Banking sector reports 84% higher half-year net profit

Ljubljana – Slovenian banks generated a cumulative after-tax profit of EUR 226.4 million in the first half of the year, an increase of 84% compared with the same period last year that the central bank says is the product of a release of impairments and provisions.

According to the monthly report released by Banka Slovenije, the combined pre-tax profit of banks in Slovenia rose by over 90% year-on-year to over EUR 251 million.

This was as more than two-thirds of banks reported net release of impairments and provisions, more than half of which was by a single bank.

A total of EUR 26 million net was released after banks formed EUR 98.5 million in net impairments and provisions in the first half of last year.

“Sustainability of earnings generated in this way remains uncertain going forward, as release of impairments and provisions is usually short-term and cannot make up for continued fall in net interest income,” the central bank warns in the report.

The fall in net interest revenue slowed down, with the figure for June at EUR 310.2 million, down 4.5% year-on-year. Non-interest revenue was up by 2.7% to EUR 279.9 million.

Total assets grew by 10.3% in one year to June to reach EUR 47.7 billion, following a growth of EUR 1.4 billion in June alone in the biggest monthly growth since June 2008.

The increase is attributed to financing secured through the June auction of the Eurosystem’s targeted longer-term refinancing operations and a surge in household deposits.

Growth in lending to the non-banking sector continued, increasing by EUR 426 million year-on-ear to almost EUR 24 billion as the volume of housing loans rose by EUR 245.9 million.

Year-on-year decline in lending to businesses slowed down again with the volume, at EUR 8.9 billion, now already comparable to the level in the same period last year.

Lending to households has been increasing since March with the year-on-year growth in June at 2.9%, mainly due to an increase in housing loans, at 6.6%. Housing loans in June were up by EUR 71 million, twice as much as the average growth in the first five months of this year.

The share of exposure to non-performing loans remained low, at 1.4% in the last three months.

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