December 18, 2019 / 8:52 AM / a month ago

Risks to financial stability are growing, Slovenian central bank says

LJUBLJANA, Dec 18 (Reuters) - Systemic risks are growing for the Slovenian financial system because of an economic slowdown and uncertainty in the international environment, although the system remains stable for now, the Bank of Slovenia said in a report on Wednesday.

“Uncertainties in the international environment are increasing, which reflects in weaker growth of the Slovenian economy,” the bank said.

“This is raising income risks of the banking system in the environment of low interest rates. Profitability of banks will increasingly depend upon the amount of lending,” it said.

On Tuesday, the central bank cut its forecast for growth in gross domestic product this year to 2.6% from the 3.2% it forecast in June. It foresees 2020 growth at 2.5%, compared with 2.9% in June.

The central bank also said capital adequacy of the banking system is “relatively good” and lending risk is low, mainly as a result of reducing bad loans in recent years. (Reporting By Marja Novak, editing by Larry King)

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