NBS: Slovakia's Banking Sector Remains Resilient

  Bratislava, November 27 (TASR) - Slovakia's banking sector is still resilient, with sufficient capital buffers and robust profitability, according to a financial stability report presented by representatives of Slovakia's central bank (NBS) at a press conference on Monday.
        The capital adequacy of banks continued to grow to reach 19.7 percent in June. Resilience was supported by an increase in the counter-cyclical capital buffer from 1 percent to 1.5 percent. The situation has also been stabilised in terms of liquidity.
        "An important prerequisite for stability among banks is a sufficient level of profitability. This increased by more than half year-on-year. Profit growth was mainly driven by an increase in net interest income, particularly from the corporate sector. Banks' interest rate margins have returned to a much healthier level when compared to the previous decade. However, they aren't expected to grow significantly from now on. The main factor influencing profits will be stable growth in incomes from interest, especially from housing loans," said executive director of the NBS supervision and financial stability section Vladimir Dvoracek.
        According to him, the main source of uncertainty regarding profitability is the rate of increase in the proportion of fixed-term deposits. Another significant factor for bank profitability in the period ahead could be potential state interventions, especially in the form of a bank levy," he underlined.
        Dvoracek pointed out that most debtors should be able to continue to repay their loans even at higher interest rates. "Despite relatively rapid growth in interest rates, the household and corporate sectors should be able to continue to repay their loans without any significant problems. The proportion of default on loans remains at an all-time low," stated Dvoracek, adding that this also applies to loans for which rising interest rates have already led to higher repayment instalments.