The aggregate net profit of Slovak commercial banks in February 2014 rose 12.1 y/y to EUR 93.37mn, supported by rising net interest income, central bank data showed.

The sector’s net main source of revenue - the net interest income - rose by 5.7% y/y to EUR 302.69mn, while the net non-interest income increased by 0.6% y/y to EUR 86.22mn in February. The growth in the non-interest revenue was driven mainly by a significant increase in dividends received that totalled EUR 256,000 compared to EUR 12,000 a year earlier, and by a 42.8% decline in costs related to debt securities transactions. Net creation of reserves and provisions for February rose by 30.5% y/y to EUR 38.11mn.

IntelliNews comment: Slovak commercial banks started the year with good financial results posting a double-digit growth in earnings in the first two months of 2014 (the annual growth in January stood at 18.2%). Yet, 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 government introduced a 0.4% special tax on corporate bank deposits, which was extended to cover also retail deposits as of October 2012. The special tax affected negatively the performance of the sector in 2012 and 2013. Last year, the Slovak commercial banks posted a 10.7% profit growth, following a 27% y/y drop in 2012.