February 18, 2021
Members of the NLB d.d. Supervisory Board met today at their second regular meeting of 2021, focusing the discussion on the NLB Group business operations in the previous year and familiarizing themselves with the draft of the 2020 Annual Report. They also took note of the process of integration of Komercijalna banka a.d. Beograd, the reports submitted by the Bank’s experts, and also granted consent to transactions requiring the Supervisory Board’s approval.
The preliminary NLB Group unaudited financial results show that 2020 was, despite the challenges of the COVID-19 pandemic and the resulting economic hibernation, a very solid year with core revenues from lending, and the fees and commission business quickly returned to pre-COVID-19 levels. The Group’s results demonstrated the robustness and resilience of its sustainable business model, including sound underwriting criteria across economic cycles. Total net operating income of the NLB Group amounted to EUR 504.5 million, representing a moderate 2% decrease YoY (2019: EUR 517.2 million).
Profit before impairments and provisions amounted to EUR 210.5 million, a mere 1% decrease YoY, supported by non-recurring income (the sale of NLB Vita and debt securities). Profit after tax amounted to EUR 268.9 million (please note that immaterial changes are still possible), strongly affected by the acquisition of Komercijalna banka a.d. Beograd that had a net positive impact of negative goodwill in the amount of EUR 137.0 million, and additionally established EUR 13.4 million for expected credit losses on the performing portfolio for the Komercijalna banka group. Excluding the impact of the acquisition, Group profit would amount to EUR 141.3 million, significantly exceeding previous forecasts mostly because of better than expected cost-of-risk performance.
In total, NLB Group established impairments and provisions in the amount of EUR 71.4 million, mostly related to the COVID-19 outbreak. The cost-of-risk related to credit risk stood at 74 basis points (NLB Group pre-acquisition 62 basis points) – and was lower than guidance, mainly due to very solid asset quality trends in Slovenia and continuously successful NPL workout from legacy NPL stock. The Group applied very strict discipline to cost mitigation activities, driving costs down by 4% YoY, totalling EUR 293.9 million and leading to a cost-to-income ratio of 58.3%.
Capital adequacy stands at 16.6%, with EUR 92.2 million from 2020 profits already anticipated for dividend distribution, while excess capital above the regulatory requirement provides a robust basis for continued growth. Also important was the negative goodwill recognised in profits that is still subject to validation by the regulator prior to inclusion into the capital base.
The acquisition of Komercijalna banka a.d. Beograd at the end of December 2020 added EUR 4.3 billion to the Group’s balance sheet, bringing NLB Group’s total assets to nearly EUR 20 billion (EUR 19.6 billion). The conclusion of this process marked another very important milestone in the Groups’ strategy to become the leading financial institution focused on and headquartered in our home region – South-eastern Europe.
More information about the Key Unaudited FY2020 data along with details on the acquisition of Komercijalna banka a.d. Beograd will be presented during a webcast hosted by the Management Board of NLB d.d. on Wednesday, February 24, 2021 at 15:00 CET.
We kindly invite all interested stakeholders to take part. More details about the webcast are available here.