Last checked at 12 Nov 2020 17:45
NLB Group posts EUR 104.6 million net profit in the first nine months of 2020
Despite challenging economic circumstances this year that has been marked by the COVID-19 pandemic, NLB Group generated a net profit of EUR 104.6 million in the first nine months of 2020 (EUR 57.6 million decrease YoY, mainly due to established additional impairments and provisions in the amount of EUR 50.2 million), the Management Board reported to the Supervisory Board of NLB d.d. at today's 65th session. During the meeting, the Supervisory Board focused on NLB Group operations in Q3 2020, of which more information is available in the Interim NLB Group Report. Tomorrow, on Friday, November 13th, 2020, at 11:00 am CET, all interested stakeholders are kindly invited to the presentation of our business results by the NLB Management Board, which will be available here.
After witnessing economic hibernation in the first half-year due to the COVID-19 pandemic and the consequential public and economic lockdown, the summer reduction in the number of infections and easing of measures to contain the epidemic ensured a robust rebound of activities in Q3 2020. NLB Group therefore noted a normalisation of revenues to pre-COVID-19 levels. The Group generated almost the same net operating income of EUR 383.3 million in the first nine months of 2020 as in the same period last year (1% decrease), and only slightly lower profit before impairments and provisions of EUR 167 million (a 2% decrease).
Net non-interest income reached EUR 158.8 million and increased by EUR 10.2 million or 7% YoY. Net fee and commission income declined by only EUR 1.7 million or 1% YoY, indicating the swift return of fee and commission income to pre-crisis levels.
NLB Group also managed total costs well, both by categories and geographically. Compared to the same period last year, they decreased by EUR 0.7 million. CIR stood at 56.4%.
The total assets of NLB Group increased and amounted to EUR 15,145.7 million, demonstrating customers' high trust in the Group, mainly due to the constant inflow of customer deposits.
Gross loans to customers at the Group level amounted to EUR 8,111.1 million (EUR 172.8 million or 2% higher YtD). Loan growth was recorded in gross loans to the corporate clients (EUR 56.2 million or 2% increase YtD) and individuals (EUR 105.9 million or 3% YtD) alike. All the subsidiaries reported growth in gross loans to customers, with total 6% growth YtD, especially in the housing segment, where most banks reported double digit growth. Also, in Slovenia, a more attractive offer of housing loans specifically tailored to the customers' needs was met with a very good response and resulted in EUR 202.3 million of new housing loans in 2020. In contrast, macroprudential measures by the Bank of Slovenia introduced in November 2019 continued to have a significant negative impact on volumes of consumer loans in Slovenia.
High quality credit portfolio and strong capital position
The quality of the credit portfolio remains high. The NLB Group's exposure to industry sectors considered as COVID-19 sensitive (accommodation, transport, and the car industry) is limited, and the share of non-performing exposures (NPE) in line with the EBA guidelines decreased to 2.5% despite the epidemic. The cost of risk stood at 84 bps.
Total capital ratio of the Group was significantly strengthened and reached a very solid 21.5% (a 5.3 p.p. YtD increase), well above the regulatory requirements and management target. The strong capital position of the Group will be important for the pending takeover of Komercijalna Banka a.d. Belgrade, envisaged for the last quarter of 2020, and which depends on obtaining relevant consents from regulators, as well as for successfully facing the consequences of the COVID-19 pandemic. In addition, the liquidity position of the Group remains extremely strong.
"As already in the spring, the months that have followed have once again showed that knowledge, experience, professionalism, responsibility, and finally sheer size of a major player like NLB Group can prove to be especially effective in times of crisis and economic hibernation. We continued to respond successfully to the COVID-19 pandemic, maintaining as a priority the concern for the health of our employees and customers, to whom we have offered an even wider range of 24/7 accessible digital solutions, while seamlessly also providing branch operations and cash service. During the coronavirus crisis, we also continuously supported our customers by offering moratoria (EUR 1.7 billion) and significant liquidity lines, supporting vital businesses and households," NLB CEO Blaž Brodnjak briefly summed up the Group's activities. "The outlook for the future remains uncertain, since the second wave of the epidemic brought another set of measures, thereby curbing public life, consumption, and many economic activities, however, we will continue supporting our clients, offering them relevant solutions whenever and wherever, and help them to be prepared - for whatever may come," he added.
Continued focus on the home region quality of life and sustainable goals
At the meeting, the Supervisory Board also discussed the report on the introduction of sustainability into the Group's business operations, with an emphasis on the development of systematic management of climate and environmental risks. The Supervisory Board (SB) also acquainted itself with the progress in the development of the sustainable financing portfolio, as well as with the plan for the improvement of non-financial reporting and sustainable corporate governance.
Members of the SB also reappointed Blaž Brodnjak as the CEO/CMO, Archibald Kremser as the CFO and Andreas Burkhardt as CRO of NLB d.d. for a period of five years from the end of their term on 6 July 2021.
"During its term of office, the Management Board has successfully completed the privatisation process of the bank and had taken important value-accretive steps to strengthen the NLB Group's systemic role in all the markets where it operates. Hence, we believe NLB Group is poised to offer a compelling investment story over the next mid-term period. The Supervisory Board is confident that the Management Board has the right combination of track record, know-how, experience, ability, business relationships and intuition, to implement the strategy of the NLB Group as a regional specialist - a strategy that not only sets new trends and brings added value to stakeholders, but contributes to a higher quality of life in Group's home region," emphasized the president of the Supervisory Board, Primož Karpe.
Blaž Brodnjak expressed gratitude for the granted trust on behalf of the Management Board and added: "We are honoured by the opportunity to, in the coming years, with full motivation and energy take NLB Group to another level as one of the most meaningful businesses and one of the most attractive employers in our home region."
At the meeting, members of the Supervisory Board also took note of the reports submitted by the Bank's experts and granted consent to transactions requiring Supervisory Board approval.
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