NBS: Slovakia's Financial Sector Remains Stable, Environment Worsens

Bratislava, 1 June (TASR) - Slovakia's financial sector remains stable, profit-making and resilient, but the economic environment is less favourable than in the past, as economic growth has slowed and uncertainty remains elevated, according to the latest Financial Stability Report for May 2026, presented by Slovakia's central bank (NBS) officials at a press conference on Monday. NBS Bank Board member and executive director of the supervision and financial stability section Vladimir Dvoracek pointed out that the country is operating in a far more challenging environment than it did in the past. The risks to future developments stem from both external and domestic factors. "Concerning the external risks, these are primarily geopolitical, such as the ongoing war in Ukraine and the emergence of new military conflicts in the Middle East. The war with Iran is lasting longer than we expected. All this is affecting small, and especially open economies, such as Slovakia, to a greater extent than some bigger countries," he explained. The consequences of the current global situation are already being reflected in higher input costs, in particular for energy, but also in higher interest rates. Banks operating in Slovakia continue to maintain sound profitability, driven primarily by interest incomes from mortgage lending, stressed Dvoracek. "Mortgage rate alterations are taking place gradually, with borrowers moving from lower interest rates to higher ones, and the positive impact of these higher rates on the profitability of banks is yet to fully run its course," he explained. Dvoracek said that banks' capital and liquidity positions remain stable and at a very high level. "Stress testing has shown that banks would be able to withstand even a significantly adverse scenario, based on an economic slowdown and a rise in inflation driven by higher energy prices. The impact on the banking sector would be manageable," stressed the NBS Bank Board member. The central bank saw positive developments in the insurance sector last year. "The situation improved in life insurance especially. Although savings and investment-linked insurance products declined, there was growth in risk and health-insurance policies. The insurance sector has maintained its level of profitability," stated Dvoracek. ko/df