Slovakia's annual credit decline deepens to 2.9% in May 2013

By bne IntelliNews July 1, 2013

The total value of outstanding bank loans in Slovakia fell 2.9% y/y to EUR 41.76bn as of end-May 2013, following a 0.3% annual decline in April, which was their first annual decrease since November 2010, data by the central bank showed. Commercial banks' corporate loan book narrowed by 3.9% y/y as of end-May, deepening from a 3.4% y/y decline in the previous month. The yearly growth in lending to households remained flat compared to April at 9.4%.

On a monthly basis, the total value of outstanding bank loans fell 0.7% in May, following a 0.4% decline in April.

In May alone, the Slovak banks extended a total of EUR 1.49bn in new loans, compared to EUR 1.51bn in April and EUR 1.18bn in May 2012.

IntelliNews comment: The lending activity in Slovakia's banking sector weakened last year given the fragile domestic economic situation, deteriorating outlook and mounting risks in the external environment. The outstanding amount of corporate loans fell mainly due to the tightening of credit standards.

We expect the lending market to be sluggish this year as corporate credit growth is set to hold back in line with the economic slowdown, which may also affect retail lending, as demand for loans might dwindle in a weakening labour market. New, stricter bank regulations and increased risks from default are also exerting pressure on the lending market.

Loans granted, outstanding amounts, EUR mn   May-13 Apr-13 May-12 y/y change m/m change
Loans - total 41,762.8 42,048.6 43,013.6 -2.9% -0.7%
Loans to non-financial corporations 15,671.9 15,760.3 16,312.0 -3.9% -0.6%
Loans to households 19,374.4 19,189.7 17,707.3 9.4% 1.0%
Loans for house purchase 17,239.0 17,074.2 15,806.6 9.1% 1.0%
Consumer loans 2,621.5 2,591.7 2,299.7 14.0% 1.1%
New Loans, EUR mn          
New Loans - total 1,490.8 1,507.2 1,177.1 26.6% -1.1%
--operating loans 664.2 697.0 410.0 62.0% -4.7%
--investment loans 59.4 78.7 101.3 -41.3% -24.5%
--consumer loans 128.0 128.3 112.1 14.1% -0.3%
--loans for house purchases 500.5 428.0 419.4 19.3% 17.0%
----mortgages 84.7 79.3 76.1 11.3% 6.9%
----building loans 2.3 2.9 2.8 -20.0% -21.5%
----intermediate loans 48.3 59.0 57.6 -16.2% -18.2%
----other loans for house purchases 365.3 286.8 282.8 29.2% 27.3%
--other loans 138.7 175.2 134.3 3.3% -20.8%
Source: National Bank of Slovakia          

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