MAGYAR NEMZETI BANK
and published professional articles in English on its website. Related information was typically and mainly communicated to international economic actors via the Twitter interface, which also allowed for continuous and direct interaction. During the year, the MNB continuously updated the public on the international activities of the central bank and its executives. There was also active communication about the foreign visits of Hungarian delegations as well as the international meetings and conferences organised in Hungary.
3.12 THE MNB’S INCOME IN 2020 The MNB generated a profit of HUF 255.4 billion in 2020. This was due in part to the interest income, which remained positive even though it was lower than in 2019, along with the realised exchange rate gain that was higher than in 2019. Foreign exchange sales due to the state’s expenditures on protection against the pandemic contributed to the rise in the exchange rate gain. The MNB paid HUF 250 billion as a dividend from its retained earnings to the central budget in 2020. In 2020, the MNB recorded a profit of HUF 255.4 billion. During the year, the following main developments had an effect on the balance sheet and the profit: – the level and composition of international reserves defined by monetary policy, risk management considerations and foreign currency purchases and sales affecting the level of reserves: net foreign exchange inflows from EU transfers, operations performed by the Government Debt Management Agency in relation to debt management, and the foreign exchange conversions
performed by the Hungarian State Treasury for purposes not related to debt financing; – developments in instruments absorbing forint liquidity, which are correlated with changes in foreign exchange reserves and the MNB’s net foreign currency receivables, as well as with the evolution of the central bank’s liquidity and growth support instruments; – monetary policy instruments to support the liquidity and lending activities of the banks (collateralised loan facility, FGS) and the BGS aimed at diversifying the fundraising of the corporate sector and increasing the liquidity of the corporate bond market; – central bank asset purchase programmes (government security and mortgage bond purchase programmes); – changes in forint interest rates and international foreign exchange interest rates; and – changes in exchange rates. Net interest and interest-related income generated a profit of HUF 40.7 billion, which was HUF 8.7 billion lower than the outcome in 2019. Both forint and foreign exchange interest incomes showed profits, but the decline in forint interest income exceeded the improvement in foreign exchange interest income. In 2020, due to the central bank’s measures taken to mitigate the negative economic and financial impacts of the pandemic, the balance sheet total increased significantly, and the stock of interest-bearing forint assets and liabilities increased substantially.
Table 8 Abbreviated income statement and individual balance sheet items of the MNB (HUF billions)
Description (P/L line)
No.
2019
2020
Change
1 2 3 4 5 6 7
Net interest and interest-related income (I+II)-(X+XI) Net forint interest and interest-related income (I-X) Net foreign exchange interest and interest-related income (II-XI) Realised gains/losses arising from financial operations (IV-XIV) Income arising from exchange rate changes (III-XII) Other constituents of net income* (V+VI+VII+VIII)-(XIII+XV+XVI+XVII+XVIII) Profit/loss for the year (1+4+5+6)
49.4 30.6 18.8 7.3 229.1 -31.1 254.7
40.7 10.7 30.0 5.1 286.1 -76.5 255.4
-8.7 -19.9 11.2 -2.2 57.0 -45.4 0.7
8 9 10
Selected items of equity in the balance sheet Retained earnings Revaluation reserves due to unrealised foreign exchange gain/loss Revaluation reserves due to changes in the market value of the foreign currency securities
198.2 187.8 32.2
202.9 586.4 58.0
4.7 398.6 25.8
*Incomes from supervisory activities, net profit/loss of banking operations, costs of issuing banknotes and coins, creation of provisions and impairment, income/expenses from commission and from other items.
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ANNUAL REPORT • 2020
