2026 Q1 Quarterly decision on the countercyclical buffer rate: 1.25%

Quarterly decision of the National Bank of Belgium on the countercyclical buffer rate for 2026Q1: 1.25 % Pursuant to Art. 5 §2 Annex IV to the Banking Law, the National Bank of Belgium has decided to set the countercyclical buffer rate for exposures in Belgium at 1.25 %. 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 1 October 2025, the National Bank of Belgium has decided to increase the countercyclical capital
   buffer rate for Belgian exposures from 1% to 1.25%. The increase will take effect on 1 July 2026, following a six-month implementation period.
5. In view of the good level of compliance with the prudential expectations for new Belgian mortgage
   loans introduced in 2020 (cf. circular NBB_2019_27), the NBB has noted that vulnerabilities in mortgage loan portfolios have decreased in recent years, both in terms of the probability of default and the potential losses that banks would incur in the event of default. In 2025, the NBB recalibrated the capital requirements which are in place in Belgium since 2013 to strengthen the resilience of the banking sector against potential risks in mortgage portfolios. The reduction in vulnerabilities in these 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.

portfolios justifies a decrease in the capital buffer against these risks. Also in 2025, the NBB assessed that the level of risks not related to Belgian mortgage portfolios had not increased further. Consequently, the size of the capital buffer dedicated to these risks does not need to be adjusted.
6. In addition, the NBB has decided to simplify its macroprudential policy. There are currently two
macroprudential capital buffers in place: a specific buffer for mortgage loans and a more general countercyclical buffer. Given the uncertain economic and geopolitical context, the NBB considers that the resilience of the banking sector would be best ensured by combining these two buffers into a single, general buffer. The recalibrated buffer dedicated to mortgage loan portfolios will therefore be integrated into the countercyclical buffer in future. The current uncertain environment makes it even more difficult than usual to identify precisely how losses might materialise for the Belgian banking sector. The use of a single capital buffer with a broader scope is therefore appropriate. In the event of an economic or financial shock, regardless of its nature, the NBB may decide to release the expanded countercyclical buffer, i.e. allow banks to use the previously reserved capital. This would enable them to provide financing solutions to Belgian borrowers facing repayment difficulties while continuing to grant the necessary loans to the real economy in Belgium.
7. 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 Q2 -5.4 Households % GDP 2025 Q2 -5.5 Non-financial corporations % GDP 2025 Q2 0.1 CCyB guide related to preferred credit gap2 % RWA 2025 Q2 0.0 Standardised credit-to-GDP gap % GDP 2025 Q1 -34.4 CCyB guide related to standardized credit gap2 % RWA 2025 Q1 0.0 Bank loan growth y-o-y % 2025 M06 4.0 Households y-o-y % 2025 M06 2.9 Non-financial corporations y-o-y % 2025 M06 5.8 p.m. Credit-to-GDP ratio3 % GDP 2025 Q2 78.1 Non-financial private sector resilience Debt-to-GDP ratio % GDP 2025 Q1 116.5 Households % GDP 2025 Q1 57.1 Non-financial corporations % GDP 2025 Q1 59.5 Net financial assets % GDP 2025 Q1 135.5 Financial and assets markets Equity prices, nominal (Euro Stoxx 50) y-o-y % 2025 M07 8.9 Price-earnings ratio (Euro Stoxx 50)4 – 2025 M07 18.7 House prices, nominal y-o-y % 2025 Q1 3.8 House prices, real y-o-y % 2024 Q2 -1.7 10-year government bond yield % points/y 2025 M07 3.2 Bank lending rate on mortgage loans to households % points/y 2025 M06 3.1 Bank lending rate on loans to non-financial corporations % points/y 2025 M06 3.5 Banking sector resilience CET 1 capital ratio % 2025 Q2 14.7 Equity-to-total assets ratio % 2025 Q2 7.3 Loan-to-deposit ratio % 2025 Q2 97.0 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 Q2 3.35 Belgian households % total loans 2025 Q2 1.25 Forbearance ratio Belgian non-financial corporations % total loans 2025 Q2 1.73 Belgian households % total loans 2025 Q2 0.84 Loan loss ratio5 Consolidated, including interbank loans b.p. 2024 11.3 Non-consolidated, excluding interbank loans b.p. 2024 13.3 Sources: LSEG, 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: LSEG, NBB.

STATISTICAL ANNEX (cont.)
Sources: LSEG, NBB.

STATISTICAL ANNEX (cont.)
Source: NBB.