Low confidence in the corporate sector results in depressed borrowing

Confidence in the corporate sector continues to be low, as reflected in demand for new loans. This was a finding of a report by the Finance Ministry and the central bank (NBS) on lending opportunities for the Slovak banking sector in the corporate sector. In the first half of this year, a majority of banks reported a year-on-year decline in demand for loans in reaction to the lower volume of investment activities. The amount of loans in default continued to grow. In the first quarter of this year, such loans exceeded €1 billion, and 7 percent of loans were in default. In late June, this figure rose to 7.5 percent, the SITA newswire wrote.

Confidence in the corporate sector continues to be low, as reflected in demand for new loans. This was a finding of a report by the Finance Ministry and the central bank (NBS) on lending opportunities for the Slovak banking sector in the corporate sector. In the first half of this year, a majority of banks reported a year-on-year decline in demand for loans in reaction to the lower volume of investment activities. The amount of loans in default continued to grow. In the first quarter of this year, such loans exceeded €1 billion, and 7 percent of loans were in default. In late June, this figure rose to 7.5 percent, the SITA newswire wrote.

The situation in the corporate sector improved moderately in the second quarter, while the differences among individual sectors remained relatively large. The overall slight improvement, stimulated by exports, was confirmed not only by confidence indicators regarding anticipated demand, but also by actual increases in sales. In spite of the positive signs, future development is still uncertain, the report noted. Positive trends in the financial situation of enterprises did not translate into a growth in lending, but banks experienced a slowdown in the growth pace of loans in default. Commercial real estate was identified as a separate problem, representing a significant risk for financing banks. The persisting uncertainty regarding future developments resulted in banks’ preservation of loan conditions at a relatively strict level.

Source: SITA

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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