Page 126 - SE Outlook Regions 2024

5.11.2 Banks
Slovenian commercial banks achieved €819.1mn in pre-tax profit during the first nine months of 2023, representing an annual surge of 123.5%. Net profit also experienced substantial growth of 120.1% y/y, reaching €713.7mn in the first nine months of the year. Net interest income totaled over €1bn, jumping 103.7% y/y. By the end of September, banks' assets had climbed to €51.9bn, from €50.6bn at the end of December 2022.
In November 2023, the Slovenian government temporarily imposed a tax on banks and higher corporate income tax as part of a comprehensive financial plan to finance post-flooding reconstruction. In August, Slovenia experienced its most severe flooding in at least three decades, causing extensive damage initially estimated at €10bn.
The government said that a dedicated budget fund has been established, separate from other budgetary allocations, to collect funds for flood and landslide-related initiatives. The primary sources of income for this fund include a 0.2% tax on the balance sheet total of banks and savings banks, a three-percentage-point increase in the corporate income tax rate, and the utilisation of net and balance sheet profits from the Slovenian State Holding.
According to Fitch, the stability of the Slovenian banking sector persists, characterised by robust capitalisation, evident in a total capital ratio of 19% as of the end of the second quarter of 2023. Additionally, there are positive trends in asset quality and profitability. The ratio of non-performing exposures to non-financial corporates and households experienced a decline, reaching 1.6% by the end of the second quarter of 2023.
The normalisation of monetary policy has contributed to the sector's profitability, with net interest income surpassing the levels recorded in 2022 during the period from January to July 2023. However, it is noteworthy that monetary transmission in Slovenia remains slower compared to other euro area countries. This phenomenon can be attributed to the lower indebtedness of the real sector, with household indebtedness standing at 52% of disposable income as of the end of
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