Slovenia Top Banks Ratings May Be Raised by Moody’s on Economy

  • NLB, Nova KBM and Abanka funding risk seen improving
  • Econonomic outlook will help reduce level of problem loans

Ratings for Nova Ljubljanska Banka d.d., Nova Kreditna Banka Maribor d.d. and Abanka d.d may be raised by Moody’s Investors Service as Slovenia’s economy gathers strength, improving lenders’ funding conditions following a reduction in wholesale borrowing.

All long-term ratings and rating inputs of Nova Ljubljanska and Abanka d.d. were placed on review for upgrade while the long-term deposit ratings, baseline and adjusted credit assessment of Nova Kreditna were given the same treatment, Moody’s said in a statement Thursday. The improvements will likely result in upgrades of one to three notches upon completion of the ratings reviews, it said.

“A gradual recovery in credit demand should also support banks’ lending growth and revenues after several years of loan book contraction,” the ratings agency said. “The improving operating environment will benefit Slovenian banks’ credit profiles by containing funding risks, helping to reduce the high level of problem loans and restoring their profitability.”

Slovenia’s main banks were recipients of 3.2 billion euros ($3.56 billion) of taxpayers’ money in 2013 when the Adriatic nation narrowly avoided the fate of Greece or Ireland in asking for an international bailout. The government of Prime Minister Miro Cerar is now seeking to recoup some of that money by selling the banks that benefited from the action. Nova KBM purchase by Apollo Global Management was completed in April, while Nova Ljubljanska and Abanka have yet to find buyers.

Slovenian banks’ pretax profit was 245 million euros at the end of May on higher non-interest income and lower loan-loss provisions, the central bank in Ljubljana said last month. Loans 90 days overdue decline to 8 percent, while they stood at 10.8 percent as measured by the European Banking Authority.

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