BRATISLAVA, October 3, (WEBNOVINY) — The Slovak financial sector has not yet noticeably felt the growing uncertainty that appeared on global markets over recent months. “Despite the fact that we speak about negative trends on global markets, the Slovak financial sector mostly recorded positive trends,” said Marek Licak of the department of analyses from the viewpoint of macro-level prudence of the National Bank of Slovakia (NBS). As far as the future development is concerned, the central bank has not quantified yet what impact can be expected in Slovakia provided that the negative trend in the world continues. The only quantification for now is stress testing of our banks while even the negative development should not leave considerable traces on their financial stability, according to the central bank.
Over the past weeks, reports appear increasingly frequently on rating agencies’ decisions downgrading the rating of foreign parents of Slovak banks. The executive director of the NBS department for supervision over the financial market Vladimir Dvoracek said that currently we see prices of shares of some foreign banks dropping. However, he underscored that the banks operating in Slovakia are part of the Slovak financial sector and are independent corporate entities operating based on a license from the central bank. This means that downgrading of the rating of a foreign parent bank does not have any direct influence on Slovak clients.
While the analysis of the financial sector for 2010 spoke about relatively favorable trends in the macroeconomic development and signs of stabilization of financial markets, during the first half of the year and the following months of 2011, the situation deteriorated in several areas. The substantial was an increase in uncertainty on financial markets prompted mainly by worries about the health of European banks, the crisis of eurozone members and also by worries about the slowdown of global economic growth. Negative expectations regarding economic growth have even more fueled the debt crisis in the eurozone. In Slovakia, most sectors reported an increase in the volume of assets and also profitability posted growth while in some sectors it closely approached or even achieved the pre-crisis levels. The reason is the orientation of the local financial system on the Slovak economy along with the fact that in the first half of this year positive data dominated on the economic growth in Slovakia.
The banking sector in Slovakia posted a net profit of EUR 431 over six months of this year, representing a y/y increase of 79 percent. Behind the growth of the bank houses‘ profit was a decline in costs on forming provisions and reserves to band loans, by 56 percent y/y. Banks also benefited from an increase of loans to households and the subsequent growth in interest income. Dvoracek finds it important that about half of the generated profit last year remained in Slovakia‘s banks.
SITA
