January 21, 2022

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The banks achieved a net profit of more than 600 million euros in Slovakia at the end of November, and maintained their financial stability

The banks achieved a net profit of more than 600 million euros in Slovakia at the end of November, and maintained their financial stability

Banks Achieve End of November 2021 in Slovakia, net profit of 677.7 million. euro. As follows from the data of the National Bank of Slovakia (NBS), this is a significant increase year on year, its profit at the end of November last year amounted to 422.9 million. euro.

More on the topic: The economic effects of the Corona virus

This is an increase of 60.2%. According to the Slovak Banks Association, the annual comparison of bank profitability is misleading. This is not a huge jump within the long-term average.

two main cases

In 2020, there were two main cases that affected annual development. The abolition of bank tax is one of the reasons for increasing profitability. Furthermore, the creation of provisions was significant in 2020.

In 2021, the need disappeared and banks could no longer release provisions. Thus, after a significant drop in profits in 2020, bank profits return to pre-crisis levels, according to the association.

The effect of low interest rates

While the impact of these factors is declining every month and such a significant increase in profitability can no longer be expected, banks have long faced the effects of low interest rates, which continue to negatively affect business in the banking sector.

11-month net interest income fell 2.1% year over year to 1.485 billion. euro. Banks were not able to stem the decline in this income, despite the relatively strong growth in loans and income from targeted long-term refinancing operations, without which the decline would have been more pronounced.

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Banks are financially stable

According to the National Bank of Slovakia, banks in Slovakia remain financially stable, and they have managed to cope well with the crisis caused by the epidemic. After deferred payments, most loans are repaid on a regular basis.

The central bank also has a positive perception that the bank’s shareholders have pursued a responsible dividend policy, making the banks stronger in capital than they were before the pandemic crisis.