From January, credit institutions will be able to pay dividends again. This will also make it possible to buy back shares to reward shareholders and make payments to reward performance. The central bank will not extend these restrictions.
The reason for the decision of Magyar Nemzeti Bank (MNB) is that the doubts caused by the coronavirus epidemic have now subsided, and a rapid economic recovery has begun, which will also reduce the risks related to the capital position of credit institutions.
The bank indicated that with the continued deferral of repayment, the percentage of loans subject to suspension of repayment also decreased to about 4 percent, which also reduces the risks. According to central bank data, sector-wide impairment coverage for credit institutions is sufficient, MTI writes.
The central bank’s current move is also in line with that of the European Central Bank (ECB) at the end of September, in which the ECB withdrew its previous recommendation to limit the payment of dividends. Last March, MNB adopted a comprehensive set of measures for credit institutions to mitigate the effects of the pandemic, but financial institutions have so far been able to exempt them from restricting the payment of dividends if strict conditions are met.
