Profits of Slovak banks to fall in coming years

The Slovak financial sector has maintained its high resilience to external shocks, with all banks in Slovakia having enough of their own resources at their disposal and also meeting all capital criteria with comfortable margins, said the central bank's (NBS) financial market supervision department director Vladimir Dvořáček on Thursday. Dvořáček was presenting a Report on Financial Stability in November 2016. At the same time he pointed out that the Slovak banking sector's profitability is expected to drop in the next few years. Even though the banks' profits rose by 6 percent year-on-year in the first three quarters of 2016, when non-recurring effects are calculated in, it becomes evident that overall profits were down by 8 percent. "We conducted a simulation of profitability for the next three years, and it emerged that we'll see a drop in the profitability of the banking sector next year, with this trend, albeit more moderately, set to continue in 2018 and 2019," said Dvořáček, adding that the overall slump in profits could be as huge as 40-50 percent in the next few years. This development should be largely driven by a continuing drop in interest incomes.