The National Bank of Hungary published the results of its April 2025 quarterly Bank Sentiment Survey, showing that banks perceived a slight deterioration in the operating environment in 2024 Q4 and 2025 Q1 and expect sentiment to weaken further in 2025 Q2 and Q3. Respondents attributed the weaker assessment mainly to higher operating expenses, uncertainty in the international and domestic economic environment, a tightening regulatory environment, worsening corporate creditworthiness and falling profitability, partly offset by stronger household credit demand and intensified competition. Two-thirds of banks perceived a deterioration in the international macroeconomic environment and a net 43% in the domestic environment, while competition was reported as stronger mainly from non-bank participants (net 38%), with a net 30–40% expecting further intensification across segments. Access to funds was broadly unchanged, though 11% expect short-term funding conditions to improve and a net 8% foresee narrower long-term funding and interbank liquidity as long-term central bank secured loans mature. Credit risk developments were described as contained, but a net 24% reported a deterioration in corporate creditworthiness and expect a similar further deterioration; around half saw rising retail credit demand, while expected demand growth over the next six months fell to 30–35%. Regulatory tightening was reported by 30% of banks and expected by 35% over the next six months, linked to the tightened extra profit tax, the mortgage interest rate cap and the amended Capital Requirements Regulation (CRR3), alongside continued pressure on profitability and operating costs.
National Bank of Hungary 2025-05-20
National Bank of Hungary Bank Sentiment Survey shows banks expect further deterioration in the operating environment in 2025 Q2–Q3
The National Bank of Hungary's April 2025 Bank Sentiment Survey shows a slight deterioration in the operating environment in late 2024 and early 2025, with further weakening expected in mid-2025. Banks cite higher operating expenses, economic uncertainty, regulatory tightening, and worsening corporate creditworthiness as key factors, though household credit demand and competition from non-bank participants have intensified. Regulatory tightening, linked to the extra profit tax, mortgage interest rate cap, and amended Capital Requirements Regulation, is expected to continue impacting profitability and operating costs.