Slovak Banking Sector’s Profit Falls 27 Percent on Bank Tax

Banks operating in Slovakia posted a 27 percent drop in profit in 2012 as net interest revenue fell and costs were boosted by a special bank levy.

Net income fell to 488 million euros ($662 million) from 669 million in 2011, according to data released today by the central bank on its website. Total assets of Slovak banks grew 3.8 percent to 57.9 billion euros.

The levy on client deposits, in place since last January, reduced profit by 170 million euros, the Slovak Banking Association, an industry body, said on its website. Net interest income fell 3 percent to 1.76 billion euros, the first drop ever, according to the Association.

Slovakia, a euro-area member since 2009, is relying on tax increases, including special levies for selected industries, to cut the fiscal deficit at a time when the slowing economy is reducing budget revenue and demand for bank loans. Unlike in some peers, the government didn’t need to support the banks, mostly subsidiaries of foreign lenders such as Erste Group Bank AG, during the recent financial crisis.