Central bank: Hungary’s banking sector remains profitable and shock-resistant
The Hungarian banking system is still characterised by high profitability, abundant liquidity and a strong capital position, and consequently, the sector’s shock resilience remains strong, National Bank of Hungary (NBH) department head Bálint Dancsik said on Thursday, presenting the central bank’s Financial Stability Report.
The capital position of banks has further strengthened, which is important for both shock-resistant capacity and lending capacity, with high capital buffers also implying high lending capacity. The current level would be sufficient to double private sector credit, Dancsik said.
There are no general supply constraints in lending, but the duality of the credit market remains unchanged. Household lending picked up throughout last year and at the beginning of this year, while corporate lending did not pick up.
Based on a stress test, the banking sector would meet regulatory requirements for liquidity and capital adequacy even in the event of a severe, low-probability shock, he noted.
The report said Hungarian banks recorded a profit of HUF 1,595bn in 2024, which was even higher than in the previous year. The continued high level of net interest income and bank credit risk, not growing sharply, contributed substantially to maintaining the outstanding profitability. The role of specific, one-off items was significant, and after excluding such items, the sector’s profit decreased year-on-year.
The 12-month rolling profitability indicators have fallen from their peak levels in May 2024, but remain outstanding by international standards: the sector’s return on equity (RoE) fell to 22.6pc and its return on assets (RoA) dropped to 2.0pc at the end of 2024.
According to the report, lending developments in Hungary are still characterised by dual trends. The annual growth rate for household loans outstanding reached 10.5pc in February, while the corporate loan portfolio grew by only 1.8pc.
The improving household income situation, increasing competition between banks and the subsidised loans all contributed to the growth in the household loan portfolio. The spreads of market-based housing loans did not move away from their near-zero level. Due to the prolonged dynamisation of the real economy, no turnaround has been seen in corporate lending, and looking ahead, demand for investment loans may remain subdued according to the banks’ expectations.
The NBH initiated discussions with credit institutions on the possibilities of increasing corporate lending to support the economy. The share of foreign currency loans in corporate loans rose to 50pc, but the stock of FX lending remains concentrated in corporations with foreign currency income. In 2025, household loans outstanding are forecast to grow by 12pc, and corporate loans by 4.5pc.
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