NBS: Slovak Financial Cycle Continues to Recover, Credit Growth Drives Upturn

Bratislava, 11 January (TASR) - The financial cycle in Slovakia continues to recover and in the third quarter of 2025, its growth was supported by the credit market, as demand for loans rose mainly due to gradually declining interest rates and positive sentiment in the housing market, the Slovak Central Bank (NBS) has stated in its latest commentary. Lending to both households and companies is increasing. The economy is maintaining a slight growth and is not expected to contribute to increased risk build-up in the period ahead. According to the NBS, under the ongoing recovery trend of the financial cycle, no risks have so far emerged that would require a change to the so-called countercyclical capital buffer. Banks build up this buffer in good times so that it can be used to cover unexpected losses in bad times. It is set by the NBS depending on whether cyclical risks are rising or falling. Since 1 August 2023, it has stood at 1.5 percent. "Loan provision and the gradual increase in indebtedness are in line with economic fundamentals such as household disposable income, revenue growth and economic growth, which influence their development," the central bank assessed. In the view of the NBS, the loans provided do not show increased risk level, while the share of mortgages with a ratio of monthly instalments to monthly income close to or above the set limit has continued to decline gradually. On the other hand, there is a heightened economic uncertainty. Although part of US tariffs are currently reduced or suspended, which has eased the biggest concerns about their adverse impact on global trade, uncertainty regarding renewed escalation persists. Geopolitical risk also remains in place, putting pressure on public resources. "The Slovak economy must additionally cope with the ongoing consolidation of public finances towards sustainable levels, as well as with structural challenges of the economy," the NBS underlined. mf/am