Page 136 - SE Outlook Regions 2023

The central bank said that the high inflation, disruptions in trade and a
decline in confidence exacerbate the macroeconomic situation and may
spill over into the financial system indirectly.

Slovenia’s central bank said in December that it noticed increased
systemic risks in the Slovenian banking system, due to the growing
uncertainty in the economic environment and as a result it raised the
countercyclical capital buffer.

The measure is aimed to increase the resilience of the banking system.

“Similarly to other countries in the EEA, the central bank is therefore
raising the countercyclical capital buffer for exposures from zero to
0.5% of the total risk exposure amount,” the Bank of Slovenia said in a
statement.

Under the new regulations, commercial banks will have to provide
more capital for exposures to the domestic economy within one year.

According to the central bank, banks' profit before taxation in the first
nine months of was €366.5mn, down 1.6% y/y. With the continuation of
relatively favourable income trends, however, renewed net formation of
impairments and provisions in 2022 reduces profits.

Net interest income was higher 6.9% in the first nine months to
€597mn.

3.11.3 Industry

The largest industrial sectors in Slovenia are ferrous metallurgy,
automotive industry, ICT, electronics, healthcare and drug industry as
well as metal processing and metallurgy.

Manufacturing is the most important sector of industrial production and
accounts for 90% of total output. The biggest segments include
fabricated metal products, except machinery and equipment (12%),
electrical equipment (10%), motor vehicles, trailers and semi-trailers
(7%), rubber and plastic products (7%), machinery and equipment
(6%), food products (5%), and basic metals (5%).

Companies in Slovenia, like elsewhere in Europe, are struggling with
soaring energy costs. This has resulted in some, especially those in
energy-intensive industries, halting operations, among them Slovenian
aluminium producer Talum.

In September 2022, it was reported that Talum will reduce further its
production of primary aluminium obtained through electrolysis for the
third time in less than a year from October 1 due to the situation on the
energy market. The aluminium industry is facing a crisis due to the high
energy costs, which forced many producers around the world to cut
capacity as smelting aluminium is particularly energy intensive.

In October 2022, the Slovenian parliament adopted legal changes to
help companies deal with high electricity and gas prices by allocating
€86mn for 2022.

136 SE Outlook 2023 www.intellinews.com