BRATISLAVA: Slovakia's central bank said on Monday that stress tests showed the country's banking sector remained sound in the first half of this year as profits surged and banks were well capitalised and they saw relatively little impact from global financial turmoil.
The most recent stress tests showed that compared with stress test results released at the end of 2010 the risk of possible losses from loans to households and on bond portfolios had risen but overall the banking sector was resilient to negative trends and scenarios.
The central European country has not had to bail out any of its banks, which are run by Italian, Austrian, Dutch, Belgian and Hungarian parent banks, including VUB Banka, a unit of Italy's Intesa Sanpaolo , Slovenska Sporitelna, owned by Austria's Erste Group Bank , and CSOB, a subsidiary of Belgium's KBC .
"The banking sector's financial position, reflecting its ability to withstand negative shocks, improved throughout the first half of 2011," the National Bank of Slovakia (NBS) said in a half-yearly report.
"Profits rose by 79 percent on the year in this period. A relatively big part of this increase was due to extraordinary one-off income of selected banks. The sector's profitability would be up 50 percent on the year without it," it said.
The euro zone's second-poorest country has been shielded from the direct impact of the recent rout in global financial markets and the bloc's spiralling debt crisis, due to banks' very limited holdings of toxic assets and low levels of foreign currency borrowing.
The Slovakian financial sector's exposure to Greece, Portugal or Italy, whose debt problems are at the heart of the euro zone's two-year-old sovereign debt crisis is marginal and risks are relatively small, the central bank said.
Copyright Reuters, 2011
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