3 March 2017
40th regular NLB Supervisory Board Session
Today, 3 March 2017, the NLB Supervisory Board held its 40th ordinary meeting with main focus on unaudited financial results of the NLB Group in 2016. The NLB Group increased net profit for the third consecutive year to EUR 110 million, which is an increase by 20% since 2015 (EUR 91.9 million) in a challenging interest rate environment. In addition to positive developments in the parent bank, all core/strategic NLB Group banking members showed profitable and improving operations in 2016, thus contributing an increasingly important part to the Groups’ results. Some of the Group members delivered record performance. The NLB Supervisory Board is pleased that the bank has made significant progress towards digitalisation and modernisation of its services, its market position and competitiveness in 2016. It is also very important that NLB’s primary focus has shifted even more towards delivering the best services to clients. More information about the NLB Group performance is available in the Unaudited Annual Financial Statements 2016, published today, 3 March 2017.
Primož Karpe, Chairman of the Supervisory Board of NLB, said: ”The Supervisory Board is satisfied with the Bank’s financial performance and NLB Group’s achievements in 2016. We see a stable growth of net profit and a continuous decisive decline of non-performing loans. NLB is ready for the process of privatisation and will act in accordance with decisions and instructions by the owner. The NLB Supervisory Board is also very pleased that the bank is focused on its core business, market position, digitalisation of services, simplifications of processes, customers’ experience, and, above all, on providing the innovative services that will benefit clients the most. To please and satisfy the customers is, after all, the primary purpose of the Bank. The challenges that lie ahead of the NLB Group remain unchanged and we continue with the implementation of our new strategy. The Bank believes it has set firm foundations for sustainably profitable and value-creating future for its stakeholders. We believe clear vision, financial performance and strong capital base position NLB well for the future challenges.” The Supervisory Board complimented the Management Board and the entire NLB team for the achieved results and stable positive operations.
In 2016 the NLB Group continued to improve client solutions offering, user experience, eased accessibility of services and fulfiled its advisory role to clients. NLB is rapidly adapting to trends in banking digitalisation and the issue has a prominent place both in its strategic plans and in its daily work. In 2016 NLB introduced several modern digital product solutions, such as the introduction of e-pens/electronic signature in branches, updated Klikin, personal business account for private entrepreneurs and private individuals with a lower volume of business, etc.
The Bank continues to maintain its leading position as the key bank and advisor for Slovene corporates of all sizes. NLB has invested specifically into higher availability and ease of access to its services for small and medium-sized companies. With the automation of the approval process, including a creditworthiness check, “Quick financing” up to EUR 100,000 is provided for small enterprises within 24 hours. A mobile application “NLB Klikpro” was introduced allowing companies, entrepreneurs and private individuals with small businesses a simple “Check – pay – order” services at their fingertips. The Bank introduced – the first on the Slovene market – the “All in one POS”.
At Investment Banking services, in close cooperation with other business segments, the Bank maintained its successful coverage of corporate and institutional clients with advisory and capital markets, as well as its standard range of treasury solutions (leading role in organising domestic and international syndicated loan facilities with a total volume of EUR 800 million, helped raise EUR 192 million in domestic capital markets instruments, etc.).
Six core banks in five SE European markets – growing strongly together
The Group operates with six banking entities in five markets (Serbia, Montenegro, Macedonia, Kosovo, Bosnia and Herzegovina) – all of which have been growing strongly in terms of market activities (especially retail lending with attractive margins) and profitability. The Group core bank subsidiaries collectively contributed EUR 57.7 million to the Group profits (compared to EUR 38,7 million in 2015), representing an increase of almost 50%.
This is the result of strong loan production especially in Serbia, Macedonia and Kosovo, as well as exceptionally low risk results in all entities. All entities have been showing a positive dynamics in business evolution – operating in markets that also show a higher GDP and loan growth compared to the Eurozone, as well as still substantially higher margins.
All members have launched efforts to enhance efficiency of operations and moreover invest significantly in new channels and digital service offerings. The Rebranding of all subsidiary banks under “NLB Banka” brand was concluded in 2016, finally facilitating the full exploitation of the brand and activity synergies on the Group level.
NPL levels strongly reduced
2016 was an exceptional year in strongly reducing NPL volume by 31% to a level of just below EUR 1.3 billion (2015: EUR 1.9 billion). This resulted in the NPL ratio reduced to 13.8% (2015: 19.3%), while the internationally more comparable NPE ratio by EBA methodology already decreased to 10% (2015: 14.3%).
This strong performance on NPL reduction was possible due to strong results in collection and continued divestment of exposures at asset and portfolio level. As we all know, 2016 saw the conclusion of a benchmark sale of part of the non-performing portfolio of EUR 500 million in gross exposures.
Liquidity and capital ratios are very strong
Liquidity and capital ratios are very strong and a solid basis for further growth – fully anticipating a 100% (EUR 63.8 million) of NLB d.d. profit dividend pay out to shareholders. ROE stands at 7.4% whereas the after tax RORAC (on a normalised capital requirement of 14.75% of RWA) already reached 9.7%.
The Group was successfully overcoming the challenging 2016 (record low interest rates and general over-liquidity, increasing regulatory pressure, strong competition in the markets, etc.). International rating agencies have acknowledged strong progress by upgrading the Bank to BB- (S&P outlook Positive).
New medium-term strategy
NLB Group defined a new medium-term strategy in 2016 to reinforce its regional specialist leadership position and ambitious plans for further profitable growth based on better services to its clients leveraging on digital channels, improved efficiency, an enhanced clients’ experience, Group synergies and a dedication to be a regional solutions’ innovation champion – aiming to achieve above 10% ROE, CIR of 50%, while in target state providing a strong dividend flow of approximately 70% of the Group profits.
NLB Supervisory Board