STA, 14 May 2020 - NLB generated EUR 18.3 million in net profit at group level in the first quarter, a 68% year-on-year decrease that Slovenia's largest bank said was the result of credit impairments and provisions formed due to the coronavirus epidemic.
Net interest income decreased by 3% to EUR 77.4 million, "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", says NLB's business report published on Thursday.
Net fee and commission income increased 6% 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, net fee and commission income dropped due to the outbreak of Covid-19, especially in card operations, the bank said.
In the first quarter the NLB Group set aside impairments and provisions totalling EUR 28.3 million, which compares to EUR 0.6 million in the same period last year. Additional credit impairments and provisions in the amount of EUR 24.5 million were recognized in the first quarter due to the outbreak of Covid-19.
Gross loans to customers amounted to EUR 8.13 billion, which is 2% more than at the end of last year. Deposits from customers increased moderately, the bank said.
Gross loan to households remained level while gross loans to companies increased by 5% compared to the end of 2019. Lending restrictions introduced by Banka Slovenije in November 2019 and the coronavirus outbreak reduced new loans to households while demand increased for working capital at companies, NLB said.
The bank said it holds a very strong liquidity position, at the group and individual subsidiary bank level. The total capital ratio for the group stood at 18.5%, which "represents a solid basis to cover all regulatory requirements... also in the aggravated circumstances during COVID-19 pandemic".
Credit portfolio quality did not deteriorate, with the share of non-performing loans remaining unchanged at 2.7%. The 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".
While the supervisory board also got acquainted with the results today, chairman Blaž Brodnjak assessed the crisis could also mean an opportunity.
"On the one hand, us being the largest banking and financial group headquartered 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 towards making full use of our potential," said Brodnjak.