Bank Board Releases Details Of Decision On CCyB Rate Adjustment

The Bank Board released a statement with a full justification of its decision to lower the countercyclical capital buffer (CCyB) rate by 25bp to 2.00%. The statement is normally published the day after the decision, as was the case this time.

• The Bank Board noted that its Financial Cycle Indicator (FCI) "decreased in 2023 Q1 to levels well below the local peak reached at the end of 2021," mainly due to "a slowdown in growth in new loans to households, slower property price growth and a decline in the debt of households and corporations". Furthermore, "net new loans to households for house purchase slowed, dropping in volume by around 27% year on year at the end of 2023 Q2".
• "Should the cyclical risks continue to disappear naturally from the banking sector’s balance sheets, the CNB is ready to lower the countercyclical capital buffer rate gradually further. Should the economic situation worsen significantly and significant unexpected credit losses form in the domestic banking sector, the CNB is ready to lower the buffer rate more significantly or release the buffer fully in order to foster smooth lending to the real economy."