The Belgian financial sector had a relatively good year in 2024 despite extreme market volatility and strong turbulence, according to the National Bank of Belgium (NBB).
However, in its latest financial stability report, released on Wednesday, the NBB advises institutions to remain cautious amid geopolitical tensions and economic policies in the United States.
Belgium’s economy achieved a “soft landing” after soaring inflation and a rapid tightening of monetary policy, including sharp interest rate hikes in 2022 and 2023, according to the NBB.
The year 2024 also saw the return of €22 billion to banks from a one-year government bond issued in September 2023, money that originated primarily from regulated savings accounts.
The NBB is concerned about the commercial real estate market, which has struggled to recover even as monetary policy eased last year. The bank stresses the importance of vigilance, urging banks to closely monitor credit risks associated with this sector.
“Risk pockets” persist due to high interest rates and the widespread adoption of remote working following the pandemic.
Amid uncertain macroeconomic conditions, the NBB maintains its unchanged macroprudential policy, including the countercyclical capital buffer, a financial safety net of €2.5 billion or 1%.
The bank calls on public authorities to preserve debt sustainability, given the significant impact of public finances on banks’ health.
