NLB Group: Short Overview of Preliminary Unaudited Full Year 2018 Financial Results

20th February 2019

In 2018 NLB Group continued its trend of stable and profitable business operations, net profit for the period amounted to EUR 203.6 million with substantial continued contribution from subsidiaries.

in EUR million / % / bps   2018   2017   Change
YoY
  Q4 18   Q3 18   Q4 17
Key Income Statement Data (in EUR million)                        
Net operating income 493.3   487.7   1%   124.3 125.9 122.4
Net interest income 312.9   309.3   1%   81.0 80.2 80.6
Net non-interest income 180.4   178.4   1%   43.3 45.7 41.8
Total costs -288.7   -284.7   -1%   -78.3 -70.4 -76.9
Result before impairments and provisions 204.6   203.0   1%   46.0 55.5 45.6
Impairments and provisions 23.3   29.5   -21%   4.3 4.6 -7.7
Result before tax 233.3   237.3   -2%   51.5 61.7 38.9
Income tax -21.8   -4.0   -   -5.1 -6.0 3.2
Result of non-controlling interests 7.9   8.2   -4%   1.2 2.2 1.0
Result after tax 203.6   225.1 -10%   45.3 53.5 41.1
                       
Key Financial Indicators                        
Return on equity after tax (ROE a.t.)   11.8%   14.4%   -2.6 p.p.  
Return on assets after tax (ROA a.t.)   1.6%   1.9%   -0.2 p.p.  
Interest margin (on interest bearing  assets)   2.56%   2.57%   -0.01 p.p.   2.63%   2.59%   2.67%
Cost-to-income ratio (CIR)   58.5%   58.4%   0.1 p.p.   63.0%   55.9%   62.8%
Cost of Risk Net (bps)1   -43   -62   19 p.p.        
                         
 in EUR million / % / bps   31 Dec 2018   31 Dec 2017   Change
YoY
Key Financial Position Statement Data (in EUR million)            
Total assets   12,740.0   12,237.7   4%            
Loans to customers (gross)   7,627.5   7,641.2   0%            
Loans to customers (net)   7,148.4   6,994.5   2%            
Deposits from customers   10,464.0   9,879.0   6%            
Equity   1,616.2   1,653.6   -2%            
Other Key Financial Indicators                        
Total capital ratio   16.7%   15.9%   0.8 p.p.            
Total risk weighted assets (RWA)   8,677.6   8,546.5   2%            
NPL volume - gross  (in EUR million)   622.3   844.5   -26%            
Share of non-performing loans (NPL) in all loans 6.9% 9.2% -2.3 p.p.            
Net non-performing loans (NPL)/total net loans 2.6% 3.8% -1.2 p.p.            
Non-performing exposure (NPE) - EBA Definition   4.7%   6.7%   -2.0 p.p.            
Employees            
Number of employees   5,887   6,029   -2.4%
1 Credit impairments and provisions (annualised level) / average net loans to non-banking sector

Main developments:

  • Higher operating income: interest and non-interest income higher by 1%. Net interest income increased slightly due to loan volume growth – predominantly in retail - and lower interest expenses, net non-interest income increased due to higher fees and commissions.
  • Stable cost dynamics at Group level with moderate increase on discretionary spending.
  • NPLs further reduced due to successful resolution measures and supportive macroeconomic environment. NPE ratio stood at 4.7%. Overall negative cost of risk was recorded with release of impairments and provisions in the amount of EUR 23.3 million. Higher income tax (EUR 21.8 million vs EUR 4.0 million in 2017), given significant positive non-recurring effects in 2017.

Strategic focus:

  • Regional specialist: NLB Group is the only financial institution focusing solely on the SEE region. We have a unique understanding of the local environment; the language, culture and mentality.
  • Customer-oriented: we are focusing on delivering the best customer experience and pay special attention to building personal relations with our clients, our societies and our environment.
  • Digital: We are building unique omnichannel product distribution, partnership programs and end-to-end customer solutions.

Unaudited report FY2018 is scheduled to be published on 8 March 2019, while presentation and call for the interested stakeholders will take place on 11 March 2019 (details to be announced).

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