Slovak banks’ lending portfolio edges up 0.6% y/y in August 2013

By bne IntelliNews September 30, 2013

The total value of outstanding bank loans in Slovakia edged up by 0.6% y/y to EUR 41.66bn as of end-August 2013, following a 0.03% annual growth in July, data by the central bank showed. Commercial banks’ corporate loan book narrowed by 1.4% y/y as of end-August, softening from a 3.4% y/y decline in the previous month. The yearly growth in lending to households decelerated slightly to 9.4% from 9.6% in July.

On a monthly basis, the total value of outstanding bank loans fell 0.4% in July, following the same 0.4% decline in July.

In August alone, the Slovak banks extended a total of EUR 1.42bn in new loans, lower than EUR 1.44bn in July and EUR 1.66bn in August 2012.

IntelliNews comment: The lending activity in Slovakia's banking sector has weakened since the second half of last year given the weak consumer sentiment, deteriorating domestic economic outlook and mounting risks in the external environment. The outstanding amount of corporate loans has been falling mainly due to the tightening of credit standards, but also due to the growing reluctance of companies to invest given the uncertain economic outlook.

We expect the lending market to be sluggish this year as corporate credit growth is set to hold back in line with the continuous fall in private investments. Retail lending looks resilient despite the economic slowdown and the weak consumer sentiment. It may be negatively affected by the high unemployment, but is supported by increasing real wages, relatively low real estate prices and the low interest rate environment. The growth potential for consumer lending is high given the fact that Slovakia has the lowest level of indebtedness in the eurozone with the ratio of household debt to gross disposable income standing at 43%. On the other hand, the lending market is pressured by new, stricter bank regulations and increased risks from default in line with the economic slowdown.

Loans granted, outstanding amounts, EUR mn   Aug-13 Jul-13 Aug-12 y/y change m/m change
Loans - total 41,660.2 41,839.2 41,399.1 0.6% -0.4%
Loans to non-financial corporations 15,606.6 15,598.7 15,828.2 -1.4% 0.1%
Loans to households 19,869.6 19,728.8 18,155.1 9.4% 0.7%
Loans for house purchase 17,606.2 17,494.7 16,177.2 8.8% 0.6%
Consumer loans 2,687.8 2,661.1 2,399.5 12.0% 1.0%
New Loans, EUR mn          
New Loans - total 1,420.7 1,438.3 1,660.8 -14.5% -1.2%
--operating loans 428.8 512.3 790.2 -45.7% -16.3%
--investment loans 208.6 119.8 224.0 -6.9% 74.1%
--consumer loans 124.6 128.5 121.7 2.4% -3.1%
--loans for house purchases 427.9 492.3 352.1 21.5% -13.1%
----mortgages 67.7 80.6 61.9 9.4% -16.1%
----building loans 1.6 2.3 2.0 -22.8% -30.9%
----intermediate loans 34.9 44.6 46.1 -24.3% -21.8%
----other loans for house purchases 323.8 364.8 242.2 33.7% -11.2%
--other loans 230.7 185.3 172.8 33.6% 24.5%
Source: National Bank of Slovakia          

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