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UPDATE 1-Slovenia macroeconomic conditions, forecasts favourable - cbank head

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By Marja Novak

BRDO PRI KRANJU, Slovenia, Nov 6 (Reuters) - Macroeconomic conditions in Slovenia and economic forecasts for 2018 and 2019 are favourable, though banks will have to keep adapting to new economic conditions, the central bank's governor, Bostjan Jazbec, said on Monday,

"Banks' profit in the coming years will depend mainly on the size of their business, the movement of interest rates, credit growth and credit risks," Jazbec, who also sits on the ECB governing council, told a banking conference.

"Banks will have to focus on additional sources of non-interest income and on introducing advanced technologies and digitalisation," the Bank of Slovenia governor said.

Slovenia's banks came close to collapsing in 2013 under the weight of bad loans, pushing the country close to needing an international bailout. That was averted by the government pouring more than three billion euros into local banks to rescue them. Export-oriented Slovenia returned to economic growth a year later and the government expects the economy to expand by 4.4 percent this year versus 3.1 percent in 2016.

"The main element supporting the economic cycle is growth of private consumption and private investments amid better conditions on the labour market ... and among companies," said Jazbec.

He said the profitability of Slovenian banks has been increasing over the past two years amid a improved credit portfolio, adding the revived credit cycle is expected to increase interest rate income. The amount of bank loans to companies has increased this year after falling for seven years.

"Further rise of investment can be expected with continuation of favourable economic conditions," Jazbec added.

(Reporting By Marja Novak)

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