Nova KBM

Nova KBM improves its operations, slight loss in the first quarter | NKBM

In compliance with provisions of the Ljubljana Stock Exchange Rules and the Financial Instruments Market Act, Nova KBM d.d., Maribor, hereby makes the following announcement:

Nova KBM improves its operations, slight loss in the first quarter

25 April 2013
In compliance with provisions of the Ljubljana Stock Exchange Rules and the Financial Instruments Market Act, Nova KBM d.d., Maribor, hereby makes the following announcement:

At today’s meeting, the Nova KBM supervisory board has been informed about the Bank’s operations in the first three months of the current year. At the end of March, Nova KBM disclosed a profit in the amount of EUR 6 million before provisions and impairments. Provisions and impairments amounted to over EUR 12 million in the first quarter, therefore the bank disclosed a loss from continuing operations in the amount of EUR 6.2 million. The supervisory board endorsed the audited annual report of Nova KBM and the Nova KBM Group and was informed about the material for the Shareholders’ Meeting. The Shareholders’ Meeting is planned to take place in June, and the shareholders will also decide about a capital increase. Capital adequacy of the Bank to total capital amounted to 9.32 per cent at the end of March. Capital adequacy to Core Tier 1 capital according to EBA methodology amounted to 7.62 per cent at the end of last year. Despite the difficult conditions, the Bank’s and the Group’s operations are running smoothly, they meet the required regulatory capital adequacy and exceed the prescribed liquidity ratios. Detailed information about the Bank’s operations in the first quarter is expected to be published tomorrow afternoon on the websites of Ljubljana and Warsaw Stock Exchanges.

Last year and in the first quarter of this year, the economic situation continued to deteriorate. The weak economic activity, numerous bankruptcies of companies, lesser demand and investments, and increasing unemployment had an impact on the Bank’s and the Group’s operations. “It is expected that the volume of impairments will be reduced compared to the previous year, as a large portion of the credit portfolio has already been revalued. In the current year we still expect a loss from continuing operations, and are slightly more optimistic for the year 2014”, says Mr Aleš Hauc, President of the Management Board of Nova KBM, and adds that the Bank shall “continue its projects to improve the operations, and to strengthen capital adequacy in compliance with EBA recommendations. We have also enhanced risk management and client monitoring as well as cost and organisational efficiency. This is the basis for the further development of the Bank and it is also what potential investors, shareholders and our clients expect of us.”

At the Shareholders Meeting, which is planned to be called by the Bank in May, the shareholders will decide about obtaining fresh capital required by the Bank for its further development. The preparations for the capital increase are underway according to the deadlines. Based on several offers, the Bank has selected UniCredit CAIB investment company as the organiser. The envisaged amount of capital increase along with other details about the procedure will be disclosed by the Bank in due time, taking into account the principle of equitable right to information and rules that apply to public limited companies.

“Like many other financial institutions in the region, the Bank is in a demanding situation, however, the Bank’s management board is carrying out intensive measures to improve operations and to meet the principles of good corporate management. It is expected that fast decisions taken by the government that will accelerate the rehabilitation of the financial system in Slovenia, the stabilisation of the state budged and strengthening of the economy will have a positive impact on the measures and development priorities of the Bank”, said Dr. Peter Kukovica, Chairman of the Bank’s Supervisory Board. In March, Nova KBM submitted the Restructuring Plan for Nova KBM Group to the Ministry of Finance, which is now being checked by the European Commission. The plan envisages an optimisation of the Bank’s and the Group’s operations, disinvestment and reduction of the total assets.

According to consolidated and audited data, Nova KBM Group disclosed in the business year 2012 a profit of EUR 91.2 million before provisions and impairments, of which EUR 69.8 million were from continuing operations, and EUR 22.4 from the sale of Zavarovalnica Maribor. As a result of provisions and impairments, the Group disclosed a net loss of EUR 205.7 million. Net profit was disclosed by KBM Infond (EUR 1.2 million), KBM Fineko (EUR 0.6 million), PBS (EUR 0.3 million) and Credy banka (EUR 0.1 million). In the field of banking, net consolidated loss was also disclosed by Adria Bank AG (EUR -2.7 million) headquarted in Austria, which disclosed a profit under Austrian accounting standards (EUR 0.25 million). A loss was also disclosed by KBM Leasing Hrvatska (EUR -4,0 million), Gorica Leasing (EUR -20.9 million), KBM Invest (EUR -21,8 million) and KBM Leasing (EUR -22.3 million). Last year, the Group was reduced by two companies: KBM Projekt of Zagreb which has been in liquidation since October and Zavarovalnica Maribor, the majority stake in which was sold by Nova KBM to Pozavarovalnica Sava and Slovenska odškodninska družba in December. To date the purchase money has been paid in full, which means that the sale procedure has been officially completed.

Changes in the Nova KBM Group also had an impact on the number of employees, which was reduced from 2991 to 2027. At the end of 2011, Nova KBM had 1346, and at the end of last year 1280 employees. The Bank respects all labour and legal regulations and principles of good business practices, it has been regularly paying out salaries and allowances, while at the same time taking into account the actual financial situation of the Bank and realistic plans for the future, and has been leading dialogues with the trade unions. The Bank plans for the number of employees to be reduced by another 100 by the end of the year, however, new employment in areas where it is necessary and justified is not excluded. Thus the Bank shall complete its reorganisation plan in July. With the new organisation, the Bank expects to ensure cost efficiency and a staff structure that will result in better efficiency of work procedures and high quality of services provided to the clients. The number of staff on individual contracts has also decreased, and their perks are being renegotiated and reduced. The program of staff reduction will continue, especially by not substituting people who retire and by not extending fixed-term employment contracts.

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