The Slovak banking industry is “resilient” against a potential market turmoil and economic slowdown as lenders have enough capital to cope with shocks, the central bank said.
The capital ratio increased to 17.2 percent as of Dec. 31 from 15.8 percent a year ago, Narodna Banka Slovenska said in an analysis e-mailed to journalists today. Stress tests showed lenders would need to boost capital by as much as 7 million euros ($10 million), or 0.2 percent of equity, to maintain the 8 percent minimum for the indicator in an adverse scenario.
As much 30 million euros in new equity by 2015 might be needed to keep banks’ capital above 2.5 percent of risk-weighted assets, an obligation that is set to come to force from October, in case of financial-market turmoil, the bank said.
Banks in the eastern euro-area member, mostly units of foreign lenders such as Erste Group Bank AG (EBS) and UniCredit SpA (UCG), are benefiting from the acceleration of growth, which is set to reach 2.4 percent this year and 3.3 percent in 2015, according to the central bank’s forecast. Their net income rose 12 percent last year to 549 million euros, adding to the capital buffer.
Bad loans were 90 percent covered by collateral or provisions, the bank said. Non-performing loans for households accounted for 4.2 percent of total retail lending as of Dec. 31. For loans to corporate clients, their share increased to 8 percent of total from 7.5 percent in 2012.
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