43rd NLB Supervisory Board Meeting: NLB Group in the First Half of 2017 with 117.9 Million EUR Net Profit

1st September 2017

Today, 1st September 2017, the 43rd NLB Supervisory Board meeting was held, focusing primarily on NLB Group performance results in the first half of this year. The NLB Group continues with its trend of positive business performance for the 14th consecutive quarter, by making a profit after tax of EUR 117.9 million EUR, which is 48.4 million EUR or 70% more than in the same period in 2016. You can find more about the performance of the NLB Group in its Semi-Annual Report published today, 1st September.

The Supervisory Board expressed satisfaction over what has been achieved so far. With yet another successful quarter NLB has confirmed that the strategy is correct and results of intense work are becoming a tradition this Bank is committed to uphold in the future.

“Solid foundations laid by this Bank for a sustainable and profitable future are a clear vision, good financial performance and solid capital base. We are pleased that on such grounds NLB is aiming its strategic focus at the very core of its business – its customers. Relentless pursuit of enhancements and provision of top client services are driving its progress in digitalisation and modernisation of services. If client satisfaction is your main motivation, success is bound to follow,” said Primož Karpe, the President of NLB Supervisory Board.

Due to successful business operations in all segments, the Return on Equity (ROE after tax) increased to 15.5% (first half of 2016 - 9.4%). Total Capital Ratio and Common Equity Tier 1 Ratio (CET1) were 16.5%, significantly exceeding regulatory requirements and testifying to the Group’s capital strength. Net operating income remained stable (-1% YoY) compared to the same period last year, with a slight improvement if normalised by non-recurring items (+0,2%), with positive trends especially in fees and commission income (+7% YoY). The cost-cutting trend continued with costs 3% lower than in the same period last year leading to further improvements of Cost to Income Ratio (CIR), which is now 57.7%. Pre-provision results thus increased 2% YoY (H1: 102,0 million), and +5% if normalised for non-recurring items (H1: 92,8 million).

Rising Loan Demand in and outside Slovenia

Due to positive macroeconomic situation the demand for loans was rising in Slovenia as well as other countries, particularly in the retail segment. In Slovenia, retail loans compared to the end of 2016 increased by 3%. NLB kept its leading position in the Slovenian market with a retail loan and deposit market share of 23.4 and 30.3% respectively. A record half-year growth of home loans was recorded with as much as 52% more new loans approved than in the same period last year. The corporate market share remains stable at 22.3%; a higher growth was recorded in the segment of small companies and sole traders.

The future is digital

Results confirm that this year’s best digital transformation award received by NLB in May went to the right company. In the first half of 2017, the number of new digital users increased by 35.200, and the coverage of NLB Klikin mobile application reached 12.3%. 90%of all new accounts were opened with the e-Pen application. As the first bank in Slovenia, NLB launched in May a web chat and video call service available 24 by 7. The Bank continues to pursue enhanced customer experience also by planned investments in further product digitalisation across the entire NLB Group.

High Profit Growth on International Strategic Markets

  1. volume growth continued and with gross loan balances 4% higher compared to the end of 2016. Banking members in the Group operating in international strategic markets contributed EUR 58.8 million to the overall profit, which is an increase of 71% compared to the same period last year (EUR 34.3 million in the first half-year of 2016).

Proactive Risk Management

In the first half of 2017, the quality of loan portfolio further improved on account of considerably upgraded new loan approval standards (implemented in 2014) and consequently rather low volume of new non-performing loans (NPL) in this period. This was reflected in NPL volumes falling by 9%, the share of non-performing loans (NPL ratio) decreased to 12.6% in the first six months, while the share of non-performing exposures (NPE ratio in line with EBA’s guidelines) dropped to 9%. The quality of loan portfolio remains one of the Group’s key objectives. NLB Group resolutely continues to further reduce the NPEs.

Strong Capital and Liquidity Position

At the end of the first half-year in 2017, the capital adequacy of the NLB Group remained high. The Total Capital Ratio stood at 16.5%, which is considerably above the minimum values set by supervising institutions. Liquidity reserves of NLB also remain very high.

As usual, the Supervisory Board also took note of the reports from its Committees and the Bank’s experts granting their consent to relevant cases if required. At this meeting, the Supervisory Board was also informed of procedures to find substitute members. Currently the Supervisory Board operates with 6 members.

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