Based on the cyclical systemic risk indicators, lending has a healthy structure even with dynamic expansion; therefore, the increase of the countercyclical capital buffer is not justified at present. Considering the relevant factual data and the forward-looking information, the Financial Stability Council maintains the countercyclical capital buffer rate at 0 percent as of 1 October 2019. Given the dynamics of lending, the MNB will continue to closely monitor credit market developments.
As the press release said, The Financial Stability Council (FSC) of the National Bank of Hungary/Magyar Nemzeti Bank (MNB) has decided to maintain the countercyclical capital buffer rate applicable to domestic exposures at 0 percent. Based on the cyclical overheating and vulnerability indicators for the financial system, it is not justified to change the countercyclical capital buffer rate in effect.
While the dynamic domestic lending processes imply an ascending phase of the lending cycle, the net credit outflow cannot be considered excessive either overall or in the retail and corporate segments separately.
Both the speed of credit outflow and the absolute and relative volume of the outstanding stock, as well as the sounder structure of credit portfolios compared to earlier periods indicate sustainable lending processes in the economy. In an EU-wide and regional comparison, further room is available for the expansion of domestic lending and gradual financial deepening. Nonetheless, the MNB continues to closely monitor credit market processes.
The purpose of the countercyclical capital buffer is to increase the stability and resilience of the financial intermediary system across credit cycles. The MNB reviews the rate of the countercyclical capital buffer applicable to Hungarian exposures quarterly.
Source: National Bank of Hungary
