The aggregate net profit of Slovak commercial banks for the first ten months of 2013 rose 13.3% y/y to EUR 502.5mn, buoyed by a strong growth in the non-interest income, central bank data showed.

The sector’s net non-interest income jumped 15.4% y/y to EUR 499.7mn in Jan-Oct 2013, while the banks' main source of revenue - the net interest income - rose at the slower rate of 2.7% y/y to EUR 1.5bn. The robust growth in net non-interest revenue was driven mainly by a 9.6% rise in dividends received and by a 57.9% drop in costs related to debt securities transactions. Net creation of reserves and provisions for the ten-month period swelled by 23.6% y/y to EUR 167.4mn.

IntelliNews comment: The aggregate net profit of Slovak commercial banks dropped 27% last year 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. In 2013, the hike in the special tax continues to affect negatively the performance of the sector. The banks also increase their net creation reserves and provisions, which reflects the worsened economic situation in the country.

Despite the difficult environment, the sector shows sound results. According to central bank data, the banking sector is reportedly resilient against the risks it is facing and shows a high level of solvency, profits and available funding.