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Slovenia Commercial Banking Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2007 Product Code: R302-2449 Description Key IssuesThis quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries except Iran. All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which we have collected data. In 2006 the median local currency growth in total assets was 17.2% in Croatia. The median local currency growth in total loans was 18.2% in Bangladesh. The median local currency growth in total deposits was 16.9% in Algeria. In almost all countries local currencies were stable or rising relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation. Loan/deposit, loan/asset and loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% in Thailand. The median loan/asset ratio is 54.8% in Romania. The median loan/GDP ratio is 53.4% in Kuwait. Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data. The two most important issues in Slovenia are the need to consolidate the economic growth already achieved and to prioritise its structural reform agenda. Slovenia’s banking system is quite mature by regional and Western European standards, but it remains small according to total assets. As at year end 2006, the loan/deposit, loan/asset and loan/GDP ratios were 112.0%, 57.5% and 71.2%. The ratios are fairly high compared with other Central and Eastern European (CEE) countries. All ratios are rising. They indicate a banking system with already high loan exposure. The ‘other assets’ of Slovenia’s banking system are dropping from an already small base. This points to a situation wherein the banks are using the resources of the European financial system as a whole to provide further loans to the Slovenian population, who are already fairly debt laden. Growth in loans showed steady progress to the year ending December 31 2006, up 24.5%. However, growth in assets and deposits was not outstanding compared with rates for the region. Assets increased 15.9% on the previous year, while deposits increased 9.5%. Slovenia is new to the eurozone. Of the 10 states to enter the EU in 2004, Slovenia ranks first for the absorption rate of EU aid via structural funds. The EU is Slovenia’s main export market and the EU recovery has assisted the country’s economic growth. Slovenia has not yet benefited from the same access to EU structures as older member states. Notably, the free movement of labour is still restricted. Our annual growth forecasts have been raised from 4.4% to 4.7% following the strongest quarterly expansion since the start of the decade. Real GDP growth increased by 7.2% y-o-y in Q107. Private investment has continued to make an incredible recovery and to play a vital role in growth. Internal and external pressures to inflation require careful monitoring. The risks of euro interest rates on Slovenia are probably greater than for other CEE countries. Table of Contents
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