Magyar Nemzeti Bank records a successful year in 2006

Annual general meeting of the MNB

The Magyar Nemzeti Bank held its annual general meeting today. The parties attending approved the MNB’s audited annual accounts showing a HUF 14.6 billion profit for 2006. The general meeting has elected a new auditor.

The Magyar Nemzeti Bank held its annual general meeting on 29 May 2007. Minister of Finance János Veres represented the State, as the shareholder. Members of the Board of Directors, the Monetary Council and the Supervisory Board, as well as the representatives of the State Audit Office and the auditor were also present at the meeting. The annual accounts of the Magyar Nemzeti Bank for 2006 were presented by András Simor, Governor of the MNB. The general meeting has approved the annual accounts.

The balance sheet total of the Magyar Nemzeti Bank was HUF 4,843.6 billion on 31 December 2006, up HUF 132.5 billion (2.8%) from the previous year, mainly as an effect  of currency conversions related to net foreign borrowing by the central government. The amount of foreign exchange reserves was HUF 151.2 billion (3.8%) higher, reaching HUF 4,082.3 billion.

In 2006, the net forint interest balance showed a loss of HUF 131.6 billion. In contrast, the net foreign exchange interest balance showed a HUF 116.4 billion gain. The net loss in the interest balance fell to HUF 15.2 billion from the previous year, attributed to lower annual average forint interest rates and higher foreign interest rates. The gains realised due to changes in foreign exchange rates had the greatest impact on the MNB’s annual financial results, showing a profit of HUF 66.4 billion due to the temporary depreciation of the forint exchange rate during the year.

On 31 December 2006, the shareholder’s equity of the Magyar Nemzeti Bank was HUF 91.1 billion, including a balance sheet profit of HUF 14.6 billion.

As a combined effect of changes in stocks and interest rates, the market value of securities held under foreign exchange reserves fell, and consequently, the equalisation reserve for foreign currency securities shown under equity indicated a negative balance of HUF 20.6 billion on 31 December 2006. Pursuant to Article 17 of Act LVIII/2001 on the Magyar Nemzeti Bank, the Government made a direct cash reimbursement to the appropriate equalisation reserve to the amount of the negative balance before 31 March 2007.

Pursuant to Article 65 of Act LVIII/2001 on the Magyar Nemzeti Bank, the general meeting has adopted a decision concerning the appropriation of the profit for the year, according to which the MNB shall not pay any dividends, and shall transfer this sum to the accumulated profit reserve.

As the five-year contract between the Magyar Nemzeti Bank and its auditor, Ernst & Young, expired, at recommendation of the President of the State Audit Office the general meeting elected KPMG Hungária Kft. as the new auditor.

The financial results of the Magyar Nemzeti Bank are mainly determined by the objectives of monetary policy and the instruments at its disposal to achieve them. The effects on financial results may not influence the discharge of its statutory duties, and therefore the operations of the Bank shall be limited to the prudential and cost-effective management of its operating expenses.