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NLB Investor Presentation 2020
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Investor Presentation
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NLB Group Presentation
FY2019 Unaudited Results
Disclaimer
This presentation has been prepared by Nova Ljubljanska banka d.d., Ljubljana (the "Company"). This presentation has been prepared solely for the purpose of informative presentation of the business conduct of the Company. This presentation has not been approved by any regulatory authority and does not constitute or form part of any offer to sell or issue or invitation to purchase, or any solicitation of any offer to purchase, any securities of the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision.
This presentation should not be considered as a recommendation that any recipient of this presentation should purchase or sell any of the Companies financial instruments or groups of financial instruments or assets. This presentation does not include all necessary information, which should be considered by the recipient of this presentation when making a decision on purchasing any of the the Companies financial instruments or assets. Each recipient of this presentation contemplating purchasing any of the Companies financial instruments or assets should make its own independent investigation of the financial condition and affairs, and its own appraisal of the Companies creditworthiness. Any corporate body or natural person interested in investing into Companies financial instruments or assets should consult well-qualified professional financial experts and thus obtain additional information. The information and opinions contained in this presentation are provided as at the date of the presentation and are subject to change. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this presentation, or on its completeness, accuracy or fairness.
The presentation has not been independently verified and no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of their respective parent or subsidiary undertakings or associated companies, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, as to, and no reliance should be placed for any purpose whatsoever on the truth, fullness, accuracy, completeness or fairness of the information or opinions contained in this presentation or any other information relating to the Company, its subsidiary undertakings or, associated companies or affiliates, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available and no responsibility or liability whatsoever is assumed by any such persons for any such information or opinions or for any errors or omissions or for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation is subject to correction, completion and change without notice..
This presentation does not purport to contain all information that may be required to evaluate the Company. In giving this presentation, none of the Company or any of their respective parent or subsidiary undertakings or associated companies, or any of such person's respective directors, officers, employees, agents, affiliates or advisers, or any other party undertakes or is under any obligation to amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in connection with it. None of the foregoing persons accepts any responsibility whatsoever for the contents of this presentation, and no representation or warranty, express or implied, is made by any such person in relation to the contents of this presentation. To the fullest extent permissible by law, such persons disclaim all and any responsibility or liability, whether arising in tort, contract or otherwise, which they might otherwise have in respect of this presentation. Recipients should not construe the contents of this presentation as legal, tax, regulatory, financial or accounting advice and are urged to consult with their own advisers in relation to such matters.
To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. Third industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company reasonably believes that each of these publications, studies and surveys has been prepared by a reputable source, the Company have not independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the markets in which the Company operates. While the Company reasonably believes that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly, undue reliance should not be placed on any of the industry, market or competitive position data contained in this presentation.
This presentation may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior, written consent of the Company. The manner of distributing this presentation may be restricted by law or regulation in certain countries, including (but not limited to) the United States, Canada, Australia or Japan. Persons into whose possession this presentation may come are required to inform themselves about and to observe such restrictions. By accepting this presentation, a recipient hereof agrees to be bound by the foregoing limitations.
NLB is regulated by The Bank of Slovenia i.e. "Banka Slovenije, Slovenska 35, 1505 Ljubljana, Slovenia" and by The Securities Market Agency i.e. "Agencija za trg vrednostnih papirjev, Poljanski nasip 6, 1000 Ljubljana, Slovenia.
NLB Group Highlights
Key developments
• Total Tier2 issuance EUR 285m
- ✓ In February 2020, NLB successfully completed the issuance of subordinated Tier 2 notes for inclusion in additional capital in the amount of EUR 120m on the international capital markets, with the interest rate of 3.40% p.a.
- ✓ November 2019, EUR 120m, subordinated Tier2 notes
- ✓ May 2019, EUR 45m, subordinated Tier2 notes
- Regulatory changes
- ➢ BoS restrictions on consumer lending in Slovenia
- Divestment of shareholdings in NLB Vita in December 2019
- New online application NLB Odkup terjatev for the purchase of recievables
Key performance indicators of NLB Group
| Medium-term targets set in 2018(1) | |||||
|---|---|---|---|---|---|
| YE 17 | YE 18 | YE19 | Medium term | ||
| Net interest margin(2) | 2.57% | 2.56% | 2.48% | >2.7% | |
| Loans to deposits ratio | 70.8% | 68.3% | 65.5% | <95% | |
| Total capital ratio | 15.9% | 16.7% | 16.3% | 16.25%(8) | |
| Cost-income ratio | 58.4% | 58.5% | 58.7% | ~50% | |
| Cost of risk(3) | -62 bps | -43 bps | -20 bps | <90bps(6) | |
| Return on equity (RoE) | 14.4% | 11.8% | 11.7% | ~12.0% | |
| Dividend payout | 84%(5) | 70% | 70% | ~70%(7) | |
| NPE ratio(4) | 6.7% | 4.7% | 2.7% | <4.0% |
Source: Company information
Note: (1) Target set by NLB management as a part of their financial projections for 2019-2023; (2) Calculated on the basis of interest bearing assets; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period). (3) Calculated as credit impairments and provisions over average net loans to customers; (4) Based on EBA definition. (5) Payout calculated based on 2017 profit. Total dividend paid for 2017 amounted to EUR 270.6 million (EUR 189.1 million of profit for 2017 and EUR 81.5 million of retained profit from previous years) i.e. dividend payout 120%. (6) CoR < 90bps should be read as NLB Group's limit that should not be exceeded even in deteriorated economic conditions. (7) The payment of dividends by NLB, will depend on NLB's capital structure, risk appetite, profits, financial condition, regulatory requirements, general economic and business conditions, and future prospects. (8) Target total capital ratio is regularly revised by the competent bodies to reflect each time the applicable capital requirements.
Revenues and Cost Dynamics
Net non-interest income (Group, EURm)
Cost of risk (Group, bps)
Net impairments and provisions (Group, EUR m)
Loan dynamics
Gross loans to individuals Gross loans to corporate
3.91% 4.10% 4.11%
2,339.7 2,241.6 2,376.8
+2% QoQ
+6% YoY
31 Dec 2018 30 Sep 2019
Yields - loans to individuals
Gross loans to individuals (in EUR million)
0
0
1,500
1,000
500
500
1,500 1,000
2,000 2,500
31 Dec 2019
Gross loans to corporate (in EUR million)
Yields - loans to corporate
0
1,000 1,500
2,000 2,500
500
0 500
Note: (1) Without funding of subsidiaries; (2) Only banks also before new segmentation from 2019 on; consolidated data for volumes.
2.0
2.5 3.0
0.0 0.5 1.0 1.5
Income Statement
Result after tax of NLB Group – evolution YoY (EURm)
Notes: (1) Gains less losses from capital investments in subsidiaries, associates, and joint ventures. (2) NLB Skladi, NLB Vita and Bankart.
In 2019, NLB Group generated EUR 193.6 million of profit after tax:
- Higher net interest income, due to an increase of interest income in most of the banks of the Group, supported by loan book growth.
- Higher net fee and commission income, mainly from the retail segment in the Bank and in the banking subsidiaries in SEE. Most of the foreign banks recorded an increase in number of customers.
- Increase in total costs mostly due to higher employee (adjustments on management board and senior management post-privatization compensation ) and general and administrative costs (licences, consulting and supervision).
- EUR 1.0 million of net provisions and impairments were established in 2019, while EUR 23.3 million were released in 2018.
- Income tax was EUR 8.2 million lower, mainly due to an increase of recognized deferred tax assets (DTA) (based on stable results and profit projection in the Bank, estimated 5 years DTA utilization increased).
Result before impairments and provisions (Group, EURm) Contribution to the NLB Group consolidated result a.t. (EURm)
Balance sheet structure – NLB Group
Simple client business driven balance sheet
(31 Dec 2019, in EUR million)
Liabilities
NLB Group – performance indicators across SEE countries
| Slovenia | North Macedonia |
Bosnia and Herzegovina |
Kosovo Montenegro |
Serbia | NLB Group | |||
|---|---|---|---|---|---|---|---|---|
| NLB d.d., Ljubljana |
NLB Banka Skopje |
NLB Banka Banja Luka |
NLB Banka Sarajevo |
NLB Banka Prishtina |
NLB Banka Podgorica |
NLB Banka Beograd |
||
| Data on stand-alone | basis | Consolidated data* |
||||||
| Result after tax (EURm) |
176.1 | 32.9 | 17.1 | 9.0 | 19.5 | 7.6 | 4.1 | 193.6 |
| Total assets (EURm) |
9,802 | 1,462 | 773 | 638 | 801 | 548 | 614 | 14,174 |
| RoE a.t. |
11.6% | 16.2% | 19.9% | 11.2% | 25.1% | 11.2% | 5.9% | 11.7% |
| Net interest margin(1) |
1.85% | 3.66% | 2.51% | 2.95% | 4.33% | 4.27% | 4.03% | 2.48% |
| Cost/income | 53.7% | 41.0% | 43.2% | 53.3% | 31.9% | 51.4% | 78.3% | 58.7% |
| Loans/ Deposits % (net) |
59.1% | 77.8% | 66.6% | 77.5% | 78.8% | 79.3% | 94.2% | 65.5% |
| NPL ratio | 2.8% | 4.2% | 1.3% | 3.3% | 1.5% | 4.0% | 1.6% | 3.8% |
| NLB ownership (%) |
/ | 86.97% | 99.85% | 97.35% | 81.21% | 99.83% | 99.997% | / |
| No. of branches (#) |
93 | 52 | 53 | 38 | 35 | 19 | 28 | 318 |
| Market(2) share % |
23.8% | 16.0%(3) | 18.8%(3, 4) | 5.3%(3, 5) | 17.6% | 11.9% | 1.7%(6) | / |
Note: Financial data as of December 2019
*Consolidated data. Including non-core members and other activities and other core members.
(1)Calculated on the basis of interest bearing assets; (2) Market share based on total assets; (3) Data for market share as of 30 Sep 2019; (4) Market share in the Republika Srpska; (5) Market share in the Federation of BiH; (6) Data for market share as of 30 Jun 2019;
Business Performance
Net interest income & net interest margin
Net interest income increased YoY but remains under pressure
Interest expenses Interest income
Solid interest income growth YoY (Group, EURm) Stable net interest margin(1) (Group, %) 1-9 2019 1.89% 1-3 2019 1.85% 3.71% 2.56% 1-12 2018 3.63% 3.85% 1.92% 2.56% 1.91% 2.54% 3.67% 1-6 2019 2.48% 1.88% 1-12 2019 3.59% 2.51% NLB d.d. NLB Group Strategic foreign banks
Net interest margin(1) in NLB Group banks (in %)
Source: Company information Note: (1) Calculated on the basis of interest bearing assets; Interest margins for the Group and Strategic foreign banks for 2018 are adjusted to the new methodology valid from May 2019 (calculation daily averages).
Net interest income drivers – NLB d.d.
Note: (1) Without funding of subsidiaries; (2) Includes also other items from presented interest income from loans and interest expense from deposits; (3) Calculated on the basis of interest bearing assets.
2.0% 1.9% 1.9% 1.9%
NIM(3)
Net interest income drivers – Strategic foreign markets(1)
income from loans and interest expense from deposits; (4) Calculated on the basis of interest bearing assets.
Net non-interest income – NLB Group Good performance in Fees and Commissions
(1)
Net non-interest income (Group, EURm)
| in EUR million | 2019 | 2018 | Change YoY | |
|---|---|---|---|---|
| Recurring other net non-interest income | 3.9 | 5.0 | -1.2 | -23% |
| Net income from financial transactions (Fees from Exchange differences) |
11.5 | 10.5 | 1.0 | 10% |
| Net other income | -7.7 | -5.5 | -2.2 | -39% |
| - external realization (IT, cash logistics) | 3.4 | 3.9 | -0.5 | -12% |
| - rents | 5.1 | 6.9 | -1.8 | -26% |
| - regulatory charges (SRF, DGS) | -16.2 | -16.3 | 0.1 | 1% |
Net fee and commission income growing YoY (Group, EURm)
Net non-interest income totaling EUR 195.1 million increased by EUR 14.8 million or 8% YoY, due to the following factors:
• Higher net fee and commission income by EUR 9.7 million or 6%, mainly from the retail segment in the Bank and in the banking subsidiaries in SEE. Most of the foreign banks recorded an increase in number of customers.
• Recurring other net non-interest income amounted to EUR 3.9 million (EUR -1.2 million YoY) and was affected mainly by the regulatory costs (SRF and DGS) in the total amount of EUR 16.2 million and higher net gains from FX trading.
• Net non-interest income was positively impacted by non-recurring income as a partial repayment of a larger exposure measured at fair value through profit and loss and active management of banking book securities in the amount of EUR 4.5 million • In 2019, a positive one-off effect from revaluation of a non-core equity stake was realized in the amount of EUR 6.3 million in Q2; whereas in the same period of 2018, the net non-interest income was positively impacted by the sale of NLB Nov penziski fond, Skopje in the amount of EUR 12.2 million and negatively impacted by the sale of 28.13% minority stake in Skupna pokojninska družba in the amount of EUR 0.5 million.
Note: (1) From June 2019 on different presentation of non-recurring items is in use. (2) Includes investment funds, guarantees, investment banking, insurance products and other services.
Costs – NLB Group
Cost higher by 4% YoY
- EUR 12.8 million increase in total costs mostly due to higher employee (adjustments on management board and senior management post-privatization compensation ) and general and administrative costs (licences, consulting and supervision).
- EUR 1.6 million related to restructuring and EUR 3.0 million of performance rewards paid in December.
- CIR stood at 58.7%.
- Headcount dropped by 18% over 2012-2019 driven primarily by Slovenia core & non-core members.
- Ongoing closures of unprofitable branches.
Operating expenses (Group, EURm) Employees and branches evolution – stronger rationalisation in tougher Slovenia market (#)
NLB d.d. Other
Impairments and provisions & cost of risk
Cost of risk negative
Impairments and provisions (Group, EUR m)
In 2019, the Group established EUR 1.0 million of net impairments and provisions while in the same period of previous year EUR 23.3 million were released.
Impairments and provisions for credit risk were net released in the amount of EUR 13.3 million and thus the cost of risk was negative, -20 bps.
Other impairments and provisions in 2019 were net established in the amount of EUR 14.3 million (of which established HR provisions for reorganization in the Bank in the amount of EUR 5.5 million, pending legal disputes in the amount of EUR 5.7 million, and impairments of non-financial assets in the amount of EUR 3.2 million), while in 2018 were net established in the amount of EUR 6.9 million .
Cost of risk (Group, bps) Impairments and provisions for credit risk – contribution (EURm)
*Other includes: NLB Srbija, NLB Crna gora, Leasing companies, LHB Frankfurt and NLB InterFinanz
Assets and Liabilities
NLB Group Assets
Well diversified loan book, strong liquidity position
Total assets of NLB Group – structure (EURm)
20% 19% 21% 20% 17% State SME Corporates Institutions Retail mortgages Retail consumer 3%
Credit portfolio by segment (Group, 31 Dec 2019)
Banking book portfolio by asset class (Group, 31 Dec 2019)
NLB Group Assets – Loan portfolio
Balanced loan portfolio with loan growth in most of banks
Gross loans to customers by strategic member – contribution (EURm)
Gross loan growth in all subsidiaries banks, especially in NLB Banka, Beograd and NLB Banka, Prishtina.
Gross loans to individuals in subsidiary banks grew by 12% and to corporate by 9% YoY.
NLB Group Liabilities and Equity
Funding structure driven by stable and price insensitive deposit base
NLB Group Liabilities
Deposit growth; interest rates decreasing
Deposits from customers by strategic member – contribution (EURm)
Deposit growth across all markets, despite low interest rate environment.
NLB d.d. charges minimum 0.03% monthly fee on deposits volume (threshold from January 2019 at EUR 100k) to corporate deposits and account balances.
Capital - NLB Group
Strong capital position
NLB Group capital ratios (%) Capital structure and ratios
- At the end of December 2019, the Total capital ratio for NLB Group stood at 16.3% (or 0.5 p.p. lower YtD), and for NLB at 22.6% (1.4 p.p. lower YtD).
- In June 2019, NLB paid out dividends in total amount of EUR 142.6 million, which represents EUR 7.13 gross per share. This decreased capital for EUR -43.2 million, nevertheless, the Total capital in 2019 increased by EUR 42.4 million, mainly due to new Tier 2 instrument issued in May (EUR 44.6 million), partial inclusion of 2019 net profit (EUR 35.0 million) and higher Other Comprehensive Income (EUR 10.6 million).
| (in EUR million) | 31.12.2019 | 31.12.2018 | Change YtD | |
|---|---|---|---|---|
| Common Equity Tier 1 capital | 1,451.2 | 1,453.4 | -2.2 | -0.2% |
| Additional Tier 1 capital | 0.0 | 0.0 | 0.0 | |
| Tier 1 capital | 1,451.2 | 1,453.4 | -2.2 | -0.2% |
| Tier 2 capital | 44.6 | 0.0 | 44.6 | |
| Total capital | 1,495.8 | 1,453.4 | 42.4 | 2.9% |
| Total risk exposure amount (RWA) | 9,185.5 | 8,677.6 | 507.9 | 5.9% |
| RWA for credit risk | 7,720.2 | 7,179.7 | 540.6 | |
| RWA for market risks + CVA | 523.7 | 544.5 | -20.8 | |
| RWA for operational risk | 941.6 | 953.5 | -11.9 | |
| Common Equity Tier 1 Ratio | 15.8% | 16.7% | -1.0 p.p. | |
| Tier 1 Ratio | 15.8% | 16.7% | -1.0 p.p. | |
| Total Capital Ratio | 16.3% | 16.7% | -0.5 p.p. |
Capital adequacy and local requirements (31 Dec 2019, %)
Note: *As of 1 January 2020 new SREP capital requirement applicable for NLB Group leading to overall capital requirement of 14.25% (lower by 0.5 p. p.).
Capital evolution and requirements
Strong capital position
Capital position (Group, EURm)
Structure of the Overall Capital Requirement (OCR)
buffer
• Total capital ratio reaching 16.3% on Group level in Dec-19.
req.
- As from 1 March 2019, Pillar 2 Requirement (P2R) is lowered by 0.25 p.p. (to 3.25%) as a result of better overall SREP assessment. Comfortable buffers against 2019 regulatory requirements of 14.75% OCR.
- NLB medium term target set at 16.25% total capital ratio; to be regularly revised by competent bodies to reflect each time applicable capital requirements.
- NLB issued Tier 2 instruments in total amount of EUR 285 million. The bonds issued on 19 November 2019 and on 5 February 2020, each in the amount of EUR 120 million, are subject to BS/ECB approval process and have therefore not yet been included in the capital.
Total assets (1) 893 949 953 942 7,180 Dec-16 6,865 8,546 105 7,096 501 544 8,677 Dec-17 Dec-18 7,180 7,720 524 Dec-19 7,863 9,186 +5.3% CAGR +5.9% YoY (1)
Credit Risk Market Risk incl. CVA Operational Risk
Note: (1) Increase of RWA for market risk since December 2016 is a result of inclusion of FX structural position of SEE subsidiaries; (2) OCI – Other Comprehensive Income, Intangible assets are deduction item
Solid dividend distribution
| (EURm) | ||||
|---|---|---|---|---|
| 2016 | 2017 | 2018 | 2019 | |
| NLB d.d. profit |
64 | 189 | 165 | 176 |
| o/w dividends from subsidiaries, associates and joint ventures to NLB d.d. |
29 | 58 | 50 | 71 |
| NLB Group profit after tax |
110 | 225 | 204 | 194 |
| NLB Group dividend to shareholder (paid in year after) |
64 | 271 | 142.6 | |
| Implied payout ratio(%) |
58% | 84%(1) | 70% | |
- The payment of dividends by NLB, will depend on a number of factors, including NLB's capital structure, risk appetite, profits, financial condition, regulatory requirements, general economic and business conditions, and future prospects.
- The Bank targets the payment of dividend in the amount of approximately 70% of its consolidated profit, subject to the decision by the Bank's General Assembly.
Note: (1) 2017 payout (84%) calculated based on 2017 profit.Total dividend paid for 2017 amounted to EUR 270.6 million (EUR 189.1 million of profit for 2017 and EUR 81.5 million of retained profit from previous years) i.e. dividend payout 120%.
Asset Quality
Diversified credit portfolio, focused on core markets and cautious risk taking
Credit portfolio(1) by currency and rate type (Group, 31 Dec 2019)
Source: Company information
- No large concentration in any specific industry or client segment
- Lending strategy focuses primarily on its core markets of retail, SME and selected corporate business activities
- Great emphasis is also placed on further improvement of credit portfolio
- Intensive and proactive handling of problematic customers
- Cautious lending policy
- Early warning system for detecting increased credit risk
- The Group is actively present on the market, financing existing and new creditworthy clients.
Note: (1) Credit portfolio also includes advances to banks and central banks; (2) Rating A, B and C are performing exposures. Rating A: investment grade clients with high financial stability; Rating B: clients with high ability to repay their obligations, a significant aggravation of the economic environment would cause problems to them; Rating C: performing clients with increased level of risk who may encounter problems with settlement of liabilities in the future; Ration D and E are NPLs: Default clients (article 178 of CRR), including clients in delay >90days and other clients considered 'unlikely to pay' with delays below 90 days. Numbers may not add up to 100% due to rounding.
Dec-15 Dec-16
Diversified credit portfolio, focused on core markets and cautious risk taking
Credit portfolio(1) by segment (Group, 31 Dec 2019, EURm)
Credit portfolio(1) by geography (Group, 31 Dec 2019, EURm)
Note: (1) Credit portfolio also includes advances to banks and central banks; (2) State includes exposures to central banks; (3) The largest part represent EU members.
NPLs fully covered by provisions and collateral
NPL by geography (Group, 31 Dec 2019) NPL cash coverage(1) (Group, %)
An important Group strength is the NPL cash coverage (CR1), which remains high at 89%. Further, the Group's NPL coverage ratio 2 stands at 65 %, which is well above the EU average as published by the EBA.
As such, it enables a further reduction in NPLs without any material losses.
Top 20 NPLs (Group, 31 Dec 2019)
New NPL formation very low, successfull legacy resolution
Low NPL in Retail segment throughout the economic cycle.
In Corporate segment a considerable reduction of NPL is observed in industries with the highest NPL %.
Top 10 NPL represent 29% of the entire NPL volume; the coverage with provisions remains high, limiting the potential losses.
NPL ratio decreased from 6.9% to 3.8% YtD, while NPE ratio reduced by 2.1 p.p. YtD to 2.7%.
Note: NPL was defined until December 2014 as loan exposure to D and E clients/claims and delays over 90 days from loans to A, B and C classified clients. Since customers with loans (in arrears over) with 90 days past due should be classified in nonperforming grade (D or E), NPL definition changed and from 31.12.2014 include only D and E exposures; NPLs, NPL ratio and NPL cash coverage based on Credit portfolio; (1) Refers to corporate loans issued since 2014 and retail loans issued since 2015.
High % of Stage 1 Loan portfolio (Valued at amortized cost & FVTPL)
Stage 1 loans represent 91% of loan portfolio valued at amortized cost and fair value through P&L.
Due to NPL reduction Strategy the share of Stage 3 loans is decreasing.
Limited volume of Stage 2 loans.
Strategy & IT
NLB went through difficult times – A new period is about to start
2016
2013
-
Strong incumbent heritage
-
Lagging behind international trends
-
Limited business/ customer focus
Restructuring
3 years of progressive implementation of the Restructuring Program
-
PAT back to positive
-
OPEX reduction by 20%
-
Rundown of NPL portfolio
Strategy 2020
4 years strategy defining initiatives to improve profitability
-
13 strategic initiatives successfully closed; 4 major programs started
-
Targets have been reached: NLB became the most profitable Slovenian group
-
IPO/ privatization
Strategy update 2025
NOW we are updating the strategy since…
2019
-
…key restrictions were finally eliminated (state aid process concluded)
-
… market environment has been changing
-
… new opportunities emerged
-
… we would like to identify, detail and operationalize future path for the entire NLB GROUP
We are a successful, geographical niche player with strong foundations to build on
Foundations to benefit from
Strong market positions
Above 10% market share in 5/6 countries with high entry barriers. Wide coverage and accessibility
Regional roots
The only cross-regional player with local HQ: market knowledge and image
Positive brand perception at subsidiaries
High brand equity (except for Slovenia, due to the turbulences in the past years)
Recent successes, local innovation Good recent performance, acknowledged innovations (digital) in Slovenia
Untapped opportunities
Plentiful untapped potential to be exploited in various market segments and in operations
Track record of innovation
The pioneer of banking innovation in Slovenia
First Slovenian bank to launch contactless ATMs
First Slovenian bank to launch chat and video call functionalities and the only bank with multichannel 24/7 support
Only bank with fully mobile express loan capabilities (Consumer & SME)
First Slovenian bank to offer card management functionalities in mobile wallet
Top-ranked financial apps on App Store and Google Play
Demonstrated success in moving to digital
Mobile bank users(1) ('000s) Online bank users(1) ('000s)
% Penetration of client base
Use of video call functionality (# of contacts)
Mobile wallet users & transactions
Q4 2018Q1 2019Q2 2019Q3 2019Q4 2019
Volume of purchase (in kEUR) # of users
Medium-term objectives in IT and Digital
Leverage digital and data to enhance our business model
Enhance customer experience ✓ Increase customer satisfaction ✓ Create new business opportunities Optimise operations ✓ Full (paperless) digitalization of processes ✓ Increased process automation ✓ Reduction in cost-to-serve ✓ Concentration on value adding activities (advisory, sales) Data insights ✓ Risk scoring models ✓ Behavioral models to inform individualized customer offers ✓ Support of automated decisions ✓ Upgrading digital channels to support full customer journeys ✓ Migration of customers to new digital channels ✓ Idea management implementation ✓ Deploying partnerships to explore new concepts ✓ Open eco-system to become solution Omni-channel Strategic initiatives 1 2 Innovative solutions 3 Increase innovation capacity ✓ Agile development ✓ Pull ideas driven by customer demands ✓ Empowering employees Simplification ✓ Process and product simplification to support digital delivery ✓ Simplified IT enabling digitalization 4 Strategic objectives Improve customer insight ✓ Data collection ✓ Data extrapolation ✓ Advanced analytics
35
NLB Group synergy opportunities
Group synergies are being addressed in all functional areas
- Established predominantly for subsidiary banks, but will increasingly service also the parent company
- Core banking maintenance and development operating since the beginning of 2018
- Expansion in 2019 provided additional support:
- ESB roll-out
- Solution for loan origination and approval process roll-out
- ETL's and data modelling in EDWH
IT competence center Process (System) competences
- Standardization of the loan origination and approval process and unification of the platform for all 6 subsidiary banks. An RFP to purchase a platform is being concluded
- Introduction of RPA in 2 banks in the Group
IT regionalisation activities Procurement
- Regional SIEM(1) and SOC(2) successfully set up by the parent bank in Ljubljana
-
Regional synergies in all major areas of IT infrastructure have been addressed
-
Regional standards in procurement that provide the framework for optimizations in local and regional procurement are defined
- Central sourcing in strategic sourcing categories is in place
By actively working on Group synergies, NLB Group leverages on costs (scale), speed of implementation and knowledge sharing
Outlook
Outlook 2020
Macro outlook & risk factors affecting the business outlook
Business outlook
- The macro outlook suggests that the countries where the Group operates are likely to experience growth at around three percent, if supported by loose monetary conditions, fiscal easing and solid domestic demand. The public debt in all those markets is below the EU average, accompanied by low household indebtedness and solid savings performance.
- Considering these circumstances, we expect continued loan growth in all geographies, safe for the retail market in Slovenia where new lending restrictions have been put in place by end 2019. Margins are expected to be under further pressure as observed in 2019, with business in retail lending being more resilient compared to corporate lending. NLB group continues to strive for increasing margins over time by emphasizing higher margin activities and pursuing new opportunities such as leasing. Partially losses in rate revenues will be mitigated by further emphasis on fee income.
- While it is too early to conclude we expect more challenges to grow revenues in retail business in Slovenia given the new imposed lending restrictions. Strategic foreign markets should grow on similar pace as in 2019. We emphasize that net non-interest income has included non-recurring components in the past years which by nature are unpredictable in nature.
- Costs are expected to continue growing with the same magnitude as in 2019 but are expected to plateau after that. Increased spending on IT upgrades, strategy implementation and labor cost inflation should result in similar relative increases in employee costs and other general administrative costs.
- We expect cost of risk to continue to normalize, but should stay at a reasonably low level in 2020. Asset quality is stable, and we do not foresee any material deterioration.
- NLB is currently in the process of a potential acquisition of Komercijalna banka in Serbia. As the outcome of the transaction is not clear, any potential effects are not included in the outlook.
Appendixes
| Appendix 1: Segment Analysis |
40 |
|---|---|
| Appendix 2: Macro Overview |
60 |
| Appendix 3: Financial statements |
74 |
Appendix 1
Segment Analysis
NLB Group business segments
| Retail banking in Slovenia |
Corporate and investment banking in Slovenia |
Strategic foreign markets |
Financial markets in Slovenia |
Non-core members |
|
|---|---|---|---|---|---|
| Retail NLB Skladi NLB Vita(1) Bankart(2) |
Key corporates SME corporates Investment banking and custody Restructuring and workout |
NLB Banka, Skopje NLB Banka, Banja Luka NLB Banka, Sarajevo NLB Banka, Prishtina NLB Banka, Podgorica NLB Banka, Beograd |
Treasury activities Trading in financial instruments Asset and liabilities management (ALM) |
Non-core members according to EC commitments REAM entities NLB Srbija NLB Crna Gora |
|
| (Dec 2019, in EUR million) | • Largest retail banking group in Slovenia by loans, deposits and number of branches • #1 in private banking and asset management • Focused on upgrading customer digital experience and satisfaction |
• Market leader in corporate banking with focus on advisory and long-term strategic partnerships • Market leader in Investment Banking and Custody services • Regional know-how and experience in Corporate Finance and #1 lead organiser for syndicated loans in Slovenia • Strong trade finance operations and other fee based business • Market leader at FX and interest rate hedges |
• Leading SEE franchise with 6 independent, well capitalised and largely self-funded subsidiaries • The only international banking group with exclusive focus on the SEE region |
• Maintaining stable funding base • Management of well diversified liquidity reserves • Managing interest rate positions with responsive pricing policy |
• Assets booked non-core subsidiaries funded via NLB d.d. • Controlled wind-down of remaining assets, including collection of claims, liquidation of subsidiaries and sale of assets |
| Profit b.t. | 47.5 | 56.8 | 92.9 | 27.6 | -3.1 |
| Total assets |
2,559 | 2,042 | 4,731 | 4,413 | 169 |
| % of total assets(3) |
18% | 14% | 33% | 31% | 1% |
| CIR | 71.2% | 55.4% | 50.5% | 21.0% | 127.2% |
| Cost of risk (bp) |
19 | -103 | 17 | / | -218 |
Notes: (1) 50% equity stake, under equity consolidation; Divestment of 50% equity stake in December 2019; (2) 39% minority stake; (3) Other activities 2%.
Estimated effects of segments metodology changes
From 2019, some shifts in reporting of business segments have been applied, following the completion of the restructuring process imposed by the EC and also reflecting strategic streamlining of business operations within the corporate segment as follows:
- Results from Investment Banking and Custody Services have been transferred from Financial Markets in Slovenia to an enlarged Corporate and Investment Banking in Slovenia.
- Micro clients in Slovenia have been transferred from Corporate and Investment Banking in Slovenia to Retail Banking in Slovenia.
- Corporate exposures previously reported in Non-Core Markets and Activities have been transferred to Corporate and Investment Banking in Slovenia given that special reporting requirements from EC commitments have ceased to apply. The remaining segment has been renamed Non-Core Members and contains non-core subsidiaries mostly in liquidation.
- Further, the SPVs established for NPLs from banks in Serbia and Montenegro, NLB Srbija and NLB Crna Gora, have been transferred from the Strategic Foreign Markets to Non-Core Members.
Due to the new methodology, the segment results for 2019 are not directly comparable to the segment results from the previous year. The table below presents the estimated effects due to the segment changes for the full year 2018.
| in EUR million | Retail banking in Slovenia |
Corporate and Investment banking in Slovenia |
Strategic foreign markets |
Financial markets in Slovenia |
Non-core members |
Other |
|---|---|---|---|---|---|---|
| Net interest income | 3.1 | 1.8 | 0.5 | -0.3 | -5.1 | |
| Net non-interest income | 4.6 | 2.3 | -1.8 | -8.2 | 3.2 | |
| Total costs* | -6.1 | -4.4 | 1.4 | 6.1 | 3.0 | no effects |
| Impairments and provisions* | -0.9 | 6.6 | 1.4 | 0.0 | -7.1 | |
| Result before tax | 0.7 | 6.3 | 1.5 | -2.4 | -6.1 | |
| Total assets | 37.1 | -9.5 | -43.5 | 47.9 | -32.1 | |
| Gross loans to customers | 38.1 | 111.8 | -69.0 | -0.1 | -80.8 | no effects |
| Deposit from customers | 188.1 | -107.6 | 0.0 | -71.0 | -9.6 |
Estimated effects of segments methodology changes for 2018(1)
*negative value=increase, positive value=decrease
Note: (1) Investment banking was till 2019 officialy a part of Financial Markets in Slovenia but was presented as a separate segment within Corporate banking in Slovenia in previous reports. Under new segmentation it is included in the segment Corporate and Investment banking in Slovenia.
NLB d.d.
| NLB d.d., Ljubljana | "on stand alone basis" | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Key financial indicators | Change | Balance sheet | Change | ||||||
| 1-12 2019 | 1-12 2018 | YoY | in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YtD | |||
| ROE a.t. | 13.3% | 11.6% | 1.7 p.p. | Total assets | 9,801,557 | 8,811,047 | 990,510 | 11.2% | |
| Interest margin | 1.85% | 1.89% | 0.0 p.p. | ||||||
| CIR | 53.7% | 55.3% | -1.6 p.p. | Loans to customers (net) | 4,589,170 | 4,478,071 | 111,099 | 2.5% | |
| Cost of risk net (bps)* | -38 | -66 | 28 | Loans to customers (gross) | 4,718,049 | 4,703,671 | 14,378 | 0.3% | |
| LTD net | 59.1% | 63.7% | 0.0 | Gross loans to corporate | 2,154,467 | 2,190,299 | -35,832 | -1.6% | |
| Income statement | Change | Gross loans to individuals | 2,376,792 | 2,241,624 | 135,168 | 6.0% | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | Gross loans to state | 186,790 | 271,748 | -84,958 | -31.3% | |
| Total net operating income | 353,303 | 323,401 | 29,902 | 9.2% | Financial assets | 3,168,624 | 2,869,450 | 299,174 | 10.4% |
| Net interest income | 158,126 | 158,032 | 94 | 0.1% | |||||
| Net non-interest income | 195,177 | 165,369 | 29,808 | 18.0% | Deposits from customers | 7,760,737 | 7,033,409 | 727,328 | 10.3% |
| o/w net fees and commissions |
103,955 | 100,163 | 3,792 | 3.8% | Deposits from corporate | 1,674,873 | 1,392,171 | 282,702 | 20.3% |
| Total costs | -189,795 | -178,970 | -10,825 | -6.0% | Deposits from individuals | 5,984,982 | 5,522,142 | 462,840 | 8.4% |
| Employee costs | -108,569 | -103,844 | -4,725 | -4.6% | Deposits from state | 100,882 | 119,096 | -18,214 | -15.3% |
| Other general and administrative expenses | -63,180 | -57,595 | -5,585 | -9.7% | NPL gross | 169,451 | 342,900 | -173,449 | -50.6% |
| Depreciation and amortization | -18,046 | -17,531 | -515 | -2.9% | |||||
| Result before impairments and provisions | 163,508 | 144,431 | 19,077 | 13.2% | % NPL | 2.8% | 6.3% | -3.5 p.p. | |
| Impairments and provisions | 14,238 | 33,055 | -18,817 | -56.9% | Capital (according to local legislation) | ||||
| Result after tax | 176,149 | 165,299 | 10,850 | 6.6% | Capital adequacy ratio | 22.6% | 24.1% | -1.4 p.p. | |
| Number of employees | 2,659 | 2,690 | -31 | -1.2% |
*Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
Retail banking in Slovenia
| in EUR million consolidated |
Retail banking in Slovenia | ||||||
|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Change YoY | Q4 2019 | Q3 2019 | Change QoQ | ||
| Net interest income | 87.4 | 79.3 | 8.1 | 10% | 21.8 | 21.4 | 2% |
| Net non-interest income | 78.2 | 67.1 | 11.1 | 17% | 21.4 | 21.7 | -2% |
| o/w Net fee and commmission income | 81.9 | 73.2 | 8.8 | 12% | 20.9 | 21.2 | -2% |
| Total net operating income | 165.6 | 146.4 | 19.2 | 13% | 43.2 | 43.1 | 0% |
| Total costs | -117.9 | -107.3 | -10.6 | -10% | -33.8 | -28.9 | -17% |
| Result before impairments and provisions | 47.7 | 39.1 | 8.6 | 22% | 9.3 | 14.2 | -34% |
| Impairments and provisions | -4.4 | -3.7 | -0.7 | -19% | -1.5 | -1.1 | -44% |
| Net gains from investments in subsidiaries, | 4.2 | 5.4 | -1.2 | -23% | 0.0 | 1.6 | -97% |
| associates, and JVs' | |||||||
| Result before tax | 47.5 | 40.9 | 6.6 | 16% | 7.9 | 14.8 | -47% |
| 31 Dec 2019 30 Sep 2019 31 Dec 2018 | Change YoY | Change QoQ | |||||
| Net loans to customers | 2,385.1 | 2,347.5 | 2,217.4 | 167.7 | 8% | 2% | |
| Gross loans to customers | 2,410.2 | 2,375.3 | 2,243.4 | 166.8 | 7% | 1% | |
| Housing loans | 1,425.0 | 1,401.9 | 1,374.6 | 50.5 | 4% | 2% | |
| Interest rate on housing loans | 2.54% | 2.55% | 2.50% | 0.04 p.p. | -0.01 p.p. | ||
| Consumer loans | 688.3 | 682.2 | 599.0 | 89.3 | 15% | 1% | |
| Interest rate on consumer loans | 6.33% | 6.32% | 5.88% | 0.45 p.p. | 0.01 p.p. | ||
| Other | 296.9 | 291.1 | 269.9 | 27.0 | 10% | 2% | |
| Deposits from customers | 6,456.2 | 6,320.0 | 5,814.5 | 641.7 | 11% | 2% | |
| Interest rate on deposits Non-performing loans (gross) |
0.05% 40.8 |
0.05% 43.3 |
0.08% 43.0 |
-2.2 | -0.03 p.p. -5% |
0.00 p.p. -6% |
|
| 2019 | 2018 Change YoY | ||||||
| Cost of risk (in bps) | 19 | 17 | 2 | ||||
| CIR | 71.2% | 73.3% -2.1 p.p. | |||||
| Interest margin | 2.04% | 2.02% 0.02 p.p. | |||||
| million YoY. The share of consumer loans in all gross loans increased to 29% (from 27% at the end 2018). | |||||||
| clients and transfer of micro clients from Corporate segment (EUR 188.1 million). |
- Profit before tax amounted to EUR 47.5 million, 16% increase YoY, mostly due to higher net interest and net non-interest income.
- Net interest income was 10% higher YoY due to higher interest rates and growth in volume of gross loans in the amount of EUR 166.8 million YoY, of which EUR 38.1 million increase relates to the transfer of micro clients from the Corporate segment. The production of new consumer loans amounted to EUR 368.6 million (EUR 336.2 million in 2018), which led to an increase of balance of EUR 89.3 million YoY. Housing loans increased by EUR 50.5 million YoY. The share of consumer loans in all gross loans increased to 29% (from 27% at the end 2018).
- The segment recorded EUR 78.2 million of net non-interest income. The comparison shows EUR 11.1 million (17%) increase YoY, EUR 8.8 million due to an increase in net fee and commission income, of which EUR 0.5 million increase is related to NLB Skladi and EUR 0.6 million to bancassurance business. The effect of the transfer of micro clients from Corporate to Retail segment is assessed to amount to EUR 4.6 million.
- Considering the effect of the change in segment presentation (approximately EUR 6.1 million) the total costs were EUR 10.6 million higher YoY.
- The presentation of the increase in deposits from customers YoY (EUR 641.7 million) is mostly due to an increase in demand deposits from retail
Retail banking in Slovenia
High and stable market shares across products
Market share of net loans to individuals in Slovenia Market share of deposits from individuals in Slovenia
Upside from fee generating products
NLB Private banking offering NLB Bankassurance GWP (EURm)
Long-term deposits Sight deposits Short-term deposits
- Improving macro and low household indebtedness (21% GDP) driving retail banking growth
-
1 player in Private Banking(1)
- Limited competition and strong cross-selling capabilities with Bankassurance and asset management
-
1 player in Slovenian asset management(2) ; market share of NLB Skladi at mutual funds in Slovenia equals 34.02% as of 31 December 2019
- AuM of 1,513.8 EURm as of 31 December 2019 including investments in mutual funds and discretionary portfolios
- Bankassurance business
- Life: NLB Vita has reached 15.7% market share by GWP, being #3 largest player in the Slovenian market as of 31 December 2019
- Non-life: Solid growth, in partnership with #3 non-life company (Generali)
Source: Bank of Slovenia (retail loans and deposits), Company information, Slovenian Fund Management Association Note: (1) Company information; (2) By AuM (Slovenian Fund Management Association).
Corporate and Investment banking in Slovenia
| v mio EUR | Poslovanje s podjetji in investicijsko | ||||||
|---|---|---|---|---|---|---|---|
| na konsolidirani osnovi | bančništvo v Sloveniji | ||||||
| 2019 | 2018 | Letna sprememba | Q4 2019 | Q3 2019 | Sprememba v zadnjem kvartalu |
||
| Čiste obresti | 37.3 | 42.5 | -5.3 | -12 % | 8.9 | 8.7 | 2 % |
| Čisti neobrestni prihodki | 43.0 | 34.1 | 8.8 | 26 % | 9.6 | 8.9 | 8 % |
| od tega čiste opravnine | 32.4 | 29.9 | 2.5 | 8 % | 7.7 | 8.5 | -9 % |
| Skupaj čisti prihodki | 80.2 | 76.7 | 3.6 | 5 % | 18.5 | 17.6 | 5 % |
| Stroški skupaj | -44.4 | -43.0 | -1.5 | -3 % | -12.8 | -10.8 | -19 % |
| Rezultat pred oslabitvami in rezervacijami | 35.8 | 33.7 | 2.1 | 6 % | 5.7 | 6.8 | -17 % |
| Oslabitve in rezervacije | 21.0 | 26.6 | -5.6 | -21 % | 3.2 | 14.9 | -78 % |
| Rezultat pred davki | 56.8 | 60.4 | -3.5 | -6 % | 8.9 | 21.7 | -59 % |
| 31 Dec 2019 30 Sep 2019 31 Dec 2018 | Change YoY | Change QoQ | |||||
| Net loans to customers | 2,049.6 | 2,031.2 | 1,950.4 | 99.2 | 5% | 1% | |
| Gross loans to customers | 2,150.9 | 2,179.5 | 2,061.0 | 89.9 | 4% | -1% | |
| Corporate | 1,976.8 | 1,998.8 | 1,854.4 | 122.4 | 7% | -1% | |
| Key/SMECorporates | 1,819.3 | 1,779.0 | 1,643.2 | 176.1 | 11% | 2% | |
| Interest rate on Key/SME Corporates loans |
1.82% | 1.83% | 1.88% | -0.06 p.p. | -0.01 p.p. | ||
| Investment banking* | 0.1 | 0.1 | 0.1 | - | - | ||
| Restructuring and Workout | 157.4 | 219.7 | 211.2 | -53.8 | -25% | -28% | |
| State | 173.6 | 180.3 | 206.1 | -32.5 | -16% | -4% | |
| Interest rate on State loans | 1.88% | 1.98% | 1.69% | 0.19 p.p. | -0.10 p.p. | ||
| Deposits from customers | 1,299.1 | 1,014.5 | 1,120.8 | 178.3 | 16% | 28% | |
| Interest rate on deposits | 0.07% | 0.07% | 0.07% | 0.00 p.p. | 0.00 p.p. | ||
| Non-performing loans (gross) | 128.7 | 188.2 | 179.7 | -51.1 | -28% | -32% | |
| 2019 | 2018 Change YoY | ||||||
| Cost of risk (in bps) | -103 | -135 | 32 | ||||
| CIR | 55.4% | 56.0% -0.6 p.p. | |||||
Interest margin 2.20% 2.61% -0.41 p.p. *Investment banking was shown as separate part of this segment before 2019. Profit before tax of Investment banking for year 2018 in amount EUR 2.8 million.
- Profit before tax amounted to EUR 56.8 million, 6% decrease YoY, of which a positive effect of EUR 6.3 million was recorded due to the change in segment presentation.
- Net interest income decreased EUR 5.3 million YoY, mostly due to decrease in balances in restructuring and workout loans and partly because of lower interest margins. EUR 89.9 million increase of gross loans to customers was affected by the change in segment presentation in net amount of EUR 111.8 million (EUR 149.8 million due to transfer from NLB Non-Core and EUR -38.1 million from transfer of micro clients to Retail). Key and SME clients recorded the growth in gross loans mostly due to production of new long-term loans, especially in H2 2019. The gross loans to state recorded a decrease of EUR 32.5 million YoY.
- Net fee and commission income increased EUR 2.5 million YoY, of which most represents the effect of the change in segment presentation (positive effects of EUR 5.0 million and EUR 0.6 million due to inclusion of Investment Banking and previously Non-Core Corporate exposures in the segment, respectively, and negative effect of EUR -3.6 million due to the transfer of micro clients to Retail).
- Total costs increased EUR 1.5 million YoY, mostly due to the change in segment presentation (EUR 4.4 million).
- Impairments and provisions were released in the amount of EUR 21.0 million as a result of successful restructuring and sale of pledged real-estate.
- The Investment Banking and Custody recorded non-interest income in the amount of EUR 9.0 million and has increased by EUR 0.7 million YoY. Total income growth is the result of a larger volume of transactions and tariff adjustments. The total value of assets under custody decreased to EUR 14.8 billion (EUR 15.9 billion at the end of 2018).
Corporate banking in Slovenia High market shares across products(1)
#1 in corporate and state loans #1 in corporate and state deposits #1 in guarantees and letters of credit
- Largest bank in the country with high capacity to lend to and service large clients serving over 9,000 corporate clients as of 31 December 2019.
- Competitive advantage in SME market due to largest branch network fueled the growth in Mid Corporate and Small Enterprises.
- After several years of Large Corporate portfolio decline, mainly due to EC commitments, in 2019 increase of the loan portfolio was recorded, based also on transactions in cross-border lending.
Strong local corporate fee business, across merchant acquiring, investment banking and custody services
13.2 k (2) POS terminals
36.6% market share(2) in merchant acquiring
EUR 14.8 bn assets under custody
Strategic foreign markets
| in EUR million consolidated |
Strategic foreign markets | ||||||
|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Change YoY | Q4 2019 | Q3 2019 | Change QoQ | ||
| Net interest income | 157.5 | 150.1 | 7.4 | 5% | 40.0 | 39.7 | 1% |
| Net non-interest income | 52.9 | 63.9 | -11.0 | -17% | 15.0 | 14.1 | 7% |
| o/w Net fee and commmission income | 55.0 | 50.1 | 4.9 | 10% | 14.5 | 14.7 | -2% |
| Total net operating income | 210.4 | 214.0 | -3.6 | -2% | 55.0 | 53.8 | 2% |
| Total costs | -106.2 | -100.0 | -6.2 | -6% | -28.7 | -26.4 | -9% |
| Result before impairments and provisions | 104.2 | 114.0 | -9.8 | -9% | 26.3 | 27.4 | -4% |
| Impairments and provisions | -11.3 | -14.3 | 3.0 | 21% | -5.3 | 1.1 | - |
| Result before tax | 92.9 | 99.7 | -6.8 | -7% | 21.0 | 28.5 | -26% |
| o/w Result of minority shareholders | 8.2 | 7.9 | 0.3 | 4% | 2.0 | 2.4 | -15% |
| 31 Dec 2019 30 Sep 2019 31 Dec 2018 | Change YoY | Change QoQ | |||||
| Net loans to customers | 3,024.6 | 2,907.9 | 2,718.0 | 306.6 | 11% | 4% | |
| Gross loans to customers | 3,162.1 | 3,059.9 | 2,932.7 | 229.4 | 8% | 3% | |
| Individuals | 1,603.8 | 1,555.2 | 1,438.1 | 165.7 | 12% | 3% | |
| Interest rate on retail loans | 6.71% | 6.76% | 7.09% | -0.38 p.p. | -0.05 p.p. | ||
| Corporate | 1,470.3 | 1,414.7 | 1,405.0 | 65.3 | 5% | 4% | |
| Interest rate on corporate loans | 4.49% | 4.54% | 4.92% | -0.43 p.p. | -0.05 p.p. | ||
| State | 88.0 | 90.0 | 89.6 | -1.7 | -2% | -2% | |
| Interest rate on state loans | 4.00% | 4.12% | 4.33% | -0.32 p.p. | -0.12 p.p. | ||
| Deposits from customers | 3,856.7 | 3,698.6 | 3,438.1 | 418.6 | 12% | 4% | |
| Interest rate on deposits | 0.53% | 0.54% | 0.61% | -0.09 p.p. | -0.01 p.p. | ||
| Non-performing loans (gross) | 111.6 | 132.6 | 219.9 | -108.3 | -49% | -16% | |
| 2019 | 2018 Change YoY | ||||||
| Cost of risk (in bps) | 17 | 35 | -18 | ||||
| CIR | 50.5% | 46.7% | 3.7 p.p. | ||||
| Interest margin | 3.59% | 3.85% -0.26 p.p. |
- Profit before tax amounted to EUR 92.9 million, 7% decrease YoY, due to one-off effect of the sale of NLB Nov penziski fond in Q1 2018.
- Increase of net interest income by EUR 7.4 million YoY was recorded on behalf of higher volume (EUR 229.4 million increase of gross loans to customers YoY), despite the decreasing trend of interest margins.
- Regular part of net non-interest income net fee and commission income increased by EUR 4.9 million or 10%. Nevertheless, total net non-interest income decreased EUR 11.0 million YoY, due to one-off positive effect of the sale of NLB Nov penziski fond in Q1 2018.
- Total costs increased by EUR 6.2 million YoY, despite EUR 1.4 million decrease due to the change in segment presentation.
- Net impairments and provisions were established in the amount of EUR 11.3 million in 2019 (of which EUR 3.1 million due to established provisions for pending legal disputes in NLB Banka, Podgorica), while in 2018 in the amount of EUR 14.3 million.
- Gross loans to customers increased by EUR 229.4 million YoY due to an increase in gross loans in most subsidiary banks, whereas the largest increases were recorded in NLB Banka, Beograd (EUR 91.7 million) and NLB Banka, Prishtina (EUR 73.2 million). High increase was negatively affected by the change in segment presentation (EUR -69.0 million).
SEE banks continuing solid performance
- ✓ 5% growth of net interest income YoY
- ✓ Net non-interest income higher YoY, if non-recurring income from the sale of NLB Nov Penziski Fond, Skopje in Q1 2018 is excluded
- ✓ Growing credit portfolio in all markets, with aggregate deposits balance up YoY
| NLB Banka Skopje |
NLB Banka Banja Luka |
NLB Banka Sarajevo |
NLB Banka Prishtina |
NLB Banka Podgorica |
NLB Banka Beograd |
Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| core | banks(1) | ||||||||||||||
| B/S (EURm) | 31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
31 Dec 2019 |
31 Dec 2018 |
Δ |
| Total assets | 1,462 | 1,350 | 773 | 721 | 638 | 592 | 801 | 668 | 548 | 489 | 614 | 484 | 4,837 | 4,305 | 12% |
| Net loans to customers |
915 | 859 | 412 | 385 | 399 | 359 | 540 | 467 | 346 | 311 | 412 | 319 | 3,025 | 2,699 | 12% |
| Deposits from customers |
1,176 | 1,076 | 618 | 576 | 515 | 472 | 685 | 586 | 437 | 392 | 437 | 353 | 3,868 | 3,455 | 12% |
| P&L (EURm) | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | Δ |
| NII(2) | 49.0 | 48.8 | 18.5 | 19.1 | 18.0 | 17.6 | 31.0 | 27.4 | 20.3 | 18.0 | 20.7 | 19.8 | 157.5 | 150.6 | 5% |
| NNII(2) | 15.9 | 24.0 | 11.6 | 10.9 | 9.5 | 8.3 | 5.8 | 5.0 | 6.0 | 5.8 | 4.1 | 3.8 | 52.9 | 57.8 | -9%(4) |
| OpEx | -26.6 | -25.0 | -13.0 | -13.0 | -14.7 | -14.2 | -11.7 | -11.8 | -13.5 | -12.3 | -19.5 | -18.0 | -98.9 | -94.4 | 5% |
| PPI | 38.3 | 47.7 | 17.1 | 17.0 | 12.8 | 11.7 | 25.1 | 20.6 | 12.8 | 11.5 | 5.4 | 5.6 | 111.5 | 114.0 | -2% |
| Result a.t. |
32.9 | 37.1 | 17.1 | 16.2 | 9.0 | 8.8 | 19.5 | 14.8 | 7.6 | 10.0 | 4.1 | 5.2 | 90.3 | 92.1 | -2% |
| Ratios | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||
| RoE a.t. |
16.2% | 19.9% | 19.9% | 18.7% | 11.2% | 11.6% | 25.1% | 21.6% | 11.2% | 14.9% | 5.9% | 7.9% | |||
| Net interest margin(3) |
3.66% | 3.98% | 2.51% | 2.79% | 2.95% | 3.20% | 4.33% | 4.44% | 4.27% | 4.11% | 4.03% | 4.92% | |||
| CIR | 41.0% | 34.4% | 43.2% | 43.5% | 53.3% | 54.8% | 31.9% | 36.4% | 51.4% | 51.8% | 78.3% | 76.2% | |||
| LTD net |
77.8% | 79.8% | 66.6% | 66.8% | 77.5% | 76.1% | 78.8% | 79.7% | 79.3% | 79.3% | 94.2% | 90.3% |
Source: Company information
Note: (1) Calculated as simple sums for each item; (2) NII: Net interest income; NNII: Net non-interest income; (3) Calculated on the basis of interest bearing assets ; interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period). (4) In Q12018 one-off effect from the sale of Nov Penziski Fond, Skopje (EUR 8.5 milion effect on NLB banka Skopje level).
NLB Banka Skopje
| NLB Banka AD Skopje | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | Change | |||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 16.2% | 19.9% | -3.7 p.p. | |
| Interest margin* | 3.66% | 3.98% | -0.3 p.p. | |
| CIR | 41.0% | 34.4% | 6.5 p.p. | |
| Cost of risk net (bps)** | 17 | 74 | -56 | |
| LTD net | 77.8% | 79.8% | -1.9 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 64,890 | 72,753 | -7,863 | -10.8% |
| Net interest income | 49,022 | 48,781 | 241 | 0.5% |
| Net non-interest income | 15,868 | 23,972 | -8,104 | -33.8% |
| o/w net fees and commissions |
14,966 | 14,334 | 632 | 4.4% |
| Total costs | -26,578 | -25,049 | -1,529 | -6.1% |
| Employee costs | -13,765 | -12,975 | -790 | -6.1% |
| Other general and administrative expenses | -9,068 | -8,878 | -190 | -2.1% |
| Depreciation and amortization | -3,745 | -3,196 | -549 | -17.2% |
| Result before impairments and provisions | 38,312 | 47,704 | -9,392 | -19.7% |
| Impairments and provisions | -2,224 | -6,796 | 4,572 | 67.3% |
| Result after tax | 32,877 | 37,068 | -4,191 | -11.3% |
| Number of employees | 903 | 893 | 10 | 1.1% |
| Balance sheet | Change | |||
|---|---|---|---|---|
| in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | |
| Total assets | 1,462,306 | 1,350,054 | 112,252 | 8.3% |
| Loans to customers (net) | 915,149 | 858,592 | 56,557 | 6.6% |
| Loans to customers (gross) | 969,213 | 918,140 | 51,073 | 5.6% |
| Gross loans to corporate | 393,137 | 383,212 | 9,925 | 2.6% |
| Gross loans to individuals | 573,826 | 531,406 | 42,420 | 8.0% |
| Gross loans to state | 2,250 | 3,522 | -1,272 | -36.1% |
| Financial assets | 242,360 | 196,112 | 46,248 | 23.6% |
| Deposits from customers | 1,175,612 | 1,076,154 | 99,458 | 9.2% |
| Deposits from corporate | 314,598 | 272,060 | 42,538 | 15.6% |
| Deposits from individuals | 854,135 | 800,372 | 53,763 | 6.7% |
| Deposits from state | 6,879 | 3,722 | 3,157 | 84.8% |
| NPL gross | 48,311 | 56,050 | -7,739 | -13.8% |
| % NPL | 4.2% | 5.1% | -0.9 p.p. | |
| Capital (according to local legislation) | ||||
| Capital adequacy ratio | 16.4% | 16.7% | -0.3 p.p. |
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation
based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
NLB Banka Banja Luka
| NLB Banka A.D., Banja Luka | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | ||||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 19.9% | 18.7% | 1.2 p.p. | |
| Interest margin* | 2.51% | 2.79% | -0.3 p.p. | |
| CIR | 43.2% | 43.5% | -0.3 p.p. | |
| Cost of risk net (bps)** | -48 | -45 | -2 | |
| LTD net | 66.6% | 66.8% | -0.2 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 30,153 | 29,996 | 157 | 0.5% |
| Net interest income | 18,547 | 19,057 | -510 | -2.7% |
| Net non-interest income | 11,606 | 10,939 | 667 | 6.1% |
| o/w net fees and commissions |
11,486 | 10,911 | 575 | 5.3% |
| Total costs | -13,018 | -13,046 | 28 | 0.2% |
| Employee costs | -8,396 | -8,350 | -46 | -0.6% |
| Other general and administrative expenses | -3,256 | -3,521 | 265 | 7.5% |
| Depreciation and amortization | -1,366 | -1,175 | -191 | -16.3% |
| Result before impairments and provisions | 17,135 | 16,950 | 185 | 1.1% |
| Impairments and provisions | 1,535 | 1,387 | 148 | 10.7% |
| Result after tax | 17,101 | 16,184 | 917 | 5.7% |
| Number of employees | 480 | 476 | 4 | 0.8% |
| Change | Balance sheet | Change | ||||
|---|---|---|---|---|---|---|
| YoY | in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | ||
| 1.2 p.p. | Total assets | 773,410 | 720,509 | 52,901 | 7.3% | |
| -0.3 p.p. | Loans to customers (net) | 411,739 | 384,806 | 26,933 | 7.0% | |
| -0.3 p.p. -2 |
Loans to customers (gross) | 426,844 | 408,312 | 18,532 | 4.5% | |
| -0.2 p.p. | Gross loans to corporate | 173,476 | 176,353 | -2,877 | -1.6% | |
| Change | Gross loans to individuals | 200,454 | 180,933 | 19,521 | 10.8% | |
| YoY | Gross loans to state | 52,914 | 51,026 | 1,888 | 3.7% | |
| Financial assets | 148,104 | 107,316 | 40,788 | 38.0% | ||
| Deposits from customers | 618,095 | 575,775 | 42,320 | 7.4% | ||
| Deposits from corporate | 145,915 | 135,670 | 10,245 | 7.6% | ||
| Deposits from individuals | 435,123 | 402,203 | 32,920 | 8.2% | ||
| Deposits from state | 37,057 | 37,902 | -845 | -2.2% | ||
| NPL gross | 7,620 | 19,199 | -11,579 | -60.3% | ||
| % NPL | 1.3% | 3.2% | -1.9 p.p. | |||
| Capital (according to local legislation) | ||||||
| Capital adequacy ratio | 15.9% | 15.6% | 0.4 p.p. | |||
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
NLB Banka Sarajevo
| NLB Banka d.d., Sarajevo | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | ||||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 11.2% | 11.6% | -0.3 p.p. | |
| Interest margin* | 2.95% | 3.20% | -0.2 p.p. | |
| CIR | 53.3% | 54.8% | -1.5 p.p. | |
| Cost of risk net (bps)** | 51 | 55 | -4 | |
| LTD net | 77.5% | 76.1% | 1.4 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 27,475 | 25,857 | 1,618 | 6.3% |
| Net interest income | 17,962 | 17,586 | 376 | 2.1% |
| Net non-interest income | 9,513 | 8,271 | 1,242 | 15.0% |
| o/w net fees and commissions |
8,760 | 7,405 | 1,355 | 18.3% |
| Total costs | -14,654 | -14,170 | -484 | -3.4% |
| Employee costs | -8,379 | -8,453 | 74 | 0.9% |
| Other general and administrative expenses | -4,859 | -4,910 | 51 | 1.0% |
| Depreciation and amortization | -1,416 | -807 | -609 | -75.5% |
| Result before impairments and provisions | 12,821 | 11,687 | 1,134 | 9.7% |
| Impairments and provisions | -2,486 | -1,965 | -521 | -26.5% |
| Result after tax | 9,047 | 8,757 | 290 | 3.3% |
| Number of employees | 450 | 455 | -5 | -1.1% |
| Change YoY |
Balance sheet | Change | ||||
|---|---|---|---|---|---|---|
| in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | |||
| -0.3 p.p. | Total assets | 637,739 | 592,166 | 45,573 | 7.7% | |
| -0.2 p.p. | Loans to customers (net) | 399,299 | 359,499 | 39,800 | 11.1% | |
| -1.5 p.p. -4 |
Loans to customers (gross) | 420,236 | 391,567 | 28,669 | 7.3% | |
| 1.4 p.p. | Gross loans to corporate | 189,476 | 176,368 | 13,108 | 7.4% | |
| Change | Gross loans to individuals | 226,355 | 211,972 | 14,383 | 6.8% | |
| YoY | Gross loans to state | 4,405 | 3,227 | 1,178 | 36.5% | |
| Financial assets | 50,054 | 39,337 | 10,717 | 27.2% | ||
| Deposits from customers | 515,230 | 472,297 | 42,933 | 9.1% | ||
| Deposits from corporate | 134,566 | 127,175 | 7,391 | 5.8% | ||
| Deposits from individuals | 300,051 | 280,207 | 19,844 | 7.1% | ||
| Deposits from state | 80,613 | 64,915 | 15,698 | 24.2% | ||
| NPL gross | 18,582 | 30,805 | -12,223 | -39.7% | ||
| % NPL | 3.3% | 5.7% | -2.4 p.p. | |||
| Capital (according to local legislation) | ||||||
| Capital adequacy ratio | 16.0% | 16.4% | -0.4 p.p. | |||
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation
based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
NLB Banka Prishtina
| NLB Banka sh.a., Prishtine | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | ||||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 25.1% | 21.6% | 3.5 p.p. | |
| Interest margin* | 4.33% | 4.44% | -0.1 p.p. | |
| CIR | 31.9% | 36.4% | -4.5 p.p. | |
| Cost of risk net (bps)** | 33 | 89 | -56 | |
| LTD net | 78.8% | 79.7% | -0.9 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 36,788 | 32,406 | 4,382 | 13.5% |
| Net interest income | 31,014 | 27,372 | 3,642 | 13.3% |
| Net non-interest income | 5,774 | 5,034 | 740 | 14.7% |
| o/w net fees and commissions |
7,373 | 6,131 | 1,242 | 20.3% |
| Total costs | -11,731 | -11,801 | 70 | 0.6% |
| Employee costs | -6,210 | -5,961 | -249 | -4.2% |
| Other general and administrative expenses | -3,740 | -4,662 | 922 | 19.8% |
| Depreciation and amortization | -1,781 | -1,178 | -603 | -51.2% |
| Result before impairments and provisions | 25,057 | 20,605 | 4,452 | 21.6% |
| Impairments and provisions | -3,069 | -3,792 | 723 | 19.1% |
| Result after tax | 19,545 | 14,836 | 4,709 | 31.7% |
| Number of employees | 474 | 476 | -2 | -0.4% |
| Change YoY |
Balance sheet | Change | |||||
|---|---|---|---|---|---|---|---|
| in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | ||||
| 3.5 p.p. | Total assets | 801,085 | 668,127 | 132,958 | 19.9% | ||
| -0.1 p.p. -4.5 p.p. |
Loans to customers (net) | 540,073 | 466,854 | 73,219 | 15.7% | ||
| -56 | Loans to customers (gross) | 567,103 | 493,950 | 73,153 | 14.8% | ||
| -0.9 p.p. | Gross loans to corporate | 359,414 | 315,408 | 44,006 | 14.0% | ||
| Change | Gross loans to individuals | 207,689 | 178,542 | 29,147 | 16.3% | ||
| YoY | Gross loans to state | 0 | 0 | 0 | - | ||
| Financial assets | 77,977 | 64,733 | 13,244 | 20.5% | |||
| Deposits from customers | 685,385 | 585,851 | 99,534 | 17.0% | |||
| Deposits from corporate | 196,818 | 154,828 | 41,990 | 27.1% | |||
| Deposits from individuals | 476,546 | 421,003 | 55,543 | 13.2% | |||
| Deposits from state | 12,021 | 10,020 | 2,001 | 20.0% | |||
| NPL gross | 10,939 | 14,361 | -3,422 | -23.8% | |||
| % NPL | 1.5% | 2.4% | -0.9 p.p. | ||||
| Capital (according to local legislation) | |||||||
| Capital adequacy ratio | 16.4% | 14.6% | 1.8 p.p. | ||||
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation
based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
NLB Banka Podgorica
| NLB Banka a.d., Podgorica | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | ||||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 11.2% | 14.9% | -3.7 p.p. | |
| Interest margin* | 4.27% | 4.11% | 0.2 p.p. | |
| CIR | 51.4% | 51.8% | -0.4 p.p. | |
| Cost of risk net (bps)** | -8 | -41 | 33 | |
| LTD net | 79.3% | 79.3% | 0.0 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 26,261 | 23,818 | 2,443 | 10.3% |
| Net interest income | 20,276 | 18,047 | 2,229 | 12.4% |
| Net non-interest income | 5,985 | 5,771 | 214 | 3.7% |
| o/w net fees and commissions |
6,445 | 5,926 | 519 | 8.8% |
| Total costs | -13,489 | -12,340 | -1,149 | -9.3% |
| Employee costs | -7,656 | -7,180 | -476 | -6.6% |
| Other general and administrative expenses | -4,300 | -4,301 | 1 | 0.0% |
| Depreciation and amortization | -1,533 | -859 | -674 | -78.5% |
| Result before impairments and provisions | 12,772 | 11,478 | 1,294 | 11.3% |
| Impairments and provisions | -3,808 | -1,267 | -2,541 | - |
| Result after tax | 7,565 | 10,033 | -2,468 | -24.6% |
| Number of employees | 303 | 318 | -15 | -4.7% |
| Change YoY |
Balance sheet | Change | ||||
|---|---|---|---|---|---|---|
| in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | |||
| -3.7 p.p. | Total assets | 548,483 | 489,283 | 59,200 | 12.1% | |
| 0.2 p.p. -0.4 p.p. |
Loans to customers (net) | 346,299 | 310,692 | 35,607 | 11.5% | |
| 33 | Loans to customers (gross) | 359,180 | 323,914 | 35,266 | 10.9% | |
| 0.0 p.p. | Gross loans to corporate | 100,961 | 90,223 | 10,738 | 11.9% | |
| Change | Gross loans to individuals | 231,506 | 203,207 | 28,299 | 13.9% | |
| YoY | Gross loans to state | 26,713 | 30,484 | -3,771 | -12.4% | |
| Financial assets | 57,339 | 54,781 | 2,558 | 4.7% | ||
| Deposits from customers | 436,545 | 391,750 | 44,795 | 11.4% | ||
| Deposits from corporate | 135,396 | 116,364 | 19,032 | 16.4% | ||
| Deposits from individuals | 283,091 | 256,975 | 26,116 | 10.2% | ||
| Deposits from state | 18,058 | 18,411 | -353 | -1.9% | ||
| NPL gross | 18,129 | 20,627 | -2,498 | -12.1% | ||
| % NPL | 4.0% | 5.2% | -1.2 p.p. | |||
| Capital (according to local legislation) | ||||||
| Capital adequacy ratio | 15.0% | 16.2% | -1.3 p.p. | |||
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions (EUR million)
NLB Banka Beograd
| NLB Banka a.d., Beograd | "on stand alone basis" | |||
|---|---|---|---|---|
| Key financial indicators | ||||
| 1-12 2019 | 1-12 2018 | YoY | ||
| ROE a.t. | 5.9% | 7.9% | -2.0 p.p. | |
| Interest margin* | 4.03% | 4.92% | -0.9 p.p. | |
| CIR | 78.3% | 76.2% | 2.1 p.p. | |
| Cost of risk net (bps)** | 28 | -51 | 79 | |
| LTD net | 94.2% | 90.3% | 3.9 p.p. | |
| Income statement | Change | |||
| in 000 EUR | 1-12 2019 | 1-12 2018 | YoY | |
| Total net operating income | 24,863 | 23,596 | 1,267 | 5.4% |
| Net interest income | 20,722 | 19,764 | 958 | 4.8% |
| Net non-interest income | 4,141 | 3,832 | 309 | 8.1% |
| o/w net fees and commissions |
5,980 | 4,998 | 982 | 19.6% |
| Total costs | -19,471 | -17,981 | -1,490 | -8.3% |
| Employee costs | -10,531 | -9,498 | -1,033 | -10.9% |
| Other general and administrative expenses | -6,345 | -7,270 | 925 | 12.7% |
| Depreciation and amortization | -2,595 | -1,213 | -1,382 | -113.9% |
| Result before impairments and provisions | 5,392 | 5,615 | -223 | -4.0% |
| Impairments and provisions | -1,254 | -377 | -877 | - |
| Result after tax | 4,142 | 5,202 | -1,060 | -20.4% |
| Number of employees | 479 | 458 | 21 | 4.6% |
| Change YoY |
Balance sheet | Change | ||||
|---|---|---|---|---|---|---|
| in 000 EUR | 31 Dec 2019 | 31 Dec 2018 | YoY | |||
| -2.0 p.p. | Total assets | 614,268 | 484,492 | 129,776 | 26.8% | |
| -0.9 p.p. 2.1 p.p. |
Loans to customers (net) | 412,046 | 318,792 | 93,254 | 29.3% | |
| 79 | Loans to customers (gross) | 419,521 | 327,847 | 91,674 | 28.0% | |
| 3.9 p.p. | Gross loans to corporate | 253,842 | 198,833 | 55,009 | 27.7% | |
| Change | Gross loans to individuals | 164,003 | 127,629 | 36,374 | 28.5% | |
| YoY | Gross loans to state | 1,676 | 1,385 | 291 | 21.0% | |
| Financial assets | 74,781 | 58,285 | 16,496 | 28.3% | ||
| Deposits from customers | 437,268 | 352,940 | 84,328 | 23.9% | ||
| Deposits from corporate | 186,376 | 160,683 | 25,693 | 16.0% | ||
| Deposits from individuals | 249,021 | 182,702 | 66,319 | 36.3% | ||
| Deposits from state | 1,871 | 9,555 | -7,684 | -80.4% | ||
| NPL gross | 8,004 | 9,957 | -1,953 | -19.6% | ||
| % NPL | 1.6% | 2.4% | -0.9 p.p. | |||
| Capital (according to local legislation) | ||||||
| Capital adequacy ratio | 19.5% | 16.7% | 2.8 p.p. | |||
* Interest margin data for 2018 are adjusted to new methodology valid from 2019 on (calculation based on the number of days for the period).
** Calculated as credit impairments and provisions over average net loans to customers.
Result after tax and before impairments and provisions
Financial markets in Slovenia(1)
| in million EUR Financial markets in Slovenia consolidated |
|||||||
|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Change YoY | Q4 2019 | Q3 2019 | Change QoQ | ||
| Net interest income | 33.6 | 31.4 | 2.1 | 7% | 8.4 | 9.3 | -10% |
| Net non-interest income | 2.0 | -1.1 | 3.1 | - | 0.3 | 0.2 | 3% |
| Total net operating income | 35.6 | 30.3 | 5.3 | 17% | 8.7 | 9.5 | -9% |
| Total costs | -7.5 | -6.5 | -1.0 | -15% | -2.3 | -1.6 | -44% |
| Result before impairments and provisions | 28.1 | 23.8 | 4.3 | 18% | 6.3 | 7.9 | -20% |
| Impairments and provisions | -0.5 | 0.2 | -0.7 | - | 0.0 | 0.0 | - |
| Result before tax | 27.6 | 24.0 | 3.6 | 15% | 6.4 | 7.9 | -20% |
| 31 Dec 2019 30 Sep 2019 31 Dec 2018 | Change YoY | Change QoQ | |||||
| Balances with Central banks | 1,044.1 | 468.8 | 575.0 | 469.1 | 82% | 123% | |
| Banking book securities | 3,093.6 | 3,053.1 | 2,755.2 | 338.3 | 12% | 1% | |
| Interest rate on banking book securities | 1.03% | 1.04% | 1.25% | -0.22 p.p. | -0.01 p.p. | ||
| Wholesale funding* | 161.6 | 170.6 | 244.1 | -82.6 | -34% | -5% | |
| Interest rate on wholesale funding* | 0.50% | 0.48% | 0.50% | 0.00 p.p. 0.02 p.p. |
|||
| Subordinated liabilities | 210.6 90.3 0.0 - 0.0 |
- | |||||
| Interest rate on subordinated liabilities | 4.03% | 4.22% | 0.00% - - |
* Item includes only borrowings, till 30 June 2019 it included also deposits from banks.
- Profit before tax amounted to EUR 27.6 million, 15% increase YoY, despite negative effect of EUR -2.4 million recorded due to the change in segment presentation.
- Net interest income EUR 2.1 million higher YoY, mostly due to higher volumes, since the yields on securities decreased YoY.
- Higher net non-interest income, EUR 3.1 million YoY, mostly due to active management of banking book securities, which positively affected the net income from financial transactions mostly in Q1 2019.
- Continuation of prudent liquidity reserves management.
- Increase in balances with the central bank (EUR 469.1 million YoY) due to high inflow of deposits (one-off item).
- Increase in banking book securities (EUR 338.3 million YoY) due to surplus in liquidity.
Note: (1) The segment Financial markets in Slovenia was in previous reports shown without Investment banking so the results are comparable with previous year.
Financial markets in Slovenia
Strong liquidity position
Well positioned and funded division
- Strong liquidity buffer provides solid base for future core growth consisting of liquid assets which are not encumbered for operational or regulatory purposes
- Banking book securities portfolio is well diversified in terms of asset class and geography to minimize concentration risk, and is invested predominantly in high quality issuers on prudent tenors
- Liquidity ratios (as of 31 Dec 2019): LCR 362% (NLB d.d.) and 325% (NLB Group); NSFR 159% (NLB d.d.) and 160% (NLB Group)
The volume of ECB eligible credit claims increased due to the modification in ECB eligibility criterion adopted on 10 May 2019 in ECB Guideline (EU) 2019/1032.
Well diversified banking book by geography (31 Dec 2019)
Maturity profile of banking book securities(3) (31 Dec 2019, EURm) (4)
Note: Numbers refer to NLB d.d. only; (1) Incl. trading and banking book securities; (2) Includes other European countries, US, Canada, Australia and Russian federation; (3) Including DARS bonds; ¸ (4) Loans booked under segment Corporate Banking Slovenia.
Non-core members
| in EUR million consolidated |
Non-core members | ||||||
|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Change YoY | Q4 2019 | Q3 2019 | Change QoQ | ||
| Net interest income | 2.7 | 9.3 | -6.6 | -71% | 0.6 | 0.6 | -10% |
| Net non-interest income | 8.2 | 5.2 | 3.0 | 59% | 1.7 | 2.2 | -19% |
| Total net operating income | 11.0 | 14.5 | -3.5 | -24% | 2.3 | 2.8 | -17% |
| Total costs | -14.0 | -18.2 | 4.3 | 23% | -4.0 | -3.4 | -18% |
| Result before impairments and provisions | -3.0 | -3.7 | 0.7 | 19% | -1.7 | -0.6 | -169% |
| Impairments and provisions | -0.1 | 11.9 | -12.0 | - | -1.4 | 0.3 | - |
| Result before tax | -3.1 | 8.2 | -11.3 | - | -3.2 | -0.3 | - |
| 31 Dec 2019 30 Sep 2019 31 Dec 2018 | Change YoY | Change QoQ | |||||
| Segment assets | 169.5 | 192.9 | 263.7 | -94.2 | -36% | -12% | |
| Net loans to customers | 67.4 | 83.8 | 160.9 | -93.5 | -58% | -20% | |
| Gross loans to customers | 137.2 | 164.7 | 288.6 | -151.4 | -52% | -17% | |
| Investment property and property & equipment received for repayment of loans |
75.6 | 81.1 | 68.5 | 7.0 | 10% | -7% | |
| Other assets | 26.5 | 27.9 | 34.3 | -7.8 | -23% | -5% | |
| Deposits from customers | 0.0 | 0.0 | 9.6 | -9.6 | - | #DIV/0! | |
| Non-performing loans (gross) | 93.6 | 112.2 | 179.7 | -86.1 | -48% | -17% | |
| 2019 | 2018 Change YoY | ||||||
| Cost of risk (in bps) | -218 | -705 | 487 | ||||
| CIR | 127.2% | 125.5% | 1.7 p.p. |
- The segment recorded EUR 3.5 million decrease of net operating income, which included a transfer of the NLB Non-Core part to Corporate and Investment Banking segment (approximately EUR -3.3 million) and a transfer of NLB Srbija and NLB Crna Gora from Strategic Foreign Markets (EUR 1.3 million); effect on net non-interest income from contractual penalty (EUR 1.3 million) in Q1 2019.
- Decrease in total costs, EUR 4.3 million YoY, due to positive effect of divestment of non-strategic Group members, transfer of NLB Non-Core part to Corporate (approximately EUR 4.4 million) and negative effect of transfer of NLB Srbija and NLB Crna Gora from Strategic Foreign Markets (EUR 1.4 million).
- A substantial decrease in total assets of the segment YoY (EUR 94.2 million, of which EUR 32.1 million due to the change in segment presentation), which is in line with the divestment strategy of the Non-Core segment..
Other(1)
| in EUR million consolidated |
Other | ||||||
|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Change YoY | Q4 2019 | Q3 2019 | Change QoQ | ||
| Total net operating income | 12.7 | 4.8 | 7.9 | 163% | 1.8 | 1.2 | 51% |
| Total costs | -13.4 | -9.6 | -3.7 | -39% | -5.9 | -2.5 | -135% |
| Result before impairments and provisions | -0.6 | -4.8 | 4.1 | 87% | -4.0 | -1.3 | - |
| Impairments and provisions | -5.8 | 2.4 | -8.2 | - | -5.7 | 0.0 | - |
| Result before tax | -6.4 | -2.3 | -4.1 | -173% | -9.7 | -1.3 |
- The segment Other recorded EUR 6.4 million of loss before tax, EUR 4.1 million decrease YoY. EUR 12.7 million net operating income was influenced by positive effect from from equity share EUR 6.3 million and EUR 0.2 million from contractual penalty. EUR 13.4 million of total costs, related mostly to IT, cash transport, external realization, restructuring costs, empty business premises and consulting.
- Establishment of EUR 5.5 million of HR provisions for reorganization.
Appendix 2: Macro Overview
NLB Group – Macro overview
NLB d.d. & 6 subsidiary banks operate in Slovenia (EU member) & 5 SEE countries (convergence to EU)
| EUR | |
|---|---|
| GDP (EURbn) | 47.5 |
| Real GDP growth (%) | 3.0 |
| Population (m) | 2.1 |
| Household indebtedness(1) |
22.2% |
| Credit ratings (S&P / Moody's / Fitch) |
AA- / Baa1 / A |
| EUR(3) | |
|---|---|
| GDP (EURbn) | 17.7 |
| Real GDP growth (%) | 3.0 |
| Population (m) | 3.5 |
| indebtedness(1) Household |
28.2% |
| Credit ratings (S&P / Moody's / Fitch) |
B / B3 / n.a. |
| EUR | |
|---|---|
| GDP (EURbn) | 4.8 |
| Real GDP growth (%) | 4.0 |
| Population (m) | 0.6 |
| indebtedness(1) Household |
27.0% |
| Credit ratings (S&P / Moody's / Fitch) |
B+ / B1 / n.a. |
| EUR | Serbia |
|---|---|
| 47.5 | GDP (EURbn) |
| 3.0 | Real GDP growth (%) |
| 2.1 | Population (m) |
| 22.2% | indebtedness(1) Household |
| EUR AA- / Baa1 / A |
Credit ratings (S&P / Moody's / Fitch) |
| Kosovo | |
|---|---|
| GDP (EURbn) | 6.9 |
| Real GDP growth (%) | 4.1 |
| Population (m) | 1.8 |
| indebtedness(1) Household |
15.4% |
| Credit ratings (S&P / Moody's / Fitch) |
n.a. / n.a. / n.a. |
| North Macedonia |
|
|---|---|
| GDP (EURbn) | 11.1 |
| Real GDP growth (%) | 4.0 |
| Population (m) | 2.1 |
| Household indebtedness(1) |
24.4% |
| Credit ratings (S&P / Moody's / Fitch) |
BB- / n.a. / BB+ |
Source: Central banks, National Statistics Offices, FocusEconomics, NLB.
Note: GDP volume and growth on Q3 2019, annualized; (1) Includes households loans as % of GDP, Q3 2019, annualized; (2) Bosnia and Herzegovina is comprised of 2 entities, The Federation of Bosnia and Herzegovina and Republika Srpska; (3) Official currency is BAM – Bosnia-Herzegovina Convertible Mark, pegged to EUR.
Macro Overview
Economic data Fiscal data Monetary data
- Most countries are likely to grow at around 3% to 4% if supported by loose monetary conditions, fiscal easing and solid domestic demand.
- Inflation is likely to remain within target ranges throughout the region.
-
Economic growth will be sensitive to the slowdown in the Eurozone and tighter global trade conditions.
-
Environment for necessary reforms is still seen favourable.
- Fiscal imbalances should not aggravate general government borrowing position and public debt seems manageable, nevertheless caution still recommended.
-
Large current account deficits and geographical contagion are important drivers to capital flows.
-
Loans potential for the credit financing remains solid.
- As loan to deposit ratios remain firm, a future expansion of the regional banking sectors should not be capped from a refinancing perspective.
- A more pronounced slowdown in Europe or larger capital outflows from EM would moderate favourable trends in the region.
Real GDP growth, %
KEY FINDINGS:
Highest YoY increase of economic growth in 2019 was registered by Kosovo (+4.0%), followed by Serbia (+3.4%).
Four countries with above 3% growth of GDP in 2019.
Growth decelerated sligthly in 2019, but, overall, real GDP growth in the region will remain strong, well above the Eurozone.
| Real GDP growth, % | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 4.1 | 3.4 | 3.0 | 3.6 | 2.7 | 2.7 | 3.0 | 3.0 |
| North Macedonia | 3.9 | 2.8 | 1.1 | 2.7 | 3.3 | 3.2 | 3.3 | 3.2 |
| Kosovo | 4.1 | 4.1 | 4.2 | 3.8 | 4.0 | 3.9 | 3.9 | 3.7 |
| Serbia | 1.8 | 3.3 | 2.0 | 4.4 | 3.4 | 3.4 | 3.4 | 3.3 |
| Montenegro | 3.4 | 2.9 | 4.7 | 5.1 | 3.2 | 2.8 | 2.9 | 3.0 |
| Slovenia | 2.2 | 3.1 | 4.8 | 4.1 | 2.7 | 2.6 | 2.7 | 2.5 |
| Eurozone | 2.0 | 1.9 | 2.7 | 1.9 | 1.1 | 1.0 | 1.3 | 1.3 |
Sources: FocusEconomics
Average inflation rate, %
KEY FINDINGS:
There seems to be a favourable inflation development in all countries.
CPI continues to be driven by exogenous factors, nonetheless robust domestic demand is expected to lift inflation over the medium term.
The inflation rates are projected to remain stable close to 2.0 %.
| Average inflation rate, % | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | -1.1 | -1.6 | 0.8 | 1.4 | 0.6 | 1.4 | 1.7 | 1.8 |
| North Macedonia | -0.3 | -0.2 | 1.4 | 1.4 | 0.8 | 1.5 | 1.9 | 2.1 |
| Kosovo | -0.5 | 0.3 | 1.5 | 1.1 | 2.7 | 1.8 | 1.9 | 2.0 |
| Serbia | 1.4 | 1.1 | 3.2 | 2.0 | 1.9 | 2.0 | 2.4 | 2.6 |
| Montenegro | 1.5 | -0.3 | 2.4 | 2.6 | 0.4 | 1.5 | 1.7 | 1.8 |
| Slovenia | -0.8 | -0.2 | 1.6 | 1.9 | 1.7 | 1.7 | 1.9 | 2.0 |
| Eurozone | 0.2 | 0.2 | 1.5 | 1.8 | 1.2 | 1.2 | 1.4 | 1.6 |
Sources: FocusEconomics
Note: HICP for Slovenia, Kosovo and Eurozone, other CPI; Consensus Forecasts for 2020, 2021 and 2022
Unemployment rate, % KEY FINDINGS:
Despite strong growth, unemployment is projected to stay at relatively high levels across the whole region, with the exception of Slovenia.
In 2019, all the countries showed the improvements. Future rates of unemployment are expected to continue to improve or stay at same levels.
Official unemployment rates seem to be affected by various factors such as shrinking labour force on one side and permanent unemployment on the other.
| Unempoyment rate, % | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 43.2 | 41.7 | 38.4 | 36.0 | 33.1 | 31.0 | 30.0 | 28.7 |
| North Macedonia | 26.1 | 23.7 | 22.4 | 20.7 | 17.3 | 16.8 | 16.0 | 16.0 |
| Kosovo | 32.9 | 27.5 | 30.5 | 29.5 | 25.3 | 26.0 | 25.3 | 24.9 |
| Serbia | 17.7 | 15.3 | 13.5 | 12.7 | 10.9 | 10.5 | 9.8 | 9.7 |
| Montenegro | 17.6 | 17.7 | 16.1 | 15.2 | 14.7 | 14.3 | 14.2 | 13.7 |
| Slovenia | 9.0 | 8.0 | 6.6 | 5.1 | 4.4 | 4.3 | 4.2 | 4.7 |
| Eurozone | 10.9 | 10.0 | 9.1 | 8.2 | 7.6 | 7.5 | 7.4 | 7.4 |
Sources: FocusEconomics
Note: BiH data for registered unemployment rate; Consensus Forecasts for 2020, 2021 and 2022
Current account, % GDP
KEY FINDINGS:
Huge difference between countries due to various reasons. Trade deficit is being covered either by capital inflows or remittances.
Montenegro continues to underperform in the region.
In general, no large reductions of current account deficits can be expected in the near future.
| Currrent Account, % GDP | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | -4.9 | -4.5 | -4.2 | -3.6 | -4.9 | -5.1 | -4.6 | -4.9 |
| North Macedonia | -1.9 | -2.9 | -1.0 | -0.1 | -1.0 | -1.3 | -1.4 | -1.2 |
| Kosovo | -8.6 | -7.9 | -5.4 | -7.6 | -4.8 | -7.8 | -7.8 | -7.7 |
| Serbia | -3.5 | -2.9 | -5.2 | -5.2 | -6.0 | -5.6 | -5.5 | -5.3 |
| Montenegro | -11.0 | -16.2 | -16.1 | -17.0 | -15.8 | -15.3 | -14.4 | -14.3 |
| Slovenia | 3.8 | 4.8 | 6.1 | 5.7 | 5.4 | 5.0 | 4.7 | 4.7 |
| Eurozone | 2.6 | 3.3 | 3.1 | 3.1 | 2.7 | 2.8 | 2.8 | 2.6 |
Sources: FocusEconomics
Macro Overview – Fiscal data
Fiscal Balance, % GDP
KEY FINDINGS:
A slight deterioration in the fiscal performance is expected in Kosovo.
BiH and Slovenia are expected to keep balanced public finances, while budget deficit will stay at relatively high levels in North Macedonia. The level is expected to improve in Montenegro.
| Fiscal balance, % GDP | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 0.7 | 1.2 | 2.6 | 2.3 | 1.0 | 0.7 | 0.8 | 0.8 |
| North Macedonia | -3.5 | -2.7 | -2.7 | -1.8 | -2.1 | -2.5 | -2.3 | -2.2 |
| Kosovo | -1.6 | -1.1 | -1.1 | -2.6 | -1.1 | -2.9 | -2.7 | -2.7 |
| Serbia | -3.5 | -1.2 | 1.1 | 0.6 | -0.2 | -0.5 | -0.6 | -0.8 |
| Montenegro | -8.0 | -3.4 | -5.5 | -3.6 | -2.6 | -0.2 | 1.0 | 0.5 |
| Slovenia | -2.8 | -1.9 | 0.0 | 0.8 | 0.4 | 0.3 | 0.4 | 0.3 |
| Eurozone | -2.0 | -1.4 | -0.9 | -0.5 | -0.9 | -1.0 | -1.0 | -1.0 |
Sources: FocusEconomics
Macro Overview – Fiscal data
Public Debt, % GDP
KEY FINDINGS:
Public debt varies intensively between the countries. Nevertheless, slow convergence of public indebtedness is projected.
In 2020, a reduction of public debt is expected in Serbia, Slovenia, BiH and Montenegro while an increase is expected for Kosovo, and N. Macedonia.
Nonetheless, all the countries in the region are below the Eurozone level.
| Public debt, % GDP | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 45.5 | 44.1 | 39.2 | 34.3 | 33.3 | 31.7 | 31.3 | 29.6 |
| North Macedonia | 38.1 | 39.9 | 39.4 | 40.6 | 40.5 | 41.8 | 41.2 | 40.3 |
| Kosovo | 13.1 | 14.4 | 16.2 | 17.1 | 17.3 | 19.7 | 21.6 | 23.8 |
| Serbia | 69.5 | 67.6 | 59.3 | 53.7 | 51.8 | 49.5 | 47.6 | 46.3 |
| Montenegro | 66.2 | 64.4 | 64.2 | 70.1 | 72.3 | 69.2 | 64.9 | 63.0 |
| Slovenia | 82.6 | 78.7 | 74.1 | 70.4 | 66.8 | 63.9 | 61.0 | 58.7 |
| Eurozone | 90.8 | 90.0 | 87.8 | 85.9 | 85.0 | 83.9 | 82.5 | 81.1 |
Sources: FocusEconomics
Int. reserves, import coverage in months
KEY FINDINGS:
International reserves expressed as import coverage in months remain stable and seem sufficient.
Favourable trendline adds to the stability of foreign exchange rate in Serbia, North Macedonia and BiH. Unless major geopolitical tensions realize, stable currency regimes remain our baseline scenario.
| Total reserves, import coverage in months |
2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 7.2 | 7.7 | 7.6 | 7.8 | 7.7 | 7.6 | 7.4 | 7.2 |
| North Macedonia | 5.6 | 5.9 | 4.8 | 5.2 | 5.3 | 5.1 | 5.0 | 4.8 |
| Kosovo | 3.5 | 2.8 | 2.9 | 3.0 | 3.1 | 3.0 | 3.1 | 2.9 |
| Serbia | 8.2 | 7.7 | 6.6 | 6.6 | 7.0 | 6.3 | 6.0 | 5.7 |
| Montenegro | 4.2 | 4.5 | 4.5 | 5.1 | 5.5 | 5.2 | 4.6 | 4.5 |
Sources: FocusEconomics
Loans growth (NFC + Households), %
KEY FINDINGS:
Encouraging levels of credit growth in both corporate and retail segment, much higher than in Eurozone.
Kosovo (10.1%) and Serbia (9.1%) leading the credit growth in the region in 2019.
In the region healthy loan dynamics driven by rising consumption, tighter labour market, as well as rising fixed investments.
| Loan growth (NFC + Households), % |
2014 | 2015 | 2016 | 2017 | 2018 | Nov 2019 |
|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 1.8 | 2.4 | 3.8 | 7.3 | 5.5 | 6.5 |
| North Macedonia | 10.0 | 9.6 | -0.1 | 5.4 | 7.2 | 6.4 |
| Kosovo | 6.2 | 7.3 | 10.6 | 12.4 | 10.9 | 10.1 |
| Serbia | 0.5 | 3.3 | 5.5 | 3.6 | 9.5 | 9.1 |
| Montenegro | -1.1 | 2.5 | 5.4 | 7.7 | 9.1 | 5.6 |
| Slovenia | -12.4 | -5.1 | 1.8 | 4.6 | 4.7 | 6.5 |
| Eurozone | -0.7 | 0.8 | 1.7 | 1.7 | 2.3 | 2.5 |
Sources: National Central Banks, ECB, NLB
Total Loans (NBS), % GDP
| Total Loans as % of GDP | 2014 | 2015 | 2016 | 2017 | 2018 | Q3 2019 |
|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 60.1 | 58.9 | 57.3 | 58.3 | 58.3 | 58.5 |
| North Macedonia | 48.6 | 49.8 | 47.0 | 47.5 | 48.1 | 48.2 |
| Kosovo | 33.5 | 34.9 | 37.1 | 39.2 | 41.9 | 42.5 |
| Serbia | 56.7 | 57.5 | 58.7 | 56.8 | 57.0 | 57.2 |
| Montenegro | 69.6 | 67.8 | 62.1 | 63.2 | 63.6 | 62.4 |
| Slovenia | 57.2 | 52.2 | 50.9 | 50.1 | 48.6 | 49.3 |
| Eurozone | 92.0 | 91.4 | 90.8 | 90.1 | 90.5 | 91.5 |
Sources: National Central Banks, ECB, NLB
Note: Eurozone Total loans includes only NFC + Households loans
Deposits growth (NFC + Households), % KEY FINDINGS:
There are substantial differences in deposit growth numbers.
Serbia and Kosovo leading the deposit growth in the region in 2019, followed by strong growth of other countries in the region.
An exception is Montenegro, which is the only country with the growth below the Eurozone level in 2019. Its growth was influenced by the exclusion of deposits from Invest Bank and Atlas Bank due to their bankruptcy proceedings.
| Deposit growth (NFC + Households), % |
2014 | 2015 | 2016 | 2017 | 2018 | Nov 2019 |
|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 9.1 | 8.2 | 7.8 | 8.6 | 8.7 | 9.3 |
| North Macedonia | 10.5 | 6.4 | 5.4 | 5.0 | 9.5 | 9.1 |
| Kosovo | 2.9 | 7.4 | 8.7 | 4.1 | 7.3 | 12.4 |
| Serbia | 9.7 | 7.1 | 11.5 | 3.1 | 14.9 | 12.4 |
| Montenegro | 9.6 | 11.8 | 10.5 | 13.7 | 3.2 | 0.7 |
| Slovenia | 6.5 | 5.6 | 7.1 | 6.9 | 6.8 | 6.2 |
| Eurozone | 3.7 | 3.0 | 1.7 | 1.7 | 2.3 | 2.5 |
Sources: National Central Banks, ECB, NLB
Total Deposits (NBS), % GDP
In 2019, growing deposit to GDP ratio in the whole region with the exception of Montenegro, though in the latter the ratio is still above its peers in the region.
Across the whole region the share of deposits in GDP is lower than in Eurozone.
| Total Deposits as % of GDP | 2014 | 2015 | 2016 | 2017 | 2018 | Q3 2019 |
|---|---|---|---|---|---|---|
| Bosnia and Herzegovina | 55.8 | 57.5 | 59.0 | 62.6 | 64.6 | 66.7 |
| North Macedonia | 53.1 | 53.4 | 52.5 | 53.4 | 55.7 | 57.7 |
| Kosovo | 45.3 | 46.1 | 47.5 | 47.8 | 50.6 | 52.4 |
| Serbia | 41.7 | 42.7 | 45.1 | 44.3 | 46.1 | 48.0 |
| Montenegro | 65.9 | 72.4 | 72.2 | 74.8 | 74.1 | 72.1 |
| Slovenia | 64.9 | 64.7 | 64.7 | 64.0 | 63.3 | 63.4 |
| Eurozone | 80.9 | 82.1 | 83.9 | 85.3 | 87.1 | 90.3 |
Sources: National Central Banks, ECB, NLB
Note: Eurozone Total deposits includes only NFC + Households deposits; For Montenegro, deposits data excludes deposits with Invest Bank and Atlas Bank, according to CBCG
Appendix 3: Financial statements
NLB Group Income Statement
| (EURm) | 1-12 2019 |
1-12 2018 |
YoY | Q4 2019 | Q3 2019 | Q4 2018 | QoQ |
|---|---|---|---|---|---|---|---|
| Interest and similar income |
364.8 | 358.9 | 2% | 92.1 | 91.4 | 92.1 | 1% |
| Interest and similar expense |
-46.3 | -45.9 | -1% | -12.4 | -11.6 | -11.1 | -6% |
| Net interest income |
318.5 | 312.9 | 2% | 79.7 | 79.8 | 81.0 | 0% |
| Fee and commission income |
235.0 | 218.6 | 8% | 61.3 | 61.9 | 56.5 | -1% |
| Fee and commission expense |
-64.6 | -57.9 | -12% | -17.8 | -17.3 | -15.9 | -3% |
| Net fee and commission income | 170.3 | 160.6 | 6% | 43.5 | 44.6 | 40.7 | -3% |
| Dividend income | 0.2 | 0.1 | 76% | 0.0 | 0.0 | 0.0 | 55% |
| Net income from financial transactions |
33.8 | 14.7 | 130% | 5.8 | 5.1 | 3.1 | 14% |
| Other operating income |
-9.3 | 4.9 | - | -0.1 | -2.1 | -0.5 | 94% |
| Total net operating income |
513.6 | 493.3 | 4% | 128.9 | 127.4 | 124.3 | 1% |
| Employee costs |
-171.2 | -165.1 | -4% | -48.0 | -41.8 | -43.2 | -15% |
| Other general and administrative expenses |
-99.3 | -96.3 | -3% | -31.4 | -23.3 | -28.4 | -35% |
| Depreciation and amortisation |
-31.0 | -27.2 | -14% | -7.7 | -7.9 | -6.7 | 3% |
| Total costs | -301.4 | -288.7 | -4% | -87.0 | -73.0 | -78.3 | -19% |
| Result before impairments and provisions |
212.2 | 204.6 | 4% | 41.9 | 54.4 | 46.0 | -23% |
| Impairments and provisions for credit risk | 13.3 | 30.2 | -56% | -2.3 | 16.4 | 7.0 | - |
| Other impairments and provisions |
-14.3 | -6.9 | -107% | -8.4 | -1.1 | -2.7 | - |
| Gains less losses from capital investments in subsidiaries, associates and joint ventures |
4.2 | 5.4 | -23% | 0.0 | 1.6 | 1.3 | -97% |
| Result before Tax |
215.4 | 233.3 | -8% | 31.2 | 71.2 | 51.7 | -56% |
| Income tax expense |
-13.6 | -21.8 | 38% | 2.2 | -0.9 | -5.1 | - |
| Non Controlling Interests |
8.2 | 7.9 | 4% | 2.0 | 2.4 | 1.2 | -15% |
| Net Profit / (Loss) Attributable to Shareholders |
193.6 | 203.6 | -5% | 31.3 | 67.9 | 45.3 | -54% |
NLB Group Statement of Financial Position
| (EURm) | 31 Dec 2019 | 31 Dec 2018 | YtD |
|---|---|---|---|
| ASSETS | |||
| Cash and balances with Central Banks and other demand |
|||
| deposits at banks |
2,101.3 | 1,588.3 | 32% |
| Financial instruments |
3,829.7 | 3,399.2 | 13% |
| o/w Trading Book |
24.0 | 63.6 | -62% |
| o/w Non-trading Book |
3,805.7 | 3,335.6 | 14% |
| Loans and advances to banks (net) | 93.4 | 118.7 | -21% |
| o/w gross loans |
93.5 | 118.8 | -21% |
| o/w impairments | -0.1 | -0.1 | 25% |
| Loans and advances to customers | 7,604.7 | 7,148.4 | 6% |
| o/w gross loans |
7,938.3 | 7,627.5 | 4% |
| - Corporates |
3,646.3 | 3,540.4 | 3% |
| - State |
278.6 | 360.5 | -23% |
| - Individuals |
4,013.5 | 3,726.5 | 8% |
| o/w impairments and valuation |
-333.6 | -479.0 | 30% |
| Investments in associates and JV | 7.5 | 37.1 | -80% |
| Goodwill | 3.5 | 3.5 | 0% |
| Other intagible assets |
36.0 | 31.4 | 15% |
| Property, plant and equipment |
195.6 | 177.4 | 10% |
| Investment property |
52.3 | 58.6 | -11% |
| Other assets |
250.0 | 177.1 | 41% |
| Total Assets | 14,174.1 | 12,740.0 | 11% |
| LIABILITIES & EQUITY | |||
| Deposits from banks and central banks |
42.8 | 26.8 | 60% |
| Deposits from customers |
11,612.3 | 10,464.0 | 11% |
| - Corporates |
2,772.0 | 2,337.3 | 19% |
| - State |
257.4 | 261.1 | -1% |
| - Individuals |
8,582.9 | 7,865.6 | 9% |
| Borrowings | 234.8 | 320.3 | -27% |
| Subordinated liabilities |
210.6 | 15.1 | - |
| Other liabilities |
342.6 | 256.5 | 34% |
| Total Liabilities | 12,443.2 | 11,082.6 | 12% |
| Shareholders' Equity | 1,685.9 | 1,616.2 | 4% |
| Non Controlling Interests |
45.0 | 41.2 | 9% |
| Total Equity | 1,730.9 | 1,657.4 | 4% |
| Total Liabilities & Equity |
14,174.1 | 12,740.0 | 11% |
