Profits of banks increase at record high rate

Their incomes were impacted by the sale of shares of payment card issuer Visa Europe.

Illustrative stock photoIllustrative stock photo (Source: SME)

The net profit of Slovakia’s banking sector amounted to €560.6 million in the first nine months of 2016, which is 6.4 percent more than last year. It is their best result since 2011, but it has been affected mostly by one-time operations, the ČTK newswire reported.

The biggest impact on this year’s profitability of Slovak banks was the sale of shares of Visa Europe to the pycompany Visa Inc. The banks may have earned some €100 million on the transaction.

This transaction, however, does not represent a sustainable income for the banking sector as it will be paid in a single amount, according to the Slovak Banking Association. Moreover, NBS predicts that due to the transaction the net non-interest incomes of banks linked to payment cards will decrease in the future as the banks paid less to Visa than to MasterCard, where a similar change had been done some time ago, as reported by the SITA newswire.

The net interest income, which is the main source of banks’ profits, dropped more than 4 percent to €1.34 billion, while the net income from fees and provisions fell by about 1 percent to €391.2 million, ČTK wrote, referring to the data of the National Bank of Slovakia (NBS), the country’s central bank.

Slovak banks, meanwhile, increased the total volume of loans to their clients by one-tenth compared with last year, while deposits in banks increased at a slower rate, ČTK wrote.

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