The banking sector's pre-tax profits increased 20.4% to Ft 387.6 billion, but after-tax profits rose at a slower pace because of a bigger tax burden, including the extraordinary bank tax, to Ft 320 billion. Banks drew 43% more from foreign sources to finance their lending in 2005 than a year earlier, and these sources accounted for more than one-fifth of total assets. The growth rate of banks' forex liabilities was nearly three times as high than in 2004. At the same time, the share of total assets made up by domestic deposits, interbank deposits and domestic issues of securities fell.
Despite falling rates, the banking sector managed to maintain a high level of profitability. The sector's return on equity was 22.6% in 2005, slightly less than in 2004. Return on assets was 2%, improving from the year before. Banks' interest margin fell only slightly from 3.94% to 3.89%, despite a significant reduction in the base rate. Interest revenue and interest expenditures fell at practically the same rate during the year.