"This year Slovenia's banking system will most likely, although modestly, return to profitability after five consecutive years of losses," is what Moody's vice-president, Armen Dallakyan, wrote in a press release.

According to the agency's estimates Slovenia will record a two percent growth this year, which will be driven by exports and public investments. This will reportedly have a positive impact on loan portfolios, profitability, and the capitalisation of Slovenia's banks.

Moody's still warns that foreign investments and domestic expenditure will remain modest, which may obstruct the potential improvement of the performances of banks.

Bad loans still represent a certain risk
However Slovenia's banks are still highly exposed to bad debts – the share of bad debts in three of the assessed bank at the end of last year was at 31,5 percent on average. The risk of bad loans will remain high, despite expectations that their share will drop to around 25 percent. With that said, it should also be pointed out that banks have already set up provisions for the majority of bad debts.

A. Č.; translated by K. J.