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Banks’ profits in year to date down by 35 percent year-on-year

The banking sector in Slovakia reported post-tax profits of €321.7 million up to the end of July 2012. According to data from Slovakia’s central bank, the National Bank of Slovakia (NBS), this was 34.9 percent less than for the same period of last year. Net interest income fell by 1.7 percent to €1.028 billion.

The banking sector in Slovakia reported post-tax profits of €321.7 million up to the end of July 2012. According to data from Slovakia’s central bank, the National Bank of Slovakia (NBS), this was 34.9 percent less than for the same period of last year. Net interest income fell by 1.7 percent to €1.028 billion.

Formation of reserves and provisions rose slightly, too, but the profitability of banks in Slovakia dropped this year mainly due to the introduction of a special bank levy, according to the banks. When the levy was introduced, banks repeatedly warned that it would have a negative impact on their profitability in 2012, the SITA newswire wrote. The NBS said that the profitability of the sector might not return to pre-crisis levels because of the bank levy, which is not likely to change.

The Fico government introduced the increased levy as part of its financial consolidation measures. This September an amendment to the law on the special levy for certain financial institutions takes effect. With effect from the last quarter of 2012, the basis for calculating the levy will be widened to include retail deposits, meaning that banks will already have to start paying the full special levy this year. However, the levy rate should eventually decrease and, in order to eliminate a double burden, the duty of banks to pay a contribution to the Deposit Protection Fund will temporarily be suspended.

According to preliminary data, the post-tax profits of the banking sector in Slovakia increased by about one-third last year to nearly €672 million. However, the Slovak Banking Association told SITA that an important component of banks' profit was one-off income. After deducting this, the net profit of the banking sector last year was around €503 million, approximately the same as in 2010.

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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