EM CEEMEA CREDIT: MBHBAN: FY24 results, neutral for credit

MBH Bank Nyrt (MBHBAN; Ba2/-/-)

FY24 results, neutral for credit 

• Hungarian lender MBH Bank’s financial results highlight strong asset quality and capital position, but pressure on margins persists. Our feeds show recently issued, snr pref MBHBAN 5.25 Jan30 EUR benchmark bond charting at z+266bp, having launched at MS+300bp some two months ago (source: Bloomberg data).
• For FY24, NII stood at HUF511.6bn, a 10.2% YoY contraction (adverse rates cycle, supported by lending growth), partly offset by growth in F&C (investment services) at HUF105bn, +21.5% YoY. Net operating profit at HUF633.8bn vs HUF655bn in FY23. NIM remains sequentially stable in spite of rates cycle with FY at 4.31%, a 105bp decline YoY.
• Total assets at YE24 reached HUF12,504bn, a 12.6% YoY increase. LtD reached a solid 75.9%. Liquidity Coverage Ratio is strong @ 144.2% for Q4. Asset quality looks strong: NPLs progress further in their downward trajectory across segments, sequentially lower at 2.8% ratio with a conservative coverage at 182.5%. Capital remains conservatively adequate with CET1 at 18.2% in Q4 (CAR at 19.6%) offering a meaningful buffer.
• For context, publicly listed MBH Bank, inception date on May 1, 2023, is the outcome of a merger between three long standing financial institutions in Hungary, ie then publicly-listed MKB Bank, and privately held Takarékbank and Budapest Bank. From these, MBH Bank derives its strong expertise in various areas, including a domestic market share of close to 20% in the corporate segment (MKB Bank), close to 28% in the leasing segment (Budapest Bank) and 24% in agricultural finance (Takarekbank). MBHBAN has capillary presence domestically with over 400 branches and 1000 ATMs.