Nova Ljublj. S Regulatory News (NLB)

May 11, 2021

NLB Group generates robust EUR 64.6 million net profit in Q1 2021, continues focusing on sustainability and digitalization

Despite the ongoing COVID-19 pandemic that continues to cripple economies through the world, the first quarter of 2021 proved to be a very solid one for NLB Group. The Group generated EUR 64.6 million of profit after tax (EUR 46.3 million higher YoY), proving that even in times of economic difficulties knowledge, experience, and sound business decisions and actions based on sustainable principles can generate success.

The result of the Group in the first quarter of 2021 was based on various factors, learned the NLB Supervisory Board at today's meeting, familiarizing itself with the Interim Report available here. For example:

· Net interest income totalled EUR 97.5 million, marking a growth of 26.0%. Komercijalna Banka group contributed EUR 24.0 million. Net interest income without Komercijalna Banka group contribution was lower YoY despite positive loan growth YTD in almost all banks, as expected pressure on interest rates continued.

· Net fee and commission income increased by 27.6% to EUR 54.1 million on the Group level, mostly due to the Komercijalna Banka group contribution, but also as a result of a very solid asset management and bankassurance performance in the still challenging environment.

· Total costs increased on the Group level because of Komercijalna Banka group's contribution and integration costs, but were lower YoY in NLB d.d. by EUR 3.1 million as a result of continuing strict cost discipline, concretely due to lower employee costs and deliverables from cost rationalization projects. The Cost to income ratio of materially enlarged Group (CIR) stood at 62.7%, a 2.4 p.p. YoY increase.

· Net impairments and provisions were released in the amount of EUR 15.5 million, mostly due to repayment of several exposures and changes in credit ratings in the NLB d.d., while the notable establishment in Q1 2020 was mostly related to changed macroeconomic parameters that incorporated the estimated impacts of the COVID-19 outbreak. The cost of risk was negative, -78 bps (146 bps in the same period in 2020) and is expected to outperform the current outlook range in 2021 (70-90 bps); including potential one-off effects.

· Asset quality remained stable despite the COVID-19 pandemic due to our diversified credit portfolio, active monitoring of our clients for early detection of credit deterioration, and intensive and proactive handling of customers in distress. The NPL ratio remained at YE 2020 level of 3.5%. Existing moratoriums represented very moderate 3.7% of the total loan book. The performance of loans with expired moratoria has been stable.

· The integration process of Komercijalna banka continues to progress well, with first sales initiatives showing positive response in the market amidst an improved macro environment and the first substantial wave of voluntary leaves of employees in progress.

More information on NLB Group operations in Q1 2021 is available in the Interim NLB Group Report published today. On Wednesday, 12 May at 15:00 EST/14:00 GMT, all interested stakeholders are kindly invited to the presentation of business results by the NLB Management Board, which will be available here. Members of the Management Board will, as usual, receive and address your questions live during the webcast, however, if you already know what you wish to ask them, you may submit your questions now. If you register for the event, you will be able to send them via web app, or you may simply send them to the email address IR@nlb.si.

Continuing on the path of sustainability and digitalization

The lessons from the COVID-19 pandemic have brought the importance of sustainable business and living to the forefront and are by now rooted deeply in our minds, so NLB Group also continued to focus on the digitalization and sustainability of its business decisions and operations in Q1.

NLB has formed a detailed channel strategy to support its digital journey, focusing on decreasing its physical footprint, enhancing the quality of its advice, upgrading value-added services in branches, and, above all, increasing the penetration of digital channels by proactively moving sales of simpler products to digital channels and enhancing the capabilities of the NLB's unique 24/7 Contact Centre.

In addition, we have once again launched the #HelpFrame project, a programme where knowledge and understanding of economic environment and macroeconomic trends meet professionalism and sustainability. We will again search and listen to the stories of entrepreneurs, written by the dire economic situation as a result of the COVID-19 pandemic. Apart from the know-how, advice, and our services, we will offer advertising space to the selected entrepreneurs, farmers, and micro and small businesses to make sure that their efforts and work are also noticed by potential buyers and customers.

"The Supervisory Board is satisfied with the business results of the NLB Group in the first quarter of 2021, especially as the Group is continuing on the path of sustainable business operations," emphasised Supervisory Board President Primož Karpe.

"The journey to sustainable banking is a long, and in our region, a very challenging one, but we know where we are heading and what our goal is. As an institution of a systemic reach, we want to be one of the key drivers of change and one of the most meaningful companies and most desirable employers in the region we call and treat as our home. Our most honest wish, ambition, and plan is for it to thrive; hence we support it, nurture it, invest in it, and make sure that it is ready - for whatever may come," added NLB's CEO Blaž Brodnjak.

At today's meeting, members of the Supervisory Board of NLB d.d. also took note of the reports submitted by the Bank's team and granted consent to transactions requiring its approval.

This announcement will be available on the company's website (www.nlb.si) as of 11 May 2021.

Investor RelationsNLB d.d., Ljubljana