Banka Slovenije’s assessment is that the Slovenian banking system remains stable, despite the economic, financial and geopolitical uncertainties in the international environment. The level of systemic risks remains moderate, with the exception of macrofinancial risks and risks inherent in information and communication technology, which remained elevated, while income risk remains low. The banking system’s resilience to shocks remains high, which Banka Slovenije attributes to macroprudential policy measures and the proactive macroprudential policy stance. A new calculation has also been made for the minimum creditworthiness amount, which will be made available to the relevant public for commentary before any final adoption.
Amid unpredictable developments in international financial markets, persistent geopolitical conflicts and high energy prices, macrofinancial risks are assessed as elevated, with an outlook for further deterioration. For now the latest data, whether for Slovenia or for the euro area overall, shows the economy’s resilience to the growing number of risks posed by the external environment and its ability to adapt to them.
The risk inherent in information and communication technology also remains elevated. Alongside cyber threats, the new definition of this risk now includes technical faults, data loss and interruptions to business continuity caused by hardware or software defects in banks. In light of cyber threats, elevated geopolitical risk and the potential misuse of advanced AI models, the outlook has been held at rising. The publication also analyses how advances in AI are structurally increasing risk by enabling sophisticated attacks that existing tools are not yet able to fully mitigate.
The credit risk assessment has been held at moderate, although the outlook has been upgraded to stable. Portfolio quality was essentially unchanged over the first half of the year, despite the difficult economic environment. The share of Stage 2 exposures (increased credit risk) also remained unchanged.
The assessment of the risk inherent in the real estate market remains moderate, but this risk is strengthening. In addition to demand outstripping the limited supply, recently the rise in real estate prices has also been driven by a rise in construction costs. These have been further exacerbated by the tensions in the Middle East, and the corresponding rise in energy and commodity prices. Conversely the data from online advertisements of real estate for sale shows demand slowing, and this process has continued in the second half of the year. The volume of new housing loans has also declined in recent months compared with the preceding periods.
The funding risk assessment remains moderate with a stable outlook. Deposits by the non-banking sector, household deposits in particular, remain the main source of bank funding, with sight deposits continuing to account for the majority of savings (82%), despite a moderate rise in interest rates on deposits. With digital banking becoming more widespread, and alternative investments more accessible, the risk of a rapid withdrawal of deposits is increasing. To maintain stability in this source of funding, it is vital for banks to closely monitor the habits of savers and to adapt their range of deposit products.
Interest rate risk in the banking system remains moderate and stable. The share of fixed-rate loans to the non-banking sector has increased in the observed period (reaching 52%), while the average maturity has also increased. Primary liquidity has declined, while banks have increased their holdings of debt securities. These changes have lengthened the average repricing period on the asset side of the balance sheet, while the unchanged average repricing period on the liability side means that bank sensitivity to changes in interest rates has increased. Banks are making increasing use of derivatives to hedge against interest rate risk.
Income risk remains low with a stable outlook, with net interest income and total income in the banking system at a relatively high level for the fourth consecutive year. The large interest rate spread between assets and liabilities is widening again following the hike in key interest rates, which is also having a favourable impact on the net interest margin, which remains above average.
Climate risks in the banking system remain moderate and stable. The banks’ exposure to climate-sensitive sectors has increased slightly, largely on account of increased exposure to the construction sector, while the carbon indicators improved further, thanks to a decline in exposure to energy supply and agriculture. Our additional analysis finds that more than a third of the banks’ analysed exposure to households and non-financial corporations is linked to regions with high earthquake risk.
The banking system is maintaining high resilience from the perspective of solvency and profitability. Profitability remains above average, despite an increase in impairments and provisions. The continuing prudent allocation of earnings to reserves will remain the key to maintaining the stability of the system in the future. The banking system’s liquidity resilience is also high and stable. In light of the variation in the size of liquidity surpluses at individual banks, diligent liquidity management will remain the key to maintaining high resilience, particularly at the banks with smaller surpluses.
Macroprudential policy and restrictions on consumer lending
Banka Slovenije is addressing the risks described above through its measures of macroprudential policy, which remains in a preventive stance, with a focus on strengthening the resilience of the banking system and preventing the build-up of risks. The existing macroprudential instruments provide protection against any adverse shocks, thereby strengthening the resilience of the banking system and reducing the possibility of risk contagion in the banking system, and further spread into the real sector.
As part of our regular review of the adequacy of the macroprudential measures, Banka Slovenije has reassessed the level of minimum creditworthiness amount for consumers. This is the amount that a consumer must be left with each month after paying all instalments under credit agreements. In line with the established methodology, our assessment took account of the calculation of the minimum cost of living by the relevant ministry and published at the end of last year, which we adjusted for the inflation forecasts for 2026 and 2027. From the beginning of next year, the amount is projected at EUR 840 (it currently stands at EUR 745). Banka Slovenije’s assessment is that the increase in the amount, given the income growth and the possibility of adjusting loan amounts and maturities, will have a relatively small impact on the number of new housing and consumer loans.
Publication Financial Stability Review undergoing translation.
