Budapest, 29 May 2025 – 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 outstanding. Banks’ lending capacity is abundant, and no general credit supply constraints can be identified. In the past period, credit risks did not rise despite the prolonged dynamization of the real economy, while the non-performing loan ratio is historically low.
The shock resilience of the Hungarian banking system is strong even in view of the current uncertain global environment. In 2024, the credit institution sector’s consolidated capital adequacy ratio (CAR) rose slightly to 20.5 per cent, and at HUF 2,256 billion, the free capital of banks was at a high level, over and above the increasing capital requirements. Solvency stress tests show that the banking sector’s shock resilience would remain robust even in the event of an extremely unfavourable economic scenario, and the incurred capital needs would remain manageable. Even in the event of a low-probability, severe shock as examined in the stress scenario, the sector’s lending capacity would not be constrained. The banking sector would also remain resilient in the event of alternative stress scenarios with less severe macroeconomic effects (escalation of the tariff war, a significant decline in Germany’s industrial production), but with a higher probability of occurrence.
Capital accumulation is supported by the fact that Hungarian banks recorded a profit of HUF 1,595 billion in 2024, which was even higher than in the previous year; about half of this may be reinvested based on preliminary dividend payment plans. The continued high level of net interest income and the fact that bank credit risks did not increase sharply in 2024 contributed substantially to maintaining the outstanding profitability. The role of specific, one-off items (dividend income, reduction of the windfall tax, a one-off accounting effect) was also significant, and after excluding such the sector’s profit decreased in a year-on-year comparison. 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 22.6 per cent, and its return on assets (RoA) dropped to 2.0 per cent at the end of 2024.
Banks’ liquidity remains abundant. The Hungarian banking system’s Liquidity Coverage Ratio (LCR) was 170 per cent, while the operational liquidity reserve amounted to HUF 21,000 billion in March 2025. Based on the Liquidity Stress Test results, the domestic credit institution sector’s liquidity surplus would provide adequate coverage to meet increased regulatory requirements even in the event of a severe shock. Central bank long-term collateralised loans as well as the transfer of part of the municipal deposits to the Hungarian State Treasury will have a dampening effect on the liquidity of banks in 2025; at the same time, however, there is abundant systemic liquidity available to manage this.
Lending developments in Hungary are still characterised by dual trends. The annual growth rate for household loans outstanding reached 10.5 per cent in February 2025, while the corporate loan portfolio grew by only 1.8 per cent. 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 dynamization 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 MNB 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 50 per cent, but the stock of foreign currency lending remains concentrated in corporations with foreign currency income. In 2025, household loans outstanding are forecast to grow by 12 per cent, and corporate loans by 4.5 per cent.
The Hungarian banking system has significant lending capacity thanks to its outstanding profitability, abundant liquidity and its high level of free capital, despite increasing capital requirements. According to our estimate, the free capital of HUF 2,256 billion would make it possible to disburse approximately HUF 30,000 billion, with which the private sector’s lending portfolio would more than double.
https://www.mnb.hu/en/publications/reports/financial-stability-report