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Financial stability strong, some risks remain, c-bank says

Ljubljana, 18 December (STA) - The Slovenian financial system is sound and risks remain low to moderate, with only one particular area of concern, banks' income, suggests the Slovenian central bank's quarterly financial stability report, released on Wednesday.

The income risk estimate has been raised from moderate in the second quarter to heightened with a negative outlook in the third quarter, mostly as a result of increasing systemic risks associated with the cooling of economic growth and uncertainty in the international environment.

The only other risk estimated as heightened stems from the real estate market, but its outlook has been changed to positive as housing prices start to drop.

All the other analyses risks remain low to moderate.

Banka Slovenije says that the main reason why crediting risk remains low is the recent introduction of curbs on consumer lending, which accounts for a small portion of the credit portfolio but was growing quickly in recent years.

The capital adequacy of the banking system is "reasonably good" but will become more challenging as the cooling of economic growth makes it more difficult for banks to be profitable.

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