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Banks Return to Profit in February

Ljubljana, 04 April (STA) - Banks in Slovenia generated EUR 29m in pre-tax profit in January and February this year as write-downs and provisions were halved to EUR 66m on the same period last year, figures released by the central bank show.

This is a positive development as banks in Slovenia made EUR 356m in after tax losses last year, after ending 2010 with EUR 56m in the red. The costs of impairments and provisions rose by 35.4% to EUR 1.1bn in 2011.

But the central bank noted that the latest fall in provisions is primarily the consequence of high impairments and provisions in February 2011, while these costs still represent 31% of banks' gross revenues.

Although loans to the non-banking sector rose by EUR 165m in February due to heavier borrowing by the state, the crediting of the non-banking sector was still down 3.8% year-on-year, according to Banka Slovenije Bulletin.

Loans to non-financial companies were down 6% y/y in February. The fall is the result of lower crediting by Slovenian banks as banks in foreign ownership registered an increase in lending to companies.

The amount of loans to households decreased by EUR 72m in the first two months of the year due to a reduction of such loans by big banks, while year-on-year growth in such loans fell to 2% from 8%.

The central bank explains in the March issue of its bulletin that loans to households are as a rule lowest this time of the year, but it also says that the falling trend has been observed for some time now.

Banks reduced their debt to abroad by EUR 168m in February. Deposits by the non-banking sector were down by EUR 396m that month as the state reduced its deposits by EUR 548m as a EUR 1bn state bond reached maturity.

Deposits by households increased for the third month running in February, adding EUR 70m in February and a total of EUR 238m in all three months.

Total assets of the whole banking system fell by EUR 556m in February and was reduced by 4.5% year-on-year.

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