Scope assigns MFB BBB+ rating

Ratings

Scope Ratings has assigned the state-owned Hungarian Development Bank (MFB) a BBB+ issuer rating, level with its sovereign rating for Hungary, MFB said in a disclosure posted on the website of the Budapest Stock Exchange on Monday, according to a report by state news wire MTI.

The outlook for the rating is stable.

In a separate release, Scope said its rating for MFB reflects the "explicit, direct and irrevocable statutory funding guarantee of Hungary for MFB's financial obligations", as well as the state's record of financial support for the lender, a supportive legal framework, and MFB's "high strategic importance" as an entity for implementing government policy.

Scope explained that any change to Hungary's sovereign rating or to the legal framework for government support for MFB could result in a modification of MFB's rating.

The agency noted that MFB's NPL ratio fell to 3.39% in 2020, but said it expected the trend to reverse by year-end because of the end of a repayment moratorium and "rising loans associated with increased risk". 

Scope added that MFB's "sound" Tier 1 capital ratio of 22.4% in 2020 allows the bank to retain earnings to support further growth and provide a buffer in view of its expanding balance sheet. 

The agency said "challenges" to MFB's BBB+ rating include the lender's limited loan portfolio diversification and modest though stable profitability, both a reflection of MFB’s public policy mandate.

ADVERTISEMENT

Reforms to raise productivity would strengthen recovery - OE... Analysis

Reforms to raise productivity would strengthen recovery - OE...

Meeting called to address Pegasus spyware lacks quorum  Parliament

Meeting called to address Pegasus spyware lacks quorum 

Skanska commercial dev unit names new EVP of operations Hung... Appointments

Skanska commercial dev unit names new EVP of operations Hung...

Zsa Zsa Gabor's ashes buried in Budapest City

Zsa Zsa Gabor's ashes buried in Budapest

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.