Here we are a part

of something bigger

NLB Group Annual Report 2024

NLB Group

Annual Report 2024

3

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

With an in-depth understanding

of customer’s needs and business

environment, NLB Group charts

a path that ensures not only its

long-term development, but also

the development of wider economic

environment in our home region,

South-Eastern Europe. We invite you

to explore the key achievements,

financial performance, and strategic

objectives of NLB Group in 2024.

OVERVIEW

NLB Group

Annual Report 2024

4

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

NLB Group at a Glance

Investment grade rating

from

Moody’s

(A3 long-term deposit rating

with positive outlook; as of 7 January

2025, solicited rating) and from

Standard & Poor’s

(long-term credit

rating at BBB with a stable outlook).

Strategic focus 2030

Sustainable banking

Total assets

EUR

3,411

million

EUR

1,245

million

more than

2.9

million

8,322

EUR

28,035

million

Total capital

Total operating income

Number of active clients

Employees

Ratings

7

banks with

409

branches

5

leasing companies

3

asset management

companies

º

NEW GROUP

STRATEGY 2030

º

THE

DOUBLING OF NLB GROUP’S

BALANCE SHEET, REVENUES,

AND PROFIT BY 2030

• Sustainability is

and

• NLB Group is committed to the

with

a

to reduce emissions in lending,

investments, and operations.

•

ESG Risk Rating: 10.5 (low risk), ranking us in the top 5

percentile of global banks and earning

NLB Group

Annual Report 2024

5

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Statement by the Management Board of NLB

Esteemed Stakeholders,

By now, you know us well. You

know that our deepest commitment

extends to continuously providing our

customers with meaningful services

and; between maintaining stability

and fostering growth in the markets

of our operations, as well as driving

shareholder value and advancing

their interests. You also know that

we constantly strive to exceed

expectations and that we do not

shy away from seizing opportunities

that lie beyond not yet discovered

horizons. This was also the case for

NLB Group in 2024.

In the preceding year, we clearly and confidently

demonstrated our ambition that reaches beyond the

known by introducing

NLB Group’s

new business

strategy

for the following five-year period – a

strategy designed to devote our Group and its talents

to growth and development in a rapidly changing

financial environment.

The strategy called

"New Horizons"

that was presented

during the second NLB Investor Day in May stipulates

that the Group’s ambition remains to

create sustainable

growth

to support individuals and businesses alike. It

foresees the

doubling of the NLB Group’s balance sheet

(to more than EUR 50 billion assets),

recurring revenues

of more than EUR 2 billion, and a profit of more than

EUR 1 billion by 2030

,

combining organic growth with

selected M&As in the targeted markets in South-Eastern

Europe (SEE) –

our

home region

.

The strategy focuses on growth across three

pillars: Retail, Corporate and Investment Banking,

and Payments, along with operating platform

enhancement initiatives that enable their delivery. One

of the most prominent ones includes

transitioning to a

fully digital business model

, which includes leveraging

advanced technologies such as artificial intelligence,

cloud services, and data analytics.

We believe that with a thorough understanding of the

business environment and a prudent consideration of

the risks, the new business strategy paves a path that

will continue to justify the trust of our shareholders –

who will receive strong dividend payments – while at the

same time fosters long-term development of the Group

and, indirectly, also the wider economic environment

and society in our home region.

Hedvika Usenik

Member

Andrej Lasič

Member

Archibald Kremser

Member

NLB Group

Annual Report 2024

6

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

However, the development of such an ambitious

business strategy has been supported by the strong

business results and milestones we have achieved in

recent years, including 2024. Global economic activity

held up well in the first half of the year but moderated

later; moreover, in the European Union especially

gave way to an evolving interest rate environment,

as well as structural changes such as digitalisation,

decarbonisation, and demographic shifts. Economic

growth, interest rate cuts, and the gradual disinflation

trends contributed to

healthy credit activity

and

demand for banking services in all client segments,

product lines, and geographies, which positively

impacted NLB Group’s operations. All of this activity

enabled the Group to

reach EUR 515 million of net

income after tax

, further strengthening market shares

across SEE geographies, with all banking members

reporting solid net earnings and

contributing 58.1% to

the Group’s after-tax result

.

The Group’s robust performance in 2024 generated

substantial value for our shareholders

, as NLB

honoured its commitment by

increasing its dividend

payment

from the previous year’s distribution

by 100%

,

resulting in a combined

EUR 220 million

pay-out

in two

tranches. The amount represents a 40% pay-out ratio

of the previous year’s profit after tax. Furthermore, the

Bank’s outlook for 2025 continues to surpass even this

percentage, while at the same time will strive to maintain

the capacity for organic and/or M&A-driven growth.

The June General Meeting that confirmed the first

dividend pay-out also

confirmed rotations in the NLB’s

Supervisory Board

, as the mandates of three members

expired in 2024. The General Meeting re-appointed

Primož Karpe (later also confirmed as Chairman for the

third time in a row) and appointed two new members,

namely Natalia Olegovna Ansell and Luka Vesnaver.

Also, in 2024, the NLB Workers’ Council appointed

Sergeja Kočar for another term as an employee

representative in the Supervisory Board.

When it comes to expansion through mergers and

acquisitions, NLB Group in 2024 marked

another

milestone

in its development and the services and

solutions it offers to its clients in the markets of SEE.

The Group successfully

completed the transaction

and

became the sole shareholder of SLS HOLDCO, Ljubljana

the parent company of Summit Leasing Slovenija,

Ljubljana and its Croatian subsidiary Mobil Leasing,

Zagreb, together forming

SLS Group

. This transaction

not only enabled NLB to become the leading provider

of leasing services on the Slovenian market, but

also marks

NLB’s re-entry

into the market of one of

Slovenia’s most important business partners,

Croatia

,

after three decades.

The Group also strengthened its position in its home

region by

expanding its asset management

into the

North Macedonian market by NLB Skladi, Ljubljana

acquiring Generali Investments, Skopje, later rebranded

to

NLB Fondovi

,

Skopje

. Furthermore, to consolidate

ownership of the asset management companies

within the NLB Group under the umbrella of NLB

Skladi, Ljubljana the ownership of the Serbian asset

management company KomBank Invest, Beograd was

also transferred and renamed to

NLB Fondovi, Beograd

.

In line with its new strategy of pursuing selected

M&As in the targeted markets, NLB also launched

an all-cash

voluntary

public takeover offer

aimed at

acquiring control over

Addiko Bank AG

for all issued

and outstanding Addiko Bank AG shares. As

at

16 August

2024,

th

e offer had not achieved sufficient acceptance

declarations to reach the

required

acceptance threshold

of at least 75% of the issued shares, and so it was not

extended. NLB nevertheless remains committed to further

business development and delivering its new business

strategy, including possible other takeover opportunities.

Yet, in 2024, NLB was active not only on regional

financial but also on international

capital markets

,

successfully issuing EUR 300 million in 10NC5

subordinated Tier 2 notes in January to strengthen its

capital position, and EUR 500 million in 6NC5 senior

preferred notes in May for MREL purposes. The capital

position remains rock solid and well above regulatory

requirements, representing a firm foundation for further

value accretive growth at a maintained and attractive

dividend payout.

NLB’s successful capital markets activity was also

reflected in an

ever more positive recognition of the

Bank

and

stronger confidence among professional

stakeholders and rating agencies

. In June, therefore,

S&P

affirmed NLB’s long-term credit rating BBB with

Peter Andreas Burkhardt

Member

Antonio Argir

Member

Blaž Brodnjak

Chief Executive Officer

NLB Group

Annual Report 2024

7

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

a stable outlook, reflecting its expectation that NLB

will maintain solid financial performance over the next

12–24 months, while prudently expanding across its core

markets in Slovenia and SEE and integrating newly

acquired banks and non-banks. Later, in September,

Moody‘s indicated a low credit risk and strong financial

health. To top off these recognitions, the Ljubljana Stock

Exchange, which traditionally recognises excellence

among listed companies in various categories, has in

2024 once again awarded NLB the title of

Prime Market

Stock of the Year

.

In November, NLB Group also received a

new,

significantly improved ESG Risk Rating of 10.5

by

Morningstar

Sustainalytics, reflecting a low risk of

material financial impacts from ESG factors. The rating

places NLB Group in the top 5

th

percentile of all banks

assessed by the rating company.

We are proud that our sustainability performance

has been acknowledged once again, as we recognise

sustainable practices as key drivers of our long-

term business success

. The Group’s commitment to

sustainability extends across all its markets in SEE

and three pillars: sustainable operations, sustainable

finance, and contribution to society. As a systemically

important financial institution in the region, NLB Group

has set the goal to actively contribute to the sustainable

transformation of the economy and society towards a

greener, fairer, and more inclusive future. Therefore, the

Group has integrated a sustainability perspective and

ESG factors into its new business strategy

and daily

operations. Guided by the strategy, UN Principles for

Responsible Banking, the Net Zero Banking Alliance,

the Paris Agreement goals, and the United Nations’

Sustainable Development Goals, NLB Group actively

manages its sustainability-related impacts, and

financially material risks and opportunities. These stem

from climate change, human capital, corporate culture

and governance, digitalisation, broader societal issues,

and other important sustainability-related topics.

We are aware, however, that financial institutions also

hold an important social function. Therefore, through

corporate social responsibility

activities, NLB Group

also actively contributes to wider socio-economic

development and an improved quality of life in our

home region. This involves

supporting communities

with

donations

and

initiatives

such as NLB Youth

Sports,

promoting financial literacy

,

endorsing

sports

and culture

,

aiding affected communities

when natural disasters hit, such as during October’s

devastating floods in Bosnia in Herzegovina, and

ensuring responsible relations with employees

. The

latter was once again recognised in 2024 by the Top

Employers Institute, which awarded NLB the prestigious

Top Employer certificate

for the 9

th

consecutive year.

Additionally, the bank was once again, for the 13

th

consecutive year, awarded as a Family-Friendly

Company with special recognition for promoting the

culture of a family-friendly company in Slovenia.

All these achievements, strategically structured plans

and ambitions keep us

firmly positioned for further

growth

and development. Consequentially – and

perhaps even more importantly – they also ensure our

stability in supporting all the markets, societies and

communities where we operate. More specifically, our

dedication to South-Eastern Europe, our home region,

goes beyond simply providing financial solutions and

services. We are committed to fostering a thriving

community where individuals and businesses identify

new opportunities and explore new horizons. We know

that

here we are a part of something bigger

.

Yours truly,

Mangement Board of NLB

NLB Group

Annual Report 2024

8

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Statement by the Chairman

of the Supervisory Board of NLB

1 McKinsey & Co: "The Global Banking Annual Review 2024: Attaining Escape Velocity," October 2024.

To Our Shareholders,

the period of 2008–2020 has

marked an extended decade during

which the average banking sector

players globally (but even more

so applicable for the European

market) did not show much, if any,

value creation. But then there has

been last 3 to 4 years, when banks

in general returned more capital to

their shareholders than any other

sector of the economy. The later

happened both in terms of dividend

yield and stock performance, with

underlying profitability exceeding the

cost of equity by very solid margin

for the best performing peers.

These were the outcomes which a

neutral observer would quickly pin

only to the rising rates, net interest

margin expansion, and long overdue

economic post-pandemic resurgence

of the economies. But is that really

a case? The fact is that banking

valuations and still prevailing

valuation gap to other industries

highlight both, different regulatory

playground and the need for a

banking business model to evolve.

As the rates are now cut and the forward-looking yield

curve flattens, the natural questions arise: Who will be

the winners within the banking sector of the future?

What’s the right strategy to create shareholder value

going forward and what has changed compared

to period prior to outperformance? In seeking the

answers, we could dwell deep into the cost of equity

consideration, and even deeper into the underlying

structure of the balance and off-balance sheet trends

of the banks, based on which we could easily make a

strong case that best performing banks of today look

nothing like they did 10 years ago (and your NLB Group

should qualify in this bucket, as it falls into very top

decile of all the banks in the world who were able to

move up five or more deciles in their return on tangible

equity over 2013–2023 period

1

). Four operational

metrics, along with avoiding risk, largely explain

most of the outperformance of total shareholder

return: revenue growth and its decomposition;

better net interest margin management from lower

cost deposit-gathering strategies or more efficient

distribution and credit risk management; growing

fee income (from expansion in wealth management,

and other fee-heavy businesses) and of course cost

efficiency, driven also by digitalisation.

While all these four elements are already core pillars

of NLB Group’s 2030 Strategy, your Supervisory Board

is of the opinion that when it comes to the future, the

rules of the game will predominantly evolve around

two softer, yet crucial elements, and that’s learning and

persistence. In other words:

•

Lazy bankers will lose to average ones

•

Average ones will lose to focused ones

•

Focused ones will lose to (positively) obsessed ones

•

And the champions will obsess and focus over

fundamentals, not trophies.

Chairman

NLB Group

Annual Report 2024

9

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Excellence comes from perfecting the basics – and

when talking about the basics, I’m referring to the bank

operating model: to end-to-end process optimisation

and subsequent digitalisation allowing scalability, to

understanding the technology and investing into it to

transform, to understanding the data and use it to serve

the clients better and with more tailor-made solutions.

Furthermore, to applying AI where it brings clear

optimisation of costs and better understanding of the

risks, as well as an increase of competitive advantage

for the professionally curious ones. But all of that must

materialise in bolder go-to-market steps and moves

and even more focus on talent and culture, all with the

purpose to serve the clients the way they will feel they

are getting more than just "value for money" when using

the services of the bank.

Least but not last, we are aware we need to understand

"disruption" and "transition" of the future banking model

equally well as those who sit behind the driving wheels

of the largest digitally native banks of the today’s world.

By saying that, we should relentlessly study:

•

The ways the people do digital today and the ways the

2

PYMNTS Intelligence: "How the World Does Digital;" 2024.

people will do digital tomorrow (in all aspects of life:

from how they "have fun," how "they communicate," to

how they pursue "be well" initiatives). Having said that,

these three categories respectively engage people in the

digital world more than does digital banking, with the

latter nevertheless being on the extremely high 4

th

place

of all the digital activities the people engage in today

2

.

•

The giants of the banking future, so one day we’ll also

be able to stand on their shoulders.

NLB Group has adopted the 2030 Strategy with the

clear mindset of transformation. You must agree it

does not lack ambition. You also probably agree it is

focused to unlock even more shareholder value, backed

by higher dividend payout ratios and/or inorganic

equity value creation. As the rate curve changes and

net interest margin naturally shrinks, the strategy

assumes to compensate that in volume growth, it

assumes to compensate that in expansion into new

markets (both organically and inorganically), it predicts

tapping into the untapped revenue pools that exist

already today, and it should concretely materialise

into 16 new customer proposition offerings across the

corporate, retail, and payments business verticals. On

top of all that, the Strategy does not shy away from

continued deep awareness of the whole scope of ESG

responsibilities, as fully outlined in the Sustainability

Statement of this Annual Report.

But to back our promise of the future, we need to invest,

transformation-wise in both technology and talent. We

need to invest into leadership and sustainability, we need

to invest into knowledge and into persistence. Because

by doing things with the right mindset and alongside

the right direction, the future will eventually yield

results through our valuation re-rating, in the erasing

of perceived discounts vs. i.e. US banks, insurers, pure

asset managers and other financial business models,

embedding finance and financial decisions into every

pore of today’s trade, investment, and funding ecosystem.

This way we should enable ourselves to continue giving

back to all our key constituencies to whom we remain

committed to: To our shareholders, to our employees, to

our wider society and of course, to our clients.

Yours truly,

Supervisory Board of NLB

This is where our community

thrives.

(i)

Market share as at 30 September 2024.

(ii)

Market share of leasing portfolio. Change in

methodology in NLB Lease&Go, leasing, Ljubljana

and Summit Leasing Slovenija, Ljubljana: as of 31

December 2024, the leasing portfolio in banks is no

longer included in the calculation.

(iii)

Data in local financial statements. Result after tax for

full-year 2024.

(iv)

On 7 August 2024, Generali Investments, Skopje was

renamed NLB Fondovi, Skopje.

(v)

On 10 October 2024, KomBank Invest, Beograd was

renamed NLB Fondovi, Beograd.

For further information on NLB Group subsidiaries,

please refer to the chapter

NLB Group Key Members

.

NLB Skladi, Ljubljana

Assets under

management

3,048.6

(in EUR milliions)

Market share

of AUM

40.7%

in mutual funds

Result

after tax

12.1

(in EUR millions)

NLB Lease&Go, leasing, Ljubljana

Result

after tax

3.3

(in EUR millions)

Total assets

349.0

(in EUR millions)

Market share

by total assets

11.3%

(ii)

NLB, Ljubljana

Market share

by total assets

31.3%

Active clients

728,350

Result

after tax

478.2

(in EUR millions)

Total assets

16,975.1

(in EUR millions)

Summit Leasing Slovenija, Ljubljana

Result

after tax

0.0

(iii)

(in EUR millions)

Total assets

926.2

(iii)

(in EUR millions)

Market share

by total assets

27.9%

(ii)

NLB Banka, Podgorica

Market share

by total assets

14.3%

Active clients

96,093

Result

after tax

27.7

(in EUR millions)

Total assets

1,034.5

(in EUR millions)

Mobil Leasing, Zagreb

Result

after tax

1.7

(iii)

(in EUR millions)

Total assets

126.4

(iii)

(in EUR millions)

NLB Banka, Sarajevo

Market share

by total assets

6.0%

(i)

Active clients

132,887

Result

after tax

14.4

(in EUR millions)

Total assets

1,005.1

(in EUR millions)

NLB Banka, Banja Luka

Market share

by total assets

20.9%

Active clients

210,580

Result

after tax

29.5

(in EUR millions)

Total assets

1,172.1

(in EUR millions)

NLB Fondovi, Beograd

(v)

Assets under

management

58.0

(in EUR milliions)

Market share

of AUM

3.5%

in mutual funds

Result

after tax

-0.4

(in EUR millions)

NLB Lease&Go Leasing Beograd

Result

after tax

0.2

(in EUR millions)

Total assets

125.6

(in EUR millions)

Market share

by total assets

7.9%

NLB Komercijalna Banka, Beograd

Market share

by total assets

9.8%

Active clients

1,062,590

Result

after tax

140.5

(in EUR millions)

Total assets

5,553.5

(in EUR millions)

NLB Fondovi, Skopje

(iv)

Assets under

management

66.4

(in EUR milliions)

Market share

of AUM

18.8%

in mutual funds

NLB Lease&Go Skopje

Result

after tax

-0.7

(in EUR millions)

Total assets

23.1

(in EUR millions)

Market share

by total assets

n.a.

NLB Banka, Skopje

Market share

by total assets

15.9%

Active clients

471,007

Result

after tax

67.8

(in EUR millions)

Total assets

2,158.8

(in EUR millions)

NLB Banka, Prishtina

Market share

by total assets

17.0%

Active clients

242,986

Result

after tax

37.0

(in EUR millions)

Total assets

1,426.9

(in EUR millions)

NLB Group

Active clients

2,944,493

Result

after tax

514.6

(in EUR millions)

Total assets

28,035.4

(in EUR millions)

Market share

by total assets

3.2%

(ii)

Result

after tax

0.1

(iii)

(in EUR millions)

We connect

with societies

and their

people like no

other bank in

the region.

The NLB Group is the

only financial institution

headquartered and

focused on the SEE

region. This is our home.

We know the languages,

customs and people,

and we share a common

history.

NLB Group

Annual Report 2024

12

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Non-performing loans (NPLs)

(in EUR millions)

Gross loans to customers

(in EUR millions)

Robust normalised performance over five years,

fuelled by strong loan demand and revenue

growth, along with stable asset quality

Profit a.t.

(in EUR millions)

204

2018

194

2019

2020

2021

2022

Net interest income

(in EUR millions)

2018

2019

2020

2021

2022

2023

31 Dec

2018

31 Dec

2019

31 Dec

2021

16,721

31 Dec

2018

31 Dec

2019

31 Dec

2020

31 Dec

2021

31 Dec

2022

31 Dec

2023

31 Dec

2020

31 Dec

2022

2023

934

31 Dec

2023

330

NLB Group

Annual Report 2024

13

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

(EBA definition)

14

bps

Capital

Asset

quality

EUR

1,672.5

million

EUR

220

million

18.73

%

37.47

%

1.1

MREL

vs. 15.50% requirement (incl. P2G)

representing a 100% increase over the previous

year’s distribution

vs. 35.04% requirement

New MREL funding in 2024: EUR 800 million

Governance

Social

Environmental

of new sustainable financing, supporting

the green transformation of our clients

increase of employee engagement

(+28 p.p. vs baseline year 2015)

by Sustainalytics ESG Risk rating

(improved by 5.5 points)

NLB Group

Annual Report 2024

14

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Key performance indicators

Table 1:

Key financial indicators for NLB Group and NLB

NLB Group

NLB

2024

2023

2022

2024

2023

2022

Income statement data

(in EUR millions)

Net interest income

934

833

505

432

373

177

Net non-interest income

311

260

294

378

266

189

Net non-interest income (BoS)

354

300

503

389

277

199

Net revenue

1,683

1,454

1,181

1,069

830

461

Total costs

-602

-502

-460

-312

-238

-208

Operating costs (BoS)

-642

-541

-496

-323

-249

-218

Result before impairments and provisions

643

591

338

498

401

158

Impairments and provisions

-37

-14

-29

14

78

6

Gains less losses from capital investments in

subsidiaries, associates, and joint ventures

3

1

1

-

-

-

Result before tax

608

578

483

512

479

164

Result of non-controlling interests

16

13

11

-

-

-

Result after tax

515

551

447

478

514

160

Financial position statement data

(in EUR millions)

Total assets

28,035

25,942

24,160

16,975

16,015

13,939

Gross loans to customers

16,721

14,064

13,397

8,816

7,277

6,157

Impairments and valuations of loans to customers

-358

-329

-324

-158

-121

-95

Net loans to customers

16,364

13,735

13,073

8,657

7,156

6,062

Financial assets

6,324

4,804

4,877

4,548

3,016

2,961

Deposits from customers

22,206

20,733

20,028

12,294

11,882

10,984

Equity

3,226

2,883

2,366

2,526

2,249

1,603

Non-controlling interests

72

65

57

-

-

-

Total off-balance sheet items

7,336

6,301

5,449

6,108

5,291

4,046

Key financial indicators

a) Capital adequacy

Total capital ratio

18.7%

20.3%

19.2%

24.4%

25.2%

25.6%

Tier 1 ratio

15.8%

16.9%

15.7%

19.6%

19.7%

19.1%

CET 1 ratio

15.3%

16.4%

15.1%

18.8%

18.8%

18.1%

Total RWA (in EUR millions)

18,216

15,337

14,653

11,153

9,207

7,833

RWA / Total assets

65.0%

59.1%

60.6%

65.7%

57.5%

56.2%

b) Asset quality

NPL coverage ratio 1 (coverage of gross non-

performing loans with impairments for all loans)

108.7%

110.0%

98.9%

107.2%

87.9%

86.1%

NPL coverage ratio 2 (coverage of gross

non-performing loans with impairments

for non-performing loans)

62.7%

64.6%

57.1%

70.4%

61.2%

58.1%

NPL coverage ratio (EBA definition)

63.5%

65.6%

58.1%

70.6%

61.4%

58.2%

NPL coverage ratio (EBA definition) (BoS)

63.5%

65.6%

58.1%

70.6%

61.4%

58.2%

NPL volume (in EUR millions)

330

301

328

148

138

111

NPL ratio (internal def.; NPL/ Total loans)

1.6%

1.5%

1.8%

1.4%

1.2%

1.1%

Net NPL ratio (internal def.; net

NPL / Total net loans)

0.6%

0.5%

0.8%

0.4%

0.5%

0.5%

NPL ratio (EBA definition)

2.0%

2.1%

2.4%

1.6%

1.9%

1.7%

NPL ratio (EBA definition) (BoS)

1.6%

1.5%

1.8%

1.4%

1.2%

1.1%

NPE ratio (EBA definition)

1.1%

1.1%

1.3%

0.8%

0.9%

0.9%

NPE ratio (EBA definition) (BoS)

1.1%

1.1%

1.3%

0.8%

0.9%

0.9%

Received collaterals / NPL

55.9%

58.1%

61.0%

48.5%

58.7%

58.4%

NLB Group

Annual Report 2024

15

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

NLB Group

NLB

2024

2023

2022

2024

2023

2022

NPL Collateral received / NPL (EBA definition)

67.0%

45.6%

54.7%

61.3%

67.1%

75.6%

Credit impairments and provisions / RWA

0.1%

-0.1%

0.1%

0.3%

0.0%

0.2%

c) Profitability

Net interest margin (BoS)

(v)

3.5%

3.4%

2.2%

2.6%

2.5%

1.3%

Financial intermediation margin (BoS)

4.8%

4.6%

4.4%

5.0%

4.4%

2.9%

Operational business margin

(vi)

5.0%

4.8%

3.6%

3.8%

3.7%

2.5%

ROE b.t.

19.1%

21.6%

20.6%

21.2%

26.0%

10.5%

ROA b.t.

2.3%

2.3%

2.1%

3.1%

3.3%

1.2%

ROE a.t.

16.5%

21.0%

19.9%

19.8%

27.9%

10.2%

ROA a.t.

1.9%

2.2%

1.9%

2.9%

3.5%

1.2%

d) Business costs

Operating costs / Average total assets (BoS)

2.4%

2.2%

2.2%

2.0%

1.7%

1.7%

CIR

(vii)

45.7%

45.9%

57.6%

34.5%

37.3%

56.8%

Total costs / RWA

3.3%

3.3%

3.1%

2.8%

2.6%

2.7%

Total costs / Total assets

2.1%

1.9%

1.9%

1.8%

1.5%

1.5%

e) Liquidity

Liquidity assets / Short-term financial

liabilities to non-banking sector

43.7%

51.9%

48.5%

54.7%

66.5%

61.8%

Liquidity assets / Average total assets

34.5%

41.0%

40.7%

40.0%

51.5%

49.8%

Liquidity Coverage Ratio (LCR)

197.2%

245.7%

220.3%

235.6%

299.7%

276.5%

Net stable funding ratio (NSFR)

167.6%

187.3%

183.0%

155.1%

175.0%

177.6%

f) Leverage ratio

Leverage ratio

9.9%

9.6%

9.1%

12.4%

10.9%

10.3%

g) Other

Market share in terms of total assets

-

-

-

31.3%

30.2%

27.6%

LTD

73.7%

66.2%

65.3%

70.4%

60.2%

55.2%

Total revenues / RWA

6.8%

7.1%

5.4%

7.3%

6.9%

4.7%

Key indicators per share

Shareholders

(viii)

-

-

-

4,649

3,457

3,025

Shares

-

-

-

20,000,000

20,000,000

20,000,000

The corresponding value of one share (in EUR)

-

-

-

10

10

10

Book value (in EUR)

157.1

139.9

114.1

122.1

108.3

75.9

Branches

Number of branches

409

418

440

69

68

71

Employees

Number of employees

8,322

7,982

8,228

2,523

2,554

2,418

NLB Rating

NLB Outlook

2024

2023

2022

2024

2023

2022

International credit ratings

S&P

BBB

BBB

BBB

Stable

Stable

Stable

Moody's

A3

A3

Baa1

Positive

Stable

Stable

(i) The result before impairments and provisions of NLB Group for the year 2022 does not include negative goodwill.

(ii) Loans and advances without loans and advances classified as held for sale, cash balances at central banks, and other demand deposits.

(iii) Loans and advances, including cash balances at CBs and other demand deposits.

(iv) The carrying amount of debt instruments measured at fair value through other comprehensive income (FVOCI) is increased by value adjustments due to impairments.

(v) Calculated on the basis of average total assets.

(vi) Calculated as Net income from operational business (NII - Tier 2 expenses + Net fee and commission income + Recurring net income from financial operations)/Average total assets.

(vii) Tax on the balance sheet excluded from a calculation from 2024 on.

(viii) As per the share register of Central Securities Clearing Corporation (KDD). The shares are listed on the Ljubljana Stock Exchange. The Bank of New York (the "GDR Depositary") represented in the share register of KDD as a single

holder is not the beneficial owner of shares. It holds shares in its capacity as the depositary for the GDR holders. The GDRs representing shares are issued against the deposit of shares and are listed on the London Stock Exchange.

Therefore, the number in the share register of KDD does not represent all final beneficial owners of the Bank shares. The rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary, and

individual GDR holders do not have any direct right to either attend the general meeting of Bank’s shareholders or to exercise any voting rights under the deposited shares.

Further details on the definition of certain indicators in this table are available in the chapter

.

NLB Group

Annual Report 2024

16

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

Key Events

1

2

3

4

5

6

7

8

9

10

11

12

Issuance of

Tier 2 Notes

Top Employer

certificate

Apple Pay

available to

NLB customers

NLB Skladi,

Ljubljana as

Best Asset

Management

Company

New NLB Group

Strategy 2030

Issuance of senior

preferred notes

Acquisition

of Generali

Investments,

Skopje

First tranche

dividend payment

New NLB

Supervisory Board

appointments

New NLB website

Acquisition of

Summit Leasing

and entering the

Croatian market

Re-election of the

Chairman of NLB

Supervisory Board

Sponsorship of

NLB Ljubljana

Marathon

NLB Group

donations for flood

relief in Bosnia

and Herzegovina

KomBank Invest,

Beograd renamed

NLB Fondovi,

Beograd

Regulatory

approvals to

acquire Summit

Leasing

Generali

Investments,

Skopje rebranded

to NLB Fondovi,

Skopje

NLB awarded

Prime Market

Stock of the Year

Second tranche

dividend payment

Improved ESG risk

rating

New NLB Group

website

10.5

LOW RISK

2024

EUR

million

EUR

million

NLB Group

Annual Report 2024

17

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

January

·

Issuance of Tier 2 Notes:

The Bank issued 10NC5

subordinated Tier 2 notes in the amount of EUR 300

million (ISIN: XS2750306511). In parallel, the Bank

conducted a liability management exercise (LME)

repurchasing EUR 219.6 million of its two outstanding

Tier 2 notes with approaching call dates.

·

Top Employer certificate:

The Top Employers Institute

awarded the Bank the prestigious Top Employer

certificate for the 9

th

consecutive year.

February

·

Apple Pay:

Apple Pay became available to NLB

customers in Slovenia.

March

·

Notifications of major holdings change:

The

shareholding of Schroders plc in the Bank changed

from 5.12% to 4.98%.

April

·

NLB Skladi, Ljubljana declared the Best Asset

Management Company over a three- and ten-year

period:

The financial magazine Moje Finance awarded

NLB Skladi, Ljubljana the Best Asset Management

Company over a three- and ten-year period in the

category Naj Skladi 2023.

·

Apple Pay:

Apple Pay became available to NLB

customers in Montenegro. 

May

·

Early redemption of notes:

The Bank executed an

early redemption of subordinated Tier 2 notes in the

aggregate nominal amount of EUR 45 million (ISIN:

SI0022103855).

·

New NLB Group Strategy 2030:

The

NLB Group

revealed its new Group Strategy until 2030 at NLB

Investor Day in Ljubljana on 9 May 2024.

·

Announcement of NLB’s intention of Addiko Bank

AG public takeover offer:

On 15 May, NLB announced

its

intention to launch an all-cash voluntary public

takeover offer aimed at acquiring control over Addiko

Bank AG for all issued and outstanding Addiko shares

for a consideration of EUR 20.00 per Addiko Bank AG

share on a cum dividend basis.

3 The company was removed from the court register on 1 July 2024.

4 The company was removed from the court register on 1 July 2024.

·

Issuance of senior preferred notes:

NLB issued senior

preferred notes in the aggregate amount of EUR 500

million for MREL purposes (ISIN: XS2825558328).

·

Acquisition of Generali Investments, Skopje by NLB

Skladi, Ljubljana:

NLB Skladi, Ljubljana has expanded

into the North Macedonian market by acquiring

Generali Investments, Skopje. The acquisition was

completed after receiving all relevant approvals.

·

Award from the Slovenian Marketing Association:

NLB received the leading award from the Slovenian

Marketing Association for Excellence in NLB Brand

Management.

June

·

Addiko Bank AG public takeover offer:

On 7 June

2024, NLB published a voluntary public takeover offer

to acquire control of Addiko Bank AG and publicly

presented the offer at a webcast held on 10 June 2024.

·

Dividend payment:

The Bank paid the dividends

(the first tranche) of EUR 110 million or EUR 5.5 gross

per share.

·

Appointment of three members of the Supervisory

Board:

The NLB General Meeting re-appointed Primož

Karpe and two new members Natalia Olegovna Ansell

and Luka Vesnaver.

·

New NLB website:

NLB successfully renovated its

website (nlb.si).

·

Google Pay:

Google Pay became available to NLB

customers in Kosovo.

·

Garmin Pay:

Garmin Pay became available to NLB

customers in Slovenia.

·

The merger of NLB Leasing, Ljubljana – in liquidation

with NLB Lease&Go, leasing, Ljubljana:

NLB Leasing,

Ljubljana – in liquidation ceased to exist

3

, its assets

and liabilities were transferred to NLB Lease&Go,

leasing, Ljubljana.

·

The merger of PRIVATINVEST, Ljubljana with NLB Real

Estate, Ljubljana:

Company PRIVATINVEST, Ljubljana

ceased to exist

4

, and its assets and liabilities were

transferred to NLB Real Estate, Ljubljana.

July

·

Re-election of the Chairman of NLB Supervisory Board:

The members of the NLB Supervisory Board re-elected

Primož Karpe as their Chairman for the third time.

·

Improved Addiko Bank AG public takeover offer:

NLB

announced the improved offer price for the voluntary

public takeover offer aimed at acquiring control over

Addiko Bank AG by increasing the Share Offer Price

from EUR 20.00 to EUR 22.00 per Addiko share on a

cum dividend basis. Following the announcement of

the improvement of voluntary public takeover, the Bank

published the addendum to the Offering Memorandum

and revised Presentation on 22 July 2024.

·

Early redemption of notes:

The Bank executed the

early redemption of NLB senior preferred notes in the

aggregate nominal amount of EUR 300 million (ISIN:

XS2498964209).

·

NLB as general sponsor of NLB Ljubljana Marathon:

NLB has taken on the role of general sponsor of the

largest running event in SEE, now known as the NLB

Ljubljana Marathon.

August

·

Regulatory approvals to acquire SLS HOLDCO,

Ljubljana:

NLB obtained all required regulatory and

supervisory approvals from the Croatian Financial

Services Supervisory Agency (HANFA), the Slovenian

Competition Protection Agency (AVK), and the ECB

in relation to the completion of the transaction

contemplated in the Sale and Purchase Agreement

to acquire a 100% shareholding in SLS HOLDCO,

Ljubljana, the parent company of Summit Leasing

Slovenija, Ljubljana and its Croatian subsidiary Mobil

Leasing, Zagreb.

·

Results of Addiko Bank AG public takeover offer:

The

public takeover offer aimed to acquire control over

Addiko Bank AG did not obtain sufficient acceptance

declarations.

·

NLB Fondovi, Skopje:

Asset management company

Generali Investments, Skopje, was rebranded on

7 August 2024 to NLB Fondovi, Skopje.

September

·

Completion of the acquisition of the SLS Group and

entering the Croatian market:

After obtaining all

regulatory approvals in August, NLB completed the

transaction on 11 September 2024 and became the sole

shareholder of SLS HOLDCO, Ljubljana, the parent

company of Summit Leasing Slovenija, Ljubljana and

NLB Group

Annual Report 2024

18

Overview

MB Statement

SB Statement

Key Highlights

Business Report

Strategy

Risk Factors & Outlook

Performance Overview

Segment Analysis

NLB Group Key Members

Risk Management

Sustainability

Statement

Financial

Report

its Croatian subsidiary Mobil Leasing, Zagreb, together

forming the SLS Group.

·

Completion of the acquisition of KomBank Invest,

Beograd by NLB Skladi, Ljubljana:

After obtaining

regulatory approval, NLB Skladi, Ljubljana successfully

completed the transaction on 19 September 2024 and

with this, the NLB Group consolidates the ownership of

the asset management companies under the umbrella

of NLB Skladi, Ljubljana.

·

Beginning of a mandate of a Supervisory Board

member:

On 30 September 2024, Luka Vesnaver took

up his office as a member of the Supervisory Board

of NLB, following the ECB's decision not to object

to his appointment to the function, to which he was

appointed at the 42

nd

General Meeting of NLB on

17 June 2024.

October

·

NLB Group donation to eliminate the consequences

of the devastating floods in Bosnia and Herzegovina:

NLB Group donated EUR 1 million to help eliminate the

consequences of the disastrous floods in Bosnia and

Herzegovina that occurred in October. The donation

was directed to humanitarian organisations – the

Red Cross Society of Bosnia and Herzegovina and

Pomozi.ba, to ensure that the aid reaches those most

in need.

·

NLB Fondovi, Beograd:

KomBank Invest, Beograd was

renamed NLB Fondovi, Beograd.

November

·

Beginning of a mandate of a Supervisory Board

member:

On 8 November 2024, Natalia Olegovna

Ansell took up her office as a member of the

Supervisory Board of NLB, following the ECB's decision

not to object to her appointment to the function, to

which she was appointed at the 42

nd

General Meeting

of NLB on 17 June 2024.

·

Prime Market Stock of the Year:

Ljubljana Stock

Exchange awarded NLB for Prime Market Stock of

the Year.

·

Garmin Pay:

Garmin Pay became available to NLB

customers in Montenegro, North Macedonia, Bosnia

and Herzegovina and Kosovo.

·

Early redemption of Tier 2 notes:

The Bank executed

an early redemption of subordinated Tier 2 notes in the

aggregate nominal amount of EUR 9.9 million (ISIN:

XS2080776607).

December

·

NLB MUZA:

The Bankarium Museum has been

renamed to NLB MUZA.

·

New NLB Group website:

NLB Group successfully

renovated its website (nlbgroup.com).

·

Dividend payment:

The Bank paid the dividends

(the second tranche) of EUR 110 million or EUR 5.5 gross

per share.

·

Improvement of ESG risk rating:

NLB received an

ESG risk rating of 10.5, reflecting a low risk of material

financial impacts from ESG factors, placing NLB in the

top 5

th

percentile of all banks assessed by Morningstar

Sustainalytics.

·

Google Pay:

After migrating its card issuing to a new

service provider in December, NLB Komercijalna

Banka, Beograd introduced Google Pay to its

customers.

·

Notifications of major holdings change:

Brandes

Investment Partners, L.P. has increased its shareholding

in the Bank above 5%, reaching 5.03%.