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NBS finds Slovak banks stable and resilient towards shock

THE SLOVAK banking sector remains very stable with a high level of resilience towards negative developments, the National Bank of Slovakia (NBS), country’s central bank, said on May 27.

THE SLOVAK banking sector remains very stable with a high level of resilience towards negative developments, the National Bank of Slovakia (NBS), country’s central bank, said on May 27.

“The capital adequacy ratio has increased to its highest level since 2005,” said Vladimír Dvořáček, head of the financial market supervision department of the NBS, as quoted by the TASR newswire.

The capital adequacy ratio in Slovak banks reached 17.2 percent in February 2014. According to Dvořáček, it will be important to prevent the level of equity from falling substantially so that Slovak banks will be able to meet other criteria that NBS will require in the future.

Another indicator of sound developments in the Slovak banking sector is the risk appetite of Slovak banks, which increased by 9.2 percent year-on-year at the end of March, mainly due to an increase in loans provided to households, which has had a positive effect on interest income. Nonetheless, the NBS does not expect this trend to continue, so the structure of banks’ profits may change in the future, TASR wrote.

The central bank is optimistic when it comes to the outlook for the stability of the Slovak banking sector. Slovakia’s economy is growing, albeit moderately, with no imbalances emerging. The positive contribution of domestic demand is one important factor, along with rising profits in the private sector and positive developments in Slovakia’s net exports, as reported by TASR.

The country’s economy is reviving, which is being accompanied by growing confidence on financial markets, while another key factor is interest rates, which have been low over the long term.

Source: TASR

Compiled by Radka Minarechová from press reports

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