BUSINESS SHORT

Slovak banks immune so far, profits rise

WHILE European banks have been dealing with the effects of the current global financial crisis, their Slovak subsidiaries remain untouched. Instead, they have continued to enjoy high liquidity and reported solid profits for the first three quarters of 2008, the Hospodárske Noviny financial daily wrote.

WHILE European banks have been dealing with the effects of the current global financial crisis, their Slovak subsidiaries remain untouched. Instead, they have continued to enjoy high liquidity and reported solid profits for the first three quarters of 2008, the Hospodárske Noviny financial daily wrote.

Slovakia’s banking sector closed the first nine months of this year with a post-tax profit of Sk16.41 billion (€544.7 million), up 19.3 percent year-on-year, according to data from the National Bank of Slovakia.

The biggest bank in Slovakia, Slovenská Sporiteľňa (SLSP), recorded the biggest post-tax profit: of Sk4.34 billion (€144.1 million). VÚB Banka had the second biggest profit, of Sk3.489 billion (€115.8 million). Tatra Banka ended the first nine months of the year with a post-tax profit of Sk2.806 billion (€93.14 million).

“In spite of the fact that the financial crisis has a global character, it has barely touched our bank,” said Boris Gandel, a spokesperson for Tatra Banka. Most banking houses operating in Slovakia responded similarly.

But some banks admit that the on-going financial crisis has influenced their financial performance this year. Lenka Bartová, from the marketing department of Privatbanka, explained that her bank has felt the impact of a drop in the market price of bank bonds, as well as an increase in market interest rates.

Risky trading by clients has harmed Dexia bank in Slovakia, but this has not yet been reflected in its results.

Overall, the Slovak banking sector continues to enjoy good health. Rather than the crisis, it is the forthcoming switch to the euro which is currently having the most effect on banks’ profits. The transition to the European single currency is expected to cost financial institutions in Slovakia hundreds of millions of crowns. On the other hand, the banks are reporting an increase in crown deposits as Slovaks use this as a way to change their life savings from crowns to euros.

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