Budapest, December 22, 2021 –The development of the indicators examined shows an increasing level of cyclical systemic risks, which does not yet justify the imposition of a counter-cyclical capital requirement. With this in mind, the MNB’s Financial Stability Board left the countercyclical capital buffer rate at 0% after January 1, 2022.

The Magyar Nemzeti Bank (MNB) Financial Stability Board (FSB) left the countercyclical capital buffer rate applicable to domestic exposures unchanged at 0%. In addition, the FSB has not adjusted the 0% countercyclical capital buffer rates applicable to domestic banking system exposures in material third countries.

The narrowing of the additional developed country-specific benchmark credit-to-GDP gap to assess the domestic credit cycle came to a halt, leaving the gap negative at -1.7 percentage point. The underlying credit-to-GDP ratio at the spread was 44.2% in the quarter under review, down slightly for the first time in two years due to the rapid correction in GDP growth with the recovery of the economy. Historically, credit penetration is still low. However, based on the estimated data, the credit-to-GDP ratio is expected to converge and gradually exceed its estimated equilibrium value early next year. This is mainly due to the growth in the outstanding loan portfolio, which exceeds the growth rate of nominal GDP over four quarters. The increase in credit market activity supported by government and central bank measures, the relatively rapid resumption of the economic shock resulting from the coronavirus epidemic and all the indicators of overheating and vulnerability of the Cyclical systemic risk map also indicates the increasing level of cyclical systemic risks. risks, which does not yet justify immediate intervention. Based on credit trends and developments in the real estate market, cyclical systemic risks are expected to accumulate in the medium term due to the rapid recovery of the economy and the large economic boom.

The MNB regularly monitors and assesses cyclical systemic risks of third countries outside the European Union (EU) that are important to the national banking system. On the one hand, the financial processes of these countries can also have an impact on the evolution of the risks of the Hungarian banking system; on the other hand, the authorities of these countries operate within a different legal and prudential framework from those of the Member States of the EU. During its 2021 review, the MNB did not change the list of important third countries (Albania, Montenegro, Russia, Serbia and Ukraine) for the national banking system. According to the assessment, the level of cyclical systemic financial risks does not justify the imposition of a counter-cyclical capital requirement in any of the countries examined. Similar to the national situation, due to the effects of the pandemic and the rapid economic recovery that followed, the determination of the effective capital requirement for the exposures of the national banking system in significant third countries n is not justified.

The aim of the counter-cyclical capital buffer is to increase the stability and resilience of the system of financial intermediaries through credit cycles. The MNB reviews the rate of the counter-cyclical capital buffer applicable to domestic exposures on a quarterly basis and the rates applicable to significant third countries each year.

Additional information on the counter-cyclical capital buffer and other information necessary for its operation

Magyar Nemzeti Bank