Significant growth in the green finance market
In 2021, the green financial markets substantially increased according to the Green Finance Report of the Central Bank of Hungary (MNB). Credit institutions launched green lending, and four banks are taking advantage of the MNB's green capital requirement discount for housing. Among green financing products, the green bonds are very popular both at public and corporate level, and green lending has also been launched on the corporate side. In the investment segment, ESG products are already available, but only to a limited extent.
The HUF 300 billion green loan budget had been exhausted due to the impact of inflation, so MNB suspended the green lending programs. Nevertheless, MNB is still working on how to continue or restart programmes in a context of tightening monetary policy. The deputy governor of MNB explained that the Green Home Program or the Green Mortgage Bonds Purchase Programme would be continued, but the timing depends on price stability. The next inflation report will be published at the end of June 2022, when the Monetary Council will reassess the situation and decide on the next steps.
To increase the liquidity of the corporate bond market, MNB launched the Bond Funding for Growth Scheme (BGS) on 1 July 2019. Within the scope of the scheme, for a facility amount of HUF 1550 billion the central bank purchased bonds with good ratings issued by non-financial corporations as well as securities backed by corporate loans. In the BGS, 16 green bonds were issued for HUF 373,3 billion in the construction industry, processing industry, real estate, commerce, agriculture and electronic sectors. In December 2021 MNB closed the BGS, however, intends to launch further issues in the green corporate bond market later. Government securities are already showing signs of "greening", that means investors are putting less of a premium on these products.
For investment funds, there is a gap as domestic ESG funds represent only 1.8% of the asset value of capital markets, compared to 42% in the EU. As demand grows and investors become more aware, this area could increase.