National Bank Issues Financial Stability Report

The Hungarian banking sector's stability indicators remain favourable, the sector is characterised by high shock absorbing capability, while risks are increasing in the real estate markets, the National Bank of Hungary (MNB) says in its report published this Tuesday.

Presenting the latest biannual Financial Stability Report, Ádám Banai, a managing director at the central bank, said the banking system's liquidity was "ample" and its capital position "strong." He added that the sector's capital adequacy ratio stood at 20.7% at the end of June, representing a capital buffer of more than HUF 2,300bn.

After a slight decline, Ádám Banai said banks' twelve-month rolling return on equity reached 19.1% in June. Interest revenue from the state is on the rise as banks' bond portfolios grow, he added. State interest subsidies are expected to reach HUF 562bn in 2025, a 24% increase on the year.

The managing director highlighted growing risk on the real estate market, noting an 18.8% overvaluation of home prices. He added that outlays of Home Start government-subsidized credit for first-time home buyers could reach HUF 1,900 billion by the end of 2026.

Without a significant expansion of supply, he said the scheme could add a 15-percentage-point increase to home prices by that time.

He said the corporate lending market had expanded 2% year-on-year, but did not yet indicate a "real turnaround."