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Position of the National Bank of Slovakia on the change of the Slovak banking sector outlook by the Moody’s Investors Service agency

15 May 2009

The international rating agency Moody’s Investor’s Service changed its outlook for the Slovak banking system to negative from stable yesterday (on May 14, 2009).

The National Bank of Slovakia considers as necessary to inform that the banking sector in the Slovak Republic is sound, profitable and well capitalised:

  • The solvency ratio has increased by 0.39 percentage points since the beginning of the year. In combination with a decrease in capital requirements (lower demand for loans and tightening of credit granting conditions) this means improvement in volume of the capital level of the Slovak banks. The value of this ratio is above the average of the European Union.
  • The loan to deposit ratio of the banks is extraordinary favourable and oscillates around 76% at the present time. The Slovak banking sector is thus not dependent on financing by parent banks or companies, which in contrast to other CEE countries enables smooth operation of the banks as to their funding and liquidity.
  • The profitability of the banking sector in the first three months of this year decreased by 30% when compared with the same period of the last year. This was caused by unrepeated factors (e.g. entry into the euro area). The year 2008 was extraordinary as to the profitability and also for this reason the NBS expects the 2009 profit lower than in the previous year. Despite this fact the NBS anticipates that the profitability of the SR banking sector will be higher than the European Union average. We would like to stress that the ROE which exceeds 9.5% on a year-on-year basis is a very good result not only within the CEE countries but also within the whole European Union.
  • The risks management standards of banks in the Slovak Republic are comparable with the standards used throughout the Europe and most of the banks operating in Slovakia have implemented group risk management methods.

Despite the fact that the opinion of the Moody’s agency warns about certain risks which are connected with the global recession, it appears to be positive for the banking sector in the Slovak Republic when compared with other CEE countries peers.

The NBS considers the report to be contradictory. According to the NBS the presentation of the negative outlook by the Moody’s agency does not correspond to the latest development and to the current state of the banks in the Slovak Republic. Moreover these kinds of reports could harm them.

National Bank of Slovakia
Communications Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2168,+421-2-5865 2168, +421-2-5787 2169, 421-2-5865 2169
Internet: http://www.nbs.sk

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