Operations of the Nova KBM Group in 2011 were marked by adverse market conditions and slow recovery of the economy, which was reflected in higher than projected net provisions and impairment losses. A number of insolvency proceedings in Slovenia reached a record high in 2011. The construction industry and financial holdings were most affected by the recession, so the largest proportion of impairment losses and provisions recognised by the Bank related to these two segments. This had the most negative effect on the results of the Bank and the Nova KBM Group.
For 2011, the Nova KBM Group reported a pre-tax loss from continuing operations of €69,046 thousand. High provisions and impairment losses, weak other operating net income and lower than projected net interest income contributed the most to the loss. The Group's profit before provisions and impairment losses reached €76,314 thousand, which was slightly above 75% of the annual projection. Net loss of the Group totalled €53,655 thousand, which was €15,391 thousand lower than the loss of the Group from continuing operations, due to the positive effect of deferred taxes. The Group’s total assets as of 31 December 2011 were €5,839.7 million, down €26.9 million on the previous year.
The total assets of Nova KBM at the 2011 year-end amounted to €4,831.5 million, up 0.5% on the previous year. The 2011 capital increase and an increase in customer deposits contributed the most to the growth in total assets. The Bank's profit before provisions and impairment losses was €57,634 thousand, or 83.1% of the projection for 2011. Nova KBM's pre-tax loss from continuing operations totalled €73,590 thousand. Net loss was €59,633 thousand, after taking account of deferred taxes.
The following items contributed the most to the loss: higher than projected provisions and impairment losses; weak other operating net income; lower than projected net interest; losses on financial assets and liabilities not measured at fair value through profit or loss; and lower than projected profits from associates.
Upon the release of unaudited results for 2011, Andrej Plos, President of Nova KBM's Management Board, pointed out: »Uncertain global economic and financial market conditions had an adverse effect on the operations of Nova KBM. In spite of this situation, we will continue to support the Slovene economy in accordance with the financial plan, taking into consideration prevailing market conditions. Depressed financial and economic conditions require us to undertake and implement appropriate measures and activities on a daily basis. To improve the operations of the Bank, many sacrifices will be required from all the employees. I am, however, confident that the results will make it worth the effort.«
At the meeting, members of the Management and Supervisory Board also discussed the request of the Capital Assets Management Agency of the Republic of Slovenia to convene the Shareholders' Meeting of the Bank. The request was examined in accordance with the Bank's Articles of Association and the Companies Act, pursuant to which the date of the Shareholders' Meeting will be determined. Andrej Plos, President of Nova KBM's Management Board, said that »at the Shareholders' Meeting, the shareholders will reach a decision on the composition of the Supervisory Board. It is their right to decide who the members of the Supervisory Board will be in the future. In order for the Bank to operate efficiently, it is important that the members of the Management Board are appointed as soon as possible.«
Members of the Supervisory Board also determined the procedures for the appointment of the new Management Board, which is to be made by sending personal invitation to the candidates. Dušan Jovanovič, Chairman of the Supervisory Board, said: »It is in the interest of all to nominate the new Management Board as soon as possible, with the consent of all members of the Supervisory Board«. He added: »The new Management Board will face a number of challenges. It is therefore crucial that the Bank is run by someone who possesses sufficient knowledge and experience.«
