General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
August 03, 2018

IMF published its staff report under the 2018 Article IV consultation with Hungary. The staff report, among others, concludes that the banking system remains, on average, profitable, liquid, and well-capitalized. Bank profitability was high in 2017 and only a few small banks reported losses.

The report also reveals that the nonperforming loans (NPL) ratio declined from 7.4% to 4.2% during 2017, mainly due to sizable NPL sales, increased lending, and better debt service by borrowers. This trend is reported to have continued during the first quarter of 2018. After a long "credit-less" recovery period, bank lending to non-financial companies—particularly to small and medium enterprises—is growing by nearly 11%. Credit to households—mainly mortgages—is also growing, albeit at a slower pace. Credit growth is expected to remain strong, while NPLs will likely decrease further. Lending surveys suggest that both demand and banks' willingness to lend have improved. Deposits increased rapidly, further reducing the loan-to-deposit ratio. The preliminary data for 2017 report the average tier I capital ratio at 14.4% and capital adequacy ratio, or CAR, at 16.4%.

Staff also welcomes the continued strengthening of off-site reporting and emphasized the importance of on-site inspections as well. Staff noted the continuing progress in consolidating credit cooperatives, which can contribute to enhancing efficiency and help meet the authorities’ objective of reducing the relatively high intermediation costs. Staff highlighted that consolidation should remain market-based. The authorities concur with staff that, although real estate prices are not currently overvalued, close monitoring remains warranted. They also stressed that while macro-prudential tools can help contain financial sector risks, the housing boom should be seen in a broader context, including the low level of household debt compared to peer countries. Furthermore, Magyar Nemzeti Bank, or MNB, reiterated its commitment to continuously enhance its supervisory practices and guidelines in line with EU requirements.

 

Related Link: Staff Report

Keywords: Europe, Hungary, Banking, Article IV, NPLs, CAR, IMF

Related Insights
News

MAS Amends Notice 637 on Capital Adequacy Requirements in Singapore

MAS published the final, revised Notice 637 on the risk-based capital adequacy requirements in Singapore.

November 13, 2018 WebPage Regulatory News
News

ESMA Updates Q&A on Implementation of CSD Regulation and MAR

ESMA updated questions and answers (Q&A) documents on the implementation of the Central Securities Depository (CSD) Regulation and Market Abuse Regulation (MAR).

November 12, 2018 WebPage Regulatory News
News

FSB Finalizes and Publishes the Cyber Lexicon

FSB published a cyber lexicon, following the public consultation earlier this year.

November 12, 2018 WebPage Regulatory News
News

SRB Updates Liability Data Reporting Template for 2019

SRB published version 2.7.1 of the Liability Data Reporting (LDR) Template.

November 12, 2018 WebPage Regulatory News
News

IMF Publishes Reports on the 2018 Article IV Consultation with Chile

IMF published its staff report and selected issues report under the 2018 Article IV consultation with Chile.

November 09, 2018 WebPage Regulatory News
News

PRA Issues PS27/18 on Implementing the Extension of SM&CR to Insurers

PRA published the policy statement PS27/18, which provides feedback to responses to the consultation paper CP20/18, on implementing the extension of the Senior Managers and Certification Regime (SM&CR) to insurers (Part 2).

November 09, 2018 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for November 2018

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

November 09, 2018 WebPage Regulatory News
News

FED Finalizes the Large Financial Institution Rating System

FED finalized the new supervisory rating system for Large Financial Institutions (LFIs), to better align with the current supervisory programs and practices for these firms.

November 09, 2018 WebPage Regulatory News
News

ECB Publishes Guides for Capital and Liquidity Management by Banks

ECB published the guides for capital and liquidity management by banks in EU.

November 09, 2018 WebPage Regulatory News
News

EC Amends Regulation on Prudent Valuation for Supervisory Reporting

EC published the amended Implementing Regulation (EU) 2018/1627 on prudent valuation for supervisory reporting. Regulation 2018/1627 amends the Implementing Regulation 680/2014.

November 09, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2199