NBB maintains a countercyclical capital buffer of 1% for credit institutions The National Bank is legally required to review the level of the countercyclical capital buffer (CCyB) every quarter. This is a temporary additional capital reserve that increases the resilience of banks, so that they can better absorb credit losses and continue to support borrowers in the event of a sharp increase in repayment difficulties. The National Bank has decided to maintain the rate of this c

A strong financial sector amidst considerable uncertainty

The credit and residential property cycles are gradually picking up again after a very orderly slowdown over the last two years. The Belgian financial sector has, meanwhile, maintained its strong financial position. However, there is considerable uncertainty due to recent geopolitical developments and the impact of higher import tariffs on international trade and export-oriented sectors. These circumstances led to a period of considerable - albeit brief - turbulence on financial markets in April. The quality of the assets held by Belgian banks has remained unaffected, but the creditworthiness of certain economic sectors could deteriorate in the event of a sharp slowdown in growth due to a trade war or other geopolitical shocks.

Increased resilience remains necessary

Against this backdrop, the National Bank has determined that an additional capital reserve in the Belgian banking sector remains necessary. Several corporate sectors, for example, real estate, continue to face challenges following the substantial increase in interest rates that has occurred since the beginning of 2022. In addition, the macro-financial environment remains vulnerable to spillover effects from geopolitical developments, trade conflicts and the associated uncertainty. Belgian banks are by far the largest providers of external debt financing to Belgian households and Belgian non-financial corporations, with outstanding loans to these sectors amounting to €301 billion and €186 billion respectively.

A significant capital reserve that can be released

Should Belgian banks unexpectedly face a significant increase in credit losses in specific sub-segments of their loan portfolios, the countercyclical capital buffer can be (partly) released. This helps banks to absorb the shock in an orderly manner and support affected borrowers.

This quarter's decision implies that the National Bank is maintaining the CCyB rate at 1%, representing a buffer of around €2.5 billion.

The level of the countercyclical capital buffer is reviewed every quarter on the basis of macro-financial developments and an up-to-date risk assessment for Belgian banks.