20 FINANCE SPECIAL
ollowing five consecutive quarters in the red, NLB is celebrating a return to the black. The state-owned bank reported a EUR 3.4m net profit of the core bank and a EUR 3.9m net profit at group level for the first quarter of 2011. It attributes the results to strict implementation of measures, a cut in operating costs, and fewer additionally formed provisions as key reasons. NLB chairman Božo Jašovič has recently announced additional provisions of EUR 180m in 2011, but the bank is still sticking to the plan that it will end 2011 in the black. The results follow a EUR 250m capital increase at NLB, which also helped raise the capital adequacy ratio to an estimated 12 percent by 31 March. This is 1.8 percentage points above the ratio at the end of 2010. The first quarter profit ends a negative streak at NLB which began back in 2009, when the bank reported a EUR 82m loss at the end of the year. The situation further deteriorated in 2010, when the loss increased to EUR 202m due to write-downs and provisions stemming from bad loans. Although pleased with the results, Jašovič says it is still too early to say whether things are finally changing for the better.
The volumes of loans issued by banks to companies in 2010 grew by a modest 0.3 percent, with the growth being contributed by domestic banks. Courting controversy
The share of bad loans rose by 66 percent last year, amounting to 3.7 percent of the total loan portfolio of banks. As a result, banks in Slovenia increased impairments and provisions by 33 percent to EUR 2.4bn by the end of last year. The Slovenia Times
In the meantime, Slovenia’s second biggest bank, NKBM – which last month became the first Slovenian company to be listed on Warsaw Stock Exchange – has been courting controversy. The issue is its recent EUR 104m capital increase through the issuing of new shares. The arguments are still hot on whether the State Assets Management Agency (AUKN) was right to force three state-owned companies – Pošta Slovenije, Gen Energija and ELES – to buy the majority of shares in the recent recapitalisation. The move has certainly had some negative impact on the bank with international credit rating agency Fitch Ratings lowering the long-term credit rating of NKBM from A- to BBB+. Com ment i ng on the news, NKBM said that “although Fitch took into account that the state has preserved its roughly 51 percent stake in NKBM, it also considered the conflicting official statements about the preservation of the state stake, which were given during the capital increase procedure, as well as the absence of a clear government strategy regarding the future ownership structure”. The controversy has not hurt the bank’s financial performance, however. It has posted a EUR 3.7m operating profit in the first quar-
The recapitalization of NLB has cost tax payers EUR 250m NLB needs another EUR 250m this year ter of 2011. The bank’s total assets at the end of March stood at EUR 4.87bn, which is 1.4 percent or EUR 67.1m more than at the end of December 2010. Measured with total assets, the bank’s market share at the end of March was at 9.4 percent, which is 0.2 percentage points down compared to the end of 2010.
The situation when it comes to loans being given by the banking sector remains mixed. The volumes of loans issued by banks to companies in 2010 grew by a modest 0.3 percent, with the growth being contributed by domestic banks. Foreign-owned banks reduced loans to companies but did increase them to consumers – they issued 10 percent more loans to this group last year than the year before, and provided the money at a lower interest rate than domestic banks.
The share of bad loans rose by 66 percent last year, amounting to 3.7 percent of the total loan portfolio of banks. As a result, banks in Slovenia increased impairments and provisions by 33 percent to EUR 2.4bn by the end of last year. In comparison, banks in the eurozone have already begun reducing their impairments and provisions for bad loans. Ba n k a Sloven ije Gover nor Marko Kranjec says that the central bank expects credit risk to peak this year, meaning that provisions and impairments would stabilise and begin to turn downwards. The capital adequacy ratio of banks in Slovenia stood at 11.3 percent last year, compared to 13.2 percent in the eurozone. To reach the eurozone average, banks would require an additional EUR 1.2bn in fresh capital, Košak says. Just how this will be acquired remains to be seen.
Recapitalisation of banks in Slovenia in 2011
Source: Finance daily
The first quarter profit ends a negative streak at NLB which began back in 2009, when the bank reported a EUR 82m loss at the end of the year.
(in ‘000 000 EUR) 250
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