Hungary Country Report

TABLE OF CONTENTS

Demographics and Economy:
Outlines the key metrics and trends which influence the development of retail banking and payments in the country:

• Population structure
• Income
• Mobile and internet use
• Economic data

Retail Banking:
Explores the structure of the local banking system, its infrastructure and the leading players. Data includes:

• Aggregate retail banking indicators
• Bank branch, ATMs and POS terminals
• The profitability of top banks

Consumer Finance:
Overview of consumer finance in the country. Categories analysed include:

• Mortgage loans
• Personal loans
• Credit card loans
• Vehicle loans

Credit Cards:
Industry-leading credit card coverage for Hungary. We detail the past present and future of the industry through our credit card data and commentary, including:

• Market size split by consumer and commercial credit cards: number of cards, transaction volume, billed volume
• Profit pool analysis
• Competitive landscape: networks, issuers

Debit Cards:

• Market size: number of cards, transaction volume, billed volume
• Competitive landscape: networks, issuers

Prepaid Cards:

• Market size: number of cards, transaction volume, billed volume

Demographics and Economy
Hungary faces major challenges in relation to its ageing population. It is estimated that the population over the age of 65 will have increased by 12.6% in 2060, compared with 2015

The Economy
Hungary's major trading partners include Germany, Austria, Italy, France and Slovakia. Germany is the country's largest trading partner, accounting for 26% and 28% respectively in terms of imports and exports.

Retail Banking
The top five retail banks in Hungary in terms of asset value are OTP Bank, Erste Bank, K&H Bank, UniCredit Bank and MKB Bank. These five banks accounted for an estimated 63% of the country's total bank assets in 2015.

Consumer Finance
Compared with households in other EU states, those in Hungary are less indebted. On average, total debt per household in Hungary was $4,993 in 2015, compared with Poland's $10,856 and Slovakia's $14,501.

Cards Market
Hungary's payment cards market is developed, with a penetration rate of 107 cards per 100 adults at the end of 2015 – of which the vast majority were debit cards. Though payment cards are primarily used for cash withdrawals, the share of electronic payment volume has been on the rise in the country.

E-money
Prepaid cards represent a very small segment of the Hungarian payment cards market, with only a limited number of gift cards issued by banks and retailers.

Profit pool
However, the market turned profitable in 2015 with a pre-tax profit of $16 million, indicating that the Hungarian credit cards market, following years of contraction in the wake of the global financial crisis, is about to turn a corner.

Pricing and Enhancements
The credit card product life cycle in Hungary is at a relatively early stage of development, which is evident from the basic packaging of card products available in the market. Credit cards are typically not popular among Hungarian consumers as they prefer to make use of debit cards to pay online and use either cash or debit cards at the POS.

Card Networks
The three principal networks operating in Hungary are MasterCard, Visa and American Express. MasterCard is the dominant player with 77% of credit cards in issue at the
end of 2015. Visa is the second-largest player with 185,461 credit cards or a 13% share, followed by American Express with 140,501 cards or a 10% market share.

Key Retail Banks and Issuers
Hungary's credit cards market is highly concentrated among the top four issuers: OTP Bank, Citibank, Cetelem and Budapest Bank. At the end of 2015, these four banks collectively accounted for a market share of 71% in terms of credit cards in issue.

Merchant Acquiring and Processing
The Hungarian merchant acquiring market is concentrated among two major players, OTP Bank and K&H Bank. Together they represent 80% market share of total credit card acquired billed volume.

Online Acquiring
The most popular product categories in the Hungarian e-commerce market are computers and electronics, entertainment devices, home equipment, toys and gifts, and clothing.

Regulatory and Markets Information
The MNB is the central bank of Hungary and is a member of the European System of Central Banks. The primary objective of the MNB is to achieve and maintain price stability. In addition, the MNB supports the government's economic policy through its monetary policy instruments.