STA, 6 September 2019 - Slovenia's largest banking group, NLB saw its half-year-net profit fall by 10% year-on-year to EUR 94.3 million despite higher interest and non-interest income.
Profit before impairments and provisions was up 13% to EUR 116 million, according to the interim report released by the bank on the website of the Ljubljana Stock Exchange.
Total net operating income amounted to EUR 257.4 million, a 6% increase y/y. Net interest income rose by 5% to EUR 159 million, and net non-interest revenue increased by 8% to EUR 98.3 million.
Net interest income rose in all banks of the group as a result of loan volume growth and lower interest expenses. Subsidiary banks in SE Europe continued to perform well, contributing 38.4% to the group's profit before tax.
Net loans to customers rose by 3% year-on-year to EUR 7.28 billion, while deposits went up by 7% to EUR 10.75 billion. The growth was mainly due to retail deposits.
This year saw a gradual increase in new consumer and housing loans. The share of consumer loans in all gross loans rose from 26% in the first half of 2018 to 28% in the first half of 2019.
The group's total assets rose by 5% to EUR 13.16 billion. This is attributed mainly to the continuous inflow of retail deposits.
NLB also reports having continued with the trend of improved credit portfolio quality. The proportion of non-performing loans dropped to 6%, 2.3 percentage points down compared to a year ago.
The internationally comparable non-performing exposure ratio dropped by 1.7 percentage points to 4.1% in line with the European Banking Authority guidelines, which is very close to the mid-term target of 4%.
Total capital ratio for the NLB group at the end of June reached 16.5%.
"NLB Group is on a good path toward meeting its mid-term financial targets despite the increasingly challenging economic environment of low interest rates," the bank commented on the results.
The parent bank generated EUR 122.6 million in profit, which compares to EUR 103.3 million in the first half of last year.
The macroeconomic outlook suggests the countries where the group is present are likely to post growth rates of between 3% and 4%, if supported by loose monetary conditions, fiscal easing and solid domestic demand.
"Considering these circumstances and presented risk factors, in 2019 the Group aims to achieve a single
digit % increase of revenue and pre-provision profit with continued loan growth (in line with GDP
dynamics) and stable net interest margin," reads the release.
The results were reviewed by the bank's supervisory board today.
The board also gave a green light to establishing a new leasing company, as restrictions on leasing activities ceased to apply following the bank's completed privatisation earlier this year.