The total value of outstanding bank loans in Slovakia fell 0.3% y/y to EUR 42.05bn as of end-April 2013, recording its first annual decline since November 2010, data by the central bank showed. In March, the value of outstanding bank loans grew 1.1% y/y. Commercial banks' corporate loan book narrowed by 3.4% y/y as of end-April, deepening from a 1.5% y/y decline in the previous month. The yearly growth in lending to households accelerated slightly to 9.4% from 9% in March.

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

In April alone, the Slovak banks extended a total of EUR 1.51bn in new loans, compared to EUR 1.57bn in March and EUR 1.41bn April in 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 are also exerting pressure on the lending market.