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.
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