Ljubljana, 1 March 2004
Press Conference of NLB's Management Board:
The NLB Group fosters co-operation
A press conference was held today on the premises of Banka Domzale, member of the NLB Group, during which the President and the members of NLB's Management Board presented NLB's business results for 2003, the NLB Group's strategic guidelines for the 2004-2006 period as well as the novelties in the NLB Group's range of products and services. Andrej Flis, President of the Management Board of Banka Domzale, which hosted the conference, presented the results and plans of their bank. Marjan Kramar, President of NLB's Management Board, emphasised at the press conference that NLB was still the largest Slovene international bank and that its universality was not at issue, and pointed out the basic strategic guidelines of the Bank, namely to preserve the leading position in Slovenia, help the NLB Group to penetrate foreign markets, develop non-traditional banking activities as well as increase profitability and economic efficiency of the NLB Group.
According to SAS NLB generated SIT 12 billion of profit before tax, while the NLB Group SIT 16.7 billion based on unaudited and not fully consolidated results. Banka Domzale, the most performing member of the NLB Group, last year earned SIT 1,388 million of profit before tax according to SAS.
Banka Domzale: the most performing member of the NLB Group
Andrej Flis, President of the Management Board, reported that Banka Domzale last year recorded SIT 77,493 million of total assets which was 9.5 % more than the year before. Profit/loss before tax was 23.3 % higher than one year earlier. Capital adequacy of Banka Domzale was 12.3. Return on equity before tax exceeded 19 %. Moreover, operating costs increased by only 1.7 %. Andrej Flis pointed out that the plans of Banka Domzale remained the same, namely to strengthen personalised servicing of clients, increase quality of services, improve cross-marketing of NLB Group's services and pursue the defined policy of increasing return on equity and decreasing operating costs. He also announced that Banka Domzale would offer its clients the possibility to take out insurance with NLB Vita and start saving through NLB Skladi from the middle of the year.
NLB Group: comprehensive increase in the volume of operations
The operations of NLB and the NLB Group in 2003 that were presented by Andrej Hazabent, Member of NLB's Management Board were primarily characterised by great changes in interest rates. According to SAS NLB generated SIT 12 billion of profit before tax, while at year-end it allocated SIT 1.5 billion to provisions for general banking risks. As at 31 December 2003 NLB's total assets amounted to SIT 1,717.3 billion.
Based on the preliminary and not fully consolidated results the NLB Group earned SIT 16.7 billion of profit before tax. As at 31 December 2003 total assets of the NLB Group reached SIT 2,136.2 billion.
Andrej Hazabent emphasised that the operations of NLB and the entire NLB Group in 2003 were primarily characterised by the following: approximation of tolar interest rates to the foreign currency interest rates with a strong negative impact on income, strengthening of competition and cost control. As regards income, NLB's net interest income rose by 15% and interest margin dropped by 16.7%, which is why net interest income was by nearly 10 percentage points lower than planned, despite the increase in volume. As regards expenses, NLB's labour costs grew by 3.7 %, while the remaining costs declined by SIT 300 million (1.2 %) over the 2002 figure.
At the end of 2003 the estimated capital adequacy of NLB was 10 %.
In 2003 the volume of corporate banking (small business sector) in NLB grew by 21 %, said Pierre Van Keirsbilck, Member of NLB's Management Board. Such growth results from a different, more focused organisation of the Bank in this area as well as a markedly personalised approach to clients, to which highly trained and specialised account managers contributed the most. For this client segment the Bank launched the so-called micro-loans whose main advantages are a favourable interest rate and a rapid granting procedure.
In retail operations NLB successfully introduced bankassurance throughout its branch network and thus collected SIT 2.3 billion of premiums. Moreover, NLB launched new loans for real property as well as recorded a 7.3 % and 8.1 % growth in deposit taking and crediting, respectively.
Matej Narat, Member of the Management Board, explained that at the beginning of 2003 NLB distributed account management for small and medium-sized companies among 14 branches servicing SMEs and retail clients as well as among 5 centres servicing large companies. The results show that this orientation was the right one. As much as 88% of medium-sized and large companies are NLB's clients. The account managers from the five centres that service large companies achieved good results, namely they exceeded the ambitious goals of growth in assets, which last year totalled about SIT 90 billion, while the share of bad debt did not rise.
NLB's share in the market of large companies exceeded 35 % and it is very encouraging to see that growth in regional centres was above the average. In 2003 NLB mainly succeeded in establishing joint marketing of all services throughout the branch network and complementing the existing domestic range of services by those that the NLB Group provides abroad.
Borut Stanic, Member of NLB's Management Board, pointed out that NLB recorded high growth in its export financing, namely export loans granted abroad increased by 143 %, financial loans granted abroad by 35 %, receivables purchased from abroad by 152 % and risks assumed from abroad by 69 %. Operations in the segment of personal accounts have returned to normal in terms of information technology. The clients receive statements in due time, the system is stable and available, processing times are shorter.
Supervision over system functioning is provided for and preventive measures prepared. In addition, according to Borut Stanic, NLB has set up a back-up location and has drafted a well designed disaster recovery plan. As regards information technology, the introduction of new management and control principles has just been completed, while the key role in information technology management is played by the Bank's operative sections. Also this segment is undergoing intensive personnel restructuring.
NLB remains the largest Slovene international bank
Strategic guidelines until 2006 were presented by Marjan Kramar, President of NLB's Management Board The strategic guidelines were also approved by the Bank's Supervisory Board at its session held on 25 February 2004. Marjan Kramar stressed that NLB was still a universal bank playing the leading role in Slovenia and that it would continue to penetrate with its international banking services to those markets where it had competitive edge such as geographic proximity and good knowledge of these markets. NLB plans to consolidate the position of the NLB Group together with its members by strengthening the synergies, expanding its range of products and services to individual markets as well as improving its management and supervision functions. An important role will also be played by development of services that are not considered traditional banking services. Thus, at the beginning of April NLB plans to start marketing the first savings schemes through NLB Skladi, provided that it is granted authorisation from the Securities Market Agency for marketing of individual funds. By completing the range of services within the NLB Group the Bank actively responds to new environment created by Slovenia's accession to the EU and consequently fiercer direct competition by foreign banks in retail deposit taking. These trends have to be considered also in the tax policy which has to give domestic banks equal footing for competing with foreign banks.
As of 1 March NLB will offer long-term foreign-currency loans to corporate clients (small business sector) on the basis of the European Investment Bank's credit line. These are long-term foreign-currency investment loans with favourable interest rates (from EURIBOR + 1.5 percentage points for SMEs and from EURIBOR + 1.4 percentage points for micro-companies) and longer maturity, i.e. up to 12 or 15 years in case of infrastructure projects. In March NLB will also offer to its prime clients long-term tolar loans with favourable interest rates on the basis of NLB Prime, starting from 7.85 %. Users of Proklik plus NLB will be offered a possibility to use electronic tax transactions based on the AC NLB certificate, said Pierre Van Keirsbilck.
NLB announces a new bankassurance product in retail banking in March, namely: NLB Nalozba Vita 3. Clients will be offered consumer loans of SIT 1 million, and to those clients with good credit rating they will be granted within 30 minutes. In March, the users of Klik NLB will be able to electronically submit their personal income tax return. The NLB branch network is engaged in intensive preparations for marketing of its mutual funds and foreign-currency loans for real property with maturity of up to 30 years.
NLB's plans concerning banking with large companies were presented by Matej Narat, Member of the Management Board.
NLB responds to the companies' changed requirements by meeting the expectations and requests of its clients, improving its reputation and developing supplementary banking services, such as cash management, syndicated loans, primary issues of securities and derivatives. This year NLB will devote particular attention to financing of more complex investments in Slovenia and abroad by providing advisory services concerning preparation and implementation of larger investment projects. Despite the ever stiffer competition by foreign banks, NLB has both the will and the know-how to offer Slovene companies services that are tailored to their needs as well as a price policy adapted to the circumstances in individual regions, concluded Matej Narat.
Marjan Kramar answered the question concerning future investments in information technology and emphasised that information technology was one of the key priorities of the Bank's Management Board, as it is considered to be one of the main conditions for efficient work. The basic characteristic of IT is its continuous development and modification. Therefore, the system has to be upgraded and developed during its regular functioning and new tasks have to be added, considering the fact that the environment and especially the regulators continuously impose new requirements. Development of a comprehensive information system in the Bank, part of which is the Bancs system supporting retail operations, is a complex task but at the same time it gives the Bank a comparative competitive edge and encourages it to link and co-operate with other banks - on new markets as well.
Marjan Kramar, President of the Management Board, answered the question about the planned redundancies in the current year by particularly stressing the fact that this programme was not about laying off but about their restructuring of personnel, which is a normal process in all successful companies. "We have needs and we are looking for reserves. Our challenge is to exploit the Bank's personnel potential which is really high," emphasised Marjan Kramar and added that the best employees have to be given an opportunity to prove themselves. Employees have to be reassigned to those jobs and areas where they can contribute more. This is why an internal employment exchange has to be established which will guarantee horizontal and vertical mobility of employees, not only within NLB but also within the NLB Group. The substance of the restructuring process will be discussed in detail with trade unions, as the Bank's management is well aware of the importance of communication and dialogue.