Press release from the Bank of Slovenia Board meeting on 17 July 2012
1) The Governing Board of the Bank of Slovenia discussed the results of the ongoing supervisory review and evaluation process, which includes the current status of regular supervisory activities, both in terms of risks and capital adequacy of banks on an individual basis. All banks are subject to regular and extraordinary supervisory measures and examinations with respect to the assessed level of risk. All banks are meeting capital adequacy requirements, albeit with difficulty due to the growing risks as a result of the economic situation. Capital adequacy can be ensured not only by increasing capital, but through other restructuring activities in the banking system and the real sector as well.
2) The Governing Board of the Bank of Slovenia discussed the current operations of banks, developments on the capital markets and developments in the area of interest rates based on figures for the first five months of 2012.
The contraction in the banking system's total assets continued in May. The banking system's total assets declined by EUR 296 million to stand at EUR 49.1 billion. Debt repayments made by banks abroad contributed to the aforementioned contraction on the liability side. At the same time, growth in household deposits has slowed, while remaining positive at 1.1% in year-on-year terms. The decline in lending activity continued in May, primarily owing to the contraction in loans to the non-banking sector by the large domestic banks.
Figures relating to the second indicator of the quality of the banks' investments, i.e. the classification of claims to credit rating categories A to E in May, are a reflection of rising credit risk.
Negative growth in net interest and non-interest income, and rising impairment and provisioning costs are having an adverse effect on income risks at the banks. The proportion of gross income accounted for by impairment and provisioning costs is highest at the large domestic banks and lowest at the banks under majority foreign ownership.