Capital and liquidity reserves make the banking system crisis-proof

Hungary’s banking system was in a “state of readiness” as it faced a sharp increase in risk due to the war in Ukraine, and the sector’s capital and liquidity buffers ensure that lenders will be resilient even if the conflict extends, the National Bank of Hungary (NBH) said in a report on Wednesday.

“The banking sector has significant liquidity reserves, which provide strong protection against high risks. According to our stress test, the sector would meet regulatory liquidity and capital requirements even under a severe stress scenario,” the central bank said in its new Financial Stability Report.

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Central bank: double-digit inflation in Hungary “inevitable”

Central bank: double-digit inflation in Hungary

Barnabás Virág, deputy governor of the Hungarian central bank, said inflation would peak in the third quarter, averaging 9-10% annually.

During a press conference presenting the report, the head of the department Bálint Dancsik said that the outstanding loans of commercial banks to the companies most affected by the increase in energy and raw material prices amounted to about 2 trillion forints (5.2 billion euros), or about a fifth of all business loans. book. Within this credit, loans to the most vulnerable companies, in the chemical industry and industries that depend on metal raw materials, amount to 620 billion forints, or about 6% of the stock of loans, he said. -he adds.

Dancsik said the phasing out of the general moratorium on repayments from November 1 has not resulted in any “significant” deterioration in the quality of the portfolio, pointing out that the non-performing loan rate for the corporate loan portfolio has risen. from about 3.5% to 4.2%. by February.

In the featured photo illustration: Governor of the Central Bank György Matolcsy. Photo by Szilárd Koszticsák/MTI

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