Press release - Monthly information on bank performance in March 2017

The Governing Board of the Bank of Slovenia discusses the Monthly information on bank performance in March 2017*

The banking system’s total assets increased by fully EUR 617 million in March, bringing an end to several years of decline. Total assets increased to EUR 37.6 billion, up 1.5% in year-on-year terms. March’s increase was the result of Slovenian banks’ borrowing from the Eurosystem, where the funds were borrowed in the most recent TLTRO II tender. The above-average growth in total assets was also attributable to an increase in deposits by the non-banking sector, most notably deposits by non-financial corporations. On the investment side there was an increase in balances at the central bank, mostly from the funding obtained in the TLTRO II, which the banks have not yet placed in the target investments.

Growth in loans to the aggregate non-banking sector is continuing to strengthen: they were up 3% in year-on-year terms in March. After three months of positive increases, loans to non-financial corporations declined slightly in March, although the year-on-year rate of growth nevertheless remained positive at 2.3%. The increased corporate demand for loans being reported by banks could stabilise or even increase lending to this sector. Non-financial corporations’ increased financial strength and improved creditworthiness as a result of several years of deleveraging and rising profits could encourage further growth in lending to this sector. The overall increase in credit demand will not necessarily be reflected solely in increased lending activity by domestic banks, as non-financial corporations are also seeking alternative sources of financing more intensively. Lending activity to households is continuing to strengthen: the changes in the banks’ approach to the financing of consumer loans in particular have raised growth in this segment. Household loans were up 6.5% in year-on-year terms in March, as consumer loans have increased particularly rapidly over the last six months.

Sight deposits continue to account for a large proportion of household deposits and aggregate deposits by the non-banking sector (67% of the former and 65% of the latter). As interest rates remain low, the increase in deposits by the non-banking sector is continuing to be driven by sight deposits, and the stock of fixed-term deposits is continuing to decline. After increasing by EUR 620 million in total over a period of five months, household deposits declined slightly in March, taking the high year-on-year growth rate down slightly to 6.1%.

The quality of bank investments again improved in the first quarter of this year. The proportion of claims more than 90 days in arrears stood at 5.3% in March, while the stock of such claims stood at EUR 1.8 billion.

The banking system’s gross income in the first quarter was down 2.5% in year-on-year terms, as a result of a further decline in net interest income. Net non-interest income continued to record positive growth, in the amount of 3.8%.The banks continued releasing impairments and provisions in March. The banks generated a pre-tax profit of EUR 141.2 million in the first quarter of the year.

Bank liquidity remains favourable. The banking system’s capital adequacy is also satisfactory: the total capital ratio stood at 19.1% on a consolidated basis. 

*publication is available only in slov. language http://www.bsi.si/iskalniki/porocila.asp?MapaId=1329