The National Bank of Hungary (MNB) published its Financial Stability Report, concluding that the Hungarian banking system remains highly profitable, liquid and strongly capitalised, with a historically low non-performing loan ratio and no general constraints on credit supply. Solvency stress tests indicate the sector would remain robust even under an extremely unfavourable macroeconomic scenario, with manageable capital needs and no material constraint on lending capacity. In 2024 the consolidated capital adequacy ratio (CAR) rose slightly to 20.5%, while free capital stood at HUF 2,256 billion, which the MNB estimates could support around HUF 30,000 billion of additional lending. Banks recorded profit of HUF 1,595 billion in 2024, supported by net interest income and stable credit risk, alongside one-off items; after excluding these, profit declined year on year. Rolling profitability eased from its May 2024 peak but remained high by international standards, with return on equity at 22.6% and return on assets at 2.0% at end-2024. Liquidity buffers remained ample, with a Liquidity Coverage Ratio (LCR) of 170% and an operational liquidity reserve of HUF 21,000 billion in March 2025, although the MNB expects bank liquidity to be dampened in 2025 by central bank long-term collateralised loans and the transfer of part of municipal deposits to the Hungarian State Treasury. Credit growth continued to diverge between segments, with household loans up 10.5% year on year in February 2025 versus 1.8% growth in corporate loans; the MNB has initiated discussions with banks on options to increase corporate lending. The report also notes the foreign currency share of corporate loans rose to 50% but remains concentrated among firms with foreign currency income, and forecasts 2025 outstanding loan growth of 12% for households and 4.5% for corporates.
National Bank of Hungary 2025-05-29
National Bank of Hungary Financial Stability Report finds banks’ capital adequacy at 20.5% and lending capacity resilient under stress
The National Bank of Hungary's Financial Stability Report highlights the robust condition of the Hungarian banking system, with high profitability, liquidity, and capitalisation, alongside a low non-performing loan ratio. Solvency stress tests confirm resilience under adverse scenarios, with a consolidated capital adequacy ratio of 20.5% and substantial free capital supporting potential additional lending. Despite a slight decline in profitability, liquidity remains ample, though expected to be affected by central bank loans and municipal deposit transfers in 2025.