EXIM Hungary: every budget HUF generates HUF 4 in GDP surplus

The EXIM Hungary institutional pair showed unprecedented growth between 2022 and 2024: Eximbank’s loan portfolio more than doubled during this period, and by the end of 2024, the insurance turnover of MEHIB also reached a historic high.

The bank’s dual mandate of promoting exports and providing countercyclical economic support has set domestic corporate financing on a new course. Under the Baross Gábor Reindustrialization Loan Programme, announced with a total budget of HUF 1,200 billion, the institution provided preferential financing to more than 1,400 businesses. The products supported by the programme helped participating companies save HUF 206 billion in interest payments, and the disbursements have the potential to increase domestic GDP by a total of HUF 489 billion. Eximbank’s efficiency is well demonstrated by the fact that in both 2022 and 2024, every HUF 1 spent on interest equalization from the budget contributed HUF 4 of GDP surplus, thus exceeded its target in both years. Article by Sándor Ladányi, our Deputy CEO for Finance.

Within the integrated EXIM institutional pair, Eximbank Plc. plays a key role in corporate financing, while MEHIB Plc. has a crucial position in insurance solutions to support the competitiveness of Hungarian companies. With the expansion of these activities, EXIM Hungary experienced a golden age of its three decades of existence over the past three years. Eximbank’s activities have expanded to include a dual mandate in response to changes in the macroeconomic environment, with a significant emphasis on the development of the Hungarian economy in addition to export financing, in line with its countercyclical role. As a result, the loan portfolio is now defined by two main product groups: (1) products related to Eximbank’s core identity as an export credit agency, and (2) crisis management financial products supporting countercyclical economic policy. In addition to these two main product groups, the portfolio also includes, to a lesser extent, (3) strategically important transactions that support acquisition of Hungarian ownership, job preservation and crisis resilience in strategically important sectors, and (4) investments that finance foreign direct investments by large Hungarian companies.

Eximbank’s loan portfolio more than doubled between 2022 and 2024, significantly advancing the bank’s position in terms of size. The loan portfolio grew by 30% last year, reaching nearly HUF 3,200 billion by the end of the year, while the balance sheet total approached HUF 4,000 billion. In addition, the customer base also grew significantly: the number of the Bank’s customers exceeded 3,000, 87% of which were SMEs, a key focus of the economic policy. Despite this record growth, the Bank maintained its prudent management, as its operating costs increased at a much lower rate during the same period, and in addition, as a non-profit institution, it was able to show positive results throughout the past three years.

Over the past three years, the Bank built up a sustainable loan portfolio, and its capital adequacy exceeds regulatory and internal requirements. Due to its mandate, Eximbank has a special risk appetite and is willing to take on higher than market risk in order to achieve the economic policy objectives. Nevertheless, Eximbank’s NPL ratio (non-performing loan ratio) as a percentage of its total loan portfolio fell by almost half between 2022 and 2024 to 4.2%, approaching the average NPL ratio of the banking system. The Bank’s total capital adequacy ratio stood at 24.7% at the end of last year, exceeding the prudential capital requirements – i.e. the 8% statutory minimum, the 2.5% capital conservation buffer and the 0.56% countercyclical capital buffer – as well as the internal buffer set by the management.

In recent years, Eximbank has grown into a key source of funding in the Hungarian financial system. Eximbank has met its growing financing needs by successfully raising funds from a diverse group of investors. Between 2022 and 2024, more than half of the funds raised were in foreign currency. The broad investor interest and support demonstrate the positive international reputation of Eximbank, which is considered a safe and reliable partner by the world’s largest and best-known financial institutions.

As the insurance member of the EXIM institutional pair, MEHIB also had a record year in 2024, expanding its activities across nearly all product types. MEHIB supported exporting companies in their expansion into foreign markets through export credit insurance, thereby helping to expand their business opportunities. MEHIB’s premium income, i.e. its turnover based on insurance activities, has exceeded its planned level for years, with its total turnover – including individual and turnover types – approaching HUF 300 billion by the end of 2024, setting a 5-year record. As a result, the insurance company’s commitment portfolio reached HUF 835 billion by 2024.

The Baross Gábor Loan Programme (BGH) has significantly contributed to Eximbank’s expansion in recent years. In 2023 and the first half of 2024, it contributed to the revival of the corporate loan market with interest-subsidized financing, which attracted enormous interest. The introduction of BGH was necessary due to the dry-up of the corporate credit market, as the volume of new corporate loan agreements significantly decreased from the end of 2022 onwards due to the high-interest-rate environment and the worse-than-expected economic situation. Excluding BGH loans, contracts in nominal value of just over HUF 3,700 billion were concluded between the start and end of the Loan Programme, which was 31% (nearly HUF 1,700 billion) lower than in the same period prior to its launch. This decline represented a 39% decrease in real terms. At the same time, BGH was able to significantly mitigate the drying up of the credit market, as nearly 23% of new corporate loan agreements during its existence were linked to the Baross Gábor Loan Programme.

Eximbank provided preferential financing to more than 1,400 companies from the BGH’s HUF 1,200-billion budget. Half of the loan portfolio was contracted in EUR and the other half in HUF. Working capital loans accounted for 49% of the total volume, investment loans for 42% and leasing transactions for 9%. Ninety-nine percent of the transactions were carried out through Eximbank’s commercial banking and leasing partners, and more than 78% financed the SME sector. The schemes were initially available at a customer interest rate of 6% in HUF and 3.5% in EUR, and later at 5% in HUF and 3% in EUR.

Eximbank was able to make a significant contribution to the favourable financing of companies: businesses participating in the Baross Gábor Loan Programme achieved total interest savings of approximately HUF 206 billion. Based on transaction-level data, companies will have to pay a total of approximately HUF 173 billion in interest on contracted BGH loans over the entire term. If the transactions had been contracted under the same conditions but at market interest rates, borrowers would have faced an interest burden of approximately HUF 379 billion. More than half of the total HUF 206 billion in interest savings will be realized in the SME sector, and approximately two-thirds will be achieved on HUF loans.

As a result of the disbursements under the Baross Gábor Loan Programme – taking into account the own contribution supplementing the loan volume – a total nominal growth surplus of approximately HUF 489 billion may be generated in the economy, which represents 0.64% of the GDP. The more economical operation achieved through the disbursements and the developments and investments implemented generate significant, directly measurable, so-called first-round growth effects in the economy. In addition, spillover effects are expected to materialize following the ramp-up of new capacities realized through the investments.

Another indicator that provides insight into Eximbank’s performance is the ratio expressing the bank’s efficiency in a single figure by comparing its impact on the national economy with the interest equalization requirement arising from its activities. The Bank has two ways of influencing the Hungarian economy: on the one hand, it increases nominal GDP with its low-interest loans, and on the other hand, these loans represent expenditure for the state, as the cost of loans with interest rates more favourable than market rates appears in the central budget in the form of interest equalization requirements. EXIM Hungary’s stated goal is to ensure that its lending in a given period has at least twice the impact on the national economy as the budgetary resources expended. The ratio of the national economic impact of Eximbank’s loans to the related interest equalization requirement exceeded 4 in both 2022 and 2024, thus exceeding its target by double in both years, as every HUF 1 financed from the budget contributes to HUF 4 of additional GDP.

The success of the management over the past three years is well illustrated by the fact that two members of EXIM Hungary’s management are continuing their careers in prominent economic policy roles. Kornél Kisgergely, CEO, will retain his position as Chairman of the EXIM Board of Directors and continue his outstanding professional work as State Secretary for Public Finance at the Ministry for National Economy, while Mihály Hoffmann, Deputy CEO for Finance, will continue as CEO of the Government Debt Management Agency. EXIM Hungary pays special attention to developing a career model within the organization, as evidenced by the fact that the vacant management positions have been filled by professionals with several years of experience in the organization. EXIM Hungary’s responsible employer attitude and supportive organizational culture is also confirmed by the fact that the Bank’s employee turnover rate was 6.7% at the end of 2024, which is significantly lower than the average of the sector (9%).