NBS: Situation in Financial Sector Favourable, Risks Easing

Bratislava, November 25 (TASR) - The situation in the Slovak financial sector is developing favourably and its resilience is high, according to the current Financial Stability Report as of November that was presented by Slovakia's central bank (NBS) representatives at a news conference on Monday. Previous risks related to price growth and higher interest rates are gradually easing. Concerning future risks, the focus is shifting from inflation to an uncertain outlook for economic growth. The report includes several pieces of good news, stated executive director of the NBS supervision and financial stability section Vladimir Dvoracek. "From the viewpoint of financial stability, several risks have eased, which is the first piece of good news. This is mainly due to the fact that prices are no longer rising as sharply in terms of inflation and that interest rates have started to fall. These conditions have created slightly more favourable conditions for borrowers to repay their loans, to breathe a little perhaps after the pressures that were put on them in the period of increased inflation," he said. According to Dvoracek, another piece of good news is signs of recovery as far as the mortgage market and real-estate markets are concerned. He views it as positive that borrowers overcame the previous period of high inflation relatively well and were able to repay their loans even during it. "Certain problems appeared only in specific sectors, with the commercial real-estate sector being one of them. However, we aren't seeing any steep increase in failed loans in this area, rather adjustments to repayment schedules," said Dvoracek. Nevertheless, some risks for the financial sector persist or have even worsened, he said. These are mainly concerns about economic growth in the eurozone, especially in Germany. Developments in the German economy are uncertain and significantly affect the Slovak economy as well. Several geopolitical risks are also present, be they escalations in various conflicts or the threat of protectionist measures in international trade. Therefore, the outlook until 2025 isn't entirely clear. "It is still rather cloudy, and that's why we aren't considering loosening the reins or some large-scale prudential measures yet. I mean capital buffers and some limits on lending," stated Dvoracek. ko/df