Hungarian banking sector faces high taxes and low customer loyalty

The Hungarian banking sector is navigating significant financial challenges, characterized by high taxation and low consumer mobility. Radovan Jelasity, President of the Hungarian Banking Association and CEO of Erste Bank, indicated that banks do not expect a reversal of special taxes, such as the bank tax and windfall profit tax, until at least 2028. These levies have had a measurable impact on financial performance; for instance, Erste Bank reported a 25 percent decrease in after-tax profits during the first nine months of the year, despite growth in operating and interest revenues.

On the consumer side, there is a notable disconnect between satisfaction and behavior. While approximately 94 percent of Hungarian customers express dissatisfaction with their banks, they rarely switch institutions, missing opportunities for savings through loan refinancing. In contrast, the insurance market shows higher price sensitivity and competition. Additionally, the industry is preparing for the integration of artificial intelligence, which is expected to accelerate software development and transform financial services and customer interactions.