38th Ordinary NLB Supervisory Board Meeting
Today, 2 December, the NLB Supervisory Board held its 38th ordinary meeting focusing on the Group’s performance in the first nine months this year. During this time all the banks in the Group improved their profitability achieving a total of EUR 91.5 million of profit after tax, which is 18 % more than in the same period last year. The key business segments show a positive trend with a high contribution from the core banks in the Group. More information about the NLB Group performance is available in the Mid-Year Report for the 3rd Quarter 2016, published in line with the financial calendar today, 2 December 2016.
NLB Group Reports Profit in Nine Months 2016
The profit generated by the core business operations (retail, large, medium and small companies in Slovenia and core companies’ operations in the international markets) increased by EUR 16.5 million or 18%, and the overall net income grew by EUR 1.2 million.
The profit before impairments and provisions was EUR 143.5 million, 2% lower compared to the same period last year. A lower operating income is the result of low, even negative interest rates in the Euro area and stronger banking competition in the local and international markets where the Group operates. Positive effects from the successful divestment of equity investments have significantly neutralised the adverse effects. Compared to the same period last year the interest margin fell from 2.67% to 2.59%, net of the NPL sale effects it would amount to 2.64%.
Operating costs decreased by 1% compared to the same period last year.
The Group continues to maintain a sustainable level of impairments and provisions as a result of higher quality of the lending portfolio and relatively favourable macroeconomic situation.
Gross loans in the core business grew by EUR 61.9 million or 1% compared to the end of 2015. Without considering the decrease resulting from the sale of the NPL portfolio the loans increased by EUR 118.3 million or 1.9%. The volume of loans in the non-core segment is substantially decreasing in line with the Group’s strategic goals.
Sales Continue to Grow
A proactive sales approach yields good results, such as keeping the retail (23.4%) and corporate (22.9%) market share, and profitability has priority over business volumes. In the trade finance (including guarantees, letters of credit and other instruments), the Group increased its market share by 2.0 percentage points to 28.6%, mainly due to intensified sales activities and the top quality sales team in Slovenia.
The trading volume of securities increased by as much as 60% compared to the same period last year, and the value of assets in NLB’s custody exceeded EUR 10 billion.
Increasingly Popular Mobile Applications for Smart Devices
Market reactions in the segment of contemporary e-services are very good. The number of Klikin users is rapidly growing having reached 47,000 at the end of September. Another mobile application was launched. It is the NLB Klikpro, the mobile application for companies and entrepreneurs, who can now use their mobile devices for 24/7 services. The e-Pen was introduced in NLB as one of the first banks in Slovenia. It is used in our distribution network for digital signatures on tablets. The paper documentation is by consequence quickly receding; it is now simple to store documents and the whole procedure is shorter.
Group’s Banks Very Active in Regional Markets
The Group has strengthened its position outside Slovenia, since all of its banks have been actively looking for and realising business opportunities by focusing on their customers, sales staff efficiency and by implementing digital services and upgrading sales channels. In the next step they will pay more attention to user experience and customer satisfaction while constantly maintaining high quality of services.
Risk Management
The Group places great emphasis on constantly upgrading the risk management system with the aim of proactively identifying and managing risks and providing strategic support to the Group’s business model. In the first nine months of 2016, the Group’s NPL volume fell by EUR 504 million totalling EUR 1.391 billion on 30 September 2016. As you may know, in addition to the organic reduction of NPLs the Group successfully sold approximately 500 million of receivables to investors in two tranches (corporate and retail). These P/L effects were mostly recognised in the second quarter this year, while the majority of receivables were derecognised in the third quarter. By consequence, the percentage of the non-performing exposures according to the EBA criteria significantly decreased to 10.8%.
As usual, the Supervisory Board also got acquainted with its Committees’ reports and gave its consent to those transactions that require its approval.
NLB Supervisory Board