Banking system has plenty of liquidity

Written by Christina Vontin

The Hungarian National Bank (MNB) has presented a positive assessment of the banking sector in its latest stability report.

Zita Fellner, Chief Economist at the MNB, emphasised the stability of the banking system. The sector would remain stable even in the event of an unexpected and prolonged economic downturn. In the first half of 2024, the domestic banking sector generated a historically high profit after tax of 934 billion forints (just over 2.3 billion euros). The banking system is resilient with exceptionally high profitability, ample liquidity and adequate capitalisation. The sector’s free capital reached 1,970 billion forints by the middle of the year.

Non-performing loans at a historic low

The share of non-performing loans remains at a historically low level in both the corporate and household segments – in the corporate sector it stagnated at 3.8%, while in the household segment it fell further to 2.3%. The quality of the loan portfolio in the corporate customer segment could be jeopardised by a devaluation of commercial property. However, the resulting risks would be mitigated by the expected stabilisation of the property market.

Residential property loans more than doubled

Annual growth in corporate loans slowed to 3.7% in the sector as a whole and to 0.7% in the SME segment. At the same time, personal loans increased significantly. The reasons for this are a stable employment situation and rising real wages. The volume of housing loans more than doubled year-on-year, with both the number of loans and their volume increasing.