Today, Nova KBM released the unaudited report on its operations and the operations of the Nova KBM Group for the first nine months of the year. According to the report, Nova KBM generated a net profit of €28.1 million and managed to defend its market share in its key business segments. The net profit reported by the Nova KBM Group hit €16.2 million. Nova KBM will continue to focus on its strategic priorities, such as further restructuring of its operations and ensuring sound, cost-efficient and profitable performance, all with the aim of reinforcing its reputation and that of the Nova KBM Group as a whole.
The profit generated by Nova KBM in the first nine months of the year was 58% above that of the same period last year, while the profit of the Nova KBM Group was 39% below the figure for last year, partially reflecting its ongoing restructuring process, as part of which the businesses of some members of the Nova KBM Group are being wound down, sold or integrated into the operations of Nova KBM. Most of the income generated by the Nova KBM Group in the first nine months of the year was attributable to net interest income, which totalled €73.7 million, followed by net fee and commission income, and other non-interest income, which amounted to €41 million and €7.4 million, respectively.
“The operating results reported so far are in line with our projections, and to a large extent reflect consistent implementation of our strategic goals. The operations of the Group are stable, which forms a good basis for its further consolidation and for achieving the key goal – to focus on the principal businesses and to become an even more efficient financial partner of corporate and retail clients by providing them with high-quality financial services”, Peter Kukovica, Chairman of the Nova KBM Supervisory Board, said after he had considered the report.
Operating costs incurred by the Nova KBM Group in the first nine months of the year totalled €70.5 million, down slightly over €4.5 million, or 6%, on the same period a year ago, whereas its cost-to-income ratio reached 57.7%, an improvement of 4.4 percentage points compared with the end of last year, making the Nova KBM Group one of the most cost-efficient banking groups in Slovenia. As of 30 September 2015, the total capital ratios of the Nova KBM Group and Nova KBM stood at 25.14% and 28.04%, respectively. Net provisioning charges recorded by the Nova KBM Group in the first nine months of the year amounted to €26.7 million, down 18.3% on the same period last year, while the proportion of NPLs in its total loan portfolio saw a contraction of just over two percentage points. Effective risk management and appropriate management of distressed assets are two of the priorities Nova KBM and its group will remain focused on going forward.
At the end of September, the Nova KBM Group´s balance sheet total amounted to €4.2 billion, which was 4% less than at the end of 2014. The reduction in the balance sheet, as well as in the Nova KBM Group´s risk-weighted assets, was in line with the requirements of the European Commission. In the first nine months of the year, the Slovene banking system as a whole registered a decline of 4.9% in the volume of total loans outstanding to the non-banking sector, according to data published by the Bank of Slovenia. Nova KBM saw a decline in these loans of 4.5% during this period, with the declining trend slowing down in the last few months.
“In the first nine months of the year, we managed to preserve our market share in customer deposits and customer loans. Loans outstanding to the non-banking sector totalled €1.8 billion at the end of September, while the volume of outstanding guarantees reached €259.6 million. In addition, we had €362.8 million in approved but not yet disbursed corporate loans, overdrafts and credit lines”, Robert Senica, President of the Nova KBM Management Board, explained, adding that over the last few years, Nova KBM has made every effort to strengthen its relationships with its customers, both corporate and retail. As stated by Senica, while Slovene companies have been growing their demand for working capital and short-term funding, they have undertaken hardly any investment projects recently. Consequently, this has led to a growing level of the accumulated excess money being placed as bank deposits, with the result that companies do not always need to draw funds under loans or overdrafts they have been granted. A number of new or upgraded financial services were offered this year by members of the Nova KBM Group. Nova KBM has, among other products, introduced contactless payment cards, and has upgraded its offering of personal and housing loans as well as personal accounts. PBS has amended its offering of personal accounts, loan products, business payment cards and insurance services, while KBM Infond took over the management of an additional investment fund with six sub-funds.
Nova KBM´s credit ratings and the halt to its deteriorating reputation provide good prospects for its future development
The rating agencies that follow the operations of Nova KBM and its group decided in May and June to change Nova KBM´s credit ratings. Fitch Ratings downgraded Nova KBM´s Long-Term Issuer Default Rating (IDR) to 'B+' from 'BB-', with the rating being assigned a stable outlook, and raised its Viability Rating by one notch, to 'b+'. Moody´s Investors Service upgraded Nova KBM´s long-term local and foreign-currency deposit ratings to 'B3' from 'Caa1', and at the same time raised the outlook on the ratings to 'positive' from 'stable'. After quite some time, the assessed reputation of Nova KBM saw an improvement in the third quarter of the year, as suggested by a survey called 'Bančni monitor' (Banking Monitor), conducted by the GFK agency, according to which Nova KBM was ranked as the second most likable bank in Slovenia.
The processes of selling Nova KBM and KBM Banka are still under way
Among the most important events related to the operations of the Nova KBM Group in the first nine months of the year were the June signing of the agreement concerning the sale of Nova KBM, and the project of integrating the operations of PBS into those of Nova KBM, the work on which started in November. While Nova KBM is actively involved in the procedures related to its sale, the sale itself has not been completed yet. The process of selling KBM Banka in Serbia is still under way as well. Adria Bank has returned its banking licence and is awaiting the completion of its liquidation, which is expected to take place in 2016. KBM Leasing Hrvatska, KBM Leasing and Gorica Leasing are currently undergoing winding-up proceedings, while Moja naložba, KBM Infond, M-Pay and KBM Invest will continue to operate as members of the Nova KBM Group, and any decision regarding their future will be made by Nova KBM in accordance with its strategic plans.
