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Slovenian banks' quarterly profit flat

Ljubljana, 28 May (STA) - The brisk pace of profit growth in the Slovenian banking sector after the crisis appears to have tapered off, with banks reporting a cumulative net profit of EUR 130.2 million for the first quarter, up 1.1% over the same period last year. Profit before tax was up 4.8% to EUR 149.5 million.

Gross revenue inched 0.2% lower to EUR 290.5 million, as net interest revenue rose 6.2% to EUR 165.7 million whereas non-interest revenue was down 7.6% to EUR 124.9 million, shows a monthly central bank report released on Tuesday.

Banks' total assets rose 4.8% year-on-year to EUR 39.5 billion on the back of higher household deposits, which account for almost half of all bank financing sources. Deposits by the state and other financial organisations increased as well.

Corporate deposits, on the other hand, continued to contract, which the central bank says is an indication that companies are leveraging both own funds and bank sources to finance current operations.

The report shows that banks remain focused on lending to households, with housing loans up 5.2% year-on-year and consumer loans surging by 12.8% in the same period.

Consumer loans, which are more profitable for banks but also riskier, account for a small share of the overall credit portfolio but have been gaining in importance in recent years.

The central bank says maturities have been increasing while a lot of consumer loans are general rather than for specific purposes, which additionally increases risk.

Loans to corporate also increased in the first quarter, rising by EUR 252 million or by more than in the whole of 2018.

Overall, the quality of bank portfolios has been improving, with the share of non-performing loans dropping to 3.6% at the end of March.

Loans overdue by more than 90 days comprised only 2% of classified loans, a level comparable to the period before the crisis.

"Nevertheless, banks need to remain active in tackling outstanding non-performing loans since the cooling of economic growth can slow down this process significantly," the report says.

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