Thousands of companies in Slovakia took advantage of the possibility to defer instalments under the Coronavirus Act. According to Národná banka Slovenska (National Bank of Slovakia), the volume of deferred loans exceeds €2.8 billion, approximately two thirds of which was deferred for the longest permitted period, i.e., for nine months. A survey by Slovenská sporiteľňa found that less than 5% of medium-sized and large companies expected to have problems with payments. Even so, Slovakia’s largest bank has a solution ready for them.
A survey of companies with deferred instalments conducted by Slovenská sporiteľňa* found that 4.5% of medium and large companies foresaw problems with repayments. The number was larger for small companies, where 14.6% expect problems. A positive finding is that the number was smaller than in the first wave of the Coronavirus crisis.
We aim to address our clients’ problems on a case-by-case basis. If clients have a problem restarting payments, solutions such as an extension of the payment deferment, an extension of the repayment period or a modified payment schedule can be selected in line with each client’s possibilities. We will consider seasonality, lower instalments at the start of repayment, balloon payments and the like. This will apply especially in the case of clients who have good prospects for restoring and resuming their activities. Companies without problems have begun repayments according to the agreed repayment schedule,” explains Noro Hovančák, Member of the Board of Directors of Slovenská sporiteľňa.
According to the NBS financial stability report for November, the volume of deferred loans was over €2.8 billion in the third quarter of 2020. Companies thus deferred 12% of the total volume of corporate loans. This applied mainly to micro and small companies (15%). Medium-sized (12%) and large (6%) companies were in a better position. The banks approved nearly all instalment deferments were approved in the first four months from deferment becoming possible in 2020.
New measures to deal with another wave of the pandemic may revive entrepreneurs’ interest in deferring instalments. The overall economic outlook for 2021 is positive, however.
“Companies are gradually adapting to the new conditions and the economy is starting up, even though the first months of the new year may still be quite strongly affected by the coronavirus, especially in terms of services. We expect the year to achieve overall economic growth of 6%, with signs of recovery becoming apparent in late Spring. The average unemployment rate could reach 7.1% and then gradually decrease, though this will be more visible in 2022. The factors that will contribute the most to restoring economic growth are the Recovery Plan currently being prepared, efficient and effective vaccination and targeted government aid,” explains Matej Horňák, an analyst for Slovenská sporiteľňa.
* The Bank conducted the survey in late November / early December 2020. Around 7,500 companies took part.