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NLB
Quarterly Report • Dec 2, 2019
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Quarterly Report
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NLB Group Presentation 3Q 2019 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
- New Board member Mr. Petr Brunclík appointed as COO
- Total Tier2 issuance EUR 210m
- ✓ In November 2019, 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 3.65% p.a.
- ✓ September 2019, EUR 45m, bilateral Tier2 transaction
- ✓ May 2019, EUR 45m, subordinated Tier2 notes
- Regulatory changes
- ➢ consumer lending in Slovenia, tax on dividends increased from 25 to 27,5%
- ➢ new SREP requirement P2R reduced from 3.25% to 2.75%
- Socially responsible: supporting youth in sport, sponsoring alpine skiing championship in Maribor for the FIS Ski World Cup
- Currently in a joint process with KBC to divest shareholdings in NLB Vita.
- NLB Pay wallet fully activated in 4 Group members (others pending).
- In Slovenia 9% of consumer loans already underwritten E2E digitally through M-bank app Klikin.
Key performance indicators of NLB Group
| Medium-term targets set in 2018(1) | |||||
|---|---|---|---|---|---|
| YE 17 | YE 18 | 1-9 19 | Medium term | ||
| Net interest margin(2) | 2.57% | 2.56% | 2.51% | >2.7% | |
| Loans to deposits ratio | 70.8% | 68.3% | 67.9% | <95% | |
| Total capital ratio | 15.9% | 16.7% | 16.1% | 16.25%(8) | |
| Cost-income ratio | 58.4% | 58.5% | 55.7% | ~50% | |
| Cost of risk(3) | -62 bps | -43 bps | -31 bps | <90bps(6) | |
| Return on equity (RoE) | 14.4% | 11.8% | 13.1% | >12.0% | |
| Dividend payout | 84%(5) | 70% | / | ~70%(7) | |
| NPE ratio(4) | 6.7% | 4.7% | 3.5% | <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 interest income (Group, EURm)
Net non-interest income (Group, EURm)
Costs (Group, EURm)
Cost of risk (Group, bps)
Net impairments and provisions (Group, EUR m)
Loan dynamics
Gross loans to individuals Gross loans to corporate
Gross loans to individuals (in EUR billion) Yields - loans to individuals
7.13% 7.09% 6.76% 30 Sep 2018 31 Dec 2018 30 Sep 2019 6.78% 30 Jun 2019 1.5 1.4 1.4 1.6 +11% YoY +8% YtD +3% QoQ Gross loans to individuals (in EUR billion) Yields - loans to individuals
Gross loans to corporate (in EUR billion)
Yields - loans to corporate
0.0 0.5 1.0 1.5 2.0 2.5
0.0
0.5
Note: (1) Without funding of subsidiaries; (2) Only banks also before new segmentation from 2019 on; consolidated data for volumes.
0.5 0.0
1.0 1.5 2.0 2.5
0.0 0.5 1.0 1.5 2.0 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)
In first nine months of 2019, NLB Group generated EUR 162.2 million of profit after tax:
- Higher net interest income, mainly due to loan volume growth and lower interest expenses;
- Higher net fee and commission income;
Other core members(2)
• Net released provisions and impairments were EUR 9.7 million, while EUR 19.0 million net impairments and provisions in the same period of previous year.
Non-core members
Net operating income (Group, EURm) Contribution to the NLB Group consolidated result a.t.
Notes: (1) Gains less losses from capital investments in subsidiaries, associates, and joint ventures. (2) NLB Skladi, NLB Vita and Bankart.
Balance sheet structure – NLB Group
Simple client business driven balance sheet
(30 Sep 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) |
163.0 | 24.4 | 13.9 | 7.3 | 14.8 | 6.0 | 2.7 | 162.2 |
| Total assets (EURm) |
9,289 | 1,392 | 774 | 641 | 760 | 540 | 568 | 13,490 |
| RoE a.t. |
16.4% | 16.2% | 21.6% | 12.1% | 25.9% | 11.9% | 5.3% | 13.1% |
| Net interest margin(1) |
1.88% | 3.69% | 2.56% | 2.99% | 4.41% | 4.27% | 4.11% | 2.51% |
| Cost/income | 46.6% | 40.7% | 42.8% | 50.9% | 33.5% | 49.8% | 82.6% | 55.7% |
| Loans/ Deposits % (net) |
62.7 | 76.7 | 66.3 | 76.8 | 81.8 | 73.5 | 105.5 | 67.9 |
| NPL ratio | 4.2% | 4.5% | 2.3% | 5.1% | 2.0% | 4.1% | 1.6% | 5.2% |
| NLB ownership (%) |
/ | 87.0% | 99.8% | 97.3% | 81.2% | 99.8% | 99.9% | / |
| No. of branches (#) |
93 | 52 | 53 | 38 | 35 | 18 | 28 | 317 |
| Market(2) share % |
22.9% | 16.0% | 18.8%(3,4) | 5.2%(5,4) | 17.4% | 11.7% | 1.6%(4) | / |
Note: Financial data as of September 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) Market share in the Republika Srpska; (4) Market share as of 30 Jun 2019; (5) Market share in the Federation of BiH;
Business Performance
Net interest income & net interest margin
Net interest income increased YoY but remains under pressure
Solid interest income growth YoY (Group, EURm) Stable net interest margin(1) (Group, %) Net interest margin(1) in NLB Group banks (in %) NLB 4.42% NLB Group NLB d.d. NLB NLB 4.27% 4.04% 4.41% NLB 4.01% 2.54% 3.22% 2.56% 1.88% NLB NLB 4.11% 2.51% 1.88% 3.69% 2.67% 2.99% 5.10% -0.03 0.00 -0.32 -0.11 -0.23 -0.01 +0.23 -0.99 1-9 2018 1-9 2019 2.56% 3.71% 3.84% 1.88% 1.89% 2.54% 1-9 2018 1-12 2018 3.85% 1.92% 2.56% 1-3 2019 1.91% 2.54% 3.67% 1-6 2019 1.88% 2.51% 3.63% 1-9 2019 NLB d.d. NLB Group Strategic foreign banks
Banka, Sarajevo
Banka, Banja Luka
Banka, Skopje
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).
Banka, Beograd
Banka, Podgorica
Banka, Prishtina
Net interest income drivers – NLB d.d.
Net interest income drivers – Strategic foreign markets(1)
Net non-interest income – NLB Group Good performance in Fees and Commissions
(1)
Net non-interest income (Group, EURm)
| in EUR million | 1-9 2019 | 1-9 2018 | Change YoY | |
|---|---|---|---|---|
| Recurring other net non-interest income | 1.5 | 2.1 | -0.7 | -32% |
| Net income from financial transactions (Fees from Exchange differences) |
8.4 | 7.7 | 0.7 | 10% |
| Net other income | -7.0 | -5.5 | -1.4 | -26% |
| - external realization (IT, cash logistics) | 2.7 | 3.0 | -0.3 | -10% |
| - rents | 4.1 | 5.7 | -1.6 | -28% |
| - regulatory charges (SRF, DGS) | -13.8 | -14.2 | 0.4 | 3% |
Net fee and commission income growing YoY (Group, EURm)
Net non-interest income totaling EUR 145.9 million increased by EUR 8.8 million or 6% YoY, due to the following factors:
• Higher net fee and commission income by EUR 6.9 million or 6% YoY mostly as a result of increased fee and commission income in Retail segment in Slovenia and Strategic foreign markets.
• In 1-9 2019 positive one-off effects from revaluation of a non-core equity stake was realized in the amount of EUR 6.3 million; 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. • In first nine months of 2019, the net non-interest income was positive impacted by non-recurring income as a partial repayment of a larger exposure measured at fair value through profit and loss in the amount of EUR 5.1 million, and active management of banking book securities in the amount of EUR 3.4 million.
• Regular net other income was affected by the regulatory costs (SRF & DGS) in the total amount of EUR 13.8 million, which were by EUR 0.4 million or 3% lower YoY.
Costs – NLB Group
Cost higher by 2% YoY
- EUR 4.0 million increase in total costs mostly due to higher employee and technology costs (EUR 3.5 million).
- CIR stood at 55.7%.
- Headcount dropped by 19% over 2012-30 September 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
NLB d.d. Other
Impairments and provisions & cost of risk
Cost of risk negative
Impairments and provisions (Group, EUR m)
In nine months of 2019, the Group released EUR 9.7 million of net impairments and provisions while in the same period of previous year the Group released EUR 19.0 million net impairments and provisions.
Impairments and provisions for credit risk were net released in the amount of EUR 15.6 million and the cost of risk in the period was negative, -31 bps.
Other impairments and provisions were established in the net amount of EUR 5.9 million of which EUR 2.7 million due to established provisions for pending legal disputes in NLB Banka, Podgorica.
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
Credit portfolio by segment (Group, 30 Sep 2019)
Banking book portfolio by asset class (Group, 30 Sep 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 most subsidiary banks, especially in NLB Banka, Prishtina, NLB Banka, Beograd and NLB Banka, Sarajevo. Slight drop of 1% was recorded only in NLB Banka, Skopje.
Gross loans to individuals in subsidiary banks grew by 6% and to corporate by 4.2% YtD.
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.
Decreasing deposit interest rates (%)*
Capital - NLB Group
Strong capital position
NLB Group capital ratios (%) Capital structure and ratios
- At the end of September 2019, the Total capital ratio for NLB Group stood at 16.1% (or 0.6 p.p. lower YtD), and for NLB at 22.3% (1.8 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 15.2 million, mainly due to new Tier 2 instrument (EUR 44.6 million) and higher Other Comprehensive Income (EUR 14.6 million).
| (in EUR million) | 30.9.2019 | 31.12.2018 | Change YtD | |
|---|---|---|---|---|
| Common Equity Tier 1 capital | 1,424.0 | 1,453.4 | -29.4 | -2.0% |
| Additional Tier 1 capital | 0.0 | 0.0 | 0.0 | |
| Tier 1 capital | 1,424.0 | 1,453.4 | -29.4 | -2.0% |
| Tier 2 capital | 44.6 | 0.0 | 44.6 | |
| Total capital | 1,468.6 | 1,453.4 | 15.2 | 1.0% |
| Total risk exposure amount (RWA) | 9,126.1 | 8,677.6 | 448.5 | 5.2% |
| RWA for credit risk | 7,627.0 | 7,179.7 | 447.3 | |
| RWA for market risks + CVA | 557.6 | 544.5 | 13.1 | |
| RWA for operational risk | 941.6 | 953.5 | -11.9 | |
| Common Equity Tier 1 Ratio | 15.6% | 16.7% | -1,1 p.p. | |
| Tier 1 Ratio | 15.6% | 16.7% | -1,1 p.p. | |
| Total Capital Ratio | 16.1% | 16.7% | -0,6 p.p. |
Capital adequacy and local requirements (30 Sep 2019, %)
Capital evolution and requirements
Strong capital position
Total assets (1) 67% 893 949 953 953 942 7,180 Dec-16 6,865 8,546 105 7,096 501 544 8,677 Dec-17 Dec-18 7,210 529 Sep-18 7,428 565 Sep-19 7,863 8,607 9,126 +5,6%CAGR +5.2%YtD +6.0%YoY Credit Risk Market Risk incl. CVA Operational Risk (1)
Structure of the Overall Capital Requirement (OCR)
- Total capital ratio reaching 16.1% on Group level in Sep-19.
- 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 90 million, thereby also exerting its capital optimisation potential. The loan raised on 20 September 2019 in the amount of EUR 45 million is subject to BS/ECB approval process and has therefore not yet been included in the capital.
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
Solid dividend distribution
| Implied payout ratio(%) |
48% | 58% | 84%(1) | 70% | ||
|---|---|---|---|---|---|---|
| NLB Group dividend to shareholder (paid in year after) |
44 | 64 | 271 | 142.6 | ||
| NLB Group profit after tax |
92 | 110 | 225 | 204 | ||
| o/w dividends from subsidiaries, associates and joint ventures to NLB d.d. |
14 | 29 | 58 | 50 | ||
| NLB d.d. profit | 44 | 64 | 189 | 165 | ||
| 2015 | 2016 | 2017 | 2018 | |||
| (NLB d.d., EURm) |
• 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, Sep 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, Sep 2019, EURm)
Credit portfolio(1) by geography (Group, Sep 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, Sep 2019) NPL cash coverage(1) (Group, %)
NPL specific provisions Pool provisions
An important Group strength is the NPL cash coverage (CR1), which remains high at 86%. Further, the Group's NPL coverage ratio 2 stands at 68 %, 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.
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 30% of the entire NPL volume; the coverage with provisions remains high, limiting the potential losses.
NPL ratio decreased from 6.9% to 5.2% YtD, while NPE ratio reduced by 1.2 p.p. YtD to 3.5%.
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)
Stage portfolio at amortized costs (Group, Sep-19)
Stage 1 loans represent 89% of loan portfolio valued at amortized cost. 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
Only bank with multichannel 24/7 support (through phone, chat and video call)
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)
219 200 226 219 231 Dec-16 Dec-17 Dec-18 Q3 2018 Q3 2019 (2)
Mobile wallet users & transactions
1,653
1,930
Use of video call functionality (# of contacts)
Volume of purchase (in kEUR) # of users
Note: All figures are for Slovenia
(1) Individual users (Klikin and NLB Klik); (2) In 2017 ~30,000 inactive NLB Klik users systematically removed.
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 to provide additional support:
- ESB roll-out in
- Solution for loan origination and approval process roll-out
- Digital Banking Platform roll-out
- ETL's and data modelling in EDWH
IT regionalisation activities Procurement
- Regional SIEM(1) and SOC(2) successfully set up by the parent bank in Ljubljana
- Implementation of the Digital Banking Platform is progressing according to the project plan
- Regional synergies in all major areas of IT infrastructure have been addressed
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 has been launched
- Synergy potential analysis in SWIFT is under way
-
Introduction of RPA in 2 banks in the Group with preparation of roll out to other banks in the Group
-
Regional standards in procurement that provide the framework for optimizations in local and regional procurement are defined
- Non-FTE cost optimisation project overachieved targeted savings before its conclusion
- 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 2019
Macro outlook & risk factors affecting the business outlook
Business outlook
- ✓ Real GDP growth: most countries are likely to grow at around 3% - 4% if supported by loose monetary conditions, fiscal easing and solid domestic demand
- ✓ Public debt in all markets below EU average
- ✓ Low household indebtedness and solid savings performance
- ? Economies will be sensitive to a potential slowdown in the Eurozone
- ? Worsened interest rate outlook
- ? Regulatory & tax measures impacting banks
- ? Geopolitical uncertainties
ASSUMPTIONS:
- Single digit increase of revenues and pre-provision income
- Continued net loan growth in line with GDP dynamics and stable NIM
- Increase of cost of risk, however remaining at low levels
- Costs are expected to moderately increase in short-term period. However, the commitment to cost containment remains strong and the Bank continues to pursue a strong cost agenda
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 Treasury activities NLB Banka, Banja Luka Trading in financial instruments NLB Banka, Sarajevo Asset and liabilities NLB Banka, Prishtina management (ALM) NLB Banka, Podgorica NLB Banka, Beograd |
Non-core members according to EC commitments REAM entities NLB Srbija NLB Crna Gora |
||
| (Sep 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. | 39.6 | 47.9 | 72.0 | 21.3 | 0.1 |
| Total assets |
2,522 | 2,029 | 4,579 | 3,911 | 193 |
| total assets(3) % of |
19% | 15% | 34% | 29% | 1% |
| CIR | 68.7% | 51.2% | 49.9% | 19.2% | 114.4% |
| Cost of risk (bp) |
12 | -87 | 3 | / | -173 |
Notes: (1) 50% equity stake, under equity consolidation; (2) 39% minority stake; (3) Other activities 1%.
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 | ||||||
| 1-9 2019 | 1-9 2018 | YoY | in 000 EUR | 30 Sep 2019 31 Dec 2018 |
YtD | ||||
| ROE a.t. | 16.4% | 12.2% | 4.2 p.p. | Total assets | 9,289,364 | 8,811,047 | 478,317 | 5.4% | |
| Interest margin | 1.88% | 1.88% | 0.0 p.p. | ||||||
| CIR | 46.6% | 50.7% | -4.1 p.p. | Loans to customers (net) | 4,602,652 | 4,478,071 | 124,581 | 2.8% | |
| Cost of risk net (bps)* | -45 | -54 | 9 | Loans to customers (gross) | 4,781,439 | 4,703,671 | 77,768 | 1.7% | |
| LTD net (%) | 62.7 | 64.6 | -1.9 | Gross loans to corporate | 2,225,389 | 2,190,299 | 35,090 | 1.6% | |
| Income statement | Change | Gross loans to individuals | 2,339,655 | 2,241,624 | 98,031 | 4.4% | |||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | Gross loans to state | 216,395 | 271,748 | -55,353 | -20.4% | |
| Total net operating income | 284,593 | 255,063 | 29,530 | 11.6% | Financial assets | 3,198,525 | 2,869,450 | 329,075 | 11.5% |
| Net interest income | 118,987 | 117,579 | 1,408 | 1.2% | |||||
| Net non-interest income | 165,606 | 137,484 | 28,122 | 20.5% | Deposits from customers | 7,344,022 | 7,033,409 | 310,613 | 4.4% |
| o/w net fees and commissions |
78,066 | 75,399 | 2,667 | 3.5% | Deposits from corporate | 1,379,414 | 1,392,171 | -12,757 | -0.9% |
| Total costs | -132,563 | -129,213 | -3,350 | -2.6% | Deposits from individuals | 5,854,493 | 5,522,142 | 332,351 | 6.0% |
| Employee costs | -77,416 | -76,218 | -1,198 | -1.6% | Deposits from state | 110,115 | 119,096 | -8,981 | -7.5% |
| Other general and administrative expenses | -41,737 | -39,911 | -1,826 | -4.6% | NPL gross | 231,465 | 342,900 | -111,435 | -32.5% |
| Depreciation and amortization | -13,410 | -13,084 | -326 -2.5% |
||||||
| Result before impairments and provisions | 152,030 | 125,850 | 26,180 | 20.8% | % NPL | 4.2% | 6.3% | -2.1 p.p. | |
| Impairments and provisions | 18,271 | 18,221 | 50 | 0.3% | Capital (according to local legislation) | ||||
| Result after tax | 162,980 | 134,574 | 28,406 | 21.1% | Capital adequacy ratio | 22.3% | 24.1% | -1.7 p.p. | |
| Number of employees | 2,667 | 2,740 | -73 | -2.7% |
*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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 Change QoQ | |||||
| Net interest income | 65.6 | 56.8 | 8.8 | 15% | 21.4 | 21.2 | 1% | ||
| Net non-interest income | 56.9 | 49.4 | 7.5 | 15% | 21.7 | 15.1 | 43% | ||
| o/w Net fee and commmission income | 61.1 | 55.2 | 5.9 | 11% | 21.2 | 20.4 | 4% | ||
| Total net operating income | 122.5 | 106.2 | 16.3 | 15% | 43.1 | 36.3 | 19% | ||
| Total costs | -84.1 | -77.9 | -6.2 | -8% | -28.9 | -28.4 | -2% | ||
| Result before impairments and provisions | 38.3 | 28.3 | 10.1 | 36% | 14.2 | 7.9 | 79% | ||
| Impairments and provisions | -2.9 | -3.0 | 0.1 | 5% | -1.1 | -0.7 | -48% | ||
| Net gains from investments in subsidiaries, associates, and JVs' |
4.2 | 4.1 | 0.0 | 1% | 1.6 | 1.4 | 18% | ||
| Result before tax | 39.6 | 29.4 | 10.3 | 35% | 14.8 | 8.6 | 72% | ||
| 30 Sep 2019 30 Jun 2019 31 Dec 2018 30 Sep 2018 | Change YtD | Change YoY | Change QoQ | ||||||
| Net loans to customers | 2,347.5 | 2,296.6 | 2,277.1 | 2,184.8 | 70.3 | 3% | 162.7 | 7% | 2% |
| Gross loans to customers | 2,375.3 | 2,323.2 | 2,305.0 | 2,211.9 | 70.3 | 3% | 163.4 | 7% | 2% |
| Housing loans | 1,401.9 | 1,390.2 | 1,376.8 | 1,370.7 | 25.1 | 2% | 31.2 | 2% | 1% |
| Interest rate on housing loans | 2.55% | 2.54% | 2.54% | 2.50% | 0.01 p.p. | 0.05 p.p. | 0.01 p.p. | ||
| Consumer loans | 682.2 | 656.5 | 628.4 | 578.7 | 53.8 | 9% | 103.6 | 18% | 4% |
| Interest rate on consumer loans | 6.32% | 6.29% | 6.28% | 5.81% | 0.04 p.p. | 0.51 p.p. | |||
| Other | 291.1 | 276.6 | 299.7 | 262.5 | -8.6 | -3% | 28.6 | 11% | 5% |
| Deposits from customers | 6,320.0 | 6,209.6 | 6,095.4 | 5,731.6 | 224.6 | 4% | 588.4 | 10% | 2% |
| Interest rate on deposits | 0.05% | 0.06% | 0.06% | 0.09% | -0.01 p.p. | -0.04 p.p. | -0.01 p.p. | ||
| Non-performing loans (gross) | 43.3 | 43.0 | 43.9 | 42.8 | -0.6 | -1% | 0.4 | 1% | 1% |
| 1-9 2019 | 1-9 2018 Change YoY |
| 1-9 2019 | 1-9 2018 Change YoY | |||
|---|---|---|---|---|
| Cost of risk (in bps) | 12 | 11 | 1 | |
| CIR | 68.7% | 73.4% -4.7 p.p. | ||
| Interest margin | 2.07% | 1.95% 0.12 p.p. |
• Profit before tax amounted to EUR 39.6 million, 35% increase YoY, mostly due to higher net interest and net non-interest income.
- Net interest income was higher YoY due to higher interest rates and growth in volume of gross loans in the amount of EUR 163.4 million YoY (EUR 70.3 million YtD), of which EUR 38.1 million increase relates to the transfer of micro clients from the Corporate segment. The production of new consumer loans in the first nine months amounted to EUR 96.0 million (EUR 77.9 million in the same period of 2018), which led to an increase of balance by EUR 103.6 million YoY (53.8 million YtD). The balance of housing loans increased by EUR 31.2 million YoY (EUR 25.1 million YtD), despite a lower production of new housing loans YoY (EUR 57.6 million vs EUR 62.3 million in first nine months of 2018). The share of consumer loans in all gross loans increased to 29% (from 26% at the end of September 2018).
- The segment recorded EUR 56.9 million of net non-interest income. The comparison shows EUR 7.5 million increase YoY, of which EUR 5.9 million due to increase in net fee and commission income, most increase (EUR 3.6 million) is assessed as the effect of the transfer of micro clients from Corporate to Retail. In Q3, the segment recorded EUR 21.7 million of net non-interest income, higher by EUR 6.6 million or 43% QoQ, mostly due to DGS and SRF expenses (EUR 5.8 million).
- Considering the effect of the change in segment presentation (approximately EUR 4.5 million), the total costs were EUR 1.7 million higher YoY.
- The presentation of the increase in deposits from customers YtD (EUR 224.6 million) is mostly due to the transfer of micro clients from the corporate segment (EUR 188.1 million) and an increase in demand deposits from retail clients.
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)
Private Banking AuM (EURm)
Clients
Long-term deposits Sight deposits Short-term deposits
- Improving macro and low household indebtedness (21% GDP) driving retail banking growth
- More than 65% of the clients already have one of the package from the offer, presenting over 20% of the Slovenian population
-
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 33.3% as of 30 September 2019
- AuM of 1,436 EURm as of 30 September 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 30 September 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 in EUR million
| consolidated | Corporate and Investment banking in Slovenia | |||||||
|---|---|---|---|---|---|---|---|---|
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 Change QoQ | ||||
| Net interest income | 28.4 | 31.8 | -3.4 | -11% | 8.7 | 8.9 | -2% | |
| Net non-interest income | 33.4 | 24.7 | 8.7 | 35% | 8.9 | 9.0 | -1% | |
| o/w Net fee and commmission income | 24.6 | 21.9 | 2.7 | 12% | 8.5 | 7.9 | 7% | |
| Total net operating income | 61.7 | 56.5 | 5.3 | 9% | 17.6 | 17.9 | -2% | |
| Total costs | -31.6 | -31.9 | 0.3 | 1% | -10.8 | -10.7 | -1% | |
| Result before impairments and provisions | 30.1 | 24.6 | 5.6 | 23% | 6.8 | 7.2 | -6% | |
| Impairments and provisions | 17.8 | 15.8 | 2.0 | 13% | 14.9 | -0.4 | - | |
| Result before tax | 47.9 | 40.4 | 7.6 | 19% | 21.7 | 6.8 | - |
| 30 Sep 2019 30 Jun 2019 31 Dec 2018 30 Sep 2018 | Change YtD | Change YoY | Change QoQ | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net loans to customers | 2,031.2 | 1,947.9 | 1,950.4 | 1,959.7 | 80.8 | 4% | 71.5 | 4% | 4% |
| Gross loans to customers | 2,179.5 | 2,110.0 | 2,061.0 | 2,082.9 | 118.5 | 6% | 96.6 | 5% | 3% |
| Corporate | 1,998.8 | 1,922.1 | 1,854.4 | 1,869.1 | 144.4 | 8% | 129.7 | 7% | 4% |
| Key/SMECorporates | 1,779.0 | 1,666.4 | 1,697.2 | 1,654.6 | 81.8 | 5% | 124.4 | 8% | 7% |
| Interest rate on Key/SME Corporates loans |
1.83% | 1.85% | 1.87% | 1.93% | -0.04 p.p. | -0.10 p.p. | -0.02 p.p. | ||
| Investment banking* | 0.1 | 0.1 | 0.1 | 0.0 | - | - | - | ||
| Restructuring and Workout | 219.7 | 255.6 | 290.4 | 214.5 | -70.7 | -24% | 5.2 | 2% | -14% |
| State | 180.3 | 187.6 | 206.1 | 213.3 | -25.8 | -13% | -33.0 | -15% | -4% |
| Interest rate on State loans | 1.98% | 2.19% | 2.84% | 1.76% | -0.86 p.p. | 0.22 p.p. | -0.21 p.p. | ||
| Deposits from customers | 1,014.5 | 992.3 | 1,120.8 | 1,116.3 | -106.3 | -9% | -101.8 | -9% | 2% |
| Interest rate on deposits | 0.07% | 0.07% | 0.07% | 0.07% | 0.00 p.p. | 0.00 p.p. | 0.00 p.p. | ||
| Non-performing loans (gross) | 188.2 | 231.4 | 262.8 | 194.3 | -74.6 | -28% | -6.1 | -3% | -19% |
| 1-9 2019 | 1-9 2018 Change YoY | |||
|---|---|---|---|---|
| Cost of risk (in bps) | -87 | -63 | -24 | |
| CIR | 51.2% | 56.5% -5.3 p.p. | ||
| Interest margin | 2.25% | 2.48% -0.23 p.p. | ||
| *Investment banking w as show |
n as separate part of this segment before 2019. Profit before tax of Investment banking 1-6 2018 in amount EUR 1.3 million. | |||
• Profit before tax amounted to EUR 47.9 million, 19% increase YoY, of which EUR 4.3 million due to change in the segment presentation.
- Net interest income decreased by EUR 3.4 million YoY, despite EUR 1.6 million increase due to change in the segment presentation. The segment of gross loans to customers was affected by the change in the segment presentation in the net amount of EUR 111.8 million (EUR +149.8 million due to transfer from NLB Non-Core and EUR -38.1 million due to the 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 Q3. The gross loans to the state recorded a decrease of EUR 33.0 million YoY (EUR 25.8 million YtD).
- Net fee and commission income increased EUR 2.7 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 stayed on the same level (EUR 0.3 million YoY decrease), despite higher costs due to the change in the segment presentation.
- Impairments and provisions were released in the amount of EUR 17.8 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 7.1 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 14.4 billion (EUR 15.8 billion in 3Q 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 30 September 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 Q3 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
13.1k (2) POS terminals
36.6% market share(2) in merchant acquiring
EUR 14.4 bn assets under custody
Strategic foreign markets
| in EUR million consolidated |
Strategic foreign markets | ||||||
|---|---|---|---|---|---|---|---|
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 Change QoQ | |||
| Net interest income | 117.6 | 110.6 | 7.0 | 6% | 39.7 | 39.2 | 1% |
| Net non-interest income | 37.8 | 50.3 | -12.5 | -25% | 14.1 | 11.7 | 21% |
| o/w Net fee and commmission income | 40.5 | 36.9 | 3.6 | 10% | 14.7 | 13.5 | 9% |
| Total net operating income | 155.4 | 160.9 | -5.4 | -3% | 53.8 | 50.9 | 6% |
| Total costs | -77.5 | -73.8 | -3.7 | -5% | -26.4 | -25.7 | -3% |
| Result before impairments and provisions | 77.9 | 87.0 | -9.1 | -10% | 27.4 | 25.2 | 9% |
| Impairments and provisions | -6.0 | -3.4 | -2.6 | -78% | 1.1 | -3.9 | - |
| Result before tax | 72.0 | 83.7 | -11.7 | -14% | 28.5 | 21.3 | 34% |
| o/w Result of minority shareholders | 6.2 | 6.7 | -0.5 | -8% | 2.4 | 1.8 | 32% |
| 30 Sep 2019 30 Jun 2019 31 Dec 2018 30 Sep 2018 | Change YtD | Change YoY | Change QoQ | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net loans to customers | 2,907.9 | 2,835.6 | 2,718.0 | 2,624.1 | 189.9 | 7% | 283.8 | 11% | 3% |
| Gross loans to customers | 3,059.9 | 2,998.7 | 2,932.7 | 2,851.5 | 127.1 | 4% | 208.4 | 7% | 2% |
| Individuals | 1,555.2 | 1,514.6 | 1,438.1 | 1,400.0 | 117.1 | 8% | 155.2 | 11% | 3% |
| Interest rate on retail loans | 6.76% | 6.78% | 6.80% | 7.13% | -0.04 p.p. | -0.37 p.p. | -0.02 p.p. | ||
| Corporate | 1,414.7 | 1,400.0 | 1,405.0 | 1,359.1 | 9.8 | 1% | 55.6 | 4% | 1% |
| Interest rate on corporate loans | 4.54% | 4.62% | 4.71% | 4.92% | -0.16 p.p. | -0.38 p.p. | -0.08 p.p. | ||
| State | 90.0 | 84.1 | 89.6 | 92.4 | 0.3 | 0% | -2.5 | -3% | 7% |
| Interest rate on state loans | 4.12% | 4.21% | 4.23% | 4.32% | -0.11 p.p. | -0.20 p.p. | -0.09 p.p. | ||
| Deposits from customers | 3,698.6 | 3,547.6 | 3,438.1 | 3,268.5 | 260.5 | 8% | 430.2 | 13% | 4% |
| Interest rate on deposits | 0.54% | 0.55% | 0.56% | 0.63% | -0.02 p.p. | -0.09 p.p. | -0.01 p.p. | ||
| Non-performing loans (gross) | 132.6 | 147.0 | 146.2 | 234.9 | -13.6 | -9% | -102.3 | -44% | -10% |
| 1-9 2019 | 1-9 2018 Change YoY | |
|---|---|---|
| Cost of risk (in bps) | 3 | 2 0 |
| CIR | 49.9% | 45.9% 4.0 p.p. |
| Interest margin | 3.63% | 3.84% -0.21 p.p. |
- Profit before tax amounted to EUR 72.0 million, 14% 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 7.0 million YoY was recorded on behalf of higher volumes (EUR 208.4 million increase of gross loans to customers YoY), despite the falling trend of interest margins.
- Net non-interest income decreased by EUR 12.5 million YoY, despite EUR 3.6 million increase in net fee and commission income, mostly due to one-off effect of the sale of NLB Nov penziski fond in Q1 2018.
- Total costs increased by EUR 3.7 million YoY, of which EUR 1.1 million due to change in segment presentation.
- Impairments and provisions net established in the amount of EUR 6.0 million in nine months (of which EUR 2.7 million due to established provisions for pending legal disputes in NLB Banka, Podgorica), while in the same period of 2018 EUR 3.4 million.
- Gross loans to customers increased by EUR 127.1 million YtD due to increase in gross loans in most subsidiary banks, the largest increases were recorded in NLB Banka, Beograd (EUR 48.9 million) and NLB Banka, Prishtina (EUR 41.6 million). This increase was partly reduced by the change in segment presentation (EUR -69.0 million).
SEE banks continuing solid performance
- ✓ 6% 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 most markets, with aggregate deposits balance up YtD
| NLB Banka NLB Banka Skopje Banja Luka |
NLB Banka Sarajevo |
NLB Banka Prishtina |
NLB Banka Podgorica |
NLB Banka Beograd |
Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| banks(1) core |
|||||||||||||||
| B/S (EURm) | 30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
30 Sep 2019 |
31 Dec 2018 |
Δ |
| Total assets | 1,392 | 1,350 | 774 | 721 | 641 | 592 | 760 | 668 | 540 | 489 | 568 | 484 | 4,676 | 4,305 | 9% |
| Net loans to customers |
857 | 859 | 406 | 385 | 393 | 359 | 530 | 467 | 327 | 311 | 395 | 319 | 2,908 | 2,699 | 8% |
| Deposits from customers |
1,116 | 1,076 | 613 | 576 | 512 | 472 | 648 | 586 | 444 | 392 | 375 | 353 | 3,708 | 3,455 | 7% |
| P&L (EURm) | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | Δ |
| NII(2) | 36.8 | 36.3 | 14.1 | 13.5 | 13.5 | 13.1 | 23.0 | 20.1 | 14.9 | 13.2 | 15.3 | 14.8 | 117.6 | 110.9 | 6% |
| NNII(2) | 11.5 | 20.0 | 8.2 | 8.0 | 7.1 | 6.1 | 5.0 | 3.8 | 4.0 | 4.3 | 2.1 | 2.8 | 37.9 | 44.9 | -16%(4) |
| OpEx | -19.6 | -18.5 | -9.5 | -9.7 | -10.5 | -10.5 | -9.4 | -8.7 | -9.4 | -9.0 | -14.4 | -13.1 | -72.8 | -69.6 | 5% |
| PPI | 28.6 | 37.7 | 12.7 | 11.8 | 10.1 | 8.6 | 18.6 | 15.2 | 9.5 | 8.4 | 3.0 | 4.5 | 82.6 | 86.3 | -4% |
| Result a.t. |
24.4 | 33.3 | 13.9 | 11.7 | 7.3 | 7.4 | 14.8 | 11.2 | 6.0 | 7.7 | 2.7 | 6.4 | 69.2 | 77.8 | -11% |
| Ratios | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | 1-9 2019 | 1-9 2018 | |||
| RoE a.t. |
16.2% | 24.3% | 21.6% | 18.0% | 12.1% | 13.3% | 25.9% | 21.9% | 11.9% | 15.3% | 5.3% | 13.2% | |||
| Net interest margin(3) |
3.69% | 4.01% | 2.56% | 2.67% | 2.99% | 3.22% | 4.41% | 4.42% | 4.27% | 4.04% | 4.11% | 5.10% | |||
| CIR | 40.7% | 32.9% | 42.8% | 45.0% | 50.9% | 54.9% | 33.5% | 36.5% | 49.8% | 51.8% | 82.6% | 74.5% | |||
| LTD net |
76.7% | 81.0% | 66.3% | 66.8% | 76.8% | 76.2% | 81.8% | 82.1% | 73.5% | 75.9% | 105.5% | 101.2% |
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 | Balance sheet | Change | ||||||
| 1-9 2019 | 1-9 2018 | YoY | in 000 EUR | 30 Sep 2019 | 31 Dec 2018 | YtD | |||
| ROE a.t. | 16.2% | 24.3% | -8.2 p.p. | Total assets | 1,392,381 | 1,350,054 | 42,327 | 3.1% | |
| Interest margin* | 3.69% | 4.01% | -0.3 p.p. | Loans to customers (net) | 856,600 | 858,592 | -1,992 | -0.2% | |
| CIR | 40.7% | 32.9% | 7.8 p.p. | ||||||
| Cost of risk net (bps)** | 11 | 11 | 1 | Loans to customers (gross) | 909,819 | 918,140 | -8,321 | -0.9% | |
| LTD net (%) | 76.7 | 81.0 | -4.3 | Gross loans to corporate | 350,237 | 383,212 | -32,975 | -8.6% | |
| Income statement | Change | Gross loans to individuals | 557,008 | 531,406 | 25,602 | 4.8% | |||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | Gross loans to state | 2,574 | 3,522 | -948 | -26.9% | |
| Total net operating income | 48,261 | 56,299 | -8,038 | -14.3% | Financial assets | 247,681 | 196,112 | 51,569 | 26.3% |
| Net interest income | 36,767 | 36,288 | 479 | 1.3% | Deposits from customers | 1,116,399 | 1,076,154 | 40,245 | 3.7% |
| Net non-interest income | 11,494 | 20,011 | -8,517 | -42.6% | |||||
| o/w net fees and commissions |
10,973 | 10,648 | 325 | 3.1% | Deposits from corporate | 303,461 | 272,060 | 31,401 | 11.5% |
| Total costs | -19,628 | -18,512 | -1,116 | -6.0% | Deposits from individuals | 807,300 | 800,372 | 6,928 | 0.9% |
| Employee costs | -10,296 | -9,787 | -509 | -5.2% | Deposits from state | 5,638 | 3,722 | 1,916 | 51.5% |
| Other general and administrative expenses | -6,481 | -6,373 | -108 | -1.7% | NPL gross | 49,611 | 56,050 | -6,439 | -11.5% |
| Depreciation and amortization | -2,851 | -2,352 | -499 | -21.2% | % NPL | 4.5% | 5.1% | -0.6 p.p. | |
| Result before impairments and provisions | 28,633 | 37,729 | -9,096 | -24.1% | Capital (according to local legislation) | ||||
| Impairments and provisions | -1,462 | -669 | -793 | -118.5% | |||||
| Result after tax | 24,447 | 33,317 | -8,870 | -26.6% | Capital adequacy ratio | 17.7% | 16.7% | 1.0 p.p. | |
| Number of employees | 878 | 864 | 14 | 1.6% |
* Interest margin data for 2018 are adjusted to new methodology (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 | Change | Balance sheet | |||
| 1-9 2019 | 1-9 2018 | YoY | |||
| ROE a.t. | 21.6% | 18.0% | 3.6 p.p. | ||
| Interest margin* | 2.56% | 2.67% | -0.1 p.p. | ||
| CIR | 42.8% | 45.0% | -2.1 p.p. | ||
| Cost of risk net (bps)** | -87 | -46 | -41 | ||
| LTD net (%) | 66.3 | 66.8 | -0.5 | ||
| Income statement | Change | ||||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | ||
| Total net operating income | 22,235 | 21,493 | 742 | 3.5% | |
| Net interest income | 14,072 | 13,518 | 554 | 4.1% | |
| Net non-interest income | 8,163 | 7,975 | 188 | 2.4% | |
| o/w net fees and commissions |
8,116 | 8,030 | 86 | 1.1% | |
| Total costs | -9,526 | -9,661 | 135 | 1.4% | |
| Employee costs | -6,179 | -6,246 | 67 | 1.1% | |
| Other general and administrative expenses | -2,332 | -2,554 | 222 | 8.7% | |
| Depreciation and amortization | -1,015 | -861 | -154 | -17.9% | |
| Result before impairments and provisions | 12,709 | 11,832 | 877 | 7.4% | |
| Impairments and provisions | 2,354 | 1,189 | 1,165 | 98.0% | |
| Result after tax | 13,903 | 11,726 | 2,177 | 18.6% | |
| Number of employees | 488 | 486 | 2 | 0.4% |
| Change | |||||
|---|---|---|---|---|---|
| in 000 EUR | 30 Sep 2019 31 Dec 2018 | YtD | |||
| Total assets | 774,151 | 720,509 | 53,642 | 7.4% | |
| Loans to customers (net) | 406,417 | 384,806 | 21,611 | 5.6% | |
| Loans to customers (gross) | 426,424 | 408,312 | 18,112 | 4.4% | |
| Gross loans to corporate | 176,693 | 176,353 | 340 | 0.2% | |
| Gross loans to individuals | 198,062 | 180,933 | 17,129 | 9.5% | |
| Gross loans to state | 51,669 | 51,026 | 643 | 1.3% | |
| Financial assets | 145,914 | 107,316 | 38,598 | 36.0% | |
| Deposits from customers | 613,112 | 575,775 | 37,337 | 6.5% | |
| Deposits from corporate | 149,224 | 135,670 | 13,554 | 10.0% | |
| Deposits from individuals | 426,347 | 402,203 | 24,144 | 6.0% | |
| Deposits from state | 37,541 | 37,902 | -361 | -1.0% | |
| NPL gross | 14,025 | 19,199 | -5,174 | -26.9% | |
| % NPL | 2.3% | 3.2% | -0.9 p.p. | ||
| Capital (according to local legislation) | |||||
| Capital adequacy ratio | 15.9% | 15.6% | 0.3 p.p. |
* Interest margin data for 2018 are adjusted to new methodology (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 | ||||
| 1-9 2019 | 1-9 2018 | YoY | ||
| ROE a.t. | 12.1% | 13.3% | -1.2 p.p. | |
| Interest margin* | 2.99% | 3.22% | -0.2 p.p. | |
| CIR | 50.9% | 54.9% | -4.0 p.p. | |
| Cost of risk net (bps)** | 42 | 27 | 15 | |
| LTD net (%) | 76.8 | 76.2 | 0.6 | |
| Income statement | Change | |||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | |
| Total net operating income | 20,605 | 19,169 | 1,436 | 7.5% |
| Net interest income | 13,488 | 13,084 | 404 | 3.1% |
| Net non-interest income | 7,117 | 6,085 | 1,032 | 17.0% |
| o/w net fees and commissions |
6,481 | 5,344 | 1,137 | 21.3% |
| Total costs | -10,481 | -10,523 | 42 | 0.4% |
| Employee costs | -6,172 | -6,355 | 183 | 2.9% |
| Other general and administrative expenses | -3,266 | -3,574 | 308 | 8.6% |
| Depreciation and amortization | -1,043 | -594 | -449 | -75.6% |
| Result before impairments and provisions | 10,124 | 8,646 | 1,478 | 17.1% |
| Impairments and provisions | -1,676 | -425 | -1,251 | - |
| Result after tax | 7,318 | 7,448 | -130 | -1.7% |
| Number of employees | 449 | 459 | -10 | -2.2% |
| Change | Balance sheet | Change | |||||
|---|---|---|---|---|---|---|---|
| YoY | in 000 EUR | 30 Sep 2019 | 31 Dec 2018 | YtD | |||
| -1.2 p.p. | Total assets | 641,469 | 592,166 | 49,303 | 8.3% | ||
| -0.2 p.p. | Loans to customers (net) | 392,942 | 359,499 | 33,443 | 9.3% | ||
| -4.0 p.p. | Loans to customers (gross) | 424,843 | 391,567 | 33,276 | 8.5% | ||
| 15 0.6 |
Gross loans to corporate | 193,468 | 176,368 | 17,100 | 9.7% | ||
| Change | Gross loans to individuals | 226,420 | 211,972 | 14,448 | 6.8% | ||
| YoY | Gross loans to state | 4,955 | 3,227 | 1,728 | 53.5% | ||
| Financial assets | 44,733 | 39,337 | 5,396 | 13.7% | |||
| Deposits from customers | 511,655 | 472,297 | 39,358 | 8.3% | |||
| Deposits from corporate | 139,285 | 127,175 | 12,110 | 9.5% | |||
| Deposits from individuals | 292,254 | 280,207 | 12,047 | 4.3% | |||
| Deposits from state | 80,116 | 64,915 | 15,201 | 23.4% | |||
| NPL gross | 29,638 | 30,805 | -1,167 | -3.8% | |||
| % NPL | 5.1% | 5.7% | -0.6 p.p. | ||||
| Capital (according to local legislation) | |||||||
| Capital adequacy ratio | 15.9% | 16.4% | -0.5 p.p. | ||||
* Interest margin data for 2018 are adjusted to new methodology (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 | ||||
| 1-9 2019 | 1-9 2018 | YoY | ||
| ROE a.t. | 25.9% | 21.9% | 4.0 p.p. | |
| Interest margin* | 4.41% | 4.42% | 0.0 p.p. | |
| CIR | 33.5% | 36.5% | -2.9 p.p. | |
| Cost of risk net (bps)** | 28 | 62 | -34 | |
| LTD net (%) | 81.8 | 82.1 | -0.3 | |
| Income statement | Change | |||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | |
| Total net operating income | 28,024 | 23,894 | 4,130 | 17.3% |
| Net interest income | 23,034 | 20,085 | 2,949 | 14.7% |
| Net non-interest income | 4,990 | 3,809 | 1,181 | 31.0% |
| o/w net fees and commissions |
5,913 | 4,505 | 1,408 | 31.3% |
| Total costs | -9,396 | -8,714 | -682 | -7.8% |
| Employee costs | -4,685 | -4,407 | -278 | -6.3% |
| Other general and administrative expenses | -3,369 | -3,413 | 44 | 1.3% |
| Depreciation and amortization | -1,342 | -894 | -448 | -50.1% |
| Result before impairments and provisions | 18,628 | 15,180 | 3,448 | 22.7% |
| Impairments and provisions | -2,049 | -2,810 | 761 | 27.1% |
| Result after tax | 14,830 | 11,175 | 3,655 | 32.7% |
| Number of employees | 472 | 477 | -5 | -1.0% |
| Change | Balance sheet | Change | |||
|---|---|---|---|---|---|
| YoY | in 000 EUR | 30 Sep 2019 | 31 Dec 2018 | YtD | |
| 4.0 p.p. | Total assets | 760,208 | 668,127 | 92,081 | 13.8% |
| 0.0 p.p. | Loans to customers (net) | 530,192 | 466,854 | 63,338 | 13.6% |
| -2.9 p.p. | Loans to customers (gross) | 558,700 | 493,950 | 64,750 | 13.1% |
| -34 -0.3 |
Gross loans to corporate | 357,021 | 315,408 | 41,613 | 13.2% |
| Change | Gross loans to individuals | 201,679 | 178,542 | 23,137 | 13.0% |
| YoY | Gross loans to state | 0 | 0 | 0 | - |
| Financial assets | 79,391 | 64,733 | 14,658 | 22.6% | |
| Deposits from customers | 648,387 | 585,851 | 62,536 | 10.7% | |
| Deposits from corporate | 175,136 | 154,828 | 20,308 | 13.1% | |
| Deposits from individuals | 459,890 | 421,003 | 38,887 | 9.2% | |
| Deposits from state | 13,361 | 10,020 | 3,341 | 33.3% | |
| NPL gross | 13,363 | 14,361 | -998 | -6.9% | |
| % NPL | 2.0% | 2.4% | -0.4 p.p. | ||
| Capital (according to local legislation) | |||||
| Capital adequacy ratio | 17.0% | 14.6% | 2.4 p.p. | ||
* Interest margin data for 2018 are adjusted to new methodology (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 | Change YoY |
Change | ||||||
| 1-9 2019 | 1-9 2018 | in 000 EUR | 30 Sep 2019 31 Dec 2018 |
YtD | ||||
| ROE a.t. | 11.9% | 15.3% | -3.4 p.p. | Total assets | 539,592 | 489,283 | 50,309 | |
| Interest margin* | 4.27% | 4.04% | 0.2 p.p. | Loans to customers (net) | 326,634 | 310,692 | 15,942 | |
| CIR | 49.8% | 51.8% | -2.0 p.p. | Loans to customers (gross) | 338,317 | 323,914 | 14,403 | |
| Cost of risk net (bps)** | -29 | -47 | 17 | |||||
| LTD net (%) | 73.5 | 75.9 | -2.4 | Gross loans to corporate | 89,586 | 90,223 | -637 | |
| Income statement | Change YoY |
Gross loans to individuals | 219,641 | 203,207 | 16,434 | |||
| in 000 EUR | 1-9 2019 | 1-9 2018 | Gross loans to state | 29,090 | 30,484 | -1,394 | ||
| Total net operating income | 18,916 | 17,450 | 1,466 | 8.4% | Financial assets | 46,635 | 54,781 | -8,146 |
| Net interest income | 14,932 | 13,158 | 1,774 | 13.5% | Deposits from customers | 444,226 | 391,750 | 52,476 |
| Net non-interest income | 3,984 | 4,292 | -308 | -7.2% | Deposits from corporate | 141,952 | 116,364 | 25,588 |
| o/w net fees and commissions |
4,756 | 4,380 | 376 | 8.6% | Deposits from individuals | 281,680 | 256,975 | 24,705 |
| Total costs | -9,421 | -9,037 | -384 | -4.2% | Deposits from state | 20,594 | 18,411 | 2,183 |
| Employee costs | -5,443 | -5,324 | -119 | -2.2% | ||||
| Other general and administrative expenses | -2,829 | -3,055 | 226 | 7.4% | NPL gross | 18,204 | 20,627 | -2,423 |
| Depreciation and amortization | -1,149 | -658 | -491 | -74.6% | % NPL | 4.1% | 5.2% | -1.1 p.p. |
| Result before impairments and provisions | 9,495 | 8,413 | 1,082 | 12.9% | Capital (according to local legislation) | |||
| Impairments and provisions | -2,864 | -710 | -2,154 | - | Capital adequacy ratio | 15.8% | 16.2% | -0.5 p.p. |
| Result after tax | 6,021 | 7,674 | -1,653 | -21.5% | ||||
| Number of employees | 296 | 308 | -12 | -3.9% |
| Balance sheet | ||||
|---|---|---|---|---|
| in 000 EUR | 30 Sep 2019 | 31 Dec 2018 | YtD | |
| Total assets | 539,592 | 489,283 | 50,309 | 10.3% |
| Loans to customers (net) | 326,634 | 310,692 | 15,942 | 5.1% |
| Loans to customers (gross) | 338,317 | 323,914 | 14,403 | 4.4% |
| Gross loans to corporate | 89,586 | 90,223 | -637 | -0.7% |
| Gross loans to individuals | 219,641 | 203,207 | 16,434 | 8.1% |
| Gross loans to state | 29,090 | 30,484 | -1,394 | -4.6% |
| Financial assets | 46,635 | 54,781 | -8,146 | -14.9% |
| Deposits from customers | 444,226 | 391,750 | 52,476 | 13.4% |
| Deposits from corporate | 141,952 | 116,364 | 25,588 | 22.0% |
| Deposits from individuals | 281,680 | 256,975 | 24,705 | 9.6% |
| Deposits from state | 20,594 | 18,411 | 2,183 | 11.9% |
| NPL gross | 18,204 | 20,627 | -2,423 | -11.7% |
| % NPL | 4.1% | 5.2% | -1.1 p.p. | |
| Capital (according to local legislation) | ||||
| Capital adequacy ratio | 15.8% | 16.2% | -0.5 p.p. | |
| Gross loans to customers |
split (30 Sep |
2019, %) | ||
| State 8.6% |
26.5% 338 |
Corporate | ||
| 64.9% |
* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number of days for the period).
* * Calculated as credit impairments and provisions over average net loans to customers.
NLB Banka Beograd
| NLB Banka a.d., Beograd "on stand alone basis" |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Key financial indicators | Change | Balance sheet | Change | ||||||
| 1-9 2019 | 1-9 2018 YoY |
in 000 EUR | 30 Sep 2019 31 Dec 2018 |
YtD | |||||
| ROE a.t. | 5.3% | 13.2% | -8.0 p.p. | Total assets | 567,886 | 484,492 | 83,394 | ||
| Interest margin* | 4.11% | 5.10% | -1.0 p.p. | Loans to customers (net) | 395,070 | 318,792 | 76,278 | ||
| CIR | 82.6% | 74.5% | 8.0 p.p. | Loans to customers (gross) | 401,784 | 327,847 | 73,937 | ||
| Cost of risk net (bps)** | 6 | -104 | 110 | Gross loans to corporate | 247,720 | 198,833 | 48,887 | ||
| LTD net (%) | 105.5 | 101.2 | 4.3 | Gross loans to individuals | 152,386 | 127,629 | 24,757 | ||
| Income statement | Change | ||||||||
| in 000 EUR | 1-9 2019 | 1-9 2018 | YoY | Gross loans to state | 1,678 | 1,385 | 293 | ||
| Total net operating income | 17,401 | 17,599 | -198 | -1.1% | Financial assets | 69,483 | 58,285 | 11,198 | |
| Net interest income | 15,290 | 14,795 | 495 | 3.3% | Deposits from customers | 374,576 | 352,940 | 21,636 | |
| Net non-interest income | 2,111 | 2,804 | -693 | -24.7% | Deposits from corporate | 155,657 | 160,683 | -5,026 | |
| o/w net fees and commissions |
4,267 | 3,573 | 694 | 19.4% | Deposits from individuals | 208,237 | 182,702 | 25,535 | |
| Total costs | -14,369 | -13,117 | -1,252 | -9.5% | Deposits from state | 10,682 | 9,555 | 1,127 | |
| Employee costs | -7,671 | -6,916 | -755 | -10.9% | NPL gross | 7,791 | 9,957 | -2,166 | |
| Other general and administrative expenses | -4,605 | -5,118 | 513 | 10.0% | % NPL | 1.6% | 2.4% | -0.8 p.p. | |
| Depreciation and amortization | -2,093 | -1,083 | -1,010 | -93.3% | |||||
| Result before impairments and provisions | 3,032 | 4,482 | -1,450 | -32.4% | Capital (according to local legislation) | ||||
| Impairments and provisions | -313 | 1,978 | -2,291 | - | Capital adequacy ratio | 20.3% | 16.7% | 3.7 p.p. | |
| Result after tax | 2,719 | 6,434 | -3,715 | -57.7% | |||||
| Number of employees | 476 | 451 | 25 | 5.5% |
| Balance sheet | |||||
|---|---|---|---|---|---|
| in 000 EUR | 30 Sep 2019 | 31 Dec 2018 | YtD | ||
| Total assets | 567,886 | 484,492 | 83,394 | 17.2% | |
| Loans to customers (net) | 395,070 | 318,792 | 76,278 | 23.9% | |
| Loans to customers (gross) | 401,784 | 327,847 | 73,937 | 22.6% | |
| Gross loans to corporate | 247,720 | 198,833 | 48,887 | 24.6% | |
| Gross loans to individuals | 152,386 | 127,629 | 24,757 | 19.4% | |
| Gross loans to state | 1,678 | 1,385 | 293 | 21.2% | |
| Financial assets | 69,483 | 58,285 | 11,198 | 19.2% | |
| Deposits from customers | 374,576 | 352,940 | 21,636 | 6.1% | |
| Deposits from corporate | 155,657 | 160,683 | -5,026 | -3.1% | |
| Deposits from individuals | 208,237 | 182,702 | 25,535 | 14.0% | |
| Deposits from state | 10,682 | 9,555 | 1,127 | 11.8% | |
| NPL gross | 7,791 | 9,957 | -2,166 | -21.8% | |
| % NPL | 1.6% | 2.4% | -0.8 p.p. | ||
| Capital (according to local legislation) | |||||
| Capital adequacy ratio | 20.3% | 16.7% | 3.7 p.p. |
* Interest margin data for 2018 are adjusted to new methodology (calculation based on the number
of days for the period).
* * Calculated as credit impairments and provisions over average net loans to customers.
Financial markets in Slovenia(1)
| in million EUR consolidated |
Financial markets in Slovenia | ||||||
|---|---|---|---|---|---|---|---|
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 | Change QoQ | ||
| Net interest income | 25.2 | 25.2 | 0.0 | 0% | 9.3 | 9.9 | -6% |
| Net non-interest income | 1.8 | 0.2 | 1.6 | - | 0.2 | -0.6 | - |
| Total net operating income | 26.9 | 25.3 | 1.6 | 6% | 9.5 | 9.3 | 3% |
| Total costs | -5.2 | -4.9 | -0.2 | -5% | -1.6 | -1.8 | 12% |
| Result before impairments and provisions | 21.8 | 20.4 | 1.4 | 7% | 7.9 | 7.4 | 7% |
| Impairments and provisions | -0.5 | 0.1 | -0.6 | - | 0.0 | -0.1 | 80% |
| Result before tax | 21.3 | 20.5 | 0.7 | 4% | 7.9 | 7.3 | 9% |
| 30 Sep 2019 | 30 Jun 2019 | 31 Dec 2018 | 30 Sep 2018 | Change YtD | Change YtD | Change QoQ | |||
|---|---|---|---|---|---|---|---|---|---|
| Balances with Central banks | 468.8 | 520.2 | 666.3 | 627.1 | -197.6 | -30% | -158.3 | -25% | -10% |
| Banking book securities | 3,053.1 | 2,983.4 | 2,924.1 | 2,663.5 | 129.0 | 4% | 389.6 | 15% | 2% |
| Interest rate on banking book securities | 1.04% | 1.07% | 1.10% | 1.25% | -0.06 p.p. | -0.21 p.p. | -0.03 p.p. | ||
| Wholesale funding* | 170.6 | 235.3 | 244.0 | 252.4 | -73.4 | -30% | 325.8 | 129% | -27% |
| Interest rate on wholesale funding* | 0.48% | 0.49% | 0.51% | 0.49% | -0.03 p.p. | -0.01 p.p. | -0.01 p.p. | ||
| Subordinated liabilities | 90.3 | 44.9 | 0.0 | 0.0 | - | 0.0 - |
0.0 - |
||
| Interest rate on subordinated liabilities | 4.22% | 4.20% | - | - | - | - | - |
* Item includes only borrowings, till 30 June 2019 it included also deposits from banks.
- Net interest income on the same level YoY, mostly due to higher volumes, since the yields on securities decreased YoY.
- Higher net non-interest income, EUR 1.6 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.
- Decrease in balances with central bank (EUR 197.6 million YtD) and increase in banking book securities (EUR 129.0 million YtD).
- In nine months of 2019 two Tier 2 subordinated transactions were completed in the total amount of EUR 90 million.
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 The volume of ECB
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 minimise concentration risk, and is invested predominantly in high quality issuers on prudent tenors
Well diversified banking book by geography (30 Sep 2019)
Maturity profile of banking book securities(3) (30 Sep 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.
eligible credit claims increased due to the
Non-core members
| in EUR million Non-core members |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| consolidated | |||||||||
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 | Change QoQ | ||||
| Net interest income | 2.2 | 7.5 | -5.3 | -71% | 0.6 | 0.6 | 7% | ||
| Net non-interest income | 6.5 | 5.9 | 0.6 | 9% | 2.2 | 1.5 | 46% | ||
| Total net operating income | 8.7 | 13.4 | -4.7 | -35% | 2.8 | 2.1 | 35% | ||
| Total costs | -9.9 | -13.8 | 3.9 | 28% | -3.4 | -3.4 | -1% | ||
| Result before impairments and provisions | -1.3 | -0.4 | -0.8 | -183% | -0.6 | -1.3 | 52% | ||
| Impairments and provisions | 1.3 | 9.3 | -8.0 | -86% | 0.3 | 0.3 | 2% | ||
| Result before tax | 0.1 | 8.8 | -8.8 | -99% | -0.3 | -1.0 | 69% |
| 30 Sep 2019 30 Jun 2019 31 Dec 2018 30 Sep 2018 | Change YtD | Change YoY | Change QoQ | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Segment assets | 192.9 | 205.8 | 263.7 | 310.6 | -70.8 | -27% | -117.8 | -38% | -6% |
| Net loans to customers | 83.8 | 93.3 | 160.9 | 200.0 | -77.1 | -48% | -116.2 | -58% | -10% |
| Gross loans to customers | 164.7 | 181.6 | 288.6 | 360.0 | -123.9 | -43% | -195.3 | -54% | -9% |
| Investment property and property & equipment received for repayment of loans |
81.1 | 84.4 | 68.5 | 74.6 | 12.6 | 18% | 6.5 | 9% | -4% |
| Other assets | 27.9 | 28.1 | 34.3 | 36.0 | -6.4 | -19% | -8.1 | -22% | -1% |
| Deposits from customers | 0.0 | 0.0 | 9.6 | 9.8 | -9.6 | - | -9.8 | - | #DIV/0! |
| Non-performing loans (gross) | 112.2 | 121.1 | 126.3 | 233.6 | -14.2 | -11% | -121.4 | -52% | -7% |
| 1-9 2019 | 1-9 2018 Change YoY | |||
|---|---|---|---|---|
| Cost of risk (in bps) | -173 | -357 | 185 | |
| CIR | 114.4% | 103.3% 31.4 p.p. |
- The segment recorded EUR 4.7 million decrease of net operating income, and was effected by transfer of NLB Non-core part to Corporate (approximately EUR -3.7 million) and transfer of NLB Srbija and NLB Črna Gora from Strategic foreign markets (EUR +0.8 million); effect on net non-interest income from contractual penalty (EUR 1.3 million) in Q1 2019.
- Decrease in total costs, EUR 3.9 million YoY, due to divestment of non-strategic Group members and transfer of NLB Non-core part to Corporate (approximately EUR -3.3 million) and transfer of NLB Srbija and NLB Črna Gora from Strategic foreign markets (EUR +1.1 million).
- A substantial decrease in total assets of the segment YoY (EUR 117.8 million, of which EUR 32.1 million due to change in segment presentation), which is in line with the divestment strategy of the non-core segment.
Other(1)
| in EUR million consolidated |
Other | ||||||
|---|---|---|---|---|---|---|---|
| 1-9 2019 | 1-9 2018 | Change YoY | Q3 2019 | Q2 2019 | Change QoQ | ||
| Total net operating income | 10.9 | 1.6 | 9.4 | - | 1.2 | 7.6 | -84% |
| Total costs | -7.5 | -5.0 | -2.5 | -51% | -2.5 | -2.8 | 10% |
| Result before impairments and provisions | 3.4 | -3.4 | 6.8 | - | -1.3 | 4.8 | - |
| Impairments and provisions | -0.1 | 0.1 | -0.2 | - | 0.0 | 0.0 | 33% |
| Result before tax | 3.4 | -3.3 | 6.6 | - | -1.3 | 4.8 |
• The segment Other recorded EUR 3.4 million of profit before tax, EUR 6.6 million increase YoY. EUR 10.9 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 7.5 million of total costs, related mostly to IT, cash transport, external realization, restructuring costs and empty business premises.
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) | 45.8 |
| Real GDP growth (%) | 3.0 |
| Population (m) | 2.1 |
| Household indebtedness(1) |
22.0% |
| Credit ratings (S&P / Moody's / Fitch) |
AA- / Baa1 / A |
| EUR(3) | |
|---|---|
| GDP (EURbn) | 17.1 |
| Real GDP growth (%) | 2.7 |
| Population (m) | 3.5 |
| indebtedness(1) Household |
28.2% |
| Credit ratings (S&P / Moody's / Fitch) |
B / B3 / n.a. |
| EUR | |
|---|---|
| GDP (EURbn) | 4.6 |
| Real GDP growth (%) | 3.1 |
| Population (m) | 0.6 |
| Household indebtedness(1) |
27.6% |
| Credit ratings (S&P / Moody's / Fitch) |
B+ / B1 / n.a. |
| EUR | Serbia |
|---|---|
| 45.8 | GDP (EURbn) |
| 3.0 | Real GDP growth (%) |
| 2.1 | Population (m) |
| 22.0% | Household indebtedness(1) |
| EUR AA- / Baa1 / A |
Credit ratings (S&P / Moody's / Fitch) |
| Kosovo | |
|---|---|
| GDP (EURbn) | 6.5 |
| Real GDP growth (%) | 4.0 |
| Population (m) | 1.8 |
| indebtedness(1) Household |
15.6% |
| Credit ratings (S&P / Moody's / Fitch) |
n.a. / n.a. / n.a. |
| North Macedonia |
|
|---|---|
| GDP (EURbn) | 10.7 |
| Real GDP growth (%) | 3.2 |
| Population (m) | 2.1 |
| indebtedness(1) Household |
24.4% |
| Credit ratings (S&P / Moody's / Fitch) |
BB- / n.a. / BB+ |
Source: IMF, World Bank, Central banks data, National Statistics Offices, FocusEconomics.
Note: GDP volume and population estimated for 2018; GDP growth forecasted for 2019 by FocusEconomics Consensus Forecast; (1) Includes households loans as % of GDP, Q2 2019, own calculation; (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 financial conditions.
-
Environment for necessary reforms seen slightly improved.
- 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.
-
Positive momentum for higher lending volumes seen ahead.
- 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 was registered by Serbia (from 2% to 4.3% in 2018, followed by North Macedonia, growing (from 1.1% to 2.7% in 2018).
Five countries with above 3% growth of GDP in 2018.
Growth is decelerating sligthly in 2019, but, overall, real GDP growth in the region will remain strong, well above the Eurozone.
| Real GDP growth, % | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | 0.7 | 4.1 | 3.4 | 3.0 | 3.6 | 2.7 | 2.7 | 3.1 |
| North Macedonia |
3.6 | 3.9 | 2.8 | 1.1 | 2.7 | 3.2 | 3.3 | 3.2 |
| Kosovo | 1.2 | 4.1 | 4.1 | 4.2 | 3.8 | 4.0 | 3.7 | 3.6 |
| Serbia | -1.6 | 1.8 | 3.3 | 2.0 | 4.3 | 3.1 | 3.2 | 3.2 |
| Montenegro | 1.8 | 3.4 | 2.9 | 4.7 | 4.9 | 3.1 | 2.8 | 2.9 |
| Slovenia | 2.8 | 2.2 | 3.1 | 4.8 | 4.1 | 3.0 | 2.7 | 2.6 |
| Eurozone | 1.4 | 2.0 | 1.9 | 2.7 | 1.9 | 1.1 | 1.0 | 1.3 |
Sources: FocusEconomics
Average inflation rate, %
KEY FINDINGS:
There seems to be a favourable inflation development in all countries. Minor pressures noted in Serbia, yet with no material impact on the local currency.
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, % |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | -0.9 | -1.1 | -1.6 | 0.8 | 1.4 | 1.0 | 1.5 | 1.7 |
| North Macedonia |
-0.3 | -0.3 | -0.2 | 1.4 | 1.4 | 1.3 | 1.7 | 2.0 |
| Kosovo | 0.4 | -0.5 | 0.3 | 1.5 | 1.1 | 2.8 | 1.8 | 1.9 |
| Serbia | 2.1 | 1.4 | 1.1 | 3.2 | 2.0 | 2.0 | 2.2 | 2.7 |
| Montenegro | -0.7 | 1.5 | -0.3 | 2.4 | 2.6 | 1.0 | 2.0 | 1.8 |
| Slovenia | 0.4 | -0.8 | -0.2 | 1.6 | 1.9 | 1.7 | 1.8 | 1.9 |
| Eurozone | 0.4 | 0.2 | 0.2 | 1.5 | 1.8 | 1.2 | 1.3 | 1.4 |
Sources: FocusEconomics
Note: HICP for Slovenia, Kosovo and Eurozone, other CPI; Consensus Forecasts for 2019, 2020 and 2021
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 2018, the biggest improvement was recorded by BiH, North Macedonia, Slovenia. 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.
| Unemployment rate, % |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | 43.9 | 43.2 | 41.7 | 38.4 | 36.0 | 33.0 | 31.0 | 30.2 |
| North Macedonia |
28.0 | 26.1 | 23.7 | 22.4 | 20.7 | 18.4 | 17.4 | 17.4 |
| Kosovo | 35.3 | 32.9 | 27.5 | 30.5 | 29.6 | 28.8 | 28.0 | 27.6 |
| Serbia | 19.2 | 17.7 | 15.3 | 13.5 | 12.7 | 11.4 | 10.7 | 10.2 |
| Montenegro | 18.0 | 17.6 | 17.7 | 16.1 | 15.2 | 14.6 | 14.4 | 13.8 |
| Slovenia | 9.7 | 9.0 | 8.0 | 6.6 | 5.1 | 4.4 | 4.4 | 4.4 |
| Eurozone | 11.6 | 10.9 | 10.0 | 9.1 | 8.2 | 7.6 | 7.5 | 7.5 |
Source: FocusEconomics
Note: BiH data for registered unemployment rate; Consensus Forecasts for 2019, 2020 and 2021
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 heavily in the region.
In general, no large reductions of current account deficits can be expected in the near future.
| Current Account, % GDP |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | -11.0 | -4.9 | -4.5 | -4.2 | -3.6 | -4.9 | -5.0 | -4.4 |
| North Macedonia |
-0.5 | -1.9 | -2.9 | -1.0 | -0.1 | -1.0 | -1.4 | -1.0 |
| Kosovo | -6.9 | -8.6 | -7.9 | -6.0 | -8.0 | -7.2 | -7.3 | -7.1 |
| Serbia | -5.6 | -3.5 | -2.9 | -5.2 | -5.2 | -5.9 | -5.6 | -5.6 |
| Montenegro | -12.4 | -11.0 | -16.2 | -16.1 | -17.2 | -16.9 | -15.9 | -15.4 |
| Slovenia | 5.1 | 3.8 | 4.8 | 6.1 | 5.7 | 5.3 | 5.1 | 4.9 |
| Eurozone | 2.3 | 2.6 | 3.3 | 3.1 | 3.1 | 2.8 | 2.7 | 2.6 |
Source: FocusEconomics
Macro Overview – Fiscal data
Fiscal Balance, % GDP
KEY FINDINGS:
A slight deterioration in the fiscal performance throughout most of the region expected for 2019-20.
BiH and Slovenia are expected to keep balanced public finances, while budget deficit will stay at relatively high levels in North Macedonia and Kosovo. Level is expected to improve in Montenegro.
| Fiscal balance, % GDP | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | -2.0 | 0.7 | 1.2 | 2.6 | 2.3 | 0.7 | 0.4 | 0.3 |
| North Macedonia |
-4.2 | -3.5 | -2.7 | -2.7 | -1.8 | -2.4 | -2.5 | -2.2 |
| Kosovo | -2.3 | -1.6 | -1.1 | -1.1 | -2.6 | -2.6 | -2.7 | -2.5 |
| Serbia | -6.2 | -3.5 | -1.2 | 1.1 | 0.6 | -0.2 | -0.5 | -0.4 |
| Montenegro | -3.0 | -8.0 | -3.4 | -5.5 | -3.4 | -2.4 | 0.2 | 0.7 |
| Slovenia | -5.5 | -2.8 | -1.9 | 0.0 | 0.8 | 0.4 | 0.3 | 0.5 |
| Eurozone | -2.5 | -2.0 | -1.4 | -0.9 | -0.5 | -0.9 | -1.0 | -1.1 |
Source: FocusEconomics
Public Debt, % GDP Macro Overview – Fiscal data
KEY FINDINGS:
Public debt varies intensively between the countries. Nevertheless, slow convergence of public indebtedness is projected.
In 2019, a reduction of public debt is expected in Serbia, and Slovenia, while an increase is forecasted for Kosovo, Montenegro and N. Macedonia.
All the countries in the region are below the Eurozone level.
| Public debt, % GDP | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | 45.9 | 45.5 | 44.1 | 39.2 | 34.3 | 34.3 | 33.1 | 31.5 |
| North Macedonia |
38.1 | 38.1 | 39.9 | 39.4 | 40.6 | 41.9 | 42.0 | 40.4 |
| Kosovo | 10.7 | 13.1 | 14.4 | 16.2 | 17.1 | 18.6 | 19.8 | 21.6 |
| Serbia | 64.2 | 69.5 | 67.6 | 59.3 | 53.8 | 51.6 | 49.7 | 47.2 |
| Montenegro | 59.9 | 66.2 | 64.4 | 64.2 | 70.8 | 72.3 | 68.4 | 65.8 |
| Slovenia | 80.3 | 82.6 | 78.7 | 74.1 | 70.4 | 66.6 | 63.4 | 60.6 |
| Eurozone | 92.0 | 90.8 | 90.0 | 87.8 | 85.9 | 84.5 | 83.4 | 82.3 |
Source: 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.
| Int. Reserves (months of imports) |
2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|---|---|---|
| BiH | 6.4 | 7.2 | 7.7 | 7.6 | 7.8 | 7.8 | 7.7 | 7.5 |
| North Macedonia |
6.3 | 5.6 | 5.9 | 4.8 | 5.2 | 5.1 | 5.1 | 4.8 |
| Kosovo | 3.3 | 3.5 | 2.8 | 2.9 | 3.0 | 3.0 | 2.9 | 2.8 |
| Serbia | 8.1 | 8.2 | 7.7 | 6.6 | 6.6 | 6.7 | 6.3 | 5.9 |
| Montenegro | 3.8 | 4.2 | 4.5 | 4.5 | 5.1 | 5.5 | 4.8 | 4.2 |
Source: FocusEconomics
Loans growth (NFC + Households), %
KEY FINDINGS:
Encouraging levels of credit growth in both corporate and retail segment, much higher than in Eurozone.
Kosovo (10.9%), Serbia (9.5%) and Montenegro (9.1%) leading the credit growth in the region in 2018.
In Serbia and Montenegro healthy loan dynamics driven by rising consumption and fixed investments.
| Loan growth (NFC + Households), % |
2014 | 2015 | 2016 | 2017 | 2018 | 2019* |
|---|---|---|---|---|---|---|
| BiH | 1.8 | 2.4 | 3.8 | 7.3 | 5.5 | 5.9 |
| North Macedonia |
10.0 | 9.5 | 0.2 | 5.3 | 7.2 | 6.5 |
| Kosovo | 4.2 | 7.3 | 10.4 | 11.4 | 10.9 | 10.3 |
| Serbia | 0.5 | 3.3 | 5.5 | 3.6 | 9.5 | 9.0 |
| Montenegro | -1.1 | 2.5 | 5.4 | 7.7 | 9.1 | 5.8 |
| Slovenia | -12.4 | -5.1 | 1.8 | 4.6 | 4.7 | 6.1 |
| Eurozone | -1.9 | 1.0 | 1.3 | 1.9 | 2.8 | 3.1 |
Sources: National Central banks, ECB, Own calculations
Note: August 2019 YoY growth
Total Loans (NBS), % GDP
KEY FINDINGS:
Entire region below Eurozone average with an excellent growth potential.
Stable loan to GDP ratio in BiH and North Macedonia.
In Slovenia, the negative trend stabilized this year. In Montenegro, the ratio is continuing to fall.
In Kosovo, the share of loans in GDP is steadily increasing, but still the lowest among
| Total loans, % GDP | 2014 | 2015 | 2016 | 2017 | 2018 | 2019* |
|---|---|---|---|---|---|---|
| BiH | 60.2 | 59.0 | 57.5 | 58.7 | 59.5 | 58.9 |
| North Macedonia |
49.3 | 51.0 | 47.6 | 48.7 | 48.8 | 49.1 |
| Kosovo | 33.8 | 34.9 | 36.9 | 38.9 | 42.4 | 43.2 |
| Serbia | 61.0 | 62.3 | 59.1 | 60.5 | 57.5 | 57.2 |
| Montenegro | 68.5 | 65.8 | 64.0 | 62.8 | 63.4 | 62.8 |
| Slovenia | 57.2 | 52.2 | 50.9 | 50.1 | 48.6 | 49.1 |
| Eurozone | 96.4 | 94.0 | 92.6 | 91.1 | 90.7 | 94.7 |
Sources: National Central banks, ECB, Own calculations
Note: Eurozone Total loans includes only NFC + Households loans; For 2019 Q2 data on loans and GDP;
Deposits growth (NFC + Households), %
KEY FINDINGS:
There are substantial differences in deposit growth numbers.
Serbia (14.9%) leads the deposit growth in the region in 2018, followed by strong growth of other countries in the region.
An exception is Montenegro, which is the only country with growth in 2018 under the Eurozone level. Its growth in 2019 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 | 2019* |
|---|---|---|---|---|---|---|
| BiH | 9.1 | 8.2 | 7.8 | 8.6 | 8.7 | 9.4 |
| North Macedonia |
10.5 | 6.4 | 5.4 | 5.0 | 9.5 | 9.4 |
| Kosovo | 2.8 | 7.4 | 8.9 | 3.9 | 7.3 | 10.0 |
| Serbia | 9.7 | 7.1 | 11.5 | 3.1 | 14.9 | 12.0 |
| Montenegro | 9.6 | 11.8 | 10.5 | 13.7 | 3.2 | -4.6 |
| Slovenia | 6.5 | 5.6 | 7.1 | 6.9 | 6.8 | 7.0 |
| Eurozone | 3.7 | 3.0 | 4.6 | 4.1 | 4.2 | 6.2 |
Sources: National Central banks, ECB, Own calculations
Total Deposits (NBS), % GDP
KEY FINDINGS:
Before 2019, slightly falling, but stable deposit to GDP ratio in Montenegro and Slovenia. Growing trend in the rest of the region with the highest increase in BiH and Kosovo.
In 2019, a drop in all countries except North Macedonia.
Across the whole region the share of deposits in GDP is lower than in Eurozone.
| Total deposits, % GDP | 2014 | 2015 | 2016 | 2017 | 2018 | 2019* |
|---|---|---|---|---|---|---|
| BiH | 56.2 | 57.8 | 59.4 | 62.7 | 66.4 | 65.6 |
| North Macedonia |
54.2 | 54.6 | 53.7 | 55.0 | 56.8 | 57.3 |
| Kosovo | 45.6 | 46.6 | 47.9 | 48.5 | 52.0 | 50.7 |
| Serbia | 45.2 | 46.6 | 46.1 | 47.6 | 48.2 | 47.8 |
| Montenegro | 66.7 | 72.4 | 76.1 | 76.0 | 74.9 | 69.4 |
| Slovenia | 64.9 | 64.7 | 64.7 | 64.0 | 63.3 | 63.2 |
| Eurozone | 82.9 | 82.5 | 84.0 | 84.4 | 85.1 | 89.9 |
Sources: National Central banks, ECB, Own calculations
Note: Eurozone Total deposits includes only NFC + Households deposits; For 2019 Q2 data on deposits and GDP; For Montenegro, 2019 Q2 deposits data excludes deposits with Invest Bank and Atlas Bank, according to CBCG
Appendix 3: Financial statements
NLB Group Income Statement
| (EURm) | 1-9 2019 |
1-9 2018 |
YoY | Q3 2019 | Q2 2019 | Q3 2018 | QoQ |
|---|---|---|---|---|---|---|---|
| Interest and similar income |
272.7 | 266.7 | 2% | 91.4 | 90.9 | 91.6 | 1% |
| Interest and similar expense |
-33.9 | -34.9 | 3% | -11.6 | -11.2 | -11.4 | -4% |
| Net interest income |
238.8 | 231.9 | 3% | 79.8 | 79.7 | 80.2 | 0% |
| Fee and commission income |
173.7 | 162.0 | 7% | 61.9 | 58.0 | 56.0 | 7% |
| Fee and commission expense |
-46.9 | -42.1 | -11% | -17.3 | -15.8 | -15.6 | -9% |
| Net fee and commission income | 126.9 | 120.0 | 6% | 44.6 | 42.1 | 40.4 | 6% |
| Dividend income | 0.2 | 0.1 | 75% | 0.0 | 0.1 | 0.0 | -89% |
| Net income from financial transactions |
28.0 | 11.7 | 141% | 5.1 | 10.7 | 5.0 | -52% |
| Other operating income |
-9.2 | 5.4 | - | -2.1 | -9.0 | 0.3 | 76% |
| Total net operating income |
384.7 | 369.0 | 4% | 127.4 | 123.6 | 125.9 | 3% |
| Employee costs |
-123.2 | -122.0 | -1% | -41.8 | -41.4 | -41.1 | -1% |
| Other general and administrative expenses |
-67.9 | -67.9 | 0% | -23.3 | -23.4 | -22.5 | 0% |
| Depreciation and amortisation |
-23.3 | -20.5 | -14% | -7.9 | -7.7 | -6.9 | -3% |
| Total costs | -214.4 | -210.4 | -2% | -73.0 | -72.4 | -70.4 | -1% |
| Result before impairments and provisions |
170.3 | 158.6 | 7% | 54.4 | 51.2 | 55.5 | 6% |
| Impairments and provisions for credit risk | 15.6 | 23.2 | -33% | 16.4 | -4.0 | 7.6 | - |
| Other impairments and provisions |
-5.9 | -4.2 | -39% | -1.1 | -0.8 | -3.0 | -34% |
| Gains less losses from capital investments in subsidiaries, associates and joint ventures |
4.2 | 4.1 | 1% | 1.6 | 1.4 | 1.6 | 18% |
| Result before Tax |
184.2 | 181.7 | 1% | 71.2 | 47.7 | 61.7 | 49% |
| Income tax expense |
-15.8 | -16.6 | 5% | -0.9 | -9.5 | -6.0 | 90% |
| Non Controlling Interests |
6.2 | 6.7 | -8% | 2.4 | 1.8 | 2.2 | 32% |
| Net Profit / (Loss) Attributable to Shareholders |
162.2 | 158.3 | 2% | 67.9 | 36.4 | 53.5 | 86% |
NLB Group Statement of Financial Position
| ASSETS Cash and balances with Central Banks and other demand deposits at banks 1,531.4 1,588.3 -4% 3,399.2 Financial instruments 3,841.4 13% 63.6 o/w Trading Book 87.6 38% 3,335.6 o/w Non-trading Book 3,753.9 13% 118.7 Loans and advances to banks (net) 90.3 -24% 118.8 o/w gross loans 90.4 -24% -0.1 o/w impairments -0.1 29% 7,148.4 Loans and advances to customers 7,496.0 5% 7,627.5 o/w gross loans 7,905.1 4% 3,540.4 - Corporates 3,661.5 3% 360.5 - State 312.1 -13% 3,726.5 - Individuals 3,931.5 6% -479.0 o/w impairments and valuation -409.0 15% 37.1 Investments in associates and JV 7.5 -80% 3.5 Goodwill 3.5 0% 31.4 Other intagible assets 32.1 2% 177.4 Property, plant and equipment 191.0 8% 58.6 Investment property 56.4 -4% 177.1 Other assets 239.8 35% 12,740.0 Total Assets 13,489.5 6% LIABILITIES & EQUITY Deposits from banks and central banks 26.8 56.3 110% Deposits from customers 10,464.0 11,038.2 5% - Corporates 2,337.3 2,429.9 4% - State 261.1 278.0 6% - Individuals 7,865.6 8,330.2 6% Borrowings 320.3 242.7 -24% Subordinated liabilities 15.1 90.3 - Other liabilities 256.5 357.6 39% Total Liabilities 11,082.6 11,785.1 6% Shareholders' Equity 1,616.2 1,661.5 3% Non Controlling Interests 41.2 42.9 4% Total Equity 1,657.4 1,704.4 3% |
(EURm) | 30 Sep 2019 |
31 Dec 2018 | YtD |
|---|---|---|---|---|
| Total Liabilities & Equity |
13,489.5 | 12,740.0 | 6% |
