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 Articles
News

ESAs Amend Technical Standards on Mapping of ECAIs Under CRR

ESAs published a second amendment to the implementing technical standards on the mapping of credit assessments of External Credit Assessment Institutions (ECAIs) for credit risk under the Capital Requirements Regulation (CRR).

May 20, 2019 WebPage Regulatory News
News

OCC Consults on Information Collection for Home Mortgage Disclosures

OCC is soliciting comment on the revision of the information collection titled “Regulation C—Home Mortgage Disclosure.” OCC also notes that it has sent the collection to OMB for review.

May 20, 2019 WebPage Regulatory News
News

EIOPA Updates Q&A on Regulations in May 2019

EIOPA published additional questions and answers (Q&A) on guidelines, directives, and regulations applicable to insurers in Europe.

May 17, 2019 WebPage Regulatory News
News

FSB Publishes Update on Meeting of RCG for Americas

FSB published a summary of the meeting of its Regional Consultative Group (RCG) in Americas.

May 17, 2019 WebPage Regulatory News
News

IASB Issues Work Plan and Meeting Updates for May 2019

IASB published an updated work plan, along with the update of its meeting in May 2019.

May 17, 2019 WebPage Regulatory News
News

FCA Publishes Its Business Plan for the Coming Year

FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20.

May 17, 2019 WebPage Regulatory News
News

CFTC Proposes to Amend Derivatives Clearing Organization Regulations

CFTC proposed amendments to certain regulations applicable to registered derivatives clearing organizations (DCOs) under Part 30 of the CFTC regulations.

May 16, 2019 WebPage Regulatory News
News

APRA Licenses Societe Generale As Foreign Deposit-Taking Institution

APRA granted Societe Generale a license to operate as a foreign authorized deposit-taking institution under the Banking Act of 1959.

May 16, 2019 WebPage Regulatory News
News

EBA Provides Updates on Its Work on Basel III Impact Assessment in EU

EBA is working to finalize the impact assessment on implementation of Basel III standards, in response to the EC call for advice, which was received on May 04, 2018.

May 16, 2019 WebPage Regulatory News
News

ISDA Publishes Two Consultations on Benchmark Fallbacks

ISDA published two consultations on benchmark fallbacks, the comment periods for which expire on July 12, 2019.

May 16, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 3097