Ljubljana, Slovenia, 3-3-2015 — /EuropaWire/ — “The NLB Group stabilised its operations and ended the business year with a profit for the first time since 2008, totalling EUR 62.3 million“ said the Chairman of the Bank’s Management Board Janko Medja at the presentation of the business results for 2014. On behalf of the Bank’s Management Board, he thanked all the Bank’s clients, employees and other stakeholders, including the owner – Republic of Slovenia, who remained loyal to it in these difficult times and rightly kept their confidence in Slovenia’s largest financial institution.
The Chairman of the Supervisory Board of the NLB Gorazd Podbevšek told the attending journalists: “This was a pivotal change in the operations of the NLB Group as it ended the year recording profit for the first time after five consecutive years of posting loss. The Management Board of the NLB met and even exceeded all the expectations and goals set by the Supervisory Board for 2014. The Bank fulfilled the commitments made by Slovenia to the European Commission upon capital increase. These are the only criteria used by the Supervisory Board in assessing the efficiency of the Bank’s operations and the Management Board.”
All segments of the Bank’s core activity are operating at a profit, cost-cutting above the plan
Operations of the NLB Group were positive for the first time since 2008. In 2014, the NLB Group’s profit before provisions amounted to EUR 207.5 million while its net profit after tax is EUR 62.3 million. Significant progress was achieved in the field of result before provisions, mainly thanks to a thorough transformation of the Bank and its active return on the market in all market segments: retail operations, SME and large corporate operations.
In 2014, the NLB Group achieved profit before provisions and impairments in the amount of EUR 207.5 million, which means EUR 192 million more than in 2013 when it generated a result of EUR 15.5 million before impairments and provisions and (for comparison) without taking into account the effects of the transfer of property to the BAMC and the termination of qualified liabilities. The improvement of regular operating profit (before impairments and provisions) can be ascribed to the proportional contribution of improved regular income which was 47% higher than in 2013, reduction of costs which dropped by 9% compared to 2013 and successfully completed state aid procedure. Better final result after tax was also the consequence of a considerable improvement of the situation in the environment and stabilised impairments and provisions which were by EUR 928.8 million lower than in 2013.
All segments of the Bank’s core activity are operating at a profit. In 2014 NLB d.d. increased its market share in non-bank loans by 1.1 percentage point. In the segment of corporate loans, its market share also increased by 1.1 percentage point, while the market share of retail loans grew by 0.6 percentage point.
With strong presence in BiH, Serbia, Montenegro, Macedonia and Kosovo, the entire NLB Group maintained its significant market shares also on those markets.
Also in 2015, the NLB Group continues with the process of comprehensive transformation and plans to further consolidate its results in all segments of operations and to reduce the share of NPLs in the portfolio.
The Bank has achieved capital adequacy and meets the ECB’s capital plan
The comprehensive NLB transformation is already bringing results. We are through the period of instability and capital increases by taxpayers. The Bank now has sufficient capital adequacy and a healthy liquidity. We are fully meeting the ECB’s capital plan which the Bank prepared in the scope of comprehensive assessment of capital adequacy in the autumn of 2014. Capital adequacy was further increased with the profit for 2014.
Adequate provisions established for NPLs
The scope of NPLs was somewhat reduced in 2014 and remains stable, with the plan to reduce it further at a slightly quicker pace. At the level of NLB d.d., the gross value of NPLs dropped by EUR 84.7 million to EUR 1.5 billion, and at the level of the NLB Group by EUR 150.4 million, to EUR 2.7 billion.
The Bank is actively managing this area, which includes improved control and early detection mechanisms, processes of restructuring, collection and divestment. NLB d.d. will continue to pursue the active policy of managing and reducing the scope of NPLs for which system solutions are being prepared.
The dynamic of this process largely depends on the regulatory requirements as well as the efficiency of individual company restructuring procedures. They are affected by economic situation reflecting in the intensity of investment demand and the resulting volume of new loans granted. The decrease in the share of NPLs will be gradual and will, striving for an as good outcome as possible, take some years.
Strengthening integrity as the Bank’s priority task
The Bank highlighted the strengthening of integrity in terms of preventing misconduct and non-ethical behaviour as its priority task. In the framework of systematic and structured process of establishing the reasons for the creation of NPLs which will continue in 2015, we identify the key factors contributing to the reasons for the occurrence of NPLs and directly included them in the improvement and reorganisation of the business processes.
Based on the thorough overview, we identified 64 cases of suspected criminal offences in 2014. Of those, 31 were of external origin, committed by persons outside the Bank, and 30 committed by the former or present employees of the Bank. Three cases involved both internal and external perpetrators. A total of 21 criminal charges were filed with the National Investigation Office for 34 suspected criminal offences and 30 criminal charges for 30 suspected criminal offences were submitted to other police units. In the procedures in which the Bank suffered damage, we are actively filing damage compensation claims to ensure that the Bank’s damage is compensated. A total of 62 persons have been reported for individual criminal offences. The Specialised State Prosecutor’s Office has been informed of all criminal charges filed.
The NLB will focus on ensuring that the Bank’s operations are ethical and in accordance with the best international practices applicable to this area. With the aim of raising the standards of fair, transparent and lawful operation in Slovenia, we will also participate in various professional and social initiatives.
Challenges for the future
In accordance with the Commitments made to the European Commission, the Bank started with the preparations for the privatisation process which the Slovene Government undertook to complete by the end of 2017. It is a complicated and lengthy procedure. One of the key objectives of the present Management Board is therefore to increase the Bank’s value so that potential buyers will be able to offer the best price for a bank with a development potential.
The Bank’s Management Board expresses its gratitude to all clients, colleagues in the Bank and the Group, the owner – Republic of Slovenia, and all other stakeholders who kept their confidence in Slovenia’s largest financial institution in these difficult times.
NLB Corporate Communications
T: +386 1 477 2000