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Slovenian banking system stable, c-bank stress tests show

Author Iskra Pavlova
Slovenian banking system stable, c-bank stress tests show Source: Slovenian government

LJUBLJANA (Slovenia), August 2 (SeeNews) - The Slovenian banking system is stable with sufficient capital adequacy, the central bank said on Friday, pointing to the results of this year's stress tests in the sector.

The stress tests cover the three year period of 2019-2021 and are based on end-2018 data, the central bank said in a statement on its website.

The bank used two macroeconomic scenarios to test the country's banks - a base scenario which took into consideration the most likely developments until the end of 2021 , and a stress one which implied a potential deterioration of the macroeconomic conditions with the GDP contracting 2.3% over the three-year period.

The central bank said it determined the deviation of the stress scenario from the base one, using the deviation of the European Banking Authority (EBA) in the 2018 EU-wide stress test.

In both tests, the domestic banking system showed sufficient capital adequacy.

Such an outcome is a result of the fact that the Slovenian banks are relatively well capitalised and have improved the quality of its credit portfolio thanks to reducing the share of non-performing loans in the recent years, the central bank said.

A total of 15 banks operate in Slovenia.

Their net profit increased 16.4% year-on-year in the first five months of 2019, reaching 268.3 million euro ($298 million), the central bank said last month in its latest monthly report on the banking sector performance.

The share of non-performing loans had dropped to 3.4% at end-May from 4.0% at end-December.

($=0.9008 euro)