Business News

Banks Halve Nine-Month Pre-Tax Profit

Ljubljana, 06 November (STA) - Total assets of banks in Slovenia decreased by EUR 510m in the first nine months of the year to EUR 51.102bn, while their pre-tax profit more than halved on the same period last year, figures from the central bank show.

While operating costs remained on a par with last year's figure, writedowns and provisions kept rising. In September provisions and impairments increased by EUR 74m to EUR 447m, a 57% rise year-on-year.

The increase reflects growing credit risks, while impacting on operating results. As a result, the pre-tax profit of banks fell to EUR 95m in the first nine months, according to the Bulletin of Banka Slovenije.

Total bank assets dropped by EUR 321m in September and were down 0.4% year-on-year. This was mainly on account of a EUR 260m decrease in liabilities to the euro system as refinancing by the European Central Bank (ECB) reached maturity. Slovenian banks renewed a little less than one third of ECB loans due.

The other reason for the decrease in assets was a fall in state deposits. Claims to foreign banks shrank by EUR 292m and investments in securities were down.

Loans to the non-banking sector dropped by EUR 6m at the monthly level in September, while the annual growth rate dropped to 1.9%. The main reason for the fall was a decline in loans to non-financial companies and other financial organisations coupled with modest lending to households.

The drop in crediting of non-financial firms was much lower in September than August. The year-on-year contraction remained at 0.6%, while the loans decreased by EUR 12m. The bulk of the fall was brought about by small domestic banks and majority foreign-owned banks.

After relatively high crediting of households in August, the net increase in these loans in September was at EUR 28m among the lowest monthly increases this year. The annual growth rate was 10%, which is level with the previous two months.

Following three months of deleverage, banks in Slovenia posted EUR 249m in net borrowing against foreign banks. Most of the banks took out loans to repay ECB funds or return state deposits. It was mainly foreign-owned banks that borrowed abroad.

Deposits by the non-banking sector dropped by EUR 268m in September, chiefly on account of lower state deposits as well as deposits by other financial organisations and households. Year-on-year deposits by the non-banking sector fell by 1.2%.

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