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Macroprudential Commentary – September 2022

Publications, Macroprudential Commentary – September 2022

The countercyclical capital buffer rate remains unchanged at 1.5%,

effective from 1 August 2023

Growth trends in the credit and property markets persist for the time being
Factors dampening loan demand are expected to increase
Banks remain well capitalised

The reasons for the uptrend in private sector borrowing remain present

The labour market is still relatively stable, despite deteriorating economic outlooks. Elevated inflation is discouraging households from saving. Concerns about the continuing uptrends in interest rates and property prices are also incentivising borrowing. Although credit is becoming more expensive, it remains affordable.

For a long time, loans to households have been growing strongly, as for some time have loans to firms. At a time of rising prices there is increasing demand from firms for loans to finance their working capital as well as their fixed investment.

Factors dampening loan demand will strengthen

Banks expect household demand for loans to moderate in the near term, owing primarily to rising interest rates. Also contributing to this trend should be a lessening of the incentive to refinance loans and the cooling of the property market. Another factor is households’ increasing cautiousness in response to rising prices, in particular energy prices.

Banks remain well capitalised

Current trends in their profitability are giving banks scope to preserve their solvency levels going forward. Hence there is no need at present for a further increase in the countercyclical capital buffer rate.

Národná banka Slovenska does not envisage any need to adjust the countercyclical capital buffer rate in the next quarter

The financial cycle’s intensity can be expected to ease in the light of economic developments and monetary policy tightening. And although risks associated with the financial cycle will continue to build up in their portfolios, banks should have sufficient capital to cover them.

In the event of risks materialising and having an adverse impact on the financial sector, NBS stands ready to reduce the CCyB rate to the extent necessary.

Also in this edition
  • How electricity prices may affect household spending (page 3)
  • How banks are changing their liquidity management behaviour (page 7)