Press release after the meeting of the Governing Board of the Bank of Slovenia on 18 June 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 June 2013 review of the performance of the banks in the current year, developments on the capital market and interest rates, and approved it.

After increasing for two months, the banking system’s total assets contracted by EUR 450 million in April. The year-on-year contraction in total assets stood at 8.5%, 2.2 percentage points more than at the end of 2012. Lending activity continued to contract, primarily as a result of a decline in funding via deposits by the non-banking sector, while the banks’ repayments of debt to the rest of the world slowed during the month.

Decline in deposits, household deposits in particular, in April was a reflection of the deterioration in the income position of this sector in the context of government austerity measures, rising unemployment and declining real earnings. Despite the decline in household deposits, deposits by the non-banking sector in April remained at the same level as a year earlier. As a result of debt repayments on the financial markets, their relative importance as funding increased by 4.5 percentage points over one year to 53%.

After stagnating for several months, the quality of the banks’ credit portfolio deteriorated again in April. The portion of past due claims (over 90 days) reached 15.2% of all classified claims. The increase in bad claims and the large contraction in the balance sheet were both factors in the increase in the proportion of non-performing claims.

The banks have earmarked half of this year’s gross income for covering impairment and provisioning costs. The banking system recorded a pre-tax loss of EUR 41.5 million during the first four months of the year.

3) The Governing Board of the Bank of Slovenia approved the report on the operations of payment systems for the first quarter of 2013.