National Bank maintains countercyclical capital buffer for credit institutions at 0%

The NBB has decided to maintain the CCyB rate at 0% for the second quarter of 2023, allowing Belgian banks to maintain credit to households and non-financial corporations without tightening credit conditions.
This decision was made in response to recent developments in the US and Swiss banking sectors, which highlighted the risks that can materialize when interest rates are low, credit and liquidity conditions are ample, and asset prices are high.
The NBB urged Belgian banks to remain vigilant and proactively manage risks during the current downward phase of the financial, credit, and real estate cycles. The NBB also encouraged financial institutions to be cautious in their decisions regarding dividends and other types of profit distributions, considering the potential macroeconomic developments. Given the latest developments, it is anticipated that the expense of equity and other financial instruments such as AT1-bonds will persist at elevated levels for a while, making it even more imperative to take action now.
Belgian banks should use their available capital to increase credit risk provisions, offer debt restructuring solutions to clients, and support the real economy. The NBB will continue to closely monitor Belgian banks‘ use of the capital room provided by the current CCyB decision to support credit volumes and credit conditions.