NLB Group’s H1 Business Results Well on Track to 2021 Projections

August 12, 2021

“NLB Group’s business results in the first half of the year proved once again the relevance and consistency of its strategy, especially its focus on digitalisation, cost containment, competitive pricing, and flexibility, as well as last year’s acquisition of Komercijalna banka Beograd – whose contribution to the H1 results of the Group has already been meaningful,” emphasised Supervisory Board President Primož Karpe at today’s regular meeting, during which the Board discussed the Group’s operations in the first six months of 2021. As such, the results show that NLB Group is well on track to achieve 2021 projections.  

NLB Group generated EUR 139.8 million of profit after tax (EUR 66.1 million higher YoY) with a visible contribution from the Komercijalna banka group.

Net interest income increased by 32% YoY and totalled EUR 198.6 million, mostly on the back of the Komercijalna banka group contribution (EUR 48.9 million); however, even without it, net interest income remained stable at the same level YoY despite the continuity of the low interest rate environment and the excessive liquidity of the entire banking industry.

Net non-interest income also exceeded expectations and reached EUR 135.3 million. A major part of this has derived from the net fee and commission income, which grew YoY in all banks of the Group, but mostly in NLB d.d. (up 16% YoY) largely due to the efficient cross-selling of other banking products in relation to an increased loan origination volume and significantly intensified asset management services. This supports a reassessment of private individuals’ allocation of their investments in the enduring low interest rate environment. Komercijalna banka group contributed EUR 18.0 million to the net non-interest income.

The impressive growth of net fee and commission income has led to growth of quarterly operational business margin (OBM) for NLB Group by nine basis points YoY to 3.32%, indicating an efficient use of the excess liquidity and gradually moderating dependency on the net interest income.

Total costs amounted to EUR 197.3 million, on track to deliver on our FY guidance. Costs decreased YoY in NLB d.d. (EUR 2.3 million) mostly due to the positive effects of cost optimisation projects, and in non-core members (EUR 0.7 million). The Group is undertaking several strategic initiatives (channel strategy, digitalisation, paperless, process and branch network optimisation, etc.) to maintain the sustainable cost base going forward.

Net impairments and provisions were released in the amount of EUR 19.0 million, of which EUR 30.7 million release from the loan book, mostly due to the repayment of several larger exposures, improved credit ratings of certain clients and changed parameters for forming collective impairments and provisions related to more favourable macroeconomic forecasts. Other impairments and provisions include EUR 7.7 million in restructuring provisions and EUR 5.0 million in provisions for the legal risk in Komercijalna banka, Beograd.

Based on the positive developments in the first six months of 2021, and due to the good asset quality and decisive workout, NLB Group is improving the cost of risk guidance for FY 2021 to a range between 20 and 40 bps (from previous 70 – 90 bps). We believe our profit projection for 2021 will be easily achieving or exceeding the target of high single digit ROE on the back of the particularly low CoR.

The Group’s total assets increased to EUR 21,187.3 million, a EUR 1,621.4 million increase YtD.

Loan growth is with 4% YtD, and is well on track to reach our FY ambition – where growth is evenly split between markets, with strong demand from private individuals across all geographies. Corporate loan growth is starting to pick up with reasonable margins and we see an increasing demand for cross-border lending. Deposits continue to grow (+5% YtD), but at a bit moderated rate recently.

Solid foundations enable and encourage further growth

On 23rd of July, the ECB announced that it decided against extending the dividend recommendation beyond September 2021. NLB is prudently assessing all potential credit and other business risks and any impact they may have on the sustainability of our business model. Our strong capital position with 14.7% CET1 ratio and TCR at 17.0% supports our ambition to pay out a combined 92.2 million EUR in 2021, which leaves capacity for further growth and at the same time adheres to regulatory requirements.

“We are, indeed, satisfied with the Group’s business results in the first six months of 2021. A strengthened capital and liquidity position, on one hand ensures justifying expectations of our stakeholders, having already paid out the first instalment of dividends envisaged for 2021, and on the other hand enables us to continuously search for new growth opportunities,” commented NLB’s CEO Blaž Brodnjak who also added: “We will continue to strive for increasing revenues by stimulating loan growth and market shares, strengthening our business operations, and exploring further value accretive M&A opportunities in our home region.”

We kindly invite you to join our Webcast

More information on NLB Group operations in H1 2021 is available in the Interim Report published today. On Friday, 13 August at 11:00 CET/9:00 GMT, all interested stakeholders are kindly invited to the presentation of business results by the NLB Management Board, which will be available here.

Members of the Management Board will, as usual, receive and address your questions live during the webcast, however, if you already know what you wish to ask them, you may submit your questions now. If you register for the event, you will be able to send them via web app, or you may simply send them to the email address

At today’s meeting, members of the Supervisory Board of NLB d.d. also took note of the reports submitted by the Bank’s team and granted consent to transactions requiring its approval.

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