Monthly report on bank performance in July 2018
The Governing Board of the Bank of Slovenia discussed and approved the Monthly briefing on bank performance in July 2018.
The banking system’s total assets reached EUR 38.3 billion at the end of May 2018, as year-on-year growth increased by 0.5 percentage points in May to 2.5%.
Growth in loans to the non-banking sector (NBS) stood at 5.3% at the end of May, up 0.6 percentage points on December of last year. Similarly to last year, in their lending activity the banks are focusing on households. This year’s nominal increase in loans has again been larger in the household segment than in the corporate segment. Year-on-year growth in loans to non-financial corporations slowed to 2.3% in May. Year -on-year growth in loans to households is relatively stable, and stood at 6.7% in May, with rates of 4.2% in the housing loans segment and 11.7% in the consumer loans segment.
Deposits by the NBS are still increasing, while net repayments of debt have continued on the wholesale markets. Deposits by the NBS were up 5.1% in year-on-year terms in May, while household deposits were up 6.2%. The increase in deposits by the NBS is sufficient to fund the increase in loans, and the banks thus had no need to increase other sources of funding.
Non-performing exposures (NPEs) declined to EUR 2.2 billion in May, taking the NPE ratio down to 5.2%. Exposures to non-financial corporations account for the majority of the NPEs (EUR 1.5 billion), and this client segment also has the highest NPE ratio, at 11.2%. Forborne exposures account for the largest part of the NPEs to non-financial corporations, while only EUR 426 million are still more than 90 days in arrears. The wholesale and retail trade sector records the largest NPEs, at EUR 501 million, and the quality of this segment of the portfolio is also among the worst, with an NPE ratio of 20.1%. Claims more than 90 days in arrears now amount to just EUR 864 million, or just 2.4% of total classified claims.
The banks generated a pre-tax profit of EUR 251 million in the first five months of the year, up almost a fifth on the same period last year. Net interest income in May was no longer down on last year. Non-interest income has improved this year, as a result of favourable one-off effects at certain banks. The banks recorded a net release of impairments and provisions in the total amount of EUR 14.7 million over the first five months of the year, which had a significant impact on the level of the profit realised in the banking system.