Economy 18 October 2017, 4:04pm

Hungarian bravado in savings: Not toeing the CEE line

Portfolio

In the Central and Eastern European region, Hungarians are the least satisfied with the amount of their savings and they are the most helpless as well: Hungarians have rearranged their savings the least as a low interest environment prevailed. The Hungarian population is extremely polarised in terms of taking and avoiding risks, and it is also Hungary that reports the highest ratio of those who never create family budgets (76%), László Harmati, Deputy CEO of Erste Bank, said in his presentation at Portfolio’s Öngondoskodás 2017 (Self-care 2017) conference on Tuesday.

Erste Bank Deputy CEO László Harmati made the following statements in his presentation:

Real income in the retail segment in Hungary has been rising since 2013; the growth pace of savings is not letting up this year either, and the savings ratio is developing steadily around 6 to 7% against available income. This is a relatively high number in historic terms, but not in regional comparison.
Concentration of savings in terms of numerical quantity has been declining massively, which means an increasing number of individuals can save. However, the concentration in terms of total savings has not diminished.
In the CEE region, Hungarians embrace financial security the most; Hungarians represent the highest ratio of respondents in an Erste Group survey who consider it very important to have savings. However, this ratio is also declining slightly in Hungary.
The growth of Hungarian retail customers’ median savings has decelerated, while monthly savings increased in 2016 at the highest rate in Hungary, reflecting an 8% pace. This ratio has dropped to 2 % year-to-date. Slovakia and the Czech Republic are now far ahead, while robust convergence is apparent in Croatia.
Hungarians are the least satisfied with the amount of their savings. This has not always been the case (claiming a spot in the middle of the CEE pack for some years after the crisis), but it is most obvious this year.
As another feature special to Hungary, retail customers’ willingness to invest has changed the least on the back of a low interest rate environment, and Hungarians for now are less active in rearranging their savings.
The surveys also indicate extreme polarisation in the Hungarian population in terms of taking or avoiding risks, which means a very low ratio of individuals taking moderate risks.
Similar to previous years, the ratio of respondents in Hungary that consider themselves well-informed in financial matters is low, echoing results from Balkan countries. Hungary is also where the ratio of creating family budgets is lowest: 67% of Hungarians never make them.
This latter also ties in with the finding in the survey that the Hungarian population is the least appreciative of family budget services offered by banks. Interestingly, the same ratio is quite high in the Balkans.
Enhancement of digital self-care and savings profile means a breakout opportunity in every segment. Hungarians’ related affinity is not bad, claiming a spot in the middle of the field and reflecting fast-paced progress. Online or mobile banking services are used by 37% of Hungarians, while this ratio is 70% in the Czech Republic, 61% in Slovakia, and 41% in Croatia, but Romania and Serbia are behind Hungary.
Lots of positive trends are apparent in the Hungarian market: savings are growing and their concentration is diminishing; propensity to save in the CEE region has been highest in Hungary for years; rearrangements in savings reflect a high degree of flexibility, and Hungarians are not ultra-conservative in risk-taking. The Hungarian market is making swift progress in online shopping and use of financial services as well.