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Slovenia's banking sector posts 20% growth in H1 net profit

Ljubljana, 03 September (STA) - Slovenian banks saw their cumulative half-year net profit rise by a fifth year-on-year to EUR 355.9 million due to strong growth in non-interest revenue and cancellation of provisions and impairments.

The banking sector's pre-tax profit was up by a quarter to EUR 402.2 million, shows a report by the central bank.

Banka Slovenije said that the situation in the sector remained favourable, but warned that persisting low interest rates and a slow-down in interest activity could exert pressure on interest revenue and thus the banks' profitability.

Net interest revenue rose by 2.8% in the first half of the year as non-interest revenue surged by 38.6%. Gross revenue rose by 18.8% to EUR 704.9 million.

In the period, the banks cancelled EUR 35.5 million worth of impairments and provisions.

The banks' total assets increased by 4.4% year-on-year to EUR 40.152 billion at the end of June. It was mainly loans to the non-banking sector that increased.

The report notes a strong growth in loans to foreign companies, running at an annual rate of 35% in June. Nevertheless, these loans represent only 4.3% of all loans to the non-banking sector.

The growth in lending to the non-banking sector has been driven mainly by household loans. Retail loans were up 11.7% year-on-year in June with housing loans remaining stable.

The growth in lending to businesses remained at last year's level, rising to 5% in June due to loans to a major Slovenian company.

Exposure to non-performing loans (NPL) kept decreasing to EUR 1.4 billion in June. Exposure to new NPL, approved over the past two years and a half, was low.

"We would like to note the need to consistently maintain the attained crediting standards, considering that the expected economic slow-down may reflect in increased exposure to NPL in the future," the central bank said.

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