Slovak banking sector earnings grow 10.7% in 2013

By bne IntelliNews February 3, 2014

The aggregate net profit of Slovak commercial banks for 2013 rose 10.7% y/y to EUR 552.9mn, buoyed by a strong growth in the non-interest income, central bank data showed.

The sector’s net non-interest income jumped 12.9% y/y to EUR 588.7mn in 2013, while the banks' main source of revenue - the net interest income - rose at the slower rate of 3.1% y/y to EUR 1.8bn. The robust growth in non-interest revenue was driven mainly by a 9% rise in dividends received and by a 63.2% drop in costs related to debt securities transactions. Net creation of reserves and provisions for 2013 rose by 30.5% y/y to EUR 219.09mn.

IntelliNews comment: In 2013, Slovak commercial banks improved their financial performance and remained resilient against the risks they were facing. Fitch forecast last year, that the profitability of the Slovak banking sector will probably remain constrained by a moderate growth in 2014 due to the higher tax burden and restrictions on loan fees.

In 2012, the aggregate net profit of Slovak commercial banks dropped 27% to EUR 488.2mn mainly due to the introduction of a 0.4% special tax on corporate bank deposits as of January 1, 2012, which was extended to cover also retail deposits as of October 2012. The special tax affected negatively the performance of the sector in 2013 as well. The banks also increase their net creation reserves and provisions, which reflects the worsened economic situation in the country.

EUR 000 Jan-Dec-2013 Jan-Dec-2012 y/y change
Net interest income 1,813,698.0 1,758,929.0 3.1%
Net non-interest income 588,726.0 521,400.0 12.9%
--ow: gross fee and commission income 645,462.0 615,422.0 4.9%
Net operating profit/loss -245,554.0 -338,368.0 -27.4%
General operating expenses 1,203,752.0 1,177,996.0 2.2%
Net creation of reserves and provisions -219,091.0 -167,823.0 30.5%
Profit before tax 734,027.0 596,142.0 23.1%
Net profit 552,874.0 499,482.0 10.7%
Source: National Bank of Slovakia      

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