunities for cardholders, with varying promotions.
Most banks have also clearly defined account opening and referral promotions that can result in substantial financial benefits for clients.
New account holders can typically receive around 40,000 HUF in bonus funds through reaching set conditions over a common two-year loyalty period.
Banks, with few exceptions, have refrained from passing on the supplementary transaction tax, which is set at 0.45% for currency exchanges, introduced on October 1, 2022. They also do not charge customers for an annual financial transaction tax of 500 HUF on card purchases.
Prior to the introduction of the financial transaction tax in 2013, many banks offered free accounts with waived management fees, card fees, and transaction costs contingent on acceptable monthly deposits.
Regulatory changes introduced this tax, subsequently increasing its rate by 50% in July 2024, thereby intensifying the financial burden on consumers while contributing to overall annual inflationary pressures.
Inflation adjustments have led to significant increases in banking fees, with cumulative rises estimated at about 40% due to recurring adjustments per inflation rates established each previous year.
Furthermore, the financial transaction tax is expected to prompt an additional potential fee increase of up to 50%, pushing the overall rise in banking fees even higher.
Economic expert Gergely Péter cautioned that imposing new restrictive regulations on banks to enforce lower banking costs could yield several adverse outcomes.
Potential declines in banking innovation and digital advancements could ultimately harm consumers.
There is also the risk that banks may retract current promotional account opening incentives and potentially reduce or eliminate advantageous exchange rates and coupon programs available to clients.
In 2024, Hungarian banks recorded their highest profits ever, reportedly amounting to 2 trillion HUF.
The consolidated profit reached 2,007 billion HUF, while the non-consolidated profit was estimated at 1,632 billion HUF.
Despite overall profitability, the return on equity (ROE) diminished compared to 2023. While net interest income decreased by 99 billion HUF, risk costs increased by 116 billion HUF, impacting overall profitability.
The sector saw a dividend income achievement totaling 476 billion HUF, and though taxes and regulatory fees deducted from profits reached 263 billion HUF, resulting in a corrected pre-tax profit exceeding 1.5 trillion HUF, the industry experienced a notable uptick in fees and commission income, increasing by 17.4% due to inflation-linked fee adjustments and heightened business activity.
The lending volume saw an expansion of 7.5% and deposits grew by 7% despite the economy underperforming.
January 2025 data from the Hungarian Central Statistical Office indicated a 3.9% year-on-year decline in industrial production.
Seasonally adjusted outputs showed a 0.8% increase compared to December 2024 but varied between sectors, with declines noted in automotive, electrical equipment, and food production.
Addressing attendees at the recent EXIM Awards gala, he suggested the government may intervene in the banking sector if necessary.
He further proposed the creation of specific account packages aimed at seniors and families, advocating for affordable banking options for these groups while seeking cooperation from the Hungarian Banking Association.
Although concrete measures have yet to be established, there is growing certainty that the government will enact policies related to the rising account fees.
Research indicates that while the Hungarian banking sector anticipated record profits in 2024, numerous discounts and benefits are currently available to clients.
According to financial expert Péter Gergely, several of these benefits have been mandated by the state, making many services free or discounted.
For all retail customers, card payments in stores and online are free, alongside payment requests and cash withdrawals up to 150,000 HUF, as stipulated by law.
Additionally, QR code transactions and cash withdrawals up to 40,000 HUF per month are also provided at no charge by participating merchants.
Many banks offer free transfer options up to 50,000 HUF, with unlimited or discounted transfers available as well.
However, many customers remain in outdated account packages that may no longer be advantageous.
Across various age demographics, banking services are notably affordable or free.
For individuals aged 14-18, banks such as Gránit, MBH, and OTP have eliminated key fees, including monthly account management and annual card fees, while offering free card payments.
Withdrawal at ATMs and post offices is also available for those aged 16 and up.
OTP and Raiffeisen banks have implemented coupon discount programs specifically for this age group.
Students generally qualify for student accounts until the age of 26, which often feature lower fees compared to standard adult accounts, and banks do not usually charge annual card fees during the first year.
Borrowers receiving student loans may access a specialized Diákhitel Account, which provides most services for free under legal regulations across multiple banking institutions.
Young adults entering the workforce and opting out of further education can access accounts that afford similar benefits to student accounts until the age of 35. For instance, OTP offers automatic fee discounts for account management if account holders are under 28. The prior lower income threshold for discounted account management fees has largely become irrelevant as minimum wages have increased, maintaining a nominal distinction.
Upon reaching 65, retirees can avail themselves of a 50% discount on account management fees from CIB Bank if they join as a family group.
Former specific accounts for retirees with favorable monthly fees and additional services, such as medical advice lines, remain accessible to existing clients.
There are several additional discount strategies available to adult customers, which could effectively reduce the costs associated with expensive banking services.
An example of such is the basic account offering, a service mandated by the European Union with fees tied to the minimum wage, currently at approximately 1,334 HUF monthly, which includes certain free transactions such as cash withdrawals and electronic transfers.
Major banks like Erste, Gránit, MBH, OTP, and Raiffeisen provide discounted currency exchange services and offer consistent digital coupon opportunities for cardholders, with varying promotions.
Most banks have also clearly defined account opening and referral promotions that can result in substantial financial benefits for clients.
New account holders can typically receive around 40,000 HUF in bonus funds through reaching set conditions over a common two-year loyalty period.
Banks, with few exceptions, have refrained from passing on the supplementary transaction tax, which is set at 0.45% for currency exchanges, introduced on October 1, 2022. They also do not charge customers for an annual financial transaction tax of 500 HUF on card purchases.
Prior to the introduction of the financial transaction tax in 2013, many banks offered free accounts with waived management fees, card fees, and transaction costs contingent on acceptable monthly deposits.
Regulatory changes introduced this tax, subsequently increasing its rate by 50% in July 2024, thereby intensifying the financial burden on consumers while contributing to overall annual inflationary pressures.
Inflation adjustments have led to significant increases in banking fees, with cumulative rises estimated at about 40% due to recurring adjustments per inflation rates established each previous year.
Furthermore, the financial transaction tax is expected to prompt an additional potential fee increase of up to 50%, pushing the overall rise in banking fees even higher.
Economic expert Gergely Péter cautioned that imposing new restrictive regulations on banks to enforce lower banking costs could yield several adverse outcomes.
Potential declines in banking innovation and digital advancements could ultimately harm consumers.
There is also the risk that banks may retract current promotional account opening incentives and potentially reduce or eliminate advantageous exchange rates and coupon programs available to clients.
In 2024, Hungarian banks recorded their highest profits ever, reportedly amounting to 2 trillion HUF.
The consolidated profit reached 2,007 billion HUF, while the non-consolidated profit was estimated at 1,632 billion HUF.
Despite overall profitability, the return on equity (ROE) diminished compared to 2023. While net interest income decreased by 99 billion HUF, risk costs increased by 116 billion HUF, impacting overall profitability.
The sector saw a dividend income achievement totaling 476 billion HUF, and though taxes and regulatory fees deducted from profits reached 263 billion HUF, resulting in a corrected pre-tax profit exceeding 1.5 trillion HUF, the industry experienced a notable uptick in fees and commission income, increasing by 17.4% due to inflation-linked fee adjustments and heightened business activity.
The lending volume saw an expansion of 7.5% and deposits grew by 7% despite the economy underperforming.
January 2025 data from the Hungarian Central Statistical Office indicated a 3.9% year-on-year decline in industrial production.
Seasonally adjusted outputs showed a 0.8% increase compared to December 2024 but varied between sectors, with declines noted in automotive, electrical equipment, and food production.
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