After reporting total pre-tax profits of EUR 17m for the first half of

the year, the banking sector made a pre-tax loss of EUR 4m through seven

months, according to Banka Slovenije.

Struggles with bad loans, which

are generating significant costs of impairments and provisions, continue to

affect earnings of the Slovenian banking sector.

In its monthly

report on the state of the banking sector, the central bank also points to

a further drop in total assets of the sector as a result of the repayment

of debt taken out abroad.

Total assets fell by EUR 1.2bn or 2.1% to

EUR 48.8bn in the first six months of the year. The drop was influenced

heavily by Slovenia's biggest bank, NLB, repaying the state-guaranteed

bonds it issued in 2009.

Banka Slovenije also finds in its report

that the Slovenian banking sector managed to increase gross revenues in the

first six months on the back of non-interest revenues, but continued to see

a decline in crediting activity.

Expensive foreign financing

continues to affect crediting, with loans to the non-banking sector

dropping by 5.8% in July.

The report also says that growth in

household savings has slowed, amounting to 0.5% in July.