Profile of NLB Group and NLB
NLB Group and NLB financial highlights
Supervisory Board Members
Statement of the President and Chief Executive Officer
Financial Review of NLB Group and NLB in 2002
Volume of operations of NLB Group and NLB
Key trends in NLB Group and NLB profit performance
Key financial data according to International Financial Reporting Standards (IFRS)
NLB Group and NLB risk management
Human Resources Management
Audited Consolidated Financial Statements for NLB Group under Slovenian Accounting Standards
Financial data and figures of NLB according to Bank of Slovenia Methodology
Audited Financial Statements for NLB d.d. under Slovenian Accounting Standards
Audited Consolidated Financial Statements for the NLB Group according to
International Financial Reporting Standards
Audited Financial Statements for the NLB d.d. according to
International Financial Reporting Standards
FINANCIAL REVIEW OF NLB GROUP AND NLB IN 2002
The financial review of operations presents an analysis of the
financial results and volume of operations of NLB Group and
NLB in 2002. The financial review is based on audited financial
statements of NLB and audited consolidated financial statements
of NLB Group under Slovene Accounting Standards
('SAS'). Notes to the SAS financial statements are presented on
pages from 45 to 137.|
As at January 1, 2002 new SAS were applied. For the purpose
of comparable analysis between 2001 and 2002 financial
results, the 2001 data is adjusted to the new SAS.
Data or figures with additional explanation named 'on comparable
basis' refers to comparison were daughter banks that
where fully merged into NLB d.d. in October 2001 assume
them as a part of NLB from the beginning of 2001.
In the consolidated statements the explanation named 'on
comparable basis' refer to the exclusion of LHB Group and
Tutunska banka in the 2002 financial results. These were consolidated
for the first time into NLB Group at the end of 2001
and consequently where not included in the Group's income
statements in that year.
NLB and NLB Group marks 2002 with a sound financial performance
The year 2002 was noted for an increasingly competitive environment,
declining interest rates and a less favourable macroeconomic
environment due to a gradual slowdown in economic
activity. Consequently there was less demand for lending
products from the personal and corporate sectors and a
slower growth in net interest income due to declining margins.
Despite this background the NLB Group and the NLB Parent
Bank turned in a solid performance in 2002 and in particular
reflected their growing interdependence on each other.
Positive synergetic effects are expected to continue in the
future resulting from further integration and co-operation
within the Group.
In the period from 1 January to 31 December 2002, NLB Bank
recorded a pre-tax profit of 12.6 billion and ended the financial
year with a balance sheet totalling 1,619.2 billion tolars
With 1,981.0 billion in total assets, NLB Group's profit for 2002
totalled 15.6 billion tolars before tax and minority interests
Considering the competitive and economic environment, NLB
Group and the Bank recorded sound results in 2002 that
were influenced by the following three key factors:
- declining interest margins,
- significant increase in non-interest income,
- the beginning of a cost management process.
NLB achieved all its growth targets in balance sheet growth
in 2002 with the exception of growth in lending to the nonbanking
sector. Less favourable economic conditions weakened
demand in the private sector, which inevitably limited
growth in the credit portfolio.
However, the Group maintains its largest market share in
total Slovene banking system assets.
NLB Group experienced a decline in interest margin in the
face of increased competition resulting in pressure on
growth in net interest income. To manage the impact of the
above pressures, NLB introduced a number of measures and
programmes, focused on managing income growth and cost
management in 2002:
- Adapting a flexible interest rate policy, focused on maximising
profitable growth through interest rate management
of both loans and deposits.
- The programme of increasing non-interest income represents
a cornerstone of a continued sound operation of NLB
and NLB Group. The aim of the programme is to enhance
non-interest income, to compensate for the pressures on
growth in interest income.
- A more aggressive marketing approach, that required
more intensive activity in introducing a wide range of customised
banking products and services focused on specialised
segments, as well as development and improvement
of state-of-the-art distribution channels.
- The cost reduction programme provides for restricting the
increase in expenses and is aimed at reducing the costs of
materials, fixed assets, maintenance and services by stepping
up control, and by staff reduction and restructuring.
- Disinvestment programme, which will contribute to more
effective operations and partially offset the restricted
- The introduction of a new, less hierarchic organisation
structure at the beginning of 2003 will facilitate a successful
implementation of the cost reduction programme with
a more flexible and more transparent operation in five
business areas of the Bank. Each business area is headed
up by an individual member of the Management Board. It
also provides for the facility of measuring performance and
remuneration of NLB's top management.
Within the Group, NLB and members of the Group are
becoming increasingly interdependent and this has an
increasingly significant positive influence on the Group's
results. Going forward, mutual co-operation will lead to the
strengthening of synergies and result in the Group's additional
Trends in the operation of Group members may be summarised
in three points:
- Among the Groups' domestic banks, the financial results
of almost all banks in Slovenia in 2002 improved on 2001.
- Among Groups' foreign banks, the solid performance of
Tutunska banka stood out.
- Results of other affiliates are in line with target.