10 May 2006

The Magyar Nemzeti Bank held its Annual General Meeting on 10 May 2006. Minister of Finance János Veres was present at the Meeting as the representative of the Hungarian state, the shareholder. Members of the Board of Directors, the Monetary Council, the Supervisory Board, the representative of the State Audit Office and the Bank’s auditor also attended the Meeting. Governor Zsigmond Járai put forward the annual accounts of the Magyar Nemzeti Bank for 2005.

The financial results of the Magyar Nemzeti Bank were determined mainly by the objectives of monetary policy and the instruments required to achieving them. The pursuit of its statutory objectives set forth in the MNB Act may not be influenced by the effect of such on financial results. Consequently, the MNB’s financial policy is limited to managing its operating expenses in a cost-effective and cost-saving manner.

The balance sheet total of the Magyar Nemzeti Bank was HUF 4,711.0 on 31 December 2005, up HUF 812.3 billion on its amount a year previously, mainly as a combined result of the upward effect on the balance sheet total of net foreign currency conversion linked to the central budget and the downward effect of repayments of debt by the central budget to the Bank as well as repayments of foreign debt by the Bank. Foreign exchange reserves increased by HUF 1,083.6 billion to HUF 3,931.1 billion in 2005.

Net forint-denominated interest expense was HUF 116.8 billion and net foreign currency-denominated interest income HUF 99.2 billion in 2005. The difference decreased relative to the previous year, the reason for which being the reduction in forint interest rates and an increase in foreign currency interest rates.

On 31 December 2005, the Magyar Nemzeti Bank had shareholder’s equity of HUF 132.9 billion. Here, financial results were a loss for the year of HUF 21.4 billion.

As a combined effect of revaluations and transactions, the market value of securities held as part of foreign exchange reserves fell overall. Consequently, the equalisation reserve of foreign currency-denominated securities, a constituent of shareholder’s equity, had a negative balance of HUF 14.8 billion on 31 December 2005. Pursuant to Article 17 of Act LVIII of 2001 on the Magyar Nemzeti Bank, the central budget provided a reimbursement equivalent to the negative balance, which had been recorded in the balance sheet for the year.

The Annual General Meeting approved the report on the audited financial accounts of the Magyar Nemzeti Bank for the financial year 2005.

Retained earnings provided cover for the loss for the year. Consequently, the central budget has no liability reimburse for losses. Pursuant to Article 65 of Act LVIII of 2001 on the Magyar Nemzeti Bank and according to the decision of the Annual General Meeting, the MNB is not required to make a dividend payment from its retained earnings.

The Annual General Meeting discussed and approved the business report of the Magyar Nemzeti Bank for the financial year 2005.

Magyar Nemzeti Bank