Press release after the Meeting of the Governing Board of the Bank of Slovenia on 16 July 2013

1) The Governing Board of the Bank of Slovenia discussed current supervisory matters.
2) The Governing Board of the Bank of Slovenia discussed the July 2013 report on the performance of the banks in the current year, developments on the capital market, and interest rates.

The increase in government deposits after the issue of Slovenian government bonds denominated in US dollars had a major impact on the banking system’s aggregate balance sheet in May. The banking system’s total assets increased by EUR 380 million, thereby slowing the year-on-year contraction to -7.2%. Loans to the non-banking sector continued to decline in May. A decline of EUR 265 million in loans to non-financial corporations accounted for just under a half of the decline in loans. While loans to non-financial corporations declined by 12.8% in year-on-year terms, growth in loans to households has also been declining this year, the year-on-year rate reaching -3.1% in May.

Limited funding remains a major factor in the decline in the banks’ lending activity. Slovenian banks’ liabilities to banks in the rest of the world have declined by EUR 1.1 billion this year (the banks under majority foreign ownership accounting for EUR 650 million of this), comparable to last year’s decline of EUR 1.2 billion in liabilities over the same period. Household deposits also declined in May, by EUR 81 million, but the decline was more moderate than in April and no longer as pronounced as in the two previous months. Deposits by non-financial corporations remain unchanged.

The banking system recorded a pre-tax loss of EUR 117 million during the first five months of the year, as a result of a year-on-year decline of 21% in net interest income and high impairment and provisioning costs, although the latter were down 4.3% on the same period last year.