Annual Report (ESEF) • Apr 12, 2024
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Our strategic focus: Sustainable banking
| Total assets | EUR 3,109 million |
|---|---|
| Total operating income | EUR 1,093 million |
| Number of active clients | |
| Employees | |
| Number of banks | 7 |
Be a CLIENTS FIRST
Peter Andreas Burkhardt
Esteemed Stakeholders,
The most inspiring success stories are never only written by great results, unique measures, or continuous winning streaks. They also come from defeats, born in a dignified way. Of joy and satisfaction, when achieving the almost impossible. And they are, above all, made up of indescribable feelings of belonging, homecoming, and our hearts and souls with and for our home region – and we live it every day.
With this in mind, we made sure that 2023 was truly another year to remember – one in which NLB Group demonstrated that its actions and with its strategic focus and business decisions laid the foundations for stable, profitable operations for years to come. All of this was accomplished in addition to our donations to continue to create better footprints, and by that improving the quality of life in South-eastern Europe.
In a continuously uncertain operating environment with escalating geopolitical tensions, the Group’s business model resilience remained one of the key distinguishing factors among the market participants. It provided for recurring solid performance that is characterised by robust net income after tax of EUR 550.7 million, further strengthening market shares across geographies, client segments, and product lines.
Among our key achievements, the acquisition process was successfully completed in September, within the envisaged timeframe and budget, as yet another indication of the Group’s proven capacity to acquire and seamlessly consolidate. The sale and purchase agreement for Summit Leasing Slovenia was signed in November. Subject to regulatory clearances, this transaction will boost NLB Group’s ambitions in the strategically important shareholders, and provide the clients with additional services and solutions.
The latter of these ambitions will also be supplemented in the future by expanding the offer of asset management of NLB Skladi to acquire a 100% shareholding in Generali Investments AD Skopje.
In 2023, the Group continued to focus on enhancing our customers’ user experience, as well as recognising Slovenia launched the new mobile and web application, "NLB Klik," upgraded the Group’s mobile wallet "NLB Pay" with Google Pay, and launched the NLB Smart POS solution for micro and small businesses.
We supported large regional infrastructure projects such as the Krivača and Selac wind power-plants, the Sava Congress Centre in Belgrade, and others. The Bank also successfully issued its first oversubscribed transaction which not only reflected the strong credit and performance of NLB Group, but also demonstrated that NLB has wide access to capital markets, and confirmed our focus on sustainable growth.
We published NLB Group’s first Net-Zero portfolio targets that outline our efforts and progress in aligning emissions with the Net-Zero pathways by 2050 or sooner, focusing on key sectors such as real estate. In NLB Group, we firmly support the transition to a low-carbon sustainable economy that will use resources more efficiently.
We believe, however, that a positive contribution to society is also achieved with direct and decisive actions whenever and wherever needed, which we have proven by further generous support that address the most pressing challenges of our societies, and in 2023 cumulatively amount to more than EUR 17 million.
In June, the Group contributed over EUR 1.35 million across its recipients covering a variety of societal challenges such as childcare, assistance for socially vulnerable families, support for the elderly, and aid for employees facing constraints due to illness during the August floods in Slovenia: to eliminate the consequences of which the Bank donated a total of EUR 9.5 million.
A total of EUR 4 million was allocated to the 20 most-affected municipalities; EUR 1 million was established for dozens of NLB’s impacted employees; and EUR 5 million was transferred to the budget of the Republic of Slovenia.
Furthermore, under the recently adopted regulations, starting in 2024, NLB will be obliged to pay an additional tax exceeding EUR 30 million annually for the next five years. Combining donations and the respective balance sheet tax, NLB will contribute significantly to the community.
2023 translated into significant added value for our shareholders. NLB has delivered on its commitment, performing substantial dividend payments of EUR 110 million in two tranches in cash dividends in a cumulative amount of EUR 500 million between 2022 and the end of 2025.
What is more, the business results of 2023 enabled us to significantly increase our future dividends after tax. In 2024, this translates to EUR 220 million in dividends, representing a 100% uptick from 2023, while at the same time maintaining capacity for organic and/or M&A driven growth for meaningful and value accretive acquisitions to further strengthen our position in target markets.
To complement a strengthened dividend pay-out in December 2023, the Group kicked-off successful operations and added value for all its stakeholders in the future. The details of future strategic priorities and ambitions of the Group will be disclosed at the upcoming Investor Day.
Furthermore, the Group received a new ESG Risk Rating of 16.0 by Sustainalytics, thus improving the previous rating by 1.7 points. The improved rating ranks in the top 13 per cent among...
Anniversary of the NLB shares listing on the Ljubljana Stock Exchange, and of global share certificates at the London Stock Exchange, as well as the NLB stock reaching record valuations bringing investors 65% price return and more than 128% total return (including dividends), bringing annual return in excess of 17%. At the beginning of the year 2024, share price exceeded...
With shares and GDRs has in the past year materially improved, from combined average daily liquidity around EUR 500,000 in 2020 and 2021 to more than EUR 1,000,000 at the beginning...
Consistent strong performance. All of these accomplishments fuel our motivation to even more enthusiastically address key opportunities that lie ahead. We are fully aware that we can succeed...
In 2023, for the eighth year in a row, been awarded the renowned Top Employer certificate for the best employers, underscoring our focus on their learning and development. We are taking...
Ingredient our economies and businesses need to succeed on the global stage. We are finding inspiration in the effort, dedication, successes, and triumphs of athletes and in the dignity with...
Efforts contribute to a better quality of life in our home region. We are, last but not least, building our success on our home court advantage. And we are confident that the best for our NLB...
Lasič Archibald Kremser Peter Andreas Burkhardt Antonio Argir Blaž Brodnjak
Member Member Member Member Member Chief executive officer
Dear shareholders, esteemed clients, valued employees and other interested stakeholders, 1 McKinsey & Co: The Global Banking Annual Review statement that the year 2023 has been transformational from a typical bank shareholder mindset perspective. Banks, in general, have generated record profits following the steepest and fastest years of banks’ profitability evolution bonanza, but (and it’s worth emphasising that "but") with considerable variation between banks, riding the tailwind. The time has come to talk about...
Consider it with a different mindset. As the McKinsey annual review of the sector 1 points out, regardless of what happens next, including cycle change and rate spread "normalisation", the...
Affecting three key banking pillars: the balance sheet, transactions, and distribution. This brings us to the main question: where is our NLB Group on this transition path? At the Supervisor...
Shareholder value. Namely, the banking valuation gap highlights a need for our business model to evolve alongside the three key pillars mentioned above. If the capital markets, on average...
Below) the cost of equity, where then is this "unlocking factor" that can persuade investors there is indeed a way to a long-term sustainable and highly profitable growth of NLB Group, wit...
Sector, carefully underwritten retail and corporate lending remain at the core of our activities. However, the two other "growing revenue pools" are also particularly interesting for the Group...
All their sub-segments. Unlike balance sheet conditioned growth in lending and deposit-taking (the balance sheet factor), where our commitment to organic and inorganic growth remains in...
The two segments also stand out as the largest value creation and total shareholder return generating sub-sectors across the financial institutions’ universe over the last decade. It is easy to...
Insurance assets under management have been surpassing on-balance sheet growth over the last decade as the source of funding for investments in the real economy. Even our core SEE re.
Our growth (both geographic and organic) in the asset & wealth management market share proves that, and our adopted payments strategy focus adds further rationale to the above. Transactions players are no longer solely in the domain of banks. Banks have been selling and spinning off operations or acquiring them, in line with their strategies, to either gain scale or rationalize.
NLB Group, with its payment and transaction-focused ambition (coupled with its co-ownership of payment processing) and regional wealth and asset management ambition, can ride this trend.
Channels, although that depends on the market characteristics of the retail bank clientele. We have already created an omnichannel experience where branch and contact centre professionals.
Need to invest more into the most advanced technology and apply it to segments like credit-risk decisioning in real time, back-end processes that drive clients through self-servicing, and web architecture. Nevertheless, as we all know, the deeper we dive into the digital world, the stronger our cyber security defences need to be, addressing the plethora of cyber risks all banks are.
Our minds. Since the distribution channels of NLB Group allow for further development, there is ample room and opportunity for improvements in their utilisation, allowing for an even more.
Products into non-financial platforms or vice versa is also growing. "Traditional" embedded finance ecosystems such as retail and B2C marketplaces (car leasing/mobility being a good example).
Embedded finance’s long-term prospects may look appealing, some already market-proven best practices offer attractive scaling options, for example in insurance and point-of-sale lending.
Channels, removing this silos logic over the mid-term into a more streamlined approach offers us new opportunities for performance improvements. Hence, if the transition of the banking market.
Making it happen. Deploying its capital prudently and strictly in line with our RORAC-driven profitability signalling system. Still, only by relentlessly pursuing excellence will we be able.
Whom we owe all this: to our shareholders, to our employees, to our wider society (in the widest ESG sense) and of course, to our clients.
| NLB, Ljubljana | NLB Lease\&Go, Ljubljana | NLB Skladi, Ljubljana | Market share by assets |
|---|---|---|---|
| 10.1% | NLB Banka, Banja Luka | Active clients | 210,985 |
| Market share by total assets | 20.4% | Result after tax | 24 (in EUR millions) |
| Total assets | 1,041 (in EUR millions) | Active clients after tax | 9 (in EUR millions) |
| Assets under management | 2,360 (in EUR millions) | NLB Banka, Prishtina | Active clients |
| 230,418 | Market share by total assets | 16.9% | Result after tax |
| 36 (in EUR millions) | Market share by total assets | 39.6% | NLB Banka, Sarajevo |
| Market share by total assets | 6.2% | Active clients | 133,567 |
| Result after tax | 13 (in EUR millions) | Total assets | 917 (in EUR millions) |
| Active clients after tax | 27 (in EUR millions) | Total assets | 971 (in EUR millions) |
| NLB Banka, Skopje | NLB Lease\&Go, Skopje | Market share by total assets | 15.6% |
| Net loans to customers | 9 (in EUR millions) | Result after tax | -1 (in EUR millions) |
| Total assets | 1,902 (in EUR millions) | Total assets | 283 (in EUR millions) |
| NLB Komercijalna Banka, Beograd | NLB Lease\&Go Leasing, Beograd | Market share by total assets | 5.1% |
| Active clients | 1,060,357 | Result after tax | 132 (in EUR millions) |
| Result after tax | -1 (in EUR millions) | Total assets | 5,019 (in EUR millions) |
| Total assets | 71 (in EUR millions) |
| Year | Profit a.t. (in EUR millions) |
|---|---|
| 2018 | 204 |
| 2019 | 194 |
| 2020 | 270 |
| 2021 | 236 |
| 2022 | 447 |
| 2023 | 551 |
| Year | Net interest income |
|---|---|
| 2018 | 313 |
| 2019 | 318 |
| 2020 | 300 |
| 2021 | 409 |
| 2022 | 505 |
| 2023 | 833 |
| Date | Gross loans (in EUR millions) |
|---|---|
| 31 Dec 2018 | 7,627 |
| 31 Dec 2019 | 7,938 |
| 31 Dec 2020 | 10,033 |
| 31 Dec 2021 | 10,903 |
| 31 Dec 2022 | 13,397 |
| 31 Dec 2023 | 622 |
Empowering growth through strong capital, delivering significantly higher shareholder returns, underpinned by solid asset quality trends -7 bps Capital Asset quality vs. 15.5% require 1.5 % MREL TCR Dividend pay-out in 2024 MREL ratio MREL funding (stock) cost of risk NPL ratio which represents a 40% pay-out ratio of the 2023 profit MREL funding in 2023: EUR 540 m
| Key financial indicators for NLB Group and NLB | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NLB Group | NLB | |||||||||
| 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |||||
| Income statement data (in EUR millions) | Net interest income | 833 | 505 | 40 | (BoS) | 300 | ||||
| Total costs | -502 | -460 | -415 | -238 | -208 | -184 | ||||
| Operating costs (BoS) | -541 | -496 | -451 | -249 | -218 | -193 | ||||
| Result before impairments and provisions (i) | 591 | 338 | 252 | 401 | 15 | |||||
| Result before tax | 578 | 483 | 261 | 479 | 164 | 211 | ||||
| Result of non-controlling interests | 13 | 11 | 11 | |||||||
| Result after tax | 551 | 447 | 236 | 514 | 160 | 208 | ||||
| Gross loans to customers | 13,939 | 12,700 | 14,064 | 13,397 | 10,903 | |||||
| Impairments and valuations of loans to customer | -329 | -324 | -316 | -121 | -95 | -97 | ||||
| Net loans to customers | 13,735 | |||||||||
| from customers | 20,733 | 20,028 | 17,641 | 11,882 | 10,984 | 9,660 | ||||
| Equity | 2,883 | 2,366 | 2,079 | 2,249 | 1,603 | 1,552 | ||||
| Non-controlling interests | 65 | 57 | 137 | |||||||
| Total off-balance sheet items | 6,301 | 5,449 | 4,655 | |||||||
| Tier 1 ratio | 17.8% | 25.2% | 25.6% | 24.6% | 16.9% | 15.7% | ||||
| CET 1 ratio | 16.4% | 15.1% | 15.5% | 18.8% | 18.1% | 20.3% | ||||
| Total RWA (in EUR millions) | 15,337 | 14,653 | 12,667 | 9,20 | ||||||
| NPL coverage ratio 1 (coverage of gross non-performing loans with impairments for all loans) | 110.0% | 98.9% | 86.1% | 87.9% | 86.1% | 75.1% | ||||
| NPL coverage ratio 2 (coverage of gross non-performing loans with impairments for all loans) | ||||||||||
| NPL coverage ratio (EBA definition) (ii) | 65.6% | 58.1% | 58.4% | 61.4% | 58.2% | 60.8% | ||||
| NPL coverage ratio (EBA definition) (BoS) (iii) | 65.6% | 58.1% | 58.4% | 61.4% | 58.2% | 60.8% | ||||
| NPL volume (in EUR millions) | ||||||||||
| Net NPL ratio (internal def.; net NPL / Total net loans) | 2.4% | 1.2% | 1.1% | 1.5% | 0.5% | 0.8% | ||||
| NPL ratio (EBA definition) (ii) | 2.1% | 2.4% | 3.4% | 1.9% | 1.7% | 2.4% | ||||
| NPL ratio (EBA definition) (BoS) (iv) | 1.3% | 1.7% | 0.9% | 0.9% | 1.1% | |||||
| NPE ratio (EBA definition) (BoS) | 1.1% | 1.3% | 1.7% | 0.9% | 0.9% | 1.1% |
| 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|---|
| Received collaterals / NPL | 58.1% | 61.0% | 61.7% | 58.7% | 58.4% | 60.0% |
| NPL Collateral received / NPL (EBA definition) | 45.6% | 54.7% | 58.8% | 67.1% | 75.6% | 63.1% |
| Net interest margin (BoS) (v) | 3.4% | 2.2% | 2.0% | 2.5% | 1.3% | 1.2% |
| Financial intermediation margin (BoS) | 4.6% | 4.4% | 3.4% | 4.4% | 2.9% | 3.1% |
| Operational business margin (vi) | 4.8% | 3.6% | 3.3% | 3.7% | 3.3% | 1.2% |
| ROE a.t. | 21.0% | 19.9% | 11.4% | 27.9% | 10.2% | 13.8% |
| ROA a.t. | 2.2% | 1.9% | 1.1% | 3.5% | 1.2% | 1.8% |
| Operating costs / Average total assets (BoS) | 2.2% | 2.2% | 2.2% | 1 | 3.3% | 2.6% |
| Total costs / Total assets | 1.9% | 1.9% | 1.9% | 1.5% | 1.5% | 1.4% |
| Liquidity assets / Short-term financial liabilities to non-banking sector | 51.9% | 48.5% | 48.9% | 66.5% | ||
| Liquidity Coverage Ratio (LCR) | 245.7% | 220.3% | 252.6% | 299.7% | 276.5% | 314.5% |
| Net stable funding ratio (NSFR) | 187.3% | 183.0% | 185.2% | 175.0% | 177.6% | 171.4% |
| Leverage ratio | 30.2% | 27.6% | 26.3% | |||
| LTD | 66.2% | 65.3% | 60.0% | 60.2% | 55.2% | 53.3% |
| Total revenues / RWA | 7.1% | 5.4% | 5.3% | 6.9% | 4.7% | 5.4% |
| Shareholders (vii) | - | - | - | 3,457 | 3,025 | 2,571 | |
|---|---|---|---|---|---|---|---|
| Book value (in EUR) | 139.9 | 114.1 | 103.9 | 108.3 | 75.9 | 77.6 | |
| Branches | Number of branches | 418 | 440 | 479 | 68 | 71 | 75 |
| Employees | Number of employees | 7,982 | 8,228 | 8,185 | 2,554 | 2,418 | 2,510 |
| NLB Outlook 2023 | NLB Outlook 2022 | NLB Outlook 2021 | |
|---|---|---|---|
| S\&P | BBB | BBB | BBB- |
| Stable | Stable | Stable | |
| Fitch | - | - | - |
| - | - | - | |
| Moody’s (viii) | A3 | Baa1 | Baa1 |
| Stable | 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 class 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) 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.
(KDD). The shares are listed on Ljubljana Stock Exchange. The Bank of New York Mellon (the 'GDR Depositary') represented in the share register of KDD as a single holder is not the ben.
The GDRs representing shares are issued against the deposit of shares and are listed on London Stock Exchange. Therefore, the number in the share register of KDD does not represent all f.
Employer certificate: The Top Employers Institute awarded the Bank the prestigious "Top Employer" certificate for the 8th consecutive year.
Best Indoor Experience 2023: Bankarium won the competition.
Rating upgrade: Credit rating agency Moody’s upgraded NLB’s long-term deposit rating to A3 from Baa1.
USA regional banks & Credit Suisse turmoil: The turmoil impacted Europe as it put European banks under much stress. Swiss financial regulators engineered an emergency rescue plan for Credit Suisse with the UBS Group AG buying Credit Suisse.
From a liquidity point of view, no material deviations from the normal intra-monthly deposit dynamics were identified at the Group level as a result.
Awarded NLB as part of the global private banking awards in 2023.
Acquisition: The agreement concluded on 16 November 2022 between the acquiring company NLB and the acquired company.
New MREL requirement: From 1 January 2024, the MREL requirement to be met by the Bank on a consolidated basis at the resolution group level shall be 30.99% of the Total Risk.
Dividend payment: The Bank paid the dividends (the first tranche) of EUR 55 million, or EUR 2.75 gross per share.
New members of the Supervisory Board: The General Meeting appointed Mark William Lane Richards, and two new members – Cvetka Selšek and André-Marc Prudent-Toccanier, all for four-year terms.
Green Senior Preferred Notes: The Bank debuted in 4NC3, counting towards meeting the MREL requirement.
Donations to various associations, humanitarian organisations and groups: The Bank donated EUR 1.35 million to more than 30 organisations for the elderly and employees who might be in need due to illness or accident.
ECB’s licence for N Banka merger: On 3 August 2023, NLB received the authorisation of the ECB.
To alleviate the effects of the floods that affected a part of Slovenia, the Bank introduced systemic steps, including a donation of EUR 4 million for sustainable reconstruction to the most affected areas. In addition, NLB Banka, Skopje donated EUR 60,000 to the Slovenian Red Cross and other organisations to support flood relief efforts.
As a part of risk management, the Bank has been enhancing measures to mitigate future negative impacts of similar events.
N Banka legal and operational merger: On 1 September, the legal and operational merger between N Banka and NLB was successful.
First Bankarium commemorative banknote: The Bankarium commemorative banknote was presented to the public.
Acquisition of Summit Leasing: The Bank acquired subsidiaries.
Acquisition of Generali Investment AD Skopje: NLB Skladi signed SPA for acquiring a majority shareholding in Generali Investments AD Skopje.
ESG Risk Rating: The NLB received a rating.
Dividend payment: The Bank paid the dividends (the second tranche) of EUR 55 million or EUR 2.75 gross per share.
Prime Market Share of the Year: Ljubljana Stock Exchange awarded NLB.
Awards from the Croatian Public Relations Association: gold for the NLB Investor Day, silver for the NLB Frame of Help and bronze for the communication support of the N Banka acquisition.
Requirement has been reduced from 2.40% to 2.12% while Pillar 2 guidance remains at 1.00%. The new SREP decision shall apply as of 1 January 2024.
MREL requirement: NLB received a new requirement.
By 2024, NLB must comply with 30.66% TREA (excluding CBR) and 10.69% LRE at the NLB Resolution Group level.
Employer Brand Awards Adria 2023: NLB received two awards at Best Integration of Corporate and Employer Brand.
Additional donations for flood relief: NLB donated an additional EUR 5 million to the Budget of the Republic of Slovenia to a particular budget.
53.03% Shares in GDR format (i) (i) Bank of New York Mellon on behalf of the GDR holders GDR holders with shares >5% shareholders
The Bank’s shares are listed on the Prime Market sub-segment of the Ljubljana Stock Exchange (ISIN SI0021117344, Ljubljana Stock Exchange of the London Stock Exchange (ISIN: US66980N2036 and US66980N1046, London Stock Exchange GDR trading symbol: NLB and 55VX). Five GDRs represent one NLB share.
| Percentage of shares | Bank of New York Mellon on behalf of the GDR holders (ii) | 10,605,146 | 53.03 |
|---|---|---|---|
| of which EBRD (iii) | / >5 and <10 | ||
| of which Schroders plc (iii)(iv) | / >5 and <10 |
This information is sourced from the NLB’s shareholders’ book that is accessible at the web services of CSD (Central Security Depository, Slovenian: KDD - Centralna klirinško depotna d declarations by individual holders pursuant to the applicable provisions of Slovenian legislation, which require that the holders of shares in a listed company notify the company whenever they hold 1/3, 50%, or 75%. The table lists all self-declared major holders whose notifications have been received. In reliance on this obligation vested with the holders of major holdings, the Bank p more percent of the Bank’s shares.
(ii) The Bank of New York Mellon holds shares in its capacity as the depositary (the GDR Depositary) for the GDR holders and is not the beneficial owner. 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 share information on GDR ownership is based on self-declarations by individual GDR holders as required pursuant to the applicable provisions of Slovenian law.
(iv) Further information is available.
Exchange awarded NLB as Prime Market Share of the Year Expanded Analyst Coverage of NLB by HSBC and PKO BP, and first credit rating by Bank of America Market Performance of NLB 11%. It started the year positively, only to fall to the lowest in March as investors were probably spooked by the still elevated inflation and increasingly faltering demand (for loans), as the growing trend up until November. Not surprisingly, the index closed the remainder of the year with a strong performance, reaching its highest price at the close of the year after Q3 results high growth.
The effect was further enhanced by the fact that the liability side of the balance sheet reacted with a notable lag in scope. Hence, the index gained 11% in 2023, outperforming value in March and rebounded to a volatile period, ending with the lowest price in November to finish the year strong. It also reached the
| GDR Shares (NLBR) | GDR (NLB) |
|---|---|
| 18.00 | |
| 17.00 | |
| 16.00 | |
| 15.00 | |
| 14.00 | |
| 13.00 | |
| 12.00 | |
| 11.00 | |
| 10.00 | |
| 9.00 | |
| 8.00 | |
| 90.00 | |
| 85.00 | |
| 80.00 | |
| 75.00 | |
| 70.00 | |
| 65.00 | |
| 60.00 | |
| Jan 2023 | |
| Feb 2023 | |
| Mar 2023 | |
| Apr 2023 |
| Share information | 31 Dec 2023 |
|---|---|
| Total number of shares issued | 20,000,000 |
| Highest closing price (in 2023) | EUR 86.0 |
| Lowest closing price (in 2023) | EUR 6.0 |
| NLB Group earnings per share (EPS) | EUR 27.5 |
| Price/NLB Group book value (P/B) | 0.61 |
| Dividend per share (for the previous business year) | EUR 5.5 |
| Market capitalisation (i) | EUR 1,700,000 |
in several indices: the SBITOP index, SBITOP TR index, and ADRIA prime index of the Ljubljana Stock Exchange, FTSE Frontier Index, MSCI Frontier, and MSCI Slovenia, S&P Eastern S&P Frontier BMI, S&P Frontier Ex-GCC BMI, S&P Slovenia BMI, as well as the STOXX All Europe Total Market, STOXX Balkan Total Market, STOXX Balkan Total Market ex-Greece Eastern Europe 300 Banks, STOXX Eastern Europe Large 100, STOXX Eastern Europe Total Market, STOXX Eastern Europe Total Market Small, STOXX Global Total Market, and STOXX.
participated in various forms of engagement, such as investor meetings, calls, conferences, and roadshows to meet the requirements of the Bank’s ownership. Transparent communication with the financial performance of the Group. The Bank promoted greater awareness and understanding of operating businesses, developments, and events, which influence the performance of the.
Hermes, JP Morgan, Deutsche Bank, Wood & Company, Citi, InterCapital, Raiffeisen Bank International, HSBC, PKO BP, and Ilirika BPH. Throughout 2023, the Bank participated in more equity and for fixed-income investors, and met 160+ investors on 200+ investor interactions. Those meetings covered various topics, including governance (including remuneration), sustainability.
In 2023, the growth in the Euro area was weak, as the economic environment was affected by tighter financial conditions, lower aggregate demand, and an insufficient credit environment. Palestine and the Middle East added to the rise of uncertainty.
The global and European economy: The 2020s are turning into an inactive decade for the global economy as stagnation, loss of momentum, and the unresolved conflict in Ukraine and additional Israel-Palestinian hostilities since October 2023 have contributed to uncertainty.
Freight rates, initially declining since the Suez Canal obstruction, were impacted as Houthi attacks blocked the Red Sea trade route. While the global economy is in a better place concerning the recession risk than last year, developing countries still feel the strain of slow growth that is further aggravated by elevated food prices.
The global economy expanded slowly in 2023, predominantly driven by a solid year for the US economy and emerging markets, which have become a growth driver for the world economy. This has been a pleasant surprise despite the central banks’ substantial tightening of the monetary policy.
US economic growth in 2023 was relatively resilient; however, the unemployment rate rose by 0.4 percentage points within a year, which is a considerable jump in a short amount of time. Credit card debt has already been growing, and retail sales data suggests consumer spending has been low historically.
In China, economic activity stabilised after the reopening, despite weakness in the real estate sector towards the year’s end, as it represents a noticeable portion of the economy. The increasing debt levels are directly muting China’s growth.
In the Euro area, a recession was avoided, but year-on-year GDP growth was on a stagnation in Q3 and Q4. The export of goods started the year strong in Q1, but soon soured after that, remaining in contraction for the remainder of the year in year-on-year terms due to weak external demand.
HICP inflation started the year in the double-digit territory, nearing the mandated goal by year-end, and followed a similar downward trend. Services prices rose noticeably until August, then started declining due to retreating demand. Food maintained significant pressure on prices, especially in the last quarter, primarily due to the base effect.
Industrial production lost the previous year’s momentum in March and contracted until the final quarter as foreign and domestic demand weakened, reflected in the manufacturing PMI. Retail trade as a proxy for demand showed negative momentum (year-on-year) throughout 2023, influenced by higher interest rates and consumer spending cutbacks.
There was a mild uptick in Q3 that was still below the peak in Q3 2022. Negotiated wages and gross disposable income rose, improving for most countries of the Euro area in the same comparison, supporting an increase in the household saving rate, surpassing the 2022 levels.
1.6% economic growth in Slovenia in 2023. Moreover, recent ECB data on year-end wage negotiations suggests persistent future wage pressures. In the closing quarter, consumer confidence slightly improved. However, the Economic Sentiment Indicator (ESI) and its sub-indicators showed signs of bottoming out in the last two months of 2023.
The unemployment rate raised its target range from 4.25%–4.50% to 5.25%–5.50% (by four 25 basis points hikes) and stayed there from July until the end of the year. Despite December minutes suggesting reductions in year-end data in labour markets, consumer demand, and the housing market, supported the FED’s cautious approach to easing monetary policy.
of tight labour markets and wage growth pressures instilling uncertainty about the "second round effects." The risk of the recession has receded compared to a year ago, and inflation has grown; however, will continue to reflect the impact of monetary policy tightening and elevated rates across advanced economies in 2024, leading to sluggish investment. After contracting noticeably, commodity prices. Borrowing costs for countries with poor credit ratings will remain very high. The Euro area GDP should grow at an underwhelming pace in 2024, supported by expected inflation. Exports should pick up again as global trade improves. However, slowdowns in the Mediterranean economies and the lagged effects of interest rate hikes will cap the overall uptick and pose risks. Governments should continue to roll back the related support measures to reduce elevated public debts and avoid additional inflationary pressures. The Euro area households, especially low-income earners, continue to face pressure as energy prices soar or interest rates continue to remain elevated.
The 2023 was a year of stagnation, slow growth, weak demand and tight labour markets. Austerity must be ushered in to manage the situation. The economy appeared slow, but still slightly less stagnant than the Euro area and began picking up in Q3. As the year started, the export sector grew; however, as economic growth started receding in the first half of the year, double-digit inflation caused domestic demand for foreign goods to retreat even faster, causing imports to contract. Private consumption remained the main growth driver, but disinflationary trends grabbed hold as the CBs lifted policy rates. Only the Serbian economy persisted with double-digit inflation by June, and growth rates subsided by Q3 of 2023. Still, by Q3 of 2023, the item was already experiencing notable disinflationary trends and was surpassed by housing and related costs and leisure and accommodation prices.
Demand, with Montenegro being an outlier with solid Q1 and Q3 prints. Retail sales mostly posted negative growth in annual terms, apart from Bosnia and Herzegovina and Montenegro, which experienced growth across the region until August, when it experienced a setback but finished the year on a more positive note. Tight labour markets (in historical terms) enabled and supported the growth of employment in Bosnia and Herzegovina, and Slovenia.
Growth in Slovenia was slow in the first half of 2023 and decreased further in Q3, as it experienced a flood-induced slowdown. The annual decline in good auto industry. Moreover, private consumption shifted into contraction, and both public spending and fixed investment expanded less than in Q2. The savings rate declined notably in Q3, as said, the external sector made a net contribution to GDP as imports declined sharply in comparison to exports. Turning to Q4, the available data suggested growth would pick up as the imports posted the best reading in over a year (which was still rather shabby), while retail trade contracted at a softer YoY pace amid lower inflation, was a good sign for private spending. GDP growth was driven by domestic demand, as household consumption, public spending, and fixed investment grew rapidly. On the flip side, exports shrank, reflecting the stagnation of major growth partners. The economy gathered steam in Q4, while economic sentiment strengthened in the same period, especially in the services sector.
On 17 December, the ruling Serbian Progressive Party (SNS) obtained a majority, while international observers denounced the misuse of public resources during the campaign, and made accusations about voter intimidation. North Macedonia’s annual economic growth increased, expenditure breakdown indicates that the economy weakened in general, as a sharper decline in imports drove the improvement. Public spending, total investment, and exports all contracted in double digits until May and started subsiding after (apart from the hiccup in August). During the last quarter, the economy gathered some steam. Industrial output rebounded annually from Herzegovina, the YoY economic growth accelerated in Q3 to the same slow pace of growth already seen in Q1. The improvement was driven by pickups in both public and private spending while exports continued their sharp contraction since Q3 2020. The economy lost momentum towards the year’s end as industrial output contracted markedly in annual terms in the last quarter and continued to shrink, albeit at a softer rate than in Q3.
In mid-December, the EU decided not to open accession negotiations with the country due to a lack of compliance with the membership criteria. The Q1 growth improvement was driven by more vigorous private spending thanks to robust remittance inflows and a marked pickup in government expenditures due to rising public wages. For Q4 2023, the picture painted was mixed. Tourist arrivals lost steam in October. However, merchandise exports fell at a softer rate relative to Q3. In other news, on 1 January, the country joined other European countries. Montenegro’s YoY GDP growth cooled slightly in Q3, coming from Q2’s expansion. A softer, albeit still-strong increase in exports and a faster expansion in imports was noted, alongside a surprisingly strong disinflationary trend at the end of Q2. That said, both fixed investment and government consumption gained steam. Available data for Q4 2023 is relatively upbeat, as outpaced Q3’s average increase. That said, merchandise exports plunged YoY in October, while economic sentiment was less optimistic than in Q3. 2.2% economic growth in the Group’s region.
companies seemingly decided to deleverage and thus turn to their possible internal sources, such as retained earnings and cash buffers, since corporate lending performed much worse than standards) and demand (higher rates) impediments.
| Corporate loans | Δ % YoY in EUR millions | Household loans | Δ % YoY in EUR millions | Corporate deposit | Δ % YoY |
|---|---|---|---|---|---|
| Slovenia | 9,968 -4.9 | 12,556 3.4 | 10,784 11.1 | 26,514 2.8 | 1.6 |
| Macedonia | 3,460 3.3 | 3,730 6.7 | 2,625 13.2 | 5,671 7.9 | 3.1 |
| BiH | 5,854 8.1 | 5,998 7.8 | 7,601 2.9 | 8,417 13.6 | 2.5 |
| Kosovo | 2,954 9.8 | 1,914 17.3 | 1,321 12.4 | 4.7 |
Source: Statistical offices, CBs, NLB. Note: Net interest margin calculated on interest-bearing assets. Residential loans and deposits for Montenegro. (i) Data for countries, the growth was in the lower single-digit range, except in Kosovo, where it was just shy of double-digit (YoY) growth. Corporate deposit growth was in double digits in Serbia, with growth below the mid-single digit range. The growth of household deposits was least pronounced in Slovenia, and was more notable in Kosovo and North Macedonia, and in double-digit (North Macedonia and Serbia), as well as some marginal movements downwards (Montenegro and Slovenia) with no significant changes occurring despite the notable rise in interest rates, income improved throughout the Group’s region, reflecting the interest rate hikes by respective central banks, the growth of lending, and price effects. The capital adequacy ratio improved it improved to more or less half of that extent, insinuating that the banks in the Group remain solid and well-capitalised.
Source: Herzegovina. Data for the Euro area, Bosnia and Herzegovina and North Macedonia are from Q3 2023 and for Serbia is from 30 November 2023.
| Slovenia | Euro area | Serbia | Montenegro | Kosovo |
|---|---|---|---|---|
| 12.0% | 15.0% | 20.6% | 19.7% | 14.4% |
| Slovenia | Euro area | Serbia |
|---|---|---|
| 27.9% | 18.1% | 21.3% |
| 30.9% | 19.4% | 19.4% |
| 24.5% |
decreased in Slovenia, North Macedonia, and Serbia, but improved in Bosnia and Herzegovina, Montenegro, and Kosovo. The banks’ profitability in the Group’s region has continued to improve.
the year will certainly not be impossible. The net interest income increased further in 2023 compared to last year and reached levels not seen in approximately 15 years, as the profitability in the...
| Source: | ECB, National CBs, NLB. |
|---|---|
| Note: | LTD for Serbia is from 30 November 2023, the rest are from 2022 |
| Year | 2022 | 2023 |
|---|---|---|
| Slovenia | 94.6% | 94.3% |
| North Macedonia | 67.1% | 63.6% |
| Serbia | 79.3% | 74.3% |
| Bosnia and Herzegovina | 85.5% | 81.6% |
| Montenegro | 71.3% | 71.7% |
| Kosovo | 78.3% | 80.2% |
| Other | 60.2% | 62.2% |
Slovenian men's national handball team
The Group considers and complies with the regulations concerning prevention of money laundering and terrorist financing (AML/CTF), with the Prevention of Money Laundering and Terrorist Financing provisions of Directive (EU) 2019/1153, Directive (EU) 2019/2177, and Regulation (EU) 2018/1672 into Slovenia’s legislation. In addition, an Amendment and supplements to the Act on the Slovenian Official Gazette in November 2022. The Group regularly monitors and manages all newly introduced financial sanctions from all relevant regimes.
The regulatory environment in the EU is evolving, as the European Commission proposed a third Payment Services Directive (PSD3) and a new Payment Services Regulation (PSR) to enhance user protection, open banking, enforcement, and uniformity under the new legislative framework, which is expected to enter into force by the end of 2026. The Bank meets its obligations under PSD2, the respective regulatory technical standards and ZPlaSSIED. The Bank is committed to providing the best user experience while ensuring compliance with the regulatory requirements in the payment and settlement systems.
In the EU, finance is being directed to support economic growth while reducing environmental pressures and considering social and governance aspects. In 2023, the Bank updated its governance of the ESG area by a sustainability management approach. Both documents demonstrate a straightforward top-down and bottom-up process for sustainability governance, including climate change aspects, that extend from the updated other sustainability-related internal documents in various business areas in line with regulatory and other developments. These developments are monitored regularly by the Sustainability team and promptly implemented in the internal governance framework.
In December 2022, the Digital Operational Resilience Act (DORA) Regulation was published in the EU’s Official Journal. The new framework introduces a comprehensive set of rules concerning financial sector firms’ information and communications technologies (ICT) and risk management to strengthen the stability of financial systems. The Group carried out activities to implement the new regulatory requirements, which will apply from 17 January 2025.
The regulatory environment in the Group’s region is crucial for the stable functioning of financial systems. During 2023, 132 changes with material effects on the Group were adopted in the regulatory environments in the Group’s region. It is worth noting that during 2023, 119 changes with material effects on the Bank and the Group were adopted in the EU and Slovenian regulatory environments. The Group strives to be fully compliant with the regulation that influences the Group, which are presented herein.
The Bank is subject to capital adequacy and liquidity rules imposed by the EU (CRR/CRD), which ensure the safety and soundness of banks to limit their risk exposure. The CRD V was further transposed into the Banking Act (ZBan-3). In October 2021, the European Commission adopted further elements of the Banking Union III in the EU. These final elements were agreed in December 2023, endorsed by the Council and Parliament, and will be implemented in EU law.
The most significant regulatory changes introduced by the National Bank of Serbia throughout 2023 were related to the facilitation of financing of the citizens, dinarisation of the financial system, further leading to the stabilisation of the prices on the market and related to preserving and strengthening the financial system stability. In that sense, to facilitate Temporary Measures for Banks Relating to Natural Persons’ Housing Loans, introducing a temporary freeze on the variable nominal interest rate. Further, to prescribe measures related to the National Bank of Serbia adopted the Decision on Amendment to the Decision on Capital Adequacy of Banks to increase the exposure in dinars and the Decision on Amendments to the ratios for calculation of required reserves of the dinars and foreign currency base.
In addition, several laws and by-laws regarding tax and accounting, outsourcing of activities and labour law, Payment Services and Payment Systems and related by-laws continued during the 2023 year, and several new by-laws from various areas related to this Law were also adopted and are in the process.
The Republic of North Macedonia adopted several significant acts, such as the Decision on the credit risk management methodology, the Circular for the protection of consumers who use financial services, countercyclical protective layer of the capital for exposures in the Republic of North Macedonia and exposures to other countries, the Decision on the method of implementation of measures, office activities, etc. In addition, the Bank continuously undertakes the necessary activities according to the set deadlines.
In the Federation of Bosnia and Herzegovina, the most important area (Guidelines for Managing Risks Related to Climate Change and Environmental Risks). Implementing the Guidelines is to guide the banking sector in terms of determining, measuring information related to these risks, and segment integration of environmental sustainability in the Bank’s business activities. In June 2023, the Federal Banking Agency adopted the Decision for entities of the banking system, which prescribes new terms for provider and user of services (banks and others), as well as definitions of complaints.
Changes were made to the local procedures. The Law on Prevention of Money Laundering and Financing of Terrorist Activities has not yet been adopted, the Ministry of Security of Bosnia and Herzegovina made Amendments to the Financing of Terrorist Activities. The Rulebook prescribes additional indicators of suspicious transactions and clients, including indicators of suspicious transactions of bank employees.
In addition, numerous decisions were published that influenced the Bank’s internal acts and processes. The most important one is the Decision on minimum standards of recording of banks’ lending activities phase, loan approval, credit exposure, etc., for the entire time of the establishment and duration of the contract with the client. Next to this decision, the Agency published Guidelines for the regulation. The Guidelines are not obligatory; however, certain expectations of banks are to be accomplished and reported to the Agency by 30 June 2024.
Next, the Central Bank of Bosnia and Herzegovina is maintaining mandatory reserves and determining compensation for the amount of reserves, intending to harmonise with the policy of the ECB and mitigate the impact of the increase in the.
Lastly, the National Assembly has adopted the new Family Law, which affects the Bank’s product called Children’s Deposit. Parents or guardians cannot make payments from the Guardianship Authority.
In Kosovo, in 2023, several regulations were adopted by the Central Bank of Kosovo. The Bank’s main activities concerned the implementation of the requirements for customers’ access to payment accounts with basic services as a necessary tool to encourage their participation in the financial market. It is also related to Regulations on the interbank payment system, etc. Furthermore, there have been legal changes and guidelines to follow regarding cyber security, the Law on prevention and protection from violence against women, instructions regarding the Logs of Personal Data Processing Activities, etc.
In Montenegro, the main activities in 2023 were dedicated to implementing the Law on Interbank Fees and Special regulations that govern interbank fees charged when executing payment transactions in Montenegro based on payment cards issued to consumers and special business rules related to issuing or executing Transactions (PSD2) apply from 8 April 2024. The PSD2 regulation in Montenegro relies on and complements the existing EU rules, and it refers to payment services in the internal market, exceptions, improves cooperation and the exchange of information among participants in the payment traffic, and introduces stricter security requirements for electronic payments.
Development of the SEE region
The Group has continued to execute its medium-term strategy, focusing on strengthening its market position in its home region, actively participating in the growth and consolidation of the banking sector. Efficiency remains a key strategic orientation to deliver the Group’s vision. The Group is currently in the process of defining its new Strategy 2030, which is expected to outline the key decisions to further strengthen its role as a systemically important financial institution in the SEE region. To achieve this, it strives to become a leader in all its target markets and to have a prominent role by facilitating further development of the region and increasing its standard of living. The Group is promoting ambitious environmental, sustainability, and corporate governance agendas.
The Group aims to reduce emissions by 2050. In 2023, the Group published its first net zero portfolio targets within the NLB Group Net Zero disclosure report. For more information on Net Zero, please refer to the report.
As part of the banking system, the Group is carrying its share of responsibility for building a stable banking system. The 2022 acquisition of N Banka is an example of the Group’s resolve to commit capital in turn for sustainable growth, which was successfully closed with the transfer of all customers and their operations.
of the latest trends, needs, and technologies, it will stay competitive and deliver the best possible banking experience. Ensuring strong customer support remains one of the Group’s key focuses to assist clients with their questions or concerns, wherever they may be.
The Group continues implementing substantial efforts and resources toward digital distribution channels. Business interactions have remained even after normalisation since the COVID-19 pandemic. Effective and safe digital distribution channels require novel operating models and automated processes. A key aspect of process optimisation is a reduced amount of printed paper. The Group will continue to invest in IT infrastructure and its digital capabilities and roles. The focus will be on improving the speed of the best online experience for customers in the SEE, and enhancing capabilities for processing data, modelling, and delivering relevant services to clients. One such example is the launch of personal finances and offers a unified user experience on mobile phones and PCs.
The Group is working to strengthen its market position as a systemic player in types of its main stakeholders: shareholders, customers, and employees. Concerning its shareholders, the Group views its decisions through a lens of maximising its return on equity. The employee engagement metric is measured and analysed in relation to its employees. The Group regularly engages with its stakeholders in defining what is material to them and the Group.
Significant strategic business efforts have been made to achieve business synergies across the Group regarding costs and operational efficiency. The Group believes that these can help offset the Bank has achieved further synergies with the full integration of N Banka in 2023. The Group monitors market conditions and analyses potential M&A opportunities that could add value to financial services across all its markets, thus diversifying its services horizontally.
In the Group Strategy, leasing is one of the strategic activities representing an important part of the Group gaining momentum, while new leasing companies were established within the Group in North Macedonia and Serbia in 2022. The Group has further materially enhanced its strategically important position as a leading auto finance provider. In addition, NLB Skladi, which offers clients asset management services, concluded an agreement to purchase the majority ownership of Generali Investments.
Fostering strong client relationships is vital for maintaining a stable and growing deposit base. At the same time, wholesale funding focuses on meeting M.
Nonetheless, overall funding cost remains low thanks to a reliable deposit base and the stability of sight deposit pricing, which remains unaffected by market fluctuations.
| Period | Average cost of wholesale funding |
|---|---|
| Q3 2023 | 4.87% |
| Q2 2023 | 4.73% |
| Q4 2023 | 5.78% |
| Q1 2023 | 5.66% |
| 0.51% | |
| 0.58% | |
| 0.80% | |
| 0.88% | |
| 0.24% | |
| 0.28% | |
| 0.38% | |
| 0.46% |
Deposit strategy bank within the Group has established processes that enable prudent strategic deposit management that is aligned with business targets and regulatory requirements. Regularly monitoring d regulatory-related reasons.
The LTD ratio evolution in recent years, including the disruptive COVID pandemic in 2020, political turbulence in 2022, and high inflation in 2023, was still co Group is robust, and the liquidity position strong. A leading Group market position and a responsive client relationship are essential for a stable deposit base.
Besides that, proper deposit pricing is aligned with international standards. The year 2023 further underlined the importance of responsive deposit pricing and active client relationships in highly competitive markets; strategic targets.
The deposit beta, which measures the Group’s response in deposit pricing from the start of the ECB hiking cycle, was low at 8% in 2023, and is a sign of a stable deposit b funding source, with around 80% insured by the Deposit Guarantee Scheme.
Despite the challenging business environment, Group retail deposits recorded an increase in 2023. Sight deposits to increased interest rates and expected transformation to term deposits, sight deposits represent a stable funding source. This supports the stable business of the Group in the region, even d represent a smaller share of the deposit structure of the Group, they are still an important source of liquidity as well.
As at the end of 2023, the Bank’s Overall Capital Requirement (OCR) on a consolidated basis was 14.51%. This requirement has two components:
2 The Bank of Slovenia has increased the countercyclical capital buffer for exposures in Slovenia from December 2023 onwards.
3 Starting from 1 January 2023, the Bank of Slovenia has mandated that banks maintain systemic risk buffer rates for sectoral exposures. The required rates are 1.0% for all exposures to natural persons.
| Pillar 1 | Pillar 2 | TSCR | Combined Buffer | P2G | OCR+P2G |
|---|---|---|---|---|---|
| 8.00% | 2.40% | 10.40% | OCR | 14.51% | |
| OC | 1.95% | 1.95% | 0.45% | 0.60% |
In addition to the above requirements, the Pillar 2 Guidance (P2G) is 1.0% of Common Equity Tier 1 (CET1). Effective from 1 January 2024, NLB will make a decision on a consolidated basis for 2024. As per the decision, the Pillar 2 Requirement decreased by 0.28 p.p. to 2.12%, since the overall SREP assessment improved. Effective as at 1 January 2024, the countercyclical capital buffer rate for exposures in Slovenia will increase from 0.5% to 1.0%. At the same time, the sectoral systemic risk buffer for retail exposures to natural persons will be adjusted.
| Tier 1 | Tier 2 | TCR Realised | OCR+P2G Requirement |
|---|---|---|---|
| 31 Dec 2021 | 511 | 511 | 2,253 |
| 31 Dec 2022 | 2,806 | 3,109 |
| CET 1 | CET 1 Ratio Realised | CET 1 (OCR+P2G) Requirement |
|---|---|---|
| 31 Dec 2021 | 10.46% | |
| 31 Dec 2022 | 10.96% | |
| 31 Dec 2023 | 10.80% |
| 0.2% | -0.3% | -0.9% | TCR | |
|---|---|---|---|---|
| 31 Dec 2022 | Result | OCI | DTA | RWA Impact |
| TCR | 31 Dec 2023 |
Capital realisation YoY and surplus of NLB Group in EUR millions:
| 31 Dec 2023 | 31 Dec 2022 | Change YoY | Surplus 31 Dec 2023 | |
|---|---|---|---|---|
| Common Equity Tier 1 Capital | 2,509.9 | 2,208.2 | 301.7 | 829.0 |
| Tier 1 Exposure Amount (RWA) | 15,337.2 | 14,653.1 | 684.1 | |
| Common Equity Tier 1 Ratio | 16.4% | 15.1% | 1.3 p.p. | 5.4 p.p. |
| Tier 1 Ratio | 16.9% | 15.7% | 1.3 p.p. | 4.0 p.p. |
| Total Capital Ratio | 20.3% | 19.2% | 1.1 p.p. |
The dividend payout in 2023 was split into two tranches. The first instalment of EUR 55.0 million was paid in June 2023, while the second was paid in the same amount of EUR 55.0 million.
In 2023 (YoY), the RWA of the Group for credit risk increased by EUR 370.3 million, mainly as the consequence of ramping up lending activity in all Group banks. Higher RWA for exposures associated with particularly high risk due to new project financing loans given, mainly in the Bank and NLB Komercijalna banka, Beograd, was partially offset. In contrast, a RWA decrease was observed for liquidity assets, mainly in Komercijalna Banka, Beograd, due to the maturity of some Serbian bonds and higher MIGA guarantee for assets.
RWA for exposures dominated in EUR at the central bank in Skopje. Furthermore, RWA also decreased due to the maturity of Macedonian bonds and Bosnian bonds of Republika Srpska. The institutions, mainly in the Bank, due to the purchase of bank bonds, a larger volume of deposits at commercial banks and higher risk weights for institutions from countries outside the EEA, resulted in higher impairments and provisions, upgrades, and improved data of real estate collaterals for CRR eligibility, which resulted in the RWA reduction for non-performing exposures.
The increase in RWA million YoY was the result of higher RWA for FX risk of EUR 86.6 million (mainly the result of more opened positions in domestic currencies of non-euro subsidiary banks – mostly RSD), value for derivative transactions subject to CRR risk based on OEM method, and higher RWA for TDI risk of EUR 1.2 million (mostly IRS derivatives). The increase in the RWA for operational risk was observed in the Bank and Komercijalna banka, Beograd, resulting in a higher three-year average of relevant income. There were no significant deviations from previous years in the other components used.
| 31 Dec 2022 | Change YoY | RWA | RWA Density | |||
|---|---|---|---|---|---|---|
| Total risk exposure amount (RWA) | 15,337.2 | 14,653.1 | 684.1 | 4.7% | ||
| RWA for credit risk | 12,168.1 | 45.3% | 11,797.9 | 46.7% | 370.3 | 3.1% |
| governments or local authorities | 96.9 | 37.2% | 101.2 | 42.9% | -4.3 | -4.2% |
| Public sector entities | 19.1 | 19.3% | 57.9 | 37.5% | -38.8 | -66.9% |
| Institutions | 369.8 | 33.6% | 292.0 | 28.9% | 77.8 | 26.6% |
| Corporates | 3,7 | |||||
| Secured by mortgages on immovable property | 1,067.5 | 37.5% | 987.7 | 37.5% | 79.7 | 8.1% |
| Exposures in default | 117.4 | 113.3% | 156.4 | 113.6% | -39.0 | -24.9% |
| Items associated with particularly high risk | 6 | |||||
| Claims in the form of CU | 12.9 | 20.4% | 17.9 | 26.2% | -5.0 | -28.1% |
| Equity exposures | 104.4 | 121.9% | 90.1 | 124.1% | 14.3 | 15.8% |
| Other items | 434.4 | 48.0% | 420.1 | 46.3% | 14.3 | 3.4% |
Funding and MREL Wholesale funding activities in the Group are conducted with the aim of achieving diversification, improving structural liquidity and capital position, and fulfilling regulatory requirements.
The Resolution Strategy (PRS) for NLB Group is based on the Multiple Point of Entry (MPE) strategy. Bail-in at the level of NLB is the primary resolution tool to be applied during the stabilization process.
The group in the Banking Union is headed by NLB and the remaining six resolution groups are headed by the banking subsidiaries located in non-EU countries (Bosnia and Herzegovina, Montenegro, and North Macedonia).
| Resolution group | MREL legislation not implemented yet |
|---|---|
| NLB d.d. & NLB Lease\&Go, NLB Skladi, Other SLO | SRB |
| NLB Komercijalna Banka, Sarajevo | RKS |
| NLB Banka, Prishtina | MKD |
| NLB Banka, Skopje |
The NLB Resolution Group consists of NLB as the only banking member and other non-banking members, the latter of which are presented in the table below.
| Entity | 31 Dec 2023 |
|---|---|
| NLB d.d. | 7,861 |
| NLB Lease\&Go, Ljubljana |
of the own funds and eligible liabilities items by which the Bank met the MREL requirement was as presented in the table below.
| 2023 CET1 | 1,768 |
|---|---|
| Additional Tier 1 instruments | 82 |
| Tier 2 instruments | 508 |
| Unsecured and unsubordinated claims arising from debt instruments | 964 |
| Total | 3,322 |
In June 2023, the Bank issued green bonds, ensuring that the Bank could comfortably meet the higher MREL requirement from 1 January 2024 onwards. In addition, the Bank obtained other MREL eligible instruments in a total amount.
MREL requirement and realised MREL ratio
| Realised MREL ratio CET1+T1+T2 | MREL requirement (including CBR) | MREL deposits and senior funding |
|---|---|---|
| 31 Dec 2022 | 2,358 | 964 |
| 30 Sep 2023 | ||
| 31 Dec 2023 |
Risk factors affecting the business outlook are (among others):
The prospective stagflation in 2023. As a result of rising inflation, high-interest rates, weaker external demand, and increased macroeconomic uncertainty, subdued economic growth or its growth could suggest a further slowdown, namely in private consumption and investment growth. Credit risk usually increases considerably due to the potential impact on the credit portfolio in light of anticipated inflationary pressures and expected decreases in economic growth. Lending growth in the corporate and retail segments remains cautious, and the Group carefully monitors the potentially most affected segments to detect any significant increase in credit risk at a very early stage.
In August 2023, certain areas in Slovenia were assessed, and retail segments were estimated as negligible, with only minor client credit quality deterioration or received collaterals occurring. The aforementioned adverse developments could affect the risk management; there can be no certainty that they will be sufficient to ensure the Group’s credit portfolio quality or the corresponding impairments remain adequate. The investment strategy adapts to the expected market trends in accordance with the set risk appetite.
Geopolitical uncertainties have increased volatility in the financial markets, particularly shifts in credit spreads and its prominent bond portfolio positions, mostly sovereigns, and carefully manages them by incorporating adequate early warning systems to limit the potential sensitivity of regulatory capital observed. Current developments, market observations, and potential mitigations are closely monitored and discussed.
While the Group monitors its liquidity, interest rate, credit spread, FX risks, significant and unanticipated movements on the markets or a variety of factors, such as competitive pressures, consumer confidence, or other certain factors outside the Group’s control, could affect the continuous provision of services to clients, their monitoring, and the prevention of cyber-attacks and potential fraud events. The Group has established internal controls that only sometimes entirely prevent possible adverse effects.
With regards to litigation risk, in recent years, and even more so in recent periods, the Bank has seen a shift in case law that is generally unfavorable, including loan insurance premium in Serbia and CHF litigations in Slovenia. In the latter case, we have noticed an increase in the number of proceedings against the Bank, which was expected. The Group is closely monitoring developments.
The Group is subject to various regulations and laws relating to banking, insurance, and financial services. Respectively, it faces the risk of significant impacts from changes in the environment in which it operates, including changes of tax treatment of banking business (e.g., application of VAT on card payments services in Bosnia and Herzegovina) and changes in interpretation of legislation regarding the repayment of consumer loans in Slovenia. The SEE region is the Group’s most significant geographic area of operations outside the RoS, and the economic conditions in this region are, therefore, critical as the Group's financial condition could be adversely affected by any instability or economic deterioration in this region.
embedded in previous forecasts. The baseline scenario presents an expected forecast macroeconomic view for all the countries of the Group. This scenario is based on recent official and private data. Key characteristics include no additional supply shocks, decreasing inflation due to increased ECB key rate and quantitative tightening, a slightly less tight labour market, GDP growth supported by sufficient energy supplies easing price pressures in the Euro area. China’s decision to abandon strict COVID restrictions supports the Euro area exports, which stimulates demand. Lower inflation expectations, followed by additional ECB support and moderated growth potential in the following two years. The severe, supply- and demand-driven scenario depicts sluggish economic growth and elevated inflation. The Group home countries experience near-zero real economic growth, leading to substantial upward shocks in financial markets. Political tensions persist, causing supply chain disruptions and inflation expectations. GDP growth remains low as the ECB implements a restrictive monetary policy. Despite a slow increase in the unemployment rate, many industries still face a tight labor market.
The Bank considers these scenarios in calculating expected credit losses in the context of the IFRS 9. On this basis, the Group revised scenario weights in H1 2023 and assigned weights (baseline scenario 60%), with minor changes in some entities to reflect the likelihood of relevant future economic conditions in their environment. Regular yearly revision of IFRS 9 provisioning will be conducted.
The stress-testing framework is integrated into the Risk Appetite Assessment Process (ILAAP), and the Recovery Plan to determine how severe and unexpected changes in the business and macro environment might affect the Group’s capital adequacy or proactive management of the Group’s overall risk profile in these circumstances, including capital and liquidity positions from a forward-looking perspective. Risk Management actions that are necessary. Moreover, the selection and application of mitigation measures follow a three-layer approach, considering the feasibility analysis of the measure, its impact on the Group’s business model.
outlook constitutes forward-looking statements which are subject to several risk factors and are not a guarantee of future financial performance. The NLB Group is pursuing various strategies given the adaptive monetary policy of the ECB and local central banks to the general economic sentiment. In Slovenia, the economic growth is forecasted to accelerate in 2024 compared to previous years, supported by export demand from the wider Euro area. Downside risks are a slower-than-expected recovery among key trading partners and potential energy price spikes. Economic growth is seen accelerating due to improved performance among trading partners, disinflation, falling interest rates, and stronger household consumption. The performance of the Euro area, ethno-nationalistic tensions, and the wars in Ukraine and Gaza may impact growth in 2024.
| Country | GDP (real growth in %) | Average inflation (in %) | Unemployment rate (in %) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2023 | 2024 | 2025 | 2026 | 2022 | 2023 | 2024 | 2025 | 2026 | 2022 | 2023 | 2024 | 2025 | 2026 | |
| Slovenia | 6.7 | 6.5 | 2.5 | 1.6 | 1.9 | 9.3 | 7.2 | 3.1 | 2.5 | 2.2 | 4.0 | 3.8 | 4.2 | 4.2 | 4.0 |
| Serbia | 2.5 | 2.5 | 2.9 | 3.4 | 3.4 | 12.0 | 12.1 | 5.8 | 3.7 | 3.0 | 9.6 | 9.5 | 9.0 | 8.8 | 8.6 |
| N. Macedonia | 2.2 | 1.8 | 2.6 | 3.2 | 3.2 | 14.1 | 9.4 | 4.0 | 2.6 | 1.8 | 1 | ||||
| Kosovo | 4.3 | 3.3 | 3.7 | 4.0 | 4.0 | 11.6 | 4.9 | 2.8 | 2.7 | 2.5 | 12.6 | 11.0 | 10.5 | 10.0 | 9.5 |
| Montenegro | 6.4 | 5.1 | 3.3 | 3.2 | 3.3 | 13.0 | 8.6 | 3.8 | 2.8 | 2.4 | 14.7 | 13.2 | 13.0 | 12.7 | 12.5 |
Note: NLB Forecasts are highlighted in grey.
capital return will not impede the Bank’s capacity to grow, either organically or through M&A, while, at the same time, avoiding the capital to build excessively. The outlook for 2025 (i.e. subject to revision at the upcoming Investor Day in May. On the "as-is" presumption, the guidance for 2025 indicates the continuation of the current trends with stable and growing results million and higher dividend distribution also translates to a one percentage point increase of ROE a.t. (from around 14% to 15%), and ROE normalised expected to exceed 20% (previously retaining up to EUR 4 billion in M&A capacity. With this guidance on dividends, the Bank will pay cumulative dividends between 2022 and 2024 in the total amount of EUR 430 million.
| Last Outlook for 2023 | Actual 2023 Performance | Outlook for 2024 | Last Outlook for 2025 | Revised Outlook for 2025 |
|---|---|---|---|---|
| Regular | EUR 1,200 million | CIR \~ 46% | 46% | < 50% |
| Cost of risk | \~ 0 bps | -7 bps | 20-40 bps | 30-50 bps |
| Loan growth | Mid single-digit | 5% | Mid single-digit | High single-digit |
| EUR 500 million (2022-2025) | (i) More than 40% of 2024 profit | (i) ROE a.t. | ROE a.t. normalised | (ii) >15% |
| >20% | 21% | 29% | \~ 15% | \~ 20% |
| \~ 15% | > 20% | M\&A potential | Tactical M | capital returns will be revised during the new 2030 strategy process. |
| (ii) ROE a.t. normalised = result a.t. divided by the average risk-adjusted capital. | An average risk-adjusted capital is calc | contribution. |
It's not just about the jump you make, but the courage to take that leap in the first place.
As a systemically important regional financial institution, NLB Group aims to actively contribute to the sustainable transformation of the economy and society to a more green, just and inclusive model.
Sustainability matters and ESG factors are at the core of its business strategy and business model.
Green lending classification refers to the internal methodology of NLB Group, which refers to environmentally sustainable lending. If a loan is mapped to either of these frameworks, it is considered as a green loan.
The Group regularly monitors and strengthens the existing mechanisms, control functions, and activities.
A milestone was the adoption of a comprehensive Sustainability Policy in December 2023, together with the rulebook for harmonised sustainability management across the Group.
The policy focuses on improving quality of life, and contributing to a sustainable economy and society across the Group’s three sustainability pillars.
These pillars define and deliver forward-looking strategic priorities for the Group.
NLB, as a parent bank in the Group, is a signatory to the UN Environment Programme Finance Initiative (UNEP FI) Principles for Responsible Banking and Net Zero Banking Alliance Goals and takes decisive actions to address climate-related risks and opportunities.
This contributes to achieving the 2015 Paris Climate Agreement objective to limit global warming.
The Group Net Zero disclosure report was published, reaffirming our commitment to achieving Net-Zero by setting targets for reducing its financed emissions and maintaining a coal exclusion policy.
This includes transitioning the operational and attributable GHG emissions from lending and investment portfolios to align with pathways consistent with achieving net zero by 2050 or sooner.
The Group’s fundamental commitment to responsible business conduct is set out in the NLB Group Code of Conduct.
At the same time, specific principles are stipulated in several areas. In 2023, the Group put particular emphasis on implementing the Policy on Respect for Human Rights in its business conduct by setting standards for respect for human rights in its operations.
NLB Group’s portfolio decarbonisation strategy focuses on four key sectors: power generation, iron and steel, residential and exposure, and has set NZBA-aligned targets.
The Group finances its corporate and retail clients in their sustainable transition and actively engages with them to encourage the development of sustainable practices.
The production volume of sustainable financing stood at EUR 287 million, of which EUR 198 million was corporate, and EUR 89 million was retail and micro business.
Total outstanding volume strategy and assessed market potential in the region, the Group set a new commitment in December 2023 to allocate EUR 1.9 billion by 2030 to clients in sustainable transition.
In June 2023, the Group issued a green bond of EUR 500 million. The proceeds shall be used in line with NLB Green Bond Framework which is aligned with ICMA principles.
The first annual allocation and impact report is expected to be published soon.
The Group has made improvements in orientations and annual plans in risk management. Among other improvements, ESG risk management was upgraded and further integrated into NLB Group’s overall credit-approval process and related credit portfolio management.
Methodologies in credit rating classification and ESG due diligence were improved, within NLB Group’s commitment to the strict limitations of the exclusion list.
At the Group, sustainable operations mean managing our non-financial operations by being an environmentally responsible institution and ensuring sustainable relations with our stakeholders. The calculation of operational carbon footprint (Scope 1, Scope 2, Scope 3, limited and without category 15) has been in place since 2019, following the Group’s climate-neutral commitment. We started the initiative to reach operational net-zero by 2050 or sooner.
In 2023, the Group made advancements in implementing ESG diligence. The Group stayed committed to high standards in all aspects of sustainable client relations, including identifying clients’ needs and issues, responsible product development, and the protection of client data, as well as cyber- and physical security.
At the Group, sustainable practices and human resource management are strongly interconnected. In addition to adhering to labour regulations, we foster an inclusive workplace environment, motivational and remuneration mechanisms, increased the number of trainings per employee, promoted health, safety, and well-being, and improved employee engagement. Sustainability training for employees in all hierarchical levels was provided to enhance and further develop their capacity and skills. In total, employees did 7,572 total hours of sustainability training, as well as to strengthen the employees’ client engagement capacity and practices to support the Net-Zero Strategy.
Two major initiatives were completed further to enhance the sustainability practices launched across the Group in September. The Group-wide initiative engaged more than 1,000 employees in several sustainability activities.
The Group actively contributes towards more comprehensive socio-economic development and education in the communities where it operates. In 2023, NLB Group continued to manage CSR activities in such a way that each of them contributes to at least one UN SDG. Among the focuses are financial literacy and financial inclusion, especially among young people and the elderly. More information is available in the chapter Corporate Social Responsibility.
The Group recognises the challenges. The call to drastically change how companies, governments, and individuals – consumers – address sustainability is expected to be intensified in 2024 and onwards. To further improve standards, the Group will continue to implement initiatives and activities across all three sustainability pillars in accordance with the annual action plans. The main priorities in 2024 are as follows:
Despite its clear ambition and action to mitigate sustainability risks, positive changes in business and society necessitate collective efforts. It is imperative for the clients to also take action, while governments should provide the necessary guidance and direction.
ESG Risk score improved by 1.7 points. This represents low risk and ranks the Group among the top 13 percent of all banks assessed with Sustainalytics.
The Group remains determined to create more sustainable and inspiring projects. More information is also available in NLB Group Sustainability Report 2023.
In 2023, Bankarium, the pioneering Slovenia financial literacy centre, guided visitors through six stages of personal finance management with interactive digital games, quizzes, and educational resources, significantly contributing to knowledge transfer for future generations. NLB Banka, Podgorica extended its outreach in Montenegro, hosting financial literacy programs in seven schools.
The Bank is a great patron of developing Slovenian art and culture. The Group launched a new NLB Group Art Programme for visual arts, aiming to support contemporary art in SEE, including investing in acquisitions and collaborations.
To be responsible for the environment is to care for nature. In response to the degradation of a section of the southern Trnovski gozd, a forest located in Slovenia, we planted 2,500 seedlings across approximately one hectare to aid regeneration efforts. Similarly, NLB Banka Banja Luka organised a tree-planting initiative with colleagues from the Bijeljina region.
In support of Slovenian beekeeping, which is among the best in the world, NLB endorses the preservation of a rich cultural heritage and the protection of the environment. On the 150th anniversary of the International Young Beekeepers Competition, which took place in Slovenia in the summer, the first competition of this kind in Slovenia was attended by over 150 participants from 30 countries.
The goal of several "Women in Adria" events that were organised by NLB Banka, Banja Luka throughout Bosnia and Herzegovina was to bring together women. Through inspiring stories, the goal was to empower each other and point out the positive sides of female togetherness. NLB Komercijalna Banka organised a traditional Organic contest to reward the best projects in organic agriculture, with the best four receiving RSD 2.5 million.
Slovenia, as the Bank actively supports youth sports in other markets, with over 2,000 children participating across the Group's region. Furthermore, NLB Group demonstrates its dedication specifically for disabled basketball players and giving ongoing support to KHF Istog, one of Kosovo's most successful women's handball clubs.
NLB Group made a substantial donation. Employees proposed and selected recipients for the donation. In response to devastating floods in Slovenia, the Bank donated EUR 9.5 million to help the most affected citizens and municipalities.
The Group posted a profit after tax of EUR 550.7 million, surpassing the previous year by a remarkable EUR 103.8 million, representing a 23% YoY increase. It is noted that this includes deferred tax assets (EUR 61.9 million), and the 2022 result by the negative goodwill from the acquisition of N Banka (EUR 172.8 million).
| Net non-interest income | Total costs | Impairments and provisions | Share of profit from investments in associates and joint ventures | Negative goodwill | Income tax | Results of non-controlling interest | Total net operating income |
|---|---|---|---|---|---|---|---|
The following key drivers influenced the Group’s performance:
The effects of cancelling the high balance deposit fee in the Bank and implementing temporary measures, particularly in Serbia, were therefore effectively mitigated and resulted in a mode EUR 11.5 million, of which EUR 9.0 million was a direct voluntary contribution to the budget and municipalities for flood recovery in Slovenia, the rest being discretionary support payments.
Factors, namely, general inflationary trends within the region, investments into technology enhancements across the Group, the expansion of the leasing and asset management activities, and costs related to the new acquisition.
The Group net released EUR 11.8 million in impairments and provisions for credit risk, attributed to material repayments of previously written-off development in loans to individuals. Consequently, the cost of risk was negative at -7 bps.
Other impairments and provisions were net established in the amount of EUR 25.9 million, mainly related to the Bank, and legal provisions.
Based on substantially increased profit projections for the upcoming five years (2024 onwards) and the higher corporate income tax rate (nominal rates increased) by EUR 61.9 million (EUR 48.4 million recognised income due to profit projections and EUR 13.5 million due to increase of tax rate). The unrecognised deferred tax assets amount to EUR 9.6 million, which are projected to be paid in the foreseeable future, was recorded on NLB Group.
Enhanced financial performance resulted in ROE a.t. at 21.0%, with goodwill.
A sound financial position was confirmed by a robust Total Capital Ratio (TCR) of 20.3%, which improved by 1 p.p. YoY primarily due to the partial inclusion of 2023 results.
Mostly due to repayments, cured clients, and collection. The combination of successful resolution of NPL and credit growth of a high-quality portfolio resulted in the decrease of gross NPL to 1.1%.
Unencumbered liquidity reserves portfolio amounted to EUR 10,207.1 million (39.6% of total assets). Recurring profit before impairments and provisions of the Group, totalling EUR 550.7 million of net profit.
In Q1 2023, the result before impairments and provisions was affected by the accrual of a one-time yearly payment of regulatory costs in Slovenian banks (EUR 2.9 million Single Resolution Fund), EUR 5.0 million in donations to 20 municipalities affected by the floods in Slovenia, and a EUR 15.3 million in additional donations for the post-flood reconstruction effort.
| 124.8 | 146.1 | 168.2 | 152.3 | -14.9 | 6.8 | -1.3 | -5.9 | -14.5 | -39.1 | -18.2 | -7.8 | -6.4 | -6.7 | 19.5 | -36.1 | 20 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| before impairments and provisions w/o non-recurring income and regulatory costs | Non-recurring net non-interest income | Regulatory costs | ||||||||||||||
| 338.3 | 591.4 | +75% |
recorded a profit on a standalone basis and positively contributed to the Group’s result. The largest contribution of EUR 269.6 million came from NLB, followed by NLB Komercijalna Banka due to elevated net interest income and net released impairment and provisions. The SEE banks contributed 44% to the Group result with growth achieved in all banks. For more information
| EUR 550.7 million | 48.9% | NLB | |
|---|---|---|---|
| 2.3% | N Banka (i) | 23.9% | NLB Komercijalna Banka, Beograd |
| NLB Banka, Skopje | 7 | NLB Banka, Podgorica | 4.4% |
| Other | 1.1% | NLB (i) | |
| N Banka (i) | NLB KB, Beograd (ii) | NLB Banka, Skopje | NLB Banka, Banja Luka |
| NLB Banka, Sarajevo | NLB Banka, Prishtina | NLB Banka, Pod | |
| 131.7 | 12.7 | +224% | +99% |
| -93% | +20% | +26% | +12% |
| +11% | +48% | NGW | 172.8 |
| 2023 | 2022 | Change YoY | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Change QoQ | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 833.3 | 504.9 | 328.4 | 65% | 231.9 | 221.5 | 20.1 | 2% | ||
| Dividend income | 0.2 | 0.2 | -0.1 | -30% | 0.0 | 0.1 | 0.0 | 0.0 | ||
| Net income from financial transactions | 17.3 | 36.6 | -19.3 | -53% | -2.3 | 4.7 | 6.0 | 8.9 | ||
| Net other income | -35.4 | -16.6 | -18.9 | -114% | 63.0 | -7.1 | -10% | |||
| Total net operating income | 1,093.3 | 798.5 | 294.7 | 37% | 292.5 | 289.2 | 269.7 | 241.9 | ||
| Employee costs | -282.2 | -257.7 | -24.5 | -10% | -74.7 | -70.0 | -70.6 | -66.8 | ||
| Other general and | ||||||||||
| Depreciation and amortisation | -49.2 | -47.4 | -1.8 | -4% | -13.7 | -12.0 | -11.8 | -11.7 | ||
| Total costs | -501.9 | -460.3 | -41.6 | -9% | -140.2 | -120.9 | -123.6 | -117.1 | ||
| Result before impairments and provisions for credit risk | 11.8 | -17.5 | 29.3 | -15.0 | -3.1 | 11.5 | 18.4 | |||
| Other impairments and provisions | -25.9 | -11.4 | -14.5 | -128% | -13.0 | -0.7 | -6.2 | -6.0 | ||
| Impairments and provisions | -14.1 | -28 | ||||||||
| ventures | 1.1 | 0.8 | 0.3 | 37% | -0.2 | 0.7 | 0.3 | 0.3 | ||
| Negative goodwill | 0.0 | 172.9 | -172.9 | 0.0 | 0.0 | 0.0 | 0.0 | |||
| Result before tax | 578.4 | 483.1 | 95.3 | 20% | 124.0 | 165.1 | 151.8 | 137.5 | ||
| Income tax | -1.7 | 15% | 3.0 | 2.8 | 3.3 | 3.4 | ||||
| Result after tax | 550.7 | 446.9 | 103.8 | 23% | 163.8 | 144.2 | 122.6 | 120.1 |
| 2022 | 2023 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | ||||
|---|---|---|---|---|---|---|---|---|---|
| -28.0 | 2022 | 569.8 | 993.4 | 207.0 | 233.2 | 267.7 | 285.4 | ||
| -64.9 | -160.1 | -32.2 | -46.2 | -53.5 |
Net interest income constituted 76% of the Group’s total net revenues (2022: 63%) and reached EUR 833.3 million. A significant increase in the net interest income was recorded in all Group businesses with prevailing higher interest rates. The growth mainly came from loans to customers, with EUR 253.7 million (EUR 98.3 million allocated to individuals and EUR 155.4 million to corporates). At the same time, interest expenses increased due to higher expenses incurred from wholesale funding raised for the minimum requirement for own funds and eligible liabilities (MREL). Net interest income sensitivity, simulated by 100 bps immediate parallel downward shift in interest rates, yields a net interest income sensitivity.
Stabilising net interest income includes ongoing increased fixed interest rate loan production, active management of funding mix, liabilities hedging activities, and increasing duration of borrowings. Consequently, the Group’s annual net interest margin was improved by 1.21 p.p. to 3.50% in 2023. The annual operational business margin was 4.75%, 1.19 p.p. higher YoY, mainly due to the margin of NLB Group (i) (quarterly data).
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | |||
|---|---|---|---|---|---|---|
| 3.14% | 4.99% | 4.39% | 4.89% | 4.73% |
| Figure 17: Net non-interest income of NLB Group (in EUR millions) | |
|---|---|
| 2022 | 2023 |
| Q1 | 6.8 |
| Q2 | 1.5 |
| Q3 | 2.6 |
| Q4 | 2.8 |
| -3.1 | |
| -10.0 | |
| -1.3 | |
| -5.9 | |
| -14.5 | |
| 19.5 | |
| 0.7 |
| 2022 | 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 |
|---|---|---|---|---|
| 11.7 | 11.8 | 12.0 | 13.7 | 38.7 |
| 41.1 | 38.8 | 51.8 | 257.7 | 155.2 |
| 170.5 | 47.4 | 49.2 | 282.2 |
Total costs amounted to EUR 501.9 million and were 9% higher than the previous year. The increase was observed in all banks of the NLB Group, and was driven by strong net operating income growth that outpaced the increase in total costs.
The escalation in depreciation and amortisation resulted from higher investment activity in the last quarter. The growth of the other general and administrative expenses was observed, particularly within the region, investments into technology enhancements across the Group, growth of the leasing and asset management activities, and the intensive integration process in Slovenia (EUR 9 million).
Several initiatives were undertaken to keep costs low, including channel strategy, digitalisation, going paperless, instituting a lean process, and branch network optimisation. In Q3, some cost increases were observed. However, owing to prevailing circumstances and the current economic situation, characterised by significant inflationary pressures across all cost categories, many of the successful initiatives were challenged.
| 2022 | 2023 Q1 | 2023 Q2 | 2023 Q3 | 2023 Q4 |
|---|---|---|---|---|
| -3.1 | -0.7 | -17.5 | -11.4 | -25.9 |
| 11.8 | 12.4 | 5.4 |
Tax and deferred taxes of NLB, Ljubljana. The effective tax rate in 2023 was significantly influenced by several non-recurring items, with the most material impact coming from the increase of projections for the upcoming five years (from 2024 onwards). NLB increased recognised deferred tax assets of EUR 56.7 million in 2023 (EUR 48.4 million recognised in income statement) increased for EUR 14.9 million due to a higher corporate income tax rate in the next five years (2024 to 2028), namely EUR 13.5 million income recognised in income statement and EUR.
The rate of NLB was the non-taxable income, consisting mostly of received dividends and the release of impairments of equity investments in subsidiary banks. In addition, tax losses carry-forward, tax assets revaluation, non-taxable dividends, and non-taxable reversal of equity investments, amounts to 11% at NLB d.d., on group level 12% (excluding also non-taxable interest from state bonds). In Slovenia to Republic of Slovenia and Slovene municipalities the equivalent rate amounts to 14%. Based on the Reconstruction, Development and Provision of Financial Resources Act, estimated to amount to more than EUR 30 million, and the tax rate for corporate income tax was increased from 19% to 22% for the years 2024 to 2028. From 2024 on, when these two changes expire, and when NLB’s tax loss carry forward will be utilised, we expect a regular effective tax.
December 2023 based on OECD Pillar 2 Model Rules and related EU Directive. It is expected that the parent company NLB will be liable to pay the top-up tax concerning subsidiaries in for the year 2024, we expect that the tax liability shall not be material.
| NLB | NLB Group | ||||
|---|---|---|---|---|---|
| Profit before tax | 479 | 578 | |||
| Non-taxable income | -98 | 0 | |||
| Non-taxable interest from state bonds | 0 | -40 | |||
| Taxable income | 243 | 538 | |||
| Adjustments | -145 | -232 | |||
| Utilization of tax loss carry forward | -115 | -117 | |||
| Other adjustments (i) | -30 | -115 | |||
| Tax base | 98 | 306 | |||
| Recognition and increase of DTAs | -62 | -62 | |||
| Non-recognised deferred tax assets on current loss and other | 0 | 11 | |||
| Total tax | -36 | 15 | |||
| Regular tax payable (corporate income tax and withholding tax) | 26 | 66 | |||
| Contribution (regular tax and donations) | 35 | 75 | |||
| Overall contribution rate | 14% | 14% |
| 31 Dec 2023 | 31 Dec 2022 | Change YoY | 31 Dec 2023 | 30 Sep 2023 | 30 Jun 2023 | 31 Mar 2023 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | 832.2 | 16% | 6,103.6 | 5,815.7 | 5,760.4 | 5,304.3 | ||||||
| Loans to banks | 547.6 | 223.0 | 324.7 | 146% | 547.6 | 518.6 | 304.7 | 329.1 | ||||
| Net loans to customers | 13,734.6 | 13,073.0 | 661.6 | 5% | 13,734.6 | 13,666.1 | 13,431.8 | 13,455.0 | ||||
| - Corporate | 6,437.8 | 6,345.7 | 92.1 | 1% | 6,437.8 | 6,526.0 | 6,454.4 | 6,269.3 | ||||
| - Individuals | 7,235.3 | 6,743.4 | 491.9 | 7% | 7,235.3 | 7,107.2 | 6,945.8 | 6,850.7 | ||||
| - State | 390.4 | 308.2 | 82.3 | 27% | 390.4 | 357.1 | 3 | |||||
| - Financial assets | 4,803.7 | 4,877.4 | -73.8 | -2% | 4,803.7 | 4,653.1 | 4,553.7 | 4,582.5 | ||||
| - Trading book | 15.8 | 21.6 | -5.8 | -27% | 15.8 | 25.0 | 21.1 | 19.3 | ||||
| - Non-trading book | 4,787.9 | 4,855.8 | -68.0 | |||||||||
| Property and equipment | 278.0 | 251.3 | 26.7 | 11% | 278.0 | 257.1 | 254.3 | 252.1 | ||||
| Investment property | 31.1 | 35.6 | -4.5 | -13% | 31.1 | 33.1 | 34.5 | 35.3 | ||||
| Intangible assets | 62.1 |
| TOTAL ASSETS | 25,942.0 | 24,160.2 | 1,781.7 | 7% | 25,942.0 | 25,278.0 | 24,701.5 | 24,011.8 | |
|---|---|---|---|---|---|---|---|---|---|
| LIABILITIES | Deposits from customers | 20,732.7 | 20,027.7 | 705.0 | 4% | 20,732.7 | 20,289.1 | 19,924.9 | 19,732.0 |
| Net loans to customers | 13,948.7 | 511.6 | 4% | 14,460.3 | 14,156.7 | 14,168.6 | 13,951.7 | ||
| State | 413.2 | 513.4 | -100.2 | -20% | 413.2 | 455.7 | 392.5 | 448.5 | |
| Deposits from banks and central banks | 95.3 | 106.4 | -11.1 | -10% | 95.3 | 127.2 | 107.4 | ||
| Securities | 509.4 | 508.8 | 0.6 | 0% | 509.4 | 529.0 | 520.0 | 513.2 | |
| Other debt securities in issue | 828.8 | 307.2 | 521.6 | 170% | 828.8 | 810.0 | 814.5 | 311.7 | |
| Other liabilities | 587.6 | 506.7 | 80.9 | 16% | 587.6 | 504.9 | 469.3 | ||
| Interests | 65.1 | 56.7 | 8.4 | 15% | 65.1 | 61.9 | 59.2 | 60.3 | |
| TOTAL LIABILITIES AND EQUITY | 25,942.0 | 24,160.2 | 1,781.7 | 7% | 25,942.0 | 25,278.0 | 24,701.5 | 24,011.8 |
NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segment
Sheet volume of the Group totalled EUR 25,942.0 million at the end of the year and increased by EUR 1,781.7 million YoY. Growth in the customer’s loan book was fully financed with growth.
| Deposits from customers | 20,733 | |||
|---|---|---|---|---|
| Net loans to customers | 13,735 | |||
| Cash equivalents & placements with banks | ||||
| Loans to state | 2.8% | |||
| Loans to corporate | 45.6% | |||
| Loans to individuals | 51.6% | |||
| Total Assets | 25,942 | |||
| Deposits from banks and central banks | ||||
| Liabilities | 588 | |||
| Assets | Other assets | 753 |
The LTD ratio (net) was 66.2% at the Group level; a 1.0 p.p. YoY increase resulted from higher relative increase of gross loans compared to deposits.
| Loans (in EUR millions) | Deposits (in EUR millions) |
|---|---|
| 13,073.0 | 20,027.7 |
| 13,734.6 | 20,732.7 |
| 65.3% | 66.2% |
| Cash equivalents, placements with banks and loans to banks | 715.5 | 752.5 | 5,494.3 | 6,651.2 | 13,073.0 | 13,734.6 | 4,877.4 | 4,803.7 |
|---|---|---|---|---|---|---|---|---|
The distribution of total assets between countries was similar to the previous year, with 57.2% of the total assets related to the Group members located in Slovenia and 19.6% in Serbia.
| Country | Percentage |
|---|---|
| Slovenia | 57.7% |
| Serbia | 19.3% |
| N. Macedonia | 7.6% |
| BiH | 7.4% |
| Kosovo | 4.5% |
| Montenegro | 3.6% |
| Other | 0.1% |
| SEE Banks (i) | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 |
|---|---|---|---|---|---|---|---|---|
| Gross loans to individuals | 6,653.9 | 7,235.3 | 3,664.5 | 3,608.8 | 3,050.3 | 3,523.1 | 6,828.2 | 3,667.8 |
| Gross loans to corporate & state | 3,245.4 | +7% | +5% | +9% | +3% | +0% | +6% |
(i) standalone basis. (ii) Merger of NLB and N Banka on 1 September 2023. Volumes for 2022 for N Banka and NLB, interest rates only for NLB.
Significant portfolio growth in all NLB Group banks in 2023, the loan portfolio remained well-diversified, and there was no large concentration in any specific industry or client segment.
The portfolio refers to the euro currency, while the rest originates from the local currencies of the Group banking members. From interest rate type, almost 66% of the loan portfolio was linked.
| Segment | Amount (in EUR millions) | Percentage |
|---|---|---|
| SME | 3,764 | 19% |
| Corporates | 2,865 | 14% |
| Retail |
| Currency | Percentage |
|---|---|
| EUR | 82% |
| RSD | 8% |
| MKD | 5% |
| BAM | 4% |
| Other | 1% |
| Country | Amount (in EUR millions) | Percentage |
|---|---|---|
| Slovenia | 10,811 | 53% |
| BiH | 1,447 | 7% |
| N. Macedonia | 1,493 | 7% |
| Montenegro | 723 | 4% |
| Kosovo | 1,016 | 5% |
| Other |
The book debt securities portfolio slightly decreased YoY to EUR 4,687 million (book value), constituting 18.1% of the Group’s total assets compared to 19.7% in 2022. The portfolio’s average yield was higher in 2023, reaching 1.67%.
| Asset Class | Amount (EUR millions) | % of total portfolio |
|---|---|---|
| Government bonds | 3,584 | |
| Corporate bonds | 15 | |
| Bank senior debt | 38 | |
| Total | 4,687 |
| Country | Amount (EUR millions) |
|---|---|
| Slovenia | 1,316 |
| Serbia | 720 |
| France | 376 |
| Germany | 275 |
| N. Macedonia | 270 |
| Belgium | 258 |
| The Netherlands |
The models are implemented, dividing the portfolio into securities valued at fair value through other comprehensive income (FVOCI) and securities valued at amortised cost (AC). The FVOCI portfolio was p.p. lower YoY, with an average duration of 1.9 years. The negative valuation of FVOCI Group’s debt securities portfolio during 2023 amounted to EUR 89 million (the net of hedge accounting). In contrast, the AC portfolio at year-end increased to 53.8% of the total Group debt securities portfolio, with an average duration of 3.7 years. Unrealised losses of AC Group represented 6.5% of the whole portfolio. Additional information is available in the NLB Group Sustainability Report 2023.
The Group’s liquidity remains strong, with a high level of unencumbered liquidity reserves in total assets (39.6%) reflected in the LCR ratio of 245.7%, compared to 220.3% at the end of 2022.
| Date | Unencumbered Liquidity Reserves (EUR millions) | LCR (%) |
|---|---|---|
| 31 Dec 2022 | 6,132 | 220.3% |
| 31 Mar 2023 | 2,651 | 231.3% |
| 30 Jun 2023 | 6,688 | 244.8% |
| 30 Sep 2023 | 2,800 | 238.9% |
| 31 Dec 2023 | 245.7% |
In 2023, the Group’s unencumbered liquidity reserves increased by 11% YoY, comprising of cash, balances with CB without CB-secured funding operations. Among others, these liquidity reserves provided the basis for future strategic growth. The growth of unencumbered liquidity reserves in 2023 can largely be attributed to levels throughout 2023. Encumbered liquidity reserves, used for operational and regulatory purposes, decreased by 66% YoY to EUR 41.5 million (excluding obligatory reserves).
| Date | ECB eligible credit claims | Cash & CB reserves | Trading book debt securities |
|---|---|---|---|
| 31 Dec 2022 | 49.4% | 0.0% | 0.0% |
| 31 Mar 2023 | 6.1% | 49.0% | 44.9% |
| 30 Jun 2023 | 6.6% | 48.6% | 44.8% |
| 30 Sep 2023 | 7.0% | 45.9% | 47.0% |
| 31 Dec 2023 | 6.3% | 48.6% | 45.0% |
| Dec 2022 | 31 Dec 2023 |
|---|---|
| 106.4 | 95.3 |
| 20,027.7 | 20,732.7 |
| 281.1 | 240.1 |
| 508.8 | 509.4 |
| 307.2 | 828.8 |
| 506.7 | 587.6 |
| 31 Dec 2022 | 31 Dec 2023 | |
|---|---|---|
| Sight deposits | 2,833.0 | 2,474.2 |
| Term deposits | 6,079.0 | 6,272.4 |
| Deposits from corporate & state | 4,359.6 | 4,177.7 |
| Deposits from individuals | 7,841.6 | 7,923.8 |
Deposits from customers increased by 4% YoY. The largest increase of 15% was recorded in the corporate and state deposit base. The corporate and state deposit base decreased due to the high price elasticity of certain large corporate and state clients. Deposits from individuals recorded growth in all bank members, increasing by 5 p.p. YoY to 48%, with term deposit volume in 2023 increasing by more than EUR 350 million, mainly in the last four months due to an attractive offer on term deposits.
Side, the securities portfolio has a duration of 2.9 years and a loan portfolio of 2.4 years. A large weight in the duration of total assets also has assets with the central bank, which lowers the
has a duration of 1.9 years and a term deposits portfolio of 0.9 year. The largest weight in the duration of total liabilities has a portfolio of sight deposits, which lowers the duration of total
Included are cash flows and not carrying amount.
| (i) | 1,310 | Derivatives |
|---|---|---|
| 1,084 | Loans and advances | |
| 14,624 | Debt securities | |
| 4,414 | Deposits | |
| 3,735 | Debt securities issued | |
| Interbank | 778 | Assets |
| Liabilities | 26,680 | O/N |
| 1.6 Y | 1.9 Y | 0.9 Y |
| 0.6 Y | 2.9 Y | O/N |
| 2.4 Y | 3.7 Y | 1.4 Y |
| 26,680 |
| Item | 31 Dec 2022 | 31 Dec 2023 |
|---|---|---|
| Guarantees | 41.0 | 35.0 |
| Letters of credit | 2,140.8 | 2,487.5 |
| Loan commitments | 1,631.6 | |
| Derivatives |
Off-balance sheet items amounted to EUR 6,300.8 million and were primarily comprised of guarantees (26%), loan commitments (39%), and derivatives (34%). Loan commitments were primarily divided between the Group’s derivatives, which were concluded by the Bank either for hedging the banking book or trading with customers. The substantial augmentation in derivatives trading volume primarily came from hedging the senior preferred bond issued in June 2023. Secondly, newly participation from NLB Group members was notable, as they engaged in hedging activities following the merger of N Banka with NLB, which led to a notable surge, particularly through the novation of existing derivatives contracts.
N Banka is included in the segment analysis for the years 2023 and 2022 as an independent legal entity; in the segment analysis for the year 2023, it is included with the result for the period.
Retail banking with individuals and micro companies (NLB and N Banka), asset management (NLB Skladi), and part of subsidiary NLB Lease&Go, Ljubljana that includes operations with retail clients.
Corporate and Investment Banking in Slovenia includes banking with Key Corporate Clients, SMEs, Cross-Border Corporate Financing, Investment Banking and Custody, Restructuring activities that include operations with corporate clients. Financial Markets in Slovenia include treasury activities and trading with financial instruments, while they also present the results of asset management.
Strategic Foreign Markets consist of the operations of strategic Group banks in the strategic markets (Serbia, North Macedonia, Bosnia and Herzegovina, Kosovo, and Montenegro), as well as investment company K Lease&Go Leasing, Beograd. Other activities include categories in NLB and N Banka whose operating results cannot be allocated to specific segments, including negative goodwill from subsidiaries NLB Cultural Heritage Management Institute and Privatinvest.
Non-Core Members include the operations of non-core NLB Group members, namely REA.
| Segment | Profit Contribution (%) | Total Assets (in EUR millions) | % of Total Assets |
|---|---|---|---|
| Retail Banking in Slovenia | 100% | 25,942 | 100% |
| Corporate and Investment Banking in Slovenia | 31% | 3,791 | 15% |
| Financial Markets in Slovenia | 15% | 3,376 | 13% |
| Strategic Foreign Markets | 6% | 7,232 | 28% |
| Other Activities | 50% | 11,059 | 43% |
| Non-Core Segment | -1% | 436 | 2% |
NLB, as Slovenia’s largest and systematically important bank, has demonstrated remarkable business resilience in the dynamic economic landscape this year. Bolstered by the successful market share, including in both retail and corporate lending. In 2023, NLB achieved a milestone with a record-high profit. The interest rate environment contributed to a considerable increase in profit, including the release of impairments of equity investments (EUR 97.8 million), and deferred tax assets (EUR 61.9 million) materially added to the overall result. Demonstrating responsibility, the Bank donated EUR 4.0 million to the 20 affected municipalities and made a one-time payment of EUR 5.0 million to the Reconstruction Fund, showcasing its commitment.
a.t. 49% contribution to NLB Group’s result a.t. Largest bank in the country (by total assets) 30.2% market share by total assets
| Key Performance Indicators | 2023 | 2022 | Change |
|---|---|---|---|
| Net interest income | 372,566 | 177,027 | 110% |
| Net non-interest income | 265,946 | 189,153 | 41% |
| Total costs | -237,864 | -207,866 | -14% |
| Impairments and provisions | 78,098 | 5,756 | - |
| Result before tax | 478,7 | - | - |
| Total assets | 16,014,776 | 13,939,333 | 15% |
| Net loans to customers | 7,156,068 | 6,062,305 | 18% |
| Gross loans to customers | 7,276,656 | 6,157,442 | 18% |
| Deposits from customers | 11,881,563 | 10,984,411 | 8% |
| Net interest margin | 2.8% | 1.5% | 1.3 p.p. |
| ROE a.t. | 27.9% | 10.2% | 17.7 p.p. |
| ROA a.t. | 3.5% | 1.2% | 2.3 p.p. |
| CIR | 37.3% | 56.8% | -19.5 p.p. |
| NPL volume | 138,004 | 111,170 | 24% |
| NPL ratio (internal LTD) | 60.2% | 55.2% | 5.0 p.p. |
| Key Performance Indicators | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Net interest income | 27,822 | 25,270 | 10% |
| Net non-interest income | 5,225 | 10,453 | -50% |
| Result after tax | 16,747 | 13,672 | 22% |
| Indicator | 2023 | 2022 |
|---|---|---|
| Total assets | 1,293,280 | - |
| Net loans to customers | 939,238 | - |
| Gross loans to customers | 955,035 | - |
| Net interest margin | 2.0% | - |
| CIR | 64.3% | - |
| NPL volume | 23,633 | - |
| NPL ratio (internal def.: NPL/Total loans) | 1.9% | - |
| Market share by total assets | 2.6% | - |
N banka's internal calculation of net interest margin and total capital ratio. Data for 2022 are for the period March-December. Data for 2023 are for the period realization YoY and surplus of NLB in EUR millions.
| Indicator | 31 Dec 2023 | 31 Dec 2022 | Change YoY |
|---|---|---|---|
| Common Equity Tier 1 capital (CET1) | 1,734.6 | 1,414.7 | 319.9 |
| Tier 1 capital amount (RWA) | 9,207.5 | 7,832.7 | 1,374.8 |
| Common Equity Tier 1 Ratio | 18.8% | 18.1% | 0.8 p.p. |
| Tier 1 Ratio | 19.7% | 19.1% | 0.6 p.p. |
| Total Capital Ratio | 25.2% | 25.6% | -0.3 p.p. |
Slovenia
The Bank has prioritised customers’ needs and experience and recently integrated N Banka, thereby strengthening its position as the market leader in retail banking. The Bank offers services accessible through various channels such as traditional branch offices, a mobile branch on wheels, and an extensive ATM network, ensuring that customers can conveniently reach the Bank's Contact Centre and digital banking and remains committed to delivering the highest standards of excellence in everything it does. The Bank’s primary objective is to strive to be the best and leverage its strategic assets and transform the sales process to enhance the user experience.
| 2022 | Change YoY | |
|---|---|---|
| Net interest income from Assets (i) | 104.8 | 159.9 |
| Net interest income from Liabilities (i) | 87.2 | 95.8 |
| Net non-interest income | 177.5 | 9.1 |
| Total costs | -153.8 | -144.0 |
| Result before impairments and provisions | 213.2 | 67.4 |
| Impairments and provisions | -32.6 | -21.4 |
| Share of profit from investments in associates |
| 2022 | Change YoY | |
|---|---|---|
| Net loans to customers | 3,694.2 | 3,586.5 |
| Gross loans to customers | 3,760.8 | 3,641.0 |
| Housing loans | 2,483.5 | 2,430.8 |
| Interest rate on housing loans (ii) | 8.14% | 7.11% |
| NLB Lease\&Go, Ljubljana | 98.2 | 69.0 |
| Other | 360.6 | 419.2 |
| Deposits from customers | 9,357.8 | 9,085.8 |
| Interest rate on deposits (ii) | 0.32% | |
| of risk (in bps) | 56 | 58 |
| CIR | 41.9% | 68.1% |
| Net interest margin (ii) | 4.17% | 1.70% |
(i) Net interest income from assets and liabilities using Fund Transfer Pricing (FTP). (ii) The segment’s net interest margin is calculated as the ratio between annualised net interest income (i) and the sum of average interest-bearing assets and liabilities divided by 2.
which in 2022 amounted to EUR 1.8 million. 30.2% and 29.8% market share in housing loans and consumer loans. The segment’s total costs increased YoY due to general inflationary trend of NLB and N Banka. Impairments and provisions for credit risk were net established due to the portfolio development, repayments of written-off receivables and changes in models. Other operational merger of N Banka was successfully completed at the beginning of September. With the merger, the Bank again confirmed its systemically important position in the market. The retail part of NLB Lease&Go, Ljubljana, continued growing steadily and recorded a 42.3% portfolio increase YoY.
| 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2023 | |
|---|---|---|---|
| Housing loans | 26.9% | 29.6% | 30.2% |
| Consumer loans | 29.8% | 24.4% | 30.5% |
| 15.2% | 33.9% | 21.5% | |
| 25.1% | 36.9% | 7.3% | |
| 36.1% | 9.8% |
Service development is primarily driven by the requirements and expectations of its clients. In addition, the Bank tailors its offer to suit specific segments and devises processes to support segment, serving as the foundation for the Bank’s initiatives and business models. To enhance user experience, the Bank is broadening its spectrum of services to cater to an array of diverse needs. The Net Promoter Score (NPS) indicates transactional satisfaction after a completed service. The Bank’s client satisfaction remained high, with a level of satisfaction with the Bank’s advisors. Kindness and competence are valued the most and are the main reasons for high client satisfaction (80 vs. 73 for the competition). The NPS for the financial sector in 2023 is 52 based on SurveyMonkey global benchmark, influenced mostly by the high satisfaction with advisory service. In the integration process, clients of N Banka have established good practices and services, such as a revolving card offer and a partnership model, focusing on providing a positive user experience. Successful migration and integration of N Banka.
NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segment our clients. Private banking is a leading banking provider for this segment in the market and an integral part of the Bank’s offering, showing a substantial 24% YoY growth in assets under management. Products and services are carefully selected and tailored to meet the unique needs of these clients. The Bank provides comprehensive wealth management, combining banking and financial services. Exceptional service has been recognised by Euromoney, which awarded the Bank’s Private Banking segment as Slovenia’s Best Private Bank for High Net Worth Individuals in 2023.
Slovenia’s largest asset management company maintains a high market share of 39.6%. Net inflows in 2023 amounted to EUR 171.3 million, accounting for 50.5% of all net inflows in the million, of which EUR 1,896.3 million is from mutual funds and EUR 464.0 million is from the discretionary portfolio.
| 31 Dec 2020 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2023 |
|---|---|---|---|
| 1,075 | 1,580 | 1,200 |
NLB Lease&Go, Ljubljana, the Bank extended its range of financial services to private individuals. Clients can now visit the branch offices for expert advice and high-quality financial services. The leasing model covers the digital aspect, enabling simple and quick car financing approval through an E2E digital process. The Bank is the largest provider of bancassurance on the market, Zavarovalnica Triglav being its long-term partners. Moreover, Vita’s model of exclusive distribution of life and health insurance products again resulted in record business volume for these products, providing coverage in the event of one or more severe illnesses and further improved its digital footprint within the Bank’s digital solutions.
| 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2023 | |
|---|---|---|---|
| NLB Skladi | 17.1% | 16.8% | 17.4% |
| Vita | 17.1% | 10.9% | 9.4% |
| Generali | 10.6% | 10.3% | 2.2% |
| 2.2% | 2.6% | 2.5% |
Overdraft sales were completed via the CC in 2023. The Bank is promoting the advisory role of its branch offices, focusing on shifting transactional business to digital and card-based services.
With the number of clients using digital banking and 24/7 accessible channels such as CC and ATMs, the Bank is closer to achieving its goal. With one of the largest ATM networks in the country, the Bank is proactively promoting the digitisation of payments through various activities.
The Group’s mobile wallet NLB Pay was significantly improved to become the digital wallet of choice. E-commerce payments gained significant traction and boosted use and improved various customer journeys.
The Bank has also offered the most flexible credit card 3-in-1 feature, providing various options. The implementation of the new Group’s mobile POS terminal solution, the NLB Smart POS, was well-received by micro-segment, small businesses, and other merchants, enabling...
| (in EUR thousands) | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Value | 12,577 | 36,218 | 58,924 | +108.7% |
| Total | 122,952 |
The Bank has introduced the possibility of returning part of the value of purchases to customers called NLB Cashback, a novelty in the Slovenian market. The City of Ljubljana has become the first open loop transit city in the region, as the Bank introduced a transit-ready solution for card acceptance for transit entirely by mobile, impacted by customer base demographics.
To grow mobile usage even more, the Bank will continue to add a broader range of servicing functionalities to the new omnichannel digital adoption and engagement. With the new solution, the Bank witnessed another boost in active digital users by 14% YoY and active digital penetration by 5.5 p.p. YoY.
When introducing changes, the Contact Centre (CC), the only 24/7 available banking contact point in Slovenia, plays a crucial role for the Bank’s clients who need assistance or help with contracting new products, as 11% of consumer...
| Date | 31 Dec 2020 | 31 Dec 2021 | 31 Dec 2022 | 31 Dec 2023 |
|---|---|---|---|---|
| Percentage | 61% | 43% | 56% | 49% |
The Bank reaffirmed its position as a leading and systemic player in its home region. It continues to support corporate clients with daily banking and tailor border financing. The Bank also strongly emphasises sustainability in all its operations.
| Table 19: Performance of the Corporate and Investment Banking | |
|---|---|
| Net interest income from Assets (i) | 106.5 |
| Net interest income from Liabilities (i) | 62.2 |
| Net non-interest income | 42.7 |
| o/w Net fee and costs | -70.2 |
| Result before impairments and provisions | 79.0 |
| Impairments and provisions | 7.9 |
| Result before tax | 86.9 |
| 31 Dec 2023 | 3,413.2 |
| Corporate | 3,306.7 |
| Key/SME/Cross-Border Corporates | 3,049.5 |
| Interest rate on Key/SME/Cross Border Corporates loans (ii) | 4.54% |
| NLB Lease\&Go, Ljubljana | 159.4 |
| State | 105.6 |
| Interest rate on State loans (ii) | 5.95% |
| Deposits from customers | 2,471.8 |
| Cost of risk (in bps) | -36 |
| CIR | 47.1% |
| Net interest margin (ii) | 3.55% |
(i) Net interest income from assets and liabilities using F for NLB. The segment’s net interest margin is calculated as the ratio between annualised net interest income (i) and the sum of average interest-bearing assets and liabilities divided by 2.
Investment Banking, the Bank continues its long tradition and commitment to sustainable and long-term business relationships. Cooperating with almost 11,000 corporate clients, the business.
The Bank provides extensive and customised financial solutions to support the broader economy. In 2023, the Bank successfully organised nine regional events for its corporate clients, with AI: Artificial and Human Intelligence Partnering for Business Success. In September, the Bank successfully migrated and integrated N Banka’s clients.
calculation. Similar to the retail segment, the notable YoY rise in net interest income was primarily driven by the loan volume and deposit margin. Deposit interest rates, being less sensitive to the environment, considering the short maturity of the deposit base. In contrast, the loan market has become increasingly competitive, and client rates have not increased fully to reflect recent.
| Date | Market Share | |||||
|---|---|---|---|---|---|---|
| Loans to Customers | Deposits from Customers | |||||
| 31 Dec 2021 | 31.5% | 39.0% | ||||
| 31 Dec 2022 | 20.0% | 38.6% | ||||
| 31 Dec 2023 | 18.3% | 25.7% |
the cancellation of the high balance deposit fee, which amounted to EUR 5.7 million in 2022, partially offset by higher fees from guarantees (EUR 1.3 million) and payment transactions (E stemming from the general inflationary trends within the region, investments into technology enhancements, and the integration process of NLB and N Banka. Impairments and provisions successful workout resolution. The volume of gross loans decreased by EUR 11.3 million YoY, primarily due to EUR 120 million repaid extraordinary liquidity credit lines from the energy.
influencing corporate clients to be more cautious when taking business decisions and investing in development projects. However, the Bank has been steadily increasing its market share in price elasticity of certain large corporate clients and slight decline in market share. Nevertheless, the Bank kept a solid deposit base, with most clients having house-bank relationships.
successful financing of the green transformation project throughout the region, encompassing the renovations of electricity distribution networks in Slovenia, the construction of a wind farm, and battery production in Slovenia. The Bank is increasing its share of financing the green transformation of Slovenian companies and beyond. Following the August floods, the Bank has taken.
floods, including a more favourable loan line of EUR 100 million, and a moratorium on the repayment of loan obligations, if required. Trade finance solutions In the trade finance, the Bank portfolio increased by 29.5% compared to the previous year. The Bank’s guarantees support all major infrastructure projects in Slovenia and the region. Through all types of letters of credit, risks for exporters and importers. A strong focus has been given to purchasing the receivables business, including introducing a reverse factoring product developed in Q4 2022.
Europe. Additionally, there has been a strong emphasis on forming strategic partnerships with key stakeholders (developers, equity/quasi-equity providers, investors, and commercial and d globally.
The Bank executed clients’ buy and sell orders in the amount of EUR 942.6 million within brokerage services in 2023. In dealing with financial ins million, and transactions involving derivatives reached EUR 173.4 million in 2023. The NLB trading platform has been thriving, offering clients the best possible interaction with the Bank introduced last year, have also shown considerable growth and high interest on the clients’ side in 2023. The Bank has been actively involved in the financial advisory business. In addition (as a sole mandated lead arranger) in the amount of EUR 304 million (NLB participating in financing with EUR 162 million), and organising the bond issuing (as a lead arranger or joint l Slovenian players in custodian services for Slovenian and international clients. The total value of assets under custody on domestic and foreign markets has increased throughout the year, billion.
Intermediary business for NLB Lease&Go, Ljubljana, has also been the focus of the Bank’s commercial activities, providing clients with the best possible finan total volume of new business in 2023 increased by 15% and reached EUR 191.3 million (including short-term financing), which had the effect on increased balance of leasing portfolio at applications have gained further validity and usefulness. They have started to be used on the market, mainly through intermediaries – vehicle broker-dealers (partners), which enables a fas payments, the Bank improved its solutions to corporate clients by revamping NLB Pay and incorporating Google Pay, transforming it into a virtual or smart wallet that enables payments.
The Bank was the leading bank in the introduction of instant payments on the Slovenian market and is the only bank enabling users of m- Slovenia and the SEPA area. Flik P2P enables money transfer among all Slovenian banks’ clients, while Flik P2M payments enable purchases on NLB POS terminals and on POS terminal group in the SEE, the Group enables services arising from the SWIFT Global Payment Initiative, an international payments service enabling banks to transfer money faster and more safely related costs.
| Year | e-commerce | POS |
|---|---|---|
| 2020 | 113 | 3,244 |
| 2021 | +48% | 2,865 |
| 2022 | 2,535 | |
| 2023 | 2,348 |
The segment is focused on the Group’s activities in international financial markets, including treasury operations. This continuous focus was on prudent liquidity reser senior preferred green notes of EUR 500 million.
| Performance of the Financial Markets in Slovenia segment in EUR millions consolidated | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Net non-interest income | 2.7 | -0.7 | 3.4 |
| Total net operating income | 40.4 | 46.6 | -6.2 |
| Total costs | -9.9 | -9.4 | -0.5 |
| Result before impairments | 35.3 | 33.8 | 1.5 |
| Item | 31 Dec 2023 | 31 Dec 2022 | Change YoY |
|---|---|---|---|
| Balances with Central banks | 4,153.2 | 3,373.7 | 779.5 |
| Banking book securities | 2,981.1 | 2,993.3 | -12.3 |
| Subordinated liabilities (Tier 2) | 509.4 | 508.8 | 0.6 |
| Other debt securities in issue | 828.8 | 307.2 | 521.6 |
The Group’s ALM process strategically manages the Group’s balance sheet concerning the interest rate, currency, and liquidity risk considering the macroeconomic environment and financial conditions. It is decentralized, with uniform guidelines and limits for each type of risk for individual Group members. From the interest rate risk perspective, the surplus liquidity position of the Group consists of high-quality debt securities. In terms of funding, the non-banking sector deposits continued to increase, mainly in the form of term deposits. The Group manages its positions and stabilizes risk exposure; the Group actively adjusts the average duration of liquidity reserves and keeps outstanding "plain vanilla" derivatives. Active profitability management has been supported by the loan market all over the Group’s strategic markets.
Wholesale funding activities in the Group aim to achieve diversification, improve structural liquidity and capital position, and fulfil regulatory requirements, especially ensuring compliance.
NLB Group issued its first green EUR 500 million senior preferred notes with 4NC3 tenor in June for MREL purposes. NLB Group members were also active in the wholesale market. More specifically, they obtained a EUR 5 million credit line to meet its MREL requirement.
| Type of bond | ISIN code | Issue Date | Maturity Date | Interest Rate | Amount | ||
|---|---|---|---|---|---|---|---|
| Senior Preferred | XS2641055012 | 27 Jun 2023 | 27 Jun 2027 | 7.125% p.a. | 500 | ||
| Senior Preferred | 19 Jul 2024 | 19 Jul 2025 | 6.000% p.a. | 300 | |||
| Tier 2 (i) | SI0022103855 | 6 May 2019 | 6 May 2029 | 3.650% p.a. | 120 | ||
| Tier 2 (i) | XS2113139195 | 5 Feb 2020 | 5 Feb 2030 | 3.400% p.a. | 120 | ||
| Tier 2 | XS2413677464 | 28 Nov 2022 | 28 Nov 2032 | 10.750% p.a. | 225 | ||
| Total Tier 2: | 510 | ||||||
| AT1 | 2028 | 9.721% p.a. | 82 | ||||
| Total outstanding: | 1,392 |
(i) Further information is available in the chapter Events After the End of the 2023 Financial Year. Note: Including issued Tier 2 (both in January 2024). Maturity envisaged on call date.
SP Tier 2 AT1 31 Dec 2023 31 Dec 2024 31 Dec 2025 31 Dec 2026 800.0
Figure 45: Banking book securities portfolio of NLB by asset class and geography as at 31 December 2023 (in EUR millions)
| Asset Class | Geography | Amount (EUR millions) |
|---|---|---|
| Government | Germany | 191 |
| Belgium | 191 | |
| The Netherlands | 162 | |
| Austria | 152 | |
| Finland | 117 | |
| Spain | 108 | |
| Sweden | 90 | |
| Ireland | 82 | |
| Covered bonds | 218 | |
| GGB | 140 | |
| Multilateral bank bonds | 117 | |
| Subordinated debt | 38 |
The goal is to provide liquidity, stabilise the interest margin, and manage interest rate risk. In 2023, an ongoing goal was to further diversify the Bank’s banking book securities portfolio, which at the year-end, debt securities measured at FVOCI represented 32.9% of the Bank debt securities portfolio, having a duration of 2.7 years, while the duration of the portfolio measured amounted to EUR 48 million (net of hedge accounting effects and related deferred taxes), and unrealised losses from securities measured at AC amounted to EUR 77 million. The average yield on the Bank’s banking book debt securities portfolio increased by 0.43 p.p. YoY to 1.17%.
Figure 46: Maturity profile of NLB banking book securities as at 31 Dec
| Period | Nominal Exposure (EUR millions) | % of Total Portfolio |
|---|---|---|
| 2025-2026 | 344 | 13% |
| 2027-2028 | 637 | 32% |
| 2029+ | 230 | 26% |
| 635 | 29% | |
| 105 | ||
| 592 | ||
| 256 |
Markets
Six subsidiary banks, two leasing companies, one IT services company, and one investment fund company. The core financial part of the Group in the Strategic Foreign Markets segment includes two leasing companies. The Group banking subsidiaries are locally firmly entrenched as important financial institutions and market leaders across various business segments and provide stability.
The subsidiary banks have a stable market position and enjoy a robust reputation. The market share of the banking subsidiaries, measured by total assets, reached or surpassed 10% in five out of six markets.
There was remarkable double-digit growth of gross loans to customers, above the local market average, especially in the retail segment, thereby contributing to the overall economic development of the region.
In strategy, the Group banks attracted new depositors (9% YoY growth), adapting to prevailing market conditions, thus ensuring organic growth and keeping an optimal balance sheet structure.
The financial literacy of clients was enhanced by organising the #FrameOfHelp project for small entrepreneurs, tree planting activities, and many more events, as stated in the Group Sustainability report.
In 2023, the Group is offering various digital solutions to clients, thus bringing, first in some markets, various solutions further boosting digital penetration by almost doubling the number of digital users.
For their contributions to the local countries of operation, the Group received awards. Leasing operations continued with solid growth, especially in Serbia, by achieving a market share in new production of 11%.
| 2023 | 2022 | Change YoY | |
|---|---|---|---|
| Net interest income | 423.2 | 298.0 | 125.2 (42%) |
| Interest income | 118.4 | 129.5 | -11.1 (-9%) |
| o/w Net fee and commission income | 124.1 | 118.7 | 5.4 (5%) |
| Total net operating income | 541.6 | 427.6 | 114.0 (27%) |
| Total costs | -251.2 | -228.1 | -23.1 (-10%) |
| Result before impairment before tax | 291.5 | 187.1 | 104.4 (56%) |
| o/w Result of minority shareholders | 12.6 | 11.0 | 1.7 (15%) |
| 31 Dec 2023 | 31 Dec 2022 | Change YoY | |
|---|---|---|---|
| Net loans to customers | 6,648.1 | 6,077.5 | 570.6 (9%) |
| Gross loans to retail loans | 6.63% | 5.66% | 0.97 p.p. |
| Corporate | 3,042.9 | 2,869.0 | 173.9 (6%) |
| Interest rate on corporate loans | 5.37% | 3.84% | 1.53 p.p. |
| State | 271.4 | 181.4 | 90.0 (50%) |
| Interest rate on state loans | 7.13% | 3.65% | 0.17% (0.21 p.p.) |
| Non-performing loans (gross) | 134.0 | 160.6 | -26.7 (-17%) |
| 2023 | 2022 | Change YoY | |||||
|---|---|---|---|---|---|---|---|
| Cost of risk (in bps) | -13 | 7 | -20 | ||||
| CIR | 46.4% | 53.4% | -7.0 p.p. | ||||
| Net interest margin | 4.19% | 3.14% | 1.05 p.p. |
| NLB Komercialna Banka, Beograd | +100% |
|---|---|
| NLB Banka, Skopje | +18% |
| NLB Banka, Banja Luka | +26% |
| NLB Banka, Sarajevo | +12% |
| NLB Banka, Prishtina | +11% |
An impressive growth of 1.8 p.p. market share YtD, following NLB Komercijalna Banka, Beograd (0.6 p.p.), NLB Banka, Skopje (0.8 p.p.), NLB Banka, Banja Luka marked a remarkable boost of 1.3 p.p., followed by NLB Komercijalna Banka, Beograd (0.6 p.p.), NLB Banka, Podgorica (0.3 p.p.) and NLB Banka, Skopje (0.3 p.p.).
Green Loans through partners – Eco mortgage loans through business partners, Eco home appliance loans, electric and hybrid vehicles, and so forth. Turbulences in the banking sector at the retained customer confidence as the total segment deposits from individuals increased by 5% YoY.
The banking members maintained a positive trend in approving new financing with 6% YoY growth, with the highest growth levels achieved in NLB Komercijalna Banka, Beograd, NLB Banka, Sarajevo and NLB Banka, Prishtina with low-double or high-single digit growth particularly in solar power plants and energy efficiency.
The SEE banks attracted corporate deposits by boosting corporate balances of the segment by 17% YoY. The rising interest rates on deposits ranged between 3.03% (NLB Banka, Sarajevo) and 4.75% (NLB Banka, Podgorica).
Despite the loan squeeze due to increasing interest rates, the banking members realised robust growth, significantly outperforming the local markets, especially in consumer loans. The highest increase in loans to individuals was achieved by NLB Banka, Prishtina, and both Bosnian banks with an increase in the loan portfolio.
Komercijalna Banka, Beograd
In 2023, the bank achieved remarkable profitability with growth of its net profit by 100%. The bank managed to increase lending activities in all segments, improving the quality of the loan portfolio by embedding it as a leading banking institution in the local market. Despite a considerable drop in housing loan demand in 2023, the bank maintained profit growth. NLB Komercijalna Banka, Beograd started the complete transformation of the business model by introducing an agile, simple, and fast working model, digitalising products. In 2023, the bank was awarded a digital award for the first time for "Welcome to the Bank of Real Opportunities" for two socially responsible campaigns – "NLB Organic" and "NLB Frame."
Despite operating in a challenging environment, the retail segment recorded 5% YoY growth in gross loans over the average market growth, driven mainly by increased volume of loans to 12%. Significant double-digit growth in consumer loans was marked (10% YoY) by increasing the market share to 10.4%. Despite a decline in demand in the housing segment, growth in the retail segment was noted by 40 bps to 12.7%. The deposit base increased by 5% YoY. The interest margin in the retail segment was still high, but under intense pressure from competition.
The bank built a strong value proposition for all products and services in the cross and upselling program, which also brought added value to customers. The bank participated in green project financing for the increase of renewable energy in Serbia. The bank also approved several project financings for important real estate developments and sovereign funding for road infrastructure development.
| Komercijalna Banka, Beograd (i) in EUR thousands | 2023 | 2022 | Change YoY | |
|---|---|---|---|---|
| Key performance indicators | Net interest income | 211,296 | 124,269 | 70% |
| Net non-interest income | 49,686 | 58,805 | -16% | |
| Result before tax | 149,281 | 69,136 | 116% | |
| Result after tax | 132,313 | 66,014 | 100% | |
| Financial position statement indicators | Total assets | 5,019,429 | 4,670,405 | 7% |
| Net loans to customers | 2,811,599 | 2,589,222 | 9% | |
| Equity | 827,575 | 737,972 | 12% | |
| Key financial indicators | Total capital ratio | 27.1% | 24.6% | 2.5 p.p. |
| Net interest margin | 4.7% | 3.0% | 1.7 p.p. | |
| ROE a.t. | 16.9% | 9.6% | 7.3 p.p. | |
| ROA a.t. | 2.8% | 1.5% | 1.3 p.p. | |
| NPL/Total loans | 0.6% | 1.0% | -0.4 p.p. | |
| Market share by total assets | 9.9% | 10.0% | -0.1 p.p. | |
| LTD | 70.2% | 70.1% | 0.1 p.p. |
Skopje The bank is a leading banking institution in the local market and is identified as a systemically important bank. In 2023, its success was once again confirmed and recognised by recent developments in payment systems of the country, and demonstrated humanity and solidarity. The bank continues to support the country’s population and economy. The focus remains on digitalisation, improving customer experience, and expanding the portfolio of products and services with a particular focus on "green" products, as well as socially responsible projects for caring for their employees and the community.
| Indicator | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Net interest income | 65,406 | 53,932 | 21% |
| Net non-interest income | 21,198 | 21,948 | -3% |
| Operating income | 49,427 | 41,668 | 19% |
| Result after tax | 44,517 | 37,874 | 18% |
| Indicator | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Total assets | 1,902,260 | 1,847,521 | 3% |
| Net loans to customers | 1,216,188 | 1,170,692 | 4% |
| Gross loans to customers | 279,987 | 265,844 | 5% |
| Indicator | 2023 | 2022 | Change |
|---|---|---|---|
| Total capital ratio | 18.9% | 18.2% | 0.7 p.p. |
| Net interest margin | 3.7% | 3.1% | 0.5 p.p. |
| ROE a.t. | 16.5% | 15.0% | 1.5 p.p. |
| ROA a.t. | 2.4% | 2.1% | 0.3 p.p. |
| CIR | 42.3% | 3.6% | -0.5 p.p. |
| Market share by total assets | 15.6% | 16.3% | -0.7 p.p. |
| LTD | 81.1% | 80.1% | 1.0 p.p. |
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements.
Increased housing (12%) and consumer loans (11%), surpassing the 2023 market growth. The highest amounts of disbursed loans so far in the retail segment led to an increase in the market share. The segment was still high, but under intense pressure from competition. The key drivers of income growth were the portfolio increase, foreign payment operations, account management, and business development. 12.4% in corporate gross loans. Considering the strategic orientation, NLB Banka, Skopje maintained its interest in credit support for investments in renewable sources and projects to increase the portfolio in the segment of long-term financing of highly creditworthy clients, securing a stable portfolio and revenue generation. The bank had a total outstanding balance of loans approved for investments in renewable sources and energy-efficient investments. NLB Banka Skopje also supported many export-oriented companies by offering them services and adapting to macroeconomic developments, corporate interest rates were aligned with market conditions throughout the year. EUR 45 million result a.t. 7% contribution to NLB Group’s result a.t.
In 2023, the bank remained the second most important bank in the Republic of Srpska market, reaffirming its status as a leading bank in retail with an increased market share of its position in the corporate and retail segments and a solid deposit base. As evidence of a highly successful year, the bank also received several "Golden BAM" awards for the highest ROE, the market of Bosnia and Herzegovina.
| Indicator | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Result before tax | 26,678 | 20,962 | 27% |
| Result after tax | 24,269 | 19,281 | 26% |
| Total costs | -19,433 | -17,293 | -12% |
| Impairments and provisions | -763 | -280 | -173% |
| Indicator | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Gross loans to customers | 575,960 | 540,533 | 7% |
| Deposits from customers | 840,115 | 796,668 | 5% |
| Equity | 107,270 | 96,237 | 11% |
| Indicator | 2023 | 2022 | Change |
|---|---|---|---|
| Total capital ratio | 15.9% | 16.0% | -0.1 p.p. |
| CIR | 41.5% | 44.9% | -3.4 p.p. |
|---|---|---|---|
| NPL volume | 5,543 | 8,272 | -33% |
| NPL ratio (internal def.: NPL/Total loans) | 0.7% | 1.1% | -0.4 p.p. |
| Market share by total assets | 20.4% | 20.1% | 0.3 p.p. |
| LTD | 66.3% | 65.7% | 0 |
Retail banking recorded excellent double-digit YoY growth in gross loans (13%), while deposits grew by 6% YoY. Consumer loans increased by 19% and housing loans experienced a YoY increase by 7%, while the market share in retail deposits was 25.7%. The key drivers of income growth were interest income and income from accounts and payments processing. The focus remains on further enhancing customer services, especially in digitalisation and bancassurance services.
Corporate banking recorded YoY growth in gross loans (2%) by supporting local companies in the region, which supported the bank’s organic growth. The bank achieved a EUR 24 million result a.t., contributing 4% to NLB Group’s result a.t. It is the 2nd largest bank in the country with a 20.4% market share by total assets.
In 2023, the bank showed solid performance and remarkable loan growth of 10% by boosting the bank’s market share. The predominant strength of the bank was in consumer lending, with a share of net non-interest income (31% of net fee and commission income in total net operating income). The bank achieved an impressive 31% YoY growth in net interest income, driven by various trends. In 2023, the bank launched new digital products and actively contributed to the country's green financing initiatives. As a result, it received several awards in the local market, including the socially responsible campaign, "The Healing Horse" and "Go Green Star"; as well as the Visa Awards for "Google Pay Launch" and for First-to-Market with "Tap-to-Phone".
| Thousands | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Net interest income | 25,490 | 19,524 | 31% |
| Net non-interest income | 11,203 | 12,152 | -8% |
| Total costs | -19,877 | -18,304 | -9% |
| Impairments | 11,436 | 12% |
| Total assets | 917,233 | 838,117 | 9% |
|---|---|---|---|
| Net loans to customers | 575,560 | 521,326 | 10% |
| Gross loans to customers | 597,715 | 542,001 | 10% |
| Deposits from customers | |||
| Capital ratio | 17.8% | 16.5% | 1.3 p.p. |
| Net interest margin | 3.0% | 2.6% | 0.4 p.p. |
| ROE a.t. | 13.6% | 12.5% | 1.1 p.p. |
| ROA a.t. | 1.5% | 1.5% | 0.0 p.p. |
| CIR | 54.2% | 57.8% | -3.6 p.p. |
| NPL volume | 15,732 | 16,986 | -7% |
| LTD | 76.8% | 77.4% | -0.6 p.p. |
Retail banking recorded YoY growth in loans. Housing loans experienced a YoY increase by 7%, while the consumer loans portfolio grew by 12% YoY, attributed to heightened demand, various campaigns, and increased employment.
The corporate banking segment achieved YoY growth in gross loans, reaching 10%. The focus was on increasing the client loan portfolio and the guarantees portfolio. A strong focus is placed on green loans and the implementation of ESG standards as well. Corporate deposits reached YoY growth of 21%, accompanied by a shift in strategy.
Prishtina In 2023, the bank kept its leading position in profitability by increasing its net profit by 11%. It ranked the second biggest bank in Kosovo by increasing its total assets by 13% YoY to retail and corporate clients, and being a market leader in innovations in the local banking sector. Net interest income grew by 18% YoY, mainly due to boosting lending activities and optimizing services.
"Most Active Local Bank in Using TFP Line" award for several consecutive years.
| Table 27: Key performance indicators of NLB Banka, Prishtina (i) in EUR | |
|---|---|
| Net interest income | 39,844 |
| Net non-interest income | 8,017 |
| Total costs | -15,995 |
| Impairments and provisions | 776 |
| Result before tax | 39,963 |
| Result after tax | 35,968 |
| Loans to customers | 831,333 |
| Gross loans to customers | 866,730 |
| Deposits from customers | 1,008,261 |
| Equity | 149,669 |
| ROA a.t. | 27.3% | -1.9 p.p. |
|---|---|---|
| CIR | 3.2% | -0.1 p.p. |
| NPL volume | 16,234 | 3% |
| NPL ratio (internal def.: NPL/Total loans) | 1.6% | -0.1 p.p. |
| Market share by total assets | 16.9% |
In 2023, the bank achieved YoY growth in gross loans (18%) and deposits (8%). The growth in retail was predominantly driven by an inflation-driven increase in real estate prices. The growth in housing loans reached 16%, and consumer loans showed a substantial 24% YoY increase.
Podgorica In 2023, the bank maintained the second position within 11 banks in the market and is identified as a systemically important bank. The predominant strength of the bank is seen.
The Bank received the recognition "The Best Bank in Montenegro" for the second year in a row, awarded by the world’s most influential financial magazine, Euromoney. It also presented itself as a responsible bank in Montenegro.
| Table 28: Key performance indicators of NLB Banka, Podgorica (i) in EUR thousands | |||
|---|---|---|---|
| Key performance indicators | 2023 | 2022 | Change YoY |
| Total costs | -20,418 | -20,252 | -1% |
| Impairments and provisions | 3,238 | 1,165 | 178% |
| Result before tax | 32,110 | 18,240 | 76% |
| Result after tax | 26,658 | 16,613 | 60% |
| Indicators | 2023 | 2022 | Change YoY |
|---|---|---|---|
| Loans to customers | 603,349 | 552,470 | 9% |
| Deposits from customers | 798,018 | 692,872 | 15% |
| Equity | 120,390 | 106,937 | 13% |
| Indicator | 2023 | 2022 | Change |
|---|---|---|---|
| Total capital ratio | 19.2% | 18.4% | 0.8 p.p. |
| Net interest margin | 41.4% | 54.3% | -12.8 p.p. |
| NPL volume | 24,140 | 32,610 | -26% |
| NPL ratio (internal def.: NPL/Total loans) | 3.2% | 4.6% | -1.4 p.p. |
| Market share by total assets | 14.4% | 13.3% | 1.1 p.p. |
| LTD | 73.2% | 76.8% | -3.6 p.p. |
Retail banking recorded YoY growth in gross loans (10%) and deposits (8%). Consumer loans present 52% of the retail portfolio, while housing loans occupied 4% YoY and housing loans by 7% YoY. Consumer loan growth was affected by timely organised and well-executed consumer loan campaigns following increased salaries within state institutions, introducing additional services for customers, especially in digitalisation.
The corporate banking segment recorded YoY growth in gross loans (3%) and deposits (26%). New production of EUR 81.5 million was recorded in all segments — large corporate, state, and SME — by improving the existing portfolio quality. The Group financed several strategic projects, including an electric transmission infrastructure, and a high-end business centre in Montenegro. The Bank and EBRD signed a contract worth EUR 2 million to lend to the population for energy efficiency projects.
Beograd The company is the IT hub, supporting the Group members and spearheading digital transformation projects. The company was built on the resource pool of the Group Competenc (2022), and additional external staff onboarding. NLB DigIT’s primary focus is to deliver services with a high level of quality to Group entities in domains where IT resources and expertise IT security setup for all the banks, IT delivery, and others.
Leasing and Asset Management operations expansion in SEE The Group is consolidating its strategically important position in its activities. Leasing is one of the strategic activities of the NLB Group. It complements the Bank’s lending services and enables retail and corporate clients to choose the option that best adds value.
NLB Lease&Go, Ljubljana in the spring of 2020, leasing activities gained momentum. New leasing companies were established within the Group in 2022 in North Macedonia and Serbia. Lease&Go, Skopje ended the year 2023 with EUR 69.4 million and EUR 9.3 million of net loans to customers, respectively.
In November 2023, the Bank entered into a sale and purchase agreement for the parent company of Summit Leasing Slovenija d.o.o., and its subsidiaries, from funds managed by affiliates of Apollo Global Management Inc. and the EBRD. Meanwhile, the Group and its partners are writing a new regional story.
The Non-Core Members segment includes the operations of non-core Group members. The main objective in the non-core segment remains a rigorous wind-down of all non-core has been pursued with a variety of measures, including the sales of portfolios (either packages that include portfolios in a single market or entity, as well as packages combining portfolios individual assets, the collection or restructuring of individual assets, and active management of real estate assets.
| 1.3 - Net non-interest income | -1.7 | 4.4 | -6.1 | |
|---|---|---|---|---|
| - Total net operating income | -0.1 | 4.7 | -4.8 | |
| - Total costs | -13.7 | -12.6 | -1.1 | |
| - Result before impairments and provisions | -13.9 | -7.9 | -6.0 | |
| -75% | ||||
| Change YoY | Segment assets | 47.1 | 61.5 | -14.5 |
| -24% | ||||
| Net loans to customers | 10.9 | 13.8 | -2.9 | |
| -21% | ||||
| Gross loans to customers | 28.6 | 35.4 | -6.9 | |
| -19% | ||||
| Investment property and property & equipment receiv | performing loans (gross) | 27.4 | 32.3 | |
| -4.8 | -15% |
The wind-down has remained the main objective of the non-core segment in all the non-core portfolios. In line with the divestment strategy, several assets decreased by EUR 14.5 million YoY. Divestment of non-core Group members A liquidation process is ongoing in all non-core leasing and trade finance subsidiaries and some real estate and well-established collection procedures. New business has been suspended for all non-core Group members who are in the process of being wound down. The decrease of the cumulative collection measures. Active management of real estate assets The divestment process of the remaining NPL exposures at the Bank or the non-core subsidiaries’ level is facilitated through a sp expertise and services are offered to the Group members, assisting them in implementing the most efficient divestment manner of the remaining non-performing portfolio or the repossess real estate management, respectively, the collateral value of NPL claims by either temporarily repossessing real estate or ensuring a value-preserving divestment process of the real estate o EUR 290.3 million were executed or supported and directly or indirectly contributed to a EUR 656.4 million NPL reduction, of which EUR 9.9 million in 2023 alone. In order to achieve e per NLB Group Real Estate strategy, as of 2024, the NLB Real Estate Management companies will be part of the non-financial core Group members. EUR 6.9 million reduction of gross lo executed or supported by the real-estate team in 2023.
The self-funded model, strong liquidity, and a solid capital position continued in 2023, demonstrating the Group’s financial resilience. Efficient management of risks and capital is comprehensively integrated into the Group’s decision-making, steering, and mitigation processes, which aims to support its business operations proactively. The governance risks into its business strategies, risk management framework, and internal governance arrangements. The Group has a well-diversified business model. Under its strategic orientation, core markets, providing innovative, but simple customer-oriented solutions, and actively contributing to a sustainable, more balanced, and inclusive economic and social system.
Risk Management in the Group manages, assesses, and monitors risks within the Bank as the main entity in Slovenia and the competence centre for six banking subsidiaries.
| Credit risk | Concentration risk | Credit spread risk | Interest rate risk in banking book | Operational risk | Market risk | Business and Strategic risk |
|---|---|---|---|---|---|---|
Based on the Group’s business strategy, credit risk is the main focus, along with operational risk. Credit risk management focuses on moderate risk-taking, striving to assure a diversified credit portfolio, adequate credit portfolio quality, and the sustainable cost of risk. In relation to the other aforementioned risks, market and other non-financial risks are less important from a materiality perspective. The Group integrates and manages ESG risks within the existing management framework. These risks are estimated as low, except for transition risk in the area of credit, which is assessed as low to medium. Liquidity risk tolerance is low. The Group must manage the sources of financing.
| KRIs | 31 Dec 2023 |
|---|---|
| Total capital ratio | 20.3% |
| CET1 ratio | 16.4% |
| LCR | 245.7% |
| NSFR | 187.3% |
| Cost of risk | -4.2% |
Corporate and retail loan origination across all markets in 2022 due to inflationary pressures, higher interest rates and low GDP growth. The impacts of the floods in Slovenia were estimated.
Besides, the Group monitored the macroeconomic and geopolitical circumstances closely, remaining very prudent in identifying any increase in credit risk at a very early stage, along with the successful collection of previously written-off receivables, revised risk parameters, and stable portfolio development in the SEE region.
The Group stayed well capitalised and well above regulatory requirements, indicating its low tolerance for liquidity risk. Significant attention was put into the structure and at the same time considering the potential adverse negative market movements.
Investment activity continued with a balanced approach to finding attractive market opportunities while pursuing the interest rate environment and corresponding increased market demand for fixed interest rate products led to moderate interest rate risk exposure, which stayed well within the risk appetite.
Stress Test exercise performed in H1 2023. On 30 July, the results of stress tests carried out for important banks by the ECB to assess the resilience of the financial institutions were disclosed.
The Group’s results of adverse depletion were lower than the peer group and average SSM sample banks results. Moreover, the Group’s up stress test showed that even in a very unfavourable market condition as defined by the EBA and ECB, the Group holds sufficient resilience in terms of capitalisation.
The qualitative outcome of Pillar 2 Guidance, which remained at a relatively low level of 100 bps. Besides, the Group is also included in two ECB Stress test exercises – the 2024 EBA Fit-for-55 climate risk scenario 2023 and will be concluded in H1 2024.
Risk Management and control are performed through a clear organisational structure with defined roles and responsibilities. The organisation and decision-making process is transparent and documented, subject to an appropriate upward and downward flow of information.
Competence line Risk Management in NLB is, by encompassing the bank, involved in the Single Supervisory Mechanism (SSM). Supervision is under the jurisdiction of the Joint Supervisory Team (JST) of: ECB regulations are followed by the Group and the local regulators.
Third-party equivalents are approved in Serbia, Bosnia and Herzegovina, and North Macedonia, aligning local regulations with CRR rules. Across the Group, risks are assessed based on management standards, also considering the specifics of the markets in which individual Group members operate.
ECB BoS · formulating and controlling the Group’s Risk Management policies and limits based on centralised reporting at the Group level. The Group greatly emphasises the risk culture and awareness across the entire Group.
The Group’s Risk Management framework is designed in accordance with its business strategy. The main risk principles and limits are set forth by the Group’s Risk Appetite and Risk Strategy.
The Group performs the risk identification process, including ESG-related ones, which are comprehensively assessed, monitored, and mitigated where necessary. Particular focus is placed on including risk analysis in the decision-making process, optimal capital usage and allocation, appropriate risk-adjusted pricing, and overall compliance with internal rules and regulations.
Risk Management focuses on managing and mitigating risks within the Group’s Risk Management framework. Within these frameworks, the Group monitors a range of risk metrics to ensure the Group’s risk profile is in line with its Risk Appetite.
In addition, the incorporation of ICAAP, ILAAP, the Recovery plan, and other internal stress-testing capabilities into the Risk Management system is essential. Moreover, the Group emphasises their integration in decision-making.
The stress-testing programme, which includes internally developed models, stress scenarios, and sensitivity analysis, is regularly revised and complemented. The Group established an internal framework from climate risk, which is constantly further enhanced by considering available ESG-related data. Such a comprehensive stress-testing framework is the subject of a regular internal validation process. The Group supports a robust validation governance process and controls over applied and selected risk approaches and internal models. The business and operating environment is influenced by responsibility, governance, changing customer behaviour, emerging new technologies, and competitors actively contributing to a more sustainable, balanced, and inclusive economic and social landscape.
Management is continuously adapting to detect and manage new potential emerging risks.
| Business strategy | ICAAP & ILAAP inputs |
|---|---|
| Recovery plan | Assessment of liquidity and capital (significant deterioration) |
| ILAAP | Economic and normative assessment of liquidity |
| Stress tests | |
| Liquidity contingency plan (LCP) |
A prudent capital-level position and achieved interim MREL targets. One of the key aims of Risk Management is to preserve a prudent level of the Group’s capital position in accordance with the Risk Appetite. It also incorporates normative and economic perspectives as part of the established ICAAP process. As at 31 December 2023, the Group had a very solid capital position, the highest quality, stood at 16.4% (1.3 p.p. YoY decrease). Capital is higher mainly due to the partial inclusion of 2023 profit (EUR 327.4 million). Temporary treatment of FVOCI for sovereign securities compensated with EUR 84.5 million of revaluation adjustments. In addition, a deduction item related to deferred taxes decreased the capital by EUR 47.0 million. An increase of RWA in NLB Group is due to lending activity in all NLB Group banks. RWA growth was partially mitigated by CRR-eligible real estate collaterals. A slight increase in RWAs for market risks and CVA is mainly the result of higher net interests, resulting in a higher three-year average of relevant income. As at 31 December 2023, the Group meets all fully loaded regulatory requirements. Moreover, enhanced own funds requirements applicable in 2023 to 2.12% applicable from 1 January 2024, while Pillar 2 Guidance remains at a low level of 1%. The MREL requirement forms part of the Group’s risk appetite, whereby its information on MREL is available in the chapter Funding Strategy, Capital, and MREL Compliance.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|
Maintaining a solid level and structure of liquidity represents the next very important risk target. The liquidity position remained stable and strong at the 25.4 p.p. YoY, remaining well above the risk appetite limit. The level of the unencumbered eligible liquid reserves remained at a high level, representing 39.6% of total assets. The Group securities, and money market placements. Even in the event of the combined adverse stress scenario, the Group would survive at least three months under such stress conditions. The core funding base is stable and constantly growing. LTD increased to 66.2% from 65.3% at the end of 2022, though it remains at a very comfortable level.
| LCR | NLB Group | 31 Mar 2023 | 30 Apr 2023 | 31 May 2023 | 30 Jun 2023 | 31 Jul 2023 | 31 Aug 2023 | 30 Sep 2023 | 31 Oct 2023 | 30 Nov 2023 | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
Maintaining adequate credit portfolio quality is the most important goal, focusing on cautious risk-taking and the quality of new loans, leading to a diversified approach in the credit risk assessment segment in line with best banking practices to enhance the existing risk management tools further.
| Retail housing | 4,105 |
|---|---|
| Retail consumer | 3,131 |
| State (iii) | 5,928 |
| Institutions | 451 |
| Total | EUR 20.2 billion |
A B C D E 62% 33% 3% 1% 1% 63% 32% 3% 1% 1% 63% NPLs 33% 3% 1% 1% 31 Dec 2021
CBs and demand deposits at banks, which are also shown in the rating distribution. (ii) Ratings A, B, and C are performing exposures. Rating A: investment grade clients with high financial stability; Rating C: performing clients with increased level of risk who may encounter issues with settlement of liabilities in the future.
Clients in delay >90 days and other clients considered "unlikely to pay" with delays below 90 days. The numbers may add up to less than 100% due to rounding. (iii) State includes exposure.
The Group is focused on the early detection of clients with potential financial difficulties and their proactive treatment. The Group actively supports SEE markets by financing existing and SME, and selected corporate business activities within the region and EU. In the Slovenian market, the focus is on providing appropriate solutions for retail, medium-sized companies, and cooperation with selected corporate clients (through different types of lending or investment instruments).
Financing also includes financing of real estate activities (projects), which represent a smaller part of the portfolio. Projects are carefully monitored throughout each phase of construction.
The LTV is, on average, lower than 60%; a sufficient reserve and repayment to the Bank is not threatened. For most approved loans, an amortization repayment structure was backed.
In the development phase, the Bank requires a minimum of 25% of equity and a pre-lease/pre-sale of 30% for offices, 60% for shopping malls and 20% for residential real estate with proven track records.
In the CRE portfolio, occupancy rates and rent deterioration have not been observed. Lending growth was observed in the corporate, as well as in the retail segments in interest rates; at the same time, the new loan production slowed down compared to the previous year.
In the corporate segment, the Bank seized opportunities to finance some of the region.
The credit portfolio (gross loans) consists of 35.7% retail clients, 14.2% large corporate clients, and 18.6% SMEs and micro companies, while the remainder of the portfolio consists of other clients.
The share of the retail portfolio in the whole credit portfolio is quite substantial, with mortgage loans as the still prevailing segment.
| Sector | Retail sector in EUR millions | Corporate sector by industry | NLB Group | % ∆ 2023 |
|---|---|---|---|---|
| Accommodation and food service activities | 198.8 | 3.0% | -17.9 | |
| Act. of extraterritorial org. and bodies | 0.0 | |||
| Agriculture, forestry and fishing | 344.7 | 5.2% | 18.4 | |
| Arts, entertainment and recreation | 20.0 | 0.3% | -3.6 | |
| Construction industry | 556.9 | 8.4% | -12.8 | |
| Education | 15.0 | 0.2% | 1.1 | |
| Electricity, gas, steam and air conditioning | 543.3 | |||
| Information and communication | 291.6 | 4.4% | -23.3 | |
| Manufacturing | 1,524.9 | 23.0% | 66.0 | |
| Mining and quarrying | 46.1 | 0.7% | -8.1 | |
| Professional, scientific and techn. act. | 234.9 | 3.5% | 47.7 | |
| Public admin. | 13.9 | 0.2% | -2.8 | |
| Transport and storage | 619.0 | 9.3% | -10.5 | |
| Water supply | 57.1 | 0.9% | 5.8 | |
| Wholesale and retail trade | 1,290.2 | 19.5% | 12.3 | |
| Other | 2.8 | 0.0% | 1.5 | |
| Total Corporate sector | 6,629.3 | 100.0% | 83.7 |
Approximately 53% of the NLB Group corporate and retail loan portfolio is linked to a fixed interest rate, which dominates the corporate segment. In the retail segment, close to 70% of the loan portfolio is linked to a fixed interest rate, which results from considerable growth predominately of housing loans at the client’s request.
| Stage 1 | 95% |
|---|---|
| Stage 2 | 3% |
| Stage 3 | 2% |
| FVTPL | 0% |
| Credit portfolio | Share of Total | YTD change | Provision Coverage | Provision Volume | Provisions & FV changes | Coverage with provisions and FV changes | |
|---|---|---|---|---|---|---|---|
| Total NLB Group | 19,239.2 | 95.0% | 1,781.6 | 704.1 | 3.5% | 85.9 | 300.5 |
| o/w Retail | 6,854.7 | 94.7% | 431.7 | 249.6 | 3.4% | 57.0 | 131.0 |
| o/w State | 5,928.1 | 100.0% | 1,182.5 | - | - | - | 0.0 |
| Corporate | Retail | |
|---|---|---|
| Stage 1 | 5,920 | 6,423 |
| Stage 2 | 426 | 193 |
| Stage 3 | 200 | 128 |
| 31 Dec 2021 | 4,526 | 5,371 |
| 31 Dec 2022 | 412 | 120 |
| 31 Dec 2023 | 242 | 130 |
| YoY Change | +1% | +7% |
| Remaining portfolio as Stage 2 | 3.5% | |
| Stage 3, and FVTPL | 1.5% |
In 2023, NPL formation amounted to EUR 118 million or 0.6% of the total loan portfolio. Nevertheless, the total amount of NPL decreased during 2023.
| Year | Formation / gross loans (stock) |
|---|---|
| 2022 | 0.9% |
| 2023 | 0.6% |
Corporate: 70, SME: 51, Retail: 76, 43, 80, 58, 143, 127, 118
In 2023, the Bank released impairments and provisions for a credit risk of EUR 118 million, affected by high inflation and relatively low GDP growth, which could have a negative impact on the level of the cost of risk in the following periods, but their impact should not be substantial.
| (in EUR millions) | Changes in models / risk parameters | Portfolio development | Repayments of written-off receivables | Net impairments and provisions for credit risk |
|---|---|---|---|---|
| 1-12 2023 | release | establishment |
Definition: Precisely set targets and various proactive workout approaches facilitated the management of the non-performing portfolio. The Group’s approach to NPL management puts a strong emphasis on the foreclosure of collateral, the sale of claims, and pledged assets.
In 2023, the multi-year declining trend of the non-performing credit portfolio stock continued, primarily due to repayments. The Group decreased to EUR 300.5 million at the end of 2023 compared to EUR 328.3 million at the end of 2022. The combined result of contraction in the non-performing credit portfolio stock led to a decrease in the internationally more comparable NPE ratio, based on the EBA methodology, which stood at 1.1%. The Group’s indicator gross NPL ratio, defined by the EBA, equals 2.1%.
| Date | Coverage ratio | NLP ratio | NPLs |
|---|---|---|---|
| Dec 2021 | 89.2% | 3.8% | 375 |
| 31 Dec 2022 | 81.8% | 3.5% | 475 |
| 31 Dec 2023 | 86.1% | 2.4% | 367 |
From legacy portfolios, the Group has developed an extensive knowledge base both in the prevention of financial difficulties for clients to restructure viable clients in case of need, and to ensure that this knowledge base is available throughout the Group. Risk units, as well as restructuring and workout teams, are properly staffed and have the capacity to deal, if needed, with considerably increased non-performing loans (NPLs).
NPL coverage ratio 1 (coverage of gross NPLs with impairments for all loans), which remains high at 110.0%. Furthermore, the Group’s NPL coverage ratio 2 (coverage of gross NPLs with impairments) is 42.6% for Q3 2023. As such, it enables a further reduction in NPLs without significantly influencing the cost of risk in the coming years. The Group strives to ensure the best possible conditions for its clients.
Real estate is the most frequent form of loan collateral for corporate and retail clients. In corporate loans, government and corporate guarantees are also common types of collateral. In retail loans, the most common collateral includes personal guarantees.
Regarding market risks in the trading book, the Group pursues a low-risk appetite for market risk in the trading book. The exposure to trading (according to the CRR) is limited. The Group carries its main business activities in euros, and the subsidiary banks, in addition to their domestic currencies, also operate in euros, the Group’s reporting currency.
Structural FX positions on a consolidated level, assets and liabilities held in foreign operations are converted into euro currency at the closing FX rate on the balance sheet date. FX differences, therefore, affect shareholder’s equity and CET1 capital.
The exposure to interest rate risk is moderate and derives mainly from the Economic Value of Equity (EVE) indicator while simultaneously monitoring the effects on Earnings At Risk (EAR). Bonds and loans with a fixed interest rate contribute the most to the interest rate risk exposure, which is managed with core deposits, the most important and material element of interest rate risk management. To a lesser extent, the Group also uses plain vanilla derivatives to hedge this risk.
The Group applies different scenarios when assessing the EVE sensitivity. In 2023, the Group upgraded the measuring of interest rate risk according to new EBA Guidelines, which impact the regulatory scenario (parallel up +200 bps) at 4.2% of the Group’s T1 capital.
| Date | EVE Change |
|---|---|
| 31 Dec 2022 | -5.1% |
| 31 Mar 2023 | |
| 30 Jun 2023 | |
| 30 Sep 2023 | |
| 31 Dec 2023 |
In operational risk management, where the Group has established a robust operational risk culture, the main qualitative activities refer to reporting loss events and control activities, processes, and/or organisation are performed on this basis. Besides that, the Group also focuses on proactive mitigation, prevention, and minimisation of potential damage referring to the potentially high severity, low-frequency events and modelling data on loss events. The Bank uses the gamma distribution technique for modelling, which proved to be the most effective for materially important risks that could happen extremely rarely. Consequently, data on realised loss events are used with a confidence interval of 99.9%. Moreover, some add-ons are added for more plausible, but still severe events which would be absorbed through P&L.
In NLB Group, the reported incurred net loss arising from loss events in 2023 was higher than in the previous year. Costs occurred due to systemic issues such as changes in the interpretation of legislation (e.g. introduction of reimbursement of a proportional part of loan costs in case of early repayment processing fee and loan insurance premium in Serbia) and changes of tax treatment of banking business (e.g. application of VAT on card payments services in Bosnia and Herzegovina). Additionally, one-off and unpredictable extreme events were noted. The list of such potential events is updated yearly, based on current risks in the Bank’s environment or past realised events in the banking industry.
Such scenarios were defined. The cyber-attack scenario as an umbrella scenario was further divided into five more detailed scenarios for different types of such attacks. The results show the difficulties operating electronic banking channels, anti-money laundering, cyber-attacks, other external fraud events, and legal risk. For these scenarios, existent controls were additionally assessed.
Furthermore, key risk indicators serve as an early warning system for the broader field of operational risks (such as HR, processes, systems, and external conditions). They are regularly monitored for timely reactions. The Group supports proactive discussion of operational risks on all hierarchical levels. Every employee can report loss events. The biggest/most important operational risks are closely monitored, and the implementation of the mitigation measures is closely monitored. In addition, the Group was also diligently managing other non-financial risks, referring to the Group’s business model or activities.
The Group contributes to sustainable finance by incorporating ESG risks into its business strategies, its risk management framework, and internal governance arrangements, integrating the main sustainability elements into its business model. The NLB Group Sustainability Committee oversees the integration of ESG factors into the NLB Group business model. Thus, sustainable finance is pursued for the lasting benefit of the Group’s clients and society. ESG risks do not represent a new risk category, but rather one of the risk drivers of the existing type of risks. The Group integrates ESG risks into credit, liquidity, market, and operational risk.
The management of ESG risks follows ECB and EBA guidelines, following the tendency of their comprehensive integration into all relevant processes. Nevertheless, the Group made significant progress in obtaining relevant ESG-related data from its clients, being the prerequisite for adequate decision-making and the corresponding actions.
Regarding GHG emissions, several important activities started in 2022. For larger corporate clients, the Group initiated direct Scope 1, 2, and 3 data-gathering processes, whereas for the SME and residential mortgages, the most essential input for GHG calculation is the buildings’ energy performance certificates. In H1 2023, NLB Group disclosed financed GHG emissions arising from analysed and used relevant historical data for physical risk and publicly available climate change pertinent studies to its region.
Nevertheless, the Group assessed them more materially than physical risk. In recent years, the Bank signed Framework Agreements with the EBRD, such as the Contract of Guarantees with the Group established a mechanism for environmental and social screening of current or potential financing applications against the MIGA and EBRD Exclusion List and applicable environmental overall credit approval process and the related credit portfolio management.
Sustainable financing is implemented in accordance with the Group’s Environmental and Social Management System. In the granting process, relevant ESG criteria were also considered in the collateral evaluation process. In the process of the transaction approval, collecting ESG data at the KYC stage was established verification that a client is adhering to the applicable laws, regulations, and standards.
If the transaction is classified with a high E&S risk, a strict deviation management process is in place monitoring is established to assess the impact of each risk and create a strategy for its mitigation. With that, the Group ensures that the risks are adequately addressed and that any changes not face any large concentration towards specific NACE industrial sectors exposed to climate risk, with the role of transitional risk being more prevalent.
Based on the industry segmentation emission-intensive sectors in its corporate clients’ businesses. The Group does not finance companies that extract fossil fuels or operate coal-fired power plants as part of its strategy. Moreover, disclosed its Net-Zero commitment. With this step, the Bank pledged to align its lending and investment portfolio with net-zero emissions by 2050.
In its initial round of NZBA targets, NLB generation and iron and steel and other sectors where the Bank has substantial emissions and/or exposure and available data. These include residential mortgages and commercial real estate.
The Group analyses and monitors its credit portfolio using heat maps. For heat maps, the Group aggregates single risks by using predefined weights to determine a final risk score. Such an approach considers transition risk perspectives.
Concerning physical risk, some adverse events in the region in the past years were observed in the public infrastructure and agriculture. However, they were rein material impacts on the Group’s portfolio quality or liquidity.
The Group carefully considers potential reputation and liability risks that could arise from the sustainable financing of its clients relevant criteria by the clients. Additional key risk indicators have been addressed, serving as an early warning system in the area of ESG risks.
Besides, physical risks, as part of ESG risks management (BCM). As such, BCM is carried out to protect lives, goods, and reputation. Business continuity plans included relevant ESG risks. They are prepared to be used in the event of their consequences.
An internal ESG stress-testing concept to identify the most relevant financial vulnerabilities stemming from transitional and physical climate risks was established, which results of the climate stress tests showed no material impacts on the Group’s capital and liquidity positions.
As a systemically important institution, the Group was included in the ECB Stress Test in December 2023 and will be concluded in March 2024. By performing this exercise, the ECB assessed how banks were prepared to deal with financial and economic shocks stemming from rating reflects a low risk of experiencing material financial impacts from ESG factors.
The Group remains committed to providing its clients with sustainable and efficient services that are supported by highly reliable and secure technology platforms. The Bank is also focused on enhancing its IT systems. IT Security, IT Infrastructure, and IT Governance have made significant progress in the consolidation process at the Group level. Additionally, the Bank rolled out further group-wide initiatives and successfully launched a new digital banking platform in Slovenia. The Bank also successfully carried out a technical merger with N Banka. The Bank has prioritised and invested in extra resources to address the increase in general cyber security risks.
At the end of 2020, an upgraded IT Strategy incorporating the Group dimension was adopted. Since the existing one is coming to an end, the current IT Strategy covers the following:
Ensuring reliability through a set of relevant indicators that are linked to the Balanced Scorecard (BSC) system. The indicators reflect high performance of IT operations and successful risk management in this area. Despite interruptions, the Bank continues to prioritise stability. In 2023, the number of days without system/service interruptions was 79% (2022: 81.1%). Harmonised Service Level Agreements were fulfilled to a very high degree. The Group members recorded high IT operational performance (between 99.87% and 99.99%).
Transformation with expanding group-wide capabilities is ongoing. The Group Competence Centre in Belgrade, Serbia, which was transferred from the Bank to a separate IT service company called NLB Digital, has made significant achievements in the key strategic directions regarding solution delivery. They developed a new call centre solution in Slovenia, executed new deployments in the region, and made progress in reducing reliance on the mainframe by migrating the next set of applications from the mainframe to distributed systems. After acquiring N Banka, the Bank onboarded the technical merger, which was completed in 2023.
IT followed the core banking system strategy, and the consolidation of core banking systems is in progress. Due to the migration, the new target core system has been established.
The focus of enterprise and application architecture is on two key areas. The first focuses on the Group roadmaps. New Group solutions have been chosen for a digital web portal and Customer Relationship Management. The second area involves establishing a standardised enterprise architecture, application portfolio management, mitigating software obsolescence and IT risks, and providing support in defining transformation paths.
Strengthening the team and management. The Bank continues implementing a comprehensive data management platform across the Group, encompassing an enterprise data warehouse, advanced analytics, risk management, and reporting. The Group continues to address data throughout the entire life cycle by implementing data governance policies and tools.
In the upcoming years, the Bank remains dedicated to its strategy, especially in digital, data, the cloud, and customer relationship management. The aim is to consolidate the Group’s infrastructure, simplify core systems, and elevate the client experience. The Group is working towards digitalisation, which involves utilising the available and ever-changing information technology tools to enhance its efficiency and provide clients with more innovative solutions. The objective is to encourage digital banking adoption among active customers.
Strengthening team and implementing new solutions. The Group focuses on cyber security, assuring the safety of banking services and products for clients. Cyber security in the Group is constantly tested and upgraded by security assessments, independent reviews, and penetration testing, as well as through Operational Risk Committee and Management Board meetings. During 2023, the Group stepped up its cyber security capabilities regarding human resources by hiring specialists for different roles, including 21 FTEs in the CISO corner, working as a second line of defence. Additionally, improvements were made in vulnerability management, with all Group members now utilising a unified approach to global trends and most recently published vulnerabilities, which provides a more proactive approach to the whole vulnerability remediation process in the Group.
Several different new cyber security initiatives were initiated in all banks, leading to EUR 1.9 million CAPEX and EUR 2.0 million OPEX annually spent. More than 1.7 million digital users in the Group at the Group level. The goal is to have a significant increase in digital users throughout all Group members. The most significant achievement of the Group Cyber security team is that almost all bank members in 2023 had individual on-demand requests for different cyber security assessments.
proprietary phishing platform and effectively executed simulated internal employee phishing tests across all Group members.
| Banka, Banja Luka | NLB Banka, Prishtina | NLB Banka, Podgorica |
|---|---|---|
| 61% | 60% | 33% |
| 34% | 67% | 55% |
| 33% | 27% | 29% |
| 32% | 30% | 25% |
| 19% | 24% |
The Group continues with the optimisation of processes and right-sizing its staffing level. Due to the acquisition of N Banka, the number of employees rose to some d
| Country | 31 Dec 2023 | 31 Dec 2022 | Changes YoY |
|---|---|---|---|
| Slovenia | 2,689 | 2,833 | -144 |
| Serbia | 2,480 | 2,614 | -134 |
| N. Macedonia | 962 | 954 | 8 |
| BiH | 990 | 971 | 19 |
| Kosovo | 468 | 467 | 1 |
| Total | 8,228 | -246 |
The Group continues strengthening its Human Resources (HR) practices based on feedback from reputable institutions and benchmarks. The Bank has been recognised as a "Top Employer" by the Dutch Top Employer Institute for the 8th consecutive year, demonstrating a high level of expertise and contribution in the areas of people strategy, leadership, digitalisation, and more. The Bank will continue to ensure an even more stimulating work environment.
Continued Organisational culture Recognising the importance of corporate culture, the Group has proactively embraced a comprehensive approach to its enhancement. Following a thorough assessment of the current organisational culture, targeted activities have been initiated to improve corporate culture. With the input of employees, various improvement initiatives were defined and implemented.
The Bank introduced leadership development programmes to improve psychological safety, promoting corporate values and work efficiency through meetings. Multiple initiatives coupled with existing practices have proven to be an effective way to support the desired development, significantly impacting employee satisfaction. Leaders at all levels play an important role in creating a productive atmosphere.
The Group is actively enhancing the leadership competencies. This year, the Group undertook two major activities: Employees at the B and B-1 levels in the Group received individual development and follow-up coaching sessions on their development. After an in-depth leadership assessment, the Group development plans were aligned with strategy and culture improvement.
Moreover, to ensure the leadership succession pipeline, the Bank has identified talented employees in leadership, professionalism, and youth potential. They received additional opportunities, knowledge, personalised development plans, and essential internal Hackathon initiatives to foster internal capabilities and an innovative and entrepreneurial mindset.
The Talents-on Hackathon in the parent bank focused on developing agile cooperation on the Group level to support the broadening and exchanging of skills throughout the Group.
The Group focuses on developing and actively cultivating its Employer Brand to attract top-tier talent across the region. The Group has implemented various internal initiatives. The Bank cooperates with multiple universities throughout the region, offering scholarships and career opportunities to young talents. Also, it invites internal ambassadors to promote and provide continuous improvements to its processes. As a confirmation of the efforts, the Bank received two Best Employer Brand Awards in the categories of banking and the integration of corporate subsidiaries.
The Bank strategically managed across the Group to plan, respond, and accept some challenges based on the workforce market by attracting, developing, and retaining employees. The most commonly used type of mobility is virtual teams, established in all entities and across borders. In addition, some reassignments and job rotations were carried out. Engagement of employees was significant, with 81.5% of employees participating in the survey.
| Engaged | Not engaged | Actively disengaged |
|---|---|---|
| 50% | 37% | 13% |
The characteristic of a contemporary learning institution. In response to the swiftly evolving business landscape, the Bank has broadened its array of training programmes to encompass emerging topics such as Analytics, Digital Literacy, ESG, Mergers and Acquisitions, among others, reflecting the shifts in our business and surroundings. To that end, in addition to regular off-the-shelf programmes, we also organised many digital literacy programmes covering subjects from Generative AI tools to MS.
The main goal remains to enhance the accessibility and availability of training or programmes by providing high-class training and workshops, whether conducted internally or externally. The majority of training hours in the Group are provided through internal training (45%) and internal e-learning programmes. In 2023, Udemy for Business was utilised across the Group to a substantial number of employees, enabling them access to 7,000+ quality training courses. The objective is to empower employees with opportunities to upskill or reskill anytime, anywhere. This approach aims to equip them with the necessary capabilities to tackle upcoming challenges effectively. A total of 3,200 employees engaged with video content, averaging 1.7 days per employee with a license.
The Group consistently prioritises imparting knowledge about healthy habits and advocates for activities that create an environment conducive to meaningful interpersonal connections and a balanced work-life dynamic. The Bank proudly holds a family-friendly certificate as a testament to these efforts. In cultivating healthy habits, mental well-being, mindfulness, personal energy, and effective communication, an internal sustainable mobility challenge ran from May through November to reduce carbon footprint.
| Fixed part | Variable part |
|---|---|
| Fixed pay is determined when an employee concludes a contract of employment. | It depends on the employee’s working performance. Employees are assessed and awarded: - quarterly or half-yearly, and - annual rewards relate to measurable, achievable, relevant, and time-bound goals. |
In 2023, NLB initiated the transformation process regarding the performance management and reward system for employees on collective agreements. The changes are more related to ensuring a more transparent and long-term incentive scheme by implementing target bonuses and yearly assessments.
Members of the Supervisory Board may receive remuneration compliant with the relevant Remuneration Policy. Members of the Management Board receive remuneration where the salary for each member is awarded and paid in cash if the variable part does not exceed EUR 50,000 and is not higher than one-third of their total remuneration.
If the amount of the variable part exceeds EUR 50,000 and is higher than one-third of their total remuneration, it is awarded and paid in cash and instruments. The variable part awarded for an individual business year shall be deferred for a period of at least five years, starting on the day of payment of the non-deferred part of the variable part.
The Board adopted this policy in its session on 26 October 2023. It was then submitted to the General Assembly of NLB for voting, which was held on 11 December 2023. The Policy was not confirmed and is applicable as of 1 January 2024. The Remuneration Policy will be further improved and presented to the shareholders at the next General Meeting.
The Remuneration policy for the Group presents the basic framework of principles for rewarding all employees. It defines fixed and variable remuneration, the goal-setting system, and performance criteria for the payment of the variable part of remuneration. The Remuneration Policy includes provisions of deferral, malus, retention, and clawback of the variable part of the remuneration for identified employees and pension benefits for all employees.
The Policy on the Provision of Diversity of the Management Body and Senior Management sets the framework for the Bank’s commitments to diversity. It focuses on the representation in the Management Body and senior management on certain aspects where specific professional competencies, skills and experience, continuity of composition of the management body and senior management, international experience, personal integrity, and geographical provenance are considered.
The Bank implements the principles of the Diversity policy through other policies and procedures, namely the Policy on the selection of suitable candidates for members of the Management Board, as well as procedures of the Nomination Committee of the Supervisory Board.
Considering the size of the Bank, the Group aims to ensure diversity in the following areas:
Corporate governance of the Bank is based on legislation of the RoS, particularly (but not exclusively) the provisions of the Companies Act (ZGD-1) and the Banking Act (ZB). Internal Capital Assessment Procedure for Banks and Savings Banks, relevant EBA Guidelines on internal governance, EBA Guidelines on the assessment of the suitability of members of and relevant EU regulations regarding sustainability issues and other applicable RoS and EU regulations. Apart from a binding legal framework, the Bank complies with the Slovenian Corporate Governance Code and leadership principles based on the "comply or explain" principle of companies listed on the Ljubljana Stock Exchange. Deviations from the recommendations of the said Statement of NLB. This statement is prepared in accordance with Article 70 (Paragraph 5) of the Companies Act (ZGD-1). The before-mentioned statement is also published on the Bank’s website.
The Bank’s Corporate Governance includes processes through which Bank objectives are set and pursued (directed and controlled). Lately, it has become an efficient way to change and identify the distribution of rights and responsibilities among different stakeholders in the Bank (Management and Supervisory Board, shareholders, investors, creditors, auditor, regulators, corporate affairs). The most important rules and procedures are: Articles of Association of NLB d.d. NLB operates under a two-tier governance system, defined by the Banking Act (ZBan-3) and the Supervisory Board provides for control and supervision of the Management Board’s work. Shareholders exercise their rights at General Meetings of Shareholders. For more information, see the NLB and NLB Group Governance Policy.
The corporate governance framework of the Bank, the Corporate Governance Policy of NLB (February 2023), is drawn up jointly by the Management and Supervisory Boards publicly disclose commitments to shareholders, clients, creditors, employees, and other stakeholders as a whole and explain how the Bank is managed and supervised, https://www.nlb.si/corporate-governance. The Corporate Governance Policy of NLB should be read together with the NLB Group Governance Policy (December 2023), in which the corporate governance is defined and governed.
In the NLB Group Code of Conduct, the values, mission, and core principles of conduct are defined together with a set of guidelines to ensure ethical business conduct that the Group respects, promotes, and expects to be followed by the whole Group. Operating with integrity and responsibility is key to the Group’s corporate culture, and every other stakeholder of the Group complies with the highest standards of integrity.
Out the first tranche of distributable profit as dividends, totalling EUR 55 million, which is equivalent to EUR 2.75 gross per share. The General Meeting also adopted decisions regarding members of the Supervisory Board, namely Deputy Chairman Andreas Klingen, Shrenik Dhirajlal Davda, Gregor Rok Kastelic, and Mark William Lane Richards, expired, the General Meeting shareholders re-appointed Shrenik Dhirajlal Davda and Mark William Lane Richards. They also appointed two new members, namely Cvetka Selšek, a former CEO and Chairwoman of the bank, and a banker who has held various managerial positions in his 40-year career at Societe Generale. All four were appointed for a four-year term of office, which for the existing members began on 15 August 2023, after the ECB agreed to their appointment to their position.
The Bank’s website. The Bank’s corporate governance is based on a two-tier system in which the Management Board manages the Bank’s daily operations, and the Supervisory Board con shareholders exercise their rights related to the Bank’s operations at General Meetings. The Bank’s General Meeting passes decisions that follow legislation and the Bank’s Articles of Association, amending the Articles of Association, use of distributable profit, granting a discharge from liability to the Management and Supervisory Boards, changes to the Bank’s share capital, appointing remuneration of members of the Supervisory and Management Boards, and authorisation regarding the characteristics of the issue of securities. There were two General Meetings of Shareholders. Shareholders took note of the adopted NLB Group Annual Report 2022. They adopted the Report of the Supervisory Board of NLB on the results of the examination of the NLB Group Annual Report 2022, additional information to the Report on remuneration in the business year 2022 based on SSH’s Baselines, and the Internal Audit Report for 2022, with the Opinion of the Supervisory Board from the previous year and granted a discharge from liability to the Management Board and Supervisory Boards. The shareholders decided to pay General Meeting of Shareholders Supervisory Board.
In accordance with the Articles of Association, the Supervisory Board consists of 10 members, eight of whom represent the interests of shareholders and two of whom represent the interests of employees. Members representing shareholders’ interests are elected and recalled at the Bank’s General Meeting from persons proposed by shareholders or the Supervisory Board of the Bank. All Supervisory Board members must be independent experts. As at 31 December 2023, there was only one change in the composition of the Supervisory Board in 2023: two existing and two new members were elected, as mentioned above. At the end of the year, the composition of the Supervisory Board was as follows:
| Primož Karpe | Chairman | |||||
|---|---|---|---|---|---|---|
| Shrenik Dhirajlal Davda | Deputy Chairman | Term of office: 2019–2023, renewed term 2023–2027 | ||||
| David Eric Simon | Member | Term of office: 2016–2020, renewed term 2020–2024 | ||||
| Mark William Lane Richards | Member | Term of office: 2019–2023, renewed term 2023-2027 | ||||
| Cvetka Selšek | ||||||
| Andre-Marc Prudent-Toccanier | ||||||
| Sergeja Kočar | ||||||
| Tadeja Žbontar Rems |
Out of 10 members, 4 were female (40%). Diversity: As at 31 December 2023, the Supervisory Board had the following members:
Shrenik Dhirajlal Davda, MBA, LLB Deputy Chairman Term of office: 2019–2023, renewed term 2023–2027
Member Term of office: 2023–2027
Member Term of office: 2019–2023, renewed term 2023-2027
| Name | Term of Office | Membership in Committees | Membership in Management Bodies |
|---|---|---|---|
| Cvetka Selšek | 2023–2027 | * Nomination Committee (Member) | |
| * Remuneration Committee (Member) | None | ||
| Verica Trstenjak, Ph.D. | 2020–2024 | - None | Slovenia – Member of the Honorable Tribunal |
| Tadeja Žbontar Rems, M.Sc. | Member | * Operations and IT Committee (Member) | |
| * Remuneration Committee (Member) | None |
The Supervisory Board appoints committees that prepare proposals for resolutions passed by the Supervisory Board, ensure their implementation, and perform other advisory committees.
The selection of an audit firm is carried according to the internal act. A proposal for the criteria for the appointment of include the mandatory disclosure of all possible (non-) audit services. Based on the recommendation of the Audit Committee, the Supervisory Board proposes the appointment of an audit firm to assess and document compliance with independence requirements before accepting or continuing a statutory audit engagement. The Audit Committee annually requires written declaration from the audit partners and senior personnel involved in the audit engagement.
Further information about the work and composition of the Committees of the Supervisory Board is available in the following sections:
| David Eric Simon | Chairman |
|---|---|
| Cvetka Selšek | Deputy Chairwoman (from 18 September 2023) |
| Andreas Klingen | Chairman (until 19 June 2023) |
| André-Marc Prudent-Toccanier | Chairman (from 18 September 2023) |
| Cvetka Selšek | Deputy Chair |
| David Eric Simon | Member |
| Primož Karpe | Chairman |
| Andreas Klingen | Deputy Chairman (until 19 June 2023) |
| Mark William Lane Richards | Deputy Chairman (from 18 September 2023) |
| Shrenik Dhirajlal Davda | Chairman (from 18 September 2023) |
| Mark William Lane Richards | Deputy Chairman |
| Verica Trstenjak | Member |
| Sergeja Kočar | Member |
| Mark William Lane Richards | Deputy Chairman (until 19 June 2023) |
| Primož Karpe | Member |
| Tadeja Žbontar Rems | Member |
| André-Marc Prudent-Toccanier | Member (from 18 September 2023) |
| Gregor Rok Kastelic | Member (until 19 June 2023) |
| Gre Rems | Member |
The Management Board represents the Bank and manages its daily operations, independently and at its discretion, as provided by the applicable laws and the Articles of Association. It has three to seven members (the president and up to six members) appointed and dismissed by the Supervisory Board. The president and members of the Management Board are assigned with the law and Articles of Association.
As at 31 December 2023, the composition of the Management Board was as follows:
| Number of members: | 6 | |
|---|---|---|
| 5 members - year | 2016–2021, renewed term 2021–2026 | |
| Peter Andreas Burkhardt | CRO | Term of office: 2013–2016, 2016–2021, renewed term 2021–2026 |
| Archibald Kremser | CFO | Term of office: 2013–2016, 2016–2021, renewed term 2021–2026 |
In 2023, the composition of the Management Board included:
2022–2027
Direct responsibility:
Membership in management or supervisory bodies of related or unrelated companies:
The Management Board is available in the chapter Corporate Governance Statement of NLB.
The Management Board appoints different committees, commissions, boards, and working bodies to execute relevant tasks within the powers of the Management Board.
| Chairman | CRO |
|---|---|
| Chairman | CFO |
| Chairman | CEO |
| Number of members | 8 |
| Number of members | equal to the number of the appointed members of the Management Board |
The Committee determines credit ratings, makes decisions on the reclassification of clients, and approves competencies. The Committee adopts decisions on investment transactions in commercial banking within the statutory powers in corporate banking in the Bank (all companies, banks, and financial institutions). Meetings are convened once a week. The Committee monitors conditions in the macroeconomic environment. It analyses the balance sheet, changes to and trends in the assets and liabilities of the structure of the Bank’s and the Group’s balance sheet. Committee meetings are generally convened once a month. The Committee is responsible for monitoring, guiding, and supervising operations. As a rule, the Committee meets once every two months. The Committee is responsible for adopting decisions related to the development portfolio to transform the Bank and decisions associated with...
| Chairman | CRO |
|---|---|
| Number of members | 12 |
The Risk Committee monitors and periodically reviews matters related to risk and commercial risk and prepares...
| Chairman | CFO |
|---|---|
| Number of members | 3 |
| Chairman | CMO (responsible for Co) |
|---|---|
| Number of members | 13 |
| Chairman | CRO |
|---|---|
| Number of members | 5 |
The Sales Committee adopts decisions on managing the range of products and services and the relations with the clients. It decides on the approval of loans and other investment proposals, the conditions of which deviate from standard banking products and services and which represent additional risks for the Bank.
Committee for New and Existing Products
Group Real Estate Management Sub Committee
Committee for Business IT Architecture
NLB Group Non-Performing Assets Divestment Committee
Chairman: CRO
Chairman: Director of NLB d.d.
Number of members: 20
The Watch List Committee is a body which monitors the progress of activities for clients on the Watch list. As a rule, committee meetings are convened quarterly.
The NLB Group Members and issues opinions, recommendations, and initiatives. As a rule, committee meetings are convened quarterly. The Committee oversees the integration of the ESG factors to the NLB Group across the company, issues opinions, recommendations, and initiatives, and takes relevant decisions when needed.
The Committee shall discuss, develop and approve sustainability strategies, policies, sustainability-related strategic objectives and shall monitor its development and realisation. As a rule, committee meetings are convened quarterly.
As the parent bank, NLB Group ensures compliance with EU and BoS legislation, the local legislation, and regulatory requirements applicable to respective Group members while also considering internal rules, ECB Guidelines, and the NLB Group Governance Policy through corporate and business governance rules, principles, criteria, and mechanisms which define the roles, authorisations, and responsibilities of relevant parties.
The Bank, the Group Steering Department is the principal partner of the Bank’s Management Board in the corporate and partially also business governance of strategic and non-strategic Group members.
Introduced in recent years: country managers who support and steer the Group members and facilitate best practice-sharing on different levels, and stream coordinators who address the factors affecting the streams and the Group members, the increasing transmission of current information, needs, and other requirements from the Group members.
Consists of corporate rules and governance principles comprised of:
Guidance and oversight:
d.o.o., Ljubljana), two companies were sold (Tara Hotel d.o.o. and Optima Leasing d.o.o. in liquidation), the liquidation process of NLB Leasing d.o.o. Be
In the last year, an in-depth revision and renewal of the existing NLB Group operating model was performed due to recent changes in the Group structure and business governance. As a re
is the main business governance counterpart of the Group members, responsible for harmonisation and standardisation of the Group operations and, therefore, represents the highest level o
entirely or at least primarily dedicated to the Group. The revised NLB Group Governance Policy also provides the formal framework for the operation of other business governance levels (
overarching formal framework and defines the roles of key stakeholders in sustainability management, and establishes clear communication and escalation rules. The policy was adopted in
February 2024. The legal and organisational structure of the banking group, including a description of the internal governance arrangements, the arrangements about close links and the arr
The NLB Group consists of NLB and Group members who represent: · financial core members: banks, leasing companies, and asset management companies; · non-financial core member
companies; · non-core members: companies in wind-down process or companies considered non-strategic for NLB Group. At the end of 2023, the Group comprised 30 members, six fewer
Committed to the culture of responsibility to the customer, implementation of the planned business results, care for the environment, and promotion of a healthy lifestyle. The Bank acts in a business practices, as well as the values of the NLB Group. The confidence it enjoys among the customers, fellow employees, shareholders, and society gives it great responsibility. The Bank benefits, and growth. As such, all employees are included in yearly training and awareness-raising activities in general ethics, anti-corruption, anti-money laundering, information security, principles of expected behaviour regarding ethical conduct and requires adequate conduct from all the employees at any level of the organisation, including its contractors.
Prevention activities to protect the Bank and its stakeholders from the risk to reputation, money laundering, terrorist financing, fraud, corruption, and other forms of financial crime. The Bank conducts assessments regarding new and changed products, fit and proper assessments for key function holders, and members of management bodies, outsourcing, and other material changes affect corruption, conflicts of interest, protecting personal data, AML/CFT, Information Security, Physical Security, and other relevant topics related to everyday work were prepared as a standard as prevention of insider trading and market manipulation, ethics, anti-corruption, mitigation of conflict of interests, personal data protection, information security, and similar topics.
The Group regularly raises awareness through various means, such as monthly compliance newsletters, highlighting essential regulatory changes and providing current information on the compliance risk management system and regularly monitors and implements activities, and also renews relevant internal acts to manage compliance risks also in individual areas, such as instruments and custody, data protection, prevention tax evasion, and obligations arising from the automatic exchange of information on financial accounts and the management of the system.
The Group addresses the challenges of stringent regulation and strict regulatory requirements with a systematic approach to mitigating compliance risks. It is essential to ensure that employees are aware of regulations. The Group is continuously strengthening its compliance function and due diligence of its operations. A culture of compliance is integrated into day-to-day business of the Group that compliance risks are mitigated.
Compliance and Integrity addresses the following areas:
Within the framework of the programme of ensuring business compliance, the Group also deals with the ethics and integrity of the organisation.
| The number of employees who completed training on the Code of Conduct in 2023 | NLB | 2,363 |
|---|---|---|
| NLB Group | 4,179 | |
| The number of suppliers and b | NLB | 350 |
| NLB Group | 751 |
In line with the Market Abuse Regulation (MAR) and other relevant regulations, the Bank has established a system at the level of the Bank and the entire Group to comply with the obligations related to inside information identification and disclosure according to the applicable rules and regulations applicable at any time. Also, the Bank has a system to prevent insider trading, market manipulation, and illegal disclosure of inside information.
The Bank is committed to the prevention of Money Laundering and Financing of Terrorism (AML/CFT), including the EBA, BoS, and other competent authorities’ guidelines and standards. The RoS is a member of the EU and thus subject to the European recommendations throughout the EU. For the Bank, it is paramount to effectively mitigate the risk of money laundering, financing of terrorism, and breaches of financial sanctions. For the Bank, unified policies and standards apply. The same principles also apply to the Bank’s framework on financial sanctions.
The Bank regularly updates and enhances its governance in line with directives, reporting, and constant on-site and off-site control, the headquarters effectively monitor implementation and execution of standards throughout the Group. The Bank regularly performs customer due diligence and performs additional measures, both in the segment of "Know your customer" and ongoing monitoring of transactional activities. In the case of detected deviations, also considering the AML legislation requires, reports the customers and transactions to the competent Financial Intelligence Unit.
In its Acceptance Policy, the Bank has also adopted additional measures to prevent high awareness of the AML/CFT and financial sanctions with regular training of all Bank employees.
The information security area, inter alia, focuses on the Bank’s overall digital resilience by improving cyber threat intelligence situational awareness and testing the cyber security resilience of information systems (pen-tests). Furthermore, the Bank collaborates with outsourcing providers according to EBA guidelines. Special obligatory e-trainings in information security and social engineering were prepared for all employees – with one specially dedicated to prevention measures in this area.
In response to a notable surge in cyber fraud attempts targeting its customers, the Bank has implemented a robust Brand Intelligence/Brand Protection service to combat phishing portals, empowering it to take decisive and independent actions to mitigate threats posed by phishing campaigns targeting its clients. New information security approaches were introduced in each local Chief Information Security Officer (CISO) office in core subsidiaries. The focus was on increasing awareness of the local responsibility for information security management for the organisation's ability to build defence, and local regulatory compliance.
The Bank continues its membership in the only global cyber intelligence-sharing community focused on financial services, and cyber resilience resources to anticipate, mitigate, and respond to cyber threats and NLB Group cyber threat intelligence service was founded. To manage cyber risks, the Group is working on a network of relationships.
In 2023, the Group continued the cyber-attack incident response exercise and participated in the 2023 FS-ISAC CAPS (cyber-attack against payment systems) exercise, simulating systems and processes, locking part of the bank data through forced cooperation of a bank employee and receiving a demand for a payment of ransom.
The Bank runs its operations in line with dedicated Data Privacy Officer, education, and training of employees. A new Slovenian Personal Data Protection Act (ZVOP-2) was adopted in 2022 and is implemented in the Bank’s operations.
The Bank has established standards for preventing and investigating suspected misconduct. This framework enables anyone, both internal and external stakeholders, to unhinderedly report potential suspected misconduct. Various measures are in place to ensure complete and total protection of the informant from any potential retaliation they could endure due to well-intended reporting of a suspicion of harmful conduct. A specialised team centrally handles all reports received, following the detailed internal procedures.
Furthermore, the Bank has implemented effective and appropriate reporting mechanisms safeguarding its brand’s integrity. It has implemented a robust brand protection tool, a testament to its commitment to preserving the trust and confidence that customers place in the Bank.
We are committed to ensuring the security of our customers and employees, and as such, we have strengthened our approaches to managing risks related to cyber security and prevention. The Bank Association (ZBS) initiatives play a pivotal role in educating the public about cyber and payment fraud prevention. We devote significant attention to employee training, informing process improvement.
Internal Audit reviews key risks in the Group’s operations, advises management at all levels, and deepens understanding of the Bank’s operations. It provides independent and impartial assurance of internal controls; thereby strengthening and protecting the value of the Bank. Internal Audit is an independent, objective, and advisory control body responsible for a systematic and professional evaluation of the functionality of internal control systems, and management of the Group operations on an ongoing basis. Internal Audit provides impartial assurance to the Management and Supervisory Board.
In terms of collection and risk reporting, the ICAAP process, cyber security transformation processes, digital banking platform, the Single Resolution Board – SRB, ESG, anti-money laundering, outsourcing, RWA for credit and operational risk, cash management in branches, and others, Internal Audit performs its tasks and responsibilities at its discretion and in compliance with its internal methodology and comprehensive risk analysis for 2023. Internal Audit planned 91 audits, of which 62 were completed and covered various areas of operations in the Bank. Among these, five were joint audits with a local auditor, three were quality reviews in banking subsidiaries, and one new audit was initiated. In addition, Internal Audit was involved in several other reasons. Most of the recommendations given in 2023 were implemented within the agreed-upon deadlines.
Implementation of uniform rules is a priority for Internal Audit, which continuously increases efficiency through education, updating the internal audit charter and manual, advising management, and ensuring high-quality and professional operations of the internal audit function within the Group. Internal Audit regularly monitors compliance with these rules within the Group.
ZTFI-1, Official Gazette of the RoS, No. 77/18, 17/19 – corr., 66/19 in 123/21. In accordance with the provisions of Article 134 (2nd paragraph) of the Mark statements made in the business report, which are in accordance with the attached financial statements as of 31 December 2023, and represent the actual and fair financial standing of the Bank as of December 2023. The Management Board confirms that the business report gives a fair view of developments and operating results of the Bank and the Group and their financial standings, companies included in the consolidation that are exposed as a whole.
Ljubljana, 10 April 2024
Management Board of NLB
Hedvika Usenik
Andrej Lasič
Archibald Kremser
Peter Andreas
Chief Executive Officer
NLB has an authorisation to perform banking services pursuant to Article 5 of the Banking Act (Official Gazette of the RS, No. 92/2021, with Amendments; hereinafter referred to as the Banking Act) which includes the acceptance of funds from the public and the granting of credits for its own account. The bank has an authorisation to perform mutually recognised and additional financial services. It may perform the following:
9 The Companies Act (ZGD-1; Official Gazette of the RoS, No. 65/09 and consecutive changes). 10 February 2023. Pursuant to Article 70, paragraph 5 of the Companies Act, this statement is part of the Business Report of the NLB Group Annual Report 2023. The main function of this statement is the prompt informing of investors on the coherence of the Bank’s operations.
The recommended best corporate governance practices contribute to a transparent and understandable corporate governance system, enhancing the confidence of employees, other stakeholders (shareholders, regulators, suppliers, etc.), and the public. A decision on which code the Bank will follow was made jointly by the Management of NLB.
Last year, the Corporate Governance Statement of NLB was made according to the renewed version of the Slovenian Corporate Governance Code for Listed Companies. Compliance with this statement is on a "comply or explain basis," in which the Bank provides an explanation regarding deviations, reasoning for non-compliance with a certain recommendation, or alternative solutions.
The Bank’s system of corporate governance is described from the beginning to the end of the financial year, which also corresponds to the beginning and the end of the calendar year (from 1 January until 31 December) in the NLB Group Annual Report, and is also published as a separate report on the Bank’s website in the chapter Corporate Governance. NLB strives to increase the level of its business transparency.
Guidelines on the Disclosure for Listed Companies (Ljubljana Stock Exchange, 18 December 2020) are followed on an electronic communications system of the Ljubljana Stock Exchange, and in line with the Rules of the London Stock Exchange through Regulatory News Services (RNS) of the London Stock Exchange. NLB also upholds its own code of conduct.
The NLB Group Code of Conduct defines values, lays down the standards of ethical business conduct, and serves as the guideline for all our relationships regardless of whether it involves clients, competitors, business partners, or employees. At the same time, it is the basis of the Group values and basic principles of conduct which provide specific conduct guidelines to its employees. The aim of this approach is to enhance the ethical standards of the Bank’s operations.
The second version was adopted by the Supervisory Board on 19 October 2022 and was adopted by the Supervisory Board on 26 October 2023 but was not approved by the General Meeting of shareholders on 11 December 2023. Since the voting is of consultative nature it has entered into force.
NLB does not provide an external assessment of its compliance with the recommendations of the Slovenian Corporate Governance Code for Listed Companies. For several years, NLB has been a systemically important bank with demanding regulation that takes into account high standards of corporate governance. The Bank is highly regulated by a regulator and adheres to different, in most cases stricter, banking regulations with regard to the following recommendations:
NLB does not provide an external assessment of its compliance with the recommendations of the Slovenian Corporate Governance Code for Listed Companies.
The Sustainability Policy of NLB d.d. and NLB Group contains basic principles and guidelines for sustainability management, replacing the previous NLB Sustainability Framework. The Bank has also started activities to support its commitment to a climate-positive future and its net-zero ambition, following UNEP FI – NZBA guidance and methodology. In December 2023, NLB Group published the first NLB Group Sustainability Report, detailing efforts and progress towards transitioning the operational and attributable GHG emissions from lending and investment portfolios to align with pathways that are consistent with achieving net-zero emissions.
In assessing a candidate’s eligibility to be a Supervisory Board member, statutory criteria and Supervisory Board Members in NLB (June 2022) state that it is not necessary for candidates to have a certificate evidencing their specialised professional competence for membership on a Supervisory Board, provided all strict conditions are fulfilled according to banking legislation, including a wide range of knowledge, skills, and experience.
Access to the archives after expiration of the term of office of the members of the Supervisory Board is determined by the provisions of the Rules of Procedure of the Supervisory Board of NLB and not in a special agreement.
The Rules of Procedure of the Supervisory Board of NLB include the scope of topics and time frames of periodic reporting to the Supervisory Board, which are included in the annual Action Plan of the Bank.
In 2023, the NLB Workers’ Council did not report to the Supervisory Board despite being prompted. The NLB Workers’ Council is expected to report to the Supervisory Board in the future.
Access to the archives after expiration of the term of office of the members of the Supervisory Board is determined by the provisions of the Rules of Procedure of the Supervisory Board. Members of the Supervisory Board do not sign a special Agreement on access to the archives upon taking up the position.
Decisions discussed at the Supervisory Board meetings are recorded in the information system. As soon as it is possible, but no later than two working days after the meeting of the Supervisory Board, the Secretariat prepares copies of the decisions adopted at the meeting, which are listed in each decision. An employee of the Secretariat, who is present at the meeting, approves the amendments to the resolutions and thereby confirms the consistency of the content of the decisions.
Board members (representatives of capital and representatives of workers) did not receive attendance fees, but received payments for performing their function based on the decisions of the Supervisory Board. Remuneration of the members of the Supervisory Board is regulated by the Articles of Association and the Remuneration Policy for the Members of the Supervisory Board of NLB d.d.
Board to the Supervisory Board to assist in the implementation of the Supervisory Board’s tasks.
Recommendation 23.5: In accordance with regulations and the Remuneration Policy of the Board of the NLB d.d, in 2023, NLB awarded to the members of its Management Board 50% of their variable remuneration in share-linked instruments: 50% of such instruments were handed over to the members of the Management Board during a 5-year deferral period.
Recommendation 26.6: The Bank maintains a list of transactions with related persons which is submitted to the Supervisory Board by special demand.
Recommendation 30.4: NLB draws up its Financial Calendar which is published on the Banks’ website, and includes the dividend payment date. Date is announced in the publication of the Agenda and Proposed Resolutions to be passed at the Annual General Meeting. The dividend payment date is determined.
NLB is governed by the provisions of the Capital Requirements Banking Act (ZBan-3) and the Regulation on Internal Governance Arrangements, the Management Body and the Internal Capital Adequacy Assessment Process for Banks and Savings Banks to maintain appropriate internal control, and risk management systems. Due to the above, the NLB has developed a steady and reliable internal governance system encompassing the following determined by the independence, quality, and validity of:
The policy entitled "Internal Control System" defines a system of internal controls as a set of rules, procedures, and organisational structures. The system of internal control aims to reduce or manage that risk and that process or measure is effective for that purpose. Mentioned policy introduces a new description of the three lines of defence, namely:
Second-level controls are divided between Risk Management and Compliance control functions (including AML/CTF and Information security management) that carry out independent controls. The effectiveness of controls is performed by the internal audit function, which assesses and regularly checks the completeness, functionality, and adequacy of the internal control system. An internal audit is conducted in the event of deficiencies, irregularities, or breaches identified in the process of implementation of internal controls. The breaches are discussed at the Operational Risk Committee (which is established for execution of individual tasks within powers of the Management Board of the Bank). The mentioned committee adopts decisions so that appropriate actions are taken, and in behalf.
As NLB advances its commitment to sustainable and responsible banking, updates to the Internal Control System policy, implemented in November 2023, reflect our dedication to promoting responsible business practices.
The internal control functions are part of the system of the internal governance in the Bank. Internal control functions operate according to the Charter on the Internal Audit of NLB adopted by the Management Board, to which the Supervisory Board of NLB gave its approval. The Management Board has set up an internal controls system, and management of the NLB. The mission and the principal task of the Internal Audit is to consolidate and secure the value of the Bank by issuing opinions on the adequacy and effectiveness of the Bank’s operations. In addition, the Internal Audit carries out regular control of the quality of operation of the other internal audit departments in the Group and takes care of constant improvement.
The Management Board has its approval of the appointment, remuneration, and dismissal to the Head of the Internal Audit, which ensures their independence and so, the independence of the work of the Internal Audit according to the Charter of the Risk Management Function of NLB adopted by the Management Board, in agreement with the Supervisory Board of NLB. The risk management function is organized within the Risk stream, covered by the member of the Management Board in charge of risk (Chief Risk Officer - CRO). The risk management function is responsible for the management of risks and responsibilities. Global Risk is represented by its General Manager. Global Risk is in functional and organisational terms separate from other functions where business decisions are adopted.
The head of the risk management function has direct access to the Management Board of the NLB, and at the same time has unhindered and independent access to the Supervisory Board. Risk management and control is performed through a clear organisational structure with defined roles and responsibilities. The organisation and delineation is designed to prevent conflicts of interest, to ensure a transparent and documented decision-making process, and is subject to an appropriate upward and downward flow of information.
The risk management function is in charge of formulating and controlling the Group’s risk management policies, setting limits, overseeing the harmonisation, regular monitoring of risk exposures, and limits based on certain criteria. The function is organised according to the local legislation, considering the bases for setup, organisation, and activities in risk management in the members, as defined in the document "Risk Management Security Function, and AML/CTF Function Compliance and Integrity in the Group in its role as internal control function performs control activities with respect to the main following areas:
standards; · harmonisation of policies and practices within the Group (Competence line Compliance and Integrity). Compliance and Integrity is an organisational unit of the Bank, placed d adopted the Integrity and Compliance Policy of the NLB and the NLB Group, which was revised in December 2023. This Policy regulates the method and scope of the activities of the com competence of the Compliance and Integrity. This enables the Compliance and Integrity to operate independently from other Bank’s departments. The Director of Compliance and Integrity interests. To ensure his independence, the Director reports directly to the Management and Supervisory Boards. Additionally, the Director provides regular updates to a designated member information security, personal data protection, and AML/CTF functions). This arrangement provides additional assurance for the independence of the Compliance and Integrity operations.
Compliance and Integrity, CISO for NLB (Chief Information Security Officer), Group CISO, DPO (Data Protection Officer), the head of the AML/CTF area for NLB, and head of Group A Compliance and Integrity. Following NLB’s model, the compliance function was established in the core members of the Group, as well based on the Group standards for the compliance an reporting procedures, NLB pursues the adopted Policy on Accounting Controls. The accounting controls are provided through the operation of the complete accounting function with the pu timely financial reporting. The principal identified risks in this area are managed with an appropriate system of authorisations, a segregation of duties, compliance with accounting rules, do in-built control mechanisms in source applications, and archiving pursuant to the laws and internal regulations.
Furthermore, the policy precisely defines primary accounting controls, perfo checking the efficiency of implementation of primary accounting controls. With an efficient mechanism of controls in accounting reporting, NLB ensures: · A reliable decision-making and accounting, and other reports of the Bank; · Compliance with legal and other requirements. Financial statements of NLB and consolidated financial statements of the NLB Group are audit company was appointed as the auditor of NLB by the 38 th General Meeting of shareholders of the Bank dated 20 June 2022 for the financial years 2023 to 2026.
regarding points 3, 4, 6, 8, and 9 of paragraph 6 of the same article Explanation regarding significant dire stake as determined by the act regulating acquisitions (Point 3 of the sixth paragraph of Article 70 of the ZGD-1) Significant direct and indirect ownership of the company’s securities in te 2023).
| Shareholder | Number of shares | Percentage of shares | Nature of ownership |
|---|---|---|---|
| RoS | 5,000,001 | 25.00 | shares |
| EBRD (i) / >5 and <10 | GDRs | ||
| Schroders plc (i) / >5 and <10 | GDRs | (i) In the form of |
Explanation regarding the holders of securities that carry special control rights (Point 4 of the sixth paragraph of Article 70 of the ZGD-1) The Bank did not issue any securities carrying sp particular: (i) restrictions of voting rights to a certain stake or certain number of votes, (ii) deadlines for executing voting rights, and (iii) agreements in which, based on the company’s coo ownership of such securities (Point 6 of the sixth paragraph of Article 70 of the ZGD-1) The shares of the Bank are freely transferable, subject to the provisions of the Articles of Associati of shares of the Bank by which the acquirer, together with the shares held by the holder before such an acquisition and the shares held by third parties for the account of the acquirer, excee by the Supervisory Board.
The Bank rejects the request for approval of transfer shares if the acquirer, together with the shares held by the acquirer before the acquisition and the shares held voting rights, increased by one share. Notwithstanding the provision mentioned in the first paragraph, approval for the transfer of shares is not required if the acquirer of the shares has acqu from these shares at its sole discretion, while at the same time committing to the Bank, it will not exercise voting rights on the basis of the instructions of an individual third party for whos receive a written guarantee from that person that this person has shares for his own account, and that this person is not, directly or indirectly, a holder of more than 25% of the Bank’s votin and does not require the issuance of approval for the transfer of shares, or does not receive the approval of the Bank, may exercise the voting right from 25% of the shares with the voting ri.
members of the management or supervisory bodies The Management Board Articles of Association define that the Management Board of the Bank is comprised of three to seven members of Management Board members is determined by a resolution of the Bank’s Supervisory Board. The President and other members of the Management Board are appointed and recalled by the Chair of the Supervisory Board of the Bank to appoint or recall an individual member or the remaining members of the Management Board of the Bank.
Management board member under the law on banking and who obtained a licence from the BoS or the ECB, if executing the competences and tasks from Item (e) of paragraph 1 of Article.
Management board member under the law regulating banking. The Bank assesses every candidate following the Bank’s Policy governing the Fit & Proper assessment prior to the appointment.
Members, of which eight members represent the interests of shareholders and two members represent the interests of employees. Members representing the interests of shareholders shall be elected and recalled by the Workers’ Council of the Bank. Members of the Supervisory Board of the Bank started their term of office.
The General Meeting of the Bank may dismiss an individual or all members of the Supervisory Board (representatives of shareholders) if adopted with at least a three-quarter majority of all votes cast. The Supervisory Board of the Bank shall at its first meeting after an appointment elect from among its members.
Representing the interests of employees cannot be elected Chair or Deputy Chair of the Supervisory Board of the Bank. All the Supervisory Board members shall be independent professionals.
May only be a person who fulfils the legally prescribed conditions for a supervisory board member under the banking act and who obtained a licence from the BoS or the ECB, if executing no. 1024/2013 for the performance of the function of a bank’s supervisory board member under the law regulating banking. The Bank assesses every candidate following the Bank’s Policy.
Association A qualified majority of at least 75% (seventy-five per cent) of the votes cast by shareholders at the general meeting of the Bank’s shareholders is required for the adoption of a.
through which shareholders exercise their rights, which include among others: decisions on corporate changes (amendments of the Articles of Association, increase or decrease of share capital), issues with respect to appointing and discharging members of the Supervisory Board (representatives of shareholders), and appointment of an auditor, distribution decisions (appropriation of profit).
The General Meeting is convened by the Management Board. The General Meeting may be convened by the Supervisory Board in cases where the Management Board is unable to ensure the unhindered operations of the Bank. The Supervisory Board may amend the agenda of the General Meeting convened in line with the bylaws. As a rule, the General Meeting of the Bank shall take place at a venue specified by the convenor. The Management Board may stipulate that shareholders may attend or vote before or at the General Meeting by electronic means without physical presence.
Votes cast, unless the applicable laws or the Bank’s Articles of Association stipulate a larger majority or other conditions (adoption and amendments of the Articles of Association, issue of new shares, decrease in share capital, the status restructuring of the Bank, liquidation of the Bank and discharge of Supervisory Board members). The shareholders have the right to subscribe for new shares in case of share capital increase, the right to profit participation (dividends), and the right to a share in surplus in the event of liquidation or bankruptcy of the Bank.
The Bank informs shareholders on their rights as shareholders in an Information on the Rights of Shareholders that is published among the documents for convocation of each General Meeting (i.e., informing shareholders, and the shareholders' right to be informed).
There were two General Meetings of shareholders in 2023. Shareholders gathered at the 39th General Meeting on 19 June 2023. At this meeting, the shareholders reviewed the Report, the Report of the Supervisory Board of NLB on the results of the examination of the NLB Group Annual Report 2022, the Report on remunerations for the business year 2022, and on SSH’s Baselines. The shareholders also decided on the allocation of distributable profit for 2022 and granted a discharge from liability to the Management Board and Supervisory Board.
The distributable profit amounted to EUR 515,463,762.89. Part of that profit, in the amount of EUR 55,000,000.00, was paid out as dividends (EUR 2.75 gross per share). The General Meeting of NLB adopted a resolution regarding the re-appointment of four members of the Supervisory Board of NLB, namely Deputy Chairman Andreas Klingen, Shrenik Dhirajlal Davda, Gregor Rok Kastelic, and Mark William Lane Richards, whose terms had expired.
The shareholders re-appointed Shrenik Dhirajlal Davda and Mark William Lane Richards, and also appointed two new members, namely Cvetka Selšek and André-Marc Prudent-Toccanier, who assumed the position of members of the Supervisory Board. The General Meeting of NLB also took note of the Internal Audit Report for 2022 and the Opinion of the Supervisory Board of NLB and adopted a decision on the determination of payment.
The Meeting of NLB Shareholders held on 19 December 2023 confirmed payment of additional dividends of EUR 55 million (EUR 2.75 gross per share), making a total dividend pay-out in 2023 a total of EUR 110 million. The ambition is a total capital return through solid cash dividends in a cumulative amount of EUR 500 million between 2022 and by the end of 2025. At the General Meeting, the shareholders ensured that the members of the management board are rewarded in accordance with the long-term strategic goals of the NLB Group and with the interests and directions of the shareholders.
Blaž Brodnjak as President & CEO, Archibald Kremser as Chief Financial Officer (CFO), Andreas Burkhardt as Chief Risk Officer (CRO), as well as Hedvika Usenik as Chief Marketing Officer, responsible for Group governance, payments, and innovations, and Andrej Lasič as CMO – responsible for Corporate and Investment Banking.
Despite the challenges, the Management Board more demonstrated its resilience and delivered strong results. The successful performance of NLB Group can be attributed to the vigorous emphasis on prudent risk management and unwavering commitment to excellent customer services while embracing opportunities for further growth. In 2023, the Management Board continued to work on the NLB Group business model. The Management Board stayed focused on the growth of core business and was aware of all the risks possible and eventual distress, while the bank helped customers and delivered remarkable business results.
They enabled the Bank to pay out a distributable profit for 2022 in the form of dividends in a total amount of EUR 110 million, thereby reaffirming their commitment. Dividends were paid in two instalments, namely in the amount of EUR 55 million in June 2023, and in the amount of EUR 55 million in December 2023.
There are many topics that the Management Board is committed to further improvement and enhancing the satisfaction and user experience of customers, and to increase digital payment penetration and innovation in the payments area. As part of this, the mobile bank, "Klikin," merged into one modern digital bank "NLB Klik," which makes it easier for our customers to manage their finances.
In the business network, we focused on enhancing technologies and people's strengths. The Management Board successfully completed the merger of N Banka (former Sberbanka that NLB acquired in March 2022) into NLB that was formed to ensure integration to make sure that former clients of the bank will benefit from the best of both worlds.
In 2023, the Management Board signed an agreement for the acquisition of the largest leasing company and the acquisition of the third largest asset management company in North Macedonia. Obtaining permits for the acquisition of Summit Leasing, Slovenia Group together with the Croatian branch, we are aware of the banks’ vital role in fighting climate change by supporting the global transition of the real economy towards net-zero, which is why we not only strive to reinforce, accelerate, and enhance our efforts.
In December 2023, our first NLB Group Net-Zero Disclosure Report was published, which reaffirms our commitment to achieving Net-Zero by setting targets for reducing its financed emissions. Regarding environmental issues, the Management Board is equally active about addressing social and governance topics; we advocate equal opportunities, as well as independent and professional conduct, achieving an improved second ESG rating (December 2023) assessed by Sustainalytics (previous ESG risk rating was improved by 1.7 points).
At the beginning of 2023, the Supervisory Board of NLB consisted of 10 members, of which eight were representatives of shareholders (in addition to Primož Karpe, Shrenik Dhirajlal Davda, David Eric Simon, Gregor Rok Kastelic, Verica Trstenjak, and Osama Zekry), while Sergeja Kočar and Tadeja Žbontar Rems were representatives of the workers. The Board expired. The General Meeting on its session dated 19 June 2023 appointed four members, of whom two were existing, while two members were new.
On 31 December 2023, the Supervisory Board consisted of Davda (Deputy Chairman), David Eric Simon, Mark William Lane Richards, Verica Trstenjak, Islam Osama Zekry, Cvetka Selšek, and André-Marc Prudent-Toccanier, with Sergeja Kočar.
Employees in the Supervisory Board of the Bank are considered independent despite the existence of an employment relationship with the Bank upon fulfilling certain terms and conditions. Criteria of conflict of interest is provided by a candidate for a function of a member of the Supervisory Board, upon each change that would mean change of his/her independence status on the Bank’s website.
In 2023, the Supervisory Board held seven regular and nine correspondence sessions. In its work, the Supervisory Board of NLB received the Risk Committee, the Nomination Committee, the Remuneration Committee, and the Operations and Information Technology Committee. Mentioned committees function as consulting bodies to the Management Board related to a particular area. Based on their findings, the Supervisory Board passed the appropriate resolutions. Each of the five committees is composed of at least three members.
The Supervisory Board adopted the regular NLB Group Sustainability Implementation Update and NLB Group Payments Progress update. Business Policy and the NLB Group 2024 Budget and Financial Projections 2025 – 2028, adopted the NLB Group Annual Report for 2022, and NLB Group Sustainability Report 2022, the Comprehensive Opinion of the Internal Audit.
In order to implement effective corporate governance arrangements, the Supervisory Board acted within its powers to ensure that the bank’s policies for assuming and managing risks. The Supervisory Board was regularly informed on the risk profile of the Group, and the corresponding types of risk to steer the Group’s fulfilment.
The following items were discussed and adopted – the NLB Group Risk appetite, the NLB Group Risk strategy, ICAAP and ILAAP of NLB Group, the Recovery Plan of NLB Group, regular R III Disclosures. Through the year, the Supervisory Board acknowledged regular reports on documents received from the regulator(s), namely, the Bank of Slovenia and ECB, and the implementation of the Group was included in the ECB Stress Test exercise aiming to assess the resilience of the financial institution, performed in H1 2023.
The Supervisory Board was acquainted with the exercise of the EBA and ECB, the Group holds sufficient resilience in terms of capitalisation. The Supervisory Board adopted decisions with regards to the convocation of the two General Meetings of Shareholders. The General Meeting acknowledged itself with the Annual Report 2022, the Report of the Supervisory Board and the Additional information to the Report on remuneration. The General Meeting adopted decisions on the four proposed candidates for the Supervisory Board and determined payments to members of the Supervisory Board of NLB.
On the allocation of second tranche of the distributable profit for 2022, and approved the Remuneration Policy for the Members of the Supervisory Board of NLB d.d. and the Members of the consultative nature. During the year, the Supervisory Board adopted periodic reports of the Internal Audit, Compliance, and issued approval to the transactions with persons in special relation according to Article 170 of the Banking Act.
According to the recommendation of the Slovenian Corporate Governance Code for Listed Companies, the Supervisory Board adopted a decision to engage the Board of NLB and the Audit Committee of NLB. It also adopted the Internal Audit’s Annual Report for 2023, the Internal Audit Plan (2024 & the long-term plan), the Action Plan for Compliance, and Security.
With the aim of ensuring sustainable development, NLB Group strives to actively contribute to a more balanced and inclusive economic and social system through Responsibility. The Supervisory Board regularly adopts decisions related to sustainability and ESG issues. Throughout the year, the Supervisory Board has maintained a well-balanced process with data-supported inputs from the latter, enabling the Supervisory Board to adopt all its decisions in line with the professional interests of the Bank, whilst always adhering to banking regulations.
Supervisory Board and at sessions of committees on which they sit, members of the Supervisory Board in particular take into account all necessary precautionary measures to avoid conflicts. The Supervisory Board of NLB established and ensured that it regularly and thoroughly monitored the Bank’s and the NLB Group’s operations.
Members is described in the Appendix C.2 of the Supervisory Board function as consulting bodies of the Supervisory Board of NLB and discuss the material and proposals of Management Board of NLB for the Supervisory Board meeting.
Committees are composed of at least three members, including a representative of the workers into each committee. The member of the Committee may only be appointed from among the members of the Supervisory Board. The term of their term of office as Supervisory Board members. The responsibilities of committees are defined in the Rules of Procedure of the Committees of the Supervisory Board of NLB.
The Audit Committee prepares draft resolutions for the Supervisory Board on accounting reporting, internal control and risk management, internal audit, the compliance of operations, and external audit, and as well as academic degrees of the Audit Committee members, are reflected in the chart on the Supervisory Board Committees (Appendix C.2 below).
There were six regular, one extraordinary summary of key topics considered by the Audit Committee:
Self-assessment of the Audit Committee for 2022. The Audit Committee performs its tasks both at the meetings themselves and outside of the meetings. In the Supervisory Board, the committee also regularly meets with representatives of professional services for individual areas covered by the committee. The president of the committee also carried out a self-assessment of its work with the help of an external independent evaluator, the Directors' Association of Slovenia. Based on the findings, an action plan March 2024.
The Risk Committee monitors and drafts resolutions for the Supervisory Board in all risk areas relevant to the corresponding risk profile and risk management strategy, and helps carry out control over senior management concerning implementation of the risk management strategy. At the end of 20 (Chairman), Cvetka Selšek (Deputy Chairwoman), Shrenik Davda, Islam Osama Zekry, and David Eric Simon (members). Changes in the membership of the committee that occurred during the year are reflected in the chart on Supervisory Board Committees (Appendix C.2 below). There were five regular sessions of the Risk Committee in 2023. The following is a summary of key topics considered by the Risk Committee:
The Nomination Committee drafts proposed resolutions for the Supervisory Board concerning the appointment of Supervisory Board members; recommends to the Supervisory Board the dismissal of members of the Management and Supervisory Boards (representatives of capital); prepares the content for the Supervisory Board; evaluates the performance of the Management and Supervisory Boards; and assesses the knowledge, skills, and experience of individual members of the Management and Supervisory Boards. The membership of the committee was as follows: Primož Karpe (Chairman), Mark Richards (Deputy Chairman), Verica Trstenjak, Sergeja Kočar and Islam Zekry (members). Membership of Bojana Šteblaj was terminated during the year and is reflected in the chart on Supervisory Board Committees (Appendix C.2 below). There were five regular sessions of the Nomination Committee in 2023. The following topics were considered:
The Remuneration Committee carries out initiatives for measures related to improving the management of the Bank’s risks, capital, and liquidity; prepares proposals for remuneration-related decisions of the Supervisory management and compliance functions. At the end of 2023, the composition of the committee was as follows: Shrenik Davda (Chairman), Mark William Lane Richards (Deputy Chairman). Changes in the membership of the committee that occurred during the year are reflected in the chart on Supervisory Board Committees (Appendix C.2 below). There were five regular and two corresponding sessions of the Remuneration Committee. The topics considered by the Remuneration Committee included:
The Operations and IT Committee performs the following main tasks: monitors the implementation of the IT Strategy, Information Security Strategy, and Operations Strategy; monitors IT projects and initiatives; monitors operating risks in the area of Operations, IT, and Security; monitors the recommendations for ensuring and increasing the level of information/cybersecurity; monitors incidents in the area of IT security; and monitors the Target Operating Model implementation in the areas of IT, the Security Operating System, Competence Centre, and Operations. At the end of 2023, the composition of the committee was as follows: Shrenik Davda (Chairman), Islam Osama Zekry (Deputy Chairman), Primož Karpe, Tadeja Žbontar Rems, and André-Marc Prudent-Toccanier. Membership of Janja Žabjek Dolinšek was terminated during the year and is reflected in the chart on Supervisory Board Committees (Appendix C.2 below). There were five sessions of the Operations and IT Committee in 2023. The Operations and IT Committee considered the following topics:
NLB adopted amendments to the Diversity Policy in 2022 to align it with the stipulations of the changed legislation and to address the concerns of stakeholders. The amended Diversity Policy outlines specific goals for achieving diverse representation on the Supervisory Board, Management Board, and senior management. The policy establishes various diversity goals, including knowledge, skills, and experience. This comprehensive approach aims to foster a deep understanding of the Bank’s strategy, challenges, and the associated risks. This policy concurrently considers a spectrum of knowledge, skills, and experience, international exposure, and geographical origin. The Diversity Policy sets out the targets to be pursued in terms of representation on the Supervisory Board.
The management body is composed in such a way that, as a whole, it has the knowledge, skills, and experience necessary for an in-depth understanding of the Bank’s strategy. The policy is reviewed by the Nomination Committee of the Supervisory Board. The Report on Diversity is adopted by the Supervisory Board on a yearly basis. The Bank implements the principles of Selection of Suitable Candidates for Members of the Supervisory Board, and the Policy on the Selection of Suitable Candidates for Members of the Management Board, as well as procedures related to this diversity policy. One of the measures to influence the selection process is: if two candidates for the position of a member of the Management Board or a member of the Supervisory Board are equally qualified, a candidate of the underrepresented sex shall be selected.
Considering the size of the Bank and the NLB Group, the diversity objectives include:
the policy is implemented To achieve the objectives outlined in this diversity policy, the following measures are applied:
Implementa Supervisory Board It is estimated that the goals for 2023 were almost achieved. Members of the Supervisory Board as a whole cover an adequately wide range of knowledge, skills, and professional experience based on the following criteria: experience, reputation, management of potential conflicts of interest, independence, available time, and collective suitability. Also, the Supervisory Board has a suitable ratio between existing and new members is not below 70%. The members of the Supervisory Board have a high level of personal integrity, a suitable share of geographical experience as set in the plan for the year 2023.
Since the term of office of four members of the Supervisory Board expired in 2023, and to retain the proportion of women in Supervisory Board, at the General Meeting dated 19 June 2023, two male representatives were re-appointed for the position, while among two new members for the position, one member was female. The goal for the members of the Supervisory Board has been almost achieved with 40% of representation of women on the Supervisory Board (on 31 December 2023).
In terms of the structure of the Supervisory Board, it is also considered appropriate, according to the plan set up for 2023 as members of the Supervisory Board are represented in the age groups from 40 to 60 years. The members of the Management Board as a whole meet a high level of requirements related to the set goals, namely age structure, gender structure, professional competencies, skills and experience, personal integrity, and geographical provenance. In terms of gender diversity, the target set for 2023 was accomplished, maintaining a representation of 16.7%, the equivalent of at least one senior management at a high level met the requirements relating to the range of knowledge, skills, and professional experience. Regarding the requirements related to international experience, it is also estimated that 43% of women in senior management is appropriate.
age structure, it is also considered appropriate, as senior management in the age structure is very dispersed and is thus represented in all age groups from 30 to 60 years.
| Wide range of knowledge, skills and professional experience | High | High | High | High | High | High |
|---|---|---|---|---|---|---|
| International experience of the members in different areas | Medium | High | Medium | High | Medium | High |
| Personal integrity | High | High | High | High | High | High |
| Geographical provenance | Medium | High | Medium | High | Medium | High |
Additional information on the framework, objectives, and chart 2023, as well as in the chapter Human Resources in this Annual Report.
As already mentioned in point 7.2: Gender diversity – process strive to construct a well-balanced pool of candidates during the recruitment process. This involves considering the equitable representation of the less-represented gender and achieving the Policy. The establishment and implementation of a comprehensive policy for candidate selection create incentives for diversity within the management body. In 2023, two new members in Supervisory Board in the recruitment process this criterion was also taken into consideration. The goal for 2023 set for the Management Board was achieved and stayed on 16.7% or one set goal was slightly higher.
committing to achieving the target of gender diversity by the conclusion of the year 2026. This initiative entails achieving a representation of 40% for members of supervisory boards and a
of the underrepresented gender in public joint-stock companies and state-owned enterprises by 2026. With the changed composition of the Supervisory Board in 2023, NLB achieved the f
out of 10 members are women). As far as both goals together are concerned NLB is slightly below 33% (5 out of 16 members). Results of the gender diversity in public companies are che
Association.
selection procedures Already explained in Point 7.3. All the above criteria are considered in the selection process for the members of the Management Board and the Supervisory Board. In
diversity among the candidates for Supervisory Board of NLB, one female representative was elected. Statement on changes that occurred between the end of accounting period up to the p
Companies, point 6.3.2 (Ljubljana Stock Exchange, 18 December 2020) NLB hereby states that the following changes occurred between the end of accounting period up to the publication
| Andrej Lasič | Member |
|---|---|
| Archibald Kremser | Member |
| Peter Andreas Burkhardt | Member |
| Antonio Argir | Member |
| Blaž Brodnjak | Chief executive officer |
| Name and Surname | Position held (President, Member) | Area of work covered within the Management Board | First appointment to the position | Professional profile | Membership in supervisory bodies in companies not related to the company |
|---|---|---|---|---|---|
| Blaž Brodnjak | President CEO | 6 July 2016 | Slovenian 1974 MBA Banking/Finance | ||
| Olimpija Archibald Kremser | Deputy CEO/ Member CFO | 31 July 2013 | Austrian 1971 MBA Banking/Finance | ||
| Peter Andreas Burkhardt | Member CRO | governance, payments and innovations | 18 September 2013 | Macedonian 1975 MBA Banking/Finance | Economic Chamber of North Macedonia |
| Andrej Lasič | Member CMO | (responsible for Retail Banking and Private Banking) | 28 April 2022 | Slovenian 1972 MBA Banking/Finance | |
| Hedvika Usenik | Member CMO | (responsible for Retail Banking and Private Banking) | 28 April 2022 | Slovenian 1972 MBA Banking/Finance |
| Name and Surname | Position held (Chairman, Deputy Chairman, Member) | First appointment to the position | Attendance at SB session in regard to the total number of SB session (for example 5/7) applicable on his/her mandate | Gender | Citizenship | Year of birth | Qualification | Professional profile | Membership in supervisory bodies in other companies or institutions |
|---|---|---|---|---|---|---|---|---|---|
| Primož Karpe | Chairman | 10 February 2016 | 7/7 | Representative of the company‘s capital structure | |||||
| Andreas Klingen | Deputy Chairman | 22 June 2015 | 3/3 | male | German | 1964 | University Degree | Banking/ Finance | Kyrgyz Invest |
| David Eric S | Member | 10 June 2019 | 7/7 | male | British | 1960 | MBA, LLB | Finance | Charity Commission of England and Wales, PSO, UK |
| Mark William Lane | Member | 1966 | MSc | Banking/ Finance | BPL Global (Lloyds of London insurance Broker), Sheffield Haworth Ltd, Vencap International pic Ukraine (UK) | ||||
| Gregor Rok Kastelic | Member | 10 June 2019 | Banking/ Finance | YES | |||||
| Verica Trstenjak | Member | 15 June 2020 | 7/7 | female | Slovenian | 1962 | PhD | Law | |
| Cvetka Selšek | Member | 19 June 2023 | University Degree | Banking/ Finance | Honorable Tribunal of Managers Association of Slovenia, Directors’ Association of Slovenia | ||||
| André-Marc Prudent- Toccanier | Member | 19 June 2023 | YES | ||||||
| Sergeja Kočar | Member | 17 June 2020 | 7/7 | female | Slovenian | 1968 | MSc | Management | |
| Tadeja Žbontar Rems | Member | 22 January 2020 | NO | ||||||
| Islam Osama Zekry | Member | 14 June 2021 | 6/7 | male | Egyptian | 1977 | PhD | IT | CIB Housing association, Egypt, Egyptian AI Council |
NLB d.d.’s Management Board and Supervisory Board provide herewith a concise statement of the risk management according to Article 17 of the Decision on Internal Assessment Process for Banks and Savings Banks (Official Gazette of the RS, no. 73/15 and 115/2021), Regulation (EU) 575/2013, article 435 (Risk management objectives and policies) (EBA/GL/2021/05) and EBA Guidelines on Disclosure requirements (EBA GL/2016/11).
Risk management in NLB Group, representing an important element of the Group’s overall corporate governance, is based on internal policies, and procedures that take into account the European banking regulations, the regulations adopted by the Bank of Slovenia, the current EBA guidelines, and the relevant good practices. Subsidiaries operating outside Slovenia are also compliant with the rules set by the local regulators. NLB Group gives high importance to the risk culture and awareness of all relevant risks.
| Surname | Membership in committees (audit, nominal, income committee, etc.) | First appointment to the position | Conclusion of the position/term of office | Chairman/Deputy Chairman/Member | Attendance at sessions (applicable on his/her mandate) | ||||
|---|---|---|---|---|---|---|---|---|---|
| Shrenik Dhirajlal Davda | Remuneration Committee | 28 June 2019 | 2027 | Chairman | 5/5 | ||||
| Mark William Lane Richards | Remuneration Committee | 26 June 2020 | 202 | Member | 1/2 | ||||
| Tadeja Žbontar Rems | Remuneration Committee | 18 September 2023 | 2025 | Member | 2/2 | ||||
| Sergeja Kočar | Remuneration Committee | 26 June 2020 | 2024 | Member | 5/5 | ||||
| Primož Karpe | Nomin Committee | 18 September 2023 | 2027 | Deputy Chairman | 1/1 | ||||
| Verica Trstenjak | Nomination Committee | 26 June 2020 | 2024 | Member | 5/5 | ||||
| David Eric Simon | Audit Committee | 7 April 2016 | 2024 | Chairman | 6/6 | ||||
| Cvetka Selšek | Audit Committee | 18 September 2023 | 2027 | Deputy Chairwoman | 1/1 | ||||
| Primož Karpe | Audit Committee | 15 April 2027 | Member | 1/1 | |||||
| Shrenik Dhirajlal Davda | Audit Committee | 28 June 2019 | 2027 | Member | 6/6 | ||||
| André-Marc Prudent-Toccanier | Risk Committee | 18 September 2023 | 2027 | Chairman | 1/1 | ||||
| Cvetka Selšek | Risk Committee | 8 July 2021 | 2027 | Member | 5/5 | ||||
| David Eric Simon | Risk Committee | 7 April 2016 | 2024 | Member | 5/5 | ||||
| Islam Osama Zekry | Risk Committee | 8 July 2021 | 2025 | Member | 3/5 | ||||
| Mark William Lane Richards | Operational and IT Committee | 8 July 2021 | 2025 | Deputy Chairman | 4/5 | ||||
| Primož Karpe | Operational and IT Committee | 15 April 2016 | 2024 | Member | 5/5 | ||||
| Tadeja Žbontar Rems | Operational and IT Committee | 18 September 2023 | 2027 | Member | 1/1 |
(i) There were also extraordinary sessions of the committees that are not reflected in this table. External member in committee stipulating that, irrespective of provision of Companies Act (ZGD-1) only members of the Supervisory Board can be appointed to Supervisory committees.
strategy of the Group. The business and operating environment, relevant for the Group’s operations, is changing with trends such as sustainability, social responsibility, governance, changing new regulatory requirements. Respectively, risk management is continuously adapting with the aim to detect and manage new potential emerging risks. NLB Group uses the "three lines of management function acts as a second line of defence. The Group has enhanced overall corporate governance, which is reflected in a lower SREP requirement in recent years. The robust and Group’s business and risk profile, based on a forward-looking perspective to meet internally set strategic objectives, and all external requirements. The Proactive Risk management and con the Group’s Business strategy, and focused on early risk identification and efficient risk management. Set governance and different risk management tools enable adequate oversight of the incorporating escalation procedures, and using different mitigation measures when necessary. In this respect, the Group is constantly enhancing and complementing the existing methods a sustainable finance by incorporating environmental, social, and governance (ESG) risks into its business strategies, risk management framework, and internal governance arrangements.
W main sustainability elements into its business model. The goal of this strategic, organisation-wide initiative is to ensure sustainable financial performance of the Group by considering ESG inclusive economic and social system. Thus, sustainable finance integrates ESG criteria into the Group’s business and investment decisions for the lasting benefit of Group’s clients and so Alliance, publicly disclosed its Net-Zero commitment. With this step, the Bank pledged to align its lending and investment portfolio with net-zero emissions by 2050. The NLB Group Sus business model. The management of ESG risks addresses the Group’s overall risk management framework, namely the credit approval process, collateral evaluation process, and related cre comprehensive integration into all relevant processes. The availability of ESG data in the region where NLB Group operates is still lacking. Nevertheless, the Group has set up the process decision-making and the corresponding proactive management of ESG risks. NLB Group plans a prudent risk profile, optimal capital usage, and profitable operations in the long run, considering key internal risk policies of NLB Group, approved by the Management Board and the Supervisory Board of NLB d.d., specify the strategic objectives and guidelines concerning risk assumption managing all types of risk at different relevant levels.
Moreover, the main strategic risk guidelines are consistently integrated into regular business strategy review, budgeting process, and o regularly monitoring its target risk appetite profile and internal capital allocation, representing the key component of proactive management. Risk limits usage and potential deviations from Management Board of the Bank, the Risk Committee of the Supervisory Board, and the Supervisory Board of the Bank. Additionally, NLB Group established a comprehensive stress testing contribute to setting and pursuing the Group’s business strategy, to support decision-making on an ongoing basis, to strengthen the existing internal controls, and to enable timely response those related to ESG, and various relevant stress scenarios or sensitivity analysis, according to the vulnerability of the Group’s business model. Stress testing has an important role when assessing adequacy, and in a liquidity forward-looking perspective. As such, it is embedded into the Group’s Risk management system, namely Risk appetite, ICAAP, ILAAP, and the Recovery plan NLB Group as a
important bank also participates in the regulatory stress test exercises carried out by the ECB. NLB Group is one of the largest Slovenian banking and financial groups with an important pr sustainably profitable, predominantly working with clients in its core markets, providing innovative but simple customer-oriented solutions, and actively contributing to a more balanced an model. Efficient managing of risks and capital is crucial for the Group to sustain long-term profitable operations. Based on the Group’s business strategy, credit risk is the dominant risk category banking book, operational risk, liquidity risk, market risk, and other non-financial risks. ESG risks do not represent a new risk category, but rather one of risk drivers of the existing types o manages them within the established risk management framework. Regular risk identification and their assessment is performed within the ICAAP process with the aim to assure their overall efficient management.
Management of credit risk, representing the Group’s most important risk, focuses on the taking sustainable cost of risk, and ensuring an optimal return considering the risks assumed. The liquidity risk tolerance is low. The NLB Group must maintain an appropriate level of liquidity at Further, with the aim of minimising this risk, the Group pursues an appropriate structure of sources of financing. The Group limited exposure to credit spread risk, arising from the valuation Group’s basic orientation in the management of interest rate risk is to limit unexpected negative effects on revenues and capital that would arise from changed market interest rates, and the indicated activities for further comprehensive enhancement of the existing interest rate risk management. When assuming operational risk, NLB Group pursues the orientation that such risk is to moderate, with a focus on mitigation actions for important risks and key risk indicators servicing as an early warning system.
The conclusion of transactions in derivative financial instruments positions. In the area of currency risk, the NLB Group thus pursues the goals of low to moderate exposure. Based on environmental and climate risk assessment impact of these risks is estimated to medium. The tolerance for all other risk types, including non-financial risks, is low with a focus on minimising their possible impacts on the Group’s operations. The main NLB Group R capital adequacy; · fulfilment of MREL requirement; · maintenance of low leverage; · improvement in the quality of the credit portfolio, sufficient NPL coverage, sustainable credit risk volume; · sustainable industry and individual concentration, sustainable exposure to cross border, leverage, M&A and project financing; · maintenance of a solid liquidity position, maintaining stable banks and sovereigns; · limited exposure to credit spread risk; · limited exposure to interest rate risk; · limited exposure to foreign exchange risk; · sustainable exposure to ESG risks; · sustainable financing in accordance with Environmental and Social Management System (ESMS) was integrated in the Group’s Risk appetite and overall risk management framework.
20.0% of capital requirement for operational risk. During 2023, the Group’s credit portfolio quality remained high-quality and well-diversified, with a stable rating structure after strong new corporate and retail loan origination across all markets in previous year due to inflationary pressures, higher interest rates, and low GDP growth. The impacts of the floods or received collaterals occurred. Besides, the Group monitored the macroeconomic and geopolitical circumstances closely, remaining very prudent in identifying any increase in credit risk low level, mainly successful collection of previously written-off receivables, revised risk parameters, and stable portfolio development in the SEE region. The Group stayed well capitalised and well above the regulatory requirements.
The Group also remained solid, with liquidity indicators high above the regulatory requirements, indicating its low tolerance for this risk. Significant attention was put into the structure and consideration of potential adverse negative market movements. Investment activity continued with a balanced approach to finding attractive market opportunities while pursuing well-informed strategies. The interest rate environment and corresponding increased market demand for fixed interest rate products led to moderate interest rate risk exposure, which stayed well within the risk appetite to liquidity and a very solid capital position, demonstrating the Group’s financial resilience.
Moreover, in 2023, NLB’s ESG Risk Rating assigned by Sustainalytics was revised and improved considering ESG factors. N Banka, which legally and operationally merged at the end of September 2023 with NLB d.d., had a similar business model to the Bank’s or the Group’s, and so, its impact was of material nature to impact on NLB Group’s risk profile or distribution of the risks on the Group level. The Condensed Statement of the management of risk is also published on the NLB internet Bank, as regards the definition and importance of a consistent tendency of the adopted risks, and ways to take into account when adopting its daily business decisions.
Ljubljana, 21 March
Hedvika Usenik
Andrej Lasič
Archibald Kremser
Peter Andreas Burkhardt
Antonio Argir
Blaž Brodnjak
Member
Member
Member
Member
Member
In accordance with Article 56 and in conjunction with Article 70c of the Companies Act, the Bank has prepared a consolidated Statement on Non-Financial Operation. This consolidated report enables interested parties to understand the material dimensions of the NLB Group’s development, performance, and position, and the impact of its activities, and includes:
The NLB Group Sustainability Report 2023 is published on the Bank’s website, on the Ljubljana Stock Exchange’s SEOnet system, on the websites of the Agency of the Republic of Slovenia, and the London Stock Exchange (LSE), at the same time as the NLB Group Annual Report 2023. The NLB Group’s Consolidated Annual Report 2023 is thus in line with the requirements of the Companies Act, exceeding 500 on the balance sheet cut-off date to include a Statement on Non-Financial Operation in their business report.
Ljubljana, 10 April 2024
Management Board of NLB
Hedvika Brodnjak
Member
Member
Member
Member
Member
It takes control, timing, and unwavering focus to win. Slovenian table tennis team
The Bank has issued only ordinary registered shares that grant shareholders the right to participate in the General Meeting of the Bank’s shareholders, the pre-emptive right to subscribe for new shares in case of a share capital increase, the right to profit participation (dividend) and the right to be informed. All shares belong to a single class and are issued in book-entry form. Information regarding the shareholder structure of NLB (as at 31 December 2023) is available.
The shares of the Bank are freely transferable, subject to the approval of the Supervisory Board, namely for the transfer of shares of the Bank by which the acquirer, together with the shares held by the holder before such an acquisition and the shares of the Bank’s voting shares. Approval for the transfer of shares is issued by the Supervisory Board. The Bank rejects the request for approval of transfer shares if the acquirer, together with the shares held by the acquirer, exceed the 25% share of the Bank with voting rights, increased by one share. Notwithstanding the provision mentioned in the first paragraph, approval for the transfer of shares is required if the acquirer commits to the Bank that (s)he will not exercise voting rights from these shares at his/her sole discretion, while at the same time committing to the Bank, (s)he will not exercise voting rights from the shares acquired if, together with the instructions for voting, (s)he does not receive a written guarantee from the person that this person has shares on his/her own account and that this person will not exercise voting rights from these shares.
The acquirer who exceeds the share of 25% of the Bank’s shares with voting rights and does not require the issuance of approval for the transfer of shares or does not receive the approval of the Supervisory Board is subject to the same restrictions. There are no restrictions other than those mentioned and those that are regulatory.
This information is included in the chapter Corporate Governance Statement of NLB.
The company does not have an employee share scheme. In accordance with the relevant remuneration policies (when required by ZBan-3), a part of variable remuneration of NLB’s Identified Staff shall consist of share-linked instruments determined by the Supervisory Board. So far, NLB has not used its own shares for this purpose. It currently uses NLB share-linked instruments. More information will be provided in the 2023 Business Year.
This information is included in the chapter Corporate Governance Statement of NLB.
The Bank is not aware of such agreements.
This information is included in the chapter Corporate Governance Statement of NLB.
This information is included in the chapter Corporate Governance Statement of NLB.
In line with the employment contracts of the members of the Management Board, if the Supervisory Board recalls a member of the Management Board, that member is entitled to compensation for early termination of his term of office. The member of the Management Board shall not be entitled to compensation for early termination of the term of office. In the event of resignation, the member of the Management Board shall not be entitled to any compensation for early discontinuation of the term of office.
| Name of member | Shares held as at 31 Dec 2023 | Percentage |
|---|---|---|
| Islam Osama Zekry | - | 0.003% |
| Shrenik Dhirajlal Davda | - | - |
| Mark William Lane Richards | - | - |
| Verica Trstenjak | - | - |
| André-Marc Prudent-Toccanier | - | - |
| Cvetka Selšek | - | - |
| Sergeja K | - | - |
| Blaž Brodnjak | 1,700 | 0.009% |
| Archibald Kremser | 791 | 0.004% |
| Peter Andreas Burkhardt | 800 | 0.004% |
| Andrej Lasič | 325 | 0.002% |
| Hedvika Usenik | 450 | 0.002% |
| Antonio Argir | 620 | 0.003% |
The Bank has no stock option agreements in relation to its listed shares.
Withholding tax In 2023, a Slovenian payer was required to withhold tax on dividend payments made to certain categories of payees:
There are some exemptions if dividends are paid to certain legal entities. According to legislation, the GDR depositary will qualify as an intermediary. Therefore, the dividends paid by the custodian to the GDR depositary will be subject to the deduction and withholding of Slovenian tax. Legal entities may be entitled, if and to the extent applicable, to claim a refund of the withholding tax. In the case of legal entities, the exemptions are related to the characteristics of the legal entities. The RoS (FURS) may approve the application of a lower tax rate specified in the double tax treaty between the RoS and the country of residence of the payee if the Slovenian payer provides documentation for taxation purposes in such a country, issued by the tax authorities of such a country.
as a payee or a higher tax rate than the one specified in the double tax treaty, the payee of the dividend is entitled to the refund of the overpaid tax. The tax refund is enforced by filing a claim with respect to the shares received by a legal person who is a Slovenian resident are exempt from Slovenian corporate income tax (davek od dohodkov pravnih oseb).
Individuals The amount of Slovenian Personal Income Tax (dohodnina) with respect to such a dividend payment.
On 24 January 2024, the Bank issued Tier 2 notes in the amount of EUR 300 million and 10NC5 tenor (ISIN: XS2750306511). In parallel, the Bank conducted two outstanding Tier 2 notes with approaching call dates (ISIN: XS2080776607 and XS2113139195). The LME was concluded on 26 January 2024.
| Item | Amount (in EUR million) |
|---|---|
| Income | 993,405 |
| 4.1. Interest and similar expenses | (160,071) |
| 4.1. Net fee and commission income | 278.0 |
| Fee and commission income | 398,741 |
| 4.3. Fee and commission expenses | (120,780) |
| Gains less losses from financial assets and liabilities not measured at fair value through profit or loss | (742) |
| 4.4. Gains less losses from financial assets and liabilities held for trading | 32,187 |
| 4.5. Gains less losses from financial liabilities measured at fair value through profit or loss | (799) |
| Fair value adjustments in hedge accounting | 3,899 |
| 5.5.a) Foreign exchange translation gains | |
| Net other income | (35.4) |
| Gains less losses on derecognition of non-financial assets | 3,200 |
| Other net operating income | (4,692) |
| 4.8. Cash contributions to resolution funds and deposit guarantee schemes | |
| Losses on derecognition of investments in subsidiaries, associates and joint ventures | (766) |
| 5.12.b), c) Net non-interest income | 260.0 |
| Total net operating income | 1,093.3 |
| 1,093,296 | |
| Employment expenses | (170.5) |
| Depreciation and amortisation | (49.2) |
| Depreciation and amortisation | (49,232) |
| 4.11. Total costs | (501.9) |
| (501,855) | |
| Result before impairments and provisions | 591.4 |
| 591,441 | |
| Impairments of financial assets | 6,717 |
| 4.14. Other impairments and provisions | (25.9) |
| Provisions for other liabilities and charges | (25,925) |
| 4.13. Impairment of non-financial assets | 53 |
| 4.14. Impairments and provisions | |
| Joint ventures | |
| 1.1 Share of profit from investments in associates and joint ventures (accounted for using the equity method) | 1,072 |
| 5.12.g) Result before tax | 578.4 |
| Profit before income tax | 578,413 |
| Attributable to non-controlling interests | 12,623 |
| Result after tax | 550.7 |
| Attributable to owners of the parent | 550,700 |
| Business Report in EUR millions | Financial Report in EUR thousands |
|---|---|
| ASSETS | |
| Cash, cash balances at central banks | 6,103,561 |
| demand deposits at banks | 5.1. Loans to banks |
| 547.6 | Financial assets measured at amortised cost - loans and advances to banks |
| 547,640 | 5.6.b) Net loans to customers |
| 13,734.6 | Financial assets |
| 4,803.7 | 4,803,678 - Trading book |
| 15.7 | Financial assets held for trading |
| 15,718 | 5.2.a) - Non-trading book |
| 4,788.0 | Non-trading financial assets mandatorily at fair value through other comprehensive income |
| 2,251,556 | 5.4. Financial assets measured at amortised cost - debt securities |
| 2,522,229 | 5.6.a) Investments in subsidiaries, associates, and joint ventures |
| 12.5 | Investment property |
| 278,034 | 5.8. Investment property |
| 31.1 | Investment property |
| 31,116 | 5.9. Intangible assets |
| 62.1 | Intangible assets |
| 62,117 | 5.10. Other assets |
| 368.7 | Financial assets measured at amortised cost |
| value changes of the hedged items in portfolio hedge of interest rate risk | (10,207) |
| 5.5.c) Current income tax assets | 42 |
| Deferred income tax assets | 111,305 |
| 5.17. Other assets | 49,154 |
| 5.13. Non-current | |
| LIABILITIES | |
| Deposits from customers | 20,732.7 |
| Financial liabilities measured at amortised cost - due to customers | 20,732,722 |
| 5.15.a) Deposits from banks and central banks | 95.3 |
| Financial liabilities measured at amortised cost - borrowings from banks and central banks | 140,419 |
| 5.15.b) Financial liabilities measured at amortised cost - borrowings from other | |
| at amortised cost - debt securities issued | 1,338,235 |
| 5.15.c) Other debt securities in issue | 828.8 |
| Other liabilities | 587.6 |
| Financial liabilities held for trading | 13,217 |
| 5.2.b) Financial liabilities measured at amortised cost - other financial liabilities | 357,116 |
| 5.15.d) Derivatives - hedge accounting | 3,540 |
| 5.5.b) Provisions | 113,305 |
| Current income tax liabilities | 35,879 |
| Deferred income tax liabilities | 1,426 |
| the parent | 2,882,850 |
| Non-controlling interests | 65.1 |
| Non-controlling interests | 65,140 |
| TOTAL LIABILITIES AND EQUITY | 25,942.0 |
| Total liabilities and equity | 25,941,985 |
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The Bank has chosen to present these APIs, either because they are in common use within the industry or because they are commonly used by investors and as such of the Bank and the Group, and are not considered to be directly comparable with similar KPIs presented by other companies. The Bank’s APIs are described below together with definitions annualized from the income statement and average net loans to customers.
| NLB Group | 2023 | 2022 |
|---|---|---|
| Numerator Credit impairment | 12,256.6 | |
| Cost of risk (bps) | -7 | 14 |
(i) NLB internal information. Credit impairments and provisions are annualized, calculated as all established and released impairments on loans and provisions for the reporting period and multiplied by 12. The net established Credit impairments and provisions are shown with a positive sign, and the net released Credit impairments and provisions are calculated as sum of the balance of the previous year end (31 December) and monthly balances of the last day of each month from January to month t divided by (t+1). Cost costs and total net operating income.
| NLB Group | 2023 | 2022 | 2021 | NLB | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|---|---|
| Total costs | 501.9 | 460.3 | 41 | 366.2 | 361.5 | ||
| Cost to income ratio (CIR) | 45.9% | 57.6% | 62.3% | 37.3% | 56.8% | 50.8% |
| NLB Komercijalna Banka, Beograd | NLB Banka, Skopje | NLB Banka, Banja Luka | NLB Banka, Sarajevo | NLB Banka, Prishtina | |
|---|---|---|---|---|---|
| 2022 | 113.6 | 36.4 | 19.4 | 19.9 | 16.0 |
| 2023 | 109.0 | 31.8 | 17.3 | 18.3 | 14.3 |
| Numerator Total cost | 20.4 | 20.3 | 23.0 | ||
| Denominator Total net operating income | 261.0 | 86.6 | 46.9 | 36.7 | 54.2% |
| 192.4 | 75.9 | 38.5 | 31.7 | 57.8% | |
| 29.0% |
– Calculated as the ratio between interest expenses annualized and average interest-bearing liabilities.
| Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | |
|---|---|---|---|---|
| Numerator Interest expenses (i) | 194.1 | 173.8 | 123.2 | 107.6 |
| Denominator Average interest-bearing liabilities (ii) | 22,083.7 | 21,828.0 | 21,097.3 | 21,060.6 |
(quarterly) are annualized, calculated as the sum of interest expenses in the period divided by the number of days in the quarter and multiplied by the number of days in the year. Interest expenses on financial liabilities. (ii) NLB internal information. Average interest-bearing liabilities (quarterly) for the NLB Group are calculated as the sum of monthly balances (t) for the corresponding quarters and monthly balance at the end of the previous quarter divided by (t+1).
– Calculated as the ratio between interest expenses on deposits from customers annualized and average wholesale funding.
| 2023 | Q3 2023 | Q2 2023 | Q1 2023 | |
|---|---|---|---|---|
| Numerator Interest expenses from wholesale funding (i) | 96.9 | 94.4 | 62.9 | 58.8 |
| Denominator Average wholesale funding (ii) | 1,674.7 | 1,665.8 | 1,329.1 | 1,205.7 |
– Calculated as the ratio between interest expenses on deposits from customers annualized and average deposits from customers.
| Millions | NLB Group | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 |
|---|---|---|---|---|---|
| Numerator | Interest expenses on deposits from customers (i) | 94.7 | 77.2 | 55.4 | 47.1 |
| Denominator | Average deposits from customers (ii) | 20.4 | |||
| Ratio | 0.46% | 0.38% | 0.28% | 0.24% |
(i) Interest expenses on deposits from customers (quarterly) are annualized, calculated as the sum of interest expenses on deposits from customers in the period divided by...
(ii) NLB internal information. Average deposits from customers (quarterly) for the NLB Group, calculated as the sum of monthly balances (t) for the corresponding quarters and monthly balances.
– The ratio between the change of interest rate on deposits from customers and change of ECB deposit facility interest rate over the selected period.
| Deposits from customers (i) | 0.09% | 0.46% | 37 | |
|---|---|---|---|---|
| Denominator | ECB deposit facility interest rate (ii) | -0.5% | 4.0% | 450 |
| Deposit beta | 8% |
Financial assets measured mandatorily at fair value through profit or loss represent the minor part (0.002% December 2023; 0.002% December 2022) of the loan portfolio (before the deductions of principal and interest on the principal amount outstanding). Classification into stages is calculated in the internal data source, by which the NLB Group measures the loan portfolio.
IFRS 9 requires an expected loss model, where an allowance for the expected credit losses (ECL) is formed. Loans measured at amortised costs (AC) are classified into the following:
The definition of default is harmonised with the EBA guidelines. A significant increase in credit risk is assessed at the reporting date in comparison to the credit rating at initial recognition; when a financial asset has material delays over 30 days (days past due are also included in the credit rating assessment), it is placed on a watch list.
| Numerator | Total (AC) loans in Stage 1 | Denominator | Total gross loans and advances |
|---|---|---|---|
| 2023 | 19,239.2 | 20,243.9 |
| Numerator | Total (AC) loans in Stage 2 | Denominator | Total gross loans and advances |
|---|---|---|---|
| 2023 | 704.1 | 20,243.9 |
| Numerator | Total (FVTPL) non-performing loans | Denominator | Total gross loans and advances |
|---|---|---|---|
| 2023 | 0.3 | 20,243.9 |
| Numerator | Total gross loans to Corporates | Corporates - IFRS 9 classification into Stage 1 |
|---|---|---|
| 6,005.6 | 6,629.3 | 90.6% |
| Numerator | Total gross loans to Corporates | Corporates - IFRS 9 classification into Stage 2 |
|---|---|---|
| 6,629.3 | 6.9% |
| Numerator | Total gross loans to Corporates | Corporates - IFRS 9 classification into Stage 3 |
|---|---|---|
| 0.3 | 6,629.3 | 2.6% |
| Numerator | Total gross loans to Retail | Retail - IFRS 9 classification into Stage 1 |
|---|---|---|
| 7,235.3 | 94.7% |
| Numerator | Total gross loans to Retail | Retail - IFRS 9 classification into Stage 2 |
|---|---|---|
| 7,235.3 | 3.4% |
| Numerator | Total (AC) loans in Stage 3 | Retail - IFRS 9 classification into Stage 3 |
|---|---|---|
| 1.8% |
Its calculation uses Tier 1 as the numerator, and the denominator is the total exposure of all active balance sheet and off-balance-sheet items after the adjustments are made in the context of funding, and other off-balance sheet items are especially pointed out. The leverage ratio is a non-risk based supplementary measure to the risk-based capital requirements. A minimum level of Bank balance sheets, and with a special emphasis on exposures which are not weighted within the framework of the existing capital requirement calculations.
| Table 47: NLB Group and NLB | Tier I | Denominator Total Leverage Ratio exposure measure | Leverage ratio |
|---|---|---|---|
| 2,597.8 | 26,927.7 | 9.6% | |
| 2,295.7 | 25,240.5 | 9.1% | |
| 1,965.6 | 19,229.5 | 10.2% | |
| 1,816.6 | 16,637.0 | ||
| 1,496.7 | 14,553.0 | ||
| 1,362.7 | 10,041.1 |
The financial institution to cover its net liquidity outflows over a 30-calendar day stress period. The LCR requires financial institutions to maintain a sufficient reserve of high-quality liquid hold must equal to or greater than their net cash outflow over a 30-calendar-day stress period (having at least 100% coverage). The parameters of the stress scenario are defined under Base.
| Table 48: NLB Group LCR calculation (i) in EUR millions | NLB Group | 31 Dec 2023 | 30 Nov 2023 | 31 Oct 2023 | 30 Sep 2023 | 31 Aug 2023 | 31 Jul 2023 | 30 Jun 2023 | 31 May 2023 | 30 Apr 2023 | 31 Mar 2023 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Numerator | 6,719.5 | 6,687.9 | 6,687.7 | 6,772.4 | 6,594.5 | 6,505.1 | 5,922.2 | 5,943.8 | 6,131.6 | 6,093.1 | 6,069.0 | 6,028.3 | 5,367.1 |
| Denominator | 2,853.9 | 2,736.9 | 2,809.2 | 2,799.8 | 2,691.4 | 2,648.8 | |||||||
| 238.9% | 251.6% | 249.0% | 244.8% | 233.0% | 222.5% | 231.3% | 228.8% | 229.0% | 220.3% | 252.6% |
(i) Based on the European Commission’s Delegated Act on LCR.
Deposit ratio (LTD) – Calculated as the ratio between net loans to customers and deposits from customers. There is no regulatory defined limitation on the LTD, however, the aim of this measure is to maintain a healthy balance between loans and deposits.
| Table 49b: NLB Group’s banking subsidiaries LTD calculation in EUR millions | NLB Komercija | Banka, Prishtina | NLB Banka, Podgorica | N Banka, Ljubljana |
|---|---|---|---|---|
| 31 Dec 2023 | 1,216.2 | 557.0 | 575.6 | 831.3 |
| 31 Dec 2022 | 1,170.7 | 523.2 | 521.3 | 740.8 |
| 31 Dec 2023 | 11,881.6 | 10,984.4 | 9,659.6 | 584.5 |
| Denominator | Deposits from customers | 4,004.1 | 1,499.5 | 840.1 |
| 3,692.2 | 1,462.0 | 796.7 | 673.4 | |
| 1,008.3 | 894.2 | 798.0 | 692. |
Calculated as the ratio between net interest income annualized and average interest-bearing assets calculation (iii) in EUR millions
| NLB | NLB Komercijalna Banka, Beograd | NLB Banka, Skopje | NLB Banka, Banja Luka | NLB Banka, Sarajevo | NLB Banka, Prishtina | NLB Banka, Podgorica | |
|---|---|---|---|---|---|---|---|
| 2023 | 372.6 | 177.0 | 211.3 | 131.6 | 65.4 | 53.9 | 32.5 |
| 2022 | 23.6 | 25.5 | 19.5 | 47.2 | 39.8 | 40.3 | 29.6 |
| 27.8 |
2.8% 1.5% 4.7% 3.0% 3.7% 3.1% 3.4% 2.6% 3.0% 2.6% 4.2% 4.1% 4.8% 4.0% 2.0%
(i) Net interest income is annualized, and calculated as the sum of interest income and interest expenses in the period divided by the number of days in the year.
(ii) NLB internal information. Average interest-bearing assets for NLB are calculated as the sum of total assets of the previous year in reporting month divided by (d+1).
Average interest-bearing assets for individual bank members are calculated as the sum of balance of previous year end (31 December) and monthly balances of the last day in reporting month divided by (t+1).
| Numerator | Denominator | |
|---|---|---|
| Net interest income (i) | 833.3 | 23,782.7 |
| 504.9 | 21,988.4 | |
| Net interest margin on interest-bearing assets | 3.50% | 2.30% |
| NLB Group | |
|---|---|
| Q4 2023 | 920.0 |
| Q3 2023 | 878.7 |
| Q2 2023 | 806.0 |
| Q1 2023 | |
| Net interest margin on interest-bearing assets (quarterly) | 3.74% |
| 3.64% | |
| 3.46% | |
| 3.14% |
Calculated as the ratio between net interest income annualized, and average total assets.
| Numerator | Denominator | |
|---|---|---|
| Net interest income (i) | 833.3 | 24,706.3 |
| 504.9 | 22,975.9 | |
| 409.4 | 20,659.0 | |
| 372.6 | 14,728.7 | |
| 177.0 | 13,133.2 | |
| 139.5 | 11,853.9 | |
| Net interest margin on total assets | 3.4% | 2.2% |
| 2.0% |
Includes risk exposure to D- and E-rated clients (includes loans and advances, debt securities, and off-balance exposures, which are included in report Finrep18; before the deduction of allowances for the ECL; the ratio is in gross terms. Non-Performing Exposure includes risk exposure to D- and E-rated clients included in the report Finrep18 before the deduction of allowances for the ECL). The share of NPEs is calculated based on an internal data source, with which the NLB Group monitors the.
| NLB Group | 2023 | 2022 | 2021 |
|---|---|---|---|
| Total Non-Performing on-balance and off-balance Exposures in Finrep18 | NPE per cent. | NPE – The NPE indicator, according to the BoS calculation | |
| 30,122.3 | 1.1% | FVOCI | |
| 28,133.2 | 1.3% | ||
| 24,328.0 | 1.7% | ||
| NLB | 2023 | 2022 | 2021 |
| Total Non-Performing on-balance and off-balance Exposures in Finrep18 | NPE per cent. | NPE – The NPE indicator, according to the BoS calculation | |
| 17,874.0 | 0.9% | ||
| 15,512.0 | 0.9% | ||
| 13,869.9 | 1.1% |
| NLB Group | Performing on-balance and off-balance Exposure in Finrep18 |
|---|---|
| 2023 | 333.8 |
| 2022 | 373.6 |
| 2021 | 415.5 |
| NLB | Performing on-balance and off-balance Exposure in Finrep18 |
| 2023 | 155.1 |
| 2022 | 136.0 |
| 2021 | 159.5 |
Loans include loans to D- and E-rated clients, namely loans at least 90 days past due or loans unlikely to be repaid without recourse to collateral (before deduction of loan loss allowances).
A percentage of total loans to clients before deduction of loan loss allowances; ratio in gross terms. Where non-performing loans are defined as loans to D- and E-rated clients, namely loans (before deduction of loan loss allowances). The share of non-performing loans is calculated based on an internal data source, with which the NLB Group monitors the loan portfolio quality.
| Non-Performing Loans | 138.0 | 111.2 | 130.4 |
|---|---|---|---|
| Denominator Total gross loans | 11,562.7 | 9,667.2 | 8,522.5 |
| NPL per cent. | 1.2% | 1.1% | 1.5% |
| NLB Group’s banking subsidiaries | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
|---|---|---|---|---|---|---|---|---|---|---|
| Banka, Prishtina | 1,558.5 | 1,506.5 | 783.9 | 734.4 | 772.2 | 724.2 | 1,043.6 | 940.5 | 756.1 | 715.3 |
| Denominator Total gross loans | 3,960.1 | |||||||||
| NPL per cent. | 3.1% | 3.6% | 0.7% | 1.1% | 2.0% | 2.3% | 1.6% | 1.7% | 3.2% | 4.6% |
It shows the accounts with respect to the total of impaired loans. The NPL coverage ratio 1 is calculated based on an internal data source, with which the NLB Group monitors the quality of the loan portfolio.
| 2021 | 2020 | 2019 | |
|---|---|---|---|
| Numerator Loan loss allowances entire loan portfolio | 121.3 | 95.7 | 97.9 |
| Denominator Total Non-Performing Loans | 138.0 | 111.2 | 130.4 |
| NPL coverage ratio 1 (NPL CR 1) | 87.9% | 86.1% | 75.1% |
| NLB Group | NLB | |
|---|---|---|
| Numerator Loan loss allowances non-performing loan portfolio | 194.2 | 84.4 |
| 2023 | 2022 | 2021 |
| 187.4 | 64.5 | |
| 212.9 | 79.0 | |
| NPL coverage ratio 2 (NPL CR 2) | 64.6% | 61.2% |
| 57.1% | 58.1% | |
| 57.9% | 60.6% |
The share of net non-performing loans in total net loans: non-performing loans after deduction of loss allowances on the non-performing loans portfolio as a percentage of total loans to presented below are based on internal data sources.
| NLB Group | NLB | |
|---|---|---|
| 2023 | 19,913.3 | 11,441.4 |
| 2022 | 18,079.1 | 9,571.5 |
| 2021 | 15,225.4 | 8,424.7 |
| Net NPL ratio per cent. (% Net NPL) | 0.5% | 0.5% |
| 0.8% | 0.5% | |
| 1.0% | 0.6% |
Received collaterals for NPLs/NPL – The coverage of the gross market value is used for this calculation. The calculations presented below are based on internal data sources.
| NLB Group | NLB | |
|---|---|---|
| 2023 | 174.6 | 81.0 |
| 2022 | 200.3 | 64.9 |
| 2021 | 226.6 | 78.2 |
| Total Non-Performing Loans | 300.5 | 138.0 |
| 328.3 | 111.2 | |
| 367.4 | 130.4 |
Non-performing loans include loans and advances in accordance with EBA Methodology that are classified as D and E, namely loans at least 90 days past due or loans unlikely to be repaid.
(EBA def.) – The gross NPL ratio is the ratio of the gross carrying amount of non-performing loans and advances to the total gross carrying amount of loans and advances, in accordance with the EBA methodology. Loans classified as held for sale, cash balances at CBs, and other demand deposits are excluded from the denominator and the numerator. The calculations presented below are based on internal data sources.
| NLB Group | NLB | |
|---|---|---|
| 2023 | 14,780.1 | 7,520.3 |
| 2022 | 13,796.0 | 6,610.8 |
| 2021 | 11,128.8 | 5,498.9 |
| Gross NPL ratio per cent. (% NPL) | 2.1% | |
| 2.4% | ||
| 1.2% | ||
| 1.1% | ||
| 1.5% |
ratio (EBA def.) – The NPL coverage ratio is the ratio of the amount of accumulated impairment, negative changes in fair value due to credit risk to the non-performing loans and advances classified as held for sale, cash balances at CBs and other demand deposits are excluded from the denominator and the numerator.
| Numerator | Volume of allowances and value adjustments for credit losses on Non-Performing loans and advances (i) | Denominator | Gross volume of Non-Performing loans and advances |
|---|---|---|---|
| (i) | 204.0 | 310.8 | 65.6% |
| 195.9 | 337.2 | 58.1% | |
| 219.1 | 375.1 | 58.4% | |
| 85.6 | 139.4 | 61.4% | |
| 65.0 | 111.7 | 58.2% | |
| 79.8 | 131.2 | 60.8% |
(i) Without loans and advances classified as held for sale, cash balances at CBs, and other demand deposits. NPL coverage ratio (EBA def.) (BoS) calculation in EUR millions.
| NLB Group | NLB | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| Collateral received/NPL (EBA def.) | 16.7 | 36.6 | ||
| 30.7 | 56.1 | |||
| 36.7 | 62.5 | |||
| 7.0 | 10.4 | |||
| 6.2 | 8.2 | |||
| 12.2 | 19.4 |
Funding ratio (NSFR) – The net stable funding ratio is a liquidity risk standard requiring financial institutions to hold enough stable funding to cover the duration of their long-term assets. Required stable funding is based on the current Basel Committee guidelines. This ratio should be equal to at least 100% on an ongoing basis. "Available stable funding" is defined as the amount of such stable funding required of a specific institution, which is a function of the liquidity characteristics and residual maturities of the various calculations presented below are based on internal data sources.
| NLB Group | NLB | |
|---|---|---|
| 31 Dec 2023 | 20,409.1 | 11,677.6 |
| 31 Dec 2022 | 18,446.7 | 11,154.7 |
| 31 Dec 2021 | 13,375.3 | 9,960.8 |
| 3 | 11,691.2 | 7,577.5 |
| 10,815.8 | 6,582.3 | |
| 6,309.5 | ||
| NSFR | 187.3% | |
| 183.0% | ||
| 185.2% | ||
| 176.5% | ||
| 177.6% |
Sensitivity of changes in market interest rates on the economic value of financial instruments. EVE represents the present value of net future cash flows and provides a comprehensive view standardized interest rate shock scenarios or more if necessary, according to the situation on financial markets. Calculations take into account behavioural and automatic options, as well as interest rates of 200 bps on the economic value of the banking book position:
| NLB Group | |
|---|---|
| 31 Dec 2023 | -83,353.2 |
| 30 Sep 2023 | -61,615.8 |
| 30 Jun 2023 | -110,452.4 |
| Denominator Equity (Tier I) | 2,589,612.0 |
| 2,281,260.0 | |
| 2,269,153.0 | |
| 2,254,020.0 | |
| 2,166,333.0 | |
| EVE as % of Equity | -4.2% |
| -3.0% | |
| -3.7% | |
| -2.7% | |
| -5.1% |
Calculated as the ratio between operational business net income annualized and average assets.
| 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|---|
| Numerator Operational business net income (i) | 1,272.4 | 1,223.6 | 1,145.3 | 1,054.7 | ||
| Denominator Average total assets (ii) | 25,494.3 | 25,037.1 | 24,211.9 | 24,049.9 | ||
| OBM (annualized) | Calculated as operational business income in the period divided by the number of days in the quarter and multiplied by the number of days in the year. |
Calculated as the ratio between result before tax and average equity.
| NLB Group | NLB | |
|---|---|---|
| Numerator Result before tax (i) | 578.4 | 478.7 |
| 2022 | 483.1 | 164.1 |
| 2021 | 261.4 | 211.5 |
| ROE b.t. | 21.6% | 26.0% |
| 20.6% | 10.5% | |
| 11.8% | 14.0% |
Calculated as the ratio between result after tax annualized and average equity.
| NLB Group | |||
|---|---|---|---|
| Numerator | Result after tax (i) | 159.6 | 208.4 |
| Denominator | Average equity (ii) | 2,623.0 | 2,248.7 |
| ROE a.t. | 21.0% | 19.9% | |
| 11.4% | 27.9% | ||
| 10.2% | 13.8% |
(i) The result after tax is annualized and calculated as a result after tax in the period and multiplied by 12. (ii) NLB internal information. Average equity is calculated as the sum of the balance as at the end of the previous year end (31 December) and monthly balance.
| NLB Group (w/o NGW) | 2022 | ||
|---|---|---|---|
| Numerator | Result after tax (i) | 274.0 | |
| Denominator | Average equity (ii) | 2,248.7 | |
| ROE a.t. | 12.2% |
| NLB Komercijalna Banka, Beograd | NLB Banka, Skopje | NLB Banka, Banja Luka | NLB Banka, Sarajevo | NLB Banka, Prishtina | NLB Banka, Podgorica | ||
|---|---|---|---|---|---|---|---|
| 2023 | 132.3 | 68.2 | 44.5 | 37.9 | 24.3 | 19.3 | |
| 12.8 | 11.4 | 36.0 | 32.4 | 26.7 | 16.6 | ||
| Denominator | Average equity (ii) | 784.6 | 713.0 | 270.4 | 252.9 | 100.2 | 95.3 |
| 94.1 | 91.5 | 131.8 | 111.1 | 116.6 | 99.5 | ||
| ROE a.t. | 16.9% | 9.6% | 16.5% | 1 |
Calculated as the ratio between result before tax annualized and average total assets.
| Result before tax (i) | 578.4 | 483.1 | 261.4 | 478.7 | 164.1 | 211.5 | |
|---|---|---|---|---|---|---|---|
| Denominator | Average total assets (ii) | 24,706.3 | 22,975.9 | 20,659.0 | 14,705.7 | 13,147.5 | 11,876.0 |
| ROA b.t. | 2.3% | 2.1% | 1.3% | 3.3% | 1.2% | 1.8% |
after tax (ROA a.t.) – Calculated as the ratio between result after tax annualized and average total assets.
| NLB Group | 2022 | 2023 |
|---|---|---|
| Numerator Result after tax (i) | 159.6 | 208.4 |
| Denominator Average total assets (ii) | 24,706.3 | 22,975.9 |
| 20,659.0 | 14,705.7 | |
| 13,147.5 | 11,876.0 | |
| ROA a.t. | 2.2% | 1.9% |
| 1.1% | 3.5% | |
| 1.2% | 1.8% |
(i) The result after tax is annualized and calculated for the reporting period and multiplied by 12. (ii) NLB internal information. Average total assets are calculated as the sum of balance as at the end of the previous year end (31 December) and monthly averages.
| Bank | Numerator Result after tax (i) | Denominator Average total assets (ii) |
|---|---|---|
| NLB Komercijalna Banka, Beograd | 132.3 | 4,760.5 |
| NLB Banka, Skopje | 68.2 | 4,668.8 |
| NLB Banka, Banja Luka | 44.5 | 1,833.2 |
| NLB Banka, Sarajevo | 37.9 | 1,771.1 |
| 24.3 | 1,003.6 | |
| 19.3 | 948.7 | |
| 12.8 | ||
| 11.4 | ||
| 36.0 | ||
| 32.4 | ||
| 26.7 | ||
| 16.6 |
TCR is the own funds of the institution expressed as a percentage of the total risk exposure amount.
| Numerator | Total capital (Own funds) |
|---|---|
| Dec 2022 | 3,109.2 |
| 31 Dec 2023 | 2,806.4 |
| 31 Dec 2022 | 2,252.5 |
| 31 Dec 2023 | 2,324.1 |
| 31 Dec 2022 | 2,004.2 |
| 31 Dec 2023 | 1,647.3 |
| Bank | Numerator Total capital | Denominator Total risk exposure Amount (Total RWA) |
|---|---|---|
| NLB Komercijalna Banka, Beograd | 717.0 | 15,337.2 |
| NLB Banka, Skopje | 620.9 | 14,653.1 |
| NLB Banka, Banja Luka | 268.7 | 12,667.4 |
| NLB Banka, Sarajevo | 251.4 | 9,207.5 |
| NLB Banka, Prishtina | 88.6 | 7,832.7 |
| NLB Banka, Podgorica | 81.4 | 6,708.5 |
| Bank | Dec 2022 | 31 Dec 2023 |
|---|---|---|
| NLB Komercijalna Banka, Beograd | 27.1% | 24.6% |
| NLB Banka, Skopje | 18.9% | 18.2% |
| NLB Banka, Banja Luka | 15.9% | 16.0% |
| NLB Banka, Sarajevo | 17.8% | 16.5% |
| NLB Banka, Prishtina | 15.8% | 15.7% |
| NLB Banka, Podgorica | 19.2% | 18.4% |
| 21.4% |
The chart shows voting rights shares. The Group includes entities according to the definition in the Financial Conglomerates Act (Article 2).
| (i.a) | 100% direct ownership | Prvi Faktor, v likvidaci |
|---|---|---|
| (ii) | 46.03% direct ownership of NLB d.d. | Abanka merged into Nova KBM, which currently has a 29.22% share in Bankart. This is over the 25% threshold set in the Foundation. |
| (iii) | 100% direct ownership | NLB Lease\&Go, leasing, d.o.o., Ljubljana. |
| (iv) | 51% direct ownership | NLB Lease\&Go, leasing, d.o.o., Ljubljana, 49% NLB Banka AD Skopje. |
| (v) | 50% | Komercijalna Banka, Beograd. |
| Nova Ljubljanska banka d.d., Ljubljana | Banks | Core | Non-Core | Financial institutions | Companies |
|---|---|---|---|---|---|
| Slovenia | Bankart, Ljubljana | (ii) | 50% | ARG-Nepremičnine, Horjul | 75% |
| 75% | PRIVATINVEST, Ljubljana | 100% | 100% | Slovenia | NLB Lease\&Go, leasing, Ljubljana |
| 100% | NLB Cultural Heritage Management, Ljubljana | 100% | PRO-REM, Ljubljana – v likvidaciji | 100% | 100% |
| Foreign countries | NLB Banka, Sarajevo | 97.35% | Banka, Banja Luka | 99.85% | 99.85% |
| NLB Banka, Skopje | 86.97% | 86.97% | NLB Komercijalna Banka, Beograd | 100% | 100% |
| KomBank Invest, Beograd | 100% | 100% | NLB Lease\&Go, Skopje | (iv) | 51% |
| 100% | NLB InterFinanz in Liquidation, Zürich | 100% | NLB InterFinanz, Beograd – u likvidaciji | 100% | 100% |
| LHB AG, Frankfurt am Main | 100% | 100% | NLB Crna Gora, Podgorica | 100% | 100% |
| OL Nekretnine – u likvidaciji, Zagreb | 100% | 100% | Subsidiary | % direct share | % indirect share at the group level |
| Associate | % direct share | % indirect share at the group level | Joint Venture | 100% | Prvi faktor-faktoring, Beograd – u likvidaciji |
| (i.b) | 90% | 95% |
| (i) | Compliance and Integrity | Group Steering | Strategy and Business Development | Legal and Secretariat | Brand and Communication | Human Resources and Or |
|---|---|---|---|---|---|---|
| and Control | Restructuring | Workout and Legal support | CRO | Group Real Estate Management | Controlling | Financial Accounting and Administration |
| Financial Markets | CFO | CSA & Cross-border F | Banking and Custody | NLB Group Corporate and Investment Banking Management | Customer, Product Management and Digital Services | Private Banking |
| KC | 24/7 Distribution Network | Area Branch East Slovenia | Area Branch Southeast Slovenia | Area Branch Southwest Slovenia | Micro Enterprises | Mobile Banking |
| Distribution Network Coordination | CMO | IT Delivery | Data Man Services and Business Development | Payments Processing | Cash Processing | Financial Instruments Processing |
| Corporate Customer Delivery | Retail Banking Processing | COO | Understanding of the | taken into account in accordance to the definitions of the (currently valid) Banking Act-ZBan-3. | (i) | Worker´s Council is independent organisational unit with no subordinate or superior orga |
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| 5.10. Intangible assets | 250 |
|---|---|
| 5.11. Leases | 251 |
| 5.13. Other assets | 263 |
| 5.14. Movements in allowance for the impairment of financial assets | 275 |
| 5.16. Provisions | 278 |
| 5.17. Deferred income tax | 285 |
| 5.19. Other liabilities | 289 |
| 5.20. Share capital | 290 |
| 5.21. Other equity income and reserves | 291 |
| 5.23. Capital adequacy ratios | 292 |
| 5.24. Off-balance sheet liabilities | 298 |
| 6.1. Credit risk management | 301 |
| 6.2. Market risk | 324 |
| 6.3. Liquidity risks | 341 |
| 6.5. Fair value hierarchy of financial and non-financial assets and liabilities | 342 |
| 6.6. Environmental and climate-related risks | 352 |
| 7. Analysis by segment for NLB Group | 354 |
| 8. Related-party transactions | 358 |
| 9. Events after the reporting date | 367 |
The Management Board hereby confirms its responsibility for preparing the consolidated financial statements of NLB Group and the financial statements of NLB, including the accounting policies and notes to the financial statements. The Management Board is responsible for the preparation and fair presentation of these financial statements in accordance with the International Financial Reporting Standards, the requirements of the Slovenian Companies Act and the Banking Act so as to give a true and fair view of the financial position of NLB Group and NLB as at 31 December 2023, and their financial performance.
The Management Board confirms that the appropriate accounting policies were consistently applied, and that the accounting estimates were prepared according to the principles of prudence and good management. NLB, together with the accompanying notes, have been prepared on a going-concern basis for NLB Group and NLB, and in line with valid legislation and the International Financial Reporting Standards.
The Management Board is responsible for appropriate accounting practices, the adoption of appropriate measures for safeguarding assets, and the prevention and identification of fraud and other irregularities or illegal acts.
Peter Andreas Burkhardt
Antonio Argir
Blaž Brodnjak
Member
Member
Member
Member
Member
in EUR thousands
| NLB Group | NLB | Notes | 2023 | 2022 | 2023 | 2022 | |||
| Interest income calculated using the effective interest method | 952,875 | 993,405 | 569,776 | 498,338 | 221,962 | ||||
| Interest expenses calculated using the effective interest method | (148,034) | (53,086) | (115,779) | (34,166) | |||||
| Other interest and similar expenses | (125,772) | (44,935) | |||||||
| Net interest income | 833,334 | 504,922 | 372,566 | 177,027 | |||||
| Dividend income | 169 | 242 | 145,258 | 56,044 | |||||
| Fee and commission income | 398,741 | 381,599 | 170,981 | 166,440 | |||||
| Fee income | 277,961 | 273,350 | 128,549 | 129,149 | |||||
| Gains less losses from financial assets and liabilities not measured at fair value through profit or loss | (742) | 866 | (834) | (1,050) | |||||
| Gains less losses from non-trading financial assets mandatorily at fair value through profit or loss | 1,784 | 90 | 2,445 | (1,451) | |||||
| Gains less losses from financial liabilities measured at fair value through profit | 3,588 | 1,655 | |||||||
| Foreign exchange translation gains less losses | (2,778) | 297 | 3,003 | (1,588) | |||||
| Net gains or losses on derecognition of investments in subsidiaries, associates and joint ventures | |||||||||
| Other net operating income | (4,692) | 16,778 | (4,006) | 4,411 | |||||
| Administrative expenses | (452,623) | (412,886) | (218,407) | (190,865) | |||||
| Cash contributions to resolution funds and deposit guarantee | (47,390) | (19,457) | (17,001) | ||||||
| Gains less losses from modification of financial assets | (16,271) | (26) | - | - | |||||
| Provisions for credit losses | 5,055 | (3,050) | 3,074 | 282 | |||||
| Provisions for other liabilities and charges | (14,454) | (7,668) | (14,968) | ||||||
| Impairment of non-financial assets | 53 | (5,433) | 97,114 | 22,767 | |||||
| Gain from bargain purchase | - | 172,878 | - | - | |||||
| Share of profit from investments in associates and joint ventures | 5,903 | 921 | 172 | 168 | |||||
| Profit before income tax | 578,413 | 483,063 | 478,746 | 164,070 | |||||
| Income tax | (15,090) | (25,230) | 35,541 | (4,468) | |||||
| Profit for the year | 563,323 | 159,602 | |||||||
| Attributable to non-controlling interests | 12,623 | 10,971 | - | - | |||||
| Earnings per share (in EUR per share) | 27.5 | 22.3 | 25.7 | 8.0 | |||||
| Diluted earnings per share (in EUR per share) | 27.5 | 22.3 | 25 |
in EUR thousands
| NLB Group | NLB | Notes | 2023 | 2022 | 2023 | 2022 | |||||||
| Net profit for the year after tax | 563,323 | 457,833 | 51 | ||||||||||
| Items that will not be reclassified to income statement | Actuarial gains/(losses) on defined benefit pensions plans | 5.16.c) | (444) | 4,031 | 588 | 2,048 | |||||||
| Fair value changes of equity instruments measured at fair | comprehensive income/(losses) of entities accounted for using the equity method | 45 | 121 | - | - | ||||||||
| Income tax relating to components of other comprehensive income | 5.18. | (973) | 17 | (465) | 80 | ||||||||
| Translation gains/(losses) taken to equity | 1,884 | 596 | - | - | |||||||||
| Debt instruments measured at fair value through other comprehensive income | 70,926 | (163,055) | 33,822 | (92,030) | |||||||||
| Valuation gains | statement 4.4., 4.14. | (6,312) | 5,538 | (4,224) | 6,142 | ||||||||
| Income tax relating to components of other comprehensive income | 5.18. | 6,718 | 10,996 | 11,849 | 1,382 | ||||||||
| Total comprehensive income for the year after | 562,365 | 69,157 | |||||||||||
| Attributable to non-controlling interests | 13,042 | 10,220 | - | - |
in EUR thousands
| NLB Group | NLB | Notes | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Cash, cash balances at central banks, and other demand trading | 15,718 | 21,588 | 17,957 | 21,692 | |||
| Non-trading financial assets mandatorily at fair value through profit or loss | 14,175 | 19,031 | 16,643 | 15,411 | |||
| Financial assets measured at fair value | |||||||
| Assets measured at amortised cost - debt securities | 2,522,229 | 1,917,615 | 1,966,169 | 1,597,448 | |||
| - loans and advances to banks | 547,640 | 222,965 | 149,011 | 350,625 | |||
| - loans and advances to customers | 165,962 | 177,823 | 101,596 | 114,399 | |||
| Derivatives - hedge accounting | 47,614 | 59,362 | 47,614 | 59,362 | |||
| Fair value changes of the hedged items in portfolio hedge of interest rate risk | (10,207) | ||||||
| Investments in associates and joint ventures | 12,519 | 11,677 | 4,823 | 4,571 | |||
| Tangible assets | |||||||
| Property and equipment | 278,034 | 251,316 | 85,970 | 78,592 | |||
| Investment property | 31,116 | 35,634 | |||||
| Deferred income tax assets | 111,305 | 55,527 | 109,449 | 34,888 | |||
| Other assets | 49,154 | 72,543 | 13,907 | 13,161 | |||
| Non-current assets held for sale | 4,849 | 15,436 | 4,048 | 4,235 | |||
| Total | 5.2.b) | 13,217 | 21,589 | 17,510 | 22,150 | ||
| Financial liabilities measured at fair value through profit or loss | 4,482 | 1,796 | 3,210 | 2,514 | |||
| Financial liabilities measured at amortised cost - deposits from | |||||||
| and central banks | 140,419 | 198,609 | 82,797 | 57,292 | |||
| - due to customers | 20,732,722 | 20,027,726 | 11,881,563 | 10,984,411 | |||
| - borrowings from other customers | 99,718 | 82,482 | - | 21 | |||
| Liabilities | 5.15.d) | 357,116 | 294,463 | 198,020 | 164,567 | ||
| Derivatives - hedge accounting | 3,540 | 2,124 | 1,420 | 2,124 | |||
| Provisions | 113,305 | 122,652 | 48,456 | 45,216 | |||
| Current income tax liabilities | |||||||
| Liabilities | 5.19. | 58,653 | 49,081 | 32,350 | 25,387 | ||
| Total liabilities | 22,993,995 | 21,737,915 | 13,765,325 | 12,336,463 | |||
| Equity and reserves attributable to owners of the parent | |||||||
| Share capital | 5.20. | 200,000 | 20 | ||||
| Instruments | 5.21. | 84,178 | 84,184 | 84,178 | 84,184 | ||
| Accumulated other comprehensive income | 5.22.b) | (76,118) | (160,588) | (36,316) | (81,677) | ||
| Profit reserves | 5.22.a) | 13,522 | 13,522 | 13,522 | 13,522 | ||
| Retained earnings | |||||||
| Total equity | 2,947,990 | 2,422,325 | 2,249,451 | 1,602,870 | |||
| Total liabilities and equity | 25,941,985 | 24,160,240 | 16,014,776 | 13,939,333 |
Hedvika Usenik
Andrej Lasič
Archibald Kremser
Peter Andreas Burkhardt
Antonio Argir
Blaž Brodnjak
Member
Member
Member
Member
Member
Chief executive officer
| in EUR thousands | Accumulated Other Comprehensive Income | NLB Group Share Capital | Share Premium | Other Equity Instruments | Profit Reserves | Retained Earnings | Equity Attributable to Owners of the Parent | Equity Attributable to Non-controlling Interests | Total Equity | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1,357,089 | 2,365,585 | 56,740 | 2,422,325 | - Net Profit for the Year | - | - | - | - | ||||||
| - | - | - | - | - | 550,700 | 550,700 | 12,623 | 563,323 | ||||||
| - Other Comprehensive Income | - | - | 82,953 | 1,897 | (317) | - | 84,533 | 419 | ||||||
| Total Comprehensive Income | 84,952 | |||||||||||||
| Dividends | - | - | - | - | - | - | (110,000) | (110,000) | (4,634) | |||||
| Transactions with Non-controlling Interests (note 3.) | - | - | - | - | - | - | 8 | 8 | (8) | |||||
| Transfer of Fair Values Reserve | - | - | - | (63) | - | - | 63 | - | - | |||||
| Other | - | - | (60,019) | (14,588) | (1,511) | 13,522 | 1,789,890 | 2,882,850 | 65,140 | |||||
| 2,947,990 | ||||||||||||||
| in EUR thousands | Accumulated Other Comprehensive Income | NLB Group Share Capital | Share Premium | Other Equity Instruments | Profit Reserves | Retained Earnings | Equity Attributable to Owners of the Parent | Equity Attributable to Non-controlling Interests | Total Equity | |||||
| 1,004,385 | 2,078,733 | 137,390 | 2,216,123 | - Net Profit for the Year | - | - | 446,862 | 446,862 | ||||||
| - Other Comprehensive Income | - | - | (153,255) | 632 | 3,697 | - | (148,926) | (751) | ||||||
| Dividends | - | - | - | - | - | - | (100,000) | (100,000) | (4,568) | |||||
| Other Equity Instruments Issued | - | 82,000 | - | - | - | - | - | 82,000 | - | |||||
| Transactions with Non-controlling Interests (note 3.) | - | - | (1) | - | - | - | - | - | - | |||||
| Other | - | 2,184 | - | - | - | - | (2,405) | (221) | 56 | |||||
| Balance as at 31 December 2022 | 200,000 | 871,378 | 84,184 | (142,909) | (16,485) | (1,194) | 13,522 | 1,357,089 | 2,365,585 | 56,740 | 2,422,325 |
| thousands | Accumulated other comprehensive income | NLB Share capital | Share premium | Other equity instruments | Fair value reserve of financial assets measured at FVOCI | Other Profit reserves | |||
|---|---|---|---|---|---|---|---|---|---|
| at 1 January 2023 | 200,000 | 871,378 | 84,184 | (79,743) | (1,934) | 13,522 | 515,463 | 1,602,870 | |
| - Net profit for the year | - | - | - | - | - | 514,287 | 514,287 | ||
| - Other comprehensive income | - | - | 47,521 | 557 | - | 48,078 | |||
| (110,000) | (110,000) | Merger of subsidiary | - | - | (2,889) | 172 | - | 204,904 | 202,187 |
| - Other | - | (6) | - | - | - | (7,965) | (7,971) | ||
| Balance as at 31 December 2023 | 200,000 | 871,378 | 84,178 | (35,111) | (1,205) | 13,522 |
| capital | Share premium | Other equity instruments | Fair value reserve of financial assets measured at FVOCI | Other Profit reserves | Retained earnings | Total equity | ||
|---|---|---|---|---|---|---|---|---|
| Notes | 5.20. | 5.22.a) | 5.21. | 5.22.b) | 5.2 | |||
| 458,266 | 1,551,934 | - Net profit for the year | - | - | - | 159,602 | 159,602 | |
| - Other comprehensive income | - | - | (92,207) | 1,762 | - | (90,445) | ||
| Total comprehensive income after tax | - | - | (92,207) | 1,762 | - | 15 | ||
| 82,000 | - | - | - | - | 82,000 | |||
| - Other | - | 2,184 | - | - | (2,405) | (221) | ||
| Balance as at 31 December 2022 | 200,000 | 871,378 | 84,184 | (79,743) | (1,934) | 13,522 | 515,463 | 1,602,870 |
| NLB Group | NLB | Notes | 2023 | 2022 | 2023 | 2022 | ||
|---|---|---|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Interest received | Dividends received | 417 | 965 | 138,327 | 75,071 | |||
| Fee and commission receipts | 397,366 | 382,354 | 164,611 | 162,129 | ||||
| Fee and commission payments | (120,892) | (105,086) | (41,809) | (37,183) | ||||
| Net gains/(losses) from financial assets and liabilities held for trading | 29,374 | 32,799 | 4,287 | 12,073 | ||||
| Payments to employees and suppliers | (467,937) | (428,539) | (216,407) | (186,800) | ||||
| Income tax (paid)/received | (33,404) | (18,336) | (7,750) | 3,635 | ||||
| Cash flows from operating activities before changes in operating assets and liabilities | 620,715 | 417,114 | 412,400 | |||||
| Net (increase)/decrease in trading assets | 200 | (213) | 200 | (213) | ||||
| Net (increase)/decrease in non-trading financial assets mandatorily at fair value through profit or loss | 6,416 | 3,357 | ||||||
| Net (increase)/decrease in loans and receivables measured at amortised cost | (818,626) | (1,357,757) | (414,239) | (890,003) | ||||
| Net increase/(decrease) in deposits and borrowings measured at amortised cost | 854,231 | 476,590 | 280,488 | 621,876 | ||||
| Net increase/(decrease) in other liabilities | (108,705) | 678,724 | 46,580 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Receipts from investing activities | 445,345 | 211,536 | 196,331 | 138,980 | ||||
| Proceeds from sale of property, equipment, net of cash and cash equivalents | 12,776 | - | 20,068 | 21,130 | ||||
| Proceeds from non-current assets held for sale | 16,786 | 1,081 | 944 | 645 | ||||
| Proceeds from disposals of debt securities measured at amortised cost | (1,083,639) | (252,726) | (551,632) | (442,731) | ||||
| Purchase of property, equipment, and investment property | (42,681) | (26,910) | (10,152) | (5,748) | ||||
| Purchase of intangible assets | (19,305) | (14,273) | (1) | |||||
| Purchase of debt securities measured at amortised cost | (1,021,653) | (409,784) | (528,893) | (309,355) | ||||
| Net cash flows from investing activities | (638,000) | |||||||
| Proceeds from financing activities | 497,708 | 599,338 | 497,708 | 598,902 | ||||
| Issuance of subordinated bonds | - | 217,873 | - | 217,873 | ||||
| Issuance of senior preferred notes | 497,708 | 299,020 | - | 82,000 | ||||
| Other proceeds related to financing activities | - | 436 | - | - | ||||
| Payments from financing activities | (122,273) | (131,745) | (111,264) | (100,974) | ||||
| Dividends paid | (114,749) | (104,586) | (110,000) | |||||
| Net cash flows from financing activities | 375,435 | 467,593 | 386,444 | 497,928 | ||||
| Effects of exchange rate changes on cash and cash equivalents | (595) | 6,213 | 1,039 | (1,106) | ||||
| Cash and cash equivalents at beginning of year | 5,500,222 | 5,176,311 | 3,494,435 | 3,254,784 | ||||
| Cash and cash equivalents of merged bank at the date of the merger | - | - | 118,158 | - |
| thousands | NLB Group | NLB | Notes | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|---|---|---|---|
| Cash and cash equivalents comprise: | Cash, cash balances at central banks, and other demand deposits | original maturity up to three months | 506,266 | 208,404 | 5,000 | 155,054 | |
| Debt securities measured at fair value through other comprehensive income | with original maturity up to three months | 26,022 |
Nova Ljubljanska banka d.d. Ljubljana (hereinafter: ‘NLB’ or ‘the Bank’) is a Slovenian joint-stock entity providing universal banking services.
Slovenia and the SEE market. Information on NLB Group’s structure is disclosed in note 5.12. Information on other related party relationships of NLB Group is provided in note 8. NLB is Republike 2, 1000 Ljubljana. NLB’s shares are listed on the Ljubljana Stock Exchange, and the global depositary receipts (‘GDR’) representing ordinary shares of NLB, are listed on the L and as at 31 December 2022, the largest shareholder of NLB with significant influence is the Republic of Slovenia, owning 25.00% plus one share. All amounts in the financial statements otherwise stated.
The principal accounting policies have been prepared in accordance with the International Financial Accounting Standards (hereinafter: ‘the IFRS’) as adopted by the European Union (hereinafter: ‘EU’). Additional requirements under financial statements are comprised of the income statement and statement of other comprehensive income, the statement of financial position, the statement of changes in equity, the statement presenting the financial statements.
The financial statements have been prepared on a going-concern basis, under the historical cost convention as modified by the revaluation of financial assets and financial liabilities at fair value through profit or loss, including all derivative contracts, hedged items in fair value hedge accounting relationships, non-current assets held for sale, and investments.
This requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements. Although these estimates are based on management’s best knowledge of current events and activities, actual results may ultimately differ from those estimates. Accounting estimates and updates are recognised in the period in which the estimate is revised. Critical accounting estimates and judgements in applying accounting policies are disclosed in note 2.34.
This document contains NLB Group. The presented accounting policies apply to both sets of financial statements, with the exception of policies described in notes 2.4. and 2.5., which only apply to the consolidated financial statements for investments in subsidiaries, and associated and joint ventures between separate and consolidated financial statements are described. Data relating to separate financial statements is marked ‘NLB 200’.
MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segment
| in EUR thousands | 31 Dec 2022 | NLB Group | NLB | Old presentation | New presentation |
|---|---|---|---|---|---|
| Interest income calculated using the effective interest method | 561,467 | 558,826 | 2,641 | 214,163 | 217,881 |
| (3,718) | Other interest and similar income | ||||
| 8,309 | 10,950 | (2,641) | 7,799 | 4,081 | |
| Interest and similar income | 4.1. | 569,776 | 569,776 | - | 221,962 |
| - | Interest expenses calculated using the effective interest method | ||||
| (43,785) | (53,086) | 9,301 | (27,373) | (34,166) | |
| 6,793 | Other interest and similar expenses | ||||
| (21,069) | (11,768) | (9,301) | (17,562) | (10,769) | |
| (6,793) | Interest and similar expenses | ||||
| (64,854) | (64,854) | - | (44,935) | (44,935) | |
| - | Net interest income | ||||
| 504,922 | 504,922 | - | 177,027 | 177,027 |
| Interest income calculated using the effective interest method | 561,467 | 558,826 | 2,641 | 214,163 | 217,881 |
|---|---|---|---|---|---|
| Loans and advances to customers at amortised cost | 489,999 | 483,392 | 6,607 | 174,543 | 174,543 |
| Negative interest | - | 3,966 | (3,966) | - | 3,718 |
| Other interest and similar income | 8,309 | 10,950 | (2,641) | 7,799 | 4,081 |
| Finance leases | - | 6,607 | (6,607) | - | - |
| Negative interest | 3,966 | - | 3,966 | 3,718 | - |
| Interest expenses calculated using the effective interest method | 43,785 | 53,086 | (9,301) | 27,373 | 34,166 |
|---|---|---|---|---|---|
| Negative interest | - | 9,301 | (9,301) | - | 6,793 |
| Other interest and similar expenses | 21,069 | 11,768 | 9,301 | 17,562 | 10,769 |
| Negative interest | 9,301 | - | 9,301 | 6,793 | - |
‘Negative interest’ from section ‘Other interest and similar these changes in the presentation.
201 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm
| NLB Group | NLB | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Old presentation | New presentation | Change | Old presentation | New presentation | Change | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | Increases/(decreases) in operating liabilities | 468,473 | 476,590 | (8,117) | 620,902 | 621,876 | (974) | ||
| Net increase/(decrease) in deposits and borrowings measured at amortised cost | 467,966 | 476,083 | (8,117) | 616,303 | 617,277 | (974) | |||
| Net cash flows from operating activities | (116,822) | (108,705) | (8,117) | 45,606 | 46,580 | (974) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | Payments from financing activities | (123,628) | (131,745) | 8,117 | (100,000) | (100,974) | 974 | ||
| Lease payments | - | (8,117) | 8,117 | - | (974) | 974 | |||
| Net cash flows from financing activities | 475,710 | 467,593 | 8,117 | 498,902 | 497,928 | 974 |
In the consolidated financial statements (NLB Group), subsidiaries which are directly or indirectly controlled by NLB have been fully consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to NLB Group. NLB controls an entity when all three elements of control are met:
NLB reassesses whether it controls an entity if facts and circumstances indicate there are changes to one or more of the three elements of control. If the loss of control of a subsidiary occurs, the subsidiary is no longer consolidated from the date that the control ceases. Where necessary, the accounting policies of subsidiaries have been amended to ensure consistency with the policies adopted by NLB. The financial statements of consolidated subsidiaries are prepared as at the parent entity’s reporting date.
Non-controlling interests are disclosed in the consolidated statement of changes in equity. Non-controlling interest is that part of the net results, and of the equity of a subsidiary, attributable to interests which NLB does not own, either directly or indirectly. NLB Group measures non-controlling interest on a transaction-by-transaction basis, either at fair value, or by the non-controlling interest’s proportionate share of net assets of the acquiree. Inter-company transactions, balances, and unrealised gains on transactions between NLB Group entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment of the asset transferred.
NLB Group treats transactions with non-controlling interests as transactions with equity owners of NLB Group. For purchases of subsidiaries from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is deducted from the equity. For sales to non-controlling interests, the differences between any proceeds received and the relevant share of non-controlling interests are also recorded in the equity. All effects are presented in the line item ‘Equity Attributable to Non-controlling Interest.’
NLB Group accounts for business combinations using the acquisition method when the acquired set of activities and assets meets the definition of a business, and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process, and whether the acquired set has the ability to produce outputs.
The acquired process is considered substantive if it is critical to the ability to continue producing outputs; and the inputs acquired include an organised workforce with the necessary skills, knowledge, or experience to perform that process or it significantly contributes to the ability to continue producing outputs and is considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
The consideration transferred is measured at the fair value of the assets transferred, equity interest issued, liabilities incurred or assumed, including the fair value of assets or liabilities from contingent consideration arrangements and fair value of any pre-existing equity interest in the subsidiary. However, amounts related to the settlement of pre-existing relationships which are recognised in profit or loss. Acquisition-related costs such as advisory, legal, valuation, and similar professional services are deducted from the equity, and all other transaction costs associated with the acquisition are expensed.
Identifiable assets acquired and liabilities assumed in a business combination are measured at fair value at the acquisition date. A contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. A contingent consideration classified as an asset or liability is measured at fair value at each reporting date, and changes in fair value are recognised in the statement of profit or loss in accordance with IFRS 9. Other contingent considerations that are classified as assets or liabilities are also measured at fair value at each reporting date, and changes in fair value are recognised in profit or loss.
For each business combination, NLB Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the acquiree’s identifiable net assets at the date of acquisition. All other components of non-controlling interests are measured at their acquisition-date fair values, unless another measurement basis is required. The consideration transferred is measured at fair value, the amount of any non-controlling interest in the acquiree, and the fair value of an interest in the acquiree held immediately before the acquisition.
Any negative amount, a gain on a bargain purchase, is recognised in profit or loss after management reassesses whether it has identified all the assets acquired and all the liabilities assumed. Goodwill is tested annually for impairment. For the purpose of impairment testing, goodwill arising from a business combination is, from the acquisition date, allocated to the Group’s cash-generating units (CGUs) that are expected to benefit from the synergies of the combination.
Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.
In a business combination achieved in stages, NLB Group remeasures its previously held equity interest in the acquiree at its acquisition-date fair value, and recognises the resulting gain or loss in profit or loss.
In the separate financial statements (NLB), investments in subsidiaries, associates and joint ventures are accounted for with the cost method. Dividends from subsidiaries, joint ventures and associates are recognised in profit or loss when the right to receive the dividend has been established. In the consolidated financial statements, investments in associates are accounted for using the equity method of accounting. These are generally entities over which NLB Group exercises significant influence, but does not have control. Joint ventures are entities over whose activities NLB Group has joint control, established by contractual agreement, and are accounted for using the equity method of accounting.
NLB Group’s share of its associates and joint ventures post-acquisition profits or losses is recognised in the consolidated income statement as income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When NLB Group’s share of losses in an associate and joint venture equal or exceed its interest in the associate and joint venture, including any long-term interests that form part of the net investment, NLB Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the associate and joint venture. NLB Group resumes recognising its share of losses only after its share of profits is recognised (note 5.12.g). NLB Group’s subsidiaries, associates and joint ventures are presented in note 5.12.
Functional and presentation currency Items included in the financial statements environment in which the entity operates (i.e., the functional currency). The financial statements are presented in euros, which is NLB Group’s presentation currency. Transactions and balances are recorded at the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets are recognised in the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges. Translation differences resulting from changes in the amortised cost of monetary items denominated in foreign currencies are recognised in the income statement. Translation differences on non-monetary items, such as equity instruments at fair value through profit or loss, are reported in the income statement. Non-monetary items, such as equity instruments classified as financial assets measured at fair value through other comprehensive income, are included together with valuation reserve in the equity. Gains and losses resulting from foreign currency purchases and sales for trading purposes are included in the income statement as gains less losses from financial assets and liabilities.
Entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. In the consolidated financial statements, exchange differences arising from the translation of the net investment in foreign operations are recognised in other comprehensive income. If the foreign operation is lost, the previously recognised exchange differences on translations to a different presentation currency are reclassified from other comprehensive income to profit and loss for the period. The accumulated currency translation differences are reclassified as a non-controlling interest within the equity.
Interest income and expenses for all financial instruments are recognised in the income statement for all interest-bearing instruments on an accrual basis using the effective interest method. Interest income on all trading assets and liabilities is recognised using the contractual interest rate. The effective interest method is used to calculate the amortised cost of a financial asset or financial liability, and to allocate the interest income over the expected life of the financial instrument, or a shorter period (when appropriate) to the gross carrying amount of the financial asset.
Interest income is earned on fixed-yield investments and trading securities, and accrued discounts and premiums on securities. The calculation of the effective interest rate includes all fees and points paid or received. Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets other than credit-impaired assets. When a financial asset becomes credit-impaired, interest income is calculated using the effective interest rate to the net amortised cost of the financial asset. If the financial asset cures and is no longer credit-impaired, interest income is again calculated on a gross basis. An adjusted effective interest rate is applied to the amortised cost of the financial asset from initial recognition. The credit-adjusted effective interest rate is the interest rate that, at initial recognition, exactly discounts estimated future cash payments or receipts over the expected life of the financial instrument.
The NLB Group provides a service to its customers, the consideration is invoiced and generally due immediately upon satisfaction of a service provided at a point in time. When the service is provided, the NLB Group has generally concluded that it is the principal in its revenue arrangements because it typically controls the services before transferring them to the customer. Fees and commissions are presented within interest income or expenses.
Dividends are recognised in the income statement within the line item ‘Dividend income’ when NLB Group’s right to receive the dividend is established. In the consolidated financial statements, dividends received from associates and joint ventures reduce the carrying value of the investment.
a) Classification and measurement
In the case of a financial instrument not measured at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial instrument are included in the initial measurement. Subsequent to initial recognition, debt financial assets need to be assessed based on a combination of the Group’s business model for managing the assets and the instruments’ contractual cash flow characteristics. The measurement categories for financial assets are:
Financial assets are classified as held to collect if they are held within a business model for the purpose of collecting contractual cash flows, and if cash flows are solely payments of principal and interest on the principal amount outstanding. Interest income is calculated using the effective interest method and is subject to impairment. Interest income calculated using the effective interest method, foreign exchange gains and losses, and impairment are recognised separately in profit or loss.
Any gain or loss on derecognition is recognised in profit or loss in the line item ‘Gains less losses from financial assets and liabilities not measured at fair value through profit or loss.’ Debt financial instruments are classified for the purpose of both collecting contractual cash flows and selling if cash flows are solely payments of principal and interest on the principal amount outstanding. FVOCI positions are measured at the AC in the income statement. Interest income is calculated using the effective interest method, foreign exchange gains and losses, and impairments are recognised separately in profit or loss until the instrument is derecognised.
At derecognition of the debt financial instrument, the cumulative gains and losses previously recognised in other comprehensive income are reclassified to profit or loss in the line item ‘Gains less losses from financial assets and liabilities not classified at fair value through profit or loss.’ Equity instruments that are not held for trading may be irrevocably designated as FVOCI, with no subsequent reclassification of gains or losses unless the dividend clearly represents a recovery of part of the cost of the investment, in which case, such gains are recorded in other comprehensive income.
For the NLB Group, the most material equity instrument irrevocably designated as FVOCI is the investment in the National Resolution Fund (note 5.4.a). NLB Group decided to use this presentation to ensure safety, low risk, and the high liquidity of the fund. All other financial assets are mandatorily measured at FVTPL, including financial assets held for trading and financial assets with contractual cash flows that are not solely payments of principal and interest on the principal amount outstanding. Net gains and losses, including any interest income, are recognised in profit or loss.
The NLB Group may designate financial assets at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or liabilities on different bases, or if the liabilities are part of a group of financial instruments which are managed and their performance evaluated on a fair value basis in accordance with a documented risk management strategy.
comprehensive income with no subsequent reclassification to the income statement. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Any gain or loss on the derecognition of a financial liability is recognised in profit or loss. In the event of derecognition of a financial liability measured at amortised cost, the gains and losses classified at fair value through profit or loss. Gains and losses on disposals of financial liabilities designated as measured at fair value through profit or loss are also presented separately from...
determined its business model separately for each reporting unit within NLB Group, and is based on observable factors for different portfolios that best reflect how the Group manages group...
the business model and the financial assets held within that business model are evaluated and reported to key management personnel; • the risks that affect the performance of the business are compensated (e.g., whether the compensation is based on the fair value of the assets or on collection of contractual cash flows); and • the expected frequency, value, and timing without taking worst-case and stress case scenarios into consideration. In general, the business model assessment of the Group can be summarised as follows: • Loans and deposits given a...
for the loan portfolio is to collect the contractual cash flows; • Debt securities are divided into three business models: • the first group of debt securities presents ‘held for trading’ category; sale’ with the intention of collecting the contractual cash flows and sale of financial assets, and forms part of the Group’s liquidity reserves; • the third part of debt securities is held within...
regard to debt securities within the ‘held to collect’ business model, the sales which are related to the increase of the issuers’ credit risk, sales made close to the final maturity, or sales in order to an increase in credit risk may still be consistent with a held to collect business model if such sales are incidental to the overall business model, and: • are insignificant in value both individually and collectively; or • are significant in value. A review of instruments’ contractual cash flow characteristics (the SPPI test – solely payment of principal and interest on the principal amount outstanding) The se...
‘held to collect and sell’ relates to the assessment of whether the contractual cash flows are consistent with the SPPI test. The principal amount reflects the fair value at initial recognition level, consideration for the time value of money, credit risk, other basic lending risks, and a profit margin consistent with basic lending features. If the cash flows introduce more than de minimis...
asset is mandatorily measured at fair value through profit or loss. NLB Group reviews the portfolio within ‘held to collect’ and ‘held to collect and sale’ for standardised products on a level...
established a procedure for SPPI identification as part of regular investment process with defined responsibilities for primary and secondary controls. Special emphasis is put on new and n...
financial assets When contractual cash flows of a financial asset are modified, NLB Group assesses if the terms and conditions have been modified to the extent that, substantially, it becomes...
making such assessment: • reason for modification of cash flows; • change in currency of the loan; • introduction of an equity feature; • replacement of initially agreed debtor with a new debtor...
the SPPI test. If the modification results in derecognition of a financial asset, the new financial asset is initially recognised at fair value, with the difference recognised as a derecognition gain. If the modification does not result in cash flows that are substantially different, the modification does not result in derecognition. In such cases, NLB Group recalculates the gross carrying amount...
The gross carrying amount is recalculated as the present value of the renegotiated or modified contractual cash flows that are discounted at the financial asset’s original effective interest rate...
Current market transactions in the same instrument (i.e., without modification or repackaging), or based on a valuation technique whose variables only include data from observable market transactions in the same instrument, or is based on a valuation technique whose variables only include data from observable markets, the difference between the one gains or losses. In cases where the data used for valuation are not fully observable in financial markets, day one gains or losses are not recognised immediately in the income statement. It is either amortised over the life of the transaction, deferred until the instrument’s fair value can be determined using market observable inputs, or realised through settlement.
d) Derecognition of financial assets occurs when the financial asset expires, or when the financial asset is transferred, and the transfer qualifies for derecognition. A financial liability is derecognised only when it is extinguished, i.e., when NLB Group writes off financial assets in their entirety or a portion thereof when it has exhausted all practical recovery efforts and has no reasonable expectations of recovery. Criteria indicating collateral, and different stages of enforcement procedures. NLB Group may write off financial assets that are still subject to enforcement activities, but this does not affect its rights in the event of recovery in full. A write-off reduces the gross carrying amount of a financial asset and allowance for the impairment. Any subsequent recoveries are credited to credit loss expenses.
Write-offs and recoveries of financial instruments traded on active markets is based on the price that would be received to sell the assets or transfer liability (exit price) being measured at the reporting date, estimated using discounted cash flow techniques or pricing models. If discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates; and terms and conditions. If pricing models are used, inputs are based on market-based measurements at the reporting date.
g) Derivative financial instruments and hedge accounting. Derivative financial instruments are initially recognised in the statement of financial position at fair value. Derivative financial instruments are subsequently re-measured at their fair value. Fair values are obtained from quoted market prices. Derivatives are carried at their fair value within assets when the derivative position is favourable to NLB Group, and within liabilities when the derivative position is unfavourable to NLB Group.
The derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. NLB Group designates certain derivatives as either: • hedges of the fair value of recognised assets or liabilities, or a highly probable forecasted transaction (cash flow hedge); or • hedges of a net investment in a foreign operation. NLB Group and NLB have exercised the option to continue applying the existing IAS 39 hedge accounting requirements in accordance with the policy choice permitted under IFRS 9.
Instruments: Disclosures are implemented. At the inception of the transaction, NLB Group documents the relationship between hedged items and hedging instruments, as well as its risk management transactions. NLB Group also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair value or cash flows attributable to the hedged risk. Effective changes in the fair value of hedging instruments and related hedged items are reflected in ‘Fair Value Adjustments in Hedge Accounting’ in the income statement, recorded in the same line as change in fair value of hedging instruments and hedged item if they are different.
If a hedge no longer meets the hedge accounting criteria, the adjustment used is amortised to profit or loss over the remaining period to maturity. The adjustment to the carrying amount of a hedged equity security is included in the income statement upon disposal of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective portion is immediately recognised from other comprehensive income to the statement in the periods when the hedged item affects the profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets hedge accounting criteria, any cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the income statement. Hedge of a net investment in a foreign operation. Hedges of net investments in foreign operations are recognised directly in equity. The gain or loss relating to the ineffective portion is recognised in profit or loss.
Assets and Liabilities Held for Trading. Gains and losses accumulated in other comprehensive income are included in the consolidated income statement when the foreign operation is disposed of.
Expected credit losses for collective allowances. IFRS 9 applies an expected loss model that provides an unbiased and probability-weighted estimate of credit losses by evaluating a range of scenarios. The loss model requires NLB Group to recognise not only credit losses that have already occurred, but also losses that are expected to occur in the future. An allowance for expected credit losses is recognised together with loan commitments and financial guarantee contracts.
In the general model, the allowance is based on the expected credit losses associated with the probability of default in the recognition, in which case, the allowance is based on the probability of default over the life of the financial asset (LECL). When determining whether the risk of default has increased significantly, information that is relevant and available without undue cost or effort is considered. This includes both quantitative and qualitative information and analysis, based on the Group’s historical data, experience.
rated D, DF, or E based on the internal rating system and contains the clients with material delays over 90 days, as well as the clients that were assessed as unlikely to pay. All facilities of r when a credit rating significantly deteriorates at the reporting date in comparison to the credit rating at initial recognition a significant deterioration is a 3-notch rating decrease taking into c deterioration from invest/invest with care to speculative investment rating grade on the short rating scale (with only 3 performing rating groups), • when a threefold increase of LPD since i instrument origination and the last available PD curve), • when a financial asset has material delays over 30 days with a healing period of 3 months and the materiality limit aligned with th default definition, the holding period of 3 months is applied), • if NLB Group grants a forbearance to the borrower where the rules of forbearance expiry are aligned with the ECB Guidelin placed on the watch list based on features which lead to increased credit risk (such as spending habits, decreased employment security, political risk and similar). The methodology of cred a rating from international credit rating agencies – Fitch, Moody’s, or the S&P. Ratings are set on a basis of the average international credit rating. If there are no international credit ratings Classification for Financial Markets clients' segments in NLB d.d. and NLB Group. For banks without an international credit rating, we obtain information from Bureau van Dijk, a Moody information is obtained by an analyst from the annual reports with the assistance of the central relationship manager. The classification into stages is based on the facility level. Neverthele the same client. When the SICR criteria no longer exist, the facility may be transferred to a more favourable stage subject to the prescribed cure period of three months. The ECL for Stage remaining maturity of the financial asset is shorter than 1 year.
Country
| Optimistic Scenario | Baseline Scenario | ||||||||
| 2022 | 2023 | 2024 | 2022 | 2023 | 2024 | ||||
| Slovenia | 4.7 | 5.5 | 4.0 | 3.5 | 3.1 | 2.8 | |||
| Bosnia and Herzegovina | 4.0 | 4.9 | 4.6 | 2.4 | 2.3 | 3.0 | |||
| Montenegro | 6.2 | 6.9 | 5.2 | 4.2 | 3.9 | 3.2 | |||
| North Macedonia | 4.1 | 6.0 | 5.2 | 2.9 | 3.6 | 4.0 | |||
| Serbia | 4.8 | 6.5 | 5.0 | 3.6 | 4.1 | 3.8 | |||
| Kosovo | 4.4 | 6.5 | 5.1 | 2.8 | 3.9 | 3.5 |
Country
| Optimistic Scenario | Baseline Scenario | ||||||
| 2023 | 2024 | 2025 | 2023 | 2024 | 2025 | ||
| Slovenia | 2.4 | 3.4 | 2.5 | 0.6 | 2.2 | 2.5 | |
| Bosnia and Herzegovina | 2.3 | 2.9 | 2.4 | 1.0 | 2.0 | 2.3 | |
| Montenegro | 6.0 | 5.5 | 3.4 | 2.6 | 3.2 | 3.2 | |
| North Macedonia | 3.6 | 4.3 | 3.3 | 1.6 | 3.0 | 3.3 | |
| Serbia | 3.3 | 4.2 | 3.6 | 1.8 | 3.1 | 3.4 | |
| Kosovo | 4.1 | 4.6 | 3.8 | 2.4 | 3.5 | 3.8 |
NLB Group formed three probable scenarios with an associated probability of occurrence for forward-looking assessment of risk provisioning in the context of IFRS 9. IFRS 9 macroeconomic impairment calculation. Both features may change when material changes in the future development of the economy are recognised and not embedded in previous forecasts. On this basis, receiving 20% each, and the baseline scenario 60%), with minor changes in some entities to reflect the likelihood of relevant future economic conditions in their environment. Effects of expected credit losses are disclosed in notes 5.14. and 5.16.b).
‘Provisions’ and in the income statement in the line item ‘Provisions for credit losses.’ The ECLs for debt instruments measured at fair value through other comprehensive income do not red which remains at fair value. Instead, an amount equal to the allowance that would arise if the assets were measured at amortised cost is recognised in other comprehensive income as an accumulated loss recognised in other comprehensive income is recycled to the profit or loss upon derecognition of the assets, or when the amount of allowances for ECL decreases due to an (or restructured financial asset) arises as a result of a debtor’s inability to repay a debt under the originally agreed terms, either by modifying the terms of the original contract (via an annexation of the repayment of the original debt.
When receivables from the client receive restructuring status, the debtor must be classified in the rating grade C or lower. The definitions of forborne loans c These definitions aim to achieve comprehensive coverage of exposures to which forbearance measures have been extended. The accounting treatment of forborne loans depends on the type repayment proceeding from extending the deadline for the repayment of the principal and/or interest, and/or a forbearance of the repayment of the principal, and/or interest or a reduction in on the basis of the discounted value of the estimated future cash flows under the modified terms, and recognises the resulting effect in profit or loss.
In the event of the reduction of a claim contractually agreed debt waiver and ownership restructuring or debt to equity swap, NLB Group derecognises the claim in the part relating to the write-down or the contractually agreed u written down, is based on an updated estimate of the probability of loss. NLB Group considers the debtor’s modified position, the economic expectations, and the collateral of the forborne assets (i.e., property, plant and equipment; securities; and other financial assets), including investments in the equity of debtors obtained via debt-to-equity swaps, it recognises the acquire between the fair value of the asset and the carrying amount of the eliminated claim in profit or loss.
Forborne exposures may be identified in both the performing and non-performing parts portfolio, it can be reclassified to the performing part when exposure is no longer considered as impaired or defaulted, when determined amounts were repaid, when one year has passed from performing part, repayment of the last overdue amount, end of the grace period), and after the introduction of forbearance there have been no overdue amounts or doubts concerning the repayment. The absence of doubt is confirmed by analysis of the financial situation of the debtor.
The forborne status is withdrawn when: • at least a 2-year probation period has passed since the latest of: deemed performing; • regular payments of the principal or interest were made, in a substantial total amount, during at least half the probation period; • no exposure, in the probation period financial indicators. In the case of a deferral of payment approved due to the COVID-19 crisis, the probation period is extended for the period of deferral.
In certain default. Repossessed assets are initially recognised in the financial statements at their fair value and classified in the appropriate category according to their purpose and are sold as soon as repossessed assets are measured and accounted for in accordance with the policies applicable to the relevant asset categories. Non-financial repossessed assets mainly represent items of real estate obtained as collateral from the foreclosure of loans and receivables (realisable value), wherein only the direct costs of sales can be considered, but up to the amount of gross carrying amount of foreclosed loan.
At subsequent measurement, the realisable value is determined by certified real estate appraisers. The real estate is impaired when the carrying value exceeds the realisable value. The effect of impairment is recognised as the impairment of other assets.
Financial assets and liabilities are offset, and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised the liability simultaneously.
Securities sold under sale and repurchase agreements (repos) are retained in the financial statements, and the counterparty liability is recognised in financial liabilities are reclassified in the financial statements as pledged assets when the transferee has the right by contract or custom to sell or re-pledge the collateral. Securities purchased under agreement In financial statements, the difference between the sale and repurchase price is treated as interest and accrued over the life of the repo agreements using the effective interest method.
They are subsequently measured at cost less any accumulated depreciation and any accumulated impairment loss. Each year, NLB Group assesses whether there are indications that property estimated. The recoverable amount is the higher of the fair value less costs to sell and value in use. If the recoverable amount exceeds the carrying value, the assets are not impaired. If the carrying value exceeds the recoverable amount, an impairment loss is recognised in the income statement.
Items of a largely independent property and equipment which do not generate cash flows are included in the cash-generating unit and later tested for possible impairment.
Intangible assets include software licenses, goodwill (note 2.5.), and identifiable intangible assets with a finite useful life and are in the statement of financial position stated at cost, less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis at rates as follows:
| Core banking system | 10 years |
|---|---|
| Other software | 3 – 5 years |
Amortisation does not begin until the assets are available for use. The identifiable intangible assets from goodwill are recorded at fair value on the acquisition date if the intangible asset is separable or arises from contractual or other legal rights. After initial recognition, intangible assets are measured at cost less accumulated amortisation and impairment losses.
Investment properties include properties held to earn rentals, or to increase the value of the properties. They are carried at fair value determined by a certified appraiser. Fair value is based on current market prices. Any gain or loss arising from a change in the fair value is recognised in the income statement.
Current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is deemed to be met only when the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
Assets held for sale are measured at the lower of the assets’ previous carrying amount and fair value less costs to sell. In the case of business combinations, NLB Group measures an acquired non-current asset (or disposal group) at fair value less costs to sell.
NLB Group as a lessee recognises a liability to make lease payments and an asset representing the right to use the underlying asset (i.e., the right-of-use asset) during the lease term. Leases are defined as those which at the commencement date have a lease term of 12 months or less without the option to purchase the underlying asset. Leases of underlying assets with a value are recognised as expenses on a straight-line basis over the lease term.
At the commencement date, NLB Group measures the right-of-use asset at cost. The cost of right-of-use assets includes:
Right-of-use assets are depreciated on a straight-line basis over the lease term, and interest on the lease liabilities is recognised separately. In the statement of financial position, right-of-use assets are presented in the line item ‘Other financial liabilities.’
NLB Group as a lessor classifies a lease as a finance lease when the risks and rewards incidental to ownership of a leased asset are transferred to the lessee. Payments under operating leases are recognised as income on a straight-line basis over the lease term.
issued financial instruments with characteristics of equity Upon initial recognition, other issued financial instruments are classified in part or in full as equity instruments if the contractual characteristics of the instrument indicate that it is an equity instrument in accordance with IAS 32 Financial Instruments: Presentation. An issued financial instrument is only considered an equity instrument if that instrument does not represent a contractual obligation to deliver cash or another financial asset to another entity.
Transaction costs incurred for issuing such instruments are deducted from retained earnings. The corresponding interest is recognised in equity in the statement of financial position. The line item ‘Other Equity Instruments’ presents the issued financial instruments with characteristics of equity in the statement of changes in equity.
Provisions are recognised when NLB Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. They are recognised in the statement of financial position as a liability at the end of the reporting period.
When the effect of the time value of money is material, NLB Group determines the level of provisions by discounting the expected cash flows.
Financial guarantees are contracts that require the issuer to make specific payments to reimburse the holder for a loss it incurs because the specified debtor fails to make payment when due in accordance with the terms of debt instruments. Such financial guarantees are given to banks, financial institutions, and other bodies on behalf of the customer to secure loans, overdrafts, and other banking facilities.
The obligation of the Bank (guarantor) to pay if the client fails to perform certain works in accordance with the terms of the commercial contract. Financial and non-financial guarantees are initially recognised at fair value and subsequently measured at the greater of:
Documentary (and standby) letters of credit constitute a written and irrevocable commitment of the issuer to pay the beneficiary the value set out in the documents by a defined deadline:
A commitment may also take the form of a letter of credit confirmation, which is usually done at the request of the customer by the confirming bank, in addition to that of the issuing bank, which independently assumes a commitment to the beneficiary under certain conditions.
Other contingent liabilities and commitments to extend credit, uncovered letters of credit, and other commitments. The nominal contractual values of guarantees, letters of credit, and undrawn loan commitments where the...
A contingent liability recognised in a business combination is initially measured at its fair value and is recognised as a liability. Upon subsequent recognition, it is measured at the higher of:
This requirement does not apply to contracts accounted for in accordance with IFRS 9.
Other comprehensive income, cash flow hedges, and actuarial gains and losses on defined benefit pension plans is charged or credited directly to other comprehensive income. Deferred in arising between the tax bases of assets and liabilities, and their carrying amounts for financial reporting purposes. Deferred tax assets are recognised if it is probable that future taxable profits can be utilised. Deferred tax assets and liabilities are measured at tax rates enacted or substantively enacted at the end of the reporting period that are expected to apply to the period when the carrying amount of deferred tax assets and assesses future taxable profits against which temporary taxable differences can be utilised. Deferred tax assets for temporary differences arising are recognised only to the extent that it is probable that:
- the temporary differences will be reversed in the foreseeable future; and
- taxable profit will be available.
NLB Group recognises a deferred tax liability on withholding tax payable on future planned dividend pay-out. In the case of business combination, deferred tax balances are recognised if related to temporary differences resulting from the acquisition. Income taxes are measured in accordance with IAS 12 Income Taxes. Slovenian tax law does not set deadlines by which uncovered tax losses must be utilised. A tax (financial services, exempt from value-added tax (with the exception of securities transactions) and the services of insurance brokers and agents), paid in Slovenia. The tax rate is 8.5% (2022: 8 sales tax, it reduces accrued revenues in the financial statements.
NLB Group provides asset management services to its clients. Assets held in a fiduciary capacity are recognised in the income statement when the service has been provided (see also note 2.10.). Further details on transactions managed on behalf of third parties are disclosed in note 5.25. Based on the requirements of Slovenian legislation, NLB Group has, in note 5.25., information related to the receipt, processing, and execution of orders and related custody activities.
Employee benefits include:
- short-term employee benefits (salary, separation allowance, and non-monetary benefits);
- reimbursement of commuting costs, meal allowance, compensation for use of own resources;
- retirement indemnity bonuses (post-employment supplementary pension insurance);
- variable remuneration.
Cash-settled share-based payment transactions If certain conditions are met, members of the Management Board and employees performing special work (i.e., and activities) receive part of their variable remuneration in the form of financial instruments, whose value is linked to the value of NLB share. Upon expiration of the legally prescribed period, the first contracts, including share-based payment transactions, were concluded in the second quarter of 2022. In the statement of financial position, a liability is recognised in value is measured initially and at each reporting date up to and including the settlement date, with changes in fair value recognised in the income statement line item ‘Gains less losses from share-based payment transactions. NLB Group does not have any equity-settled share-based payment transactions.
Dividends on ordinary shares Dividends on ordinary shares Treasury shares If NLB or another member of NLB Group purchases NLB shares, the consideration paid is deducted from the total shareholders’ equity as treasury shares. If such shares are purchased by NLB itself or other NLB Group entities, NLB creates reserves for treasury shares in equity. Share issue costs Costs directly attributable to the issue of new shares are recognised.
Segments are reported in a manner consistent with internal reporting to the Management Board of the Bank, which is the executive body that makes decisions regarding the allocation of resources. Organisational units (OUs) are managed under normal operating conditions. Interest income among individual OUs in the parent bank (NLB) and N Banka is allocated using a fund transfer pricing model. Income is allocated to the OU that actually provides the service that generates income. Direct costs are attributed to the segment that is directly related to the provided service, and indirect costs are allocated according to general keys. External net income is the net income of NLB Group from the consolidated income statement presented in note 7. In accordance with IFRS 8, NLB Group has the following reportable segments: Retail Banking in Slovenia, Corporate and Investment Banking in Slovenia, Strategic F.
NLB Group’s financial statements are influenced by accounting policies, assumptions, estimates, and management judgments regarding the amounts of assets and liabilities within the next financial year. All estimates and assumptions required in conformity with the IFRS are best estimates undertaken in accordance with the applicable standards based on past experience and other factors, including expectations with regard to future events.
NLB Group monitors and challenges estimates to determine the necessary allowances for ECL. NLB Group creates individual allowances for individually significant financial assets attributed to Stage 3. Such an assignment is based on information about the debtor, and other important facts. Individual assessments are based on the expected discounted cash flows from operations and/or the assessed expected payment from collateral. Allowances are created for assets in Stage 3 with exposure below the materiality threshold. The ECL in this group of assets are estimated based on expected value of risk parameters combining the historic movement to estimate future risk parameters are validated and back-tested on a regular basis to make the loss estimations as realistic as possible. NLB Group applies 3 different macroeconomic scenarios.
The key features of each scenario are described in note 2.13.a) Forward-looking information. Recognised allowances represent a weighted average of the results of the three scenarios of assets from performing to non-performing status) and loss rates (the % of exposure that will not be repaid in case of default occurrence). Applying a 100% probability on each of the scenarios.
| Level of collective allowances | 91% | 100% | 137% |
|---|---|---|---|
The result shows that the optimistic scenario would result in 91% of the baseline provisions, while the severe scenario and its conservative assumptions lead to an increase of 37% compared to the baseline.
The fair values of financial investments traded on the active market are based on current bid prices (financial assets) or offer prices (financial liabilities). The fair values of financial instruments that are not traded on the active market are determined by using valuation models. These include a comparison with recent transaction prices, the use of a discounted cash flow model, valuation based on comparable entities, and other frequently used valuation models. These valuation models at their best estimate reflect current market conditions at the measurement date, which may not be representative of market conditions either before or after the measurement date.
Management reviewed all applied models as at the reporting date to ensure they appropriately reflect current market conditions, including the relative liquidity of the market and the applied credit spread. Changes in assumptions regarding these factors could affect the reported fair values of financial instruments held for trading, and financial assets measured at fair value through other comprehensive income.
The fair values of derivative financial instruments are determined on the basis of market data (mark-to-market), in accordance with NLB Group’s methodology for the valuation of financial instruments. The market exchange rates, interest rates, yield, and volatility curves used in valuations are based on the market snapshot principle. Market data are saved daily at 4 p.m., and later used for the calculation of the fair values (market value, NPV) of financial instruments. NLB Group applies market yield curves for valuation, and fair values are additionally adjusted for credit risk of the counterparty. The fair value hierarchy of financial instruments is disclosed in note 6.5.
The process of identifying and assessing the impairment of investments in subsidiaries, associates and joint ventures is inherently uncertain, as the forecasting of cash flows requires the significant use of estimates, which themselves are sensitive to the assumptions used. The review of impairment represents management’s best estimate of the facts and assumptions such as:
Liabilities for certain employee benefits are calculated by an independent actuary. The main assumptions included in the actuarial calculation are as follows:
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | ||
| Actuarial assumptions | ||||
| Discount factor | 3.6% - 8.0% | 3.1% - 8.3% | 4.0% | |
| Wage growth based on inflation, promotions, and wage growth based on past years of service | 2.4% - 13.4% | 2.3% - 14.2% | 2.4% - 8.0% | |
| Other assumptions | ||||
| Number of employees eligible for benefits | 7,177 | 7,154 | 2,519 |
A sensitivity analysis of significant actuarial assumptions for post-employment benefit:
| 31 Dec 2023 | 31 Dec 2022 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| NLB Group | NLB | NLB Group | NLB | |||||||
| Discount rate | Future salary increases | Discount rate | Future salary increases | Discount rate | Future salary increases | Discount rate | Future salary increases | |||
| +0.5 p.p. | -0.5 p.p. | +0.5 p.p. | -0.5 p.p. | +0.5 p.p. | -0.5 p.p. | +0.5 p.p. | -0.5 p.p. | |||
| Impact on provisions for employee benefits - post-employment benefits (in %) | (4.4) | 4.8 | 4.8 | (4.5) | (4.2) | 4.5 | 4.5 | (4.2) | ||
| Impact on provisions for employee benefits - post-employment benefits (in %) | (4.7) | 5.0 | 5.1 | (4.8) | (4.5) | 4.8 | 4.9 | (4.7) |
Individual analysis is done by changing one assumption for +/- 0.5 percentage points, while all other assumptions stay the same. The breakdown of actuarial gains and losses for post-employment benefit by causes:
| NLB Group | NLB | |||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||
| Actuarial gains and losses due to changed financial assumptions | (470) | 4,093 | 614 | 1,759 | ||
| Actuarial gains and losses due to changes in demographic assumptions | 141 | - | - | - | ||
| Actuarial gains and losses due to experience | (115) | (62) | (26) | 289 |
| (444) | 4,031 | 588 | 2,048 |
|---|---|---|---|
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Post-employment benefit | 9.6 - 20.9 | 11.1 - 22.0 | 10.9 | 11.1 |
NLB Group operates in countries governed by different laws. The deferred tax assets recognised as at 31 December 2023 are based on profit forecasts and take the expected manner of recovery of assets or changes in profit forecasts can lead to the recognition of currently unrecognised deferred tax assets or derecognition of previously created deferred tax assets. If profit projections in the foreseeable future (i.e., within five years) would change by 10%, the estimated amount of deferred tax assets would change by approximately EUR 10.7 million (notes 4.15. and 5.17.).
During the current year, NLB Group adopted all new and revised standards and interpretations issued by the International Accounting Standards Board (hereinafter: ‘the IASB’) and the International Financial Reporting Standards that are endorsed by the EU that are effective for annual accounting periods beginning on 1 January 2023. Accounting standards and amendments to existing standards effective for annual periods beginning on or after 1 January 2023 include:
NLB Group has disclosed the impact on financial statements in note 4.15. Accounting standards and amendments to existing standards that were endorsed by the EU, but not mandatory for annual accounting periods beginning on 1 January 2023, were not adopted early by NLB Group. These standards and amendments are not expected to have a significant impact on future reporting periods and on foreseeable future transactions.
NLB Group plans to adopt the accounting standards and amendments listed below for reporting periods commencing on or after 1 January 2024:
provide the entity with extended payment terms or the entity’s suppliers with early payment terms. NLB Group does not expect an impact on the financial statements.
• IAS 21 (amendment for annual periods beginning on or after 1 January 2025. The amendments clarify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange exchange that currency for another currency through market or exchange mechanisms that create enforceable rights and obligations without undue delay at the measurement date and for a specific estimate the spot exchange rate as the rate that would have applied to an orderly exchange transaction between market participants at the measurement date under prevailing economic conditions expect an impact on the financial statements.
Changes in 2023 Capital changes:
Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm
| NLB Group | NLB | ||
| in EUR thousands | 2023 | 2022 | 2023 |
| Interest and similar income | 952,875 | 558,826 | 477,154 |
| Interest income calculated using the effective interest method | 952,875 | 558,826 | 477,154 |
| Financial assets measured at fair value through other comprehensive income | 38,645 | 38,840 | 9,184 |
| Securities measured at amortised cost | 36,886 | 16,791 | 24,237 |
| Deposits with banks and central banks | 130,829 | 12,067 | 122,807 |
| Loans and advances to banks measured at amortised cost | 21,616 | 3,770 | 9,584 |
| Loans and advances to customers at amortised cost | 724,899 | 483,392 | 311,342 |
| Negative interest | - | 3,966 | - |
| Other interest and similar income | 40,530 | 10,950 | 21,184 |
| Financial assets held for trading | 6,213 | 3,732 | 6,459 |
| Non-trading financial assets mandatorily at fair value through profit or loss | 48 | 48 | 417 |
| Derivatives - hedge accounting | 14,529 | 559 | 14,308 |
| Finance leases | 18,959 | 6,607 | - |
| Other | 781 | 4 | - |
| Total | 993,405 | 569,776 | 498,338 |
| Interest expenses calculated using the effective interest method | 148,034 | 53,086 | 115,779 |
|---|---|---|---|
| Deposits from banks and central banks | 3,372 | 795 | 6,914 |
| Borrowings from banks and central banks | 1,880 | 1,236 | 712 |
| Due to customers | 68,784 | 19,464 | 36,266 |
| Borrowings from other customers | 1,515 | 939 | - |
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Subordinated liabilities | 35,155 | 12,737 | 35,155 | |
| Debt securities issued | 36,579 | 8,183 | 36,579 | |
| Lease liabilities (note 5.11.a) | 728 | 431 | 132 | |
| Negative interest | 21 | 9,301 | 21 | |
| Other interest and similar expenses | 12,037 | 11,768 | 9,993 | |
| Derivatives - hedge accounting | 4,470 | 7,468 | 4,444 | |
| Financial liabilities held for trading | 5,595 | 3,497 | 5,191 | |
| Interest expenses on defined employee benefits (note 2.30., 5.16.c) | 668 | 374 | 330 | |
| Other | 1,304 | 429 | 28 | |
| Total | 160,071 | 64,854 | 125,772 |
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Net interest income | 833,334 | 504,922 | 372,566 |
The line item ‘Negative interest’ classified under the line item ‘Interest income calculated using the effective interest method’ in 2022 mainly includes the interest from targeted longer-term and EUR 3,677 thousand for NLB (note 5.15.b). The line item ‘Negative interest’ classified under the line item ‘Interest expenses calculated using the effective interest method’ in 2022 in thousand for NLB Group and EUR 6,238 thousand for NLB. It also includes interest from deposits with financial organisations in the amount of EUR 186 thousand for NLB Group and NLB for NLB Group and NLB.
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Financial assets measured at fair value through other comprehensive income | 116 | 173 | - | |
| - related to investments held at the end of reporting period | 116 | 173 | - | |
| Investments in subsidiaries | - | - | 144,930 | |
| Investments in associates and joint ventures | - | - | 275 | |
| Non-trading financial assets mandatorily at fair value through profit or loss | 53 | 69 | 53 | |
| Total | 169 | 242 | 145,258 |
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Fee and commission income | ||||
| Fee and commission income relating to financial instruments not at fair value through profit or loss | ||||
| Credit cards and ATMs | 130,460 | 113,358 | 50,094 | |
| Customer transaction accounts | 93,527 | 89,277 | 53,355 | |
| Other fee and commission income | ||||
| Payments | 88,334 | 94,035 | 24,977 | |
| Investment funds | 32,994 | 29,640 | 9,916 | |
| Agency of insurance products | 13,425 | 10,511 | 9,679 | |
| Other services | 10,381 | 17,336 | 3,816 | |
| Total fee and commission income from contracts with customers | 369,121 | 354,157 | 151,837 | |
| Guarantees | 17,954 | 16,417 | 9,577 | |
| Total | 387,075 | 370,574 | 161,414 |
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Fee and commission expenses | ||||
| Fee and commission expenses relating to financial instruments not at fair value through profit or loss | ||||
| Credit cards and ATMs | 91,543 | 78,291 | 33,387 | |
| Other fee and commission expenses | ||||
| Payments | 13,169 | 13,812 | 1,351 | |
| Insurance for holders of personal accounts and gold cards | 1,516 | 1,335 | 888 | |
| Investment banking | 4,627 | 4,036 | 679 | |
| Guarantees | 1,691 | 1,713 | 1,598 | |
| Other services | 4,314 | 5,594 | 606 | |
| Total | 116,860 | 104,781 | 38,509 |
| in EUR thousands | NLB Group | 2023 | 2022 | NLB |
|---|---|---|---|---|
| Net fee and commission income related to banking activities | 270,215 | 265,793 | 122,905 |
| NLB Group | NLB | ||
| in EUR thousands | 2023 | 2022 | 2023 |
| Fee and commission income related to fiduciary activities | |||
| Receipt, processing, and execution of orders | 1,661 | 1,928 | 1,546 |
| Management of financial instruments portfolio | 1,724 | 1,601 | - |
| Initial or subsequent underwriting and/or placing of financial instruments without a firm commitment basis | 228 | 143 | 228 |
| Custody and similar services | 6,027 | 5,150 | 5,842 |
| Management of clients‘ account of non-materialised securities | 1,942 | 1,696 | 1,942 |
| Safe-keeping of clients‘ financial instruments | 75 | 34 | - |
| Advice to companies on capital structure, business strategy, and related matters and advice, and services relating to mergers and acquisitions of companies | 9 | 473 | 9 |
| Total | 11,666 | 11,025 | 9,567 |
| Fee and commission expenses related to fiduciary activities | |||
| Fee and commission related to Central Securities Clearing Corporation and similar organisations | 3,844 | 3,374 | 3,847 |
| Fee and commission related to stock exchange and similar organisations | 76 | 94 | 76 |
| Total | 3,920 | 3,468 | 3,923 |
| Net fee income related to fiduciary activities | 7,746 | 7,557 | 5,644 |
| Total fee and commission income a) and b) | 398,741 | 381,599 | 170,981 |
| Total fee and commission expenses a) and b) | 120,780 | 108,249 | 42,432 |
| Total net fee and commission a) and b) | 277,961 | 273,350 | 128,549 |
| Fee and commission income | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fee and commission income relating to financial instruments not at fair value through profit or loss | 84,170 | 22,043 | 117,756 | 125 | - | 14 | (121) | 223,987 | ||||
| Other fee and commission | 71,260 | 23,400 | 71,358 | 493 | 46 | 2,763 | (12,520) | 156,800 | ||||
| Total fee and commission income from contracts with customers | ||||||||||||
| Guarantees | 120 | 10,361 | 7,545 | 35 | - | 13 | (120) | 17,954 | ||||
| Total | 155,550 | 55,804 | 196,659 | 653 | 46 | 2,790 | (12,761) | 398,741 | ||||
| Fee and commission expenses | (41,434) | (15,593) | (72,547) | (2,727) | (122) | (1,118) | 12,761 | (120,780) | ||||
| Total | (41,434) | (15,593) | (72,547) | (2,727) | (122) | (1,118) | 12,761 | (120,780) | ||||
| Net fee and commission income | 114,116 | 40,211 | 124,112 | (2,074) | (76) | 1,672 | - | 277,961 |
| Fee and commission income | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fee and commission income relating to financial instruments not at fair value through profit or loss | 76,956 | 19,022 | 106,491 | 635 | - | 11 | (480) | 202,635 | ||||
| Other fee and commission | 71,481 | 29,072 | 70,320 | 687 | 182 | 2,132 | (11,327) | 162,547 | ||||
| Total fee and commission income from contracts with customers | ||||||||||||
| Guarantees | 120 | 9,365 | 7,014 | 32 | - | - | (114) | 16,417 | ||||
| Total | 148,557 | 57,459 | 183,825 | 1,354 | 182 | 2,143 | (11,921) | 381,599 | ||||
| Fee and commission expenses | (35,312) | (13,907) | (65,087) | (3,012) | (184) | (2,668) | 11,921 | (108,249) | ||||
| Total | (35,312) | (13,907) | (65,087) | (3,012) | (184) | (2,668) | 11,921 | (108,249) | ||||
| Net fee and commission income | 113,245 | 43,552 | 118,738 | (1,658) | (2) | (525) | - | 273,350 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| - gains | 94 | 96 | 2 | |
| - losses | (836) | (1,764) | (836) | |
| Debt instruments measured at amortised cost | - gains | - | 3,269 | - |
| - losses | - | (735) | - | |
| Total | (742) | 866 | (834) |
Sales of debt instruments measured at amortised cost in 2022 were made due to increase in credit risk.
| NLB Group | NLB | ||||
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||
| Foreign exchange trading | - gains | 35,774 | 43,213 | 12,308 | 19,388 |
| - losses | (7,394) | (13,988) | (7,299) | (11,465) | |
| Debt instruments | - gains | 188 | 237 | 134 | 195 |
| - losses | (28) | (175) | (28) | (175) | |
| Derivatives | - currency | 2,462 | 3,636 | (1,512) | 2,768 |
| - interest rate | 1,182 | 512 | (4,014) | 605 | |
| - securities | 3 | 16 | 3 | 16 | |
| Total | 32,187 | 33,451 | (408) | 11,332 |
Interest income from financial assets held for trading is included in the income statement line item ‘Interest and similar income’ and interest expenses from financial liabilities held for trading.
| NLB Group | NLB | ||||||
|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||||
| Equity securities | - gains | 2,667 | 3,481 | 1,901 | 2,699 | ||
| - losses | (985) | (3,162) | (712) | (1,925) | |||
| Debt securities | - gains | 122 | 70 | - | - | ||
| - losses | (44) | (299) | - | - | |||
| Loans and advances to customers | - gains | 24 | - | 1,256 | (2,225) | ||
| Total | 1,784 | 90 | 2,445 | (1,451) |
| NLB Group | NLB | |
|---|---|---|
| 2023 | 2022 | 2023 |
| Other operating income | ||
| Income from non-banking services | 7,933 | 6,862 |
| - cash transportation | 3,455 | 3,481 |
| - operating leases of movable property | 2,133 | 485 |
| - IT services | 221 | 1,249 |
| - other | 2,124 | 1,647 |
| Rental income from investment property | 1,755 | 359 |
| Revaluation of investment property to fair value (note 5.9.) | 617 | 223 |
| Sale of investment property | 427 | 17 |
| Other operating income | 6,676 | 2,915 |
| Total | 17,408 | 10,376 |
| NLB Group | NLB | |
|---|---|---|
| 2023 | 2022 | 2023 |
| Donations | 12,008 | 11,564 |
| Expenses related to issued service guarantees | 545 | 545 |
| Revaluation of investment property to fair value (note 5.9.) | 1,734 | 41 |
| Other operating expenses | 7,813 | 2,232 |
| Total | 22,100 | 14,382 |
(4,692)
16,778
(4,006)
| NLB Group 2023 | NLB Group 2022 | NLB 2023 | |
|---|---|---|---|
| Employee costs | 252,731 | 230,277 | 118,962 |
| Gross salaries, compensations, and other short-term benefits | 17,424 | 16,343 | 8,225 |
| Social security contributions | 12,612 | 11,404 | 6,864 |
| Defined benefit expenses (note 5.16.c) | (602) | (365) | (279) |
| Post-employment benefits | (1,134) | (82) | (452) |
| Other employee benefits | 532 | (283) | 173 |
| Total | 282,165 | 257,659 | 133,772 |
| NLB Group 2023 | NLB Group 2022 | NLB 2023 | |
|---|---|---|---|
| Material | 6,672 | 6,091 | 1,624 |
| Services | 46,735 | 47,053 | 26,824 |
| Intellectual services | 18,385 | 20,393 | 9,768 |
| Costs of supervision | 4,942 | 5,422 | 2,806 |
| Costs of other services | 23,408 | 21,238 | 14,250 |
| Other tax expenses | 4,454 | 4,096 | 1,040 |
| Membership fees and similar | 903 | 833 | 359 |
| Business travel | 1,684 | 1,230 | 561 |
| Marketing | 17,373 | 15,340 | 9,213 |
| Buildings and equipment | 32,680 | 33,092 | 15,290 |
| Electricity | 8,285 | 10,212 | 4,307 |
| Rents and leases | 3,012 | 2,079 | 526 |
| Maintenance costs | 9,370 | 8,846 | 4,977 |
| Costs of security | 5,952 | 6,181 | 2,203 |
| Insurance for tangible assets | 656 | 689 | 152 |
| Other costs related to buildings and equipment | 5,405 | 5,085 | 3,125 |
| Technology | 43,093 | 32,735 | 23,100 |
| Maintenance of software and hardware | 22,527 | 15,792 | 10,232 |
| Licences | 12,612 | 9,725 | 8,829 |
| Data assets and subscription costs | 3,267 | 3,022 | 2,157 |
| Other technology costs | 4,687 | 4,196 | 1,882 |
| Communications | 12,490 | 11,146 | 4,567 |
| Postal services | 4,868 | 4,043 | 2,814 |
| Telecommunication and internet | 5,141 | 4,717 | 558 |
| Other communication costs | 2,481 | 2,386 | 1,195 |
| Other general and administrative costs | 4,374 | 3,611 | 2,057 |
| Total | 170,458 | 155,227 | 84,635 |
| Total administrative expenses | 452,623 | 412,886 | 218,407 |
|---|---|---|---|
| Number of employees | 7,982 | 8,228 | 2,554 |
|---|---|---|---|
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| External audit services | 944 | 750 | 333 | 275 |
| Other audit services | 28 | 412 | 28 | 287 |
| Total | 972 | 1,162 | 361 | 562 |
The contractual amount of remuneration of auditor for audit of annual report (without VAT, predefined costs and inflation, if exceeds 3% in individual state of the NLB Group member) in 20.
Additionally, to the services included in the paragraph above, the statutory auditor in 2023 performed also other assurance services in the amount of EUR 343 thousand (Group: EUR 35,017 thousand), both related to the issuance of bonds. Amounts are presented without VAT. Payment was included in the calculation of the effective interest rate on the instrument issued.
For the years 2024-2028 tax on banks’ balance sheets was introduced in Slovenia. The yearly tax liability is estimated to be more than EUR 30 million.
| NLB Group | NLB | |||||
|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |||
| Cash contributions to deposit guarantee schemes | 36,946 | 33,884 | 9,686 | |||
| Cash contributions to resolution funds | 2,147 | 2,260 | 1,697 | |||
| Total | 39,093 | 36,144 | 11,383 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Amortisation of intangible assets (note 5.10.) | 16,402 | 15,757 | 7,528 | 5,769 |
| Depreciation of property and equipment: | ||||
| - own property and equipment (note 5.8.b) | 24,832 | 22,941 | 10,508 | 10,260 |
| - right-of-use assets (note 5.11.a) | 7,998 | 8,692 | 1,421 | 972 |
| Total | 49,232 | 47,390 | 19,457 | 17,001 |
| in EUR thousands | 2023 | 2022 | NLB Group | 12-month expected credit losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| 12-month expected credit losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Total | Financial assets modified during the period | Amortised cost before modification | 510,682 | 4,141 | 4,145 | 518,968 |
| Net modification gains/(losses) | (16,043) | (123) | (105) | (16,271) | (56) | 5 | 25 | (26) |
The majority of modification loss of financial assets in 2023 refers to the Decision on temporary measures for banks in relation to housing loans to natural persons, which limited the interest rates of housing loans in Serbia. The loss represents the difference between the balance of the loan on the modification date and the discounted value of the cash flows of the modified repayment plans using the original effective interest rate.
| NLB Group | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|
| Financial assets modified since initial recognition | Gross carrying amount of financial assets for which loss allowance has changed to 12-month measurement during the period | 775 | - |
| NLB Group | NLB | 2023 | 2022 | 2023 | 2022 | |||
|---|---|---|---|---|---|---|---|---|
| Provisions for credit losses | (5,055) | 3,050 | (3,074) | (282) |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Guarantees and commitments | (5,055) | 3,050 | (3,074) | (282) |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Provisions for other liabilities and charges | 25,925 | 5,932 | 14,422 | 2,325 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Restructuring provisions | 3,654 | 10,325 | 3,800 | - |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Provisions for legal risks | 7,280 | 1,645 | (2,678) | 125 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Other provisions | 14,991 | (6,038) | 13,300 | 2,200 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Total | 20,870 | 8,982 | 11,348 | 2,043 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Cash balances at central banks, and other demand deposits at banks | (504) | (6,600) | 110 | |
| Loans and advances to banks measured at amortised cost (note 5.14.a) | 23 | 67 | (80) | |
| Loans and advances to individuals measured at amortised cost (note 5.14.a) | 37,632 | 17,140 | 15,689 | |
| Loans and advances to other customers measured at amortised cost (note 5.14.a) | (41,396) | (2,629) | (4,254) | |
| Debt securities measured at fair value through other comprehensive income (note 5.14.b) | (7,054) | 3,870 | (5,058) | |
| Debt securities measured at amortised cost (note 5.14.b) | 1,749 | 474 | 672 | |
| Other financial assets measured at amortised cost (note 5.14.a) | 2,833 | 2,132 | 589 | |
| Total impairment of financial assets | (6,717) | 14,454 | 7,668 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Investments in subsidiaries | - | - | (96,876) | |
| Investments in associates and joint ventures | - | - | (241) | |
| Total | - | - | (97,117) |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Property and equipment (note 5.8.b) | 47 | 1,620 | - | |
| Other assets | (100) | 3,813 | 3 | |
| Total | (53) | 5,433 | 3 |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Total impairment of non-financial assets | (53) | 5,433 | (97,114) |
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Total impairment | (6,770) | 19,887 | (89,446) |
| Current income tax | 66,072 | 26,753 | 25,210 | 5,992 |
|---|---|---|---|---|
| Deferred income tax (note 5.17.) | (50,982) | (1,523) | (60,751) | (1,524) |
| Total | 15,090 | 25,230 | (35,541) | 4,468 |
| NLB Group | N | ||||
|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | |||
| Profit before tax | 578,413 | 483,063 | 478,746 | ||
| Tax calculated at prescribed rate of 19% | 109,898 | 19.0% | 91,782 | 19.0% | 90,962 |
| Tax effect of: | |||||
| Income not subject to tax | (13,180) | -2.3% | (45,621) | -9.4% | (45,966) |
| Non-deductible expenses | 10,572 | 1.8% | 7,332 | 1.5% | 3,130 |
| Utilization of previously non-deductible expenses | (16,034) | -2.8% | (3,370) | -0.7% | (2,578) |
| Tax reliefs | (3,324) | -0.6% | (4,132) | -0.8% | (3,301) |
| Use of previously unrecognised tax losses | (22,266) | -3.8% | (5,022) | -1.0% | (21,898) |
| Unrecognised deferred tax assets on current period tax losses | 14,218 | 2.4% | 487 | 0.1% | - |
| Recognition of previously unrecognised deferred tax on tax losses | (46,697) | -8.1% | - | - | (46,697) |
| Recognition of previously unrecognised deferred tax on deductible temporary differences | (1,918) | -0.3% | (4,688) | -1.0% | (1,918) |
| Changes in deferred taxes due to the increase of tax rate | (13,491) | -2.3% | - | - | (13,544) |
| Effect of different tax rates in other countries | (18,636) | -3.2% | (12,963) | -2.7% | - |
| Withholding tax for which no tax credit was available | 6,920 | 1.2% | 1,617 | 0.3% | 6,920 |
| Deferred tax liability on undistributed profits | 9,626 | 1.7% | - | - | - |
| Adjustment to tax in respect of prior years | 50 | - | (282) | -0.1% | (3) |
| Other | (648) | -0.1% | 90 | - | (648) |
| Total | 15,090 | 2.6% | 25,230 | 5.2% | (35,541) |
Each member of NLB Group (disclosed in note 5.12.a) is taxable as required by local tax legislation. Income tax rates within NLB Group ranges from 9 to 32%. A tax rate of 19% was applied.
The effect of income not subject to tax of NLB in 2023, related to:
In 2023, NLB increased recognised deferred tax assets for EUR 56,668 thousand. The losses in the amount of EUR 46,697 thousand, recognition of previously unrecognised deferred tax on deductible temporary differences (tax non-deductible impairments of non-core equity investments) and deferred tax assets for valuation of financial instruments which was recognised in other comprehensive income in amount of EUR 8,290 thousand. Deferred tax assets were also increased for the years 2024 to 2028, of which EUR 13,544 thousand was recognised in the income statement, and EUR 1,380 thousand in other comprehensive income.
The deferred tax assets for tax losses in 2023 are recognised in the amount that takes into account other recognised deferred tax assets expected within five years. The deferred tax assets from this calculation include deferred tax assets for temporary non-deductible expenses for impairment of debt securities measured at fair value through other comprehensive income.
NLB is not aware of any tax audits initiated by tax authorities. NLB has a special tax status at the Financial Administration of the Republic of Slovenia (FURS). The purpose of the status is to establish cooperation between FURS and the taxpayers, with the aim of reducing tax risks and uncertain tax positions.
Earnings per share are calculated by dividing the net profit by the weighted average number of ordinary shares in issue, less treasury shares. Diluted earnings per share are the same.
| 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|
| Net profit attributable to the owners of the parent (in EUR thousands) | 550,700 | 446,862 | 514,287 | 159,602 |
| Weighted average number of ordinary shares (in thousands) | 20,000 | 20,000 | 20,000 | 20,000 |
| Basic earnings per share (in EUR per share) | 27.5 | 22.3 | 25.7 | 8.0 |
| Diluted earnings per share (in EUR per share) | 27.5 | 22.3 | 25.7 | 8.0 |
| NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|
| Balances and obligatory reserves with central banks | 5,435,460 | 4,536,526 | 4,077,399 | 3,104,442 | ||
| Cash | 470,902 | 489,197 | 181,735 | 180,483 | ||
| Demand deposits at banks | 198,489 | 246,815 | 59,365 | 54,456 | ||
| Total | 6,104,851 | 5,272,538 | 4,318,499 | 3,339,381 | ||
| Allowance for impairment | (1,290) | (1,173) | (467) | (357) | ||
| Total | 6,103,561 | 5,271,365 | 4,318,032 | 3,339,024 |
Slovenian banks are required to maintain a compulsory reserve with the Bank of Slovenia relative to the volume and structure of their customer deposits. Other banks in NLB Group maintain a compulsory reserve in accordance with local legislation. NLB and other banks in NLB Group fulfil their compulsory reserve deposit requirements.
| NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|
| Derivatives, excluding hedging instruments | ||||||
| Swap contracts | 13,867 | 16,169 | 16,135 | 16,274 | ||
| - currency swaps | 3,687 | 743 | 3,712 | 849 | ||
| - interest rate swaps | 10,180 | 15,426 | 12,423 | 15,425 | ||
| Options | 1,249 | 2,312 | 1,249 | 2,312 | ||
| - interest rate options | 1,229 | 2,295 | 1,229 | 2,295 | ||
| - securities options | 20 | 17 | 20 | 17 | ||
| Forward contracts | 602 | 2,904 | 573 | 2,903 | ||
| - currency forward | 602 | 2,904 | 573 | 2,903 | ||
| Total derivatives | 15,718 | 21,385 | 17,957 | 21,489 | ||
| Securities | ||||||
| Treasury bills | - | 203 | - | 203 | ||
| Total securities | - | 203 | - | 203 | ||
| Total | 15,718 | 21,588 | 17,957 | 21,692 | ||
| - quoted securities | - | 203 | - | 203 | ||
| of these debt instruments | - | 203 | - | 203 |
| NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||
|---|---|---|---|---|---|---|---|---|
| Derivatives, excluding hedging instruments | ||||||||
| Swap contracts | 11,139 | 15,903 | 15,440 | 16,535 | ||||
| - currency swaps | 2,035 | 1,550 | 4,216 | 1,963 | ||||
| - interest rate swaps | 9,104 | 14,353 | 11,224 | 14,572 | ||||
| Options | 1,573 | 2,800 | 1,573 | 2,742 | ||||
| - interest rate options | 1,573 | 2,800 | 1,573 | 2,742 |
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|
| currency forward | 505 | 2,886 | 497 | 2,873 |
| Total | 13,217 | 21,589 | 17,510 | 22,150 |
The notional amounts of derivative financial instruments are disclosed in note 5.24.b).
| NLB Group | NLB | ||||
|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Assets | |||||
| Shares | 6,300 | 5,579 | 6,300 | 5,211 | |
| Investment funds | 2,658 | 10,336 | 2,558 | 2,308 | |
| Bonds | 5,217 | 3,116 | - | - | |
| Loans and advances to companies | - | - | 7,785 | 7,892 | |
| Total | 14,175 | 19,031 | 16,643 | 15,411 | |
| - quoted securities | 5,217 | 3,484 | - | - | |
| of these equity instruments | - | 368 | - | - | |
| of these debt instruments | 5,217 | 3,116 | - | - | |
| - unquoted securities | 8,958 | 15,547 | 8,858 | 7,519 | |
| of these equity instruments | 8,958 | 15,547 | 8,858 | 7,519 |
As at 31 December 2023, NLB Group did not have any assets received by taking possession of collateral and included in financial assets mandatorily at fair value through profit or loss (31 Dec 2022, NLB did not have any assets received by taking possession of collateral and included in financial assets mandatorily at fair value through profit or loss (note 6.1.l).
| NLB Group | NLB | |||||
|---|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||
| Liabilities | ||||||
| Loans and advances to companies | - | - | 1,234 | 1,786 | ||
| Other financial liabilities (note 2.31.) | 4,482 | 1,796 | 1,976 | 728 | ||
| Total | 4,482 | 1,796 | 3,210 | 2,514 |
in EUR thousands
| NLB Group | NLB | ||||
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Bonds | 1,836,604 | 2,506,224 | 962,084 | 1,196,760 | |
| - governments | 1,398,036 | 1,895,891 | 523,516 | 586,427 | |
| - Republic of Slovenia | 246,155 | 269,853 | 210,509 | 199,224 | |
| - other EU members | 200,914 | 271,464 | 194,599 | 253,346 | |
| - Republic of Serbia | 579,333 | 898,531 | 4,482 | 3,913 | |
| - other non-EU members | 371,634 | 456,043 | 113,926 | 129,944 | |
| - banks | 413,926 | 578,552 | 413,926 | 578,552 | |
| - other issuers | 24,642 | 31,781 | 24,642 | 31,781 | |
| Shares | 26,467 | 22,285 | 303 | 269 | |
| National Resolution Fund | 60,625 | 58,122 | 60,625 | 42,515 | |
| Treasury bills | 301,838 | 310,748 | - | 94,517 | |
| - Republic of Slovenia | 19,902 | 52,723 | - | 32,908 | |
| - other EU members | 247,827 | 170,382 | - | 10,888 | |
| - other non-EU members | 34,109 | 87,643 | - | 50,721 | |
| Commercial bills | 26,022 | 21,824 | - | - | |
| Total | 2,251,556 | 2,919,203 | 1,023,012 | 1,334,061 | |
| of these debt securities | 2,164,464 | 2,838,796 | 962,084 | 1,291,277 | |
| of these equity securities | 87,092 | 80,407 | 60,928 | 42,784 | |
| Allowance for impairment (note 5.14.b) | (7,329) | (15,876) | (2,448) | (8,799) | |
| - quoted securities | 1,997,126 | 2,612,330 | 962,084 | 1,291,277 | |
| of these debt instruments | 1,992,263 | 2,593,533 | 962,084 | 1,291,277 | |
| of these equity instruments | 4,863 | 18,797 | - | - | |
| - unquoted securities | 254,430 | 306,873 | 60,928 | 42,784 | |
| of these debt instruments | 172,201 | 245,263 | - | - | |
| of these equity instruments | 82,229 | 61,610 | 60,928 | 42,784 |
As at 31 December 2023, the Bank does not have any exposure towards the Russia anymore. A Russian government bond in the nominal amount of USD 8,000 thousand that would otherwise...
| in EUR thousands | NLB Group | NLB | 2023 | 2022 | 2023 | 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt securities | Equity securities | Debt securities | Equity securities | Debt securities | Equity securities | Debt securities | Equity securities | |||||||
| Balance as at 1 January | 2,838,796 | 80,407 | 3,395,261 | 66,599 | 1,291,277 | 42,784 | 1,541,042 | 44,709 | ||||||
| Effects of translation of foreign operations to presentation currency | (293) | (34) | 1,358 | 30 | - | - | - | - | ||||||
| Acquisition of subsidiary (note 5.12.e) | - | - | 53,223 | 16,164 | - | - | - | - | ||||||
| Additions | 1,446,746 | - | 1,699,839 | - | 59,345 | - | 290,245 | - | ||||||
| Derecognition | (2,249,943) | (82) | (2,141,377) | - | (479,962) | - | (414,666) | - | ||||||
| Net interest income | 38,624 | - | 38,471 | - | 9,163 | - | 10,846 | - | ||||||
| Exchange differences on monetary assets | 1,901 | - | 3,104 | - | (766) | - | 4,484 | - | ||||||
| Changes in fair values | 88,633 | 6,801 | (211,083) | (2,386) | 49,410 | 2,284 | (140,674) | (1,925) | ||||||
| Merger of subsidiary (note 5.12.d) | - | - | - | - | 33,617 | 15,860 | - | - | ||||||
| Balance as at 31 December | 2,164,464 | 87,092 | 2,838,796 | 80,407 | 962,084 | 60,928 | 1,291,277 | 42,784 |
| in EUR thousands | NLB Group | NLB | 2023 | 2022 | 2023 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt securities | Equity securities | Debt securities | Equity securities | Debt securities | Equity securities | Debt securities | Equity securities | |||||
| Balance as at 1 January | (144,578) | 1,332 | 7,481 | 3,257 | (78,283) | (1,460) | 12,365 | 99 | ||||
| Effects of translation of foreign operations to presentation currency | (31) | (5) | (12) | 3 | - | - | - | - | ||||
| Net gains/(losses) from changes in fair value | 77,269 | 6,801 | (168,581) | (2,386) | 38,046 | 2,284 | (98,172) | (1,925) | ||||
| Gains/losses transferred to net profit on disposal (note 4.4.) | 742 | - | 1,668 | - | 834 | - | 316 | - | ||||
| Impairment (note 4.14.) | (7,054) | - | 3,870 | - | (5,058) | - | 5,826 | - | ||||
| Transfer of gains/losses to retained earnings | - | (63) | - | - | - | - | - | - | ||||
| Deferred income tax (note 5.17.) | 6,718 | (1,054) | 10,996 | 458 | 11,849 | (434) | 1,382 | 366 | ||||
| Merger of subsidiary | - | - | - | - | (2,643) | (246) | - | - | ||||
| Balance as at 31 December | (66,934) | 7,011 | (144,578) | 1,332 | (35,255) | 144 | (78,283) | (1,460) |
| Fair value hedge from assets items | 2,735 | 1,655 | 2,424 | |
|---|---|---|---|---|
| Net effects from hedging instruments | (24,799) | 89,894 | (22,803) | |
| - interest rate swap for micro hedge | (15,677) | 57,981 | (13,681) | |
| - interest rate swap for macro hedge | (9,122) | 31,913 | (9,122) | |
| Net effects from hedged items | 27,534 | (88,239) | 25,227 | |
| - loans measured at amortised cost - micro hedge | (3) | (57) | (3) | |
| - bonds measured at amortised cost - micro hedge | 2,684 | (14,834) | 2,684 | |
| - bonds measured at fair value through OCI - micro hedge | 11,293 | (42,499) | 11,293 | |
| - loans measured at amortised cost - macro hedge | 13,560 | (30,849) | 11,253 |
| NLB Group | 2023 | 2022 | NLB | 2023 | 2022 | |
|---|---|---|---|---|---|---|
| Fair value hedge from liability items | 1,164 | - | 1,164 | - | ||
| Net effects from hedging instruments | 6,505 | - | 6,505 | - | ||
| - interest rate swap for micro hedge | 6,505 | - | 6,505 | - | ||
| Net effects from hedged items | (5,341) | - | (5,341) | - | ||
| - debt securities issued | (5,341) | - | (5,341) | - |
In both years presented, all fair value hedges were effective, with actual results of the hedge ratio within a range of 80–125%, therefore, no discontinuation of the hedge accounting was required.
Designated for cash flow hedge accounting or for hedge of a net investment in a foreign operation. NLB Group applied a hedge of a net investment in a foreign operation in years 2011 and other comprehensive income (note 5.22.b). This gain will be included in the consolidated income statement when the foreign operation is disposed of as a part of the gain or loss on the disposal.
| in EUR thousands | ||||
|---|---|---|---|---|
| NLB Group | NLB | Fair value | Change in fair value of hedging instrument used for calculating hedge ineffectiveness | |
| Notional amount | Fair value | |||
| Fair value hedge of assets items | ||||
| 31 Dec 2023 | 633,798 | 38,738 | 3,540 | 19,708 |
| 31 Dec 2022 | 644,132 | 59,362 | 2,124 | 90,439 |
| in EUR thousands | |||||
|---|---|---|---|---|---|
| NLB Group | NLB | Fair value | Change in fair value of hedging instrument used for calculating hedge ineffectiveness | ||
| Notional amount | Fair value | ||||
| Fair value hedge of liability items | |||||
| 31 Dec 2023 | 450,000 | 8,876 | - | 8,774 | |
| 31 Dec 2022 | - | - | - | - |
The hedging instrument is included in the statement of financial position in the line item Derivatives – hedge accounting.
242 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm fair value adjustments arising from the corresponding continuing hedge relationships.
| Item | NLB Group 2023 | NLB Group 2022 | NLB 2023 | NLB 2022 | |||
|---|---|---|---|---|---|---|---|
| Carrying amount of hedged items | Accumulated amount of FV adjustments on the hedged item | Carrying amount of hedged items | Accumulated amount of FV adjustments on the hedged item | Carrying amount of hedged items | Accumulated amount of FV adjustments on the hedged item | ||
| Micro fair value hedges | |||||||
| Fixed rate corporate loans measured at AC | - | - | 573 | 3 | |||
| Fixed rate bonds measured at AC | 108,494 | (4,349) | 108,979 | (6,721) | |||
| Fixed rate bonds measured at FVOCI | 242,347 | (15,841) | 261,879 | (27,205) | |||
| Fixed rate issued bonds | 464,393 | 5,341 | - | - | |||
| Macro fair value hedges | |||||||
| Fixed rate retail loans | 267,908 | (10,207) | 153,594 | (23,767) |
| Item | NLB Group 2023 | NLB Group 2022 | NLB 2023 | NLB 2022 |
|---|---|---|---|---|
| Micro fair value hedges | 3,591 | 57,201 | 3,591 | 57,201 |
| Macro fair value hedges | 10,577 | 31,122 | 8,540 | 31,122 |
NLB Group continuously monitors the development of Benchmark Interest Rate Reform and is actively preparing for the changes imposed by the regulation. In 2018, NLB formed a special working group which deals with the preparation for the discontinuation of some important reference interest rates and reports on this to the NLB Group ALCO.
NLB Group no longer offers new products that would be tied to reference rates in termination. With regards to the reference rates, the NLB Group offers only products related to EURIBOR, which is not scheduled for discontinuation. Therefore, NLB Group’s attention in the past few years has been focused on the modification of new contractual relationships with customers in which EURIBOR occurs.
Due to the timely transition to the new hybrid EURIBOR methodology which meets the BMR requirements, EURIBOR can continue to be used in new and legacy fallback clauses into contractual documentation with the clients. In November 2019, the Euro risk-free rates (RFR) Working Group published high level recommendations for fallback provisions required in contracts subject to the EU Benchmark Regulation. The Bank already incorporated the generic fallback clause into all new EURIBOR (both retail and corporate) contracts.
Our mid-term activities are expected to undertake on the implementation of more precise fallback provisioning, based on line with the current market consensus on those fallbacks and intends to proceed with the activities for inclusion on EURIBOR fallbacks into all new EURIBOR-based contracts. In the next period, the exact timing depends on regulatory/market development and best practice.
NLB as a supervised entity, is required to comply with the Benchmark regulation and, as a user of benchmarks, to prepare for the event that a benchmark materially changes or ceases to be provided. NLB has prepared a plan, which sets out an inexhaustive/summary action list, and will continue to closely follow market developments regarding existing benchmarks.
LIBOR discontinuation: Since many LIBOR settings ceased to exist at the beginning of 2022, the Bank finished the process of winding-down the exposures in a most efficient manner. Group activities for implementation of LIBOR transition were as follows:
| in EUR thousands | 2023 | 2022 | Notional amount (in EUR thousands) | Weighted average maturity (years) | Notional amount (in EUR thousands) | Weighted average maturity (years) | |
|---|---|---|---|---|---|---|---|
| NLB Group Interest rate swaps (assets) | EURIBOR (3 months) | 318,509 | 8.94 | 280,981 | 10.01 | ||
| EURIBOR (6 months) | 315,289 | 5.68 | 355,651 | 6.06 | |||
| USD LIBOR (6 months) | - | - | 7,500 | 0.71 | |||
| NLB Group Interest rate swaps (liabilities) | EURIBOR (3 months) | 350,000 | 2.49 | - | - | ||
| EURIBOR (6 months) | 100,000 | 2.49 | - | - |
As can be seen from the table, the majority of long-term derivatives in hedging relationships are exposed to EURIBOR, therefore, the uncertainty arising from interest rate benchmark reform derives mainly from derivatives with longer maturities, when a change of EURIBOR could be expected. As at 31 December 2023, derivatives with remaining maturity of five or more years amount to EUR 285,280 thousand (31 December 2022: EUR 295,580 thousand).
| in EUR thousands | NLB Group | 31 Dec 2023 | 31 Dec 2022 | NLB | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Debt securities | 2,522,229 | 1,917,615 | 1,966,169 | 1,597,448 | ||
| Loans and advances to banks | 547,640 | 222,965 | 149,011 | 350,625 | ||
| Loans and advances to customers | 13,734,601 | 13,072,986 | 7,148,283 | 6,054,413 | ||
| Other financial assets | 165,962 | 177,823 | 101,596 | 114,399 | ||
| Total | 16,970,432 | 15,391,389 | 9,365,059 | 8,116,885 |
The credit quality analysis for financial assets and contingent liabilities is disclosed in note 6.1.j).
| in EUR thousands | NLB Group | 31 Dec 2023 | 31 Dec 2022 | NLB | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|---|
| Governments | 1,898,725 | 1,486,496 | 1,347,161 | 1,184,601 | |||
| Companies | 79,679 | 84,979 | 72,458 | 64,913 | |||
| Banks | 536,096 | 323,944 | 536,096 | 323,944 | |||
| Financial organisations | 13,251 | 25,980 | 13,251 | 25,980 | |||
| Total | 2,527,751 | 1,921,399 | 1,968,966 | 1,599,438 |
Allowance for impairment (note 5.14.b) (5,522) (3,784) (2,797) (1,990)
Total 2,522,229 1,917,615 1,966,169 1,597,448
| in EUR thousands | NLB Group | 31 Dec 2023 | 31 Dec 2022 | NLB | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|---|
| Loans | 623 | 782 | 119,914 | 127,717 | |||
| Time deposits | 249,765 | 118,241 | 25,865 | 221,271 | |||
| Reverse sale and repurchase agreements | 294,069 | 102,358 | - | - | |||
| Purchased receivables | 3,482 | 1,853 | 3,482 | 1,853 | |||
| Total | 547,939 | 223,234 | 149,261 | 350,841 |
Allowance for impairment (note 5.14.a) (299) (269) (250) (216)
| NLB Group | NLB | |||
| in EUR thousands | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
| Loans | 13,117,311 | 12,626,259 | 6,946,199 | 5,873,443 |
| Overdrafts | 449,145 | 425,135 | 236,792 | 208,499 |
| Finance lease receivables (note 5.11.b) | 337,610 | 193,948 | - | - |
| Credit card business | 154,664 | 148,870 | 82,457 | 64,460 |
| Called guarantees | 4,498 | 2,772 | 2,403 | 1,423 |
| Total | 14,063,228 | 13,396,984 | 7,267,851 | 6,147,825 |
| Allowance for impairment (note 5.14.a) | (328,627) | (323,998) | (119,568) | (93,412) |
| Total | 13,734,601 | 13,072,986 | 7,148,283 | 6,054,413 |
| NLB Group | NLB | |||||
| in EUR thousands | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Governments | 386,291 | 303,443 | 118,220 | 124,736 | ||
| Financial organisations | 91,523 | 116,078 | 384,995 | 286,504 | ||
| Companies | 6,169,972 | 6,031,795 | 3,101,465 | 2,606,674 | ||
| Individuals | 7,086,815 | 6,621,670 | 3,543,603 | 3,036,499 | ||
| Total | 13,734,601 | 13,072,986 | 7,148,283 | 6,054,413 |
| NLB Group | NLB | ||||||
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | |||||
| Receivables in the course of settlement and other temporary accounts | 43,608 | 36,712 | 20,207 | ||||
| Credit card receivables | 54,748 | 41,364 | 42,753 | ||||
| Debtors | 9,265 | 8,516 | 2,013 | ||||
| Fees and commissions | 9,734 | 8,737 | 2,924 | ||||
| Receivables to brokerage firms and others for the sale of securities and custody services | - | 31,587 | - | ||||
| Accrued income | 7,171 | 3,390 | 6,247 | ||||
| Prepayments | 2,176 | 2,563 | - | ||||
| Other financial assets | 50,065 | 53,988 | 29,066 | ||||
| Total | 176,767 | 186,857 | 103,210 |
Allowance for impairment (note 5.14.a) (10,805) (9,034) (1,614)
Total 165,962 177,823 101,596
Receivables in the course of settlement are temporary balances which will be transferred to the appropriate item in the days following their occurrence. Other financial assets in the amount recognised in accordance with the ‘Act for Value Protection of Republic of Slovenia’s Capital Investment in Nova Ljubljanska banka d.d., Ljubljana’ (note 5.16.a). The remaining balance i assets by sector
| NLB Group | NLB | |||||
| in EUR thousands | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Banks | 51,020 | 38,362 | 19,779 | 11,918 | ||
| Government | 44,233 | 78,285 | 25,756 | 55,708 | ||
| Financial organisations | 30,715 | 23,644 | 23,554 | 17,578 | ||
| Companies | 5,062 | 6,368 | 723 | 670 | ||
| Individuals | 34,932 | 31,164 | 31,784 | 28,525 | ||
| Total | 165,962 | 177,823 | 101,596 | 114,399 |
The line item ‘Non-current assets held for sale’ includes business premises and assets received as collateral that are in the process of being sold. As at 31 December 2023, the value of assets received by taking possession of collateral and included in non-current assets held for sale by NLB Group amounted to EUR 474 thousand (31 December 2022: EUR 651 thousand). As at 31 December 2023, and as at 31 December 2022, NLB did not have any non-current assets obtained by taking possession of collateral and included in non-current assets held for sale (note 6.1.l).
| in EUR thousands | NLB Group | NLB | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||||||||
| Balance as at 1 January | 15,436 | 7,051 | 4,235 | 4,089 | |||||||
| Effects of translation of foreign operations to presentation currency | 11 | 9 | - | - | |||||||
| Transfer from/(to) property and equipment (note 5.8.) | 584 | 8,226 | 584 | 617 | |||||||
| Disposals | (10,861) | (637) | (655) | (532) | |||||||
| Valuation | (321) | 787 | (116) | 61 | |||||||
| Balance as at 31 December | 4,849 | 15,436 | 4,048 | 4,235 |
| in EUR thousands | NLB Group | NLB | ||
|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Own property and equipment | 249,920 | 228,944 | 80,240 | 75,262 |
| Right-of-use assets (note 5.11.) | 28,114 | 22,372 | 5,730 | 3,330 |
| Total | 278,034 | 251,316 | 85,970 | 78,592 |
| Land & Buildings | Computers | Other equipment | Total | for own use in operating lease | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Land & Buildings | Computers | Other equipment | Total | ||||||||||
| Cost | |||||||||||||
| Balance as at 1 January 2023 | 347,252 | 84,875 | 95,075 | 9,304 | 536,506 | 195,685 | 42,180 | 43,783 | 3,722 | 285,370 | |||
| Effects of translation of foreign operations | (68) | (20) | (3) | - | (91) | - | - | - | - | - | |||
| Additions | 16,827 | 14,104 | 15,217 | 7,604 | 53,752 | 3,527 | 4,737 | 2,829 | 482 | 11,575 | |||
| Disposals | (5,519) | (4,969) | (5,627) | (1,904) | (18,019) | - | (1,357) | (2,403) | (2) | (3,762) | |||
| Transfer to/from investment property (note 5.9.) | 86 | - | - | - | 86 | - | - | - | - | - | |||
| Transfer to/from non-current assets held for sale (note 5.7.) | (1,051) | - | - | - | (1,051) | (1,051) | - | - | (1,051) | ||||
| Merger of subsidiary (note 5.12.d) | - | - | - | - | - | 3,919 | 992 | 657 | - | 5,568 | |||
| Disposal of subsidiaries (note 5.12.b), c) | - | (22) | (50) | - | (72) | - | - | - | - | - | |||
| Balance as at 31 December 2023 | 357,527 | 93,968 | 104,612 | 15,004 | 571,111 | 202,080 | 46,552 | 44,866 | 4,202 | 297,700 | |||
| Depreciation and impairment | |||||||||||||
| Balance as at 1 January 2023 | 177,896 | 53,340 | 72,310 | 4,016 | 307,562 | 138,264 | 29,619 | 38,891 | 3,334 | 210,108 | |||
| Effects of translation of foreign operations | (10) | (3) | 11 | - | (2) | - | - | - | - | - | |||
| Disposals | (914) | (4,615) | (4,845) | (335) | (10,709) | - | (1,350) | (2,359) | (2) | (3,711) | |||
| Depreciation (note 4.11.) | 6,782 | 10,123 | 6,412 | 1,515 | 24,832 | 3,750 | 4,635 | 1,884 | 239 | 10,508 | |||
| Impairment (note 4.14.) | 47 | - | - | - | 47 | - | - | - | - | - | |||
| Transfer to/from non-current assets held for sale (note 5.7.) | (467) | - | - | - | (467) | (467) | - | - | (467) | ||||
| Merger of subsidiary (note 5.12.d) | - | - | - | - | - | 233 | 515 | 274 | - | 1,022 | |||
| Disposal of subsidiaries (note 5.12.b), c) | - | (22) | (50) | - | (72) | - | - | - | - | - | |||
| Balance as at 31 December 2023 | 183,334 | 58,823 | 73,838 | 5,196 | 321,191 | 141,780 | 33,419 | 38,690 | 3,571 | 217,460 | |||
| Net carrying value | |||||||||||||
| Balance as at 31 December 2023 | 174,193 | 35,145 | 30,774 | 9,808 | 249,920 | 60,300 | 13,133 | 6,176 | 631 | 80,240 | |||
| Balance as at 1 January 2023 | 169,356 | 31,535 | 22,765 | 5,288 | 228,944 | 57,421 | 12,561 | 4,892 | 388 | 75,262 |
As at 31 December 2023, the value of assets received by taking possession of collateral and included in property and equipment by NLB Group amounted to EUR 11,641 thousand (31 December 2022: EUR 11,962 thousand). As at 31 December 2023 and as at 31 December 2022, NLB did not have any assets received by taking possession of collateral and included in property and equipment (note 6.1.l).
| in EUR thousands | NLB Group | NLB | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Buildings | Land & | Computers | Other equipment | Total | Buildings | Land & | Computers | Other equipment | Total | ||||||
| Cost | Balance as at 1 January 2022 | 346,858 | 80,131 | 94,729 | 5,609 | 527,327 | 195,852 | 43,899 | 46,143 | 3,519 | 289,413 | ||||
| Effects of translation of foreign operations to presentation currency | 39 | 13 | 3 | - | 55 | - | - | - | - | ||||||
| Acquisition of subsidiary (note 5.12. e), f) | 4,552 | 818 | 1,154 | - | 6,524 | - | - | - | - | ||||||
| Additions | 8,118 | 13,508 | 10,767 | 4,262 | 36,655 | 1,448 | 3,072 | 1,420 | 271 | 6,211 | |||||
| Disposals | (1,242) | (9,595) | (11,550) | (567) | (22,954) | - | (4,791) | (3,780) | (68) | (8,639) | |||||
| Impairment (note 4.14.) | 79 | - | - | - | 79 | - | - | - | - | ||||||
| Transfer to/from investment property (note 5.9.) | (1,358) | - | (28) | - | (1,386) | - | - | - | - | ||||||
| Transfer to/from non-current assets held for sale (note 5.7.) | (9,794) | - | - | - | (9,794) | (1,615) | - | - | (1,615) | ||||||
| Balance as at 31 December 2022 | 347,252 | 84,875 | 95,075 | 9,304 | 536,506 | 195,685 | 42,180 | 43,783 | 3,722 | 285,370 | |||||
| Depreciation and impairment | Balance as at 1 January 2022 | 172,160 | 53,833 | 74,415 | 3,326 | 303,734 | 135,514 | 30,087 | 37,782 | 3,125 | 206,508 | ||||
| Effects of translation of foreign operations to presentation currency | (3) | 7 | 4 | - | 8 | - | - | - | - | ||||||
| Disposals | (1,109) | (9,608) | (8,084) | (134) | (18,935) | - | (4,713) | (904) | (45) | (5,662) | |||||
| Depreciation (note 4.11.) | 7,030 | 9,108 | 5,979 | 824 | 22,941 | 3,748 | 4,245 | 2,013 | 254 | 10,260 | |||||
| Impairment (note 4.14.) | 1,699 | - | - | - | 1,699 | - | - | - | - | ||||||
| Transfer to/from investment property (note 5.9.) | (313) | - | (4) | - | (317) | - | - | - | - | ||||||
| Transfer to/from non-current assets held for sale (note 5.7.) | (1,568) | - | - | - | (1,568) | (998) | - | - | (998) | ||||||
| Balance as at 31 December 2022 | 177,896 | 53,340 | 72,310 | 4,016 | 307,562 | 138,264 | 29,619 | 38,891 | 3,334 | 210,108 | |||||
| Net carrying value | Balance as at 31 December 2022 | 169,356 | 31,535 | 22,765 | 5,288 | 228,944 | 57,421 | 12,561 | 4,892 | 388 | 75,262 | ||||
| Balance as at 1 January 2022 | 174,698 | 26,298 | 20,314 | 2,283 | 223,593 | 60,338 | 13,812 | 8,361 | 394 | 82,905 |
| NLB Group | NLB | 2023 | 2022 | |
|---|---|---|---|---|
| Balance as at 1 January | 35,639 | 47,624 | 6,753 | 9,181 |
| Effects of translation of foreign operations to presentation currency | (14) | 22 | - | - |
| Acquisition of subsidiaries (note 5.12.e), f) | - | 766 | - | - |
| Additions | - | 70 | - | - |
| Disposals | (3,392) | (17,004) | (79) | (2,512) |
| Transfer from/(to) property and equipment (note 5.8.) | (86) | 1,069 | - | - |
| Transfer from/(to) other assets | 86 | - | - | - |
| Net valuation to fair value (note 4.8.) | (1,117) | 3,092 | 182 | 84 |
| Merger of subsidiary (note 5.12.d) | - | - | 784 | - |
| Balance as at 31 December | 31,116 | 35,639 | 7,640 | 6,753 |
As at 31 December 2023, the value of assets received by taking possession of collateral and included in investment property by NLB Group amounted to EUR 21,253 thousand (31 December 2022: EUR 25,326 thousand), and in NLB amounted to EUR 2,263 thousand (31 December 2022: EUR 1,901 thousand) (note 6.1.l).
| NLB Group | NLB | 2023 | 2022 | |||
|---|---|---|---|---|---|---|
| Leased to others | 1,986 | 2,496 | 373 | 355 | ||
| Not leased to others | 459 | 564 | 298 | 300 | ||
| Total | 2,445 | 3,060 | 671 | 655 |
| in EUR thousands | NLB Group | NLB |
|---|---|---|
| Software licenses | Cost | |
| Balance as at 1 January 2023 | 259,684 | 13,227 |
| 32,336 | 305,247 | 207,769 |
| Effects of translation of foreign operations to presentation currency | (25) | (13) |
| - | (38) | - |
| Merger of subsidiary (note 5.12.d) | - | - |
| - | - | 979 |
| Additions | 20,697 | - |
| - | 20,697 | 13,797 |
| Disposals | (4) | - |
| - | (4) | - |
| Write-offs | (7,740) | - |
| - | (7,740) | (4,366) |
| Disposal of subsidiary (note 5.12.b) | (167) | - |
| - | (167) | - |
| Balance as at 31 December 2023 | 272,445 | 13,214 |
| 32,336 | 317,995 | 218,179 |
| Amortisation and impairment | Balance as at 1 January 2023 | 210,821 |
| 7,384 | 28,807 | 247,012 |
| 177,344 | Effects of translation of foreign operations to presentation currency | (16) |
| (13) | - | (29) |
| Merger of subsidiary (note 5.12.d) | - | - |
| - | - | 294 |
| Disposals | (4) | - |
| - | (4) | - |
| Amortisation (note 4.11.) | 14,037 | 2,365 |
| - | 16,402 | 7,528 |
| Write-offs | (7,336) | - |
| - | (7,336) | (4,366) |
| Disposal of subsidiary (note 5.12.b) | (167) | - |
| - | (167) | - |
| Balance as at 31 December 2023 | 217,335 | 9,736 |
| 28,807 | 255,878 | 180,800 |
| Net carrying value | Balance as at 31 December 2023 | 55,110 |
| 3,478 | 3,529 | 62,117 |
| 37,379 | Balance as at 1 January 2023 | 48,863 |
| 5,843 | 3,529 | 58,235 |
| 30,425 | Other intangible assets represent additionally identified intangible assets in a business combination, namely core deposits and trade name. |
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|
| Land and buildings | 24,541 | 19,567 | 2,794 | 2,241 |
| Vehicles | 92 | 130 | 2,681 | 1,089 |
| Computers | 395 | - | 255 | - |
| Furniture and equipment | 3,086 | 2,675 | - | - |
| Total | 28,114 | 22,372 | 5,730 | 3,330 |
Lease liabilities: 28,944 (2023), 23,840 (2022), 5,793 (2023), 3,349 (2022).
In the statement of financial position, right-of-use assets are included in the line item ‘Property and equipment’ and lease liabilities are included in the line item ‘Other financial liabilities.’ Additions to the right-of-use assets during 2023 in NLB Group amounted to EUR 19,149 thousand (2022: EUR 6,411 thousand), and in NLB EUR 4,656 thousand of which EUR 500 thousand from N Banka merger (2022: EUR 1,751 thousand).
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Depreciation of right-of-use assets (note 4.11.) | 6,519 | 7,092 | 692 | 511 |
| Vehicles | 160 | 276 | 705 | 448 |
| Computers | 61 | - | 24 | - |
| Furniture and equipment | 1,258 | 1,324 | - | 13 |
| Total | 7,998 | 8,692 | 1,421 | 972 |
| 2023 | 2022 | |
|---|---|---|
| Interest expenses on lease liabilities (note 4.1.) | (728) | (431) |
| Expenses relating to short-term leases (included in administrative expenses) | (1,554) | (855) |
| Expenses relating to leases of low-value assets that are not shown above as short-term leases (included in administrative expenses) | (1,237) | (1,129) |
| Income from sub-leasing right-of-use assets (included in other operating income) | 140 | 77 |
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|
| Up to 1 Month | 448 | 3,440 | 149 | 82 |
| 1 Month to 3 Months | 446 | 431 | 258 | 155 |
| 3 Months to 1 Year | 2,125 | 2,913 | 1,187 | 664 |
| 1 Year to 5 Years | 15,693 | 16,300 | 3,592 | 2,056 |
| Over 5 Years | 10,232 | 756 | 607 | 392 |
| Total | 28,944 | 23,840 | 5,793 | 3,349 |
The increase in lease liabilities in the NLB Group in 2023 arising from the newly concluded long-term lease contracts for business premises. NLB Group as a lessor Finance and operating leases represent the majority of agreements in which NLB Group acts as a lessor. Most of the lease agreements entered into by NLB Group as lessor contracts are finance lease agreements. Most have lease terms between 2 and 10 years. Some contracts are made for an indefinite period. Finance leases Loans and advances to customers in NLB Group include finance lease receivables undiscounted lease payments to be received after the reporting date.
| NLB Group | 2023 | 2022 |
|---|---|---|
| Less than 1 year | 115,449 | 70,629 |
| 1 to 2 years | 89,047 | 46,515 |
| 2 to 3 years | 76,876 | 39,899 |
| 3 to 4 years | 62,091 | 29,423 |
| 4 to 5 years | 31,172 | 17,422 |
| More than 5 years | 20,787 | 13,878 |
| Total undiscounted lease receivable | 395,422 | 217,766 |
| Unearned finance income | (57,812) | (23,818) |
| Net investment in the lease | 337,610 | 193,948 |
During 2023, NLB Group recognised interest income on lease receivables in the amount of EUR 18,959 thousand (2022: EUR 6,607 thousand).
| NLB Group | 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|---|
| Less than 1 year | 4,991 | 2,580 | 300 | 345 | |
| 1 to 2 years | 2,920 | 1,657 | 297 | 343 | |
| 2 to 3 years | 1,678 | 1,028 | 271 | 340 | |
| 3 to 4 years | 1,434 | 694 | 254 | 315 | |
| 4 to 5 years | 1,013 | 488 | 189 | 315 | |
| More than 5 years | 689 | 1,314 | 592 | 1,224 | |
| Total | 12,725 | 7,761 | 1,903 | 2,882 |
NLB Group realised rental income arising from: investment properties in the amount of EUR 1,755 thousand (2022: EUR 2,912 thousand); and movable property in the amount of EUR 2, investment properties in the amount of EUR 359 thousand (2022: EUR 459 thousand); and movable property in the amount of EUR 485 thousand (2022: EUR 475 thousand) (note 4.8.).
| 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|
| Banks | 901,765 | 813,362 |
| Other financial organisations | 30,407 | 32,126 |
| Enterprises | 43,585 | 58,552 |
| Total | 975,757 | 904,040 |
| Country of Incorporation | Equity as at 31 Dec 2023 (in EUR thousands) | Profit/(loss) for 2023 (in EUR thousands) | NLB Group Shareholding (in %) | Voting rights (in %) | Shareholding (in %) | Voting rights (in %) |
|---|---|---|---|---|---|---|
| NLB Banka a.d., Skopje | 279,987 | 44,517 | 86.97 | 86.97 | 86.97 | 86.97 |
| NLB Banka a.d., Podgorica | 120,390 | 26,658 | 99.87 | 99.87 | 99.87 | 99.87 |
| NLB Banka a.d., Banja Luka | 107,270 | 24,269 | 99.85 | 99.85 | 99.85 | 99.85 |
| NLB Banka sh.a., Prishtina | 149,669 | 35,968 | 82.38 | 82.38 | 82.38 | 82.38 |
| NLB Banka d.d., Sarajevo | 95,980 | 12,819 | 97.34 | 97.35 | 97.34 | 97.35 |
| NLB Komercijalna banka a.d. Beograd | 827,575 | 132,313 | 100 | 100 | 100 | 100 |
| KomBank Invest a.d. Beograd | 769 | (1,201) | 100 | 100 | - | - |
| NLB Skladi d.o.o., Ljubljana | 13,707 | 9,498 | 100 | 100 | 100 | 100 |
| NLB Lease\&Go, leasing, d.o.o., Ljubljana | 21,251 | 1,664 | 100 | 100 | 100 | 100 |
| NLB Lease\&Go, d.o.o. Skopje | 1,493 | (605) | 100 | 100 | - | - |
| NLB Lease\&Go leasing d.o.o. Beograd | 7,115 | (736) | 99.64 | 99.64 | - | - |
| NLB Zavod za upravljanje kulturne dediščine, Ljubljana | 3,500 | 86 | 100 | 100 | 100 | 100 |
| NLB DigIT d.o.o., Beograd | 2,569 | 204 | 100 | 100 | 100 | 100 |
| NLB Leasing d.o.o., Ljubljana - v likvidaciji | 2,021 | 1,487 | 100 | 100 | - | - |
| NLB Crna Gora d.o.o., Podgorica | 3,643 | 348 | 100 | 100 | 100 | 100 |
| NLB InterFinanz AG, Zürich in Liquidation | 9,762 | (2,321) | 100 | 100 | 100 | 100 |
| NLB InterFinanz d.o.o., Beograd | 3 | 1 | 100 | 100 | - | - |
| LHB AG, Frankfurt | 684 | (402) | 100 | 100 | 100 | 100 |
| REAM d.o.o., Podgorica | 2,156 | 389 | 100 | 100 | 100 | 100 |
| REAM d.o.o., Beograd - Novi Beograd | 2,042 | (576) | 100 | 100 | 100 | 100 |
| S-REAM d.o.o., Ljubljana | 22,452 | (384) | 100 | 100 | 100 | 100 |
| PRO-REM d.o.o., Ljubljana - v likvidaciji | 20,447 | 635 | 100 | 100 | - | - |
| OL Nekretnine d.o.o., Zagreb - u likvidaciji | 1,153 | (314) | 100 | 100 | - | - |
| NLB Srbija d.o.o., Beograd | 18,252 | (603) | 100 | 100 | 100 | 100 |
| Privatinvest d.o.o., Ljubljana | 110 | (11) | 100 | 100 | 100 | 100 |
*100% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana.
**51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.
| Nature of Business | Country of Incorporation | Equity as at 31 Dec 2022 (in EUR thousands) | Profit/(loss) for 2022 (in EUR thousands) | NLB Group Shareholding (in %) | Voting rights (in %) | Shareholding (in %) | Voting rights (in %) |
|---|---|---|---|---|---|---|---|
| NLB Banka a.d., Skopje | Banking | 265,844 | 37,874 | 86.97 | 86.97 | 86.97 | 86.97 |
| NLB Banka a.d., Podgorica | Banking | 106,937 | 16,613 | 99.87 | 99.87 | 99.87 | 99.87 |
| NLB Banka a.d., Banja Luka | Banking | 96,237 | 19,281 | 99.85 | 99.85 | 99.85 | 99.85 |
| NLB Banka sh.a., Prishtina | Banking | 113,844 | 32,402 | 82.38 | 82.38 | 82.38 | 82.38 |
| NLB Banka d.d., Sarajevo | Banking | 90,608 | 11,436 | 97.34 | 97.35 | 97.34 | 97.35 |
| NLB Komercijalna banka a.d. Beograd | Banking | 737,972 | 66,014 | 100 | 100 | 100 | 100 |
| KomBank Invest a.d. Beograd | Finance | 1,203 | (148) | 100 | 100 | - | - |
| N Banka d.d., Ljubljana | Banking | 186,423 | 11,085 | 100 | 100 | 100 | 100 |
| Privatinvest d.o.o., Ljubljana | Real estate | 123 | (99) | 100 | 100 | - | - |
| NLB Skladi d.o.o., Ljubljana | Finance | 12,598 | 8,404 | 100 | 100 | 100 | 100 |
| NLB Lease\&Go, leasing, d.o.o., Ljubljana | Finance | 19,578 | 810 | 100 | 100 | 100 | 100 |
| NLB Lease\&Go, d.o.o. Skopje | Finance | 529 | (68) | 100 | 100 | - | - |
| NLB Lease\&Go leasing d.o.o. Beograd | Finance | 766 | (390) | 95.20 | 95.20 | - | - |
| NLB Zavod za upravljanje kulturne dediščine, Ljubljana | Cultural heritage management | 3,414 | 2,601 | 100 | 100 | 100 | 100 |
| NLB DigIT d.o.o., Beograd | IT services | 2,368 | (36) | 100 | 100 | 100 | 100 |
| Non-core members | |||||||
| NLB Leasing d.o.o., Ljubljana - v likvidaciji | Finance | 16,936 | 366 | 100 | 100 | - | - |
| Optima Leasing d.o.o., Zagreb - „u likvidaciji“ | Finance | 821 | (434) | 100 | 100 | - | - |
| NLB Leasing d.o.o., Beograd - u likvidaciji | Finance | 5,899 | (91) | 100 | 100 | 100 | 100 |
| NLB Crna Gora d.o.o., Podgorica | Finance | 3,295 | 165 | 100 | 100 | 100 | 100 |
| NLB InterFinanz AG, Zürich in Liquidation | Finance | 10,029 | (2,213) | 100 | 100 | 100 | 100 |
| NLB InterFinanz d.o.o., Beograd | Finance | 4 | 1 | 100 | 100 | - | - |
| LHB AG, Frankfurt | Finance | 1,086 | (646) | 100 | 100 | 100 | 100 |
| Tara Hotel d.o.o., Budva | Real estate | 13,546 | (3,255) | 100 | 100 | 12.71 | 12.71 |
| REAM d.o.o., Podgorica | Real estate | 1,767 | 71 | 100 | 100 | 100 | 100 |
| REAM d.o.o., Beograd - Novi Beograd | Real estate | 1,758 | (90) | 100 | 100 | 100 | 100 |
| SPV 2 d.o.o., Beograd - Novi Beograd | Real estate | 867 | 35 | 100 | 100 | 100 | 100 |
| S-REAM d.o.o., Ljubljana | Real estate | 23,141 | (184) | 100 | 100 | 100 | 100 |
| REAM d.o.o., Zagreb | Real estate | 994 | 66 | 100 | 100 | - | - |
| PRO-REM d.o.o., Ljubljana - v likvidaciji | Real estate | 19,974 | 162 | 100 | 100 | - | - |
| OL Nekretnine d.o.o., Zagreb - u likvidaciji | Real estate | 1,467 | 153 | 100 | 100 | - | - |
| NLB Srbija d.o.o., Beograd | Real estate | 31,591 | (709) | 100 | 100 | 100 | 100 |
*100% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana.
**51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.
Changes in ownership interest in the subsidiaries of NLB Group in 2023 and 2022 are presented in note 3.
| NLB Banka, Skopje | NLB Banka, Prishtina | ||||||
| 2023 | 2022 | 2023 | |||||
| Non-controlling interest in equity in % | 13.03 | 13.03 | 17.62 | ||||
| Non-controlling interest‘s voting rights in % | 13.03 | 13.03 | 17.62 | ||||
| Income statement and statement of comprehensive income | |||||||
| Revenues | 111,640 | 94,624 | 68,468 | ||||
| Profit/(loss) for the year | 44,517 | 37,874 | 35,968 | ||||
| Attributable to non-controlling interest | 5,801 | 4,935 | 6,339 | ||||
| Other comprehensive income | 3,363 | (5,071) | (141) | ||||
| Total comprehensive income | 47,880 | 32,803 | 35,827 | ||||
| Attributable to non-controlling interest | 6,239 | 4,274 | 6,314 | ||||
| Paid dividends to non-controlling interest | 4,391 | 1,332 | - |
| Current assets | 867,333 | 826,723 | 716,000 |
|---|---|---|---|
| Non-current assets | 1,034,922 | 1,020,798 | 513,757 |
| Current liabilities | 1,393,480 | 1,404,491 | 856,340 |
| Non-current liabilities | 228,788 | 177,186 | 223,748 |
| Equity | 279,987 | 265,844 | 149,669 |
| Attributable to non-controlling interest | 36,482 | 34,639 | 26,376 |
2023, NLB Group sold its subsidiary Optima Leasing d.o.o., Zagreb – u likvidaciji. The assets and liabilities derecognised from NLB Group financial statements as a result of disposal are as follows:
| in EUR thousands | |||
|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits at banks | 713 | ||
| Financial assets measured at amortised cost | - other financial assets | 4 | |
| Other assets | 104 | ||
| Total assets | 821 | ||
| Provisions | 30 | ||
| Other liabilities | 22 | ||
| Total liabilities | 52 | ||
| Net assets of subsidiary | 769 | ||
| Total disposal consideration | 470 | ||
| Cash and cash equivalents in subsidiary sold | (713) | ||
| Cash outflow on disposal | (243) | ||
| Consideration for disposal of the subsidiary | 470 | ||
| Carrying amount of net assets disposed of | 769 | ||
| Loss from disposal of subsidiary in consolidated financial statements | (299) |
At sale of subsidiary Optima Leasing d.o.o., Zagreb – u likvidaciji, NLB Group realised a loss in the amount of EUR 299 thousand.
c) Disposal of subsidiary Tara Hotel d.o.o., Budva In M derecognised from NLB Group financial statements as a result of disposal are as follows:
| in EUR thousands | |||
|---|---|---|---|
| Cash, cash balances at central banks and other demand deposits at banks | 2 | ||
| Financial assets measured at amortised cost | - other financial assets | 19 | |
| Other assets | 13,938 | ||
| Total assets | 13,959 | ||
| Financial liabilities measured at amortised cost | - borrowings from banks and central banks | 178 |
| Other financial liabilities | 20 |
|---|---|
| Deferred income tax liabilities | 193 |
| Other liabilities | 82 |
| Total liabilities | 473 |
| Net assets of subsidiary | 13,486 |
|---|---|
| Total disposal consideration | 13,019 |
| Cash inflow on disposal | 13,019 |
| Consideration for disposal of the subsidiary | 13,019 |
| Carrying amount of net assets disposed of | 13,486 |
| Loss from disposal of subsidiary in consolidated financial statements | (467) |
At sale of Tara Hotel d.o.o., Budva NLB Group realised a loss in the amount of EUR 467 thousand and NLB in the amount of EUR 105 thousand.
On 1 September 2023, with entry of the merger in the Register of Companies, the process of legal merger of N Banka d.d. with NLB d.d. was closed. As at the date universal legal successor, took over all of its rights and obligations. Merger was accounted for using merger accounting principles, due to the fact that such a merger is considered to be a business combination.
The following accounting policy was applied:
As at the day of the merger, NLB also took over control of the company of repossessed real estate. N Banka also had an investment in Bankart d.o.o., Ljubljana, which was on the day of the merger transferred to NLB.
| Items of the statement of financial position | in EUR thousands |
|---|---|
| Cash, cash balances at central banks and other demand deposits at banks | 118,158 |
| Financial assets measured at fair value through other comprehensive income | 49,477 |
| Financial assets measured at amortised cost | |
| - debt securities | 13,044 |
| - loans and advances to banks | 3 |
| - loans and advances to customers | 765,552 |
| - other financial assets | 2,664 |
| Investments in associates and joint ventures | 134 |
| Tangible assets | |
| Property and equipment | 4,884 |
| - own property and equipment | 4,546 |
| - right-of-use assets | 338 |
| Investment property | 784 |
| Intangible assets | 685 |
| Deferred income tax assets | 2,426 |
| Other assets | 68 |
| Total assets | 957,879 |
| Financial liabilities held for trading | 189 |
|---|---|
| Financial liabilities measured at amortised cost | |
| - deposits from banks and central banks | 131,070 |
| - borrowings from banks and central banks | 40,084 |
| - due to customers | 574,747 |
| - other financial liabilities | 2,193 |
| Provisions | 7,881 |
| Current income tax liabilities | 1,026 |
| Other liabilities | 943 |
| Total liabilities | 758,133 |
| Equity | 199,746 |
| Total liabilities and equity | 957,879 |
As a result of the merger, NLB’s off-balance sheet liabilities increased by EUR 200,933 thousand:
| Guarantees | 108,673 |
|---|---|
| Commitments to extend credit | 92,260 |
| Total | 200,933 |
| Net interest income | 27,822 |
|---|---|
| Net fee and commission income | 6,016 |
| Profit for the year | 13,389 |
On the level of the European Central Bank and the Single Resolution Board, a decision was made on 28 February 2022 to suspend the business operations of the same time, a transitional period or short-term moratorium was adopted, during which a solution for the Slovenian subsidiary, Sberbank banka d.d., was found with the aim to ensure the continuity of operations in a way that all shares are transferred from the shareholders to the transferee.
In the process of finding a new owner of Sberbank banka d.d., Ljubljana, a sale agreement was concluded in 2022. At the date of acquisition, the acquired bank had one 100% owned subsidiary, company Privatinvest d.o.o., whose assets consist only of repossessed real estate. It also had an investment accounted for as a financial asset measured at fair value through other comprehensive income, while on the level of NLB Group it is an associate.
In April 2022, Sberbank banka d.d. was acquired for EUR 5,109 thousand and was fully paid in cash. There are no contingent consideration arrangements. At the acquisition date, cash in acquired entities amounted to EUR 265,062 thousand (statement of cash flows within payments from investing activities).
| in EUR thousands | |
|---|---|
| Cash, cash balances at central banks and other demand deposits at banks | 265,062 |
| Financial assets held for trading | 4,788 |
| Non-trading financial assets mandatorily at fair value through profit or loss | 332 |
| Financial assets measured at fair value through other comprehensive income | 69,387 |
| Financial assets measured at amortised cost | |
| - debt securities | 12,819 |
| - loans and advances to banks | 2,489 |
| - loans and advances to customers | 1,148,615 |
| - other financial assets | 3,465 |
| Investments in associates and joint ventures | 11 |
| Tangible assets | |
| Property and equipment | 10,905 |
| - own property and equipment (note 5.8.b) | 6,387 |
| - right-of-use assets | 4,518 |
| Investment property | 464 |
| Intangible assets | 1,424 |
| Current income tax assets | 46 |
| Deferred income tax assets | 4,481 |
| Other assets | 2,169 |
| Total assets | 1,526,457 |
| Financial liabilities held for trading | 4,698 |
| Financial liabilities measured at amortised cost | |
| - deposits from banks and central banks | 24,937 |
| - borrowings from banks and central banks | 190,008 |
| - due to customers | 1,072,411 |
| - other financial liabilities | 30,155 |
| Provisions | 21,896 |
| Current income tax liabilities | 2,249 |
| Other liabilities | 2,184 |
| Total liabilities | 1,348,538 |
| Net identifiable assets acquired | 177,919 |
| Consideration given | 5,109 |
| Gain from bargain purchase | 172,810 |
the acquisition, NLB Group’s off-balance sheet liabilities increased by EUR 277,772 thousand:
| in EUR thousands | |
|---|---|
| Guarantees | 136,309 |
| - financial | 41,615 |
| - non-financial | 94,694 |
| Commitments to extend credit | 138,749 |
| Letters of credit | 2,714 |
| Total | 277,772 |
Since the bank was acquired within a very short timeframe in the process of resolution, acquisition-related costs were immaterial. NLB obtained all the necessary information for measuring.
The valuation techniques used for measuring the fair value of material assets and liabilities acquired were as follows:
Discounted cash flow approach: Since these are performing loans, it was assumed that they would be repaid by future cash flows in accordance with amortisation schedules. Credit risk was considered for loans which are classified in Stage 2 in N Banka individual financial statements, by reducing future cash flows accordingly. Also, prepayment risk was estimated for consumer and mortgage loans. The discount rates used for fair value measurement of loans were based on the publicly available interest rates published by Bank of Slovenia, that represent market rates and are thus considered the most appropriate. Discount rates differ based on product type, client segment, maturity and currency.
Discounted cash flow approach: Since these are non-performing loans, it could generally not be assumed that they would be repaid with cash flows from client’s regular business. Instead, gone concern principle was used, taking into account liquidation value of collateral as expected cash flows. Appropriate haircuts for age of valuations, type of collateral, type of location, and type of real estate were used to estimate the liquidation value of collateral, which was then discounted for a period of 4 years, with the required yield of 15%.
For debt securities classified in Level 1 of fair value hierarchy, fair values were determined by an observable market price in an active market for an identical asset. For valuing debt securities in Level 2, income approach was used, based on the estimation of future cash flows discounted to the present value. The input parameters used in the income approach were the risk-free yield curve and the spread over the yield curve (credit, liquidity, country).
Three approaches were used for estimating the value of real estate - the income capitalisation approach, the sale comparison approach and the residual land value approach. Each views the valuation from different perspectives and considers data from different market sources. The most suitable approach depends on the characteristics and use of individual real estate.
Values property by the amount of income - cash flow that it can potentially generate. The value of the property is derived by converting the expected income generated from a property into a present value estimate using market capitalization rate. This method is commonly used for valuing income-generating properties.
in the marketplace and application of adequate adjustments for individually appraised real estate. When sale transactions are not available, the direct sales comparison approach is not applicable.
is a method for calculating the value of development land. It is performed by subtracting from the total value of a development project, all costs associated with the development project, including profit but excluding the cost of the land. It is applicable only for development/ construction land.
Aggregated future cash flows were discounted by applying market interest rates for term deposits. As a discount rate, average market rates on the deposits, published by Bank of Slovenia, were used.
The fair value of acquired loans and advances to customers is EUR 1,148,615 thousand, of which EUR 1,127,261 thousand relates to performing portfolio and EUR 21,354 thousand to non-performing portfolio. The latter was recognised as purchased or originated credit-impaired financial assets (POCI). The gross contractual amount for performing loans and advances to customers is EUR 1,135,072 thousand and for this exposure 12-month expected credit losses in the amount of EUR 8,552 thousand were recognised through the income statement. The gross contractual amount for non-performing loans and advances to customers is EUR 49,641 thousand, and it is expected that approximately EUR 23 million of the contractual cash flows will not be collected. Immediately after acquisition, 12-month expected credit losses for Stage 1 financial assets in the amount of EUR 8,900 thousand and attributable deferred taxes in the amount of EUR 1,691 thousand were recognised. Additionally, EUR 39,657 thousand of revenue, EUR 18,294 thousand of gain after tax, and EUR 2,650 thousand of other comprehensive loss were recognised in NLB Group financial statements since the acquisition date. Had the acquisition occurred on 1 January 2022, management estimates that the consolidated revenue (excluding gain from bargain purchase) would have been approximately EUR 960 million, and the consolidated profit for the year (excluding gain from bargain purchase) approximately EUR 265 million. The exact result is difficult to determine due to the changed circumstances during the year, especially the impact of the war in Ukraine.
In November 2022, NLB Lease&Go, leasing, d.o.o., Ljubljana became an owner of 95.20% of financial company Zastava Istrabenz Lizing, d.o.o., Lease&Go leasing d.o.o. Beograd. The purchase price for the company was EUR 1,036 thousand and was fully paid in cash. There are no contingent consideration arrangements. At the acquisition date, cash amounted to EUR 919 thousand (included in the statement of cash flows within payments from investing activities).
| in EUR thousands | |
|---|---|
| Cash, cash balances at central banks and other demand deposits at banks | 117 |
| Financial assets measured at amortised cost | |
| - loans and advances to banks | 171 |
| - loans and advances to customers | 913 |
| - other financial assets | 5 |
| Tangible assets | |
| Property and equipment | 137 |
| - own property and equipment (note 5.8.b) | 137 |
| Investment property | 302 |
| Intangible assets | 20 |
| Current income tax assets | 5 |
| Other assets | 2 |
| Total assets | 1,672 |
| Financial liabilities measured at amortised cost | |
| - borrowings from other customers | 490 |
| - other financial liabilities | 7 |
| Provisions | 7 |
| Other liabilities | 8 |
| Total liabilities | 512 |
| Net identifiable assets acquired (100%) | 1,160 |
| Less: non-controlling interests | 56 |
| Net assets acquired (NLB Group share) | 1,104 |
| Consideration given | 1,036 |
| Gain from bargain purchase | 68 |
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec | |
|---|---|---|---|---|
| Carrying amount of the NLB Group‘s interest | 12,519 | 11,677 | 4,293 | 4,282 |
| Other financial organisations | ||||
| Enterprises | - | - | 530 | 289 |
| Total | 12,519 | 11,677 | 4,823 | 4,571 |
| Nature of Business | Incorporation Country of | Shareholding | Voting rights |
|---|---|---|---|
| Bankart d.o.o., Ljubljana | Slovenia | 46.03 | 46.03 |
| ARG - Nepremičnine d.o.o., Horjul | Slovenia | 75.00 | 75.00 |
| Nature of Business | Country of Incorporation | Shareholding | Voting rights |
|---|---|---|---|
| Bankart d.o.o., Ljubljana | Slovenia | 46.03 | 46.03 |
| ARG - Nepremičnine d.o.o., Horjul | Slovenia | 75.00 | 75.00 |
By contractual agreement between the shareholders, NLB does not control ARG-Nepremičnine, Horjul, but does have a significant influence. Therefore, the entity is accounted as an associate.
| 2023 | 2022 | |
|---|---|---|
| Carrying amount of the NLB Group‘s interest | 12,519 | 11,677 |
| NLB Group‘s share of: | ||
| - Profit for the year | 1,072 | 781 |
| - Other comprehensive income | 45 | 121 |
| - Total comprehensive income | 1,117 | 902 |
NLB Group’s interest in an associate was in previous years reduced to zero, consequently NLB Group did not recognise a share of profit in the amount of EUR 347 thousand in 2023 (2022: December 2023 amounted to EUR 1,742 thousand (31 December 2022: EUR 2,083 thousand).
| Nature of Business | Incorporation Country of | Voting rights | Voting rights |
|---|---|---|---|
| Prvi Faktor Group, Ljubljana | Finance | 50 | 50 |
NLB Group’s interest in a joint venture was in previous years reduced to zero, consequently NLB Group did not recognise a share of profit in the amount of EUR 751 thousand in 2023 (2022: 31 December 2023 amounted to EUR 13,645 thousand (31 December 2022: EUR 14,396 thousand).
| NLB Group | 2023 | 2022 |
|---|---|---|
| Balance as at 1 January | 11,677 | 11,525 |
| Acquisition of subsidiary (note 5.12.e) | - | 11 |
| Share of result before tax | 1,394 | 827 |
| Share of tax | (322) | (46) |
| Net gains/(losses) recognised in other comprehensive income | 45 | 121 |
| Dividends received | (275) | (761) |
| NLB Group | NLB | |||
|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Assets, received as collateral (note 6.1.l) | 27,637 | 51,586 | 3,129 | 3,170 |
| Deferred expenses | 12,313 | 12,200 | 6,915 | 6,929 |
| Inventories | 5,825 | 4,961 | 2,943 | 2,324 |
| Claim for taxes and other dues | 1,599 | 1,509 | 531 | 417 |
| Prepayments | 1,780 | 2,287 | 389 | 321 |
| Total | 49,154 | 72,543 | 13,907 | 13,161 |
Assets, received as collateral on NLB Group in the amount of EUR 27,122 thousand (31 December 2022: EUR 50,913 thousand), and on NLB in the amount of EUR 3,129 thousand (31 D
264 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm
| in EUR thousands | Effects of translation of foreign operations to presentation currency | Balance as at 31 Dec 2023 | Repayments of written-off receivables | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Transfers | Increases/ (Decreases) | Write-offs | Changes in models/risk parameters | Foreign exchange differences and other movements | Disposal of subsidiary | |||||
| Loans and advances to banks | 161 | - | - | 49 | - | - | 3 | 213 | - | |
| Loans and advances to individuals | 31,385 | (13) | 31,614 | (22,681) | (221) | (419) | 3 | 39,668 | - | |
| Loans and advances to other customers | 59,840 | (17) | (1,229) | 5,634 | - | (13,134) | (7) | 51,087 | - | |
| Other financial assets | 1,246 | - | (17) | (201) | (42) | (117) | (225) | (20) | 624 | |
| Lifetime ECL not credit-impaired | ||||||||||
| Loans and advances to individuals | 14,582 | (5) | (28,704) | 34,051 | (18) | 5,121 | 24 | 25,051 | - | |
| Loans and advances to other customers | 31,230 | 1 | (1,988) | (9,837) | (8) | 156 | 224 | 19,778 | - | |
| Other financial assets | 38 | - | (36) | 82 | (17) | (26) | (1) | 40 | - | |
| Lifetime ECL credit-impaired | ||||||||||
| Loans and advances to banks | 108 | - | - | (26) | - | - | 4 | 86 | - | |
| Loans and advances to individuals | 75,807 | (5) | (2,910) | 29,543 | (23,445) | 720 | 4,070 | 83,780 | 8,703 | |
| Loans and advances to other customers | 111,154 | 645 | 3,217 | (8,614) | (19,399) | (364) | 22,624 | 109,263 | 15,237 | |
| Other financial assets | 7,750 | - | 53 | 3,374 | (764) | (18) | 17 | (271) | 10,141 | |
| Of which: Purchased or originated credit-impaired | ||||||||||
| Loans and advances to individuals | (499) | - | - | (414) | (456) | - | 2,393 | 1,024 | 1,377 | |
| Loans and advances to other customers | (3,134) | (6) | - | (4,817) | (1,026) | - | 14,968 | 5,985 | 2,012 | |
| Other financial assets | 185 | (2) | - | 185 | - | - | 863 | 1,231 | - |
| in EUR thousands | Effects of translation of foreign operations to presentation currency | Transfers | Foreign exchange differences and other movements | Balance as at 31 Dec 2022 | Repayments of written-off receivables | Increases/ (Decreases) | Write-offs | Changes in models/risk parameters | Notes |
|---|---|---|---|---|---|---|---|---|---|
| Loans and advances to banks | 198 | 1 | - | (46) | - | 5 | 3 | 161 | 4.14. |
| Loans and advances to individuals | 18,336 | (6) | 19,708 | (12,932) | (239) | 6,521 | (3) | 31,385 | |
| Loans and advances to other customers | 50,961 | 6 | (4,026) | 18,487 | (1) | (5,585) | (2) | 59,840 | |
| Other financial assets | 476 | 1 | (263) | 911 | (72) | 20 | 173 | 1,246 | |
| Lifetime ECL not credit-impaired | |||||||||
| Loans and advances to individuals | 7,398 | (4) | (12,893) | 16,206 | (18) | 3,897 | (4) | 14,582 | |
| Loans and advances to other customers | 26,624 | 2 | 2,175 | 2,943 | (1) | (493) | (20) | 31,230 | |
| Other financial assets | 36 | (1) | 13 | 1 | (26) | 12 | 3 | 38 | |
| Lifetime ECL credit-impaired | |||||||||
| Loans and advances to banks | - | - | - | 108 | - | - | 108 | ||
| Loans and advances to individuals | 76,047 | 4 | (6,815) | 28,969 | (21,199) | (751) | (448) | 75,807 | |
| Loans and advances to other customers | 136,607 | 626 | 1,851 | (9,912) | (27,759) | 144 | 9,597 | 111,154 | |
| Other financial assets | 5,714 | (3) | 250 | 1,556 | (1,136) | (22) | 1,391 | 7,750 | |
| Of which: Purchased or originated credit-impaired | |||||||||
| Loans and advances to individuals | (157) | 1 | - | 24 | (219) | - | (148) | (499) | |
| Loans and advances to other customers | 613 | (2) | - | (11,136) | (244) | - | 7,635 | (3,134) | |
| Other financial assets | (608) | - | - | (1,034) | - | - | 1,827 | 185 |
| in EUR thousands | NLB Balance as at 1 Jan 2023 | Balance as at 31 Dec 2023 | ||||||
|---|---|---|---|---|---|---|---|---|
| Transfers (Decreases) | Increases/ Write-offs | Changes in models/risk parameters | Foreign differences and other exchange movements | Merger of subsidiary | ||||
| Loans and advances to banks | 216 | - | (54) | - | 2 | - | 164 | |
| Loans and advances to individuals | 6,161 | 15,744 | (14,192) | (189) | (603) | 1 | 8,073 | |
| Loans and advances to other customers | 14,880 | (1,199) | (2,541) | - | (3,622) | 25 | 13,482 | |
| Other financial assets | 203 | (193) | (92) | (7) | (34) | (1) | 98 | |
| Lifetime ECL not credit-impaired | ||||||||
| Loans and advances to individuals | 7,385 | (14,921) | 15,949 | (10) | 2,127 | 24 | 11,489 | |
| Loans and advances to other customers | 800 | 1,344 | (2,647) | (1) | (444) | - | 2,553 | |
| Other financial assets | 2 | (6) | 7 | (1) | - | - | 2 | |
| Lifetime ECL credit-impaired | ||||||||
| Loans and advances to banks | - | - | (28) | - | - | 4 | 86 | |
| Loans and advances to individuals | 34,286 | (823) | 15,358 | (5,797) | 17 | 819 | 45,663 | |
| Loans and advances to other customers | 29,900 | (145) | 11,822 | (7,292) | (29) | 1,677 | 38,308 | |
| Other financial assets | 808 | 199 | 785 | (296) | - | (8) | 1,514 | |
| Of which: Purchased or originated credit-impaired | ||||||||
| Loans and advances to individuals | - | - | 1,672 | (20) | - | 88 | 1,755 | |
| Loans and advances to other customers | 638 | - | 4,661 | (247) | - | 626 | 5,678 | |
| Other financial assets | 1 | - | - | - | - | 1 | 2 |
| in EUR thousands | |||||
|---|---|---|---|---|---|
| NLB Balance as at 1 Jan 2022 | Transfers | Increases/ (Decreases) | Write-offs | Changes in models/risk parameters | Foreign exchange differences and other movements |
| Balance as at 31 Dec 2022 | Repayments of written-off receivables | Notes | |||
| 4.14. | 4.14. | 5.6.b), c), d) | 4.14. | 12-month expected credit losses | |
| Loans and advances to banks | 182 | -34 | - | - | 216 |
| Loans and advances to individuals | 3,503 | 7,665 | (6,686) | (238) | 1,916 |
| 1 | 6,161 | ||||
| Loans and advances to other customers | 10,101 | 833 | 5,358 | (1) | (1,440) |
| 29 | 14,880 | ||||
| Other financial assets | 62 | 16 | 95 | (17) | 46 |
| 1 | 203 | ||||
| Lifetime ECL not credit-impaired | |||||
| Loans and advances to individuals | 2,421 | (6,808) | 8,313 | (15) | 3,474 |
| - | 7,385 | ||||
| Loans and advances to other customers | 1,787 | 1,192 | (2,277) | (1) | 100 |
| (1) | 800 | ||||
| Other financial assets | 1 | 2 | (1) | - | - |
| 2 | |||||
| Lifetime ECL credit-impaired | |||||
| Loans and advances to individuals | 31,497 | (857) | 9,321 | (5,761) | (279) |
| 365 | 34,286 | 2,536 | |||
| Loans and advances to other customers | 47,110 | (2,025) | 3,922 | (11,178) | (94) |
| (7,835) | 29,900 | 10,313 | |||
| Other financial assets | 1,090 | (16) | 225 | (491) | - |
| - | 808 | 210 | |||
| Of which: | |||||
| Purchased or originated credit-impaired | Loans and advances to other customers | 838 | - | 4,801 | - |
| (5,001) | 638 | ||||
| Other financial assets | 6 | - | (5) | - | - |
| 1 |
Other movements relate mainly to expenses due to initial recognition of non-performing exposure at fair value. The contractual amount outstanding on financial assets that were written off during the year ending 31 December 2023 and that are still subject to enforcement activity for NLB Group amounted to EUR 43,080 thousand (31 December 2022: EUR 29,654 thousand), and for NLB amounted to EUR 15,715 thousand (31 December 2022: EUR 9,949 thousand), of which EUR 2,962 thousand in NLB Group (31 December 2022: EUR 1,730 thousand) and EUR 1,904 thousand in NLB (31 December 2022: EUR 1,140 thousand) represent interest receivables that have not been recognised in the income statement prior to the write-off.
| in EUR thousands | NLB Group | Effects of translation of foreign operations to presentation currency | Transfers | Increases/ (Decreases) | Write-offs | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2023 |
|---|---|---|---|---|---|---|---|---|
| Debt securities measured at amortised cost | 3,519 | 2 | (52) | 1,478 | - | 9 | (10) | 4,946 |
| Debt securities measured at fair value through other comprehensive income | 9,029 | 4 | - | (2,470) | - | (87) | (1) | 6,475 |
| Lifetime ECL not credit-impaired | ||||||||
| Debt securities measured at amortised cost | 265 | (1) | 52 | (253) | - | 515 | (2) | 576 |
| Debt securities measured at fair value through other comprehensive income | 70 | - | - | (13) | - | (1) | - | 56 |
| Lifetime ECL credit-impaired | ||||||||
| Debt securities measured at fair value through other comprehensive income | 6,777 | - | - | (4,483) | (1,537) | - | 41 | 798 |
Release of lifetime ECL credit-impaired debt securities measured at fair value through other comprehensive income relates to impairment of Russian sovereign debt, which was sold in February 2023.
| in EUR thousands | NLB Group | Effects of translation of foreign operations to presentation currency | Transfers | Increases/ (Decreases) | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2022 |
|---|---|---|---|---|---|---|---|
| Debt securities measured at amortised cost | 3,253 | (2) | - | 158 | 104 | 6 | 3,519 |
| Debt securities measured at fair value through other comprehensive income | 11,148 | 5 | (25) | (2,049) | (67) | 17 | 9,029 |
| Lifetime ECL not credit-impaired | |||||||
| Debt securities measured at amortised cost | 52 | 1 | - | 271 | (59) | - | 265 |
| Debt securities measured at fair value through other comprehensive income | 70 | - | (803) | 739 | 12 | 52 | 70 |
| Lifetime ECL credit-impaired | |||||||
| Debt securities measured at fair value through other comprehensive income | 798 | - | 828 | 5,235 | - | (84) | 6,777 |
| NLB | Changes in models/risk parameters | Merger of subsidiary | Foreign exchange differences and other movements | Balance as at 31 Dec 2023 | Balance as at 1 Jan 2023 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12-month expected credit losses | Debt securities measured at amortised cost | 1,990 | (52) | 585 | - | (36) | 140 | (3) | 2,624 | ||||
| Debt securities measured at fair value through other comprehensive income | 2,022 | - | (554) | - | (21) | 204 | (1) | 1,650 | |||||
| Lifetime ECL not credit-impaired | Debt securities measured at amortised cost | - | 52 | 123 | - | - | - | (2) | 173 | ||||
| Lifetime ECL credit-impaired | Debt securities measured at fair value through other comprehensive income | 6,777 | - | (4,483) | (1,537) | - | - | 41 | 798 |
Release of lifetime ECL credit-impaired debt securities measured at fair value through other comprehensive income relates to impairment of Russian sovereign debt, which was sold in February 2023.
| NLB | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2022 | Balance as at 1 Jan 2022 | Transfers | Increases/ (Decreases) | Notes | |
|---|---|---|---|---|---|---|---|---|
| 12-month expected credit losses | Debt securities measured at amortised cost | 1,826 | - | 119 | 42 | 3 | 1,990 | |
| Debt securities measured at fair value through other comprehensive income | 2,203 | (25) | (192) | 32 | 4 | 2,022 | ||
| Lifetime ECL not credit-impaired | Debt securities measured at fair value through other comprehensive income | - | (803) | 751 | - | 52 | - | |
| Lifetime ECL credit-impaired | Debt securities measured at fair value through other comprehensive income | 798 | 828 | 5,235 | - | (84) | 6,777 |
Impairment of debt securities measured at fair value through other comprehensive income relates mainly to impairment of Russian sovereign debt (note 5.4.).
| in EUR thousands | NLB Group | NLB | 2023 | 2022 |
|---|---|---|---|---|
| 12-month expected credit losses | Lifetime ECL credit-impaired | 12-month expected credit losses | Lifetime ECL credit-impaired | 12-month expected credit losses |
| Balance as at 1 January | 223,126 | 108 | 140,881 | - |
| Effects of translation of foreign operations to presentation currency | (105) | - | 74 | - |
| Acquisition of subsidiaries (note 5.12.e), f) | - | - | 2,660 | - |
| Increases/(Decreases) | 322,034 | 5 | 75,516 | - |
| Exchange differences on monetary assets | 2,771 | - | 4,103 | - |
| Transfers | - | - | (108) | 108 |
| Merger of subsidiary (note 5.12.d) | - | - | - | - |
| Balance as at 31 December | 547,826 | 113 | 223,126 | 108 |
| in EUR thousands | NLB Group | NLB Individuals | 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
|---|---|---|---|---|---|---|
| Balance as at 1 January 2023 | 6,422,877 | 190,121 | 130,446 | 6,743,444 | 2,922,907 | 101,744 |
| Effects of translation of foreign operations to presentation currency | (1,606) | (24) | (12) | (1,642) | - | - |
| Transfers | (103,434) | 70,870 | 32,564 | - | (48,707) | 34,682 |
| Increases/(Decreases) | 551,995 | (12,564) | (7,469) | 531,962 | 204,972 | 5,439 |
| Write-offs | (221) | (18) | (23,445) | (23,684) | (189) | (10) |
| Exchange differences on monetary assets | 783 | 124 | 186 | 1,093 | 1,914 | 127 |
| Modification losses (note 4.12.) | (15,669) | (85) | (105) | (15,859) | - | - |
| Merger of subsidiary (note 5.12.d) | - | - | - | - | 298,616 | 10,279 |
| Balance as at 31 December 2023 | 6,854,725 | 248,424 | 132,165 | 7,235,314 | 3,379,513 | 152,261 |
| in EUR thousands | NLB Group | NLB Individuals | 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
|---|---|---|---|---|---|---|
| Balance as at 1 January 2022 | 5,372,551 | 120,235 | 128,285 | 5,621,071 | 2,570,925 | 66,035 |
| Effects of translation of foreign operations to presentation currency | 672 | (12) | 8 | 668 | - | - |
| Acquisition of subsidiaries (note 5.12.e) | 411,068 | - | 6,583 | 417,651 | - | - |
| Transfers | (106,876) | 78,073 | 28,803 | - | (46,023) | 35,084 |
| Increases/(Decreases) | 746,532 | (8,179) | (12,059) | 726,294 | 396,545 | 596 |
| Write-offs | (239) | (18) | (21,199) | (21,456) | (238) | (15) |
| Exchange differences on monetary assets | (746) | 34 | 12 | (700) | 1,698 | 44 |
| Modification losses (note 4.12.) | (85) | (12) | 13 | - | - | - |
(84) - - - - Balance as at 31 December 2022
| 6,422,877 | 190,121 | 130,446 | 6,743,444 | 2,922,907 | 101,744 | 59,680 | 3,084,331 |
|---|---|---|---|---|---|---|---|
In year 2023, the loss allowance for loans and advances to individuals increased by EUR 26,725 thousand at the NLB Group level, while at the NLB level it increased by EUR 17,393 thousand. The reasons for increases are also changed risk parameters, which increased the loss allowance by EUR 5,422 thousand at the NLB Group level, and by EUR 1,541 thousand at NLB level. At the NLB level, it also increased due to the merger of N Banka by EUR 3,889 thousand. At the NLB Group level, the gross carrying amount increased by EUR 491,870 thousand, mainly due to increased exposure, while at the NLB level it increased by EUR 524,497 thousand due to increased exposure and the merger of N Banka (EUR 318,198 thousand).
In year 2022, the loss allowance for loans and advances to individuals increased by EUR 19,993 thousand at the NLB Group level, while at the NLB level it increased by EUR 10,411 thousand. The main reasons for these increases are changed risk parameters, which increased loss allowance by EUR 9,667 thousand at the NLB Group level, and by EUR 5,111 thousand at NLB level and an increase of the gross carrying amount. At the NLB Group level, the gross carrying amount increased by EUR 1,122,373 thousand, mainly due to increased exposure and the acquisition of subsidiaries, while at the NLB level it increased by EUR 389,975 thousand. Acquisition of subsidiaries in 2022 (note 5.12.f) contributed EUR 417,651 thousand to the gross carrying amount of loans and advances to individuals on the NLB Group level.
| in EUR thousands | NLB Group | NLB | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| gross carrying amount of loans and advances to other customers | |||||||||||
| 12-month expected credit losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Total | 12-month expected credit losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Total | ||||
| Balance as at 1 January 2023 | 6,028,285 | 423,671 | 201,584 | 6,653,540 | 2,960,455 | 51,906 | 51,133 | 3,063,494 | |||
| Effects of translation of foreign operations to presentation currency | (1,887) | (128) | 960 | (1,055) | - | - | - | - | |||
| Transfers | (94,306) | 80,889 | 13,417 | - | (41,456) | 36,860 | 4,596 | - | |||
| Increases/(Decreases) | 277,557 | (53,135) | (27,449) | 196,973 | 115,612 | 26,546 | (2,303) | 139,855 | |||
| Write-offs | - | (8) | (19,399) | (19,407) | - | (1) | (7,292) | (7,293) | |||
| Exchange differences on monetary assets | (1,622) | (97) | (6) | (1,725) | (91) | - | - | (91) | |||
| Modification losses (note 4.12.) | (374) | (38) | - | (412) | - | - | - | - | |||
| Merger of subsidiary (note 5.12.d) | - | - | - | - | 400,313 | 47,665 | 15,080 | 463,058 | |||
| Balance as at 31 December 2023 | 6,207,653 | 451,154 | 169,107 | 6,827,914 | 3,434,833 | 162,976 | 61,214 | 3,659,023 |
| Category | Total 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
|---|---|---|---|---|
| Other customers | 4,630,485 | 412,184 | 239,354 | 5,282,023 |
| Balance as at 1 January 2022 | 2,351,275 | 123,304 | 72,637 | 2,547,216 |
| Effects of translation of foreign operations to presentation currency | 1,189 | 87 | 893 | 2,169 |
| Acquisition of subsidiaries (note 5.12.e), f) | 716,577 | - | 15,300 | 731,877 |
| Transfers | (154,654) | 123,967 | 30,687 | - |
| Increases/(Decreases) | 835,299 | (112,477) | (56,944) | 665,878 |
| Write-offs | (1) | (1) | (27,759) | (27,761) |
| Exchange differences on monetary assets | (639) | (106) | 41 | (704) |
| Modification losses (note 4.12.) | 29 | 17 | 12 | 58 |
| Balance as at 31 December 2022 | 6,028,285 | 423,671 | 201,584 | 6,653,540 |
In 2023, the gross carrying amount of loans and advances to other customers increased by EUR 174,374 thousand at the NLB Group level mostly in Stage 1 due to the increased exposure. Irrespective of that, the loss allowance decreased by EUR 22,096 thousand. The main reason for the decrease were write-offs in the amount of EUR 19,407 thousand. Also, in 2023, the gross carrying amount of loans and advances to other customers increased by EUR 595,529 thousand at the NLB level, mostly due to merger of N Bank (EUR 463,058 thousand). The loss allowance increased by EUR 8,925 thousand, the main reason was the merger of N Banka (EUR 11,815 thousand). In 2022, the gross carrying amount of loans and advances to other customers increased by EUR 1,371,517 thousand at the NLB Group level and EUR 516,278 thousand at the NLB level, mostly in Stage 1 due to the acquisition of subsidiaries and the increased exposure. Regardless of that, the loss allowance decreased by EUR 11,968 thousand at the NLB Group level and EUR 12,631 thousand at the NLB level, mainly in Stage 3. The main reason for the decrease were write-offs in the amount of EUR 27,761 thousand at the NLB Group level and EUR 11,180 thousand at the NLB level.
The gross carrying amount of other financial assets in 2023 decreased (by EUR 10,090 thousand at the NLB Group level and EUR 12,202 thousand at the NLB level) due to the sale of securities. As these receivables are by their nature short-term, they did not contribute significantly to the decrease of the loss allowance. Therefore, the loss allowance for other financial assets in 2023 decreased by EUR 823 thousand at the NLB Group level and by EUR 601 thousand at the NLB level. The main reason for this moderate increase at the NLB Group level and on the NLB level are write-offs (EUR 823 thousand at the NLB Group level and EUR 601 thousand at the NLB level). The gross carrying amount of other financial assets in 2022 increased (by EUR 58,402 thousand at the NLB Group level and EUR 21,855 thousand at the NLB level), with the majority of this increase relating to credit card receivables. As these receivables are by their nature short-term, they did not contribute significantly to the increase of the loss allowance. Therefore, the loss allowance for other financial assets in year 2022 on the NLB Group level increased only moderately. The main reason for this moderate increase at the NLB Group level and decrease on the NLB level are write-offs (EUR 1,234 thousand at the NLB Group level and EUR 509 thousand at the NLB level).
| in EUR thousands | NLB Group 2023 | NLB Group 2022 | NLB 2023 | NLB 2022 |
|---|---|---|---|---|
| 12-month expected credit losses | 1,914,170 | 7,229 | 1,713,711 | 7,220 |
| Lifetime ECL not credit-impaired | 1,599,438 | - | 1,438,250 | - |
| Effects of translation of foreign operations to presentation currency | (344) | (8) | (187) | 9 |
| Acquisition of subsidiaries (note 5.12.e) | - | - | 12,819 | - |
| Additions | 1,023,233 | - | 411,724 | 531,650 |
| Derecognition | (453,836) | (24) | (226,884) | - |
| Net interest income | 36,750 | 136 | 16,791 | - |
| in EUR thousands | |||||
|---|---|---|---|---|---|
| NLB Group | NLB | 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Balance as at 1 January 2023 | 2,999,030 | 165 | 8,337 | 3,007,532 | 1,367,496 |
| Effects of translation of foreign operations to presentation currency | (262) | - | - | (262) | - |
| Additions | 1,446,746 | - | - | 1,446,746 | 59,345 |
| Derecognition | (2,233,255) | (21) | (7,526) | (2,240,802) | (463,403) |
| Net interest income | 38,624 | - | - | 38,624 | 9,163 |
| Exchange differences on monetary assets | 1,914 | - | (13) | 1,901 | (753) |
| Merger of subsidiary | - | - | - | - | 37,085 |
| Balance as at 31 December 2023 | 2,252,797 | 144 | 798 | 2,253,739 | 1,008,933 |
| in EUR thousands | |||||
|---|---|---|---|---|---|
| NLB Group | NLB | 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Balance as at 1 January 2022 | 3,396,101 | 184 | 798 | 3,397,083 | 1,526,972 |
| Effects of translation of foreign operations to presentation currency | 1,370 | - | - | 1,370 | - |
| Acquisition of subsidiaries | (note 5.12.e) | 53,223 | - | 53,223 | - |
| Additions | 1,699,839 | - | - | 1,699,839 | 290,245 |
| Derecognition | (2,171,808) | (13,750) | - | (2,185,558) | (443,781) |
| Net interest income | 38,554 | 38 | (121) | 38,471 | 10,929 |
| Exchange differences on monetary assets | 2,054 | 973 | 77 | 3,104 | 3,434 |
| Transfers | (20,303) | 12,720 | 7,583 | - | (20,303) |
| Balance as at 31 December 2022 | 2,999,030 | 165 | 8,337 | 3,007,532 | 1,367,496 |
| Item | NLB Group 31 Dec 2023 | NLB Group 31 Dec 2022 | NLB 31 Dec 2023 | NLB 31 Dec 2022 |
|---|---|---|---|---|
| Deposits from banks and central banks | 95,283 | 106,414 | 147,002 | 212,656 |
| Borrowings from banks and central banks | 140,419 | 198,609 | 82,797 | 57,292 |
| Due to customers | 20,732,722 | 20,027,726 | 11,881,563 | 10,984,411 |
| Borrowings from other customers | 99,718 | 82,482 | - | 216 |
| Debt securities issued | 1,338,235 | 815,990 | 1,338,235 | 815,990 |
| Other financial liabilities | 357,116 | 294,463 | 198,020 | 164,567 |
| Total | 22,763,493 | 21,525,684 | 13,647,617 | 12,235,132 |
| Item | NLB Group 31 Dec 2023 | NLB Group 31 Dec 2022 | NLB 31 Dec 2023 | NLB 31 Dec 2022 |
|---|---|---|---|---|
| Deposit on demand | ||||
| - banks and central banks | 75,756 | 86,892 | 127,726 | 193,523 |
| - other customers | 17,454,515 | 17,386,022 | 10,674,541 | 10,268,908 |
| - governments | 351,313 | 421,770 | 64,406 | 151,251 |
| - financial organisations | 285,540 | 306,836 | 225,295 | 254,948 |
| - companies | 4,639,997 | 4,374,028 | 2,543,280 | 2,241,793 |
| - individuals | 12,177,665 | 12,283,388 | 7,841,560 | 7,620,916 |
| Other deposits | ||||
| - banks and central banks | 19,527 | 19,522 | 19,276 | 19,133 |
| - other customers | 3,278,207 | 2,641,704 | 1,207,022 | 715,503 |
| - governments | 61,880 | 91,662 | 35,813 | 42,049 |
| - financial organisations | 215,457 | 237,758 | 90,590 | 95,637 |
| - companies | 718,230 | 646,944 | 378,340 | 282,560 |
| - individuals | 2,282,640 | 1,665,340 | 702,279 | 295,257 |
| Total | 20,828,005 | 20,134,140 | 12,028,565 | 11,197,067 |
| Item | NLB Group 31 Dec 2023 | NLB Group 31 Dec 2022 | NLB 31 Dec 2023 | NLB 31 Dec 2022 |
|---|---|---|---|---|
| Loans | ||||
| - banks and central banks | 140,419 | 198,609 | 82,797 | 57,292 |
| - other customers | 99,718 | 82,482 | - | 216 |
| - governments | 20,357 | 21,535 | - | - |
| - financial organisations | 79,361 | 60,731 | - | - |
| - companies | - | 216 | - | 216 |
| Total | 240,137 | 281,091 | 82,797 | 57,508 |
As at 31 December 2023, NLB Group and NLB had EUR 95,249 thousand in undrawn borrowings (31 December 2022: EUR 96,878 thousand).
276 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm
term refinancing operations (TLTRO) In December 2021, N Banka participated in ECB TLTRO III.10 operation and had drawn a credit tranche of EUR 93,000 thousand for three years. In June 2023, N Banka also repaid the remaining part of the loan early in the amount of EUR 63,000 thousand. In June 2021, NLB participated in the ECB TLTRO III.8 operation and repaid early in June 2022. NLB Group accounted for these loans according to the requirements of IFRS 9 and recognises interest income by applying the expected effective interest rate (note 4 a lending performance threshold, and in the case of NLB, also expected early repayment was taken into account. As the lending performance threshold was achieved in both banks, there were criteria. Changes in the interest rate applied by the ECB were implemented prospectively. NLB Group does not consider these loans as loans at below-market rate of interest, as these targeted loans.
| Currency | Due date | Interest rate | Carrying amount | Nominal value |
|---|---|---|---|---|
| EUR | 06.05.2029 | 4.20% to 06.05.2024, thereafter 5Y MS + 4.159% p.a. | 45,980 | 45,000 |
| EUR | 19.11.2029 | 3.65% to 19.11.2024, thereafter 5Y MS + 3.833% p.a. | 119,781 | 120,000 |
| EUR | 05.02.2030 | 3.40% to 05.02.2025, thereafter 5Y MS + 3.658% p.a. | 123,176 | 120,000 |
| EUR | 28.11.2032 | 10.75% to 28.11.2027, thereafter 5Y MS + 8.298% p.a. | 220,458 | 225,000 |
| Total Subordinated bonds | 509,395 | 510,000 | |||
|---|---|---|---|---|---|
| Senior Preferred notes | EUR | 19.07.2025 | 6% to 19.07.2024, thereafter 1Y MS + 4.835% p.a. | 307,507 | 300,000 |
| EUR | 27.06.2027 | 7.125% to 27.07.2026, thereafter 1Y MS + 3.606% p.a. | 521,333 | 500,000 | |
| Total Senior Preferred notes | 828,840 | 800,000 | |||
| Total Debt securities issued | 1,338,235 | 1,310,000 |
All issued subordinated bonds represent non-convertible Tier 2 instruments (note 5.23.). In the event of bankruptcy or liquidation of the issuer, obligations arising from Tier 2 instruments rank in priority to all subordinated obligations (if any) which are expressed to rank in priority to Tier 2 instruments; with the same priority (pari passu) as, and proportionally with the obligations arising of repayment as the Tier 2 instruments; in priority to the obligations arising from shares or other instruments which qualify as Common Equity Tier 1 capital instruments or Additional Tier 1 capital.
| NLB Group and NLB | Subordinated bonds | Senior Preferred notes | ||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | |
| Balance as at 1 January | 508,778 | 288,519 | 307,212 | - |
| Cash flow items: | (34,538) | 207,523 | 479,708 | 299,029 |
| - new issued | - | 217,873 | 497,708 | 299,029 |
| - repayments of interest | (34,538) | (10,350) | (18,000) | - |
| Non-Cash flow items: | 35,155 | 12,736 | 41,920 | 8,183 |
| - accrued interest | 35,155 | 12,736 | 36,579 | 8,183 |
| - other | - | - | 5,341 | - |
| Balance as at 31 December | 509,395 | 508,778 | 828,840 | 307,212 |
| NLB Group | NLB | ||
|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | |
| Items in the course of settlement | 93,425 | 70,232 | 17,957 |
| Debit or credit card payables | 113,398 | 72,148 | 90,495 |
| Suppliers | 22,872 | 19,608 | 16,614 |
| Lease liabilities (note 5.11.a) | 28,944 | 23,840 | 5,793 |
| Accrued expenses | 35,628 | 33,574 | 17,065 |
| Fees and commissions | 1,242 | 751 | 1,133 |
| Liabilities to brokerage firms and others for securities purchase and custody services | 288 | 224 | 268 |
| Other financial liabilities | 61,319 | 74,086 | 48,695 |
| Total | 357,116 | 294,463 | 198,020 |
| NLB Group | NLB | ||
|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | |
| Provisions for guarantees and commitments (note 5.24.a) | 32,548 | 37,609 | 17,941 |
| Stage 1 | 18,429 | 18,826 | 7,653 |
| Stage 2 | 1,655 | 1,953 | 319 |
| Stage 3 | 12,464 | 16,830 | 9,969 |
| Employee benefit provisions | 17,892 | 18,026 | 11,795 |
| Restructuring provisions | 12,592 | 21,036 | 7,198 |
| Provisions for legal risks | 44,833 | 43,209 | 6,219 |
| Other provisions | 5,440 | 2,772 | 5,303 |
| Total | 113,305 | 122,652 | 48,456 |
| Date of the ruling | Plaintiff | Principal amount | Costs of the proceedings | Measures taken by NLB |
|---|---|---|---|---|
| May 2015 | PBZ | 254.76 EUR | 2,094.53 EUR | Constitutional suit against the final judgement, as NLB found the court decision contrary to the legislation in force and constitutional principles and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 21 May 2018. |
| April 2018 | PBZ | 222,426.39 EUR | 33,616.48 EUR | Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in the revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles, and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 5 October 2021. |
| September 2017 | ZaBa | 492,430.53 EUR | 99,354.14 EUR | Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in the revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles, and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 5 October 2021. |
| November 2017 | PBZ | 220,115.98 EUR | 91,348.88 EUR | NLB challenged the judgments with the extraordinary legal measure (revision) on the Supreme Court of the Republic of Croatia, which rejected NLB‘s revision on 22 November 2023 (judgment received on 5 January 2024). NLB intends to challenge the judgment in question with a constitutional lawsuit before the Constitutional Court of the Republic of Croatia. |
| December 2018 | PBZ | 3,855,173.35 SEK | 90,241.70 EUR | Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in the revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia. Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 3 October 2023. |
| March 2019 | PBZ | 424,548.41 EUR | NLB challenged the judgment with the extraordinary legal measure (revision) on the Supreme Court of the Republic of Croatia and later, if necessary, will challenge the judgment with all other available remedies of the obligations of the old foreign currency savings in accordance with Slovenian Constitutional Law are not the liabilities of NLB. |
9,185,141.76 USD
The NLB Shareholders’ Meeting provided the Management Board of NLB with instructions how to act in the event of existing or potential new final decisions by Croatian courts against LB and NLB regarding the transferred foreign currency deposits, especially not to voluntarily settle the adjudicated amounts, and also gave some additional instructions on the usage of legal remedies and regarding the management of the property from that perspective.
On 19 July 2018, the National Assembly of the Republic of Slovenia passed the ‘Act for Value Protection of Republic of Slovenia’s Capital Investment in Nova Ljubljanska banka d.d., Ljubljana’ (Zakon za zaščito vrednosti kapitalske naložbe Republike Slovenije v Novi Ljubljanski banki d.d., Ljubljana, hereinafter: ‘the ZVKNNLB’) which entered into force on 14 August 2018.
In accordance with the ZVKNNLB, the Succession Fund of the Republic of Slovenia (Sklad Republike Slovenije za nasledstvo, javni sklad, hereinafter: ‘the Fund’), shall compensate NLB for the sums recovered from NLB by enforcement of final judgements delivered by Croatian courts with regard to the transferred foreign currency deposits, that is the principle amount, accrued interest, expenses of court, attorney’s expenses and other expenses of the plaintiff, and expenses related to enforcement with the accrued interest, and shall not compensate NLB for its own costs or for the difference between the book value of its assets sold in enforcement proceedings and the price obtained for such assets in enforcement proceedings. There shall be no compensation for any voluntarily made payments by NLB.
In accordance with the ZVKNNLB and pursuant to the agreement between NLB and the Fund, as envisaged by the ZVKNNLB (which was concluded on 14 August 2018), NLB has to contest the claims made against it in court proceedings in relation to transferred foreign currency deposits, and use against court decisions that are disadvantageous for NLB, all reasonable legal remedies and to continue to actively challenge the judicial decisions of the courts of the Republic of Croatia in relation to transferred foreign currency deposits on the basis of which enforcement took place, leading, on the basis of ZVKNNLB, to the compensation of the sums recovered from NLB by enforcement.
| in EUR thousands | Effects of translation of foreign operations to presentation currency | Transfer | Increases/ (Decreases) | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2023 | Notes | ||
|---|---|---|---|---|---|---|---|---|---|
| 18,826 | (3) | 583 | 2,609 | (3,587) | 1 | 18,429 | 4.13. 4.13. 5.16.a) | ||
| Lifetime ECL not credit-impaired | Guarantees and commitments | 1,953 | - | (263) | (873) | 837 | 1 | 1,655 | |
| Lifetime ECL credit-impaired | Guarantees and commitments | 16,830 | - | (320) | (4,039) | (2) | (5) | 12,464 | |
| Of which: Purchased or originated credit-impaired | Guarantees and commitments | 4,095 | 1 | - | (1,015) | - | 14 | 3,095 |
| in EUR thousands | Effects of translation of foreign operations to presentation currency | Acquisition of subsidiaries | Transfer | Increases/ (Decreases) | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2022 | Notes | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 12,912 | 2 | 921 | 740 | 1,468 | 2,765 | 18 | 18,826 | 5.12.e) 4.13. 4.13. 5.16.a) | ||||
| Lifetime ECL not credit-impaired | Guarantees and commitments | 1,640 | (1) | - | (55) | 291 | 76 | 2 | 1,953 | |||
| Lifetime ECL credit-impaired | Guarantees and commitments | 18,889 | (1) | 180 | (685) | (1,462) | (88) | (3) | 16,830 | |||
| Of which: Purchased or originated credit-impaired | Guarantees and commitments | 4,344 | - | 180 | (11) | (444) | - | 26 | 4,095 |
| in EUR thousands | |||||||
|---|---|---|---|---|---|---|---|
| Balance as at 1 Jan 2023 | Transfer | Increases/ (Decreases) | Changes in models/risk parameters | Merger of subsidiary | Balance as at 31 Dec 2023 | ||
| 12-month expected credit losses | Guarantees and commitments | 8,156 | 158 | (146) | (1,142) | 627 | 7,653 |
| Lifetime ECL not credit-impaired | Guarantees and commitments | 378 | 147 | (616) | 387 | 23 | 319 |
| Lifetime ECL credit-impaired | Guarantees and commitments | 11,765 | (305) | (1,589) | 32 | 66 | 9,969 |
| Of which: Purchased or originated credit-impaired | Guarantees and commitments | 2,876 | - | (3) | - | 62 | 2,935 |
| in EUR thousands | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 Jan 2022 | Transfer | Increases/ (Decreases) | Changes in models/risk parameters | Foreign exchange differences and other movements | Balance as at 31 Dec 2022 | ||||
| 12-month expected credit losses | Guarantees and commitments | 3,909 | 570 | (229) | 3,910 | (4) | 8,156 | ||
| Lifetime ECL not credit-impaired | Guarantees and commitments | 141 | 60 | 192 | (15) | - | 378 | ||
| Lifetime ECL credit-impaired | Guarantees and commitments | 16,510 | (630) | (4,146) | 6 | 25 | 11,765 | ||
| Of which: Purchased or originated credit-impaired | Guarantees and commitments | 4,041 | (11) | (1,179) | - | 25 | 2,876 |
| 12-month expected credit losses | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total | 12-month expected credit losses |
|---|---|---|---|---|
| Balance as at 1 January 2023 | 3,843,293 | 83,270 | 26,897 | 3,953,460 |
| Effects of translation of foreign operations to presentation currency | (837) | (28) | (2) | (867) |
| Increases/(Decreases) | 224,499 | (9,271) | (7,960) | 207,268 |
| Foreign exchange differences | 231 | - | - | 231 |
| Transfers | (34,627) | 32,645 | 1,982 | - |
| Merger of subsidiary (note 5.12.d) | - | - | - | - |
| Balance as at 31 December 2023 | 4,032,559 | 106,616 | 20,917 | 4,160,092 |
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | ||
| Balance as at 1 January | 16,021 | 19,227 | 10,672 | |
| Effects of translation of foreign operations to presentation currency | (3) | 2 | - | |
| Acquisition of subsidiaries (note 5.12.e), f) | - | 1,393 | - | |
| Merger of subsidiary (note 5.12.d) | - | - | 531 | |
| Additional provisions (note 4.9.) | 227 | 1,046 | 587 | |
| Provisions released (note 4.9.) | (1,361) | (1,128) | (1,039) | |
| Interest expenses (note 4.1.) | 587 | 335 | 297 | |
| Utilised during year (payments) | (447) | (823) | (91) | |
| Actuarial gains and losses | 444 | (4,031) | (588) | |
| Balance as at 31 December | 15,468 | 16,021 | 10,369 |
| NLB Group | NLB | |||
|---|---|---|---|---|
| 2023 | 2022 | 2023 | ||
| Balance as at 1 January | 2,005 | 2,220 | 1,204 | |
| Effects of translation of foreign operations to presentation currency | (1) | - | - | |
| Acquisition of subsidiary (note 5.12.e) | - | 167 | - | |
| Merger of subsidiary (note 5.12.d) | - | - | 79 | |
| Additional provisions (note 4.9.) | 636 | 275 | 173 | |
| Provisions released (note 4.9.) | (104) | (558) | - | |
| Interest expenses (note 4.1.) | 81 | 39 | 33 | |
| Utilised during year | (193) | (138) | (63) | |
| Balance as at 31 December | 2,424 | 2,005 | 1,426 |
Other employee benefits include NLB Group’s obligations for jubilee long-service benefits.
| NLB Group | NLB | ||
|---|---|---|---|
| 2023 | 2022 | 2023 | |
| Balance as at 1 January | 21,036 | 19,217 | 7,288 |
| Effects of translation of foreign operations to presentation currency | (1) | 10 | - |
| Additional provisions (note 4.13.) | 4,006 | 10,335 | 3,800 |
| Provisions released (note 4.13.) | (352) | (10) | - |
| Utilised during year | (12,097) | (8,516) | (3,890) |
| Balance as at 31 December | 12,592 | 21,036 | 7,198 |
| in EUR thousands | NLB Group | NLB | 2023 | 2022 |
|---|---|---|---|---|
| Balance as at 1 January | 43,209 | 4,5,288 | 3,584 | 3,466 |
| Effects of translation of foreign operations to presentation currency | 8 | 54 | - | - |
| Acquisition of subsidiary (note 5.12.e) | - | 1,790 | - | - |
| Disposal of subsidiaries (note 5.12.b) | (30) | - | - | - |
| Merger of subsidiary (note 5.12.d) | - | - | 5,382 | - |
| Additional provisions (note 4.13.) | 16,354 | 7,595 | 899 | 125 |
| Provisions released (note 4.13.) | (9,074) | (5,950) | (3,577) | - |
| Utilised during year | (5,634) | (5,568) | (69) | (7) |
| Balance as at 31 December | 44,833 | 43,209 | 6,219 | 3,584 |
| in EUR thousands | NLB Group | NLB | 2023 | 2022 |
|---|---|---|---|---|
| Balance as at 1 January | 2,772 | 11 | 2,169 | - |
| Effects of translation of foreign operations to presentation currency | 1 | - | - | - |
| Acquisition of subsidiary (note 5.12.e) | - | 17,452 | - | - |
| Merger of subsidiary (note 5.12.d) | - | - | 1,173 | - |
| Additional provisions (note 4.13.) | 15,019 | 2,372 | 13,300 | 2,200 |
| Provisions released (note 4.13.) | (28) | (8,410) | - | - |
| Utilised during year | (12,324) | (106) | (11,339) | (31) |
| Other | - | (8,547) | - | - |
| Balance as at 31 December | 5,440 | 2,772 | 5,303 | 2,169 |
Other provisions in year 2023 in the NLB Group and NLB relate mainly to liability in relation to reimbursement of fees in case of early loan repayment. At the acquisition of N Banka on 1 March 2022, other provisions increased by EUR 17,452 thousand, which represents the assessed fair value of contingent liabilities of N Banka as at the acquisition date. During March 2022, some unfavourable events, which were taken into account already at assessing initial fair values realised, therefore EUR 8,547 thousand of provisions were used to decrease the amount of related receivables, mainly for unsettled derivative transactions. Additionally, the amount of other provisions significantly decreased in December 2022 (for EUR 8,400 thousand), when possible obligation ceased to exist.
| in EUR thousands | NLB Group | NLB | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 | Deferred income tax assets | Deferred income tax liabilities | Included in the income statement | Included in other comprehensive income | 31 Dec 2023 | Deferred income tax assets | Deferred income tax liabilities | Included in the income statement | Included in other comprehensive income | ||||||||
| Valuation of financial instruments and capital investments | 59,640 | 7,218 | 8,055 | 4,322 | 55,098 | 3,556 | 7,517 | 10,244 | |||||||||
| Impairment of financial assets | 9,704 | 3,589 | 801 | 1,342 | 1,153 | 538 | (961) | 1,171 | |||||||||
| Provisions for liabilities and charges | 9,047 | - | (928) | 81 | 1,856 | - | 23 | (31) | |||||||||
| Depreciation and valuation of non-financial assets | 4,141 | 1,304 | (452) | - | 123 | 168 | 9 | - | |||||||||
| Fair value adjustments of financial assets measured at amortised cost | 1,940 | 6,651 | (1,398) | - | 1,412 | - | 94 | - | |||||||||
| Tax losses | 54,069 | - | 54,069 | - | 54,069 | - | 54,069 | - | |||||||||
| Undistributed profit of subsidiaries | - | 9,626 | (9,626) | - | - | - | - | - | |||||||||
| Other | 248 | 522 | 461 | - | - | - | - | - | |||||||||
| Total | 138,789 | 28,910 | 50,982 | 5,745 | 113,711 | 4,262 | 60,751 | 11,384 |
The table above does not include the effects of the merger of N Banka.
| in EUR thousands | NLB Group | NLB | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31 Dec 2022 | Deferred income tax assets | Deferred income tax liabilities | Included in the income statement | Included in other comprehensive income | 31 Dec 2022 | Deferred income tax assets | Deferred income tax liabilities | Included in the income statement | Included in other comprehensive income | |
| Valuation of financial instruments and capital investments | 48,415 | 8,375 | 6,416 | 12,346 | 38,028 | 5,283 | 4,819 | 2,850 | ||
| Impairment of financial assets | 9,480 | 5,501 | 2,934 | (892) | 2,050 | 1,672 | 1,133 | (1,102) | ||
| Provisions for liabilities and charges | 9,899 | - | (1,718) | (441) | 1,819 | - | (555) | (286) | ||
| Depreciation and valuation of non-financial assets | 4,737 | 1,641 | 962 | - | 109 | 163 | 3 | - | ||
| Fair value adjustments of financial assets measured at amortised cost | 2,046 | 5,366 | (2,540) | - | - | - | - | - | ||
| Unpaid dividends | - | - | (3,876) | - | - | - | (3,876) | - | ||
| Tax losses | - | - | (253) | - | - | - | - | - | ||
| Tax reliefs | - | - | (945) | - | - | - | - | - | ||
| Other | 141 | 877 | 543 | - | - | - | - | - | ||
| Total | 74,718 | 21,760 | 1,523 | 11,013 | 42,006 | 7,118 | 1,524 | 1,462 |
Temporary differences on which NLB did not recognise deferred tax assets, as related deferred tax assets would exceed the amount of deferred tax assets expected to be reversed in five years are presented in the table below, together with non-recognised deferred tax assets.
| NLB Group | Temporary difference | deferred tax assets Non-recognised |
|---|---|---|
| Tax loss | 580,388 | 127,686 |
| Impairments and valuation of capital investments and financial instruments | - | - |
| in EUR thousands | Provisions for liabilities and charges | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Valuation of financial instruments and capital investments | Depreciation and valuation of non-financial assets | Impairment of financial assets | Unpaid dividends | Tax losses | Tax relief | Fair value adjustments of financial assets measured at amortised cost | Other | ||||||||
| Balance as at 1 January 2022 | 10,128 | 33,002 | 3,505 | 5,879 | 3,876 | 253 | 945 | 320 | 62 | 57,970 | |||||
| Effects of translation of foreign operations to presentation currency | 6 | 2 | 3 | 7 | - | - | - | - | - | 18 | |||||
| (Charged)/credited to profit and loss | (1,718) | 4,837 | 1,229 | 3,583 | (3,876) | (253) | (945) | (516) | 79 | 2,420 | |||||
| (Charged)/credited to other comprehensive income | (441) | 10,270 | - | - | - | - | - | - | - | 9,829 | |||||
| Acquisition of subsidiary (note 5.12.e) | 1,924 | 304 | - | 11 | - | - | - | 2,242 | - | 4,481 | |||||
| Balance as at 31 December 2022 | 9,899 | 48,415 | 4,737 | 9,480 | - | - | - | 2,046 | 141 | 74,718 | |||||
| Effects of translation of foreign operations to presentation currency | (5) | 1 | - | (8) | - | - | - | 2 | - | (10) | |||||
| (Charged)/credited to profit and loss | (928) | 7,490 | (596) | 232 | - | 54,069 | - | (108) | 107 | 60,266 | |||||
| (Charged)/credited to other comprehensive income | 81 | 3,734 | - | - | - | - | - | - | - | 3,815 | |||||
| Balance as at 31 December 2023 | 9,047 | 59,640 | 4,141 | 9,704 | - | 54,069 | - | 1,940 | 248 | 138,789 |
| in EUR thousands | Provisions for liabilities and charges | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Valuation of financial instruments and capital investments | Depreciation and valuation of non-financial assets | Impairment of financial assets | Tax losses | Fair value adjustments of financial assets measured at amortised cost | Unpaid dividends | ||||||||
| Balance as at 1 January 2022 | 2,660 | 31,696 | 112 | 917 | - | - | 3,876 | 39,261 | |||||
| (Charged)/credited to profit and loss | (555) | 4,688 | (3) | 1,133 | - | - | (3,876) | 1,387 | |||||
| (Charged)/credited to other comprehensive income | (286) | 1,644 | - | - | - | - | - | 1,358 | |||||
| Balance as at 31 December 2022 | 1,819 | 38,028 | 109 | 2,050 | - | - | - | 42,006 | |||||
| (Charged)/credited to profit and loss | 23 | 7,517 | 14 | (961) | 54,069 | 94 | - | 60,756 | |||||
| (Charged)/credited to other comprehensive income | (31) | 8,517 | - | - | - | - | - | 8,486 | |||||
| Merger of subsidiary (note 5.12.d) | 45 | 1,036 | - | 64 | - | 1,318 | - | 2,463 | |||||
| Balance as at 31 December 2023 | 1,856 | 55,098 | 123 | 1,153 | 54,069 | 1,412 | - | 113,711 |
| in EUR thousands | Impairment of financial assets | Valuation of financial instruments | Depreciation and valuation of non-financial assets | Undistributed profit of subsidiaries | Fair value adjustments of financial assets measured at amortised cost |
|---|---|---|---|---|---|
| Balance as at 1 January 2022 | 3,960 | 12,026 | 1,374 | - | 3,338 |
| Effects of translation of foreign operations to presentation currency | - | 4 | - | - | 4 |
| Charged/(credited) to profit and loss | 649 | (1,579) | 267 | - | 2,024 |
| Charged/(credited) to other comprehensive income | 892 | (2,076) | - | - | - |
| Balance as at 31 December 2022 | 5,501 | 8,375 | 1,641 | - | 5,366 |
| Effects of translation of foreign operations to presentation currency | (1) | (4) | - | - | (5) |
| Charged/(credited) to profit and loss | (569) | (565) | (144) | 9,626 | 1,290 |
| Charged/(credited) to other comprehensive income | (1,342) | (588) | - | - | - |
| Disposal of subsidiaries | - | - | (193) | - | - |
| Balance as at 31 December 2023 | 3,589 | 7,218 | 1,304 | 9,626 | 6,651 |
| in EUR thousands | Impairment of financial assets | Valuation of financial instruments and capital investments | Depreciation and valuation of non-financial assets |
|---|---|---|---|
| Balance as at 1 January 2022 | 570 | 6,620 | 169 |
| Charged/(credited) to profit and loss | - | (131) | (6) |
| Charged/(credited) to other comprehensive income | 1,102 | (1,206) | - |
| Balance as at 31 December 2022 | 1,672 | 5,283 | 163 |
| Charged/(credited) to profit and loss | - | - | 5 |
| Charged/(credited) to other comprehensive income | (1,171) | (1,727) | - |
| Merger of subsidiary (note 5.12.d) | 37 | - | - |
| Balance as at 31 December 2023 | 538 | 3,556 | 168 |
| Before tax | Tax expense | Net of tax | Before tax | |
|---|---|---|---|---|
| Actuarial gains and losses | (444) | 81 | (363) | 588 |
| Financial assets measured at fair value through other comprehensive income | 77,722 | 5,664 | 83,386 | 36,106 |
| Share of associates and joint ventures | 45 | - | 45 | - |
| Total | 77,323 | 5,745 | 83,068 | 36,694 |
| Before tax | Tax expense | Net of tax | Before tax | |
|---|---|---|---|---|
| Actuarial gains and losses | 4,031 | (441) | 3,590 | 2,048 |
| Financial assets measured at fair value through other comprehensive income | (165,438) | 11,454 | (153,984) | (93,955) |
| Share of associates and joint ventures | 121 | - | 121 | - |
| Total | (161,286) | 11,013 | (150,273) | (91,907) |
| NLB Group | NLB | ||||
|---|---|---|---|---|---|
| in EUR thousands | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Accrued salaries | 28,228 | 21,948 | 19,461 | 14,014 | |
| Unused annual leave | 7,657 | 6,886 | 2,761 | 2,569 | |
| Deferred income | 11,376 | 11,177 | 4,376 | 4,749 | |
| Taxes payable | 7,015 | 5,724 | 4,895 | 4,023 | |
| Payments received in advance | 4,377 | 3,346 | 857 | 32 | |
| Total | 58,653 | 49,081 | 32,350 | 25,387 |
The share capital of NLB amounts to EUR 200,000 thousand and did not change in 2023. It is comprised of 20,000,000 no-par-value ordinary registered shares, with the corresponding authorised shares. As at 31 December 2023, the major shareholder of NLB with significant influence is the Republic of Slovenia, who owns 25.00% plus one share.
The book value of a NLB share was EUR 114.1, and on a solo level was EUR 108.3 (31 December 2022: EUR 75.9). It is calculated as the ratio of net assets’ book value excluding other equity instruments issued and the number of shares.
As at 31 December 2023, the net profit for 2023 amounted to EUR 514,287 thousand (2022: EUR 159,602 thousand), and retained earnings included the Banka merger effect in the amount of EUR 204,904 thousand and reduced for the interests of subordinated bonds issued in the year 2023 – which are considered instruments of additional capital.
The decision by the Bank’s General Assembly will be prepared by the Management and the Supervisory Board, considering restrictions imposed by the actual prevailing capital position at the time of the proposal. The shares give to their holders the right to vote at the NLB’s meeting of shareholders where, as a rule, each share entitles its holder to one vote.
Shareholders whose shares already held by such shareholder or by a third person on behalf of such shareholder, represent more than 25% of the NLB’s share capital, may only exercise their voting rights under certain conditions. The Board’s approval may only be rejected if, following such an acquisition, such a person would hold shares representing more than 25% of NLB’s issued share capital plus one share.
The approval is necessary with respect to the shares acquired by a person on behalf of third persons provided that such a person is not entitled to exercise the voting rights arising out of such shares at its own discretion unless such voting instructions are accompanied with a confirmation that the person giving such instructions is the beneficial owner of the shares with respect to which more NLB shares with voting rights.
The shares also give their holders the right to be informed, as well as the pre-emptive right to subscribe for new shares on a pro rata basis in the case of bankruptcy or liquidation of NLB, and the right to receive a dividend. In 2023, NLB paid dividends for the previous year in the amount of EUR 5.5 per share (2022: EUR 5.0 per share).
As at 31 December 2023 and 31 December 2022, NLB holds no own shares. In June 2019, the General Assembly of NLB authorised the Management Board that in the period of the Bank for the payment of variable remuneration to certain employees as required by the Banking Act and other relevant regulations. NLB did not buy any own shares based on this authorisation.
NLB issued subordinated notes intended to qualify as Additional Tier 1 Instruments in the aggregate nominal amount of EUR 82 million. The notes have no scheduled maturity date. The issuer has the right to redeem the notes on 23 March 2028, and on each distribution payment date after 23 March 2028. Until 23 March 2028, the interest on the principal of the notes will accrue at the interest rate of 9.721% per annum, which shall be reset prior to the commencement of each such period (5Y MS + 7.20% per annum).
The coupon payments are discretionary and non-cumulative. The notes terms provide for a temporary suspension of payments if NLB drop(s) below 5.125%. The issue price was equal to 100% of the nominal amount of the notes. The ISIN code of the notes is SI0022104275. The carrying amount as at 31 December 2023 is not specified.
amount of EUR 49,205 thousand. As at 31 December 2023 and 31 December 2022, profit reserves in the amount of EUR 13,522 thousand relate entirely to legal reserves in accordance with
thousand (2022: net profit EUR 159,602 thousand) which is included in the retained earnings as at 31 December 2023. b) Accumulated other comprehensive income
| NLB Group | NLB | |||
|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Financial assets measured at fair value through other comprehensive income - debt securities | (66,666) | (143,954) | (35,255) | (78,283) |
| Financial assets measured at fair value through other comprehensive income - equity securities | 6,647 | 1,045 | 144 | (1,460) |
| Actuarial defined benefit pension plans | (2,265) | (1,948) | (1,205) | (1,934) |
| Foreign currency translation | (14,588) | (16,485) | - | - |
| Hedge of a net investment in a foreign operation | 754 | 754 | - | - |
| Total | (76,118) | (160,588) | (36,316) | (81,677) |
| NLB Group | NLB | |||
|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | ||
| Paid up capital instruments | 200,000 | 200,000 | 200,000 | |
| Share premium | 871,378 | 871,378 | 871,378 | |
| Retained earnings - from previous years | 1,235,363 | 908,965 | 602,402 | |
| Profit eligible - from current year | 327,398 | 334,297 | 159,833 | |
| Accumulated other comprehensive income | (75,662) | (98,470) | (36,316) | |
| Other reserves | 13,522 | 13,522 | 13,522 | |
| Minority interest | 28,798 | 26,806 | - |
| (2,295) | (2,981) | (1,067) | |
|---|---|---|---|
| (AVA) | |||
| (-) Goodwill | (3,529) | (3,529) | - |
| (-) Other intangible assets | (37,153) | (41,351) | (20,846) |
| (-) Deferred tax assets | (47,002) | - | (54,069) |
| (-) Insufficient coverage for non-performing exposures | (907) | (418) | (246) |
| 2,509,911 | 2,208,219 | 1,734,591 | |
|---|---|---|---|
| Capital instruments eligible as AT1 Capital | 82,000 | 82,000 | 82,000 |
| Minority interest | 5,907 | 5,481 | - |
| Additional Tier 1 capital | 87,907 | 87,481 | 82,000 |
| 2,597,818 | 2,295,700 | 1,816,591 | |
|---|---|---|---|
| Capital instruments and subordinated loans eligible as Tier 2 capital | 507,516 | 507,516 | 507,516 |
| Minority interest | 3,874 | 3,159 | - |
| 511,390 | 510,675 | 507,516 | |
|---|---|---|---|
| 3,109,208 | 2,806,375 | 2,324,107 | |
|---|---|---|---|
| 12,168,121 | 11,797,851 | 7,449,829 | |
|---|---|---|---|
| 1,447,713 | 1,359,476 | 818,113 | |
|---|---|---|---|
| 14,200 | 85,600 | 15,613 | |
|---|---|---|---|
| 1,707,128 | 1,410,132 | 923,943 | |
|---|---|---|---|
| 15,337,162 | 14,653,059 | 9,207,498 | |
|---|---|---|---|
| 16.4% | 15.1% | 18.8% | |
|---|---|---|---|
| 16.9% | 15.7% | 19.7% | |
|---|---|---|---|
| 20.3% | 19.2% | 25.2% | |
|---|---|---|---|
European banking capital legislation – CRD IV, is based on the Basel III guidelines. The legislation defines three capital ratios reflecting a different quality of capital: - Common Equity Tier 1 (CET1) to RWA, which must be at least 4.5%, - Tier 1 capital ratio (Tier 1 capital to RWA), which must be at least 6%, and - Total capital ratio (total capital to RWA), which must be at least 8%. In addition, there are other requirements and recommendations that are imposed by the supervisory institutions or by the legislation: - The Pillar 2 Requirement (SREP requirement): bank-specific, obligatory requirement that represents the minimum total SREP capital requirement – TSCR), - The applicable combined buffer requirement (CBR): a system of capital buffers to be added on to limitations in the payment of dividends and other distributions from capital. Some of the buffers are prescribed by law for all banks and some of them are bank-specific, set by the supervisory institution. - Pillar 2 Capital Guidance: capital recommendation set by the supervisory institution through the SREP process. It is bank-specific and is a recommendation, and not obligatory. Any non-compliance may lead to intensified supervision and the imposition of measures to re-establish a prudent level of capital (including preparation of capital restoration plan).
| Requirement | 2023 | 2022 | 2021 |
|---|---|---|---|
| Pillar 1 (P1R) | CET1 4.5% | 4.5% | 4.5% |
| AT1 1.5% | 1.5% | 1.5% | |
| T2 2.0% | 2.0% | 2.0% | |
| Pillar 2 (P2R) | CET1 1.35% | 1.46% | 1.55% |
| Tier 1 1.80% | 1.95% | 2.06% | |
| Total Capital 2.40% | 2.60% | 2.75% | |
| Total SREP Capital Requirement (TSCR) | CET1 5.85% | 5.96% | 6.05% |
| Tier 1 7.80% | 7.95% | 8.06% | |
| Total Capital 10.40% | 10.60% | 10.75% | |
| Combined buffer requirement (CBR) | |||
| Capital Conservation buffer CET1 | 2.50% | 2.5% | 2.5% |
| O-SII buffer CET1 | 1.25% | 1.0% | 1.0% |
| Systemic risk buffer CET1 | 0.10% | 0.0% | 0.0% |
| Countercyclical buffer CET1 | 0.26% | 0.0% | 0.0% |
| Overall capital requirement (OCR) = MDA threshold | CET1 9.96% | 9.46% | 9.55% |
| Tier 1 11.91% | 11.45% | 11.56% | |
| Total Capital 14.51% | 14.10% | 14.25% | |
| Pillar 2 Guidance (P2G) | CET1 1.0% | 1.0% | 1.0% |
| OCR + P2G CET1 10.96% | 10.46% | 10.55% | |
| Tier 1 12.91% | 12.45% | 12.56% | |
| Total Capital 15.51% | 15.10% | 15.25% |
As at December 31, 2023, the Group’s Overall Capital Requirement (OCR) on a consolidated basis was 14.51%. This requirement has two components:
In addition to the above requirements, the Pillar 2 Guidance (P2G) is 1.0% of Common Equity Tier 1 (CET1). Effective from 1 January 2024, NLB has lower capital requirements. On 1 December 2023, NLB received a new SREP decision on a consolidated basis for 2024. As per the decision, the Pillar 2 Requirement decreased by 0.28 p.p. to 2.12% since the overall SREP assessment improved.
Effective as at 1 January 2025, there will be some changes in the capital buffer rates for Slovenia. The countercyclical capital buffer rate for exposures in Slovenia will increase from 0.5% to 1.0%. At the same time, the sectoral systemic risk buffer for retail exposures to natural persons secured by residential real estate will decrease from 1.0% to 0.5%.
The Bank and NLB Group’s capital covers all the current and announced regulatory capital requirements, including capital buffers and other currently known requirements, as well as the P2G. As at 31 December 2023, NLB Group capital ratios on a consolidated basis stand at:
In the scope of regulatory risks, which include credit risk, operational risk, and market risk, NLB Group uses a standardised approach for credit and market risks, while the calculation of capital requirement for operational risks is made according to a basic indicator approach. The same approaches are used for calculating the capital requirements for NLB on a standalone basis, except for the calculation of the capital requirement for operational risks where the standardised approach is used.
As at 31 December 2023, the TCR for the NLB Group stood at 20.3% (or 1.1 p.p. increase compared to 31 December 2022), and the CET1 ratio stood at 16.4% (1.3 p.p. increase compared to 31 December 2022), well above requirements. The higher total capital adequacy derives from higher capital (EUR 302.8 million compared to 31 December 2022), which compensated for the increase of the RWA (EUR 684.1 million compared to 31 December 2022). The NLB Group increased its capital with a partial inclusion of 2023 profit (EUR 327.4 million).
Temporary treatment of FVOCI for sovereign securities ceased to apply as at 1 January 2023, which decreased capital by EUR 61.6 million. This effect was compensated with EUR 84.5 million in revaluation adjustments. In December 2023, a deduction item related to deferred taxes appeared in EUR 47.0 million.
RWA of Group for credit risk increased by EUR 370.3 million, mainly as the consequence of ramping up lending activity in all NLB Group banks, the most in the Bank, NLB Komercijalna banka a.d. Beograd, particularly high risk due to new project financing loans given, mainly in the Bank and NLB Komercijalna banka a.d. Beograd, was partially offset by repayments or by withdrawing the high observed for liquidity assets, mainly in NLB Komercijalna banka a.d. Beograd, due to the maturity of some Serbian bonds and higher MIGA guarantee for assets at central banks in a foreign nominated in EUR at the central bank in Skopje. Furthermore, RWA also decreased due to the maturity of Macedonian bonds and Bosnian bonds of Republika Srpska.
The RWA decline for the Bank due to the purchase of bank bonds, larger volume of deposits at commercial banks and higher risk weights for institutions from countries outside the EEA that are not on the third-party provisions, upgrades, and improved data of real estate collaterals for CRR eligibility resulted in the RWA reduction for non-performing exposures. The increase in RWAs for market risks in December 2022 was the result of higher RWA for FX risk of EUR 86.6 million (mainly the result of more opened positions in domestic currencies of non-euro subsidiary banks – mostly R value for derivative transactions subject to CRR risk based on OEM method) and higher RWA for TDI risk of EUR 1.2 million (mostly IRS derivatives).
The increase in the RWA for operational net interests, mainly from the Bank and NLB Komercijalna banka a.d. Beograd, resulting in a higher three-year average of relevant income. There were no significant deviations from previous internal capital adequacy assessment process (ICAAP) in NLB Group, set up in accordance with ECB Guidelines, is ensuring adequate capital and sustainability on an ongoing basis.
The processes to assess and maintain capital on an ongoing basis, as well the adequate distribution of internal capital for covering the nature and level of the risks to which NLB Group is exposed, are part of the overall risk management system in order to assure proactive support for informed decision-making. From an economic perspective, NLB Group manages its capital adequacy by ensuring a multiyear forward-looking assessment of NLB Group which shows its ability to fulfil all of its capital-related regulatory and supervisory requirements and risk appetite of NLB Group.
Contractual amounts of off-balance sheet financial instruments in EUR thousands
| NLB Group | NLB | ||||
|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Short-term guarantees | 369,849 | 407,967 | 205,731 | 176,535 | |
| - financial | 154,769 | 220,786 | 88,373 | 96,473 | |
| - non-financial | 215,080 | 187,181 | 117,358 | 80,062 | |
| Long-term guarantees | 1,261,764 | 1,103,341 | 817,646 | 613,061 | |
| - financial | 513,523 | 427,743 | 309,909 | 230,318 | |
| - non-financial | 748,241 | 675,598 | 507,737 | 382,743 | |
| Loan commitments | 2,469,800 | 2,388,468 | 1,822,847 | 1,635,498 | |
| Letters of credit | 41,026 | 35,029 | 10,446 | 13,204 | |
| Other | 17,653 | 18,655 | 7,904 | 9,706 | |
| 4,160,092 | 3,953,460 | 2,864,574 | 2,448,004 | ||
| Provisions (note 5.16.b) | (32,548) | (37,609) | (17,941) | (20,299) | |
| Total | 4,127,544 | 3,915,851 | 2,846,633 | 2,427,705 |
Fee income from issued non-financial guarantees amounted to EUR 8,628 thousand (2022: EUR 7,535 thousand) in NLB Group, and to EUR 5,552 thousand (2022: EUR 4,574 thousand).
| in EUR thousands | NLB Group | NLB | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||||||
| Short-term Long-term Swaps | 486,874 | 1,526,962 | 257,015 | 1,111,946 | 715,173 | 1,586,962 | 359,978 | 1,111,690 | ||
| - currency swaps | 482,463 | 10,799 | 256,820 | - | 710,762 | 10,799 | 359,587 | - | ||
| - interest rate swaps | 4,411 | 1,516,163 | 195 | 1,111,946 | 4,411 | 1,576,163 | 391 | 1,111,690 | ||
| Options | - | 45,924 | 72 | 60,626 | - | 45,924 | 72 | 60,626 | ||
| - interest rate options | - | 30,189 | 72 | 46,963 | - | 30,189 | 72 | 46,963 | ||
| - securities options | - | 15,735 | - | 13,663 | - | 15,735 | - | 13,663 | ||
| Forward contracts | 74,351 | 6,640 | 54,660 | 11,720 | 72,120 | 6,640 | 54,384 | 11,720 | ||
| - currency forward | 74,351 | 6,640 | 54,660 | 11,720 | 72,120 | 6,640 | 54,384 | 11,720 | ||
| Total | 561,225 | 1,579,526 | 311,747 | 1,184,292 | 787,293 | 1,639,526 | 414,434 | 1,184,036 |
2,140,751 1,496,039 2,426,819 1,598,470
As at 31 December 2023, the NLB Group held interest rate swaps intended as fair value hedges of assets with a total nominal value of EUR 633,798 thousand (31 December 2022: EUR 644,132 thousand) and intended to hedge the fair value of bonds issued in 2023 with a total nominal value of EUR 450,000 thousand (note 5.5.b). As at 31 December 2023, the NLB held interest rate swaps intended as fair value hedges of assets with a total nominal value of EUR 573,798 thousand (31 December 2022: EUR 644,132 thousand) and intended to hedge the fair value of bonds issued in 2023 with a total contractual value of EUR 450,000 thousand (note 5.5.b). Derivatives that qualify for hedge accounting are used to hedge interest rate risk. The fair values of derivative financial instruments are disclosed in notes 5.2. and 5.5.
| in EUR thousands | NLB Group | NLB | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||||||||||
| Capital commitments for purchase of: | - property and equipment | 3,131 | 1,651 | 3,022 | 1,496 | |||||||||
| - intangible assets | 2,901 | 5,246 | 2,470 | 5,206 | ||||||||||
| Total | 6,032 | 6,897 | 5,492 | 6,702 |
| in EUR thousands | NLB Group | NLB | ||||
|---|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||
| Fiduciary activities | 30,241,726 | 26,935,868 | 28,278,498 | 24,990,075 | ||
| Settlement and other services | 1,085,213 | 1,247,360 | 1,010,624 | 1,156,361 | ||
| Total | 31,326,939 | 28,183,228 | 29,289,122 | 26,146,436 |
| NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|
| Assets | Clearing or transaction account claims for client assets | 30,196,860 | 26,886,137 | 28,243,725 | 24,950,876 | |
| From financial instruments | 30,196,322 | 26,866,494 | 28,243,237 | 24,931,891 | ||
| - receipt, processing, and execution of orders | 11,217,662 | 10,004,881 | 10,407,489 | 9,166,585 | ||
| - management of financial instruments portfolio | 573,177 | 509,000 | ||||
| - custody services | 18,405,483 | 16,352,613 | 17,835,748 | 15,765,306 | ||
| To Central Securities Clearing Corporation or bank settlement account for sold financial instrument | 128 | 891 | 78 | 233 | ||
| To other settlement systems and institutions for bought financial instrument (debtors) | 410 | 18,752 | 410 | 18,752 | ||
| Clients‘ money | 44,866 | 49,731 | 34,773 | 39,199 | ||
| - at settlement account for client assets | 27,082 | 22,037 | 16,989 | 22,037 | ||
| - at bank transaction accounts | 17,784 | 27,694 | 17,784 | 17,162 |
| NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|---|---|---|
| Clearing or transaction liabilities for client assets | 30,241,726 | 26,935,868 | 28,278,498 | 24,990,075 | ||
| To clients from cash and financial instruments | 30,238,652 | 26,931,466 | 28,275,954 | 24,986,135 | ||
| - receipt, processing, and execution of orders | 11,233,595 | 10,024,193 | 10,423,422 | 9,185,897 | ||
| - management of financial instruments portfolio | 582,790 | 519,728 | ||||
| - custody services | 18,422,267 | 16,387,545 | 17,852,532 | 15,800,238 | ||
| To Central Securities Clearing Corporation or bank settlement account for bought financial instrument | 138 | 444 | 138 | 444 | ||
| To other settlement systems and institutions for bought financial instrument (creditors) | 2,532 | 3,540 | 2,002 | 3,078 | ||
| To bank or settlement bank account for fees and costs, etc. | 404 | 418 | 404 | 418 |
| NLB Group | NLB | 2023 | 2022 | 2023 | 2022 | |
|---|---|---|---|---|---|---|
| Fiduciary activities (note 4.3.b) | 11,666 | 9,567 | 11,025 | 9,395 | ||
| Settlement and other services | 912 | 806 | 1,372 | 1,363 | ||
| Total | 12,578 | 10,373 | 12,397 | 10,758 |
Funds managed on behalf of third parties Fiduciary activities
298 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm management
Risk management in NLB Group is implemented in accordance with the set strategic guidelines, established internal policies, and procedures which take into account European banking regulations and relevant good banking practices. In addition, the Group is constantly enhancing and complementing the existing approaches, methodologies, and processes in all risk management segments.
Efficiently managing risk is crucial for NLB Group's sustained long-term profitable operations. A robust Risk Management framework is comprehensively integrated into decision-making, steering, and mitigation processes, ensuring awareness of all relevant risks within the entire Group. NLB Group’s Risk management framework supports business decision-making on strategic and operating levels, comprehensive statement and risk strategy orientations.
yearly review of strategic business goals, budgeting, and the capital planning process;
internal capital adequacy assessment process (ICAAP) and other internal stress-testing capabilities, early warning systems, and regular risk analysis;
regulatory and internal management reporting.
NLB Group uses the ‘three lines of defence framework’ where the risk management function acts as a second line of defence. Set governance and different risk management tools enable adequate oversight of the Group’s risk profile. Moreover, they support business operations and different mitigation measures when necessary.
a) Risk management strategies and processes
The key goal of NLB Group’s Risk Management is to proactively manage, assess, and monitor risks across the entire organisation, focusing on risk identification at a very early stage, efficient risk management, and mitigation of risks with the aim of ensuring the prudent use of its capital and resources.
The risk management principles of NLB Group are defined by its Risk Appetite and Risk Strategy, designed in accordance with the Group’s business model, integrating forward-looking perspectives. The policies of NLB Group – which are approved by the Management and Supervisory Boards – specify the strategic goals, risk appetite guidelines, approaches, and methodologies for monitoring and fulfilling all external requirements.
The main strategic risk guidelines are comprehensively integrated into decision-making, including the business plan review and budgeting process. NLB Group considers risk management as an essential element of its business strategy and related mid-term financial targets.
The management of credit risk, which is the most important risk category in NLB Group, concentrates on taking measures to reduce the costs of risk, and ensuring an optimal return considering the risks assumed. As regards liquidity risk, the tolerance is low, while the activities are geared towards ensuring an adequate liquidity position.
From the valuation risk of debt securities portfolio servicing as liquidity reserves, to moderate level. The fundamental orientation in the management of interest rate risk is to limit unexpected fluctuations.
When assuming operational risk, the Group pursues the orientation that such a risk must not significantly impact its operations. On this basis, changes of control activities, processes, and proactive mitigation, prevention, and minimisation of potential damage are implemented.
The conclusion of transactions with derivative financial instruments at NLB is primarily limited to servicing customers' needs, with the goals of low to moderate exposure. The tolerance for other risk types is low and focuses on minimising their possible impacts on NLB Group’s entire operations.
Environmental, social, and governance (ESG) factors are integrated into the risk management framework, allowing the Group to monitor and manage the drivers of the existing types of risks, such as credit, liquidity, market, and operational risk. The Group integrates and manages them within the established risk management framework.
Based on environmental and climate risk assessment, the impact of these risks is estimated as low, except for transition risk in the area of climate change. NLB Group has made a pledge to align the Bank’s lending and investment portfolio with net-zero emissions by 2050.
The availability of ESG data in the region where NLB Group operates is still lacking, which affects the ability to collect related data from its clients, being a prerequisite for adequate decision-making and the corresponding proactive management of ESG risks.
Risk management focuses on managing and mitigating risks through established frameworks, and the Group monitors a range of risk metrics, including internal capital allocation in order to assure the Group’s risk profile is in line with its risk appetite. The usage of risk limits is regularly reviewed by respective committees and/or the Management Board of the Bank.
The uniform stress-testing programme includes all material types of risk and relevant stress scenario analysis, according to the vulnerability of the Group’s business model. The Group establishes measures stemming from climate risk, which will be further enhanced by considering disposable ESG-related data. Stress testing is integrated into the risk appetite, ICAAP, ILAAP, Recovery Plan, the capital and liquidity positions in a forward-looking perspective. In addition, the Group also performs reverse stress tests with the aim to test its maximum recovery capacity. Other parties are integrated into the process of setting a risk management limit system.
For the purpose of an efficient risk mitigation process, NLB Group applies a single set of standards to retail and corporate credit risk management and optimal capital consumption. The Group has a system for monitoring and reporting collateral at fair (market) value in accordance with the International Valuation standards. Lending criteria are set within internal lending guidelines. Credit risk mitigation principles and rules in NLB Group are described in more relevant details in the section ‘Credit risk management’.
In line with the set risk appetite, NLB Group follows the principle of natural hedge or using derivatives in line with hedge accounting principles.
Responsible governance, in accordance with the applicable legislation of the Republic of Slovenia, particularly the provisions of the Companies Act (ZGD-1) and the Banking Act (ZBan-3), Internal Capital Adequacy Assessment Process for Banks and Savings Banks, the EBA Guidelines on internal governance, the EBA Guidelines on the assessment of the suitability of members and remuneration practices. Several layers of management provide cohesive risk management governance in NLB Group.
NLB Group established the three lines of a defence framework with the division of activities and defines roles and responsibilities for risk management at different levels within the Group. Risk management in the Group acts as a second line of defence, accounting for the main entity in Slovenia, and as the competence centre in charge of six banking members, leasing members, and other non-core subsidiaries which are in a controlled wind-out.
Overall, the structure is designed to prevent conflicts of interest and ensure a transparent and documented decision-making process, subject to an appropriate upward and downward flow of information.
The Global Risk Department, the Credit Risk – Corporate Department, the Credit Risk – Retail Department, and which reports to the Management Board, Assets and Liabilities Committee (ALCO), Risk Committee (RICO), and Credit Committee of the Management Board and the Risk Committee are responsible for formulating and controlling the risk management policies of NLB Group, setting limits, establishing methodologies, overseeing the harmonisation of risk management policies within the Group.
All members of NLB Group that are included in the financial statements of NLB Group report their exposure to risks to the competent organisational units within the Risk management to the Management Board and its respective Committees and the Supervisory Board and its respective Committees, which is where appropriate measures are adopted.
The credit ratings of clients are centralised via the Credit Committee of NLB. The process follows the co-decision principle, in which the credit committee of the respective Group member first approves their decision, followed by the Credit Committee of NLB, which is made on the basis of all available documentation, including a non-binding rating opinion prepared by the underwriting department of NLB. This same principle and process apply to the Group.
Risk monitoring in NLB Group members is operating within an independent and/or separate organisational unit. This way, monitoring of risks is established based on standardised and the Group’s and of each member’s statement of financial position. In compliance with the risk appetite, risk management strategy, and policies of NLB Group, risk monitoring in each NLB Group member ensures the objectivity required when assessing business decisions (three lines of defence concept).
The organisational unit for managing risks directly reports to the Management Board and its committees, which report to the Supervisory Board (the Risk Committee of the Supervisory Board or Board of Directors).
(CRD), Decision (CRR), NLB Group applies a standardised approach to credit and market risk, and the basic approach (a simplified approach with less data granularity) to operational risks, risks are assessed, monitored, managed, or mitigated in a uniform manner, as defined in the Group’s Risk management standards, and consider the specifics of the markets in which individual liquidity risk, interest rate, and credit spread risk in the banking book, operational risk, market risk, ESG, and non-financial risks, in addition to the prescribed regulations, NLB Group uses management of risks. These internal methodologies are aligned with ECB, EBA, and Basel guidelines, as well as best practices in banking methodologies.
As for risk reporting, NLB Group frequency of reporting required by the Bank of Slovenia and the ECB. In addition, each member of NLB Group also complies with the requirements of its local regulations. Risk reporting is based on common methodologies for measuring exposure to risks, uniform database structure within Data Warehouse (DWH), comprehensive data quality assurance, and automated reporting.
Data and IT system Risk data are calculated and stored in NLB Group DWH and collected from NLB and other Group member’s DWH. The established process provides an integrated information subject-oriented format. Data are regularly checked and validated. Data used for internal risk assessment, management, and reporting are the same as data which NLB Group uses for regulatory compliance that aligns with the goals and objectives of the Group’s risk management function.
NLB Group data governance and data quality framework consists of identifying risks, developing policies, and the second line of defence controls by an independent validation unit under the responsibility of Group Data Governance Officer. This framework covers agreed service level standards for efficient managing of risks and capital remains crucial for NLB Group to sustain long-term profitable operations.
The Group further enhanced the robustness of its risk management comprehensively, and prudently. Risk identification in a very early stage, its efficient managing, and the corresponding mitigation processes represent essential steps in such a system. The trends, such as sustainability, social responsibility, governance, changing customer behaviours, emerging new technologies and competitors, as well as increasing new regulatory requirements detecting and managing new potential emerging risks.
The NLB Group gives special focus on the inclusion of risk analysis into the decision-making process on strategic and operating levels, appropriate risk-adjusted pricing, regular education/trainings at all levels of management, and the assurance of overall compliance with internal policies/rules and relevant regulations. During with a stable rating structure and lower level of NPLs.
In the light of inflationary pressures, higher interest rates and low GDP growth, the Group recorded a slower credit portfolio growth in minor client credit quality deteriorations or received collaterals were recorded. Besides, the Group monitored the macroeconomic and geopolitical circumstances closely, remaining prudent in management.
The cost of risk remained at low level, mainly due to the successful collection of previously written-off receivables, revised risk parameters, and a stable portfolio development. In a highly unfavourable liquidity scenario would materialise, the Group holds a sufficient level of high-quality liquidity reserves. Significant attention was put into the structure and concentration of potential adverse negative market movements.
The management of ESG risks follows ECB and EBA guidelines with a tendency of their comprehensive integration into all relevant process management. Sustainable ESG financing in accordance with Environmental and Social Management System is integrated into the Group’s Risk Appetite Statement. As part of its strategy, plants.
Moreover, in December 2023 NLB as a member of the UN Net-Zero Banking Alliance, publicly disclosed its Net-Zero commitment. With this step, the Bank made a pledge to align systemically important institution, the Group was included in the ECB Stress Test exercise performed in H1 2023.
On 30 July, the results of stress tests carried out for important banks by the bottom-up stress test showed that even in a very unfavourable market condition defined by the EBA and ECB, the Group holds sufficient resilience in terms of capitalisation. The quality namely setting Pillar 2 Guidance.
Besides, the Group is also included in two ECB Stress test exercises – 2024 EBA Fit-for-55 climate risk scenario analysis and the 2024 ECB Cyber Resilience.
In its operations, NLB Group is exposed to credit risk, or the risk of losses due to the failure of a debtor to settle its liabilities to NLB Group. For that reason, it process, NLB Group follows the International Financial Reporting Standards, regulations issued by the European Central Bank or Bank of Slovenia, and the EBA guidelines. This area is governed by acts.
Through regular reviews of the business practices and the credit portfolios of NLB entities, NLB ensures that the credit risk management of those entities function in accordance with consolidated level. NLB Group manages credit risk at two levels:
Prior to concluding an agreement, a customer’s performance, financial position, and past cooperation with NLB are assessed. To objectively assess a client’s operation, internal scoring models are important to secure high-quality collateral even though it does not affect a customer’s credit rating.
This is followed by various forms of monitoring a customer, in particular an assessment of contractual obligations. In this part of the credit process, regular monitoring of clients within the Early Warning System (EWS) is important. In the case of client default, restructuring or write-offs trends in the credit portfolio, including on-balance and off-balance sheet exposures, are actively monitored and analysed at the level of the overall portfolio of NLB Group and single.
The portfolio quality through time and to identify any breach of limits or targets. Great emphasis is placed on the evolution of portfolio structure in terms of client segmentation, credit rating coverage of NPL is an important indicator of potential future losses that is closely monitored.
Apart from analysing the portfolio as a whole, the quality of new loans production is monitored to ensure that quality is maintained within the Group Risk Appetite. Beside default risk, the portfolio management is also focused on monitoring single name and industry concentration, migration, FX.
Emphasis is also placed on stress tests that forecast the effects of adverse negative macroeconomic movements on the portfolio, on the level of impairments and provisions, and on capital.
These are calculated according to the Standardised approach, while within the second pillar an internal IRB approach is used to estimate the RWA for default, migration, and FX lending risk. In methodology, and an industry concentration add-on is estimated based on the HHI concentration indexes.
the settlement of liabilities, whether financial assets will be restructured for economic or legal reasons, and the likelihood that a customer will enter bankruptcy or a financial reorganisation collateral) are assessed following an individual review. If their discounted value differs from the book value of the financial asset in question, impairment must be recognised. Collective E individual basis. Based on IFRS 9 requirements, financial assets measured at amortised cost or at fair value through other comprehensive income are attributed to the appropriate stage bas stage of financial assets determines whether a 12-month or lifetime ECL must be considered. The ECL calculation is based on the forward-looking probability of default (PD) and loss give as predicted macroeconomic parameters for different scenarios. For off-balance financial assets, the probability of the redemption of guarantees is considered when creating collective prov regular basis to make loss estimations as realistic as possible. The management of ESG risks addresses the Group’s overall credit approval process and related credit portfolio management Lending Policy for Non-Financial Companies in NLB d.d. and NLB Group where in the special chapter Environmental and Social Framework three categories are defined (prohibited Framework in NLB d.d. and NLB Group applies to certain transactions with the greatest potential for significant E&S impact (exclusion list, regulatory compliance check, category A list); Framework in NLB d.d. and NLB Group provides a guide to the typical level of inherent environmental and social risk according to NACE codes.
| NLB Group | NLB | ||
|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | |
| Cash, cash balances at central banks, and other demand deposits at banks | 6,103,561 | 5,271,365 | 4,318,032 |
| Financial assets held for trading | 15,718 | 21,588 | 17,957 |
| Non-trading financial assets mandatorily at fair value through profit or loss | 5,217 | 3,116 | 7,785 |
| Financial assets at fair value through other comprehensive income | 2,164,464 | 2,838,796 | 962,084 |
| Financial assets at amortised cost | |||
| Debt securities | 2,522,229 | 1,917,615 | 1,966,169 |
| Loans to governments | 386,291 | 303,443 | 118,220 |
| Loans to banks | 547,640 | 222,965 | 149,011 |
| Loans to financial organisations | 91,523 | 116,078 | 384,995 |
| Loans to individuals | 7,086,815 | 6,621,670 | 3,543,603 |
| Loans to companies | 6,169,972 | 6,031,795 | 3,101,465 |
| Other financial assets | 165,962 | 177,823 | 101,596 |
| Derivatives - hedge accounting | 47,614 | 59,362 | 47,614 |
| Total net financial assets | 25,307,006 | 23,585,616 | 14,718,531 |
| Guarantees | 1,631,613 | 1,511,308 | 1,023,377 |
| Financial guarantees | 668,292 | 648,529 | 398,282 |
| Non-financial guarantees | 963,321 | 862,779 | 625,095 |
| Loan commitments | 2,469,800 | 2,388,468 | 1,822,847 |
| Other potential liabilities | 58,679 | 53,684 | 18,350 |
| Total contingent liabilities | 4,160,092 | 3,953,460 | 2,864,574 |
| Total maximum exposure to credit risk | 29,467,098 | 27,539,076 | 17,583,105 |
| from financial assets measured at amortised cost in EUR thousands | 31 Dec 2023 | NLB Group | Fully/over collateralised | Financial assets not or not fully covered | financial assets with collateral | |
|---|---|---|---|---|---|---|
| Loans to banks | - | - | - | 113 | 27 | |
| Loans to individuals | 47,586 | 28,634 | 133,472 | 83,423 | 17,960 | |
| financial assets | 119 | 57 | 4,507 | 10,484 | 405 | |
| Total | 150,468 | 75,929 | 481,136 | 160,352 | 31,002 | 25,071 |
| Financial Assets | Fully/over collateralised | Financial assets not or not fully covered with collateral | Gross value of financial assets | Net value of financial assets | Fair value of collateral |
|---|---|---|---|---|---|
| Loans to banks | - | - | - | 108 | - |
| Loans to individuals | 46,587 | 32,322 | 135,480 | 81,523 | 19,235 |
| Loans to other customers | 127,938 | 69,180 | 426,805 | 71,733 | 19,227 |
| Other financial assets | 249 | 104 | 7,301 | 8,979 | 1,374 |
| Total | 174,774 | 101,606 | 569,586 | 162,343 | 39,836 |
| Financial Assets | Fully/over collateralised | Financial assets not or not fully covered with collateral | Gross value of financial assets | Net value of financial assets | Fair value of collateral |
|---|---|---|---|---|---|
| Loans to banks | - | - | - | 113 | 27 |
| Loans to individuals | 32,400 | 20,097 | 76,149 | 43,943 | 10,579 |
| Loans to other customers | 41,759 | 18,968 | 145,806 | 19,456 | 3,938 |
| Other financial assets | 7 | 2 | 355 | 1,655 | 146 |
| Total | 74,166 | 39,067 | 222,310 | 65,167 | 14,690 |
| Financial Assets | Fully/over collateralised | Financial assets not or not fully covered with collateral | Gross value of financial assets | Net value of financial assets | Fair value of collateral |
|---|---|---|---|---|---|
| Loans to banks | - | - | - | - | - |
| Loans to individuals | 22,988 | 16,518 | 50,403 | 36,692 | 8,876 |
| Loans to other customers | 36,494 | 17,154 | 93,719 | 14,637 | 4,079 |
| Other financial assets | 3 | 2 | 379 | 830 | 23 |
| Total | 59,485 | 33,674 | 144,501 | 52,159 | 12,978 |
in EUR thousands
| NLB Group 31 Dec 2023 | NLB Group 31 Dec 2022 | ||||||
| Fully/over collateralised financial assets | Financial assets not or not fully covered with collateral | Total | Fully/over collateralised financial assets | Financial assets not or not fully covered with collateral | Total | ||
| Debt securities | 113,822 | 2,413,929 | 5,963,606 | 123,860 | 1,797,539 | 5,838,200 | |
| Loans to banks | 216 | 547,610 | 480 | 222,646 | |||
| Loans to individuals | 3,358,508 | 3,745,797 | 3,245,998 | 3,369,336 | |||
| Loans to other customers | 2,489,620 | 4,169,199 | 2,467,255 | 3,986,614 | |||
| Other financial assets | 1,440 | 164,724 | 607 | 177,022 | |||
| Total | 5,963,606 | 11,041,259 | 12,847,635 | 5,838,200 | 9,553,157 | 12,300,583 |
| Fully/over collateralised financial assets | Financial assets not or not fully covered with collateral | Gross value of financial assets | Net value of financial assets | Fair value of collateral |
|---|---|---|---|---|
| Financial assets at amortised cost | Debt securities | 113,822 | 113,724 | 113,161 |
| Loans to banks | - | - | - | |
| Loans to individuals | 1,902,110 | 1,900,201 | 4,027,602 | |
| Loans to other customers | 1,024,057 | 1,025,532 | 2,437,145 | |
| Other financial assets | 44 | 44 | 130 | |
| Total | 3,040,033 | 3,039,501 | 6,578,038 | |
| 6,309,922 | 6,271,801 | 349,391 |
| Fully/over collateralised financial assets | Financial assets not or not fully covered with collateral | Gross value of financial assets | Net value of financial assets | Fair value of collateral |
|---|---|---|---|---|
| Financial assets at amortised cost | Debt securities | 123,860 | 123,753 | 123,860 |
| Loans to banks | - | - | - | |
| Loans to individuals | 1,611,092 | 1,610,129 | 3,256,002 | |
| Loans to other customers | 837,771 | 836,196 | 1,630,471 | |
| Other financial assets | 6 | 6 | 19 | |
| Total | 2,572,729 | 2,570,084 | 5,010,352 | |
| 5,529,143 | 5,500,149 | 369,617 |
| 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|
| NLB | Fully/over collateralised loans | Loans not or not fully covered with collateral |
| Fair value of loans | 70 | 149 |
| Fair value of collateral | 7,715 | 5,800 |
| Fair value of loans | 4,345 | 4,699 |
| Fair value of collateral | 3,547 | 2,000 |
Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm protection policy NLB Group applies a single set of standards to retail and corporate loan collateral, as developed by NLB Group members in accordance with regulatory requirements.
The Policy in NLB d.d. and NLB Group has been adopted by the Management Board of NLB Group. The Policy represents the basic principles that NLB Group’s employees must aim at reducing credit risk. In line with the policy, the primary source of loan repayment is the debtor’s solvency, and the accepted collateral is a secondary source of repayment in case the debtor fails to repay.
Complying with the Basel II requirements with the aim of improving credit risk management and consuming capital economically. In accordance with Basel II, collateral may consist of pledges from governments and central banks, bank debt securities, and real-estate mortgages (the real estate must be, beside other criteria, located in the European Economic Area or in a country recognised by the European Union).
Companies and sole proprietors may be secured by other forms of collateral, as well (e.g., a lien on movable property, a pledge of an equity stake, investment coupons, collateral by pledged assets).
If there is a lower probability that this type of collateral would generate a cash flow, NLB Group takes a conservative approach and accepts only collateral that is deemed reliable.
The merger of N Banka into NLB was successfully completed with the transfer of all customers and their business. During the transition period prior to the merger, N Banka has adopted all relevant internal processes for valuing collateral.
In compliance with relevant regulations, NLB Group has established a system for monitoring and reporting collateral at fair (market) value. The market value of movable property is obtained from valuation reports of licensed appraisers or from sales agreements. Both, valuation reports and sales agreements must not be older than a specified period.
and provisions, additional deductions (haircuts) are applied to the eventual adjusted market value, depending on the type of collateral. These haircuts for purpose of liquidation value are for movables they range between 50 and 100%, depending on the type of movable. The market value of financial instruments held by NLB Group is obtained from the organised market with the internal methodology for unlisted financial instruments (such collateral is used exceptionally and on a small scale in loans granted to companies and sole proprietors). NLB has compiled a reference list of appraisers for valuations of real estate, made for the purpose of secured lending and in accordance with the international valuation standards (IVS, EVS, and RICS). Appraisals related to retail loans are generally ordered only from appraisers included on the NLB’s reference list, and appraisals are usually submitted by clients. If a client submits an appraisal that is not made by an appraiser included on the NLB’s reference list, the NLB’s expert department which employs Ministry of Justice, and certified real-estate value appraisers with licences granted by the Slovenian Institute of Auditors, will verify the appraisal. The expert department is also responsible for ensuring that members obtain valuations from in-house appraisers and outsourced appraisers, all possessing the necessary licences. NLB Group has compiled a reference list of appraisers for valuations of real estate according to the international valuation standards, and for larger exposures, real-estate evaluations must also be reviewed by an internal licensed appraiser with knowledge of the local real-estate market. If the adjustment is greater than a certain limit, the appraisal is rejected as inadequate. When assuring collateral, NLB Group follows the internal regulations which define the minimum security or pledge exposure (depending on the borrower’s rating, loan maturity, etc.) with the aim of reducing negative consequences resulting from any major swings in market prices of the assets used as collateral. NLB Group’s lien on such assets should be top ranking. Exceptionally, where the value of the mortgaged real estate is large enough, the lien can have a different priority order. NLB Group monitors mandatory periods and internal instructions. For example, the value of collateral using mortgaged real estate is monitored annually, either by preparing individual assessments or by using the public records and indexes of real-estate value published by the relevant government authorities (the Surveying and Mapping Authority in the Republic of Slovenia) or on analyses carried out once a year (in NLB automated, with a straight-line depreciation over the period of the remaining useful life).
NLB Group accepts collateral in the form of business and residential real estate: land, buildings, and individual parts of buildings in a storeyed property for construction, apartments, residential buildings, garages and holiday homes, business premises, industrial buildings, offices, shops, hotels, branches and warehouses, forests, parking spaces where the pledge right of the Bank is entered in the first place and real estate is already owned by the debtor and/or the pledger. For real estate, there must be a market, and it must be redeemable. Given to the types of movable property, that are highly likely to be sold in the event of execution, and the funds received are used to repay the collateralised claims (their market value must be considered). The Bank includes motor vehicles, agricultural machinery, construction machinery, production lines, and series-produced machines, and some custom-made production machines; securities of different issuers, investment fund units, equity securities, or convertible bonds: - Cash receivable collateral: bank deposits and savings with Bank are appropriate in domestic Bank’s assessment, are suitable for securing investments and are traded on a regulated market (marketable securities of higher-quality Slovenian and foreign issuers); - The pledge of investment funds (NLB Skladi) and are, according to the Bank’s assessment, suitable for insurance of investments. - A pledge of an equity stake: non-marketable capital shares with a credit rating of at least have longer maturities than the maturity of the investment and they must not be due and not be paid; - Other material forms of loan collateral (e.g., life insurance policies pledged to NLB) investment life insurance policy and a life insurance policy with a guaranteed return that includes saving, in addition to insurance.
Personal loan collateral is a method for reducing credit risk in the event of defaulting. NLB Group accepts the following types of personal loan collateral: - Joint and several guarantees by retail and corporate clients: for the collateralisation of private individuals’ loans with a repayment period not exceeding 60 months. For the collateralisation of legal entities investments, guarantees; - Government guarantees (e.g., of the Republic of Slovenia); - Guarantees by national and regional development agencies with which the Bank has a contract on the acceptance of collateral. Loans are very often secured by a combination of collateral types. The general recommendations on loan collateral are specified in the internal instructions and include the elements that depend on the client’s creditworthiness (credit rating), loan maturity, and varies depending on whether the loan is granted to retail or a corporate client. NLB has also created, in the area of real estate in the Republic of Slovenia, which allows direct and immediate verification of the existence of property. NLB Group strives to ensure the best possible collateral for long-term loans, in particular, the frequent form of loan collateral of corporate and retail clients. In corporate exposures, the next most frequent forms of collateral are government and corporate guarantees, while in retail.
the largest concentration of collaterals arising from mortgages on real estate, which is a relatively reliable and quality type of collateral. Due to the possible decrease of real estate market prices, the Group establishes higher amounts of impairments and provisions for non-performing loans secured by real estate, based on estimated discounts of the real-estate value, which are expected to be a pledge right of the Group is entered in the first place and the real estate is already owned by the debtor and/or the pledger. For real estate, there must be a market, and it must be redeemable.
the risk of changes in the prices of securities on capital markets. To limit such risks and restrict the possibility of the value of instruments received as collateral falling below approved limits, securities and equity shares in NLB. Deviations from the Rules are subject to the prior approval of the respective decision bodies of the Bank. The ratio between the loan amount and the securities is determined by maturity, and correlation with changes in market indexes, i.e., by considering the key features reflecting the level of volatility of market prices, and the ability to sell the securities at the market.
| in EUR thousands | NLB Group | NLB | 12-month expected credit losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Purchased credit- impaired financial assets | Total |
|---|---|---|---|---|---|---|---|
| Debt securities at amortised cost | A | 1,779,525 | - | - | - | 1,779,525 | 1,590,676 |
| B | 735,905 | - | - | - | 735,905 | 373,190 | |
| C | - | 12,321 | - | - | 12,321 | 5,100 | |
| Loss allowance | (4,946) | (576) | - | - | (5,522) | (2,797) | |
| Carrying amount | 2,510,484 | 11,745 | - | - | 2,522,229 | 1,966,169 | |
| Loans and advances to banks at amortised cost | A | 166,615 | - | - | - | 166,615 | 145,666 |
| B | 381,211 | - | - | - | 381,211 | 3,482 | |
| D and E | - | 113 | - | - | 113 | 113 | |
| Loss allowance | (213) | - | (86) | - | (299) | (250) | |
| Carrying amount | 547,613 | - | 27 | - | 547,640 | 149,011 | |
| Loans and advances to individuals at amortised cost | A | 6,787,523 | 111,211 | - | 632 | 6,899,366 | 3,450,942 |
| B | 64,863 | 55,590 | - | 10 | 120,463 | 37,338 | |
| C | 2,339 | 81,623 | - | 514 | 84,476 | 44,204 | |
| D and E | - | 126,743 | 4,266 | 131,009 | - | 76,343 | |
| Loss allowance | (39,668) | (25,051) | (82,756) | (1,024) | (148,499) | (65,224) | |
| Carrying amount | 6,815,057 | 223,373 | 43,987 | 4,398 | 7,086,815 | 3,543,603 | |
| Loans and advances to other customers at amortised cost | A | 1,344,256 | 3,758 | - | - | 1,348,014 | 1,169,524 |
| B | 4,724,560 | 158,829 | - | 12 | 4,883,401 | 2,241,740 | |
| C | 138,837 | 288,567 | - | - | 427,404 | 186,545 | |
| D and E | - | 152,759 | 16,336 | 169,095 | - | 61,215 | |
| Loss allowance | (51,087) | (19,778) | (103,278) | (5,985) | (180,128) | (54,344) | |
| Carrying amount | 6,156,566 | 431,376 | 49,481 | 10,363 | 6,647,786 | 3,604,680 | |
| Other financial assets at amortised cost | A | 125,514 | 77 | - | - | 125,591 | 83,752 |
| B | 39,042 | 156 | - | - | 39,198 | 17,630 | |
| C | 819 | 556 | - | - | 1,375 | 166 | |
| D and E | - | 9,346 | 1,257 | 10,603 | - | 1,662 | |
| Loss allowance | (624) | (40) | (8,910) | (1,231) | (10,805) | (1,614) | |
| Carrying amount | 164,751 | 749 | 436 | 26 | 165,962 | 101,596 | |
| Debt instruments at fair value through other comprehensive income | A | 1,221,592 | - | - | - | 1,221,592 | 854,472 |
| B | 1,031,205 | - | - | - | 1,031,205 | 154,461 | |
| C | - | 144 | - | - | 144 | - | |
| D and E | - | 798 | - | 798 | - | 798 | |
| Loss allowance | (6,475) | (56) | (798) | - | (7,329) | (2,448) | |
| Contingent liabilities | A | 1,691,834 | 26,522 | - | 37 | 1,718,393 | 1,383,375 |
| B | 2,286,997 | 33,489 | - | 11 | 2,320,497 | 1,409,435 | |
| C | 53,728 | 46,605 | - | 170 | 100,503 | 57,853 | |
| D and E | - | 17,221 | 3,478 | 20,699 | - | 13,911 | |
| Loss allowance | (18,429) | (1,655) | (9,369) | (3,095) | (32,548) | (17,941) | |
| Carrying amount | 4,014,130 | 104,961 | 7,852 | 601 | 4,127,544 | 2,846,633 |
| in EUR thousands | NLB Group | NLB | expected 12-month losses | Lifetime ECL not credit - impaired | Lifetime ECL credit- impaired | Purchased credit- impaired financial assets | Total |
|---|---|---|---|---|---|---|---|
| Debt securities at amortised cost | A | 1,388,564 | - | - | - | 1,388,564 | 1,318,134 |
| B | 525,606 | - | - | - | 525,606 | 281,304 | |
| C | - | 7,229 | - | - | 7,229 | - | |
| Loss allowance | (3,519) | (265) | - | - | (3,784) | (1,990) | |
| Carrying amount | 1,910,651 | 6,964 | - | - | 1,917,615 | 1,597,448 | |
| Loans and advances to banks at amortised cost | A | 87,422 | - | - | - | 87,422 | 350,138 |
| B | 135,704 | - | - | - | 135,704 | 703 | |
| D and E | - | - | 108 | - | 108 | - | |
| Loss allowance | (161) | - | (108) | - | (269) | (216) | |
| Carrying amount | 222,965 | - | - | - | 222,965 | 350,625 | |
| Loans and advances to individuals at amortised cost | A | 6,327,508 | 82,441 | - | 772 | 6,410,721 | 2,915,578 |
| B | 80,749 | 40,465 | - | 50 | 121,264 | 7,329 | |
| C | 14,620 | 67,215 | - | 1,514 | 83,349 | 34,720 | |
| D and E | - | - | 122,350 | 5,760 | 128,110 | - | |
| Loss allowance | (31,385) | (14,582) | (76,306) | 499 | (121,774) | (7,385) | |
| Carrying amount | 6,391,492 | 175,539 | 46,044 | 8,595 | 6,621,670 | 2,916,746 | |
| Loans and advances to other customers at amortised cost | A | 1,366,495 | 1,405 | - | - | 1,367,900 | 1,007,159 |
| B | 4,508,706 | 146,749 | - | 15 | 4,655,470 | 1,907,775 | |
| C | 153,084 | 275,517 | - | 1,898 | 430,499 | 28,397 | |
| D and E | - | - | 178,206 | 21,465 | 199,671 | - | |
| Loss allowance | (59,840) | (31,230) | (114,288) | 3,134 | (202,224) | (800) | |
| Carrying amount | 5,968,445 | 392,441 | 63,918 | 26,512 | 6,451,316 | 2,945,575 | |
| Other financial assets at amortised cost | A | 138,353 | 57 | - | - | 138,410 | 102,414 |
| B | 37,103 | 169 | - | - | 37,272 | 11,362 | |
| C | 1,370 | 577 | - | - | 1,947 | 759 | |
| D and E | - | - | 7,940 | 1,288 | 9,228 | - | |
| Loss allowance | (1,246) | (38) | (7,565) | (185) | (9,034) | (2) | |
| Carrying amount | 175,580 | 765 | 375 | 1,103 | 177,823 | 114,332 | |
| Debt instruments at fair value through other comprehensive income | A | 1,453,671 | - | - | - | 1,453,671 | 1,159,704 |
| B | 1,545,358 | - | - | - | 1,545,358 | 207,791 | |
| C | - | 165 | - | - | 165 | - | |
| D and E | - | - | 8,338 | - | 8,338 | - | |
| Loss allowance | (9,029) | (70) | (6,777) | - | (15,876) | (2,022) |
| A | 1,500,489 | 6,657 | - | 34 | 1,507,180 | 1,118,801 | 4,426 |
|---|---|---|---|---|---|---|---|
| B | 2,294,429 | 38,878 | - | 318 | 2,333,625 | 1,256,792 | 17,906 |
| C | 48,375 | 37,735 | - | 88 | 86,198 | 22,149 | 12,911 |
| D and E | - | - | 20,134 | 6,323 | 26,457 | - | - |
| Loss allowance | (18,826) | (1,953) | (12,735) | (4,095) | (37,609) | (8,156) | (378) |
| Carrying amount | 3,824,467 | 81,317 | 7,399 | 2,668 | 3,915,851 | 2,389,586 | 34,865 |
The client credit rating classification is based on an internally developed methodology, drawing from internal statistical analyses, good banking practices, as well as Bank of Slovenia regulation across the entire NLB Group. It includes a uniform credit grade scale of 12 rating classes, out of which nine represent performing clients and three non-performing clients.
Rating Group A is characterised by high coverage of financial liabilities with free cash flow. The Rating Group A is considered as investment grade classification. Rating Group B (BBB to B rating classes) includes clients who show stable performance, acceptable financial ratios, and qualitative elements, and have sufficient cash flow to settle their obligations, but may be more sensitive to changes for BBB, and an ‘invest with care’ for BB and B.
Rating Group C (CCC to C rating classes) includes clients who are exposed to a higher and above-average level of credit risk. CCC rated clients have effects for the Bank; however, Rating Group C is overall considered as a substantial risk. The Bank reasonably restricts cooperation with such clients and decreases its exposure to them. Rating D, DF, and E classified clients are ordinarily transferred to the specialised units for restructuring (which performs business and financial restructuring with the goal of minimising losses due to default).
The NLB Group ratings in the master scale are mapped to the following PD structure:
| Rating class | Average PD in % |
|---|---|
| AAA | 0.05 |
| AA | 0.15 |
| A | 0.30 |
| BBB | 0.60 |
| BB | 1.20 |
| B | 2.40 |
| CCC | 4.80 |
| CC | 9.60 |
| C | 19.20 |
| D | 100 |
| DF | 100 |
| E | 100 |
In 2020, NLB Group applied a new default definition based on the EBA guidelines, where the materiality threshold for delays is determined in absolute and relative terms (EUR 100 for re client level). At the same time, the assessment of rating for private individuals was improved by establishing a common rating on the client level. In 2023, a scoring model for private individuals was introduced as it introduces 9 performing rating classes (instead of the previous 3).
| in EUR thousands | NLB Group 31 Dec 2023 | NLB Group 31 Dec 2022 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| All forborne exposures | Impairment, provisions and value adjustments | Collateral and financial guarantees received on forborne exposures | Gross carrying amount | Performing | Non-performing | Performing forborne exposures | Non-performing forborne exposures | Impaired | Defaulted | |||||||||
| Loans and advances (including at amortised cost and fair value) | 246,402 | 116,477 | 129,874 | 129,925 | (7,883) | (81,121) | 92,352 | 272,249 | 117,808 | 154,385 | 154,441 | (9,929) | (79,535) | 121,376 | ||||
| Governments | 624 | 419 | 205 | 205 | (22) | (205) | - | 840 | 604 | 236 | 236 | (12) | (234) | - | ||||
| Other financial organisations | 1,388 | - | 1,388 | 1,388 | - | (1,388) | - | 1,526 | 201 | 1,325 | 1,325 | (6) | (1,325) | - | ||||
| Non-financial organisations | 168,726 | 77,709 | 90,966 | 91,017 | (3,857) | (59,606) | 58,611 | 207,473 | 89,871 | 117,546 | 117,602 | (7,267) | (61,900) | 87,245 | ||||
| Households | 75,664 | 38,349 | 37,315 | 37,315 | (4,004) | (19,922) | 33,741 | 62,410 | 27,132 | 35,278 | 35,278 | (2,644) | (16,076) | 34,131 | ||||
| Debt instruments other than held for trading | 246,402 | 116,477 | 129,874 | 129,925 | (7,883) | (81,121) | 92,352 | 272,249 | 117,808 | 154,385 | 154,441 | (9,929) | (79,535) | 121,376 | ||||
| Loan commitments given | 434 | 84 | 350 | 350 | (1) | (27) | 352 | 1,392 | 743 | 649 | 649 | (2) | (209) | 740 | ||||
| Total exposures with forbearance measures | 246,836 | 116,561 | 130,224 | 130,275 | (7,884) | (81,148) | 92,704 | 273,641 | 118,551 | 155,034 | 155,090 | (9,931) | (79,744) | 122,116 |
| in EUR thousands | NLB | All forborne exposures | Impairment, provisions and value adjustments | Collateral and financial guarantees received on forborne exposures |
|---|---|---|---|---|
| 31 Dec 2023 | Gross carrying amount | Performing | Non-performing | Performing forborne exposures |
| 110,905 | 42,584 | 68,270 | 68,321 | |
| (3,718) | (41,050) | 53,937 | ||
| Other financial organisations | 1,388 | - | 1,388 | 1,388 |
| - | (1,388) | - | ||
| Non-financial organisations | 50,979 | 15,166 | 35,762 | 35,813 |
| (70) | (23,142) | 27,232 | ||
| Households | 58,538 | 27,418 | 31,120 | 31,120 |
| (3,648) | (16,520) | 26,705 | ||
| Debt instruments other than held for trading | 110,905 | 42,584 | 68,270 | 68,321 |
| (3,718) | (41,050) | 53,937 | ||
| Loan commitments given | 434 | 84 | 350 | 350 |
| (1) | (27) | 352 | ||
| Total exposures with forbearance measures | 111,339 | 42,668 | 68,620 | 68,671 |
| (3,719) | (41,077) | 54,289 |
| in EUR thousands | NLB Group | 31 Dec 2023 | Up to 3 months | 3 to 6 months | 6 to 12 months | Over 12 months |
|---|---|---|---|---|---|---|
| Performing exposures | 7,519 | 1,813 | 8,140 | 91,122 | ||
| Non-performing exposures | 1,569 | 6,838 | 5,071 | 35,275 | ||
| Total exposures with forbearance measures | 9,088 | 8,651 | 13,211 | 126,397 |
| in EUR thousands | NLB | 31 Dec 2023 | Up to 3 months | 3 to 6 months | 6 to 12 months | Over 12 months |
|---|---|---|---|---|---|---|
| Performing exposures | 7,059 | 1,690 | 2,880 | 27,237 | ||
| Non-performing exposures | 1,312 | 6,634 | 2,455 | 16,819 |
| 31 Dec 2022 | ||||
|---|---|---|---|---|
| Performing exposures | 2,063 | 608 | 1,864 | 10,531 |
| Non-performing exposures | 1,939 | 1,261 | 7,300 | 20,184 |
| Total exposures with forbearance measures | 4,002 | 1,869 | 9,164 | 30,715 |
The main forbearance measurements used by NLB Group and NLB are: deferral of payment, reduction of interest rates, acquisition of collateral for partial repayment of claims, and others.
| Nature of assets | NLB Group | 31 Dec 2023 | 31 Dec 2022 | NLB |
|---|---|---|---|---|
| Equity securities mandatorily measured at fair value through profit or loss (note 5.3.a) | - | 368 | - | |
| Investment property (note 5.9.) | 21,253 | 25,326 | 2,263 | |
| Property and equipment (note 5.8.) | 11,641 | 11,962 | - | |
| Investments in subsidiaries and associates | - | - | 530 | |
| Real estates (note 5.13.) | 27,122 | 50,913 | 3,129 | |
| Other assets (note 5.13.) | 515 | 673 | - | |
| Non-current assets held for sale (note 5.7.) | 474 | 651 | - | |
| Total | 61,005 | 89,893 | 5,922 |
| Industry sector | Gross loans | Impairment provisions | Net loans | (%) | Gross loans |
|---|---|---|---|---|---|
| Banks | 547,939 | (299) | 547,640 | 3.79 | 223,234 |
| Finance | 154,385 | (2,321) | 152,064 | 1.05 | 235,737 |
| Electricity, gas, and water | 599,988 | (9,284) | 590,704 | 4.09 | 601,556 |
| Construction industry | 535,444 | (23,798) | 511,646 | 3.54 | 547,251 |
| Heavy industry | 1,487,769 | (29,619) | 1,458,150 | 10.09 | 1,415,304 |
| Education | 14,278 | (481) | 13,797 | 0.10 | 13,246 |
| Agriculture, forestry, and fishing | 108,204 | (3,536) | 104,668 | 0.72 | 98,813 |
| Public sector | 390,522 | (4,234) | 386,288 | 2.67 | 285,495 |
| Individuals | 7,235,314 | (148,499) | 7,086,815 | 49.05 | 6,743,441 |
| Mining | 45,801 | (1,733) | 44,068 | 0.31 | 53,854 |
| Entrepreneurs | 388,668 | (7,604) | 381,064 | 2.64 | 389,376 |
| Services | 929,438 | (34,385) | 895,053 | 6.19 | 809,891 |
| Transport and communications | 884,162 | (20,676) | 863,486 | 5.98 | 920,149 |
| Trade industry | 1,254,749 | (41,550) | 1,213,199 | 8.40 | 1,239,161 |
| Health care and social security | 34,506 | (907) | 33,599 | 0.23 | 43,710 |
| Other financial assets | 176,767 | (10,805) | 165,962 | 1.15 | 186,857 |
| Total | 14,787,934 | (339,731) | 14,448,203 | 100.00 | 13,807,075 |
| Industry sector | Gross loans | Impairment provisions | Net loans | (%) | Gross loans |
|---|---|---|---|---|---|
| Banks | 149,261 | (250) | 149,011 | 2.01 | 350,841 |
| Finance | 440,080 | (2,914) | 437,166 | 5.90 | 383,781 |
| Electricity, gas, and water | 429,569 | (2,577) | 426,992 | 5.76 | 371,356 |
| Construction industry | 131,462 | (8,652) | 122,810 | 1.66 | 150,715 |
| Country | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 |
|---|---|---|---|
| Slovenia | 6,705,660 | 6,704,603 | 6,701,924 |
| Other European Union members | 414,732 | 274,795 | 222,556 |
| Serbia | 3,306,766 | 2,790,892 | 193,376 |
| Other countries | 4,021,045 | 3,703,484 | 288,819 |
| Total | 14,448,203 | 13,473,774 | 7,406,675 |
| Heavy industry | 847,052 | (11,135) | 835,917 | 11.29 | 688,517 | ( |
|---|---|---|---|---|---|---|
| Education | 3,509 | (63) | 3,446 | 0.05 | 3,529 | ( |
| Agriculture, forestry, and fishing | 14,566 | (65) | 14,501 | 0.20 | 15,432 | ( |
| Public sector | 116,388 | (824) | 115,564 | 1.56 | 104,303 | ( |
| Individuals | 3,608,827 | (65,224) | 3,543,603 | 47.84 | 3,084,331 | ( |
| Mining | 19,996 | (71) | 19,925 | 0.27 | 23,736 | ( |
| Entrepreneurs | 83,802 | (2,753) | 81,049 | 1.09 | 64,471 | ( |
| Services | 607,989 | (15,368) | 592,621 | 8.00 | 342,882 | ( |
| Transport and communications | 580,244 | (3,814) | 576,430 | 7.78 | 589,152 | ( |
| Trade industry | 370,514 | (5,521) | 364,993 | 4.93 | 308,724 | ( |
| Health care and social security | 21,638 | (587) | 21,051 | 0.28 | 24,788 | ( |
| Other financial assets | 103,210 | (1,614) | 101,596 | 1.37 | 115,412 | ( |
| Total | 7,528,107 | (121,432) | 7,406,675 | 100.00 | 6,621,970 | ( |
| Country | Financial assets measured at amortised cost | Financial assets measured at fair value through OCI | Non-trading financial assets mandatorily at FV through profit or loss | Derivative financial instruments measured at | |
|---|---|---|---|---|---|
| Slovenia | 428,163 | 274,855 | - | 1,092 | 416,679 |
| Other members of European Union | 1,567,873 | 805,334 | 5,217 | 35,121 | 1,440,075 |
| - Austria | 113,531 | 77,472 | 707 | - | 105,552 |
| - Belgium | 173,326 | 84,471 | 706 | 7,819 | 156,407 |
| - Bulgaria | 34,226 | 1,002 | - | - | 34,226 |
| - Czech Republic | 12,975 | - | - | - | 12,975 |
| - Cyprus | 18,172 | 1,550 | - | - | 18,172 |
| - Denmark | 16,662 | 8,187 | - | - | 16,662 |
| - Finland | 67,257 | 90,419 | 707 | - | 59,293 |
| - France | 239,395 | 136,115 | - | 9,227 | 211,895 |
| - Germany | 167,538 | 107,278 | 505 | 12,301 | 136,969 |
| - Hungary | 45,211 | 5,639 | - | - | 45,211 |
| - Ireland | 58,793 | 31,191 | - | 2,677 | 52,634 |
| - Italy | 51,566 | 5,989 | 100 | - | 51,566 |
| - Latvia | 23,276 | - | - | - | 23,276 |
| - Lithuania | 20,596 | - | - | - | 20,596 |
| - Luxembourg | 69,567 | 7,337 | - | - | 69,567 |
| - Malta | 27,442 | - | - | - | 27,442 |
| - Netherlands | 117,309 | 112,840 | 2,492 | 3,097 | 91,519 |
| - Poland | 35,024 | 7,126 | - | - | 35,024 |
| - Portugal | 42,677 | 16,574 | - | - | 42,677 |
| - Romania | 53,190 | 5,013 | - | - | 53,190 |
| - Slovakia | 63,406 | 18,900 | - | - | 58,488 |
| - Spain | 67,471 | 40,190 | - | - | 67,471 |
| - Sweden | 41,597 | 48,041 | - | - | 41,597 |
| - Other | 7,666 | - | - | - | 7,666 |
| United States of America | 37,158 | 58,889 | - | - | 6,831 |
| Other countries | 489,035 | 1,025,385 | - | 27,119 | 102,584 |
| - Bosnia and Herzegovina | 59,073 | 132,027 | - | - | 4,064 |
| - Kosovo | - | 48,614 | - | 20 | - |
| - Montenegro | 60,109 | 22,665 | - | - | 6,760 |
| - North Macedonia | 154,398 | 115,535 | - | 29 | 13,129 |
| - Serbia | 140,796 | 579,332 | - | 821 | 3,972 |
| - Albania | - | 27,819 | - | - | - |
| - Canada | 26,681 | 12,133 | - | - | 26,681 |
| - Great Britain | 1,638 | 51,436 | - | 26,249 | 1,638 |
| - Iceland | 7,737 | 8,205 | - | - | 7,737 |
| - Israel | 7,408 | 9,062 | - | - | 7,408 |
| - Kazakhstan | - | 7,507 | - | - | - |
| - Norway | 19,303 | 6,465 | - | - | 19,303 |
| - Other | 11,892 | 4,585 | - | - | 11,892 |
| Total | 2,522,229 | 2,164,463 | 5,217 | 63,332 | 1,966,169 |
| Country | Financial assets amortised cost measured at | Financial assets held for trading | Financial assets through OCI at fair value measured at FV through mandatorily profit or loss | Non-trading financial assets | Derivative financial instruments | Financial assets amortised cost measured at |
|---|---|---|---|---|---|---|
| Slovenia | 360,623 | - | 331,539 | - | 2,450 | 347,976 |
| Other members of European Union | 1,214,523 | - | 951,992 | 2,267 | 36,606 | 1,184,663 |
| - Austria | 96,349 | - | 79,119 | - | - | 96,349 |
| - Belgium | 129,217 | - | 94,088 | - | 11,397 | 129,217 |
| - Bulgaria | 41,233 | - | 3,029 | - | - | 41,233 |
| - Czech Republic | 12,901 | - | - | - | - | 12,901 |
| - Cyprus | 10,187 | - | 1,553 | - | - | 10,187 |
| - Denmark | 5,975 | - | 13,333 | - | - | 5,975 |
| - Finland | 57,440 | - | 114,292 | - | - | 57,440 |
| - France | 184,831 | - | 169,157 | - | 10,087 | 179,844 |
| - Germany | 139,370 | - | 105,082 | - | 10,447 | 114,497 |
| - Greece | - | - | 10,888 | - | - | - |
| - Hungary | 37,346 | - | 5,260 | - | - | 37,346 |
| - Ireland | 53,384 | - | 31,592 | - | - | 53,384 |
| - Italy | 37,472 | - | 13,544 | 99 | - | 37,472 |
| - Latvia | 15,507 | - | - | - | - | 15,507 |
| - Lithuania | 16,798 | - | - | - | - | 16,798 |
| - Luxembourg | 91,588 | - | 27,256 | - | - | 91,588 |
| - Netherlands | 57,523 | - | 112,907 | 2,168 | 4,675 | 57,523 |
| - Poland | 19,772 | - | 17,691 | - | - | 19,772 |
| - Portugal | 46,750 | - | 16,440 | - | - | 46,750 |
| - Romania | 37,802 | - | 4,827 | - | - | 37,802 |
| - Slovakia | 31,523 | - | 31,592 | - | - | 31,523 |
| - Spain | 55,076 | - | 39,097 | - | - | 55,076 |
| - Sweden | 24,753 | - | 61,245 | - | - | 24,753 |
| - Other | 11,726 | - | - | - | - | 11,726 |
| United States of America | 25,966 | - | 62,170 | 849 | - | 4,690 |
| Other countries | 316,503 | 203 | 1,493,095 | - | 41,691 | 60,119 |
| - Bosnia and Herzegovina | 7,648 | - | 177,746 | - | - | 4,056 |
| - Kosovo | - | - | 58,034 | - | 17 | - |
| - Montenegro | 40,672 | - | 20,949 | - | - | 6,780 |
| - North Macedonia | 189,383 | - | 134,268 | - | 5 | 15,260 |
| - Serbia | 25,490 | - | 898,531 | - | - | - |
| - Albania | - | - | 25,866 | - | - | - |
| - Canada | 3,007 | - | 21,147 | - | - | 3,007 |
| - Great Britain | - | - | 54,178 | - | 41,669 | - |
| - Iceland | 7,746 | - | 7,892 | - | - | 7,746 |
| - Israel | - | - | 9,053 | - | - | - |
| - Kazakhstan | - | - | 12,970 | - | - | - |
| - Norway | 16,186 | - | 11,206 | - | - | 16,186 |
| - Russia | - | - | 2,026 | - | - | - |
| - Switzerland | 19,287 | 203 | 54,572 | - | - | - |
| - Other | 7,084 | - | 4,657 | - | - | 7,084 |
| Total | 1,917,615 | 203 | 2,838,796 | 3,116 | 80,747 | 1,597,448 |
Other members of the European Union included in the line item ‘Other’ are Malta and Estonia. Other members of the ‘Other countries’ in the line item ‘Other’ are Egypt, Uzbekistan, and
| NLB Group | NLB | |
|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | |
| A | 92.94 | 88.90 |
| B | 6.91 | 11.10 |
| C | 0.08 | 0.00 |
| D and E | 0.08 | 0.00 |
| Total | 100.00 | 100.00 |
| NLB Group | NLB | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Internal rating | A | B | C | D | Total | A | B | C | D | Total | |
| Financial assets measured at fair value through other comprehensive income | 28,421 | - | - | - | 28,421 | 28,421 | - | - | - | 28,421 | |
| Financial assets measured at amortised cost | - | - | - | - | - | - | - | - | - | - | |
| - debt securities | 9,484 | - | - | - | 9,484 | 9,484 | - | - | - | 9,484 | |
| - loans and advances to banks | - | - | - | - | - | 90,153 | - | - | - | 90,153 | |
| - loans and advances to customers | - | - | - | - | - | - | - | 7,050 | - | 7,050 | |
| Total | 37,905 | - | - | - | 37,905 | 128,058 | - | 7,050 | - | 135,108 |
| NLB Group | NLB | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Internal rating | A | B | C | D | Total | A | B | C | D | Total | ||
| Financial assets measured at fair value through other comprehensive income | 28,014 | - | - | - | 28,014 | 28,014 | - | - | - | 28,014 | ||
| Financial assets measured at amortised cost | - | - | - | - | - | - | - | - | - | - | ||
| - debt securities | 2,612 | - | - | - | 2,612 | 2,612 | - | - | - | 2,612 | ||
| - loans and advances to banks | - | - | - | - | - | 84,713 | - | - | - | 84,713 | ||
| - loans and advances to customers | - | - | - | - | - | - | - | 6,613 | - | 6,613 | ||
| Total | 30,626 | - | - | - | 30,626 | 115,339 | - | 6,613 | - | 121,952 |
| in EUR thousands | Financial assets held for trading | Non-trading financial assets mandatorily at FV through P\&L | Financial assets measured at FV through OCI | Financial assets measured at amortised cost | Financial leases | Derivatives for hedge accounting | Total |
|---|---|---|---|---|---|---|---|
| Cash and obligatory reserves with central banks, and other demand deposits at banks | - | - | - | 6,103,561 | - | - | 6,103,561 |
| Securities | - | 14,175 | 2,251,556 | 2,522,229 | - | - | 4,787,960 |
| Bonds | - | 5,217 | 1,836,604 | 2,522,229 | - | - | 4,364,050 |
| Shares | - | 6,300 | 87,092 | - | - | - | 93,392 |
| Commercial bills | - | - | 26,022 | - | - | - | 26,022 |
| Treasury bills | - | - | 301,838 | - | - | - | 301,838 |
| Investment funds | - | 2,658 | - | - | - | - | 2,658 |
| Derivatives | 15,718 | - | - | - | - | 47,614 | 63,332 |
| Loans and receivables | - | - | - | 13,945,973 | 336,268 | - | 14,282,241 |
| Loans to governments | - | - | - | 386,059 | 232 | - | 386,291 |
| Loans to banks | - | - | - | 547,640 | - | - | 547,640 |
| Loans to financial organisations | - | - | - | 91,460 | 63 | - | 91,523 |
| Loans to individuals | - | - | - | 6,986,045 | 100,770 | - | 7,086,815 |
| Loans to other customers | - | - | - | 5,934,769 | 235,203 | - | 6,169,972 |
| Other financial assets | - | - | - | 165,962 | - | - | 165,962 |
| Total financial assets | 15,718 | 14,175 | 2,251,556 | 22,737,725 | 336,268 | 47,614 | 25,403,056 |
| in EUR thousands | Financial assets held for trading | Non-trading financial assets mandatorily at FV through P\&L | Financial assets measured at FV through OCI | Financial assets measured at amortised cost | Financial leases | Derivatives for hedge accounting | Total |
|---|---|---|---|---|---|---|---|
| Cash and obligatory reserves with central banks, and other demand deposits at banks | - | - | - | 5,271,365 | - | - | 5,271,365 |
| Securities | 203 | 19,031 | 2,919,203 | 1,917,615 | - | - | 4,856,052 |
| Bonds | - | 3,116 | 2,506,224 | 1,917,615 | - | - | 4,426,955 |
| Shares | - | 5,579 | 80,407 | - | - | - | 85,986 |
| Commercial bills | - | - | 21,824 | - | - | - | 21,824 |
| Treasury bills | 203 | - | 310,748 | - | - | - | 310,951 |
| Investment funds | - | 10,336 | - | - | - | - | 10,336 |
| Derivatives | 21,385 | - | - | - | - | 59,362 | 80,747 |
| Loans and receivables | - | - | - | 13,102,729 | 193,222 | - | 13,295,951 |
| Loans to governments | - | - | - | 303,086 | 357 | - | 303,443 |
| Loans to banks | - | - | - | 222,965 | - | - | 222,965 |
| Loans to financial organisations | - | - | - | 116,046 | 32 | - | 116,078 |
| Loans to individuals | - | - | - | 6,550,704 | 70,966 | - | 6,621,670 |
| Loans to other customers | - | - | - | 5,909,928 | 121,867 | - | 6,031,795 |
| Other financial assets | - | - | - | 177,823 | - | - | 177,823 |
| Total financial assets | 21,588 | 19,031 | 2,919,203 | 20,469,532 | 193,222 | 59,362 | 23,681,938 |
| in EUR thousands | NLB | 31 Dec 2023 | Financial assets held for trading | Non-trading financial assets mandatorily at FV through P\&L | Financial assets measured at FV through OCI | Financial assets measured at amortised cost | Derivatives for hedge accounting | Total | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash and obligatory reserves with central banks, and other demand deposits at banks | - | - | 4,318,032 | - | 4,318,032 | |||||
| Securities | - | 8,858 | 1,023,012 | 1,966,169 | - | 2,998,039 | ||||
| Bonds | - | - | 962,084 | 1,966,169 | - | 2,928,253 | ||||
| Shares | - | 6,300 | 60,928 | - | - | 67,228 | ||||
| Investment funds | - | 2,558 | - | - | - | 2,558 | ||||
| Derivatives | 17,957 | - | - | 47,614 | 65,571 | |||||
| Loans and receivables | - | 7,785 | - | 7,297,294 | - | 7,305,079 | ||||
| Loans to governments | - | - | - | 118,220 | - | 118,220 | ||||
| Loans to banks | - | - | - | 149,011 | - | 149,011 | ||||
| Loans to financial organisations | - | - | - | 384,995 | - | 384,995 | ||||
| Loans to individuals | - | - | - | 3,543,603 | - | 3,543,603 | ||||
| Loans to other customers | - | 7,785 | - | 3,101,465 | - | 3,109,250 | ||||
| Other financial assets | - | - | - | 101,596 | - | 101,596 | ||||
| Total financial assets | 17,957 | 16,643 | 1,023,012 | 13,683,091 | 47,614 | 14,788,317 |
| in EUR thousands | NLB | 31 Dec 2022 | Financial assets held for trading | Non-trading financial assets mandatorily at FV through P\&L | Financial assets measured at FV through OCI | Financial assets measured at amortised cost | Derivatives for hedge accounting | Total | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash and obligatory reserves with central banks, and other demand deposits at banks | - | - | 3,339,024 | - | 3,339,024 | ||||||
| Securities | 203 | 7,519 | 1,334,061 | 1,597,448 | - | 2,939,231 | |||||
| Bonds | - | - | 1,196,760 | 1,597,448 | - | 2,794,208 | |||||
| Shares | - | 5,211 | 42,784 | - | - | 47,995 | |||||
| Treasury bills | 203 | - | 94,517 | - | - | 94,720 | |||||
| Investment funds | - | 2,308 | - | - | - | 2,308 | |||||
| Derivatives | 21,489 | - | - | 59,362 | 80,851 | ||||||
| Loans and receivables | - | 7,892 | - | 6,405,038 | - | 6,412,930 | |||||
| Loans to governments | - | - | - | 124,736 | - | 124,736 | |||||
| Loans to banks | - | - | - | 350,625 | - | 350,625 | |||||
| Loans to financial organisations | - | - | - | 286,504 | - | 286,504 | |||||
| Loans to individuals | - | - | - | 3,036,499 | - | 3,036,499 | |||||
| Loans to other customers | - | 7,892 | - | 2,606,674 | - | 2,614,566 | |||||
| Other financial assets | - | - | - | 114,399 | - | 114,399 | |||||
| Total financial assets | 21,692 | 15,411 | 1,334,061 | 11,455,909 | 59,362 | 12,886,435 |
As at 31 December 2023 and 31 December 2022, all of NLB Group’s financial liabilities, except for derivatives designated as hedging instruments, trading liabilities, and financial liabilities measured at fair value through profit or loss, were carried at amortised cost.
NLB Group defines market risk as the risk of potential financial losses due to changes in rates and/or market prices (exchange rates, credit spreads, and equity prices), or in parameters that example in the case of trading book positions. However, for the banking book positions they are reflected in the revaluation reserve. The exposure to the market risk is to a certain degree in value.
The Global Risk Department of NLB is independent from the trading activities and reports to the Bank’s Assets and Liabilities Committee (ALCO). Global Risk also monitors and limits are monitored daily and reported to the ALCO committee on a regular basis. The Bank uses a wide selection of quantitative and qualitative tools for measuring, managing, and reporting scenarios, other market risk mitigants (concentration of exposures, gap limits, stop-loss limits, etc.), net interest income sensitivity, economic value of equity, and economic capital. Stress-testing is also conducted.
In the area of currency risk, NLB Group pursues the goal of low to medium exposure. NLB monitors the open position of NLB Group on an ongoing basis. The orientation of NLB Group economic value of equity arising from changed market interest rates. The conclusion of transactions involving derivatives at NLB is limited to the servicing of the clients’ and hedging of the risks.
With financial instruments in NLB Group, the trading activities in other NLB Group members are very restricted. For monitoring and managing NLB Group’s exposure to market risks, unified methodologies are applied across entities. The methodologies are in line with regulatory requirements on individual and consolidated levels, while reporting to the regulator on the consolidated level is carried out using the appropriate frameworks.
the FX risk with a usage of combination of sensitivity analysis, VaR, scenarios, and stress-testing. In the trading book, similar to the other market risks, risk is managed on the basis of VaR limits adopted policy of managing market risk in the trading book of NLB. The trading FX risk is managed on an integrated basis at a portfolio level. NLB monitors and manages FX risk in the bank composed to protect Common Equity Tier 1 against the negative effects of the volatility of the FX rates, whilst limiting the volatility in the income statement. FX exposures in banking book currency risk policy, which also includes a limit system and is in line with the parent Bank’s guidelines and standards, as well as local regulatory requirements. Policies are confirmed by either Group currency risk exposure on a monthly basis for each member and on the consolidated level. NLB Group banks follow the guidelines for managing FX lending in NLB Group. The guidelines include identifying hidden risks, and tail-event risks related to FX lending, to mitigate the respective risk, to internalise the respective costs, and to hold adequate capital with respect to FX which a daily limit is set, are monitored daily. FX positions are managed on the currency level so that they are always within the limits. Regarding structural FX positions on a consolidation the closing FX rate on the reporting date. Foreign exchange differences of non-euro assets and liabilities against euro are recognised in OCI, and therefore affect shareholder’s equity and capital exposure, including matched funding of assets and liabilities. Exposure to currency risks is discussed at daily liquidity meetings and monthly meetings of the ALCO committee of the NLB.
| EUR | RSD | USD | CHF | |
|---|---|---|---|---|
| Financial assets | ||||
| Cash, cash balances at central banks, and other demand deposits at banks | 5,117,465 | 468,397 | 37,052 | 38,933 |
| Financial assets held for trading | 15,718 | - | - | - |
| Non-trading financial assets mandatorily at fair value through profit or loss | 7,875 | - | 6,300 | - |
| Financial assets measured at fair value through other comprehensive income | 1,629,595 | 389,392 | 138,401 | - |
| Financial assets measured at amortised cost | ||||
| - debt securities | 2,112,344 | 117,940 | 96,660 | - |
| - loans and advances to banks | 173,510 | 294,884 | 41,070 | 28,361 |
| - loans and advances to customers | 11,215,215 | 1,049,206 | 19,600 | 47,409 |
| - other financial assets | 95,883 | 18,890 | 23,091 | 47 |
| Derivatives - hedge accounting | 47,614 | - | - | - |
| Fair value changes of the hedged items in portfolio hedge of interest rate risk | (10,207) | - | - | - |
| Total financial assets | 20,405,012 | 2,338,709 | 362,174 | 114,750 |
| Financial liabilities | ||||
| Financial liabilities held for trading | 13,217 | - | - | - |
| EUR | RSD | USD | CHF | |
|---|---|---|---|---|
| Financial liabilities measured at fair value through profit or loss | 2,914 | 532 | - | - |
| Derivatives - hedge accounting | 3,540 | - | - | - |
| Financial liabilities measured at amortised cost | ||||
| - deposits from banks and central banks | 55,741 | 14,320 | 5,113 | 6,199 |
| - borrowings from banks and central banks | 127,206 | - | 13,213 | - |
| - due to customers | 16,968,455 | 1,418,343 | 360,062 | 212,261 |
| - borrowings from other customers | 99,718 | - | - | - |
| - debt securities issued | 1,338,235 | - | - | - |
| - other financial liabilities | 249,881 | 41,067 | 36,216 | 1,808 |
| Total financial liabilities | 18,858,907 | 1,474,262 | 414,604 | 220,268 |
| Net on-balance sheet financial position | 1,546,105 | 864,447 | (52,430) | (105,518) |
| Derivative financial instruments | (233,578) | (25,498) | 55,204 | 123,650 |
| Net financial position | 1,312,527 | 838,949 | 2,774 | 18,132 |
| EUR | RSD | USD | CHF | |
|---|---|---|---|---|
| Total financial assets | 19,235,733 | 1,834,866 | 323,743 | 209,176 |
| Total financial liabilities | 18,039,672 | 1,188,425 | 416,320 | 208,949 |
| Net on-balance sheet financial position | 1,196,061 | 646,441 | (92,577) | 227 |
| Derivative financial instruments | (75,897) | 42,632 | 82,411 | (2,031) |
| Net financial position | 1,120,164 | 689,073 | (10,166) | (1,804) |
| EUR | RSD | USD | CHF | |
|---|---|---|---|---|
| Financial assets | ||||
| Cash, cash balances at central banks, and other demand deposits at banks | 4,284,634 | 544 | 7,518 | 8,844 |
| Financial assets held for trading | 17,957 | - | - | - |
| Non-trading financial assets mandatorily at fair value through profit or loss | 10,343 | - | 6,300 | - |
| Financial assets measured at fair value through other comprehensive income | 989,555 | - | 28,234 | - |
| Financial assets measured at amortised cost | ||||
| - debt securities | 1,891,752 | - | 59,625 | - |
| - loans and advances to banks | 149,011 | - | - | - |
| - loans and advances to customers | 7,085,715 | - | 13,205 | 49,112 |
| - other financial assets | 78,522 | 3 | 23,036 | 4 |
| Derivatives - hedge accounting | 47,614 | - | - | - |
| Fair value changes of the hedged items in portfolio hedge of interest rate risk | (12,514) | - | - | - |
| Total financial assets | 14,542,589 | 547 | 137,918 | 57,960 |
| EUR | RSD | USD | CHF | |
|---|---|---|---|---|
| Financial liabilities held for trading | 17,510 | - | - | - |
| Financial liabilities measured at fair value through profit or loss | 3,210 | - | - | - |
| Derivatives - hedge accounting | 1,420 | - | - | - |
| Financial liabilities measured at amortised cost | ||||
| - deposits from banks and central banks | 111,289 | 78 | 6,915 | 11,607 |
| - borrowings from banks and central banks | 69,584 | - | 13,213 | - |
| - due to customers | 11,595,732 | 23 | 148,346 | 84,643 |
| - debt securities issued | 1,338,235 | - | - | - |
| - other financial liabilities | 173,942 | 2 | 23,703 | 135 |
| Total financial liabilities | 13,310,922 | 103 | 192,177 | 96,385 |
| Net on-balance sheet financial position | 1,231,667 | 444 | (54,259) | (38,425) |
| Derivative financial instruments | (157,517) | 5 | 55,204 | 39,957 |
| Net financial position | 1,074,150 | 449 | 945 | 1,532 |
| Total financial assets | 12,552,661 | 474 | 130,881 | 115,791 |
|---|---|---|---|---|
| Total financial liabilities | 11,905,320 | 104 | 196,776 | 86,245 |
| Net on-balance sheet financial position | 647,341 | 370 | (65,895) | 29,546 |
| Derivative financial instruments | (79,626) | - | 65,535 | (29,451) |
| Net financial position | 567,715 | 370 | (360) | 95 |
Other mostly relates to exposures in currency GBP and CAD.
| NLB Group and NLB | 31 Dec 2023 | 31 Dec 2022 | |
|---|---|---|---|
| Scenarios | USD | +/-13.32% | +/-9.27% |
| CHF | +/-9.67% | +/-7.88% | |
| CZK | +/-7.10% | +/-5.70% | |
| RSD | +/-0.55% | +/-0.40% | |
| MKD | +/-1.82% | +/-1.62% | |
| JPY | +/-19.69% | +/-12.35% | |
| AUD | +/-9.20% | +/-9.91% | |
| HUF | +/-20.39% | +/-13.43% | |
| HRK | - | +/-0.98% | |
| BAM | +/-0% | +/-0% |
| NLB Group | NLB | NLB Group | |
|---|---|---|---|
| Appreciation of USD | (342) | - | (333) |
| CHF | (730) | 1,330 | (662) |
| CZK | - | - | (2) |
| RSD | (125) | 4,775 | 11 |
| MKD | 4 | 5,234 | 1 |
| Other | 100 | 93 | 251 |
| Effects on comprehensive income | (1,093) | 11,432 | (734) |
| Depreciation of USD | 262 | - | 277 |
| CHF | 601 | (1,096) | 565 |
| CZK | - | - | 2 |
| RSD | 124 | (4,724) | (11) |
| MKD | (4) | (5,047) | (1) |
| Other | (70) | (93) | (203) |
| Effects on comprehensive income | 913 | (10,960) | 629 |
Market risk exposure in the trading book arises mostly as a result of the changes in interest rates, credit spreads, FX rates, and equity prices. The Management is monitored daily by the Global Risk Department. NLB uses an internal VaR model based on the variance-covariance method for other market risks. The daily calculation of the VAR value is based on a 10-day holding position period.
Interest rate risk is the risk to NLB Group’s capital and profit or loss arising from changes in market interest rates. Interest rate risk is managed based on the positions in the balance sheet assets and liabilities which are divided into the trading and banking book according to regulatory standards. It takes into account the positions in each currency. Interest rate risk management is based on general Basel standards on interest rate management in the banking book (IRRBB; hereinafter: ‘Standards’) and European Banking Authority guidelines. In the trading book, interest rate risk is managed with the adopted policy for managing market risk in the trading book of NLB.
The interest rate risk in the banking book is measured and monitored within a framework of interest rate risk management. NLB Group manages interest rate risk exposure through application of two main measures:
Optionality risk is mainly derived from behavioral options, reflected in prepayments and expected cash flows. Non-performing exposures, as well as off-balance sheet items, are considered when measuring interest rate risk exposure. The interest rate risk is closely measured, monitored, and managed. NLB stabilizes its interest rate margin primarily with the pricing policy and a fund transfer pricing policy. An important part of the interest rate risk management is presented by liquidity reserves, while it also contributes to the stability of the interest rate margin.
NLB Group also manages interest rate risk by using plain vanilla derivative financial instruments (interest rate swap agreements), most of which are treated according to hedge accounting rules. Each member of NLB Group is responsible for its own interest rate risk policy, which includes the limit system in accordance with regulatory requirements. NLB regularly monitors the interest rate risk exposure of each individual member of NLB Group in accordance with the Standards for Risk Management in NLB Group.
Interest rate risk in the banking book is measured, monitored, and reported by the Global Risk Department (weekly in the case of NLB). Exposure to interest rate risk is discussed on ALCO monthly on NLB’s individual level and quarterly on the consolidated level.
The following table presents open net interest rate risk positions by the most important currencies of NLB Group, irrespective of their behavioral characteristics:
| Currency | 1 - 3 years | 3 - 5 years | 5 - 10 years | Over 10 Years |
|---|---|---|---|---|
| EUR thousands |
The analysis of interest income sensitivity for the horizon of the next 12 months assumes a sudden change in interest rates of 50/100 basis points on the amount of net interest income.
| Currency | 1 - 3 years | 3 - 5 years | 5 - 10 years | Over 10 Years |
|---|---|---|---|---|
| EUR | (2,109,587) | 1,278,722 | 1,519,103 | 756,545 |
| RSD | 573,943 | 195,097 | 69,386 | 5 |
| MKD | 253,734 | 25,929 | (5,110) | 5,960 |
| Other | (206,743) | 130,171 | 87,324 | 3,970 |
in EUR thousands
| Currency | 1 - 3 years | 3 - 5 years | 5 - 10 years | Over 10 Years |
|---|---|---|---|---|
| EUR | (2,061,940) | 1,461,068 | 1,389,104 | 667,013 |
| RSD | 338,852 | 213,972 | 52,070 | 2 |
| MKD | 192,033 | 13,086 | 17,792 | 10,070 |
| Other | (131,316) | 73,414 | 52,832 | 6,652 |
in EUR thousands
| Currency | 1 - 3 years | 3 - 5 years | 5 - 10 years | Over 10 Years |
|---|---|---|---|---|
| EUR | (1,772,291) | 1,004,157 | 1,436,836 | 645,084 |
| Other | (176,222) | 19,729 | 20,418 | - |
in EUR thousands
| Currency | 1 - 3 years | 3 - 5 years | 5 - 10 years | Over 10 Years |
|---|---|---|---|---|
| EUR | (1,871,890) | 1,050,116 | 1,023,946 | 550,833 |
| Other | (81,512) | 29,436 | 395 | 7,189 |
Net interest income sensitivity: 57,595
Net interest income sensitivity - as % of Equity: 2.22%
The ‘EVE’ method is a measure of the sensitivity of changes in market interest rates on the economic value of financial instruments. The EVE represents the long-term effects of changing interest rates under the prescribed standardized interest rate shock scenarios.
| NLB Group | 31 Dec 2023 | 31 Dec 2022 | NLB | ||||
|---|---|---|---|---|---|---|---|
| Interest risk in banking book - EVE | 108,489 | 122,276 | 60,747 | ||||
| Interest risk in banking book - EVE as % of Equity | 4.19% | 5.60% | 3.36% |
Liquidity risk is the risk of the NLB Group being unable to fulfil current or future expected and unexpected cash requirements, across all time horizons. The risk may stem from the related to funding liquidity risk (the NLB Group’s liquidity on the liabilities-side) and market liquidity risk (counterbalancing capacity on the assets-side). On the liabilities-side, liquidity because of its incapacity to provide sufficient funds to settle its obligations, is forced to raise the necessary funds at a cost which significantly exceeds the normal cost. On the assets-side, the case of significant reduction of market value of an individual financial instrument and may result in insufficient value of counterbalancing capacity to cover the NLB Group’s liquidity needs.
In the risk identification process, first the reasons for the realisation of each identified material risk are analysed and grouped together. Part of liquidity is affected by the realisation of the material risks: the liabilities side, the assets side, and intraday liquidity risk. The origin of each risk is determined as being internal, external to the Bank, or external shock; meaning it comes from outside the Bank – e.g., a major macroeconomic event, physical or transition event, ESG rating downgrade. Based on the identified material risks, there are factors that are expected to trigger a substantial deterioration of the Group’s liquidity position. This deterioration may take place in the form of an increase in outflows, a decrease in inflows.
Liquidity risk is defined as an important risk type for NLB Group, and one which must be managed carefully. NLB Group has a liquidity risk management framework in place that enables maintaining a long-term liquidity position within the requirements set by the regulator. By maintaining a smooth long-term maturity profile, limiting dependence on wholesale funding, and holding sufficient liquidity even under severely adverse conditions. The Management Board approves the Liquidity Risk Management Policy, which outlines the key principles for the Bank’s liquidity management.
Approved limits and targets. ALCO oversees the development of the Bank’s funding and liquidity position and decides on liquidity risk-related issues in NLB Group. Risk tolerance for liquidity is defined to ensure that the Group can meet its liabilities at all times, even if a specific stress scenario is realised. NLB Group measures and manages its liquidity in two stages: - Static view (current exposure), - Forward-looking and stress-testing of liquidity risk.
The objectives are as follows: - ensuring a sufficient amount of liquidity for the settlement of all NLB Group’s liabilities; - minimising the costs of maintaining liquidity; - determining an adequate amount of liquidity for different situations and stress scenarios; - anticipating emergencies or crisis conditions, and implementing contingency plans in flows and stress-testing of liquidity risk; - preparing proposals for establishing additional financial assets as collateral for sources of funding; - to ensure that climate-related and environmental factors are incorporated into liquidity risk management and liquidity reserves calibration.
Overall assessment of the liquidity position of NLB Group is assessed in the Internal Liquidity Adequacy Assessment Process (ILAAP), which includes a formal statement on liquidity adequacy, supported by an analysis of ILAAP outcomes. The ILAAP process is integral to risk management frameworks and is aligned with the NLB Group’s management board. Based on the Risk Appetite, the NLB Group prepares a business plan and financial forecasts which are crucial for defining internal capital needs (the ICAAP process) and the normative and economic perspectives and supplemented by the stress-testing programme.
NLB Group performs stress tests on a regular basis for a variety of bank-specific and market-wide scenarios to assess liquidity strain and to ensure that current exposures remain in accordance with the NLB Group’s established liquidity risk tolerance. Stress test outcomes are used to adjust its liquidity risk management framework, counterbalancing capacity, and to develop effective contingency plans.
NLB Group regularly performs stress tests with the aim of testing the liquidity stability and the availability of liquidity in accordance with the liquidity regulation (CRR/CRD), with monitoring and reporting of the liquidity coverage ratio (LCR) according to the Delegated Act and net stable funding ratio (NSFR). This also includes consolidated levels. In accordance with the Commission Implementing Regulation (EU), NLB Group regularly monitors and issues quarterly reports on asset encumbrance. The Group manages advance, based on the planning and monitoring of cash flows.
Each NLB Group member is responsible for its own liquidity position and carries out the following activities:
NLB as a parent bank. Reporting to NLB by all Group members is performed daily. Global Risk gives guidelines and defines minimal standards for Group members regarding liquidity risk responsible for ensuring adequate liquidity via the necessary sources of funding and their appropriate diversification and maturity, and by managing liquidity reserves and fulfilling the requirements.
Member towards liquidity risk is regularly monitored and reported to ALCO, and to local Assets and Liabilities Committees.
NLB Group has reserves must become available on short notice. Liquidity reserves are comprised of cash, the settlement account at the central bank above reserve requirement, debt securities valued at market operations on the basis of which the Bank may generate the requisite liquidity at any time. The available liquidity reserves are liquidity reserves decreased by the required balances for the claims for different purposes (secured funding). The structure of liquidity reserves is shown in the following table.
| in EUR thousands | NLB Group | NLB | |||
|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Liquidity reserves | 4,958,969 | 4,020,397 | 4,142,013 | 3,180,523 | |
| Cash, cash balances at central banks* | 4,569,721 | 4,542,597 | 2,810,064 | 2,679,404 | |
| Trading book securities** | - | 203 | - | 203 | |
| Banking book securities** | 678,445 | 624,278 | 678,445 | 624,278 | |
| Total available liquidity reserves | 10,207,135 | 9,187,475 | 7,630,522 | 6,484,408 | |
| Encumbered liquidity reserves | 41,502 | 122,963 | 41,502 | 5,451 |
| in EUR thousands | NLB Group | NLB |
|---|---|---|
| Carrying amount of encumbered assets | 31 Dec 2023 | |
| Fair value of encumbered securities | ||
| Carrying amount of unencumbered assets | ||
| Fair value of unencumbered securities | ||
| Loans on |
| NLB Group | NLB | |||
|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |
| Equity instruments | 293,343 | 262,947 | 265,757 | 239,405 |
| Loans and advances other than loans on demand | 175,307 | 167,431 | 51,190 | 16,867 |
| Other assets | 13,599,848 | 12,876,402 | 6,408,890 | 4,721,729 |
| Total | 14,068,498 | 13,306,780 | 6,725,837 | 4,978,001 |
| NLB Group | NLB | |||
|---|---|---|---|---|
| Carrying amount of encumbered assets | Fair value of encumbered securities | Carrying amount of unencumbered assets | Fair value of unencumbered securities | |
| 31 Dec 2022 | Loans on demand | 1,109,016 | - | 3,673,152 |
| Equity instruments | 742 | 742 | 95,580 | |
| Debt securities | 77,522 | 74,992 | 4,682,208 | |
| Loans and advances other than loans on demand | 27,000 | - | 13,446,808 | |
| Other assets | - | - | 1,048,212 | |
| Total | 1,214,280 | 22,945,960 | 181,258 | 13,758,075 |
| in EUR thousands | NLB Group | NLB | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 |
|---|---|---|---|---|---|---|
| Derivatives | 2,486 | 9,638 | 3,238 | 13,753 | 2,486 | 9,638 |
| Deposits | - | - | 62,755 | 65,048 | - | - |
| Other sources of encumbrance | 2,861 | 1,291,180 | 2,901 | 1,135,479 | - | 159,524 |
| Total | 5,347 | 1,300,818 | 68,894 | 1,214,280 | 2,486 | 169,162 |
As at 31 December 2023, NLB Group and NLB had a large share of unencumbered assets. Other sources of encumbrance mostly relate to the obligatory reserve. On the NLB Group level, the amount of encumbered assets equalled EUR 1,301 million (31 December 2022: EUR 1,214 million).
The tables below illustrate the cash flows from non-derivative financial instruments by residual maturities at the end of the year. The amounts disclosed in the table are as at the end of the reporting period.
| Carrying amount | Total | Up to 1 Month | 1 Month to 3 Months | 3 Months to | |
|---|---|---|---|---|---|
| Cash, cash balances at central banks, and other demand deposits at banks | 6,103,561 | 6,103,561 | - | - | |
| Non-trading financial assets mandatorily at fair value through profit or loss | 14,175 | 1,009 | 707 | 11,586 | |
| Financial assets measured at fair value through other comprehensive income | 2,251,556 | 283,269 | 222,258 | 434,430 | |
| Financial assets measured at amortised cost | - debt securities | 2,522,229 | 64,238 | 115,969 | 273,677 |
| - loans and advances to banks | 547,640 | 500,739 | 43,829 | 1,572 | |
| - loans and advances to customers | 13,734,601 | 691,501 | 622,566 | 3,068,830 | |
| - other financial assets | 165,962 | 132,368 | 1,150 | 1,732 | |
| Total financial assets | 25,339,724 | 7,776,685 | 1,006,479 | 3,791,827 |
| Carrying amount | Total | Up to 1 Month | 1 Month to 3 Months | 3 Months to | |
|---|---|---|---|---|---|
| Financial liabilities measured at fair value through profit or loss | 4,482 | - | - | - | |
| Financial liabilities measured at amortised cost | - deposits from banks and central banks | 95,283 | 75,818 | - | 15,330 |
| - borrowings from banks and central banks | 140,419 | 1,198 | 1,417 | 11,311 | |
| - due to customers | 20,732,722 | 17,921,304 | 258,812 | 1,661,298 | |
| - borrowings from other customers | 99,718 | 1,101 | 1,835 | 8,261 | |
| - debt securities issued | 1,338,235 | - | 4,079 | 84,166 | |
| - other financial liabilities | 357,116 | 274,348 | 6,915 | 9,111 | |
| Credit risk related commitments | 3,196,771 | 3,196,771 | - | - | |
| Non-financial guarantees | 963,321 | 76,594 | 97,262 | 338,287 | |
| Total financial liabilities and credit-related commitments | 26,928,067 | 21,547,134 | 370,320 | 2,127,764 |
| Carrying amount | Total | Up to 1 Month | 1 Month to 3 Months | 3 Months to |
|---|---|---|---|---|
| Cash, cash balances at central banks, and other demand deposits at banks | 5,271,365 | 5,271,370 | - | - |
| Non-trading financial assets mandatorily at fair value through profit or loss | 19,031 | 6,028 | - | - |
| 2,919,203 | 3,155,399 | 622,857 | 210,878 | 413,150 |
|---|---|---|---|---|
| - debt securities | 1,917,615 | 2,015,086 | 21,204 | 93,066 | 220,454 |
|---|---|---|---|---|---|
| - loans and advances to banks | 222,965 | 223,182 | 216,396 | 763 | 4,495 |
| - loans and advances to customers | 13,072,986 | 15,075,576 | 625,837 | 674,761 | 2,959,896 |
| - other financial assets | 177,823 | 177,822 | 145,170 | 5,804 | 3,100 |
| 23,600,988 | 25,937,466 | 6,908,862 | 985,272 | 3,601,095 |
|---|---|---|---|---|
| 1,796 | 1,796 | - | - | - |
|---|---|---|---|---|
| - deposits from banks and central banks | 106,414 | 106,787 | 85,924 | 101 | 164 |
|---|---|---|---|---|---|
| - borrowings from banks and central banks | 198,609 | 201,625 | 1,386 | 2,067 | 5,809 |
| - due to customers | 20,027,726 | 20,069,028 | 17,972,715 | 301,188 | 958,293 |
| - borrowings from other customers | 82,482 | 85,495 | 651 | 1,413 | 6,247 |
| - debt securities issued | 815,990 | 1,176,970 | - | 4,427 | 52,572 |
| - other financial liabilities | 294,463 | 294,463 | 200,302 | 8,979 | 22,610 |
| 3,090,681 | 3,090,681 | 3,090,286 | 70 | 75 |
|---|---|---|---|---|
| 862,779 | 862,779 | 238,213 | 65,243 | 155,752 |
|---|---|---|---|---|
| 25,480,940 | 25,889,624 | 21,589,477 | 383,488 | 1,201,522 |
|---|---|---|---|---|
| Carrying amount | Total | Up to 1 Month | 1 Month to 3 Months | 3 Months to | ||
|---|---|---|---|---|---|---|
| Cash, cash balances at central banks, and other demand deposits at banks | 4,318,032 | 4,318,032 | - | - | ||
| Non-trading financial assets mandatorily at fair value through profit or loss | 16,643 | 17,515 | 4 | 43 | 12,714 | |
| Financial assets measured at fair value through other comprehensive income | 1,023,012 | 1,063,468 | 11,640 | 38,854 | 241,365 | |
| Financial assets measured at amortised cost | - debt securities | 1,966,169 | 2,202,821 | 6,764 | 30,167 | 154,110 |
| - loans and advances to banks | 149,011 | 201,826 | 5,933 | 6,719 | 15,928 | |
| - loans and advances to customers | 7,148,283 | 8,487,918 | 405,580 | 212,509 | 1,284,363 | |
| - other financial assets | 101,596 | 101,597 | 70,972 | 1,131 | 1,583 |
| 14,722,746 | 16,393,177 | 4,818,925 | 289,423 | 1,710,063 |
|---|---|---|---|---|
| 3,210 | 3,210 | 1,234 | - | - |
|---|---|---|---|---|
| - | - | - | - | - |
|---|---|---|---|---|
| Item | 2023 | 2022 | 2021 | 2020 | 2019 |
|---|---|---|---|---|---|
| Deposits from banks and central banks | 147,002 | 147,442 | 127,726 | - | 15,330 |
| Borrowings from banks and central banks | 82,797 | 83,851 | - | - | 1,654 |
| Due to customers | 11,881,563 | 11,919,187 | 10,985,068 | 97,176 | 540,607 |
| Debt securities issued | 1,338,235 | 1,852,163 | - | 4,079 | 84,166 |
| Other financial liabilities | 198,020 | 198,020 | 149,601 | 6,481 | 6,871 |
| Credit risk related commitments | 2,239,479 | 2,239,479 | 2,239,479 | - | - |
| Non-financial guarantees | 625,095 | 625,095 | 29,712 | 68,768 | 196,286 |
| Total financial liabilities and credit-related commitments | 16,515,401 | 17,068,447 | 13,532,820 | 176,504 | 844,914 |
| Carrying amount | Total | Up to 1 Month | 1 Month to 3 Months | 3 Months to 1 Year | 1 Year to 5 Years | Over 5 Years | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Cash, cash balances at central banks, and other demand deposits at banks | 3,339,024 | 3,339,024 | 3,339,024 | - | - | - | - | |||
| Non-trading financial assets mandatorily at fair value through profit or loss | 15,411 | 16,201 | 553 | 102 | 330 | 7,378 | 7,838 | |||
| Financial assets measured at fair value through other comprehensive income | 1,334,061 | 1,398,203 | 66,285 | 105,372 | 212,998 | 834,228 | 179,320 | |||
| Financial assets measured at amortised cost | - debt securities | 1,597,448 | 1,681,693 | 20,826 | 30,251 | 141,751 | 848,140 | 640,725 | ||
| - loans and advances to banks | 350,625 | 390,583 | 112,305 | 55,403 | 40,168 | 101,332 | 81,375 | |||
| - loans and advances to customers | 6,054,413 | 6,975,507 | 326,426 | 210,512 | 1,174,802 | 2,828,633 | 2,435,134 | |||
| - other financial assets | 114,399 | 114,399 | 90,598 | 375 | 89 | 23,320 | 17 | |||
| Total financial assets | 12,805,381 | 13,915,610 | 3,956,017 | 402,015 | 1,570,138 | 4,643,031 | 3,344,409 | |||
| Financial liabilities measured at fair value through profit or loss | 2,514 | 2,514 | 1,786 | - | - | 728 | - | |||
| Financial liabilities measured at amortised cost | - deposits from banks and central banks | 212,656 | 212,967 | 193,526 | - | - | 19,441 | - | ||
| - borrowings from banks and central banks | 57,292 | 58,819 | 13,086 | 681 | - | 45,052 | - | |||
| - due to customers | 10,984,411 | 10,996,371 | 10,604,437 | 60,516 | 119,935 | 208,066 | 3,417 | |||
| - borrowings from other customers | 216 | 216 | 1 | - | - | 215 | - | |||
| - debt securities issued | 815,990 | 1,176,970 | - | 4,427 | 52,572 | 473,176 | 646,795 | |||
| - other financial liabilities | 164,567 | 164,567 | 122,875 | 4,891 | 6,494 | 29,915 | 392 | |||
| Credit risk related commitments | 1,985,199 | 1,985,199 | 1,985,199 | - | - | - | - | |||
| Non-financial guarantees | 462,805 | 462,805 | 23,682 | 52,473 | 106,608 | 243,618 | 36,424 | |||
| Total financial liabilities and credit-related commitments | 14,685,650 | 15,060,428 | 12,944,592 | 122,988 | 285,609 | 1,020,211 | 687,028 |
When determining the gap between the financial liabilities and financial assets in the maturity bucket of up to one month, it is necessary to be aware of the fact that financial liabilities include total demand deposits, and that NLB may apply a stability weight of 60% to demand deposits when ensuring compliance with the central bank’s regulations concerning calculation of the liquidity position. To ensure NLB Group’s and NLB’s liquidity, and based on its approach to risk, in previous years, NLB Group compiled a substantial amount of high-quality liquid investments, mostly government securities and selected loans, which are accepted as adequate financial assets by the ECB. Liabilities and credit-related commitments are included in maturity buckets based on their residual contractual maturity.
339 NLB Group Annual Report 2023 Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm cash flows
| Up to 1 Month | 1 Month to 3 Months | 3 Months to 1 Year | 1 Year to 5 Years | Over 5 Years | Total | |
|---|---|---|---|---|---|---|
| Foreign exchange derivatives - Forwards - Outflow | (52,767) | (12,024) | (15,874) | (250) | - | (80,915) |
| - Inflow | 52,821 | 12,035 | 15,890 | 250 | - | 80,996 |
| - Swaps - Outflow | (264,488) | (150,003) | (77,229) | - | - | (491,720) |
| - Inflow | 264,597 | 150,432 | 78,250 | - | - | 493,279 |
| Interest rate derivatives - Interest rate swaps and cross-currency swaps - Outflow | (1,000) | (5,613) | (27,240) | (51,905) | (22,798) | (108,556) |
| - Inflow | 3,250 | 4,043 | 34,172 | 79,633 | 37,296 | 158,394 |
| - Caps and floors - Outflow | (211) | (51) | (768) | (586) | (6) | (1,622) |
| - Inflow | 179 | 37 | 629 | 416 | 3 | 1,264 |
| Total outflow | (318,466) | (167,691) | (121,111) | (52,741) | (22,804) | (682,813) |
| Total inflow | 320,847 | 166,547 | 128,941 | 80,299 | 37,299 | 733,933 |
| Up to 1 Month | 1 Month to 3 Months | 3 Months to 1 Year | 1 Year to 5 Years | Over 5 Years | Total | |
|---|---|---|---|---|---|---|
| Foreign exchange derivatives - Forwards - Outflow | (31,846) | (22,128) | (5,856) | (6,475) | - | (66,305) |
| - Inflow | 31,895 | 22,136 | 5,863 | 6,487 | - | 66,381 |
| - Swaps - Outflow | (194,674) | (52,726) | (10,042) | - | - | (257,442) |
| - Inflow | 193,719 | 53,098 | 9,996 | - | - | 256,813 |
| Interest rate derivatives - Interest rate swaps and cross-currency swaps - Outflow | (819) | (2,100) | (10,699) | (105,839) | (24,177) | (143,634) |
| - Inflow | 816 | 2,560 | 19,982 | 76,356 | 44,616 | 144,330 |
| - Caps and floors - Outflow | (14) | (36) | (667) | (16,104) | (8,632) | (25,453) |
| - Inflow | 45 | 30 | 850 | 1,468 | 15 | 2,408 |
| Total outflow | (227,353) | (76,990) | (27,264) | (128,418) | (32,809) | (492,834) |
| Total inflow | 226,475 | 77,824 | 36,691 | 84,311 | 44,631 | 469,932 |
When assuming operational risks, NLB Group follows the guideline that such risks may not materially impact its operations and, the decreasing due to the reduced complexity of operations in NLB Group, with the disinvestment process of non-core activities and optimisation of internal processes. NLB Group has set up operational risks, all with the aim of ensuring quality management of operational risks. This is particularly valid in strategic banking members. All NLB Group banking members monitor the amount of net loss that an individual member still allows in its operations. If the sum of net loss exceeds the tolerance limit, a special treatment of major loss events is required and, if necessary, events are taken. The warning and critical limit of loss events are also defined, which in case of exceeding require escalation procedures and acceptance of possible additional risk management so-called ‘zero tolerance’ was defined.
For monitoring some specific more important key risk indicators that could show a possible increase of an operational risk, the Bank developed a specific methodology across different business areas, and the results are discussed at the Operational Risk Committee. The latter was named as the highest decision-making authority in the area of operational risk management. The Management Board serves in this role at other subsidiaries. The main task of the aforementioned bodies is to discuss the most significant operational risks and loss events, and mitigation within an individual entity. All NLB Group entities, which are included in the consolidation, have adopted relevant documents that are in line with NLB Group standards. In banking management, these documents are regularly updated. The whole NLB Group uses uniform software support, which is also regularly upgraded.
In NLB Group, the reported incurred net loss arising from loss limits for operational risk. In general, considerable attention is paid to reporting loss events, their mitigation measures, and defining operational risks in all segments. To treat major loss events, bigger or more important loss events are escalated to the top levels of decision-making at NLB and the Supervisory Board of NLB. Additional attention is paid to the reporting of potential loss events in operations.
Furthermore, the methodology to monitor, analyse, and report key risk indicators is established, servicing as an early warning system. The aim is to improve business and supporting processes. In terms of risks, possible future losses are identified, estimated, and appropriately managed. Each year, special emphasis is placed on current risks as a result of the risk identification process, including operational risks, servicing as an early warning system. The major operational risks are actively managed with the measures taken to reduce them. An operational risk profile is prepared once a year based on the identified risks, among which in particular are those with a low probability of occurrence and very high potential financial influence.
For this purpose, the Bank has developed the methodology of stress-testing and scenario analysis for exceptional, but plausible events. Scenario analyses are made based on experience and knowledge of experts from various critical areas. The capital requirement for operational risk is calculated using the standardised approach at the NLB level.
In NLB Group, business continuity management is carried out to protect lives, goods, and services from various threats including natural disasters, IT disasters, epidemic/pandemic, and the undesired effects of the environment to mitigate their consequences. The concept of the action plan that is prepared each year is such that it aligns with the Business Continuity Management System. In 2023, Business Continuity Management was upgraded and optimised – rationalisation of Business Impact Analysis (hereinafter BIA). The basis for modernising the business continuity plans is the adequacy of the plans for Organisational Unit Plans (merged office buildings and HR plans) and IT plans are checked. The best indicator of the adequacy of the business continuity plans is the Recovery Plan and external audits. No major deviations were identified.
Natural disasters (floods) and IT failures, the Bank successfully used the business continuity plans and instructions for manual procedures, and thus also ensured business operations in emergencies.
Reputation risk, and profitability risk. Risks not included in the regulatory capital requirements (standardised approach) but have or might have an important influence on the risk profile of the Bank are integrated into internal capital adequacy assessment process (ICAAP).
NLB Group established internal methodologies for identifying and assessing specific types of risk, referring to the assessed as a materially important risk, relevant disposable preventive and mitigation measures are applied, including regular monitoring of their effectiveness.
On this basis, internal capital adequacy assessment process (ICAAP) is conducted for financial and non-financial assets and liabilities. Fair value is the price that would be received when selling an asset or paid to transfer a liability in an orderly transaction between market participants.
IFRS 13 specifies a fair value hierarchy with respect to the inputs and assumptions used to measure financial and non-financial assets and liabilities at fair value. Observable inputs reflect the assumptions of NLB Group. This hierarchy gives the highest priority to observable market data when available, and the lowest priority to unobservable market data.
The fair value hierarchy comprises the following levels:
Where inputs are observable, either directly (i.e., prices) or indirectly (i.e., derived from prices). Level 2 includes prices quoted for similar assets or liabilities in active markets and prices from observable sources of input parameters for financial instruments, such as yield curves, credit spreads, foreign exchange rates, and the volatility of interest rates and foreign exchange rates, is Bloomberg data.
Unobservable inputs are used to the extent that relevant observable inputs are not available. Unobservable inputs must reflect the assumptions that market participants would use when pricing the asset or liability.
Derivatives associated with these investments and other assets and liabilities for which fair value cannot be determined with observable market inputs. Wherever possible, fair value is determined using valuation techniques.
An active market is a market in which transactions for an asset or liability are executed with sufficient frequency and volume to provide pricing information on an ongoing basis. Assets and liabilities are measured at the measurement date, multiplied by the quantity of units owned by NLB Group.
The fair value of assets and liabilities whose market is not active is determined using valuation techniques depending on the availability of observable market inputs associated with the asset or liability that is the subject of the valuation.
Unobservable inputs shall reflect the estimates and assumptions that market participants would use when pricing the asset or liability.
For financial assets measured at fair value and not classified at Level 1, fair value is determined based on valuation reports provided by certified valuators. Valuations are prepared in accordance with applicable standards.
| in EUR thousands | 31 Dec 2023 | 31 Dec 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NLB Group | Level 1 | Level 2 | Level 3 | Total fair value | NLB | Level 1 | Level 2 | Level 3 | Total fair value | ||||
| Financial assets | Financial instruments held for trading | - | 15,698 | 20 | 15,718 | - | 17,937 | 20 | 17,957 | ||||
| Derivatives | - | 15,698 | 20 | 15,718 | - | 17,937 | 20 | 17,957 | |||||
| Derivatives - hedge accounting | - | 47,614 | - | 47,614 | - | 47,614 | - | 47,614 | |||||
| Financial assets measured at fair value through other comprehensive income | 1,456,684 | 793,516 | 1,356 | 2,251,556 | 955,638 | 67,071 | 303 | 1,023,012 | |||||
| Debt instruments | 1,451,824 | 712,570 | 70 | 2,164,464 | 955,638 | 6,446 | - | 962,084 | |||||
| Equity instruments | 4,860 | 80,946 | 1,286 | 87,092 | - | 60,625 | 303 | 60,928 | |||||
| Non-trading financial assets mandatorily at fair value through profit and loss | 5,317 | - | 8,858 | 14,175 | - | - | 16,643 | 16,643 | |||||
| Debt instruments | 5,217 | - | - | 5,217 | - | - | - | - | |||||
| Equity instruments | 100 | - | 8,858 | 8,958 | - | - | 8,858 | 8,858 | |||||
| Loans | - | - | - | - | - | - | 7,785 | 7,785 | |||||
| Financial liabilities | Financial instruments held for trading | - | 13,217 | - | 13,217 | - | 17,510 | - | 17,510 | ||||
| Derivatives | - | 13,217 | - | 13,217 | - | 17,510 | - | 17,510 | |||||
| Derivatives - hedge accounting | - | 3,540 | - | 3,540 | - | 1,420 | - | 1,420 | |||||
| Financial liabilities measured at fair value through profit or loss | - | 4,482 | - | 4,482 | - | 3,210 | - | 3,210 | |||||
| Non-financial assets | Investment properties | - | 10,927 | 20,189 | 31,116 | - | 7,640 | - | 7,640 | ||||
| Non-current assets held for sale | - | 4,048 | 801 | 4,849 | - | 4,048 | - | 4,048 | |||||
| Non-financial assets impaired during the year | Recoverable amount of property and equipment | - | - | 89 | 89 | - | - | - | - | ||||
| Recoverable amount of investments in subsidiaries, associates and joint ventures | - | - | - | - | - | - | 1,646 | 1,646 |
| mandatorily at fair value | 11,512 | - | 7,519 | 19,031 | - | - |
|---|---|---|---|---|---|---|
| through profit and loss | Debt instruments | 3,116 | - | - | 3,116 | - |
| Equity instruments | 8,396 | - | 7,519 | 15,915 | - | - |
| Loans | - | - | - | - | - | - |
| Financial instruments held for trading | - | 21,589 | - | 21,589 | - | 2 |
|---|---|---|---|---|---|---|
| Derivatives | - | 21,589 | - | 21,589 | - | 2 |
| Derivatives - hedge accounting | - | 2,124 | - | 2,124 | - | 2 |
| Financial liabilities measured at fair value through profit or loss | - | 1,796 | - | 1,796 | - | 2 |
| Investment properties | - | 12,192 | 23,447 | 35,639 | - | 6 |
|---|---|---|---|---|---|---|
| Non-current assets held for sale | - | 4,235 | 11,201 | 15,436 | - | 4 |
| Recoverable amount of property and equipment | - | - | 30,636 | 30,636 | - | - |
|---|---|---|---|---|---|---|
| Recoverable amount of investments in subsidiaries, associates and joint ventures | - | - | - | - | - | - |
| Equity stake | Gold | Funds | Debt securities | Loans | Derivatives | Equities | Currency | Interest |
|---|---|---|---|---|---|---|---|---|
| 1 market value from exchange market | market value from spot market | official price by fund management company | market value from exchange market | |||||
| 2 valuation model | valuation model (underlying in level 1) | valuation model | valuation model | |||||
| 3 valuation model | valuation model | valuation model | valuation model | valuation model | valuation model (underlying instrument in level 3) |
Transfers from level 1 to 3 equity excluded from exchange market from level 1 to 3 fund management company stops publishing regular valuation from level 1 to 2 debt securities excluded from exchange market from level 2 to 3 underlying instrument excluded from exchange market from level 1 to 3 companies in insolvency proceedings from level 3 to 1 fund management company starts publishing regular valuation from level 1 to 2 debt securities not liquid (not trading for 6 months) from level 3 to 2 underlying instrument included in exchange market from level 1 to 3 equity not liquid (not trading for 2 months) from level 1 to 3 and from 2 to 3 companies in insolvency proceedings from level 3 to 1 equity included in exchange market from level 2 to 1 and from 3 to 1 start trading with debt securities on exchange market from level 3 to 2 until valuation parameters are confirmed on ALCO (at least on quarterly basis).
For 2023, neither NLB Group nor NLB had any significant transfers between levels of valuation of financial instruments measured at fair value in financial statements.
Non-financial assets and liabilities at Level 2 regarding the fair value hierarchy Financial instruments on Level 2 of the fair value hierarchy at NLB Group and NLB include: - debt securities - derivatives: derivatives except forward derivatives and options on equity instruments that are not quoted on active markets; and - the National Resolution Fund. Non-financial assets on Level 2 include non-current assets held for sale.
When valuing bonds classified on Level 2, NLB Group primarily uses the income approach based on an estimation of future cash flows discounted to the present value and the spread over the yield curve (credit, liquidity, country). Fair values for derivatives are determined using a discounted cash flow model based on the risk-free yield curve. Fair values are determined using the income model, the binomial model, and the Black-Scholes model. At least one of the three valuation methods are used for the valuation of investment property. The majority of investment property is assessed. When valuing an investment property, average rents at similar locations and capitalisation ratios such as: the risk-free yield, risk premium, and the risk premium to account for like data from lessors and lessees, web databases, and own databases. NLB Group has observable data for all investment property at its disposal. If observable data for similar locations are available, wider locations and adjusts it appropriately.
| in EUR thousands | Financial instruments | Total financial assets | |||||||
|---|---|---|---|---|---|---|---|---|---|
| held for trading | Financial assets measured at fair value through OCI | Non-trading financial assets mandatorily at fair value through profit or loss | NLB Group | ||||||
| Balance as at 1 January 2022 | 1 | 351 | 1,136 | 4,472 | 5,960 | ||||
| Effects of translation of foreign operations to presentation currency | - | - | (2) | - | (2) | ||||
| Acquisition of subsidiaries | - | - | 12 | - | 12 | ||||
| Valuation: | - through profit or loss | ||||||||
| - | 16 | - | 477 | 493 | - | ||||
| - | 0 | 239 | 110 | - | 349 | ||||
| Foreign exchange differences | - | (25) | - | 262 | 237 | ||||
| Increases | - | - | - | 2,873 | 2,873 | ||||
| Decreases | - | (141) | - | (565) | (706) | ||||
| Transfers to Level 3 | - | 1,812 | - | - | 1,812 | ||||
| Balance as at 31 December 2022 | 17 | 2,236 | 1,256 | 7,519 | 11,028 | ||||
| Valuation: | - through profit or loss | ||||||||
| - | 3 | - | 1,362 | 1,365 | - | ||||
| - | 0 | 5,768 | 49 | - | 5,817 | ||||
| Foreign exchange differences | - | 21 | - | (173) | (152) | ||||
| Increases | - | - | - | 150 | 150 | ||||
| Decreases | - | (6,418) | (19) | - | (6,437) | ||||
| Write-offs | - | (1,537) | - | - | (1,537) | ||||
| Balance as at 31 December 2023 | 20 | 70 | 1,286 | 8,858 | 10,234 |
| in EUR thousands | Financial assets held for trading | Financial assets measured at fair value through OCI | Non-trading financial assets mandatorily at fair value through profit or loss | |||||
|---|---|---|---|---|---|---|---|---|
| 2023 | Derivatives | Debt instruments | Equity instruments | 2023 | Equity instruments | Items of Income statement | ||
| Gains less losses from financial assets and liabilities held for trading | 3 | - | - | - | Gains less losses from non-trading assets mandatorily at fair value through profit or loss | - | - | 1,362 |
| Foreign exchange translation gains less losses | - | - | - | (173) | Item of Other comprehensive income | Financial assets measured at fair value through other comprehensive income | - | 49 |
| in EUR thousands | Financial assets held for trading | Financial assets measured at fair value through OCI | Non-trading financial assets mandatorily at fair value through profit or loss | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2022 | Derivatives | Debt instruments | Equity instruments | 2022 | Equity instruments | Items of Income statement | |||
| Gains less losses from financial assets and liabilities held for trading | 16 | - | - | - | Gains less losses from non-trading assets mandatorily at fair value through profit or loss | - | - | 477 | |
| Foreign exchange translation gains less losses | - | (25) | - | 262 | Item of Other comprehensive income | Financial assets measured at fair value through other comprehensive income | - | 239 | 110 |
| 349 |
Financial instruments not measured at fair value in financial statements are not managed on a fair value basis. For re impact NLB Group statement of financial position or income statement. The table below shows estimated fair values of financial instruments not measured at fair value in the statement of
| NLB Group | NLB | ||||
|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | ||
| Carrying value | Fair value | Carrying value | Fair value | Carrying value | Fair value |
| Financial assets measured at amortised cost - debt securities | 2,522,229 | 2,440,596 | 1,917,615 | 1,749,169 | 1,966,169 |
| 1,889,481 | 1,597,448 | 1,442,453 | |||
| - loans and advances to banks | 547,640 | 547,555 | 222,965 | 223,077 | 149,011 |
| 149,011 | 350,625 | 362,422 | |||
| - loans and advances to customers | 13,734,601 | 13,256,192 | 13,072,986 | 12,883,859 | 7,148,283 |
| 6,895,232 | 6,054,413 | 5,965,468 | |||
| - other financial assets | 165,962 | 165,962 | 177,823 | 177,823 | 101,596 |
| 101,596 | 114,399 | 114,399 | |||
| Financial liabilities measured at amortised cost - deposits from banks and central banks | 95,283 | 95,657 | 106,414 | 106,627 | 147,002 |
| 147,379 | 212,656 | 212,880 | |||
| - borrowings from banks and central banks | 140,419 | 134,020 | 198,609 | 193,774 | 82,797 |
| 75,152 | 57,292 | 52,897 | |||
| - due to customers | 20,732,722 | 20,746,603 | 20,027,726 | 20,031,938 | 11,881,563 |
| 11,892,641 | 10,984,411 | 10,989,255 | |||
| - borrowings from other customers | 99,718 | 101,649 | 82,482 | 80,684 | - |
| - | 216 | 216 | |||
| - debt securities issued | 1,338,235 | 1,363,301 | 815,990 | 788,892 | 1,338,235 |
| 1,363,301 | 815,990 | 788,892 | |||
| - other financial liabilities | 357,116 | 357,116 | 294,463 | 294,463 | 198,020 |
| 198,020 | 164,567 | 164,567 |
maturities. The fair value of overnight deposits equals their carrying value. Loans and advances to customers The estimated fair value of loans and advances represents the discounted amount of estimated future cash flows expected to be received. Expected cash flows are discounted at current market rates for debts with similar credit risk and residual maturities to determine their fair value. Deposits and borrowings The fair value of sight deposits and overnight deposits equals their carrying value. However, their actual value for NLB Group depends on the timing and amounts of cash flows, current market rates, and the credit risk of the depository institution itself. A portion of sight deposits is stable, similar to term deposits. Therefore, their economic value for NLB Group differs from the carrying amount. The estimated fair value of other deposits and borrowings from customers is based on discounted cash flows using interest rates for new deposits with similar residual maturities. Debt securities measured at amortised cost and debt securities issued The fair value of debt securities measured at amortised cost and debt securities issued is based on their quoted market price or value calculated by using a discounted cash flow method and the prevailing money market interest rates. Loan commitments For credit facilities that are drawn soon after the NLB Group grants loans (drawn at market rates) and loan commitments to those clients that are not impaired, the fair value is close to zero. For loan commitments to clients that are impaired, fair value represents the amount of the recognised provisions. Other financial assets and liabilities The carrying amount of other financial assets and liabilities is a reasonable approximation of their fair value as they mainly relate to short-term receivables and payables.
in EUR thousands
| 31 Dec 2023 | 31 Dec 2022 | ||||||||
| NLB Group | NLB | Level 1 | Level 2 | Level 3 | Total fair value | Level 1 | Level 2 | Level 3 | Total fair value |
| Financial assets measured at amortised cost | - debt securities | 2,030,120 | 403,255 | 7,221 | 2,440,596 | 1,779,995 | 109,486 | - | 1,889,481 |
| - loans and advances to banks | - | 547,555 | - | 547,555 | - | 149,011 | - | 149,011 | |
| - loans and advances to customers | - | - | 13,256,192 | 13,256,192 | - | - | 6,895,232 | 6,895,232 | |
| - other financial assets | - | - | 165,962 | 165,962 | - | - | 101,596 | 101,596 | |
| Financial liabilities measured at amortised cost | - deposits from banks and central banks | - | 95,657 | - | 95,657 | - | 147,379 | - | 147,379 |
| - borrowings from banks and central banks | - | 134,020 | - | 134,020 | - | 75,152 | - | 75,152 | |
| - due to customers | - | 20,746,603 | - | 20,746,603 | - | 11,892,641 | - | 11,892,641 | |
| - borrowings from other customers | - | - | 101,649 | 101,649 | - | - | - | - | |
| - debt securities issued | 1,363,301 | - | 1,363,301 | 1,363,301 | - | - | 1,363,301 | - | |
| - other financial liabilities | - | - | 357,116 | 357,116 | - | - | 198,020 | 198,020 |
| Financial assets measured at amortised cost | - debt securities | 1,476,615 | 265,325 | 7,229 | 1,749,169 | 1,350,003 | 92,450 | - | 1,442,453 |
|---|---|---|---|---|---|---|---|---|---|
| - loans and advances to banks | - | 223,077 | - | 223,077 | - | 362,422 | - | 362,422 | |
| - loans and advances to customers | - | 12,883,859 | 12,883,859 | - | - | 5,965,468 | 5,965,468 | ||
| - other financial assets | - | 177,823 | 177,823 | - | - | 114,399 | 114,399 |
| - deposits from banks and central banks | - | 106,627 | - | 106,627 | - | 212,880 | - | 212,880 | |
|---|---|---|---|---|---|---|---|---|---|
| - borrowings from banks and central banks | - | 193,774 | - | 193,774 | - | 52,897 | - | 52,897 | |
| - due to customers | - | 20,031,938 | - | 20,031,938 | - | 10,989,255 | - | 10,989,255 | |
| - borrowings from other customers | - | 80,684 | 80,684 | - | 216 | 216 | - | ||
| - debt securities issued | 748,958 | 39,934 | - | 788,892 | 748,958 | 39,934 | - | 788,892 | |
| - other financial liabilities | - | 294,463 | 294,463 | - | - | 164,567 | 164,567 |
Environmental and climate-related risks
The NLB Group is engaged in contributing to sustainable finance by incorporating environmental, social, and governance (ESG) risks into its business model. Thus, sustainable finance integrates ESG criteria into the Group's operations.
The NLB Group Sustainability Committee oversees the integration of the ESG factors into the NLB Group business model. ESG risks do not represent a new risk category, but rather fit within the established risk management framework in the areas of credit, liquidity, market, and operational risk.
The management of ESG risks follows ECB and EBA guidelines, following the management of ESG risks incorporated into the Group’s overall credit approval process and the related credit portfolio management.
Sustainable financing is implemented in accordance with addressing ESG risks in all relevant stages of the credit-granting process; relevant ESG criteria were also considered in the collateral evaluation process.
The NLB Group conducts a materiality assessment of transitional and physical risk to which the Group is exposed. In this process, the identification of environmental risk factors, relevant transmission channels, and their materiality and impact on the Group is evaluated.
From the perspective of physical risk, the most relevant natural disasters are floods, landslides, and drought, while hail and windstorms are also frequent, but less material. Despite this, the Group can respond in a timely manner. Chronic risk is not determined as a material risk.
Transition risks already arise in the short term due to the determination of the EU to reduce carbon emissions, according to the NLB Group’s Net Zero Strategy in 2023; its impacts are expected to diminish gradually in the long run. Nevertheless, the Group assessed them more materially than physical risk.
As a systemic exercise, the 2024 EBA Fit-for-55 climate risk scenario analysis started in December 2023 and will be concluded in March 2024. By performing this exercise, the ECB assessed how banks would respond.
Offsetting financial assets and financial liabilities
NLB Group has entered into bilateral foreign exchange netting arrangements with certain banks and corporates. Cash flows from such transactions are netted into a single cash flow for each currency. The settlement of all interest rates derivatives is also carried out by netting of both legs of the transaction.
Assets and liabilities related to these netting arrangements follow netting rules that apply to cash flows and not to the entire financial instrument. NLB Group also holds certain standardized derivatives (some interest rate swaps) with a clearing house or central counterparty for exposures, as well as the daily settlement of cash flows for each currency.
| in EUR thousands | NLB Group | 31 Dec 2023 | Amounts not set off in the statement of financial position | Financial assets/liabilities | Gross amounts of recognised financial assets/liabilities | Impact of master netting agreements | Financial instruments collateral | Net amount |
|---|---|---|---|---|---|---|---|---|
| Derivatives - assets | 63,283 | 4,992 | 52,103 | 6,188 | ||||
| Derivatives - liabilities | 16,714 | 4,992 | 1,563 | 10,159 |
| in EUR thousands | NLB Group | 31 Dec 2022 | Amounts not set off in the statement of financial position | Financial assets/liabilities | Gross amounts of recognised financial assets/liabilities | Impact of master netting agreements | Financial instruments collateral | Net amount |
|---|---|---|---|---|---|---|---|---|
| Derivatives - assets | 80,724 | 3,053 | 72,204 | 5,467 | ||||
| Derivatives - liabilities | 17,482 | 3,053 | 1,959 | 12,470 |
| in EUR thousands | NLB | 31 Dec 2023 | Amounts not set off in the statement of financial position | Financial assets/liabilities | Gross amounts of recognised financial assets/liabilities | Impact of master netting agreements | Financial instruments collateral | Net amount |
|---|---|---|---|---|---|---|---|---|
| Derivatives - assets | 65,551 | 5,013 | 54,346 | 6,192 | ||||
| Derivatives - liabilities | 18,929 | 5,013 | 1,563 | 12,353 |
| in EUR thousands | NLB | 31 Dec 2022 | Amounts not set off in the statement of financial position | Financial assets/liabilities | Gross amounts of recognised financial assets/liabilities | Impact of master netting agreements | Financial instruments collateral | Net amount |
|---|---|---|---|---|---|---|---|---|
| Derivatives - assets | 80,834 | 3,133 | 72,204 | 5,497 | ||||
| Derivatives - liabilities | 24,273 | 3,133 | 8,251 | 12,889 |
| in EUR thousands | NLB Group | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Retail Banking in Slovenia | Corporate and Investment Banking in Slovenia | Strategic Foreign Markets | Financial Markets in Slovenia | Non-Core Members | Other activities | Unallocated | Total | ||
| Total net income | 366,988 | 149,184 | 541,624 | 40,437 | (131) | 5,574 | - | 1,103,676 | |
| Net income from external customers | 246,811 | 204,868 | 541,098 | 95,748 | (578) | 5,349 | - | 1,093,296 | |
| Intersegment net income | 120,177 | (55,684) | 526 | (55,311) | 447 | 225 | - | 10,380 | |
| Net interest income | 264,707 | 106,462 | 423,249 | 37,752 | 1,540 | (376) | - | 833,334 | |
| Net interest income from external customers | 147,803 | 161,103 | 429,464 | 94,023 | 1,444 | (503) | - | 833,334 | |
| Intersegment net interest income | 116,904 | (54,641) | (6,215) | (56,271) | 96 | 127 | - | - | |
| Administrative expenses | (141,132) | (63,955) | (223,239) | (9,202) | (13,230) | (12,740) | - | (463,498) | |
| Depreciation and amortisation | (12,675) | (6,240) | (27,990) | (689) | (508) | (635) | - | (48,737) | |
| Reportable segment profit/(loss) before impairment and provision charge | 213,181 | 78,989 | 290,395 | 30,546 | (13,869) | (7,801) | - | 591,441 | |
| Other net gains/(losses) from equity investments in associates and joint ventures | 1,072 | - | - | - | - | - | - | 1,072 | |
| Impairment and provisions charge | (32,592) | 7,909 | 1,124 | 4,757 | 3,729 | 973 | - | (14,100) | |
| Profit/(loss) before income tax | 181,661 | 86,898 | 291,519 | 35,303 | (10,140) | (6,828) | - | 578,413 | |
| Owners of the parent | 181,661 | 86,898 | 278,896 | 35,303 | (10,140) | (6,828) | - | 565,790 | |
| Non-controlling interests | - | - | 12,623 | - | - | - | - | 12,623 | |
| Income tax | - | - | - | - | - | - | (15,090) | (15,090) | |
| Profit for the year | 550,700 | ||||||||
| Reportable segment assets | 3,778,767 | 3,376,370 | 11,058,835 | 7,232,457 | 47,097 | 435,940 | - | 25,929,466 | |
| Investments in associates and joint ventures | 12,519 | - | - | - | - | - | - | 12,519 | |
| Reportable segment liabilities | 9,381,016 | 2,512,801 | 9,329,079 | 1,540,000 | 3,419 | 227,680 | - | 22,993,995 | |
| Additions to non-current assets | 19,775 | 9,826 | 40,239 | 505 | 4 | 4,099 | - | 74,448 |
| in EUR thousands | NLB Group | Total | |||||
|---|---|---|---|---|---|---|---|
| Retail Banking in Slovenia | Corporate and Investment Banking in Slovenia | Strategic Foreign Markets | Financial Markets in Slovenia | Non-Core Members | Other activities | Unallocated | |
| Total net income | 211,474 | 105,198 | 427,519 | 46,601 | 4,697 | 10,024 | 805,513 |
| Net income from external customers | 227,590 | 121,042 | 429,999 | 5,558 | 4,426 | 9,934 | 798,549 |
| Intersegment net income | (16,116) | (15,844) | (2,480) | 41,043 | 271 | 90 | 6,964 |
| Net interest income | 104,809 | 52,930 | 298,042 | 47,304 | 267 | 1,570 | 504,922 |
| Net interest income from external customers | 125,541 | 71,832 | 303,349 | 2,169 | 453 | 1,578 | 504,922 |
| Intersegment net interest income | (20,732) | (18,902) | (5,307) | 45,135 | (186) | (8) | - |
| Administrative expenses | (132,893) | (60,471) | (199,593) | (8,812) | (12,109) | (7,309) | (421,187) |
| Depreciation and amortisation | (11,149) | (4,629) | (28,538) | (618) | (498) | (621) | (46,053) |
| Reportable segment profit/(loss) before impairment and provision charge | 67,432 | 40,098 | 199,388 | 37,171 | (7,910) | 2,094 | 338,273 |
| Other net gains/(losses) from equity investments in associates and joint ventures | 781 | - | - | - | - | - | 781 |
| Gain from bargain purchase | - | - | 68 | - | - | 172,810 | 172,878 |
| Impairment and provisions charge | (21,435) | 12,156 | (12,325) | (3,363) | (829) | (3,073) | (28,869) |
| Profit/(loss) before income tax | 46,778 | 52,254 | 187,131 | 33,808 | (8,739) | 171,831 | 483,063 |
| Owners of the parent | 46,778 | 52,254 | 176,160 | 33,808 | (8,739) | 171,831 | 472,092 |
| Non-controlling interests | - | - | 10,971 | - | - | - | 10,971 |
| Income tax | - | - | - | - | - | (25,230) | (25,230) |
| Profit for the year | 446,862 | ||||||
| Reportable segment assets | 3,665,110 | 3,372,047 | 10,179,396 | 6,514,047 | 61,563 | 356,400 | 24,148,563 |
| Investments in associates and joint ventures | 11,677 | - | - | - | - | - | 11,677 |
| Reportable segment liabilities | 9,108,497 | 2,777,001 | 8,539,025 | 1,118,681 | 3,754 | 190,957 | 21,737,915 |
| Additions to non-current assets | 10,717 | 6,088 | 29,042 | 261 | 99 | 4,688 | 50,895 |
Segment reporting is presented in accordance with the strategy on the basis of the organisational structure used in management reporting of NLB Group’s results. NLB Group’s segments are business units that focus on different customers and markets. They are managed separately because each business unit requires different strategies and service levels. The business activities of the parent bank (NLB) and N Banka are divided into several segments. Interest income and expenses are reallocated between segments on the basis of fund transfer prices (FTP). Other NLB Group members are, based on their business activity, included in only one segment except NLB Lease&Go Ljubljana, which is according to its business activities divided into two segments. The segments of NLB Group are divided into core and non-core segments.
Non-Core Members include the operations of non-core NLB Group members, namely REAM and leasing entities in liquidation, NLB Srbija, and NLB Crna Gora. NLB Group is primarily a financial group, and net interest income represents the majority of its net revenues. NLB Group’s main indicator of a segment’s efficiency is net profit before tax. No revenues were generated from transactions with a single external customer that would amount to 10% or more of NLB Group’s revenues.
| in EUR thousands | Revenues | Net income | Profit/(loss) before income tax | Income tax | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||
| NLB Group | 1,392,315 | 951,617 | 1,093,296 | 798,549 | 578,413 | 483,063 | (15,090) | (25,230) | |||||
| Slovenia | 729,170 | 445,749 | 556,854 | 367,121 | 275,533 | 288,563 | 19,447 | (9,719) | |||||
| South East Europe | 663,042 | 505,855 | 538,752 | 431,267 | 305,507 | 194,764 | (34,525) | (15,487) | |||||
| Bosnia and Herzegovina | 104,460 | 84,065 | 85,158 | 71,205 | 40,677 | 33,475 | (3,467) | (2,635) | |||||
| Croatia | - | 23 | (557) | 473 | (527) | (170) | - | (45) | |||||
| Kosovo | 68,279 | 58,297 | 56,374 | 49,251 | 39,797 | 35,922 | (3,995) | (3,693) | |||||
| Montenegro | 62,625 | 49,528 | 51,658 | 38,251 | 32,032 | 15,436 | (5,502) | (1,838) | |||||
| North Macedonia | 111,599 | 94,660 | 90,233 | 78,369 | 49,895 | 41,807 | (4,910) | (3,795) | |||||
| Serbia | 316,079 | 219,282 | 255,886 | 193,718 | 143,633 | 68,294 | (16,651) | (3,481) | |||||
| Western Europe | 103 | 13 | (2,310) | 161 | (2,627) | (264) | (12) | (24) | |||||
| Germany | - | - | 51 | 58 | (402) | (647) | - | - | |||||
| Switzerland | 103 | 13 | (2,361) | 103 | (2,225) | 383 | (12) | (24) |
The column ‘Revenues’ includes interest and similar income, dividend income, and fee and commission income. The column ‘Net Income’ includes net interest income, dividend income, net fee and commission income, the net effect of financial instruments, foreign exchange translation, the effect on the derecognition of assets, net operating income, and gain less losses from non-current assets held for sale.
| in EUR thousands | Non-current assets | Total assets | Number of employees | |||||
|---|---|---|---|---|---|---|---|---|
| 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | 31 Dec 2023 | 31 Dec 2022 | |||
| NLB Group | 383,786 | 356,867 | 25,941,985 | 24,160,240 | 7,982 | 8,228 | ||
| Slovenia | 160,574 | 152,037 | 14,851,067 | 13,935,167 | 2,689 | 2,833 | ||
| South East Europe | 223,185 | 204,802 | 11,072,317 | 10,216,136 | 5,291 | 5,392 | ||
| Bosnia and Herzegovina | 38,861 | 35,550 | 1,934,891 | 1,799,877 | 990 | 971 | ||
| Croatia | - | 377 | 1,194 | 3,557 | 1 | 6 | ||
| Kosovo | 13,810 | 14,289 | 1,229,426 | 1,082,474 | 468 | 467 | ||
| Montenegro | 23,163 | 17,416 | 928,913 | 825,400 | 390 | 380 | ||
| North Macedonia | 34,276 | 36,348 | 1,895,297 | 1,832,477 | 962 | 954 | ||
| Serbia | 113,075 | 100,822 | 5,082,596 | 4,672,351 | 2,480 | 2,614 | ||
| Western Europe | 27 | 28 | 18,601 | 8,937 | 2 | 3 | ||
| Germany | 27 | 28 | 552 | 691 | - | 1 | ||
| Switzerland | - | - | 18,049 | 8,246 | 2 | 2 |
| in EUR thousands | Revenues | Net income | Profit/(loss) before income tax | Income tax | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||
| NLB Group | 1,580,178 | 1,031,042 | 1,245,280 | 860,482 | 817,111 | 389,046 | (5,933) | (25,129) | ||||
| Slovenia | 909,550 | 523,774 | 704,971 | 431,187 | 511,693 | 191,900 | 28,958 | (9,153) | ||||
| South East Europe | 670,510 | 507,243 | 542,776 | 429,307 | 308,129 | 199,981 | (34,879) | (15,952) | ||||
| Bosnia and Herzegovina | 105,503 | 84,107 | 83,567 | 70,211 | 40,555 | 33,352 | (3,467) | (2,635) | ||||
| Croatia | - | 128 | (385) | 617 | (366) | (170) | - | (45) | ||||
| Kosovo | 68,468 | 58,296 | 55,182 | 48,391 | 39,963 | 36,095 | (3,995) | (3,693) | ||||
| Montenegro | 64,729 | 49,738 | 50,465 | 37,822 | 32,836 | 18,374 | (5,502) | (1,838) | ||||
| North Macedonia | 111,933 | 94,624 | 86,612 | 75,882 | 48,822 | 41,601 | (4,910) | (3,795) | ||||
| Serbia | 319,877 | 220,350 | 267,335 | 196,384 | 146,319 | 70,729 | (17,005) | (3,946) | ||||
| Western Europe | 118 | 25 | (2,467) | (12) | (2,711) | (2,835) | (12) | (24) | ||||
| Germany | - | 1 | 51 | 54 | (402) | (646) | - | - | ||||
| Switzerland | 118 | 24 | (2,518) | (66) | (2,309) | (2,189) | (12) | (24) |
A related party is a person or entity that is related to NLB Group in such a manner that it has control or joint control, has a significant influence, or is a member of the key management personnel (Management Board, other key management personnel and their family members); the Supervisory Board; companies in which members of the Management Board have control, joint control, or a significant influence; a major shareholder of NLB with significant influence, subsidiaries, associates and joint ventures.
| in EUR thousands | NLB Group Management Board and other Key management personnel | Family members of the Management Board and other key management personnel | Companies in which members family members have control, joint control or a significant influence | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||
| Loans issued | Balance at 1 January | 2,173 | 2,097 | 469 | 415 | - | 532 | 54 | 60 | |||
| Increase | 1,214 | 1,526 | 307 | 324 | - | 8 | 46 | 76 | ||||
| Decrease | (1,532) | (1,450) | (332) | (270) | - | (540) | (76) | (82) | ||||
| Balance at 31 December | 1,855 | 2,173 | 444 | 469 | - | - | 24 | 54 | ||||
| Interest income | 57 | 41 | 17 | 10 | - | - | 1 | - | ||||
| Deposits received | Balance at 1 January | 2,556 | 2,170 | 926 | 718 | 218 | 590 | 348 | 505 | |||
| Increase | 2,617 | 2,938 | 1,440 | 634 | 496 | 6,413 | 407 | 398 | ||||
| Decrease | (2,806) | (2,552) | (1,213) | (426) | (442) | (6,785) | (338) | (555) | ||||
| Balance at 31 December | 2,367 | 2,556 | 1,153 | 926 | 272 | 218 | 417 | 348 | ||||
| Interest expenses | (33) | (7) | (6) | - | - | - | (5) | (2) | ||||
| Other financial liabilities | 1 | 2 | - | - | 12 | 3 | - | - | ||||
| Other financial liabilities measured at fair value through profit or loss (note 2.31.) | 2,075 | 801 | - | - | - | - | - | - | ||||
| Other operating liabilities | 11,066 | 6,559 | - | - | - | - | - | - | ||||
| Guarantees issued and loan commitments | 287 | 237 | 64 | 70 | - | - | 14 | 17 | ||||
| Fee income | 19 | 19 | 8 | 7 | 3 | 66 | 1 | 2 | ||||
| Other income | 16 | 17 | - | - | - | - | - | - | ||||
| Other expenses | - | - | - | - | (94) | (382) | (1) | - |
| in EUR thousands | NLB Management Board and other Key management personnel | Family members of the Management Board and other key management personnel | Companies in which members of the Management Board, key management personnel or their family members have control, joint control or a significant influence | Supervisory Board | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||
| Loans issued | Balance at 1 January | 2,172 | 2,097 | 469 | 415 | - | 532 | 54 | 60 | ||||
| Increase | 1,203 | 1,480 | 307 | 324 | - | 8 | 46 | 76 | |||||
| Decrease | (1,521) | (1,405) | (332) | (270) | - | (540) | (76) | (82) | |||||
| Balance at 31 December | 1,854 | 2,172 | 444 | 469 | - | - | 24 | 54 | |||||
| Interest income | 57 | 41 | 17 | 10 | - | - | 1 | - | |||||
| Deposits received | Balance at 1 January | 2,536 | 2,170 | 926 | 718 | 218 | 590 | 348 | 505 | ||||
| Increase | 2,555 | 2,643 | 1,440 | 634 | 496 | 6,413 | 407 | 398 | |||||
| Decrease | (2,734) | (2,277) | (1,213) | (426) | (442) | (6,785) | (338) | (555) | |||||
| Balance at 31 December | 2,357 | 2,536 | 1,153 | 926 | 272 | 218 | 417 | 348 | |||||
| Interest expenses | (33) | (7) | (6) | - | - | - | (5) | (2) | |||||
| Other financial liabilities | 1 | 2 | - | - | 12 | 3 | - | - | |||||
| Other financial liabilities measured at fair value through profit or loss (note 2.31.) | 1,975 | 728 | - | - | - | - | - | - | |||||
| Other operating liabilities | 11,080 | ||||||||||||
| Guarantees issued and loan commitments | 279 | 223 | 64 | 70 | - | - | 14 | 17 | |||||
| Fee income | 19 | 18 | 8 | 7 | 3 | 66 | 1 | 2 | |||||
| Other income | 16 | 17 | - | - | - | - | - | - | |||||
| Other expenses | - (94) (382) (1) - |
| Member / Mandate | 2023 | 2022 |
|---|---|---|
| Blaž Brodnjak 1.12.2012 | * Short-term benefits: | |
| * * - gross salary and holiday allowance: 662,159 | ||
| * - benefits and other short-term bonuses: 9,040 | ||
| Costs refunds: 1,490 | ||
| * Long-term bonuses: | ||
| * * - other benefits: 2,904 | ||
| * - variable part of payments: 92,854 | ||
| Total: 768,447 | - Short-term benefits: | |
| - * - gross salary and holiday allowance: 542,3 | ||
| * - benefits and other short-term bonuses: 6,908 | ||
| Costs refunds: 1,318 | ||
| - Long-term bonuses: | ||
| - * - other benefits: 1,912 | ||
| * - variable part of payments: 95,214 | ||
| Total: 647,7 | ||
| Peter Andreas Burkhardt 18.09.2013 | * Short-term benefits: | |
| * * - gross salary and holiday allowance: 552,167 | ||
| * - benefits and other short-term bonuses: 46,318 | ||
| Costs refunds: 1,540 | ||
| * Long-term bonuses: | ||
| * * - other benefits: 3,364 | ||
| * - variable part of payments: 83,480 | ||
| Total: 686,869 | - Short-term benefits: | |
| - * - gross salary and holiday allowance: 486,4 | ||
| * - benefits and other short-term bonuses: 33,588 | ||
| Costs refunds: 1,243 | ||
| - Long-term bonuses: | ||
| - * - other benefits: 1,452 | ||
| * - variable part of payments: 89,13 | ||
| Total: 611,85 | ||
| Archibald Kremser 31.07.2013 | * Short-term benefits: | |
| * * - gross salary and holiday allowance: 632,159 | ||
| * - benefits and other short-term bonuses: 33,364 | ||
| Costs refunds: 1,324 | ||
| * Long-term bonuses: | ||
| * * - other benefits: 3,364 | ||
| * - variable part of payments: 88,539 | ||
| Total: 758,750 | - Short-term benefits: | |
| - * - gross salary and holiday allowance: 517,3 | ||
| * - benefits and other short-term bonuses: 39,220 | ||
| Costs refunds: 1,302 | ||
| - Long-term bonuses: | ||
| - * - other benefits: 1,452 | ||
| * - variable part of payments: 91,870 | ||
| Total: 651,2 |
| in EUR thousands | NLB Group | NLB Management Board | Other key management personnel | Supervisory Board |
|---|---|---|---|---|
| 2023 | 3,076 | 6,604 | 728 | |
| 2022 | 2,282 | 6,148 | 696 | |
| Short-term benefits | 3,437 | 8,251 | 832 | |
| Cost refunds | 9 | 112 | 104 | |
| Long-term bonuses: | - severance pay | - | - | |
| - other benefits | 53 | 163 | - | |
| - variable part of payments | 299 | 1,252 | - | |
| Total | 3,437 | 8,251 | 832 |
| Member / Mandate | 2023 | 2022 | |
|---|---|---|---|
| Primož Karpe | Annual compensation | 103,680 | 96,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 9,300 | 10,952 | |
| David Eric Simon | Annual compensation | 87,480 | 81,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 13,162 | 7,931 | |
| Shrenik Dhirajlal Davda | Annual compensation | 83,683 | 72,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 19,444 | 8,767 | |
| Mark William Lane Richards | Annual compensation | 87,480 | 81,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 18,141 | 9,493 | |
| Verica Trstenjak | Annual compensation | 73,254 | 66,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 3,490 | 1,473 | |
| Sergeja Kočar | Annual compensation | 23,659 | 8,327 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 1,017 | 1,183 | |
| Islam Osama Bahgat Zekry | Annual compensation | 77,760 | 72,000 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 17,656 | 17,622 | |
| Tadeja Žbontar Rems | Annual compensation | 44,774 | 31,215 |
| Other bonuses - benefit | 279 | 382 | |
| Costs refunds | 309 | 185 | |
| Cvetka Selšek | Annual compensation | 30,102 | - |
| Other bonuses - benefit | 279 | - | |
| Costs refunds | 2,580 | - | |
| André Marc Richard Prudent Toccanier | Annual compensation | 33,063 | - |
| Other bonuses - benefit | 279 | - | |
| Costs refunds | 6,773 | - | |
| Gregor Rok Kastelic | Annual compensation | 38,025 | 81,000 |
| Other bonuses - benefit | - | 382 | |
| Costs refunds | 4,527 | 9,340 | |
| Andreas Klingen | Annual compensation | 42,250 | 90,000 |
| Other bonuses - benefit | - | 382 | |
| Costs refunds | 7,917 | 7,360 | |
| Bojana Šteblaj | Annual compensation | - | 12,014 |
| Other bonuses - benefit | - | - |
| Janja Žabjek Dolinšek | Annual compensation | - | 1,473 |
|---|---|---|---|
| 20.11.2020 - 08.07.2022 | Other bonuses - benefit | - | - |
| Costs refunds | - | 32 | - |
| NLB Group | Associates | Joint ventures | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|---|---|
| Loans issued | Balance at 1 January | 1,057 | 1,011 | 201 | 201 | |||
| Acquisition of subsidiaries | - | 77 | - | - | ||||
| Increase | 1,161 | 145 | 2 | 2 | ||||
| Decrease | (2,208) | (176) | (203) | (2) | ||||
| Balance at 31 December | 10 | 1,057 | - | 201 | ||||
| Interest income | 63 | 39 | 1 | 3 | ||||
| Impairment | 825 | (8) | 6 | 2 | ||||
| Deposits received | Balance at 1 January | 5,375 | 7,967 | 3,071 | 3,492 | |||
| Effects of translation of foreign operations to presentation currency | - | - | (3) | 3 | ||||
| Increase | 10,378 | 5,982 | 6,902 | 1,073 | ||||
| Decrease | (9,585) | (8,574) | (8,519) | (1,497) | ||||
| Balance at 31 December | 6,168 | 5,375 | 1,451 | 3,071 | ||||
| Interest expenses | - | - | (36) | (46) | ||||
| Other financial assets | 7 | 7 | 1 | - | ||||
| Other financial liabilities | 1,460 | 1,116 | - | 1 | ||||
| Guarantees issued and loan commitments | 30 | 2,034 | - | - | ||||
| Income/(expenses) | provisions for guaranties and commitments | 2 | (1) | - | - | |||
| Fee income | 8 | 69 | - | - | ||||
| Fee expenses | (16,167) | (12,894) | - | - | ||||
| Other income | 53 | 92 | 5 | 5 | ||||
| Other expenses | (1,174) | (571) | - | - |
| NLB | Subsidiaries | Associates | Joint ventures | 2023 | 2022 | ||||
|---|---|---|---|---|---|---|---|---|---|
| Loans issued | Balance at 1 January | 337,900 | 250,303 | 982 | 1,011 | ||||
| Increase | 660,088 | 536,279 | 1,161 | 145 | 2 | 2 | |||
| Decrease | (539,304) | (448,682) | (2,133) | (174) | (203) | (2) | |||
| Balance at 31 December | 458,684 | 337,900 | 10 | 982 | - | 201 | |||
| of which at amortised cost | 450,213 | 328,641 | 10 | 982 | - | 201 | |||
| of which at fair value through profit or loss | 8,471 | 9,259 | - | - | - | - | |||
| Interest income | 19,938 | 7,461 | 63 | 39 | 1 | 3 | |||
| Impairment | 11 | (645) | 861 | 27 | 6 | 2 | |||
| Valuation | 1,231 | (2,225) | - | - | - | - | |||
| Deposits | Balance at 1 January | 223,492 | 83,948 | - | - | - | |||
| Increase | 1,120,256 | 2,171,418 | - | - | - | - | |||
| Decrease | (1,321,986) | (2,031,874) | - | - | - | - | |||
| Balance at 31 December | 21,762 | 223,492 | - | - | - | - | |||
| Interest income | 985 | 940 | - | - | - | - | |||
| Interest expenses | - | (5) | - | - | - | - | |||
| Impairment | 43 | (18) | - | - | - | - | |||
| Loans received | Balance at 1 January | 13,001 | 44,484 | - | - | - | |||
| Increase | 36,887 | 13,001 | - | - | - | - | |||
| Decrease | (49,888) | (44,484) | - | - | - | - | |||
| Balance at 31 December | - | 13,001 | - | - | - | - | |||
| Interest income | - | 9 | - | - | - | - | |||
| Interest expenses | (12) | (2) | - | - | - | - | |||
| Deposits received | Balance at 1 January | 165,778 | 68,372 | 5,375 | 7,967 | 40 | 27 | ||
| Increase | 87,107,211 | 23,967,799 | 10,378 | 5,982 | 418 | 82 | |||
| Decrease | (87,168,040) | (23,870,393) | (9,585) | (8,574) | (63) | (69) | |||
| Balance at 31 December | 104,949 | 165,778 | 6,168 | 5,375 | 395 | 40 | |||
| Interest expenses | (5,205) | (465) | - | - | - | - | |||
| Derivatives | Fair value | 54 | (6,681) | - | - | - | |||
| Contractual amount | 298,290 | 113,711 | - | - | - | - | |||
| Interest income | 25 | 312 | - | - | - | - | |||
| Interest expenses | (208) | (181) | - | - | - | - | |||
| Other financial assets | 2,058 | 2,514 | 7 | 7 | - | - |
The volumes of related party transactions with major shareholder are as follows:
| in EUR thousands | NLB Group | NLB | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | 2023 | 2022 | ||||||
| Loans issued | Balance at 1 January | 17,595 | 20,534 | 17,595 | 20,534 | ||||
| Increase | 2,731 | 3,708 | 2,731 | 3,708 | |||||
| Decrease | (6,942) | (6,647) | (6,942) | (6,647) | |||||
| Balance at 31 December | 13,384 | 17,595 | 13,384 | 17,595 | |||||
| Interest income | 713 | 713 | 713 | 713 | |||||
| Investments in securities | Balance at 1 January | 564,287 | 534,522 | 473,389 | 483,656 | ||||
| Exchange difference on opening balance | (27) | 36 | - | - | |||||
| Acquisition of subsidiaries | - | 151,047 | 33,617 | - | |||||
| Increase | 550,561 | 672,692 | 409,682 | 553,823 | |||||
| Decrease | (548,065) | (746,698) | (410,346) | (521,066) | |||||
| Valuation | 10,773 | (47,312) | 10,584 | (43,024) | |||||
| Balance at 31 December | 577,529 | 564,287 | 516,926 | 473,389 | |||||
| Interest income | 7,131 | 5,816 | 5,692 | 5,844 | |||||
| Interest expenses | (21) | - | (21) | - | |||||
| Other financial assets | 65 | 31,141 | 65 | 31,141 | |||||
| Other financial liabilities | 20 | 2 | 20 | 2 | |||||
| Guarantees issued and loan commitments | 1,466 | 1,194 | 1,466 | 1,194 | |||||
| Fee income | 574 | 350 | 574 | 350 | |||||
| Fee expenses | (28) | (28) | (28) | (28) | |||||
| Other income | 272 | 257 | 272 | 257 | |||||
| Other expenses | (5,009) | (3) | (5,009) | (3) | |||||
| Gains less losses from financial assets and liabilities not measured at fair value through profit or loss | (656) | - | (656) | - | |||||
| Gains less losses from financial assets and liabilities held for trading | - | (66) | - | (66) |
| 2023 | 2022 | Number of significant transactions concluded during the year | |
|---|---|---|---|
| Guarantees issued and loan commitments | 50,000 | 188,000 | 1 |
| 3 |
| 2023 | 2022 | Number of significant transactions at year-end | |
|---|---|---|---|
| Loans | 406,005 | 565,330 | 10 |
| Debt securities measured at amortised cost | 64,132 | 64,913 | 1 |
| Borrowings, deposits and business accounts | 30,399 | 108,606 | 3 |
| Guarantees issued and loan commitments | 152,500 | 152,500 | 2 |
| 2023 | 2022 | |
|---|---|---|
| Interest income from loans | 18,489 | 5,130 |
| Fees and commissions income | 51 | 777 |
| Interest income from debt securities measured at amortised cost and net valuation effects from hedge accounting | 2,411 | (4,940) |
| Interest expenses from borrowings, deposits, and business accounts | - | (99) |
| 367 |
Overview MB Statement SB Statement Key Highlights Business Report Strategy Risk Factors & Outlook Sustainability Performance Overview Segm
Nova Ljubljanska banka d.d., Ljubljana
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 39 00, +386 1 477 20 00
E-mail: [email protected]
www.nlb.si
Blaž Brodnjak, CEO
Burkhardt, CRO
Archibald Kremser, CFO
Andrej Lasič, CMO (responsible for Corporate and Investment Banking)
Hedvika Usenik, CMO (responsible for Retail Banking and Private Banking)
| Northwest and Central Slovenia | Ljubljanska cesta 62 | 1230 Domžale, Slovenia |
|---|---|---|
| East Slovenia | Titova cesta 2 | 2000 Maribor, Slovenia |
| Northeast Slovenia | 3 | 8000 Novo mesto, Slovenia |
| Southwest Slovenia | Cesta Zore Perello - Godina 7 | 6000 Koper, Slovenia |
Trg republike 2
1000 Ljubljana, Slovenia
Ljubljana, Slovenia
Central region
Trg republike 2
1000 Ljubljana, Slovenia
Ljubljanska cesta 62
1230 Domžale, Slovenia
Titova cesta 2
2000 Maribor, Slovenia
Kocenova 1
3000 Celje, Slovenia
Seidlova cesta 3
8000 Novo mesto, Slovenia
Trg republike 2
1000 Ljubljana, Slovenia
Trg republike 2
1000 Ljubljana, Slovenia
Trg republike 2
NLB Komercijalna Banka AD Beograd
Bulevar Mihajla Pupina 165v
11070 New Belgrade, Serbia
E-mail: [email protected]
www.nlbkb.rs
Vlastimir Vuković, President of the Management Board
Vladimir Bošković, Member of the Management Board
Bojana Kaličanin - Stojanović, Member of the Management Board
NLB Banka AD Skopje
Vodnjanska 1
1000 Skopje, North Macedonia
Peter Zelen, Member of the Management Board
Igor Davčevski, Member of the Management Board
NLB Banka a.d. Banja Luka
Milana Tepića 4
78000 Banja Luka, Republic of Srpska
Goran Babić, President of the Management Board
Marjana Usenik, Member of the Management Board
Ljiljana Krsman, Member of the Management Board
NLB Banka d.d., Sarajevo
www.nlb.ba
Lidija Žigić, President of the Management Board
Denis Hasanić, Member of the Management Board
Jure Peljhan, Member of the Management Board
Marjana Usenik was appointed as Member of the Management Board starting from 1 January 2024.
Mirsad Haskaj was appointed as Member of the Management Board as of 1 January 2024.
NLB Banka d.d., Prishtina
10000 Prishtina, Kosovo
E-mail: [email protected]
www.nlb-kos.com
Gazmend Kadriu, President of the Management Board
Gem Maloku, Member of the Management Board
NLB Banka d.d., Montenegro
E-mail: [email protected]
www.nlb.me
Martin Leberle, President of the Management Board
Dražen Vujošević, Member of the Management Board
Lana Đurasović, Member of the Management Board
NLB Digital Banka d.o.o., Belgrade, Serbia
E-mail: [email protected]
www.nlbdigit.rs
Vladimir Rupar, Director
Mina Popović, Director
KomBank Invest a.d. Beograd
Kralja Petra 19
11000 Belgrade, Serbia
E-mail: [email protected]
NLB Lease&Go, leasing, d.o.o., Ljubljana
Šlandrova ulica 2
1231 Ljubljana - Črnuče, Slovenia
E-mail: [email protected]
www.nlbleasego.si
Andrej Pucer, Director
Anže Pogačnik, Director
NLB Lease&Go Leasing d.o.o., Beograd
Mihajla Pupina 1
1000 Skopje, North Macedonia
E-mail: [email protected]
www.nlbleasego.rs
Gregor Martinuč, Director
Gjore Andonovski, Director
NLB Cultural Heritage Management Institute, Ljubljana
Čopova ulica
NLB Leasing d.o.o., Ljubljana – v likvidaciji
Šlandrova ulica 2
1231 Ljubljana - Črnuče, Slovenia
E-mail: [email protected]
Anže Pogačnik, Liquidator
Prvi faktor d.o.o., Beograd – u likvidaciji
Bulevar Mihajla Pupina 1
France Zupan, Liquidator
Iztok Zupanc, Liquidator
d.o.o. u likvidaciji, Zagreb Miramarska cesta 24 10000 Zagreb, Croatia E-mail: [email protected] Vjekoslav Budimir, Liquidator
NLB InterFinanz AG in Liquidation, Zürich Beethovens Llort, Liquidator Polona Žižmund, Liquidator
NLB InterFinanz d.o.o., Beograd – u likvidaciji Bulevar Mihajla Pupina 165v 11070 New Belgrade, Serbia Liljana Zoraja, Liquidator
NLB S E-mail: [email protected] www.nlbskladi.si Luka Podlogar, President of the Management Board Blaž Bračič, Member of the Management Board
Bankart d.o.o., Ljubljana Celovška cesta Kurtevski, Director Tomaž Borštner, Director
LHB Aktiengesellschaft, Frankfurt am Main Silberbornstrasse 14 D-60320 Frankfurt, Germany E-mail: [email protected] Matjaž Jevn
128A 1000 Ljubljana, Slovenia E-mail: [email protected] Anže Boris Dugar, Director Julijana Milić, Director
PRO-REM d.o.o., Ljubljana – v likvidaciji Čopova 3 1000 Ljubljana, Slov Novak, Liquidator
REAM d.o.o., Podgorica Bul. Džordža Vašingtona br. 102, I. sprat/20 81000 Podgorica, Montenegro E-mail: [email protected] www.nlbrealestate.com Gligor Bojić,
Zagreb Miramarska 24 10000 Zagreb, Croatia E-mail: [email protected] Vjekoslav Budimir, Liquidator Ivan Štrek, Liquidator
REAM d.o.o., Beograd Bulevar Mihajla Pupina 16 www.nlbrealestate.com Miroslav Živković, Director Bojana Kostandinović, Director
NLB Srbija d.o.o., Beograd Bulevar Mihajla Pupina 165v 11070 New Belgrade, Serbia E-mail: office@
Podgorica Bulevar Džordža Vašingtona 102, II sprat/38 81000 Podgorica, Montenegro E-mail: [email protected] Goran Laličević, Executive Director Barbara Šink, Authorised Repre
1000 Ljubljana, Slovenia E-mail: [email protected] www.nlbrealestate.com Lamija Hadžiosmanović, Director Miroslav Živković, Director
ARG – Nepremičnine d.o.o. Vrhniška Director Branches and representative Offices of NLB Group members outside their country of residence
| AC | Amortised Costs |
|---|---|
| ALCO | Asset and Liability Committee |
| ALM | Asset and Liability Management |
| ALMM | Additional Liquidity Monitoring Metrics |
| AML/CTF | Anti-Money Laundering/Counter-Terrorism Financing |
| Assets under Management | |
| B2C | Business-to-Consumer |
| BCA | Baseline Credit Assessment |
| BCM | Business Continuity Management |
| BIA | Business Impact Analysis |
| BiH | Bosnia and Herzegovina |
| BM | Central Bank |
| CBR | Combined Buffer Requirement |
| CEE | Central Eastern Europe |
| CEO | Chief Executive Officer |
| CET1 | Common Equity Tier 1 capital |
| CFO | Chief Financial Officer |
| CGU | Cash-Generating Unit |
| CoR | Cost of Risk |
| CRD | Capital Requirements Directive |
| CRE | Commercial Real Estate |
| CRM | Customer Relationship Management |
| CRO | Chief Risk Officer |
| CRR | Capital Requirements Regulation |
| CSR | Corporate Social Responsibility |
| CSRD | Corporate Sustainable Reporting Directive |
| CVA | Credit Value Adjustments |
| DGS | Deposit Guarantee Scheme |
| DTA | Deferred Tax Asset |
| DWH | Data Warehouse |
| ECB | European Central Bank |
| ECL | Expected Credit Losses |
| ECRA | Enterprise Compliance Risk Assessment |
| EEA | European Economic Area |
| EI | Per Share |
| ESEF | European Single Electronic Format |
| E\&S | Environmental and Social |
| ESG | Environmental, Social and Governance |
| ESMS | Environmental and Social Management System |
| EU | European Union |
| FTE | Full Time Equivalent |
| FTP | Fund Transfer Pricing |
| FURS | Financial Administration of the Republic of Slovenia |
| FVOCI | Fair Value Through Other Comprehensive Income |
| FVTPL | Fair Value Through Profit or Loss |
| GDP | Gross Domestic Product |
| GDPR | General Data Protection Regulation |
| GDR | Global Depositary Receipts |
| GGB | Government Guaranteed Bonds |
| HHI | Herfindahl-Hirschman Index |
| HR | Human Resources |
| IA | Internal Capital Adequacy Assessment Process |
| ICMA | International Capital Market Association |
| IFRIC | International Financial Reporting Interpretations Committee |
| IFRS | International Financial Reporting Standards |
| IRRBB | Interest Rate Risks for Banking Book |
| IRS | Interest Rate Swaps |
| ISDA | International Swaps and Derivatives Association |
| IVS | International Valuation Standards |
| JST | Joint Supervisory Team |
| KRI | Key Risk Indicators |
| LCP | Liquidity Contingency Plan |
| LCR | Liquidity Coverage Ratio |
| LECL | Lifetime Expected Credit Losses |
| LPD | Lifetime Probability of a Default |
| LRE | Leverage Ratio Exposure |
| LTD | Loan-to-Deposit Ratio |
| M\&A | Mergers and Acquisitions |
| MA | Master Agreements |
| MAR | Market Abuse Regulation |
| MIGA | Multilateral Investment Guarantee Agency (part of the World Bank Group) |
| MREL | Minimum Requirement of Own Funds and Eligible Liabilities |
| MS | Mid-swaps |
| NGW | Negative Goodwill, i.e. Gains from Bargain Purchase |
| NLB or the Bank | NLB d.d. |
| NPE | Non-Performing Exposures |
| NPL | Non-Performing Loans |
| NPS | Net Promoter Score |
| OBM | Operational Business Margin |
| OCI | Other Comprehensive Income |
| OCR | Overall Capital Requirement |
| OEM | Original Exposure Method |
| O-SII | Other Systemically Important Institutions |
| P2G | Pillar 2 Guidance |
| P2M | Person to Merchant |
| P2P | Person to Person |
| P2R | Pillar 2 Requirements |
| PD | Probability of Default |
| PMI | Purchasing Managers’ Index |
| POCI | Purchased or Originated Credit-Impaired |
| RFR | Risk-Free Rates |
| RICO | Risk Committee |
| RICS | Royal Institution of Chartered Surveyors |
| ROA | Return on Assets |
| ROE | Return on Equity |
| RORAC | Return On Risk-Adjusted Capital |
| SICR | Significant Increase of Credit Risk |
| SLA | Service Level Agreements |
| SME | Small and Medium-sized Enterprises |
| SPPI | Solely Payment of Principal and Interest |
| SRB | Single Resolution Board |
| SSM | Single Supervisory Mechanism |
| TCFD | Task force on Climate Related Financial Disclosures |
| TCR | Total Capital Ratio |
| TDI | Traded Debt Instruments |
| The Group | NLB Group |
| TSCR | Total SREP Capital Requirement |
| UN | United Nations |
| UN SDG | United Nations Sustainable Development Goals |
| UNEP FI PRB | United Nations Environment Programme Finance Initiative’s Principles for Responsible Banking |
Slovenian Banking Act ZGD-1
Companies Act
ZPIZ Slovenian Pension and Disability Insurance Act
ZPPDFT-2 Prevention of Money Laundering and Terrorist Financing Act
ZPPDFT-2A Act Am Instruments Market Act
ZVKNNLB Slovenian Act for Value Protection of Republic of Slovenia’s Capital Investment in Nova Ljubljanska banka d.d., Ljubljana
ZVOP-2 Slovenian Personal Data
Production: Saatchi & Saatchi Ljubljana
Photographs: Archive of NLB and Archives of Sports Associations and Clubs
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