Nova Ljublj. S Regulatory News (NLB)

60th meeting of the Supervisory Board of NLB

Another successful year: NLB Group generated EUR 193.6 million of net profit in 2019, according to unaudited data.

Today, on 20 February, the Supervisory Board of NLB d.d. met for its 60th meeting and confirmed the unaudited results of the NLB Group for 2019. Another successful year was completed for the NLB Group, generating net profit in the amount of EUR 193.6 million in 2019. Total net operating income increased by 4%, profit before impairments and provisions by 4%, while NPE ratio was reduced significantly from 4.7% to 2.7%. All subsidiary banks in the SEE markets also operated with a profit and contributed 38% to the Group's result (2018: 37%). NLB Group is now set for further enhancing a leading position in our markets.

For more information on the NLB Group's performance, please refer to the Unaudited Annual Financial Statements 2019 and the NLB Group Presentation which were published today. On Friday, 21 February, at 11:00 CET, interested stakeholders will be able to follow the presentation of unaudited results by the Management Board in a live broadcast, which will be available here. Let us use the opportunity to invite all investors and analysts to attend the first Investors' Day, which will take place on 15 May 2020 at the headquarters of NLB d.d. in Ljubljana, Trg republike 2. You can register here by 15 April 2020.

Total net operating income amounted to EUR 513.6 million, representing a 4% increase YoY (2018: EUR 493.3 million), and was driven by higher net interest income (by EUR 5.6 million or 2%) due to loan volume growth and lower interest expenses, as well as higher net fee and commission income (by EUR 9.7 million or 6%).

CIR stood at 58.7%. Net interest margin in the NLB Group decreased by 0.08 p.p. YoY and amounted to 2.48%. The cost of risk was negative, -20 bps. Profit before impairments and provisions totalled EUR 212.2 million, which is 4% higher YoY.

Total assets of the NLB Group increased by EUR 1,434.1 million YoY and totalled EUR 14,174.1 million, mainly due to the continued inflows of deposits, mostly from individuals (growth by EUR 717.3 million or 9%). Net loans to customers of the NLB Group also increased by 6% YoY. The biggest increase of net loans to customers YoY was recorded in NLB Banka Beograd (a growth of 29%) and NLB Banka Prishtina (a growth of 16%).

In 2019, NLB Group continued to follow the principle of prudent risk-taking with an emphasis on diversification, which guarantees the high quality of the loan portfolio. This is reflected in its stable credit rating structure and a very low share of new NPLs formation (0.6% of the total loan portfolio). In addition, the internationally comparable NPE ratio (based on the EBA guidelines) dropped to 2.7% (2018: 4.7%), so that at the end of last year the NLB Group already exceeded the set medium-term target (4%). An important Group strength is the NPL coverage ratio, which remains high at 89.2%.

The Total Capital Ratio for the NLB Group stood at 16.3% at the end of 2019, which is above the regulatory requirements. As it is known, NLB issued subordinated Tier 2 bonds in November last year and successfully returned to the international loan capital market, thus confirming the high investor confidence.

Upon the publication of the unaudited results of the NLB Group, Primož Karpe, Chairman of the Supervisory Board of NLB d.d., said: "The Supervisory Board is pleased with the results of the NLB Group in 2019, demonstrating that the Group's strategic focus in the SEE region and its markets is correct. In 2019, NLB d.d. successfully completed the complex privatisation process, and thus obtained a high-quality ownership structure - international with a 25% +1 share owned by the Republic of Slovenia. Such a combination of demanding investors is very important for the future of the NLB Group as their expectations, along with the expectations of the customers, encourage us towards continuous development, the search for new opportunities, and the best user experience. The NLB Group, which operates locally and globally and is in a really good shape, is aware of its specific role and responsibility as a systemic player in most of the markets where it operates - because the SEE region is our home area. This is why we are certain that the NLB Group will continue to operate successfully, ensuring stable growth and creating added value for its stakeholders. All of this based on a refreshed business strategy, the focus of which remain our customers, digitalisation, use of new revenue opportunities, and the improvement of efficiency."

Blaž Brodnjak, President of the Management Board of NLB d.d., pointed out: "The end of 2019 and the decade opened new horizons to NLB Group. A successfully completed privatisation process of NLB d.d. and the fulfilment of the last highly limiting commitments to the EC enabled us to, once again, start operating and competing in the market with our full potential. We have already begun addressing new business opportunities with full speed and have successfully carried out several cases of cross-border financing. We expect to add leasing and factoring to the catalogue of our services soon. We are also seeking opportunities in the international syndicated loans market, project financing, larger infrastructure projects, bancassurance and asset management services, but finally after long time again analysing mid-term entrance to new markets (potentially Albania) and M&A opportunities in our home region in SE Europe. We now can and will address these opportunities with the capacity of the entire NLB Group and ambition to become the leading regional platform for universal financial services."

"NLB Group is focusing on enhancing relevant client experience at universal financial services in the region. Digital banking is our core focus, bringing higher convenience and added value to our customers. We make use of advantages of technology - behind which we are still people who understand business and the needs of the people and the environment. We are the only international banking and financial group, active in more than three markets with headquarters and an exclusive strategic interest in this region. The head and the heart of the NLB Group are here, which is why we wish and strive for this region to be successful and prepared for whatever may come. This is also why, apart from the development of modern financial services, we invest a lot in an extensive and comprehensive social responsibility programme. We engage in humanitarian activities, support our culture, try to improve the quality of the lives of disadvantaged social groups, we encourage young people to spend their free time in a healthy way by participating in our Youth Sports project and in the future we will engage our capacity to address significant environmental challenges of the region."