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NLB bank's net profit tripled to EUR 189m last year (adds)

Ljubljana, 16 April (STA) - NLB, Slovenia's biggest bank, tripled its net profit to EUR 189.1m last year, shows the annual report circulated by the bank on Monday. According to the NLB management, the results show that the bank is "well prepared for the expected privatisation".

Meanwhile, the supervisory board of the bank, which discussed the results on Friday, reported after the meeting that the group's profit after taxes doubled to EUR 225.1m in 2017 over 2016.

The bank as well as all strategic banking members of the group made profit and contributed to the record result, supervisors said.

"These are the best results in the history," NLB chairman Blaž Brodnjak told the press in Ljubljana on Monday. Operating results are robust as well, he added.

Today, the bank said that the group improved its result for the fourth consecutive year, with the non-core members of the group also making a positive contribution to the group's result for the first time.

The operating result before provisions, excluding one-off events, increased by 11% compared to 2016.

According to the bank, this "shows a continuous trend of high quality operations in all segments". Including one-off effects, the return on equity (ROE) after tax increased to 14.4%.

Loans to retail customers in Slovenia increased by 7% year-on-year, while loans on foreign strategic markets increased 8% compared to 2016. Corporate loans in Slovenia were "largely stable with sub-segments showing good performance", the bank said, pointing to 10% growth in loans to SMEs.

But the chairman pointed to commitments to the European Commission in exchange for approving state aid in 2013, which prevent it from financing the public sector, among other things.

The bank fears the commitments will prevent it from competing with other banks when construction projects get truly started again.

"If these commitments were eliminated, the bank and the group would create even better results and give even more to the owner," Brodnjak said and added that the consequences of not privatising NLB were "very painful".

In line with the commitments, the bank further reduced total assets, to EUR 8.7bn. The group's total assets totalled EUR 12.2bn at the end of the year.

The bank and the group cut operating costs as well as the number of employees by 30%. NLB employed 2,789 people and the group 6,029 at the end of last year.

According to Brodnjak, NLB attained "healthy growth of non-interest revenue". Meanwhile, the group increased interest revenue, while interest revenue decreased at the bank. But NLB turned the trend around in the second half of the year and stabilised the revenue.

The quality of the loan portfolio improved, with the volume of non-performing loans decreasing by 36% last year. The share of toxic loans was cut to 9.2% and non-performing exposure ratio to 6.7%.

The total capital ratio and core equity Tier 1 ratio were at 15.9%, which is above the regulatory requirement, the bank also said.

Meanwhile, it said that the bank was involved in legal disputes totalling EUR 585.4m, excluding interest, in claims. Most of these claims stem from Yugoslav-era foreign-currency deposits in the now-defunct LB bank.

The bank has not formed provisions for these claims, because it believes there are no legal grounds for them. Nevertheless, the European Central Bank has tasked NLB with obtaining prior approval for the distribution of profit in the event that criteria for forming provisions are fulfilled.

Brodnjak declined to comment on plans for 2018, but said that last year's figures were hard to beat. "We're operating in line with plans and there are no major concerns that we would not make the plan by the end of the year," he added.

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