By the end of August 2023, the total loan amount issued by all the Slovenian financial institutions declined by 0.6% YoY but remained roughly the same MoM. Meanwhile, the average new housing loan interest rate amounted to 3.98%, an increase of 0.35 p.p. YTD, but a decline of 0.05 p.p. MoM. Lastly, the average new consumer loan interest rate amounted to 6.72%, an increase of 0.04 p.p. YTD, but a decrease of 0.07 p.p. MoM.
The latest report regarding the Slovenian banking sector has been published by the Slovenian Central Bank, BSI. According to the report, the total amount of loans issued amounted to EUR 27.1bn, which means that on a monthly basis, it remained the same, while on a YoY basis, it declined by 0.6%. This is a far cry from the double-digit (13% YoY high in September 2022) growth that was witnessed in 2022, and this continues the trend of decline present in 2023. Inside this category, housing loans amounted to EUR 8.11bn, increasing by only 0.01% MoM, and 1.64% YoY. Furthermore, corporate loans amounted to EUR 10.5bn, a decrease of 0.7% MoM, and 1.1% YoY. Finally, consumer loans amounted to EUR 2.65bn, an increase of 1.3% MoM, and 7.2% YoY.
Housing and corporate loans YoY growth rate (2017 – August 2023)
Source: BSI, InterCapital Research
This decrease clearly shows that the interest rates have increased to such an amount, that it is getting harder and harder to justify new loans, both for households and corporates. This is pretty evident if we look at the other side of the equation, i.e. the interest rates on these loans. Inside Slovenia, the new fixed housing loans had an interest rate of 3.98%, decreasing by 0.05 p.p. MoM, but increasing by 0.35 p.p. YoY. Next up, there are consumer loans, which had an average interest rate of 6.72%, representing a decrease of 0.07 p.p. MoM, but an increase of 0.04 p.p. YoY. Corporate loans, both the ones that are smaller ones (<EUR 1m), and the larger ones (>EUR 1m) recorded interest rates of 5.92%, and 4.69%, respectively. In absolute amounts, these recorded the largest changes, with the smaller loans recording a 0.25 p.p. decrease MoM, while the larger ones recorded the opposite, an increase of 0.93 p.p. MoM. On a YTD basis, the growth is even more pronounced, with the smaller loans recording a 1.23 p.p. increase, while the larger ones grew by 1.18 p.p. YTD.
Average fixed interest rates by categories (2017 – August 2023, %)**
Source: BSI, InterCapital Research
*For years until 2023, data refers to the yearly average
**In January 2023, no data is available for large corporate loans, and as such it is presented as 0
Here we can see that as the new loan production basically stagnated and then stopped, so did the increase in the interest rates, at least the ones orientated to households. This is to be expected, and increasing the loan interest rate amount right now would be even less attractive. As a point of comparison, we also included the comparison vs. Croatia, as well as the European Monetary Union, EMU.
Comparison of average fixed interest rate by categories in Slovenia vs. Croatia and EMU (August 2023, %)
Source: BSI, HNB, InterCapital Research
As of August 2023, the Slovenian housing interest rates were 0.52 p.p. higher than the ones in Croatia, and 0.30 p.p. higher than the ones in the EMU. Consumer loans meanwhile, were 0.85 p.p. higher than in Croatia, but 1.13 p.p. lower than in the EMU. Furthermore, small corporate loans had a 1.22 p.p. higher interest rate in Slovenia than in Croatia, and one 0.86 p.p. higher than in EMU. Finally, large Slovenian corporate loans had an interest rate that was 0.39 p.p. lower than in Croatia, but 0.68 p.p. higher than in the EMU.
