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MNB to book HUF 100 bln of FX sales profit against eventual losses

Telco

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The National Bank of Hungary (MNB) yesterday said it would book against eventual losses about HUF 100 bln of profit on the sale of foreign currency from its international reserves to banks for the conversion of FX mortgages. The MNB said it had recorded about HUF 136 bln in profit on the FX sales related to the conversion. The remainder will be put into profit reserves, it added.

The plans were detailed in a short announcement on the bank's website. In the same announcement, the MNB dismissed a "baseless attack" on it by commercial news channel HirTV.

In a morning news program, HirTV cited comments by two former central bank governors that the MNB should pay its profit into the state budget to reduce government debt rather than spend it.

The MNB stressed that its tasks and operations and its relation to the general government are governed by the central bank act, saying that the MNB's profit "is the community's profit which it spends on community goals and from which it builds wealth for the community".

The MNB sold €7.9 bln to banks from its reserves for the planned conversion of FX retail mortgages into forints in November. In October-November it also sold them about €1 bln to help cover refunds to retail clients necessary under borrowers' relief legislation.

The international reserves are booked at their cost rate, and the difference between the official rate and the cost rate is accounted in the so-called revaluation reserves on the balance sheet. The MNB realised an exchange rate gain on the sale as the forint was weaker at the time of the sale than the average cost rate.

In 2013, such gains were the MNB's most significant profit item, reaching slightly more than HUF 200 bln.

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