2025 Q3: Quarterly decision of the National Bank of Belgium on the countercyclical buffer rate (1 July 2025): 1.0%

Quarterly decision of the National Bank of Belgium on the countercyclical buffer rate for 2025Q3: 1.0 % Pursuant to Art. 5 §2 Annex IV to the Banking Law, the National Bank of Belgium has decided to keep the countercyclical buffer rate for exposures in Belgium at 1.0 %. Justification

1. The countercyclical capital buffer is a macroprudential instrument designed to mitigate cyclical
   systemic risks and to counter pro-cyclicality in lending. Its objective is to support the sustainable provision of credit through the cycle by strengthening the resilience of banks. In particular, capital buffers are imposed whenever there is an increase in cyclical systemic risks (i.e. with excessive growth in lending), so that these additional requirements can be relaxed when the cycle turns and the risks start to decline. If risks emerge – in a situation of financial stress for instance – a decision can be taken to release the buffer instantly in order to give the banks some extra breathing space and thus put them in a better position to absorb losses and keep up their level of lending when the economic and financial environment is vulnerable. The countercyclical buffer rate, expressed as a percentage of banks’ risk-weighted assets, is generally between 0 and 2.5 %, but can be set higher when justified by the underlying risk. It should be noted that the countercyclical capital buffer is only one of the macroprudential instruments available to the National Bank of Belgium for achieving its mission of contributing to the stability of the financial system.
2. Pursuant to Article 5 of Annex IV to the Law of 25 April 2014 on the legal status and supervision of
   credit institutions, the National Bank of Belgium sets each quarter the countercyclical buffer rate applicable to credit exposures to counterparties located on Belgian territory on the basis of one or more reference indicators that reflect the credit cycle and the risks stemming from excessive credit growth in Belgium, and that account for the specific elements of the national economy. These indicators shall include the deviation of the credit-to-GDP ratio from its long-term trend (the credit￾to-GDP gap), accounting for the change in volumes of credit granted on Belgian territory and the evolution of Belgian GDP, the recommendations issued by the ESRB, and any other variable that the National Bank of Belgium deems relevant to capture cyclical systemic risk.
3. The National Bank of Belgium sets the countercyclical buffer rate pursuant to its policy strategy
   regarding the countercyclical capital buffer.1 In line with the Basel III framework and the ESRB Recommendation of 18 June 2014 on guidance for setting countercyclical buffer rates, the quarterly decision on the countercyclical buffer rate is partially based on a ‘buffer guide’ derived from the credit-to-GDP gap.2 Given the specific features of the domestic financial system and statistical properties of the credit series monitored, the National Bank of Belgium sets the credit-to-GDP variable on the basis of resident bank loans. The quarterly decision on the countercyclical buffer rate also takes into account additional macrofinancial indicators, including broader credit measures.
4. On 17 June 2025, the National Bank of Belgium has decided to maintain the countercyclical capital
   buffer rate for Belgian exposures at 1%. 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. Against this 1 "Setting the countercyclical buffer rate in Belgium: a policy strategy". 2 The buffer guide is the result of the credit-to-GDP gap being mapped into a benchmark buffer rate, as specified in the ESRB Recommendation of 18 June 2014 on guidance for setting countercyclical buffer rates. The benchmark buffer rate equals 0 % for credit-to-GDP gap levels up to 2 percentage points. When the credit-to-GDP gap exceeds 2 percentage points, the benchmark buffer rate increases linearly, reaching its maximum level of 2.5 % for credit-to-GDP gap levels of 10 percentage points and higher.

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. 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.
5. Countercyclical capital buffer decisions are revisited each quarter, in accordance with European
regulations and the National Bank of Belgium’s macroprudential powers under the 2014 Banking Act.

Table 1: Key indicators1
Variable Unit Latest period Value
Non-financial private sector credit cycle (resident bank loans) Preferred credit-to-GDP gap % GDP 2025 Q1 -6.0 Households % GDP 2025 Q1 -5.7 Non-financial corporations % GDP 2025 Q1 -0.3 CCyB guide related to preferred credit gap2 % RWA 2025 Q1 0.0 Standardised credit-to-GDP gap % GDP 2024 Q4 -33.4 CCyB guide related to standardized credit gap2 % RWA 2024 Q4 0.0 Bank loan growth y-o-y % 2025 M03 3.3 Households y-o-y % 2025 M03 2.5 Non-financial corporations y-o-y % 2025 M03 4.5 p.m. Credit-to-GDP ratio3 % GDP 2025 Q1 77.7 Non-financial private sector resilience Debt-to-GDP ratio % GDP 2024 Q4 117.4 Households % GDP 2024 Q4 57.4 Non-financial corporations % GDP 2024 Q4 60.0 Net financial assets % GDP 2024 Q4 135.4 Financial and assets markets Equity prices, nominal (Euro Stoxx 50) y-o-y % 2025 M04 8.5 Price-earnings ratio (Euro Stoxx 50)4 – 2025 M04 17.0 House prices, nominal y-o-y % 2024 Q4 0.8 House prices, real y-o-y % 2024 Q2 -1.6 10-year government bond yield % points/y 2025 M04 3.1 Bank lending rate on mortgage loans to households % points/y 2025 M03 2.9 Bank lending rate on loans to non-financial corporations % points/y 2025 M03 3.4 Banking sector resilience CET 1 capital ratio % 2024 Q4 14.9 Equity-to-total assets ratio % 2025 Q1 7.2 Loan-to-deposit ratio % 2025 Q1 95.5 External imbalances Current account % GDP 2024 Q2 0.1 Net international investment position % GDP 2024 Q2 61.0 Asset quality NPL ratio Belgian non-financial corporations % total loans 2025 Q1 3.38 Belgian households % total loans 2025 Q1 1.34 Forbearance ratio Belgian non-financial corporations % total loans 2025 Q1 1.84 Belgian households % total loans 2025 Q1 0.9 Loan loss ratio5 Consolidated, including interbank loans b.p. 2024 11.3 Non-consolidated, excluding interbank loans b.p. 2024 13.3 Sources: Thomson Reuters, Refinitiv, NBB. 1 Monthly averages for daily data. Data are shown end of quarter (March, June, September, December) or for the latest month available. 2 CCyB guides are expressed in percentage of risk-weighted assets.

3 Outstanding amounts of loans granted by resident monetary financial institutions to households and non-financial corporations, including those securitized, in percentage of GDP. 4 Price earnings (P/E) ratio is a trailing (12 months) P/E ratio. 5 The loan loss ratio is the net flow of new impairments for credit losses, expressed as a percentage of the total stock of loans (one basis point is one-hundredth of one per cent).

STATISTICAL ANNEX
Sources: Thomson Reuters, Refinitiv, NBB.

STATISTICAL ANNEX (cont.)
Sources: Thomson Reuters, Refinitiv, NBB.

STATISTICAL ANNEX (cont.)
Source: NBB.