“Compared to a year ago, the net profit of Nova KBM and the Nova KBM Group has increased by €7.9 million and €6.4 million, respectively. Sustainable profitability, which represents a challenge for the entire banking industry due to historically low interest rates, remains among our key priorities. To properly address this challenge, we have strengthened our marketing activities and have managed to increase our non-interest income. Furthermore, we have set up more efficient business models, including such that are based on well thought-out development and digitisation of banking products and services”, Robert Senica, President of the Nova KBM Management Board, commented on the results and future challenges, adding: “Following the change in ownership of Nova KBM at the end of this April, we are continuing to focus on the restructuring of the Nova KBM Group and on providing top-notch financial services to our customers who remain at the centre of our business. The responsibility towards the social, economic and natural environment in which Nova KBM operates remains our commitment going forward.”
In February, as part of the restructuring of the Nova KBM Group, Nova KBM sold its shareholding in the Serbian KBM Banka. In March, a request was sent to the Bank of Slovenia to approve the takeover of PBS by Nova KBM, with the legal merger of the two banks being scheduled for 1 July this year. While liquidation proceedings against the Nova KBM Group leasing companies are still under way, every effort is being made to complete the proceedings in the best possible manner and in the shortest time possible. The results of KBM Infond and KBM Invest, which also belong to the Nova KBM Group, are in line with the plan. Several new products and services have been launched recently by the Nova KBM Group companies, such as the option offered by Nova KBM to its retail customers to have the overdrafts on their personal accounts covered by the insurance provided by an insurance company, or the contactless payment cards which PBS has now also started issuing, thereby joining Nova KBM that has been issuing these cards for quite some time. Encouraging results have been achieved in the corporate banking segment, as suggested by a robust growth in loans outstanding to SMEs and an increased use of e-cash in regular financial transactions of corporate customers. Nova KBM is continuing to support a number of events, projects and sports clubs, with the most prominent being an international conference on start-ups, entrepreneurship and innovations, called PODIM. Moreover, Nova KBM remained the main or one of the main sponsors of the Golden Fox women´s ski competition, the Planica ski flying competition, the Lent Festival, the Ljubljana Festival and the Slovene men´s basketball team, in addition to providing considerable financial aid to the charity project called Godparentship and to some other charity initiatives.
Growing income and declining costs – Nova KBM´s cost efficiency is better than the industry average
The total income earned by Nova KBM in the first quarter of 2016 amounted to €33.8 million, which was up 4% on a year ago, with the net non-interest income registering a year-on-year increase of 18%. The Nova KBM Group posted a total income of €40.5 million, which was 2.9% less than in the same period last year, despite an increase of 3% in the net non-interest income, reflecting declining interest rates as well as declining lending and business volumes registered by most of the Nova KBM Group companies. The operating costs incurred by Nova KBM in the first quarter of 2016 totalled €16.9 million, which was roughly the same as a year ago, while the operating costs of the Nova KBM Group reached €22.4 million, down 3.8% on a year ago. The cost-to-income ratios reported by the Nova KBM Group and Nova KBM for the first quarter of 2016 stood at 55.42% and 50.06%, respectively, an improvement from last year, with Nova KBM´s cost efficiency being better than the industry average.
Rating upgrade and a one-third reduction in the level of NPLs
After the rating agencies indicated last year and in the first quarter of this year that the rating of Nova KBM might be upgraded and affirmed the stable outlook on its rating, Fitch Ratings upgraded Nova KBM this May. “Fitch Ratings upgraded Nova KBM´s Long-Term Issuer Default Rating to 'BB-' from 'B+', while at the same time assigning a stable outlook on the rating. The rating upgrade was mainly driven by the strong and profitable performance of Nova KBM, the reduction of its NPLs, and its asset quality improvement”, Sabina Župec Kranjc, Member of the Nova KBM Management Board, explained, adding that reducing the level of NPLs is one of the strategic goals of Nova KBM, which is being successfully pursued. Both Nova KBM and the Nova KBM Group have managed to reduce the level of their net NPLs by a third since the end of 2014.
For the first quarter of 2016, Nova KBM reported a net profit of €19.8 million, while the net profit of the Nova KBM Group hit €18.7 million. According to the unaudited report on the operations of Nova KBM and the Nova KBM Group for the first quarter of 2016, which was published today, Nova KBM registered an increase in its income compared to a year ago and managed to preserve its strong cost efficiency. In addition to expanding and upgrading its offerings, Nova KBM grew its market share in Slovenia in terms of total assets, while retaining its market share in customer loans and customer deposits, as well as its socially responsible role. The performance of the Nova KBM Group in the last two months was also favourable, reflecting its ongoing restructuring efforts, which are being undertaken in line with the adopted plan.
