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MNB maintains the countercyclical capital buffer rate at 0 per cent

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22 December 2017

The Magyar Nemzeti Bank has determined the countercyclical capital buffer rate applicable from 1 January 2018. The level of cyclical systemic risks is low, and therefore the Financial Stability Board - with a view to supporting lending - has decided to maintain the 0 percent rate.

The purpose of the countercyclical capital buffer is to increase the stability and resilience of the financial intermediary system across credit cycles. The MNB sets the level of the countercyclical capital buffer on a quarterly basis.

There has been no substantial change in the level and dynamics of cyclical systemic risks compared to the previous quarterly review, despite the further recovery in the credit market. Though the turnaround in lending has occurred in both the household and corporate segments, net credit outflow cannot be considered excessive. The degree of the persistently and significantly negative benchmark credit-to-GDP gap, as well as the current level and dynamics of the supplementary indicators on overheating and vulnerability signal a low level in cyclical systemic risks. Accordingly, the Financial Stability Board of the MNB has decided to maintain the countercyclical capital buffer rate applicable to domestic exposures at 0 percent. Foreseeably no change is expected over the forthcoming one-year horizon, which may support the sustainable lending activity of credit institutions.

Development of cyclical risks in the domestic financial system may be influenced by financial developments in countries where financial institutions with headquarters in Hungary have material exposures. Accordingly, the MNB monitors the lending practices of material third countries for the Hungarian banking system and, if necessary, prescribes a countercyclical capital buffer rate for the exposures of domestic credit institutions. In its annual review, the MNB identified Montenegro, Russia, Serbia and Ukraine as material third countries for Hungary. Based on the evaluation by the MNB and – for Russia – by the European Systemic Risk Board, the current level of cyclical systemic risk in all of countries is low, and therefore the prescription of a countercyclical capital buffer rate for exposures in those countries is not justified.

Further information on the countercyclical capital buffer and other information necessary for the functioning thereof

Magyar Nemzeti Bank