BUDAPEST, Dec 15 (Reuters) – Hungary’s lending portfolios and profitability are set to deteriorate until the end of next year, although the financial system is stable and banks are well-capitalised, financial markets watchdog PSZAF said.

Hungary became the first European Union member to seek international aid amid the global crisis last year and although it has returned to market financing, mounting job losses are set to put further pressure on lending portfolios next year.

Central European currencies fell again on Tuesday, pressured by gains in the dollar a day after Austria — a key player in the region’s bank sector — nationalised Hypo Group Alpe Adria.

But PSZAF said on Tuesday a repeat of extreme market conditions seen early this year and late last year, when Hungary sought financial assistance from the IMF and the European Union, were unlikely to return even in case of a bigger market correction.

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