EXIM Hungary closes most intense year in its 27-year operation

TXF: This year has been another challenging year of adaptability for economic operators. How do you see 2021 from your perspective?

Attila Istvan Szabo (AIS): A year ago, I said that in 2020 we broke our own records: in terms of total assets, total liabilities and balance sheet total, among others; and now, at the end of 2021, we have even surpassed last year's records. The turnaround that we started in the spring of 2020 because of the pandemic has been intensified, so my very short answer is that we are closing the most intense year of EXIM Hungary's existence so far. 

The numbers speak for themselves: looking at the total portfolio, we have achieved a 20% increase compared to last year, which was a record year at the time, so including loans, guarantees, insurances and equity investments, we are starting the next year with a total exposure of over HUF 2,000 billion. In 2020, one in eight corporate loans disbursed in the country was a financed by EXIM Hungary and given the growth I expect similar statistics for this year. We see that the integrated banking and insurance profile under one management and governance board, the one-stop-shop customer management, the wide range of products within the financing options, are a major advantage in a country with a high export exposure like Hungary, where, by comparison, the volume of exports is close to 80% of the total GDP volume. Thus, the need to provide resources and mitigate risks for enterprises operating in the export structure is even more important. 

Being an ECA, we have put a strong emphasis on providing domestic credit and stabilising our exporters during the crisis period, because their financial support has a butterfly effect on the operation of the smallest economic players. It is no coincidence that ours was the second most sought-after COVID-19 compensation loan product after the central bank's programme, and the relaxation of the EU's temporary framework has led to a significant increase in the number of relations from the EU and industrialised OECD countries in our insurance portfolio. 

TXF: What are the main factors behind your most active year ever? After all, you too have had to overcome difficult challenges recently. 

AIS: The extent to which a state-owned ECA has to act in the event of an economic downturn is significantly influenced, and in our case obviously amplified, by the degree of the export orientation of the economy of the particular country. The increase in our domestic lending activity is therefore a rapid response to the economic slowdown caused by the global health crisis, which has been painful for all of us. We have managed to increase our loan portfolio by 25% compared to our highest base ever in the previous year. We have almost doubled our guarantee portfolio, as well, and increased the number of clients by 30%.  Around 30% of our total loan portfolio is foreign exposure and we currently have buyer credit products in 62 countries. Despite the pandemic, this segment of our portfolio has grown both in volume and in terms of relations. The number of our transactions in consortial cooperation and reinsurance is increasing and we have implemented sustainability and socially oriented projects in sub-Saharan Africa. Overall, we have indeed handled and are handling difficult challenges, but this is what we have to do, and the market response in terms of numbers shows that we have calibrated our domestic and international engagement correctly.

TXF: During the year what products were most demanded in the market?  

AIS: In the first half of the year, demand for short and long-term working capital loans, including our Compensation Loan Programme was strong, enabling us to serve the entire corporate sector, from micro to large enterprises, from exporters to suppliers of exporters, and those just planning to enter foreign markets. The programme was available until the beginning of August, when the total amount requested by the accepted applications reached the ceiling of the budget, which had been increased several times previously, and almost 90% of the total amount was already disbursed. As a result of the relaxation of the EU’s regulatory framework on state aid, 18 new country relations were added to our short-term insurance portfolio. The risk awareness of Hungarian companies has increased noticeably in numbers and they have incorporated the above financial instruments into their management model. 

We always strive to be proactive rather than reactive to market needs, so in the spring we launched our Spin Up Investment Loan in parallel with the then ongoing Compensation Loan Programme, and in the fourth quarter of the year we launched our product designed for foreign direct investments. We turned our attention to financing new – both domestic and cross-border – investments. We are now focusing on helping Hungarian exporters to exploit new opportunities and new markets, of which vertical or horizontal integration linked to foreign trade is also an integral part. The Spin Up Investment Loan is the perfect solution for financing the necessary domestic developments: it offers fixed interest rates in the current environment of constantly rising interest rates. The loan programme also makes use of the EU temporary framework. 

TXF: Budapest and EXIM Hungary hosted the Annual General Meeting of the Berne Union in mid-October. Did the event meet your expectations?

AIS: We can be satisfied with the high number of participants at the four-day event. We welcomed more than 160 guests from the industry from nearly fifty countries, all of whom we tried to have discussions with; the cream of the international export credit and insurance industry was represented. It was a very busy event, besides the nearly 50  thematic sessions we had almost as many bilateral negotiations from the export credit agency of Canada to South Korea. The Budapest event was one of the top three most attended Annual General Meetings of the Berne Union, even though many had to cancel their trips due to the different epidemiological rules. 

For us, this event is also memorable and significant because during the 4-day meeting, EXIM Hungary was elected to the Management Committee of the Berne Union, and by appointment we can work together with the ECAs of the US, Japan and Finland, and the delegate of the London headquarters to strengthen world trade. It speaks for itself that from the full membership status that we acquired in 1998 we have achieved the above in just over two decades.

This recognition is due to our professional work in recent years: we have been involved in a number of club deals, we have also acted as agent, we have proven ourselves and we have brought together the export credit agents behind us. With this recognition the community has confirmed that, although we represent a small country, we are performing far beyond our capabilities and have developed to the point where we are now in the mid-asset size ECA category. 

The above decision indicates that our product range has the potential to compete with any other export credit agency, as we are in the same league as the best. Hungary has a high degree of engineering and technical knowledge that others are willing to use, and we are able to provide it with a competitive financial backing anywhere in the world, currently in 127 countries.