Slovenian Banks Bad Loans Rise on Less Credit to Economy

Slovenian banks bad loan ratio increased in September as non-performing loans advanced and less credit was given to the economy, the central bank said.

“The credit risk is reflected in a 20.2 percent annual increase of bad loan reserves and asset writedowns in September from a year earlier,” Banka Slovenije said, according to an e-mailed statement today. Bad loans, considered payment overdue more than 90 days, advanced 3 percent from the end of 2011 to 14.2 percent in September.

Total assets at lenders in the Adriatic nation dropped by 1.9 billion euros ($2.4 billion) in the first nine months to 46.9 billion euros while banks boosted their capital by receiving 2.2 billion euros of funding from the European Central Bank, the central bank said.

Slovenian state-owned banks like Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d. are at the center of concern among investors that the nation may become the next in the euro region to seek international aid to prop up the lenders. The reluctance of banks to lend will probably worsen the outlook for the export-driven economy, which is forecast to shrink an annual 1.8 percent before recovering in 2014, central bank Governor Marko Kranjec said Oct. 1.

Bad loan reserves and asset writedowns led to a pretax loss of 76 million euros for the Slovenian bank industry in the first nine months of the year, the bank said today.

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