Central Bank reacts to extreme lending growth

Banks' loan clients have a high ratio of installments compared to the value of their monthly income and the National Bank of Slovakia wants to change this. As a member of the Bank Board and Executive Director of the NBS Prudential Supervision Department, Vladimir Dvoracek, stated at Thursday's meeting with journalists, the reason was the reoccurrence of extreme lending growth. A limit on the maximum ratio of installment compared to income should thus fall from the current 80% to 60%. As Postova Banka analyst Lucia Dovalova stated, the introduction of a new limit is intended to reduce the risk that clients will not be able to repay a loan from their income, as the current ratio of installments compared to a client's income in Slovakia is among the highest in the euro area. The central bank recorded no significant increases in the first half of the year in loan developments. However, the summer months saw again a significant upsurge in lending, most notably in September and October with one of the historically highest growths.