After five years of losses, the Slovenian banking sector is back in the black.

After five years of losses at Slovenian banks, local lenders are finally making a recovery – the banking sector posted pre-tax profits of €194.8m in 2015 (see chart).

 

Chart 1 Slovenian banks

With record aggregate losses of €3.44bn in 2013, Slovenian banks were among the hardest hit during the euro crisis, nearly forcing the country into an international bailout in 2013.

Losses between 2010 and 2013 were driven primarily by the two largest banks in the country – Nova Kreditna Banka Maribor and Nova Ljubljanska Banka (NLB) – as well as the smaller bank, Abanka Vipa. In 2013, those three banks posted aggregate losses of €2.3bn leading to a massive €3bn recapitalisation by the Slovenian government at the end of the year.

During that time, these three banks had their balance sheet weighed down by non-performing loans (NPLs). In 2013, Nova Kreditna Banka Maribor classified 18.17% of its loans as NPLs, at NLB they amounted to 25.6% of the loanbook, while at Abanka Vipa that number was 44.23%. Meanwhile, NPLs amounted to 13.3% of all loans country-wide.

The recapitalisation in 2013 was sufficient to return Nova Kreditna Banka Maribor and NLB back to profitability in 2014 – that year, the two banks jointly earned €87m in pre-tax profits. However, Abanka Vipa still struggled – according to The Banker Database, the bank showed a €189.25m pre-tax loss in 2014, the largest in the country. As some of the smaller banks in the country – Banka Celje and two Austrian operations, Hypo Alpe Aldria Bank and Raiffeisen – also grappled with losses that year, the banking sector remained in the red in 2014, showing an aggregate loss of €106.1m.

However, Abanka Vipa made a recovery in 2015, with a pre-tax profit of €48.99m and the entire banking sector also returned to profitability. The Raiffeisen subsidiary still made a loss of €15m, while the contribution of the two other smaller lenders is not yet known – so far, neither Bank Celje nor Alpe Adria Bank have posted their annual results.

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