TIDMNLB
RNS Number : 9800M
Nova Ljubljanska Banka d.d.
14 May 2020
NLB Group posts EUR 18.3 million net profit despite credit
impairments and provisions established in Q1
Today, 14 May, the Supervisory Board of NLB d.d. met at its
62(nd) regular meeting and focused on the business results in the
first three months of this year. In this time period, NLB Group
generated EUR 18.3 million net profit, which is a EUR 39.6 million
decrease YoY, in particular due to credit impairments and
provisions established due to the outbreak of the COVID-19
pandemic.
More information on NLB Group operations in Q1 2020 is available
in the Interim NLB Group Report published today. On Friday, 15 May
at 11:00 am CET, all interested stakeholders are invited to the
presentation of business results by the NLB Management Board. The
webcast, followed by a Q&A session, will be available here
.
Net interest income of NLB Group in Q1 2020 amounted to EUR 77.4
million, which is a decrease of EUR 2.0 million or 3% YoY, mainly
due to higher interest expenses resulting from new Tier 2
instruments issued by the bank, which was partly compensated for by
increased loan volumes.
Net fee and commission income increased 6% YoY and amounted to
EUR 42.4 million, in particular in the retail segment in banking
members on the markets of SE Europe. In the second half of March
2020, net fee and commission income dropped due to the outbreak of
Covid-19 pandemic, especially in card operations, as clients
carried out fewer withdrawals and payments due to the lockdown.
Due to lower yields on the securities portfolio and loan book
and due to the higher cost of funding, the net interest margin of
the Group decreased and stood at 2.29%. CIR amounted to 60.3%,
which is an increase of 8.5 p.p. YoY.
In Q1 2020, NLB Group set aside impairments and provisions
totalling EUR 28.3 million, in the same period last year EUR 0.6
million. Additional credit impairments and provisions in the amount
of EUR 24.5 million were recognized in Q1 2020 due to the outbreak
of COVID-19 and consequential adjustments of macroeconomic
scenarios, which are based on the forecasts prepared by the EC,
IMF, IMAD, BoS, and other reliable experts and related off-set
measures, approved by governments in the region.
Gross loans to customers amounted to EUR 8,125.6 million, a 2%
YTD growth. Gross loans to individuals remained flat and gross
loans to corporate increased 5% YTD. Strict restrictions of retail
lending in Slovenia, imposed by the BoS as at November 2019, and
the COVID-19 outbreak in the second half of March, affected the
lower new production of loans to individuals, while the demand for
working capital facilities of corporate clients increased.
The Group holds a very strong liquidity position, at the Group
and individual subsidiary bank level.
Deposits from customers increased moderately YTD.
The total capital ratio for the Group stood at 18.5%, a 2.2 p.p.
YtD increase due to the inclusion of subordinated Tier 2 notes .
This represents a solid basis to cover all regulatory requirements,
including capital buffers and other currently known requirements,
as well as the Pillar 2 Guidance, also in the aggravated
circumstances during COVID-19 pandemic.
Credit portfolio quality did not deteriorate in Q1 2020 (the
share of non-performing loans and exposures in line with the EBA
guidelines remained unchanged at 2.7%). NLB Group expects credit
portfolio quality to worsen in 2020 through a downgrade of some
clients, including the increase of non-performing loans as a result
of the economic slowdown.
Relaxation of coronavirus preventive measures
The bank is closely monitoring the situation regarding the
coronavirus and is constantly adjusting its response. After weeks
of reduced number of operating branches and their working hours,
most of them were opened at the end of April.
In addition, the return of employees who have been working from
home to office buildings, is expected to begin on 18 May. It will
take place gradually and in accordance with all preventive health
measures.
NLB Group - regional specialist
New circumstances regarding the coronavirus pandemic and
economic hibernation have not affected our long-term goal as a
market leading regional specialist.
Despite the changed market conditions, resulting in
significantly higher challenges, the management upholds its
medium-term financial goals. However, unless a better understanding
of the eventual implications of the pandemic is established, it has
to be assumed that the timeline in achieving some targets might get
deferred.
The push on acceleration of digitalisation of the business model
and thereby improving client experience while having higher
short-term emphasis on cost management will somewhat compensate for
softer revenue environments - at least temporarily - in both
corporate and retail banking. Our dedication to our clients and our
home region as such remains unchanged.
The changes in the economic environment have also not affected
NLB Group's ambition to strengthen its position in the
South-Eastern Europe and to become a systemic player on all the
markets where we operate, especially in the Serbian market, which -
besides its natural strategic value for NLB Group - also seems to
have higher resilience to the pandemic given the structure of its
economy. The pending acquisition of Komercijalna Banka, which
depends on obtaining the consent of numerous regulators, is
underway to be completed by end of 2020. All the necessary
procedures are therefore continuing as planned.
Transition to digital channels
Figures for Slovenia show that with the outbreak of COVID-19
pandemic our clients opted for e-bank and mobile services much more
often and changed their user habits very fast and decisively. The
number of m-bank Klikin users has for the first time exceeded the
number of e-bank NLB Klik users. The total number of payments in
the e-bank and m-bank went up by nearly 18% in March when compared
to February. During the pandemic, holders of NLB cards performed by
a third more online purchases than before the epidemic, and
digitalised many more cards in the NLB Pay mobile wallet. The NLB
Contact Centre has also considerably gained popularity - in the
period from the start of lockdown and by the end of April it
recorded 150,000 contacts (via telephone, e-mail, online chat,
video call), which is almost twice as much (96%) as before the
pandemic. Video call, enabling remote client identification, was
used by 25,000 clients in this period.
"It turned out that the period of restrictive measures acted as
a sort of an accelerator to transfer clients and overall
communication to digital channels and safer contactless
transactions. Their biggest advantage, however, is that clients can
use them wherever and whenever. The bank, which was well prepared
for the new circumstances and client needs, further sped up the
processes and extended its set of services available for clients
via digital channels," emphasised Bla Brodnjak, NLB CEO.
"COVID-19 pandemic might even be considered an opportunity for
major players like NLB Group. On the one hand, us being the largest
banking and financial group with headquarters in this region - the
Group which calls this region its home - means that people listen
to us. And on the other hand, it might just give us an additional
push that we need to reach our potential," added Brodnjak.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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