STA, 4 September 2019 - Abanka Group generated EUR 26.3 million in net profit in the first six months of the year, according to unaudited report, which is 32.3% less than in the same period last year. Net interest revenue was down by 0.5% and net non-interest income by 19.5%, Abanka said on Wednesday.

Net interest reached EUR 29.8 million and net non-interest income stood at EUR 27.3 million, according to a report published on the web site of the Ljubljana Stock Exchange.

The bank's supervisory board got acquainted with the results on Tuesday.

The total assets of the group, which includes the Abanka bank and real estate company Anepremičnine, amounted to EUR 3.76 billion at the end of June, after standing at EUR 3.73 billion at the end of December.

Anepremičnine contributed EUR 17.4 million or 0.5% to the group's consolidated total assets.

Abanka posted a net profit of EUR 26.2 million in the January-June period, down 35.2% from the same period last year. Its market share reached 9.4% at the end of June.

Net interest was up by around 1% to EUR 29.8 million, while net non-interest income dropped by a quarter to EUR 26.2 million.

The bank said the rise in net interest was due to higher interest income from loans to non-banking clients.

Abanka's cancelled provisions and impairments reached EUR 5.5 million net after topping EUR 13.4 million in the same period last year.

Loans to the non-banking sector reached EUR 2.05 billion at the end of June, which is up EUR 86 million compared to the end of 2018. Loans to legal entities and sole traders increased by EUR 61.9 million and loans to individuals by EUR 24.1 million.

The biggest share of loans, 45.5%, were to individuals, followed by big companies (25.2%) and small and medium sized companies (17.1%).

The state has been Abanka's sole owner since a massive bank bailout at the end of 2013 which also saw the state salvaging NLB, NKBM and Banka Celje. The latter was merged with Abanka in 2014.

In June, a contract was signed on the sale of Abanka, Slovenia's third largest bank, to NKBM bank. The transaction is to be completed by the end of the year.

All our stories on banks in Slovenia are here

STA, 1 September 2019 - Slovenia's national system for instant peer-to-peer money transfers will be up and running by the end of 2019 or early 2020. Most of the banks have developed a special mobile app for the purpose.

The system, called Flik, is being developed by Slovenian banks in cooperation with the national payment processor Bankart, based on its exiting Bips IP infrastructure.

Transfers will be processed within seconds round the clock and every day of the week, unlike now when transactions are settled every two hours, and even than only until 4:30pm and only on weekdays.

The system involves all 15 Slovenian commercial banks and savings banks, which own it, Paul-Alexandre Raveleau from SKB bank and Tatjana Bole Pirc from DBS bank, have told the STA.

The pair, who head the inter-bank board for Flik, say that the rules and procedures have been established and that the central-bank Banka Slovenije will act as a major catalyst.

They say the banks decided to develop the system in order to provide a simple channel for fast and safe instant money transfers.

Currently, various technical solutions are being tested with the plan that 13 out of the 15 banks launch the Flik system at the end of 2019 or right at the beginning of 2020.

By mid-2020, another bank will make the service available, while another of the participating banks is yet to announce the launch date.

Eleven of the 15 banks have decided to develop a special app, while the remaining banks will include the new feature in their existing mobile bank or digital wallet solutions.

Further on, the banks will be able to opt for various solutions together, depending on the response and desire of the customers, Raveleau and Bole Pirc say.

The app will be accessed by the PIN code or fingerprint or some other biometric code allowed by smart phones, with transactions conducted using contacts in the phone, that is without time-consuming typing of payer and recipient account numbers and other data required on payment orders.

Raveleau and Bole Pirc say that the system is fully compliant with the EU's general data protection regulation, because it has been developed in cooperation with Slovenia's information commissioner.

The system will initially allow transfers of up to EUR 15,000 between the accounts of physical persons, but the banks would like to expand the system to in-store payments as early as next year.

This will require upgrading the existing POS terminals (there are between 35,000 and 40,000 of those in Slovenia at the moment) and educating cashiers. The timeline will thus also depend on retailers.

The customer experience will be similar to using contactless payment cards. For the smaller shops, bars or restaurants that do not use POS terminals special mobile apps are being tested QR code scan payments.

At later stages, the banks would like to expand instant transfers to online shopping, transactions between businesses and between customers and businesses and some transactions with the state.

Ideally, the users should get the chance to make instant transfers for the whole range of various payment transactions. The ambition is that Flik becomes a national payment standard.

The amount of transfer, now capped at EUR 15,000, may be raised or lowered in the future, depending on the users' response.

Raveleau and Bole Pirc say that this is a mayor investment for Slovenian banks, but they would not specify as each bank invests in development of its own technical solutions, based on common rules.

So are the fees for the customers up to the bank's business policies, while Raveleau and Bole Pirc expect transfers between physical persons and in-store payments to remain free for physical persons.

Bips is intended for domestic money transfers, while later instant cross-border transfers will be made possible based on the Target Instant Payment Settlement (TIPS), which became operational in late 2018.

Slovenian banks will join TIPS on their own or via Bankart gradually, and so they enter the Sepa Instant Payments system.

For cross-border transfers to become as simple as those in Slovenia and some other countries that have introduced national instant payment systems, a common EU solution will be needed or at least integration of the national systems.

UPDATE: On Friday, 6 September, a deal was reached and the strikes were cancelled (see more details here)

September 3, 2019

The possibility of a series of three-day strikes announced for September by the Traffic Pilots Union of Slovenia (SPPS) is becoming increasingly realistic following another round of unsuccessful contract negotiations between Adria Airways’ leadership and its pilots.

In a recent press release, the Pilots Union explains that a request for the start of negotiations for a new collective agreement has been submitted several times to Adria Airways’ management since the end of the summer 2018. The main reason for the request being made at the time was that the old contract expired at the end of August 2019 and the Union hoped to have enough time to negotiate a new ones. Negotiations, however, only began in May of 2019 and included the union’s demand for the Adria Airways leadership to cease all the violations of the previous work contract.

As the talks apparently proved unsuccessful, on August 15 the union declared a series of strikes for September.

With the end of the old collective agreement and without a new one in sight, the Traffic Pilots Union of Slovenia (SPPS) announced to the media that the series of 3-day strikes are about to begin this Sunday. The dates on which Adria’s pilots will not fly unless an agreement is suddenly reached are as follows:

Strike #1: from September 8, midnight (00:00) till midnight (23:59) September 10, also

Strike #2: from September 18, midnight (00:00) till midnight September 20

Strike #3: from September 30, midnight (00:00) till midnight October 2

Apart from the announced strikes, portal 24UR reports that Adria Airways also faces a growing number of angry passengers whose flights get cancelled or rescheduled.

Adria Airways was the only Slovenian airline with its base in the International Airport Jože Pučnik (also known as Brnik or Ljubljana Airport). The state sold the company in 2016 to 4K Invest, a Luxembourg-based restructuring fund, which has been running the company since.

All our stories about Adria Airways can be found here

STA, 2 September - The shareholders of spa operator Terme čatež approved the sale of Marina Portorož to MMNT on Friday. The joint venture established by investment company Adventura Holding and Glen, a company owned by the management of furniture retailer Lesnina, is to pay EUR 21.6 million for the country's biggest marina, the newspaper Finance reports.

Minutes of the AGM, available on the web site of the agency for public records (AJPES), show that the sale of Marina Portorož received the backing of 99% of all votes present at the meeting. The AGM was attended by 98.9% of capital with voting rights.

The AGM also approved a division and takeover contract between Terme Čatež and Marina Portorož under which just under EUR 40 million in assets will be transferred in the takeover and a similar amount in liabilities.

Among other things, about EUR 33.5 million worth of property is to be transferred, as well as a 7.4% stake in DZS, the biggest owner of Terme Čatež.

The AGM also gave a new mandate to supervisors Ada de Costa Petan, Robert Krajnik, Rok Gorjup, Mitja Grum, Samo Roš and Goranka Volf. The supervisory board also includes three employee representatives.

The shareholders moreover decided not to cover EUR 5.5 million in loss, which several small shareholders intend to challenge.

STA, 2 September 2019 - Lek, the Slovenian subsidiary of pharma company Novartis, has aborted its investment into expanding production in the town of Prevalje, north, where it has been present for more than 40 years. The decision seems to be have been made due to lower demand for generics following an in-depth analysis and studying all options.

"Despite lower demand on the generics market, especially in the US, over the recent years and despite the need for new technologies, Novartis has studied all options to realise the planned expansion.

"The analysis has shown the facility is suitable for introducing the technology of continuous manufacturing, but this has proved to be merely a short-term solution, so we decided not to continue the investment," Lek wrote in a press release on Monday.

The cornerstone for the additional facility for broad-spectrum antibiotics in Prevalje, a EUR 150 million investment, was laid in April 2017.

Production at what would have been Novartis's biggest investment in Slovenia to date was expected to be launched in 2020, bringing 140 much needed jobs to the Koroška region.

The Slovenian government had approved EUR 7 million in state subsidy for the new factory, which Lek was to receive in three years.

The company has so far received only EUR 1.5 million, but will return it by the end of the month, the Ljubljana-based company told the STA today.

The additional facility was completed at the end of 2018, but Novartis said already that spring that the purchase of technology for the new factory was suspended.

It explained the facility was first planned for classic production, but then it made it among possible locations for continuous manufacturing.

Last year Lek also decided not to co-finance a purification plant in Prevalje which would be used for Lek's waste waters.

Nevertheless, Novartis said today it was strengthening investment in new technologies in Slovenia.

However, the local community is extremely disappointed at the decision, regretting the loss of jobs and opportunities for the region's economic development.

"Today is a sad day not only for Prevalje, but for the entire Meža Valley and Koroška," Mayor Matic Tasič told the STA.

"Every investment is vital for entire Koroška, and of course we're interested in successful investments," said the director of the local chamber of commerce, Aleksandra Gradišnik.

She hopes Lek would implement its business plans, whatever they are, to the benefit of the region.

Tasič added "we did not expect a company with such a good reputation to afford to invest more than EUR 30 million and then abort the project".

Novartis is yet to decide what to do with the new facility.

The company, which employs more than 4,200 workers in Slovenia, has so far invested over EUR 2.3 billion in Lek, which makes it the biggest foreign investor in the country.

1 September 2019 - Eligma is a Slovenian blockchain company that launched in 2018, and one aim of the firm is to make cryptocurrencies part of daily life, and thus of shopping. To this end it has produced Elipay, an infrastructure for accepting crypto payments (in Bitcoin Cash, ELI, Bitcoin and Ether) that ensures the merchant always receives settlement in the local fiat currency. It is this service that has drawn the attention of Roger Ver’s Bitcoin.com and the Swiss firm Pangea Blockchain Fund, which together will invest €4 million in the Slovenian start-up.

According to a press release, it is Elipay and the related app that have made Slovenia the leading country in the world with regard to the number of brick-and-mortar stores and service providers that accept both regular money and crypto. The investment is aimed at helping Elipay expand beyond its current markets of Slovenia and Croatia, where more than 430 businesses now accept crypto currencies on a daily basis.

Eligma CEO Dejan Roljic is quoted as saying: “The development of finance is going towards cash becoming a thing of the past. Among other things, this is because doing business with it is quite time-consuming and expensive. On the other hand, one of the main problems with cryptocurrencies is that the confirmation of transactions can take several minutes if not more, which is unacceptable in daily shopping. Eligma effectively solved this problem with Elipay, which enables instant crypto transactions; furthermore, the merchant receives settlement in local fiat and is thus safe from crypto volatility. This makes the use of cryptocurrencies quick and effective for daily use. We must not forget that cryptocurrencies were envisioned as the electronic cash of the future.“

Shopping with Elipay is said to be very easy: the buyer scans the purchase QR-code with a crypto wallet, selects the cryptocurrency they wish to use and confirms the transaction. The current list of Elipay locations can serve more than 20,000 users of the Elipay app, along with some 4 million users of the Bitcoin.com Wallet, with other crypto wallets expected to join the system soon. Users of Elipay can also  benefit by receiving Eligma (ELI) tokens with every purchase they make. The all-time high of the token was US$0.050306 on 5 September 2018, and it is currently trading at US$0.021759.

You can learn more about Eligma here, while all our blockchain stories are here

STA, 30 August 2019 - Slovenia's economy expanded at an annual rate of 2.5% in the second quarter of the year in real terms, or by 2.6% when adjusted for season and working days. Both figures indicate a slow-down compared to the previous quarter.

The seasonally-adjusted quarter-on-quarter GDP growth ran at 0.2%, data released by the Statistics Office show. This too is a 0.4 percentage-point slow-down compared to the first quarter.

Revised data put the annual growth rate for the first quarter at 3.3% in real terms, 0.1 of a percentage point up from the previous estimate.

Seasonally adjusted annual growth in the second quarter was 0.9 percentage points slower than in the first quarter.

The Statistics Office noted the strong growth in exports and imports in the second quarter.

However, since imports grew at a faster pace than exports, this had a negative impact on GDP growth of 1.3 percentage points.

Addressing reporters in Ljubljana, Romana Korenič from the Statistics Office said that a slow-down was observed in all sectors, but she was not surprised by the 0.2% quarterly growth.

"I was much surprised by the strong external demand considering the situation in the European markets. Given the data in our trading partners I expected even slower pace of growth. Exports are extremely important for Slovenia," she said.

She added that exports were driven by industrial expenditure, whose growth in the second quarter outpaced that in the quarter before.

Exports increased by 9.4% and imports by 12.3%, the highest rates in a year and a half.

Domestic expenditure increased by 4.2% in the second quarter of 2019 due to stronger final consumption expenditure (+2.7%) and gross capital formation (3.5%).

The pace of growth was 1.5 percentage points faster than in the first quarter, but still 0.8 percentage points lower than the final quarter of 2018.

Household final consumption increased by 3.4%, 1.1 percentage points stronger growth than in the previous quarter, but 0.2 points slower than the quarter before.

Final government consumption expenditure increased by 1%, which is significantly less than in the previous quarters.

Gross capital formation expanded by 9.2%, with gross fixed capital formation increasing by 6.9%, which is a 3.1 percentage-point slow-down compared to the first quarter.

The increase in gross fixed capital formation was more prominent in construction (13.4%), while the increase in machinery and equipment (1.3%) was considerably lower than in the previous quarters.

After more than four years of continuous growth, gross fixed capital formation in transport equipment (mainly vehicles) decreased by 6.2%, while gross fixed capital formation in other machinery and equipment increased by 4%, a slow-down after more than two years of double-digit growth.

Changes in inventories had a positive impact on GDP growth; this time they contributed 0.6 of a percentage point.

The total number of people in employment in the second quarter of 2019 was 1,043,907, an increase of 2.6% y/y. Most new jobs were created in manufacturing, construction, transport, trade, and professional, scientific and technical activities.

The data will be an important indicator for the government economic forecaster IMAD, which will release its autumn forecast in the second half of September. It currently projects a 3.4% growth for this year.

IMAD noted that the annual rate of growth in the first half of the year was 2.9% in real terms, which means that despite the slow-down the rate remains high above EU average, seasonally adjusted at 1.3%.

IMAD also noted expanding domestic consumption, in particular household consumption, as the biggest contribution to growth.

"The growth in private consumption is rising even faster than we expected in spring, which we attribute to favourable trends in the labour market, the continuing high level of consumer confidence, as well as reduction of the tax burden on earnings," IMAD director Maja Bednaš commented.

The slow-down in investment in equipment and machinery is linked to a moderate growth in foreign demand, with IMAD noting that export orders have been slowing down since the second half of 2018.

This has not reflected in export growth yet because the slow-down in the international environment has been offset by accelerated exports in some product groups, such as pharmaceutical or medical products.

Pointing to dampened consumer and business confidence in Slovenia and the EU, coupled with the increased uncertainty and risks in the international environment, IMAD expects the outlook for the export economy to deteriorate later in the year.

"For next year, all international institutions project a slightly higher growth again for our leading trading partners, which we will take into consideration in the IMAD autumn forecast," Bednaš said.

Similarly, the central bank noted that the slow-down in Slovenia was due to the slow-down in the euro economy, while projecting slower rates of growth to continue for the same reason until the end of the year.

"Growth is still driven mainly by growth in merchandise exports and value added in industry, which has even been boosted compared to the first quarter," said Banka Slovenije.

The central bank also noted that the economic slow-down is already being reflected in the labour market with a slight slowdown in the growth in total employment and the nominal growth in average pay falling below 4% in May and June.

The Statistics Office also revised data for GDP growth in 2018, to 4.1% in real terms, which is a 0.4-percentage point downgrade from the February estimate, and a 0.7-percentage point drop from 2017.

GDP at current prices in 2018 amounted to EUR 45.755 billion, a 6.4% growth compared to 2017.

STA, 30 August 2019 - Port operator Luka Koper posted revenue of EUR 120 million in the first half of the year, up 6% over the same period in 2018. Net profit declined by 28% to EUR 25 million, according to an earnings report released on Friday.

The bulk of the decline in profit is attributed to a damage claim worth over EUR 9 million. Without the one-off charge, profit would have contracted by only 8%, the company said.

The second major reason is an increase in labour costs of EUR 8.4 million due to the hiring of workers that had previously been sourced from port services companies.

The number of employees thus surged by 40% over the year before to 1,662.

At the same time, investments were almost four times higher than in the same period last year, at EUR 16.5 million, with several major investments completed and additional big-ticket items under construction, including a new ro-ro terminal, a parking garage and extension of pier 1.

Volume-wise, the port saw transshipments decline by a percent, as the car business continues to contract and instability in global trade continues, according to the company.

STA, 29 August 2019 - While the volume of construction work in Slovenia in the first half of the year was up by 14% year-on-year, certain statistical indicators suggest the trend may reverse. Major builders expect the volume of business to be similar to last year's, but are cautious as they would like to see more stability in state investments.

The volume of construction work has increased, but the statistics on building permits suggests that the trend could reverse in the near future, as the number of permits has been dropping steadily over the past three years.

In the first half of 2019, the number of approved permits was down by 10% year-on-year, with the number of permits for residential buildings increasing, and the number of permits for non-residential buildings significantly dropping.

The latest business sentiment data for the sector show a deterioration both on the monthly and annual levels, but the indicator is still above the long-term average. Construction companies have decreased their prospects of hiring, while expectations related to orders are somewhat more optimistic.

Major builders such as Kolektor Koling, Kolektor CPG, CGP and Pomgrad have confirmed for the STA that they are cautious regarding future operations. They expect this year to be similar to last, and are ready for a potential cooling of the market.

They would like to see more stability on the market, including by the state embarking on major projects, especially in road infrastructure.

Kolektor Koling and Kolektor CPG say that there is demand for construction work and that this will be the case at least until the end of the year. They complain about the growth of costs and prices of input material and a shortage of qualified staff.

The members of the construction arm of the Kolektor conglomerate are currently building a new technological centre of the national grid operator ELES, upgrading the Rimske Toplice-Laško railway and reconstructing the railway infrastructure in the Croatian port of Rijeka.

For 2020, they expect the current rate of growth to be maintained, but are cautious about many risk factors, so they will constantly monitor the situation and be ready for a quick response to possible changes.

Kolektor Koling and Kolektor CPG admit that the construction sector in the country is highly dependent on public projects, such as the new Koper-Divača railway line, the Third Development Axis expressway and the second tube of the Karavanke tunnel.

"If the state stays true to its commitments and provides for a continuity of demand, then we can expect a stable and healthy growth also after 2020," they assessed.

The company CGP currently operates at full capacity, with its ongoing projects including a multi-storey car park in Koper, a high-end residential and hotel complex in Ljubljana and a Lidl logistics centre in Arja Vas, among others.

"We intend to end this year on a par with the previous year," said the company whose projects in the coming year include an Ikea shopping mall in Ljubljana and construction of apartments for the public Housing Fund.

"In the coming years we see a lack of projects mostly in the field of reconstruction and construction of public roads," CGP has told the STA, pointing a finger to the government.

Pomgrad is also operating at full capacity this year, with its ongoing projects including the upgrade of the Pesnica-Šentilj and Poljčane-Slovenska Bistrica rail sections and elderly homes near Ptuj and in Croatia's Osijek.

Together with GH Holding and VGP Drava Ptuj of Slovenia and the Croatian utility company Bikarac, they have signed a EUR 26.5 million deal to design and build a waste management centre for the city of Šibenik and its surroundings.

According to Pomgrad management board member Boris Sapač, the company expects to sign some more major contracts soon. But he complained about "public procurement procedures being too slow, which makes it hard to make plans".

The company has noticed a standstill in investment in state roads, which is something it does not welcome. "The volume of investment or tenders should be stable. This would also be good for road infrastructure, which is in a poor condition."

Sapač said that builders needed stable conditions instead of steep annual growth rates and deep falls. "This is why we are cautious optimists in our company. Excessive growths are not sustainable in our sector."

STA, 29 August 2019 - The logistics group Intereuropa generated EUR 80.57 million in sales revenue in the first half of the year, slightly more than in the same period last year, while net profit was up by 14% to EUR 3.07 million, shows the unaudited report published on Thursday.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 3% to EUR 7.07 million, and operating profit increased by 2% to EUR 6.84 million.

While the group increased net profit above all expectations, as it exceeded the plan by 25%, the amount of sales revenue was 5% below the plan.

This is mostly due to some of the planned one-off deals in the air, railway and road transport failing to materialise, the company says in the report, adding that revenues were up year-on-year only in the logistics solutions segment.

In the land transport segment, the group generated 52% of its total sales and generated EUR 42 million in sales revenue, which is 1% less year-on-year and 4% below the plans.

EBITDA were 7% above the plan, which Intereuropa attributes mostly to the received payment of a years-old claim based on a court settlement.

Labour costs in the first half of the year were up by 1% compared to the same period last year, with a growth of average labour costs per employee having the largest impact.

At the end of June, the group employed 1,359 workers, which is 32 more than at the end of last December. This is due to the direct hiring of some workers who had previously worked for the group through temping agencies.

The group's operating profit amounted to EUR 3.8 million, or 2% more than in the first half of 2018, while net financial debt of the group was down by 10% compared to the end of last year to EUR 53.9 million.

The core company Intereuropa, based in Koper, saw its sales revenue increase by 1% to EUR 57.14 million, while net profit surged by 30% to EUR 2.96 million.

The core company's EBITDA and operating profit were meanwhile down by 2% and 4% to EUR 4.95 million and EUR 2.79 million, respectively.

The report notes that EUR 691,000 in turnover with Intereuropa shares had been generated on the Ljubljana Stock Exchange (LJSE) in the first half of the year, which is more than 25% less year-on-year.

In the January-June period, the share lost 2.3% of its value on the LJSE.