Fitch: Profits mute for Slovak banks

Fitch Ratings said in a new report that the Slovakian banking sector faces no major structural imbalances, but profitability is likely to remain muted over the short- to medium-term.

In contrast to many other eastern European banking sectors, the sector benefits from a strong and stable customer deposit funding base, which helped the system avert a liquidity squeeze and rising funding costs, Fitch said.

Nevertheless, the agency said it expects the banks' aggregated profitability to remain below previous highs. This is due to anticipated lower loan growth relative to 2006 and 2007, Fitch said, and the loss of foreign-exchange related income following the euro adoption in 2009 in Slovakia.

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