Featured Product

    MNB Publishes Results on Banking Business and Lending Survey

    March 13, 2023

    The Hungarian National Bank (MNB) published the results of its banking business survey for the fourth quarter of 2022, addressed the slowdown in growth of corporate and retail lending amid an increasingly uncertain economic environment, and recommended that Revolut Bank should operate as a domestic subsidiary bank in Hungary to protect its customers.

    The banking business survey results show that 38% of banks perceived a deterioration in the economic situation in the fourth quarter of 2022 and a net 34% of banks expects a worsening economy in the first half of 2023. According to the banks, macroeconomic conditions generally contributed to the deterioration in the economy, but negative shifts in customer risks, profitability, and the availability of funds also had an adverse effect on the assessment of the banking situation. Among the factors affecting the deterioration of the economic sentiment in the next six months, the decrease in profitability and the increase in customer risks may be the determining factors, while a significant minority of banks expect further deterioration of the macro environment. The results also highlight that the increase in market competition is the only factor that had a positive effect on the economic sentiment. The competition has intensified in the retail and corporate credit markets, as well as in the field of payment services and against non-bank players. Looking ahead, the banks expect increased competition in all areas, including 45% in the retail sector, in line with reduced demand due to rising interest rates, and 34% in the corporate sector, in connection with the increasing number of announced subsidized loan programs.

    With regard to lending, MNB indicates that the corporate loan portfolio of credit institutions increased by 14% in 2022, primarily supported by large corporate loan transactions; however, the annual growth rate of household loans slowed down to 6.3% in the second half of 2022, with contribution from higher repayment activity than before and declining new loan issuance. Overall, the conditions for obtaining credit for companies tightened in the fourth quarter of 2022. Based on the results of lending survey, 17% and 27% of credit institutions, respectively, further tightened the terms of housing and consumer loans, which may continue in the first and second quarters of 2023. Looking ahead, about one-third of the banks plan to tighten the standards in the first half of 2023, parallel to this, a decrease in demand for HUF loans and longer-term loans, while in the case of foreign currency loans and short-term loans, they expect a further increase in demand.

    MNB recommends Revolut Bank to carry out its activities as a domestic subsidiary bank, with its headquarters in Hungary and sufficient capital, as an institution under the supervision of the Hungarian Central Bank, to protect its domestic customers. Despite the repeated initiatives of MNB, Revolut Bank has still not submitted an authorization request for its domestic subsidiary bank and continues to operate as a cross-border service provider. Therefore, domestic customers are still unable to settle their settlement disputes in Hungary and the Hungarian deposit insurance protection does not cover their deposits with Revolut Bank. MNB has also warned customers of the associated risks.

    Keywords: Europe, Hungary, Banking, Lending, Credit Risk, Market Risk, Interest Rate Risk, Mortgage Loans, Revolut Bank, MNB

    Related Articles

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News

    EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules

    The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.

    October 31, 2023 WebPage Regulatory News

    BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks

    As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.

    October 19, 2023 WebPage Regulatory News

    BCBS and EBA Publish Results of Basel III Monitoring Exercise

    The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.

    October 18, 2023 WebPage Regulatory News

    PRA Updates Timeline for Final Basel III Rules, Issues Other Updates

    The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.

    October 18, 2023 WebPage Regulatory News

    US Treasury Sets Out Principles for Net-Zero Financing

    The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.

    October 17, 2023 WebPage Regulatory News

    EC Launches Survey on G7 Principles on Generative AI

    The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.

    October 14, 2023 WebPage Regulatory News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938