26 August 2016
37th Ordinary Meeting of the NLB Supervisory Board
NLB Group Performance in the First Half of the Year: Profitable and Stable
Today, 26 August 2016, the NLB Supervisory Board had its 37th ordinary meeting, at which it was briefed on NLB and NLB Group business performance in the first half of the year and it confirmed the NLB Group Strategy until 2020. In the first half of 2016 the NLB Group achieved EUR 69.5 million of profit after tax, which is 30 per cent more than in the first half of 2015 and is looking back to 10 consecutive positive quarters. All the banking members of the NLB Group generated a profit, which was higher than in the same period last year. You can find more information on the NLB Group operations in the Interim Report for the 1st Half of 2016, which was published today, 26 August, in line with the financial calendar.
In key business areas (retail operations, large, medium and small enterprises in Slovenia and core companies operating outside Slovenia), the profit before taxes on the Group level increased by EUR 10.5 million or 18 per cent compared to the same period last year.
The volume of non-performing loans (NPLs) decreased in the first half of the year by EUR 146.3 million with the total of EUR 1.75 billion as at 30 June 2016. The percentage of NPLs fell by 1.4 percentage points to 17.9 percent. In addition to the organic reduction of the NPL volumes, in the first half of 2016 the Group successfully sold claims to investors in two tranches (retail and corporate claims) in the gross value of approximately EUR 500 million. These claims are expected to be transferred to investors and be derecognised from the group’s accounts in the third quarter of 2016.
Operating costs fell by 2 per cent in comparison with the same period last year.
Decreasing level of impairments and provisions is a result of improved quality of the credit portfolio. In the first half of 2016 the Group recorded negative effects resulting from lower interest income of EUR 4.3 million and additional provisions of EUR 22.6 million due to the sale of an NPL package, yet despite that both individual quarters were healthily profitable.
Proactive Sales Approach
A proactive sales approach substantially contributed to better Group performance in the first half of 2016. In retail the market share in Slovenia has been retained, despite our focus on profitability instead of business volume,while it has been on the rise in corporate lending and in the area of trade finance products. All our banks in the Group are actively looking for and are pursuing new business opportunities, with the focus on clients, sales force efficiency, enhancement of digital services and channels. The NLB Group has been solidly positioning itself in and outside of Slovenia and according to the trends could be able to create positive results in a stable and sustainable manner.
At the end of June 2016, the Group demonstrates a high capital adequacy ratio of 16.6 percent and good liquidity situation. One of the main objectives remains the continuous quality improvement of the loan portfolio with an emphasis on the high quality and diversification of new loan production.
NLB Group Strategy Confirmed Until 2020
The Supervisory Board discussed and confirmed the revised NLB Group strategy until 2020, which management believes will represent the basis for further improving business results and mid-term to long-term competitive position. The NLB Group is facing higher competition in a low interest rate environment and at increasing customer demands showing preference for digital channels, as well as additional regulatory requirements that are increasing complexity and operating costs, geopolitical risks and volatility in financial markets.
The strategy of the NLB Group therefore aims to enhance customer experience, optimise product offering, simplify IT landscape and operations and further develop its distribution channels and capabilities. The revisited strategy also comprehensively addresses modernisation and upgrading of IT systems to develop a leaner, more agile and cost effective IT architecture for the entire Group. Management believes that this will make us well prepared to take on digital and other challenges of the industry.
As usual, the Supervisory Board also took note of the reports by the Supervisory Board’s Committees and gave its consent to those business operations for which it was needed.
NLB Supervisory Board