NBS: Slovak Financial Sector Stable, But Faces Uncertainty and Risks

Bratislava, June 2 (TASR) - The Slovak financial sector continues to develop in a stable manner, and the banking sector is strong and resilient to external risks, Slovakia's central bank (NBS) Bank Board member and executive director of the NBS supervision and financial stability section Vladimir Dvoracek told a news conference dedicated to presentation of the latest Financial Stability Report on Monday. However, the sector faces growing uncertainty, which has led to NBS taking a cautious approach. It doesn't plan to change its policy settings in this area in the near future, therefore, said Dvoracek. The central bank sees three main risks causing the uncertainty. "The first is the escalation of tensions in international trade. We all know very well what the situation is like now, we're witnessing various proposals for very high tariffs, double-digit, sometimes even triple-digit figures. And all this, of course, has a negative impact not only on global trade but is also likely to have an adverse impact on our economy, as Slovakia is a small and open economy whose exports are very important to it," said Dvoracek. According to him, the economy may not fall into recession, but its relatively weak growth may slow down even further. Trade wars also have a negative impact on financial markets, which recently posted significant fluctuations resembling what was seen in the pandemic period. According to NBS, the third significant factor is domestic risk, namely the sustainability of public finances, as Slovakia is among the EU countries with the highest deficits. "Consolidation has begun, and it is essential that the government continues this consolidation so that our public finances will remain sustainable in the future as well," stressed the NBS Bank Board member. Dvoracek pointed to a revival in the housing-loan market following two weaker years. "This revival has been reflected in slightly higher growth in new mortgages when compared to last year - more than 4 percent, but at the same time real-estate prices have also started to rise hand in hand with it. "We're talking about a relatively high double-digit increase in real-estate prices, namely 12 percent," he said. "We're facing growing uncertainty. This makes us cautious, and so we don't plan to change the parameters of macro-prudential policy in the near future, neither in terms of buffers nor in those of any credit limits," added Dvoracek. ko/df