Despite a very challenging macroeconomic environment, the NLB Group maintained its profitability and generated EUR 77.7 million profits after tax in the first three quarters of this year. If one-off operating effects (last year’s and this year’s) are excluded, the result before impairments and provisions increased by 14% YOY in the first nine months of this year and is by EUR 19.1 million YOY higher. In the first nine months of 2015 all core members of the NLB Group generated profits.
The improvement was mostly the result of higher net interest income in the amount of EUR 7.7 million and of lower operating expenses in the same amount - EUR 7.7 million. Streamlining of processes and expenses will continue to be one of the basic orientations for the future in NLB.
Since February 2015 a gradually decreasing trend has been noticed in interest margin. Pressures on the revenue side will also continue in the last quarter of this year and in 2016. A further decrease of the interest margin is expected and consequently a decrease of the interest income in all markets of the NLB Group, especially in Slovenia. The non-interest income is in a large part stable.
Key market activities which contributed to the better performance of the NLB Group
The better performance of the NLB Group in the first nine months of 2015 was influenced by sales activities which are consequently most noticeable in the increase of loans to customers in strategic segments. The market share of corporate loans increased by 1.0 percentage point in 2015 and once again we notice an increase of retail loans by 2%.
NLB holds the leading role in the restructuring of the Slovene economy. We are still very active as advisers for numerous restructuring projects in Slovene companies which indicates a high level of our expertise and responsibility. After many completed restructuring projects of the largest Slovene companies, we strengthened our activity in the restructuring of mid corporates this year. All our activities in the area of restructuring in the last two years are already showing their first results. In the first half of 2015 we already recorded the first transfers of companies from restructuring back to the front office, which complies with the EBA orientations according to which the receivables or customers retain the non-performing loan status for at least one year after they begin to regularly pay their liabilities from the restructured receivables.
We successfully organised five issues of debt securities of Slovene companies in the amount of more than EUR 200 million (commercial bills for Mercator d.d. and SIJ d.d., and bonds for SDH d.d., KD Group d.d., and SIJ d.d.). At the same time, as an agent, NLB concluded syndicated loans with Slovene companies in the total amount of over EUR 150 million in cooperation with other banks.
Renovation of standard branch offices and opening of the Innovative Entrepreneurship Centre
After many years, we started renovating our standard branch offices. The refurbished open concept simplifies and enables a more intense and comfortable communication with our customers. The first sample renovated branch office Grič in Krško was opened in April, followed by the Logatec branch office, while a refurbishing of the cash desks was carried out at eleven branch offices - now these are open and equipped with automatic counters. The Bank plans to refurbish the entire distribution network within a few years.
In October the NLB Innovative Entrepreneurship Centre was officially opened. Here entrepreneurs and aspiring entrepreneurs can conclude bank transactions or attend events and trainings from entrepreneurship and finance. This is also the gathering and junction point for other stakeholders, supporters of this corporate segment. Since May 2015 when the Innovative Entrepreneurship Centre unofficially opened, more than 100 events have taken place here.
The Bank once more started the intense development cycle of services and distribution channels
Our marketing approaches follow the trends and in the last years we focus mainly on digital or internet and mobile channels, and social networks. We are where our customers are, especially with the wish and efforts to bring the banking services closer and to enhance the user experience. So in addition to the classic branches, we are always developing new possibilities of remote operation. As the first in the market we introduced contactless Maestro cards. In early October we began to sell a prepaid MasterCard with the characteristic sticker allowing customers even simpler contactless payments. Further, we launched the Klikin mobile application to give the retail customers an advanced access to the basic banking services. In October we upgraded the Klikin application with the "in-payment" function allowing the customers to remit funds using a mobile number saved in the phonebook of their smartphone. The development of services, especially digital ones, with the purpose of making the routine work and operations easier will be the highest priority in the future too.
We continue the active approach to the management of non-performing loans and the reduction of the non-core investment portfolio
The result of the past and current activities in the restructuring of non-performing loans, an active management of the pledged properties and an increasingly high centralisation of collection procedures for non-performing loans, are reflected in the lower volume of non-performing loans. These were reduced by EUR 343 million in the first nine months of 2015. At the same time the Bank began marketing activities of certain non-performing loan portfolios. We are also actively decreasing the non-core investment portfolio and in the first nine months of 2015 the NLB Group managed to reduce it by 9.3% to EUR 828 million.
This means that today NLB is able to generate a positive result in a stable and sustainable manner. The key indicators, for example the cost-efficiency and the ratio of interest and non-interest revenues, are already at relatively good levels. The Bank is thus actively –with improved and stabile operations - preparing for the privatisation in the best possible way. Privatisation is, as is well known, one of the commitments given to the European Commission by the owner, the Republic of Slovenia.
NLB Corporate Communications