Off the wire
• Financing key to Ghana's water, sanitation SDG campaign  • Kazakh President Nursultan Nazarbayev has no plans to make his children his successor  • Roundup: EU, Ukraine wrap up summit with focus on reforms, visa-free regime  • SMEs make up 99.9 pct of business entities in Slovakia: official  • Mega-earthquakes preferentially occur on flat faults: study  • Albania launches national campaign to fight violence against women  • One in eight young people in Britain not in work, education or training: ONS  • British workers could face a decade of no pay growth: academics  • Crime levels continue to fall, but 385,000 young people were victims: report  • Burundi says UN human rights investigators unwelcome  
You are here: 　 Home

Profits of Slovak banks to fall in next few years: central bank official

Xinhua, November 25, 2016 Adjust font size:

The Slovak financial sector has maintained high resilience to external shocks, though the banking sector's profitability is expected to drop in the next few years, a top Slovak central bank (NBS) official said Thursday.

Vladimir Dvoracek, director of NBS'financial market supervision department, sid even though banks' profits rose by six percent year-on-year in the first three quarters of 2016, when non-recurring effects are calculated in, it becomes evident that overall profits were down by eight percent.

"We conducted a simulation of profitability for the next three years, and it emerged that we'll see a drop in the profitability of the banking sector next year, with this trend, albeit more moderately, set to continue in 2018 and 2019," said Dvoracek, adding that the overall slump in profits could be as huge as 40-50 percent in the next few years.

This development should be largely driven by a continuing drop in interest incomes. NBS pointed in particular to a significant fall in mortgage incomes, with this situation due to a legislative change in March that introduced a ceiling on fees for repaying loans prematurely. This resulted in a doubling of refunding loans, while interest rates have declined steeply.

"With regard to the expected level of profitability and the growth of capital requirements, we assume that banks will have to restrict the paying of dividends in the near future somewhat," noted Dvoracek.

NBS also reported that the stability of the Slovak financial sector has been supported solidly by the domestic economy, which continued growing at a stable rate. At the same time there has been a dynamic double-digit increase in the volume of loans provided to households, including consumer loans and housing credit. Enditem