December 3, 2018 / 11:59 AM / 6 months ago

UPDATE 1-Slovak central bank says could lift capital buffer rate again

(Adds loan growth data, background)

BRATISLAVA, Dec 3 (Reuters) - The Slovak central bank may further raise the countercyclical capital buffer for banks later next year if excessive loan growth and a hot economy continued, the bank said on Monday as part of a report on financial sector stability.

Slovak banks will have to meet the countercyclical capital buffer of 1.50 percent as of next August to tame fast lending, the central bank decided in October.

Two years ago, Slovakia became the first euro zone country to introduce the buffer, imposing a rate of 0.5 percent that came into effect last year. The buffer rate rose to 1.25 percent in August 2018.

Slovak bank lending has grown at a double-digit clip in recent years interest rates at record lows. Lending has also been fuelled by fast economic growth, expected to accelerate to 4.5 percent next year, and unemployment falling to all-time lows around 5 percent.

Loans to households grew by 12.1 percent in September 2017-2018, a slowdown from a 13.6 percent growth in the same period last year but still the fastest pace in EU, the bank said in the report.

The central bank also said it expected banks would take a cautious approach to dividend payments to owners as capital adequacy levels have fallen from last year’s 18.6 percent to 18.2 percent, below the EU average.

Slovakia’s banks, including CSOB, Postova Banka, Slovenska Sporitelna, Tatra Banka and VUB , are largely foreign-owned and have avoided troubles seen by other banks in Europe in the decade since the global financial crisis. (Reporting by Tatiana Jancarikova; editing by Jason Hovet, Larry King)

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