Today, 29 November, the NLB Supervisory Board held its 44th meeting, focusing on the NLB Group performance results in the first nine months of 2017. During this period the NLB Group made EUR 184 million of profit after tax, which is EUR 92.5 million or 101% more than in the same period last year. The contribution to the Group’s net profit by the core international markets in the nine months amounted to EUR 73.8 million. A part of their profits achieved by them in 2016 is included as dividends (EUR 48.1 million) in the NLB results on the stand-alone basis, which amount to EUR 145.3 million in the first nine months. You can find more about the NLB Group performance in its 3Q Interim Report publicly announced today.
At this point the NLB Supervisory Board expressed great satisfaction over the achieved results, as the NLB Group’s 15th positive quarter in a row stands to testify to its sustainable and profitable operations as well as its strategy. “This year’s exceptionally good business results are facilitated more and more, close to a half by now, by the core markets outside Slovenia, where the Group can make up for the tough and highly competitive conditions in Slovenia and a much lower margin the parent bank is able to make in its local market. The second trend observed lately is that the retail segment in Slovenia as well as SEE markets tends to increasingly contribute to the final outcome, which means that the bank is additionally dispersing its risks and further improving the structure of its portfolios. The third element worth mentioning and complimenting is that this year for the first time so far the non-core companies which we are exiting made a positive contribution to the Bank’s results, since this segment also made a profit,” said Primož Karpe, the Chairman of NLB Supervisory Board, about the Group’s performance, adding that: “At the same time the profit generated by the Group in the first nine months already announces historic and record results at the end of this year.”
It should be emphasised that the regular operating result before provisions increased by 10%, which is a very good indicator of continuous work that is carried out by the Bank. By consequence, the Return on Equity (ROE after tax) increased to 15.9% including non-recurring events and a negative cost of risk. The net operating income increased by 2% y.o.y., mostly due to higher fees and other regular non-interest income. The continuous growth in the net operating income, both net interest income as well as income generated by net fees can be primarily seen in the core international markets, with a 6% growth in the same period.
The costs are 3% lower compared to the same period last year, mainly as a result of an additional decrease in labour and administration costs due to successful streamlining measures. Further cost reductions positively affected the cost-efficiency ratio (CIR), which dropped to 56.8%.
At the end of the third quarter, the loan portfolio quality improved significantly as a result of hard work on the recovery and collection of non-performing loans, consequently leading to released loan provisions. All of the above resulted in a 16.2% lower volume of non-performing loans, which currently stands at 11.9%, while the share of non-performing exposures (internationally recognised NPE ratio) fell to 8.3%. The coverage ratio, which remains high (77.5%), is an important strengths of the NLB Group, with a high quality of its loan portfolio remaining one of our key targets. Prudent risk management and high liquidity reserves are a solid and strong basis for future growth.
The total capital ratio and CET1 ratio were 16.3%, testifying to NLB Group’s capital strength.