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Performance Analysis

SME and Corporate Banking

SME and Corporate Banking

The year 2007 saw a large increase in the volume of operations in this segment and greater internationalization of the business. NLB, the bank that listens to its customers, offers businesses in Slovenia and abroad, a comprehensive portfolio of services and the competitive, workable solutions they require for their growth. As a result, the Bank collaborates in all stages of investment – from counseling, consulting and preparing documentation, to financing, monitoring the progress of investments, as well as after sale activities.

In order to provide our clients in various segments with the best possible and highest quality services, the Bank endeavors to individualize and tailor its offerings to satisfy their different needs. The Bank offers small and medium size The year 2007 saw a large increase in the volume of operations in this segment and greater internationalization of the business. NLB, the bank that listens to its customers, offers businesses in Slovenia and abroad, a comprehensive portfolio of services and the competitive, workable solutions they require for their growth. As a result, the Bank collaborates in all stages of investment – from counseling, consulting and preparing documentation, to financing, monitoring the progress of investments, as well as after sale activities. enterprises (SME) services based on the regional principle through its wide-ranging business network and provides large companies services through its system of relationship managers.

In 2007, the NLB intensified its collaboration with the banks within the NLB Group in SE European markets. This cooperation involved financing these banks as a function of their general financing requirements and to support their investments in their key clients by sharing the allocation of risks and credits. The NLB Group provided “blue chip” companies from these markets with a full range of financial services, producing synergy that results in a comprehensive monitoring of companies that are strategically important to the NLB Group. The NLB also concentrated on efforts to achieve the highest possible cross sales index, yet another way to promote the rest of the NLB Group’s financial services to the strategic clients in the local markets. In 2007, the volume of these transactions rose significantly in Serbia, Montenegro, and Bosnia and Herzegovina. The NLB credit portfolio in these markets, including Macedonia and Kosovo, totaled €563 million at the end of 2007.

Banking with Small and Medium Size Enterprises (SME)

The NLB Group has 17 branches specialized to work with small and medium size enterprises that provide quality custody and consulting.

In the markets of SE Europe the process of establishing such offices is still in progress, as most of the operations in this segment are still centralized. The NLB experience is that such offices additionally help increase the quality of services required by this important segment, making it friendlier, better and faster.

The volume of loans given to small business and independent contractors by the NLB network grew by 22% in 2007. The emphasis was on the promotion of long-term loans and loans from the EIB fund. Deposits from businesses and independent contractors grew by 13% in 2007, with sight deposits and short-term deposits prevailing.

The Bank encourages small business growth by organizing various professional training events for companies, cooperating with different funds, enterprises and promotional centers that support the development of small businesses, chambers of trade and commerce, as well as municipalities.

Corporate Banking

The beginning of 2007 was characterized by strong competition and continued robust credit activities, upshots of favorable economic trends in domestic and global markets. In the second part of year though, the corporate world was affected by events in international financial markets that slowed dynamic expansion and increased interest rates.

In 2007, the credit portfolio in the corporate segment increased by 51%. Growth occurred in both short and the long-term credits. The NLB Group successfully held on to its market share of 33%. It must be emphasized that the NLB managed to maintain a stable portfolio in its corporate segment.

Cash management services in the past year became even more important for the NLB Group. The Group provides a full range of comprehensive services for businesses that operate internationally. The Group offers a complete portfolio of International cash management services for various companies, while for others, depending on their needs; we package together individualized and comprehensive solutions.

In 2007, the NLB was commissioned to arrange several transactions for syndicated loans and guarantees for Slovenian companies in order to finance investment projects, provide working capital and funds for acquisitions. NLB also played the role of agent. The total value of these new approved syndicated loans and issued guarantees amounted to €990.0 million in 2007.

The Bank successfully upgraded its credit deposit products with additional offerings for the businesses segment.

Financing and Insurance of International Ventures
In 2007, NLB volume of financing international transactions continued to grow rapidly. The NLB not only consolidated its leading role among commercial banks in export financing and export insurance in Slovenia, but also increased the volume of financing for key NLB Group clients (local blue chip companies) in the markets of SE Europe. For this reason the volume of the credit portfolio for international business financing grew from €422 million at the end of 2006, to €833 million, almost twice as much by the end of 2007.

In export financing and export insurance, NLB provides its partners a full range of services, supporting their efforts to penetrate foreign markets. This network includes a large number of corresponding banks (more than 1300 such banks throughout the world) for cross border and international transactions, providing service and payment guarantees and documentary letters of credit. In exporting goods and services for our clients, NLB offers foreign banks and buyers structured credit deals, which we individualize to fit the specific parameters of the transaction. Indirect financing for strategic NLB Group clients, as well as direct financing in cooperation with local members of the Group, are both on the rise.

In accord with its business policy, NLB in 2007 increased its operations in the strategic markets of the South Eastern Europe and the countries of the former Soviet Union by financing export transactions for clients of NLB Group member banks.

Along with expanding operations in the NLB Group’s strategic markets in 2007, the NLB also increased the financing and insurance of exports for its clients in the markets of Russia, Ukraine, Kazakhstan and Belarus. The volume of financing these transactions resulted in a corresponding increase in NLB totaling €193 million by the end of 2007. In 2007, NLB also insured its first transactions with banks in Azerbaijan. In 2007, NLB continued financing long-term deals in close cooperation with the SID bank, which insures such transactions against commercial and/or non-commercial risks.

NLB, in 2007, continued to expand its operations in the markets of North Africa, the Middle East, mainly by providing export insurance to Slovenian companies by issuing letters of credit and guarantees, as well as guarantees based on counterguarantees.

Assistance in Obtaining EU Grants

In order to maximize the opportunities for Slovenia from the financial standpoint during the 2007 – 2013 period, NLB provides counseling services to private and public businesses when their projects are eligible for financing by non-returnable grants from the EU. The Bank provides a full range of services: it informs its clients of current availability of public tenders, advises in the preparation of project proposals, organizes the required documentation to accompany applications, helps to devise optimal financing for the projects and approves appropriate investments. By offering such a broad range of services to companies seeking free EU funding, NLB also assumes its role as a leading financial institution in this field.

Documentary Business

In 2007, the volume of NLB bank guarantees continued to grow, but there was a significant increase in the value (62%) of servicing guarantees. The largest business transactions come from infrastructure and construction projects, as well as in the purchase and sale of electricity. NLB Group members represent a large portion of this business.

Letters of credit and collection transactions continued at the previous year’s level, but a significant growth (88%) was recorded in the volume of letters of credit for imports. The trend toward using specialized instruments (such as domestic letters of credit, document dependant transfers, use of fiduciary accounts, etc.) continued to grow and attract interest from clients.

As regards the use of international checks, the volume of these checks continued to decrease, confirming the prevalent trend throughout the EU.

In 2007, NLB introduced a new business card, a debit business card and increased the number of business card holders by 19%.

NLB Proklik e-banking is designed for business users and, by the end of 2007, had 31,557 customers, a 10% growth from last year. The clients made 80% of their business transactions by using NLB Proklik to draw money from their business accounts. Over 8,500 customers already use the NLB Proklik for cross border transactions, meaning that 78% of the total cross border payments is transacted by e-banking.

In November 2007, NLB made a successful transition from the existing TARGET payment system to the new TARGET 2 system, which is used to settle accounts among banks and to transact large payments, as well as handle clients’ urgent requests for Euro payments.

NLB Group
Annual Report 2007