The Central Bank of Slovenia published its Financial Stability Review, concluding that the overall level of systemic risks to the Slovenian banking system has not changed over the past half-year and that the system’s resilience remains high. Most risks are assessed as low to moderate, and the central bank reiterates the importance of maintaining a preventive macroprudential policy stance amid persistent international uncertainty. Credit risk remains moderate with a stable outlook despite a slight increase in non-performing exposures, with loan quality deterioration concentrated in certain non-financial corporations, particularly in industry; bankruptcy proceedings have been rising since September of last year, but banks’ exposures to these firms remain small. Funding risk is also assessed as moderate with a stable outlook, supported by stable non-bank deposits, although lower deposit rates and a higher share of sight deposits are widening the maturity gap, increasing funding instability risk and intensifying competition as new digital banking providers enter. Interest rate risk is assessed as moderate with a downgraded outlook, driven by a higher share of fixed-rate loans with longer residual maturities, increased securities holdings and reduced primary liquidity; larger banks have expanded derivative hedging, while exposures remain more pronounced at others. Real estate market risk remains moderate with a stable outlook, with longer-term affordability and supply constraints, while income risk is low but with a downgraded outlook due to falling net interest income, even though income levels remain above pre-2022. Cyber risk is held at an elevated level with a stable outlook, climate risks remain moderate with a stable outlook, and liquidity resilience is assessed as high and stable despite a slight deterioration and wide variation in liquidity surpluses across banks.

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