SBA Director Klimek: Profitability of Slovak Banks among Lowest in CEE and EU

Bratislava, 7 September (TASR) - The return on equity (ROE) of Slovak banks is the lowest among the countries of Central and Eastern Europe (CEE), standing at 10.2 percent in Slovakia, executive director of the Slovak Banking Association (SBA) Marcel Klimek stated on Monday at a meeting with the media in connection with political discussions regarding a change to the bank levy in 2027. Klimek added at the meeting, which was also attended by SBA president Daniel Kollar, that, for example, the return on equity amounts to 16.2 percent in the Czech Republic, and 18.2 percent in Poland. The profitability of banks in Slovakia has long been among the lowest in the EU as well. One reason for this is the 'bank levy'. "Generally speaking, we must, unfortunately, note that in Europe, banks lag behind the rest of the world in terms of profitability, and Slovak banks lag behind even Europe in this respect. Their profitability is the lowest in the Central and Eastern European region. This means that foreign investors, who own all the relevant Slovak banks, have far better opportunities to invest their resources in other countries. For Slovakia, however, this is a problem, as Slovakia is one of the few countries to have already exceeded the 100 percent threshold in the loan-to-deposit ratio. It is already lending money that doesn't come from deposits; it has to borrow this money from abroad and is competing with other countries for its resources from abroad," he explained. Klimek believes that if the lowest possible return is on offer, investors won't favour Slovakia. This is a problem for the economy, a problem for businesses, a problem for the state and a problem for the people. In order for banks to be able to provide mortgages, credits and loans, they must have some own funds. These own resources, he said, "don't fall from the sky"; they must either come from investors or be generated through the banks' own operations. And when the banks' resources run out, their ability to provide loans and credit will be restricted. "This means fewer loans at higher interest rates. Ultimately, this is bad news for businesses, the state, the people and the economy," he emphasised. "I'm not saying anything new when I say that banks are business entities just like many other firms in Slovakia. And the messages are clear as to what business entities or the business sector in Slovakia are calling for - a stable business environment, a lower tax and levy burden, and a long-term outlook for both foreign and domestic investors to operate, do business and invest in Slovakia," he added. Klimek pointed out that both SBA and the National Union of Employers (RUZ) had been assured at the tripartite meeting on 23 March, through Labour Minister Erik Tomas (Voice-SD), acting as the government's representative, that no measures relating to taxes or levies will be introduced in 2027 that will have a negative impact on people or businesses across Slovakia. "We continue to regard Slovakia as a state governed by the rule of law, and the tripartite [the Economic and Social Council] as a fundamental body for social dialogue; we therefore consider such a promise - which is also recorded in the minutes of the tripartite meeting - to be both significant and binding. We are therefore proceeding on the basis that there will be no negative changes in the area of taxes or levies," added the SBA executive director. am/mcs