Statement of the President of the Supervisory Board
NLB's Supervisory Board currently consists of nine members. Five members were elected at the Annual General Meeting in September 2002: Anton Aunič as President, Uroš Slavinec as Deputy President, as well as Francois Louise Florquin, Zvone Ivanušič and Metka Tekavčič. The remaining four members were elected at the Annual General Meeting in July 2004 with Anne Fossemalle replacing Alain Pilloux, Christian Defrancq replacing David Michael Truman, André Bergen replacing Herman Agneessens and Borut Jamnik replacing Jože Lenič. Another two members elected at the 2002 Annual General Meeting have since stepped down from their positions, namely Igor Kušar on November 11, 2004 and Dirk Mampaey on January 1, 2005. New appointees replacing these members will be elected at the next General Meeting.
Important changes took place on NLB Management Board during 2004 with the appointment of the new President and CEO Marjan Kramar for a five-year mandate, following a well-considered selection process. Mr. Kramar took up his position on February 1, 2004. In July 2004 Erik Luts was appointed a new member of the Management Board responsible for IT.
The Supervisory Board follows a system of corporate governance in line with the international practice applicable to leading banking institutions. The Audit Committee and Development Committee are effective and very important parts of the activities of the Supervisory Board. The Code on the Incompatibility of Offices of Management Board Members and Membership of Management Positions outside of the Bank was approved. The role of the Supervisory Board is to govern the executive management board that is responsible for managing NLB and NLB Group. Our corporate governance activities regularly target risk and capital management, internal audit activities, the annual plan of the Bank and the Group, the quality and innovations of services and delivery channels, and the consolidation and expansion of business areas within the Group. The Supervisory Board approved the business strategy of the Bank and the Group, paying special attention to the information technology system, the quality of services, cost management, risk management and product innovation. The strategy of the Bank, as a universal bank, is to maintain its leading role in Slovenia and to increase its presence in the nearby region. NLB prudently manages its capital investment activities in subsidiaries in both Slovenia and abroad. New investments in 2004 included an increase in NLB's shareholding in Banka Celje, while a new investment in Euromarket banka a.d., Podgorica in Montenegro was approved. A reduction of the interest held by NLB in LHB Internationale Handelsbank AG, Frankfurt was approved.
2004 was characterised by a further material reduction in interest rates in Slovenia, reflecting the international market and the improving credit rating of Slovenia and its corporate customers. Consequently, net interest income narrowed which prompted the additional supervision of the profitability of the Bank and the Group's operations, stressing the importance of the growing fee-based activities, managing the cost rationalisation programme and prudential risk management. To ensure sufficient resources for business and capital the Supervisory Board supported the issue of NLB bonds, raising funds at the EIB bank and obtaining an international syndicated loan. NLB also successfully completed the issue of subordinated bonds. In reporting on financial performance, the Bank presented quarterly financial results during 2004 for NLB and NLB Group in accordance with both the Slovenian Accounting Standards and the International Financial Reporting Standards.
During 2004 the Annual Report 2003 was approved, as was the distribution of 3.44 billion tolars in net profit to reserves and 286 tolars per share by way of dividend. At its meeting on 12 May 2005 the Supervisory Board confirmed the Annual Report 2004 and approved the proposed distribution of profits. This included the transfer of 3.44 billion tolars to NLB's reserves and a dividend payout of 358.3 tolars per share and these proposals will be presented to the General Meeting in June 2005.
Slovenia's entry to the EU in May 2004 has brought about a major challenge. The further adaptation of the tolar interest rate environment to euro interest rates will exert additional pressure on the Bank's margins, and this therefore calls for stronger and intensified business management in all key areas. However, the economic operating environment of NLB remains stable with all macroeconomic indicators reflecting a stable economy with falling inflation. This background bodes well for Slovenia's entry to the EMU and provides a good background for NLB's continued growth.
The Supervisory Board intends to continue to improve the corporate governance of both the Bank and the Group and to thereby contribute to success in implementing NLB's strategy. By strengthening the Group's competitive edge we believe the Group will be capable of achieving a strong position in the region.