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Negative outlook for Slovak banks

THE INTERNATIONAL ratings agency Moody’s confirmed a negative outlook for the Slovak banking system. The agency expects that the ongoing weakness of the eurozone will slow economic growth in Slovakia, which might negatively affect the business environment of the banks, the SITA newswire reported on April 16.

THE INTERNATIONAL ratings agency Moody’s confirmed a negative outlook for the Slovak banking system. The agency expects that the ongoing weakness of the eurozone will slow economic growth in Slovakia, which might negatively affect the business environment of the banks, the SITA newswire reported on April 16.

Weakened foreign demand, domestic consumption and even rising taxes “will further dampen banks’ profit-generating capacity, their internal capital generation and, eventually, their capacity to provide new loans”, the agency stated in its report.

On the other hand, these negative factors will be partly balanced by the good capitalisation of the Slovak banks and their relatively stable situation in acquiring finances as well as in the area of liquidity, SITA wrote.

Moody’s also predicts that Slovakia’s weak and uncertain economic environment and rising pressure on interest margins due to greater market competition are likely to exert pressure on Slovak banks’ profitability over the following 12-18 months.

Moreover, the agency expects only mild growth in classified loans in 2013 because of the slowdown in economic growth and the labour market, and since consumer trust remains low, SITA wrote.

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