In 2014, Nova KBM and the Nova KBM Group delivered stable and sound performance, and managed to achieve one of the key objectives set for last year – to once again generate profitable results. For the year ended 31 December 2014, Nova KBM reported a net profit of €35.9 million, as opposed to a net loss of €656.5 million incurred a year ago. The priority tasks determined for Nova KBM for 2014 were derived from the commitments that Nova KBM and its owner, the Republic of Slovenia, have given to the European Commission and that constitute the framework of Nova KBM´s restructuring programme. As of 31 December 2014, Nova KBM´s total assets stood at €3.6 billion, down 7.7% on the 2013 year-end figure, while the total assets of the Nova KBM Group amounted to €4.4 billion, a year-on-year decline of 9.2%. The reduction in total assets was in line with the restructuring programme and commitments given to the European Commission. With a net profit of €23.3 million, the Nova KBM Group ended last year well above the target figure.
Stable performance and an increase in customer deposits
Despite some signs of gradual economic recovery, the market conditions in our environment continued to be tight last year. Nevertheless, Nova KBM managed to increase the volume of deposits from non-bank customers to almost €2.5 billion. An increase in deposits was registered in both corporate and retail segments, suggesting that confidence in Nova KBM strengthened last year.
The transfer of assets at risk to the BAMC was completed in the first half of 2014, making it possible for the specialised departments of Nova KBM to focus even more on the effective management of assets at increased risk that remained on the books of Nova KBM. The measures that have been taken in this regard will be further reinforced in 2015, as will be the management of all types of risk. In 2014, Nova KBM devoted a great deal of energy to corporate restructuring, debt rescheduling and other activities aimed at ensuring normal operations of corporate customers, which, on average, continued to be over-indebted. Apart from participating in the restructuring of more than 40 Slovene companies, Nova KBM strengthened its advisory role in corporate finance.
Focus on enhanced customer service
Nova KBM pursued the strategic direction of developing and upgrading financial services that bring additional value to its customers, while at the same time enabling them to conduct banking transactions in a contemporary fashion. Among the new services provided by Nova KBM last year were the following: the 'at-call deposit account', which is aimed at customers that wish to be able to withdraw their savings at any time; the option to open a personal account at a distance, i.e., through the Nova KBM website, without visiting a branch office; and a contemporary savings application called 'Varčevalnik' (Saver) that helps customers achieve their savings objectives. Furthermore, Nova KBM overhauled and expanded its offerings for corporate customers and private undertakings, introduced a personal banking service, and upgraded its online banking facilities and its corporate website.
Improved cost efficiency and further streamlining of operations
In 2014, Nova KBM downsized its branch office network by closing some less profitable units. At the same time, it relocated several of its branch offices, thereby getting even closer to its customers. Several changes were introduced to slim down the organisational structure of Nova KBM and to streamline its processes. The efficiency of the adopted cost-cutting measures was reflected in Nova KBM´s cost-to-income ratio, which improved from 61.37% in 2013 to 50.05% in 2014, with the operating costs incurred by Nova KBM falling year-on-year by almost 11%. Staff costs were down by 11.1% from 2013, while the number of staff was reduced by 77, from 1,201 at the end of 2013 to 1,124 at the end of 2014. The reduction in the number of staff was in line with the commitments set out in the restructuring programme.
In addition to carrying out their day-to-day operations, in 2014 Nova KBM and the Nova KBM Group met all obligations imposed on them with respect to the EU-wide comprehensive assets quality review and stress tests, as well as the privatisation of Nova KBM. As the second-largest systemically important bank in Slovenia, Nova KBM came under the direct supervision of the European Central Bank within the framework of the single European supervisory mechanism, effective from November 2014. Peter Kukovica, Chairman of the Nova KBM Supervisory Board, said: “The positive results reported by Nova KBM and the Nova KBM Group for the end of 2014 demonstrate that appropriate strategic and operational measures have been taken over the past two years to restore their profitability. At the same time, the results reported for the last year have removed any doubts about the appropriate level of capital adequacy of Nova KBM that arose after last year´s stress tests. Nova KBM is now a highly liquid bank with a strong capital position, and is fully prepared to deal with the challenges that lie ahead of it. The measures aimed at stabilizing the Slovene banking system, which were adopted by the government in 2013 and from which Nova KBM also benefited, place an obligation on us to ensure consistent execution of actions aimed at achieving improved operational and cost efficiency, while at the same time they strengthen the confidence of all stakeholders in Nova KBM.”
The activities that Nova KBM plans to undertake going forward were presented by Robert Senica, President of the Nova KBM Management Board: “In accordance with the adopted strategic direction, Nova KBM will continue to show sound, cost-efficient and profitable performance across all key banking segments and all services provided to retail and corporate customers. Our top priority remains our customers. We will take a more active and personal approach in order to understand them better, and we will do our best to offer them first-grade and contemporary financial solutions suited to their needs. Instead of pursuing business growth, preference will be given to preserving the quality of the loan portfolio and to proactive risk management. By working in a responsible and professional manner, and by adhering to high ethical standards, we will strive to meet the expectations of our owner, customers, business partners, and the environment in which we operate. We would like to express our sincere gratitude to all the stakeholders for the trust they have placed in us so far.”
