LJUBLJANA (Slovenia), May 15 (SeeNews) – Slovenian banking group NLB, the parent company of Nova Ljubljanska Banka [LJE:NLBR], said its net profit plunged 68% on the year to 18.3 million euro ($19.8 million) in January-March, over higher credit impairment and provision costs prompted by the coronavirus pandemic.
The group's net interest income fell 3% on the year to 77.4 million euro in the first quarter of 2020, due to higher interest expenses resulting from new Tier 2 instruments issued by the Slovenian bank, which was partly compensated for by increased loan volumes, NLB said in a statement filed with the Ljubljana bourse on Thursday.
Net fee and commission income rose 6% on the year to 42.4 million euro thanks to an increase in the retail segment in SEE banking members. In the second half of March, however, net fee and commission income dropped due to the novel coronavirus disease (COVID-19) outbreak, especially in card operations, as clients carried out fewer withdrawals and payments due to the lockdown.
The group set aside an overall 28.3 million euro in impairments and provisions in January-March 2020, compared with just 600,000 euro a year earlier.
"Additional credit impairments and provisions in the amount of EUR 24.5 million were recognized in Q1 2020 due to the outbreak of COVID-19 and consequential adjustments of macroeconomic scenarios, which are based on the forecasts prepared by the EC, IMF, IMAD, BoS [Bank of Slovenia], and other reliable experts and related off-set measures, approved by governments in the region," the banking group said.
Gross loans to customers rose by 2% year-to-date to 8.126 billion euro, with gross loans to individuals remaining flat and gross corporate loans rising 5% year-to-date.
The share of non-performing loans remained unchanged at 2.7% at the end of March.
"NLB Group expects credit portfolio quality to worsen in 2020 through a downgrade of some clients, including the increase of non-performing loans as a result of the economic slowdown," it said.
Customer deposits remained broadly flat at 11.653 billion euro.
The group's capital ratio increased by 2.2 percentage points year-to-date to 18.5% at the end of March.
"This represents a solid basis to cover all regulatory requirements, including capital buffers and other currently known requirements, as well as the Pillar 2 Guidance, also in the aggravated circumstances during the COVID-19 pandemic," the group concluded.
NLB's shares traded at 37 euro by 11:10 CET on Friday on the Ljubljana bourse, down from Thursday's closing value of 37.20 euro.
Elsewhere in Southeast Europe, NLB Group is active in Bosnia, North Macedonia, Kosovo, Serbia and Montenegro.
($=0.924392 euro)
Nova Ljubljanska Banka d.d. is among the biggest banks in SEE. You can download our SEE Top 100 ranking
here or subscribe to our free Top 100 newsletter
here