Nova Ljubljanska Banka (NLB) 2020年年度報告「LSE」.pdf

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1、Annual Report 2020This is Our HomeAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report2CONTENTSContentsThe expectations,forecasts and statements regarding future developments that are contained in this

2、 report are based on assumptions and are contingent on a number of factors that will come into play in the future.Consequently,the actual situation may turn out to be different.The Annual Report in PDF format represents its unofficial version.The Annual Report in ESEF format is pursuant to Commissio

3、n Delegated Regulation(EU)2019/815 and paragraph one of Article 134 of the Market in Financial Instruments Act(ZTFI-1)and represents its official version published on SEOnet.Report formatForward-looking statementsFurther information on sustainability is available in the NLB Group Sustainability Repo

4、rt 2020.Annual Report 2020Statement by the Management Board of NLB 5Statement by the Chairman of the Supervisory Board of NLB 8Strategic Members Overview 11Key Highlights 13Key Events 17Macroeconomic Environment 18Regulatory Environment 22Business Report 24Acquisition of Komercijalna banka a.d.Beogr

5、ad 25Strategy 26Risk Factors and Outlook 28Sustainability 30Overview of Financial Performance 32Segment Analysis 42Retail Banking in Slovenia 43Corporate and Investment Banking in Slovenia 47Strategic Foreign Markets 51Financial Markets in Slovenia 53Non-Core Members 56Risk Management 58IT and Cyber

6、 Security 69Human Resources 71Corporate Governance 73Compliance and Integrity 80Internal Audit 81Corporate Governance Statements 83Disclosure on Shares and Shareholders of NLB 92Events after the end of the 2020 financial year 93Financial Report 95Alternative Performance Indicators 180NLB Group Chart

7、 189Organisational Structure of NLB 190NLB Group Directory 191Definitions and Glossary of Selected Terms 193Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report3CONTENTSHome is where people who matter

8、the most are.Our home is here in this region.With you,among you.The Group,headquartered in Ljubljana,is the largest banking and financial group in Slovenia with a strategic focus on selected markets in SEE our home region.It covers markets with a population of approximately 17 million people.The Gro

9、up is comprised of NLB as the main entity in Slovenia and nine subsidiary banks in SEE,several companies providing ancillary services(asset management,real estate management,leasing,etc.),and a limited number of non-core subsidiaries in a controlled wind-down.NLB has an investment grade rating by S&

10、P and is a publicly listed company owned by a diversified investor base and whose largest shareholder is the RoS with a 25%plus one share.With the acquisition of Komercijalna Banka,Beograd in December 2020,the Group further strengthened its strategic and systemic position in the region and now holds

11、 a top 3 position in six out of seven markets where it has a banking presence.NLB is the first bank in Slovenia that has signed the UN Principles of Responsible Banking and has also made decisive steps on the path of sustainable banking by undertaking commitments to EBRD and MIGA on the Group level.

12、With the sustainability ambition anchored in the purpose of our functioning,the Group ensures products and services meet the needs of this generation and simultaneously preserve the opportunities of future generations.The Group employees operate in a family-friendly environment.The Bank received the

13、 Top Employer certificate already for the 6th consecutive year.The Group has one of the broadest social responsibility programmes in the region.It supports many humanitarian and cultural projects,as well as promotes sports among young people all this to ensure a better quality of life in the region

14、it calls and treats as its home.The Group will take care of the financial needs of its clients and improve the quality of life in its home region.VisionMissionEnablersOur strategic focusSustainable bankingWho we areThe Group values and understands its home region,and strives to improve and develop i

15、t for all generations.Investments in NLB brand Availability and support anytime/anywhere Robust cyber security Improved human talent management Simplification and quality of services Benefiting from emerging opportunities Prudent risk management Capital optimisation Cost and investment optimization

16、Become regional champion Putting clients first Defend our market position Exploit opportunities and synergiesAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report4CONTENTS The COVID-19 pandemic caused a

17、 downturn in the economy,but on the other hand it also brought us some positives.We pay more attention to what is happening in the environment and wonder how we influence it with our actions.In doing so,we have become enthusiastic about finding sustainable,especially local solutions.One of the most

18、recognised projects of 2020 in the entire region of SEE is certainly the#HelpFrame project.With the#HelpFrame project,we offered our own advertising space to 274 entrepreneurs,farmers,and micro and small businesses which would be difficult for them to afford in these times and thus helped them to re

19、ach potential customers,thereby making an important contribution to strengthening the domestic small business.A new boost for sustainable developmentAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report

20、5CONTENTSStatement by the Management Board of NLBAlso notable are a couple of essential milestones.In the middle of the year we managed to complete a divestment of insurance company NLB Vita as the last commitment to the EC,by which a highly limiting state aid process was officially completed and af

21、ter many years the Group could resume its full business capacity.This enabled us to again address eventual value accretive business opportunities,and we very proudly ended the year with the game-changing acquisition of Komercijalna banka a.d.Beograd(Komercijalna Banka,Beograd).With this transaction,

22、we further solidified the Groups presence in all our markets in SEE,our home region.High responsibility,supported by knowledge,experience,professionalism,and finally the strong market position of NLB Group as a regional player proved once again to be especially effective in times of crisis,brought b

23、y the COVID-19 pandemic.We have responded successfully and effectively to the new circumstances,maintaining as a priority the concern for the health of our employees.We provided protective equipment in our offices,while enabling as many of them as possible to work from home.In the meantime,the latte

24、r has also been supported as the regular working mode,wherever applicable and mutually acceptable.As the utmost priority,we also protected the health of our customers by securing preventive measures in our branches,while at the same time providing significantly enhanced accessibility and quality of

25、our key services through online channels.Clients of NLB in Slovenia can now get cash loans,overdrafts,credit cards and can order any other services 24/7 via a mobile bank without direct personal interaction,and as unique experience can sign any contract with the Bank digitally through our mobile ban

26、k Klikin.All of that is supported by 24/7 chat and the video chat service from our Dear Stakeholders,Contact Centre with a closing capacity for the majority of services.With that,NLB has already surpassed the client experience levels of majority of FinTech challengers.We have a clear plan for furthe

27、r enhancements and consistent replication of this delivery model in all our markets.After witnessing economic hibernation during a substantial part of the first half-year,various factors contributed to a robust revival of especially industrial activities by the end of the year.As a result,in the sec

28、ond half of the year the Group recorded a normalisation of revenues to pre-COVID-19 levels and generated a sound net profit of EUR 141.31 million,with all SEE subsidiary banks reporting solidly positive net earnings and contributing 36%1 to the result.This outcome was clearly strongly supported by a

29、 quick and determined response from governments and regulators with measures that helped stabilise the economic environment,but also by a very proactive response of our whole Group.We have learnt our lessons in the period from 2008-2014 and we are fully aware that concrete actions speak the loudest,

30、especially in times of crisis.That is why we decisively addressed clients needs as soon as the pandemic hit,and its potential consequences were assessed.We have,for instance,secured stable liquidity by instituting significant working capital lines to vital businesses,maintaining regular lending acti

31、vity and releasing eventual liquidity squeeze to all client segments through moratoria.We enhanced relationships and maintained the high quality of portfolios with very limited NPL migration by intensified daily contacts with clients and prompt reactions.During the first wave of epidemic we anticipa

32、ted material impacts to credit quality,resulting in significant pool impairments and provisions and cautious guidance regarding the cost of risk.However,in the second half of the year the economy and clients proved to be more resilient and actual cost of risk did not follow the initial estimates.Thi

33、s is clear proof that the underwriting criteria and practices we introduced in 2013 have been very robust across economic cycles.Structural profitability challenges,in contrast,escalated further.Due to lockdowns,prohibiting consumption,along with governmental measures,defending employment and boosti

34、ng household income,and the influx of predominantly retail deposits introduced further significant drag on interest income.We managed to partially mitigate this impact by strongly focusing on additional fee and commission income,thus defending the financial intermediation margin,though it has become

35、 obvious that in the EUR-denominated Slovenian market there is no alternative to following the logic of corporate deposits and also introducing charges for household balances.Given that a decision was taken to start charging fees from 1 April 2021 on for the balances exceeding EUR 250 thousand with

36、the ambition to reduce the threshold to EUR 100 thousand in the second half of 2021.A divestment of insurance company NLB Vita fulfilled the last commitment to the EC,by which a highly limiting state aid process was officially completed and after many years the Group could resume its full business c

37、apacity.High responsibility,supported by knowledge,experience,professionalism,and finally strong market position of NLB Group as a regional player proved once again to be especially effective in times of crisis,brought by the COVID-19 pandemic.Significantly enhanced accessibility and quality of our

38、key services through online channels.2020 was an extremely challenging and,yet in many ways,a ground-breaking year,not soon to be forgotten.In more ways than one it was also very memorable for the Group,although by far not only due to the COVID-19 pandemic and its consequences as one might think.The

39、 pandemic has,of course,had an impact on our business operations and day-to-day work,but even more notable were the lessons learned and new practices we have since adopted.1.Without the effect of the acquisition of Komercijalna Banka,Beograd.Annual Report 2020MB Statement SB Statement Key highlights

40、 Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report6CONTENTSPetr Brunclk COOArchibald Kremser CFOBla Brodnjak CEO&CMOAndreas Burkhardt CROAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview R

41、isk Management Financial Report7CONTENTSWith the implementation of capital relief measures,the inclusion of two successfully issued subordinated Tier 2 bonds and undistributed profit for the year 2019 into capital(due to the BoS restricted dividend payout in 2020 following ECB recommendation)the Gro

42、up even after the sizeable acquisition concluded the year with a diversified capital structure and solid capital position above the regulatory requirements and management buffer.This besides very high liquidity reserve balances provides a solid foundation for our further business operations and resu

43、med targeted dividend payouts as soon as supported by regulators.This position has been also shared by Moodys rating agency when upgrading the long-term local and foreign currency deposit ratings of the Bank from Baa2 to Baa1.Despite the pandemic and numerous related challenges,measures,key activiti

44、es and achievements,we positioned the Group in the most important growth market through the successfully completed acquisition of Komercijalna Banka,Beograd.Consequently,we have assumed a unique top 3 banking positions with more than a 10%market share in six out of seven of our markets.Moreover,we f

45、urther improved our international footprint by supporting selected cross-border corporate projects,we reintroduced leasing services in Slovenia through the subsidiary NLB Lease&Go with the firm ambition of a regional roll-out,we adopted a consistent and decisive IT strategy with the aim to build the

46、 best digital bank and IT team in the SEE with cyber security being at its core,and we undertook several strategic initiatives and measures for strategic cost optimisation and boosting sales-among them an ambitious channel strategy with further swift digitization,paperless operations,corporate real-

47、estate optimisation,etc.The Group closed 2020 in a very good shape.We realised that this crisis offered us many opportunities to differentiate in the market and above all by being relevant and further strengthening our relationships with clients.One of these insights resulted in the first Group-wide

48、 CSR project that has a clearly defined sustainability component,#HelpFrame project,with which we further demonstrated our genuine interest in improving the quality of life in our region we call and therefore treat as home.We have been supporting people with an entrepreneurial spirit and creative id

49、eas who have introduced products and services with a sustainable local footprint.In the Group,we acknowledged their efforts and provided almost 274 entrepreneurs,farmers,and micro and small businesses from all our markets,not only with our financial mentorship and professional support,but also with

50、advertising space that they would otherwise not have been able to afford.We consciously and decisively committed to sustainability by signing the UN Principles for Responsible Banking and commitments toward EBRD and MIGA.NLB Group decided to discontinue any financing support to coal-based technologi

51、es and has been actively seeking and supporting energy efficiency improvement and renewable energy production projects.We are genuinely focusing on the sustainability of our business decisions and actions,as well as customers needs and expectations.As a systemic player,we are in the position to trul

52、y influence the environment and the quality of life.We know that sustainability is an ongoing series of decisions and actions.We thus aim to create a regional sustainability platform with an important positive impact on the environment and society,while being recognised as a role model in governance

53、.By that we strive to become one of the most meaningful businesses and the most desirable employers in our region.We wish to partner in these endeavours with like-thinking clients,associations and other entities to create an ecosystem of relevant services,delivered in a sustainable way.All this cann

54、ot be secured without a dedicated team of colleagues who truly care about our customers and our mission and go the extra mile when needed.Year 2020 was truly an exceptional year and colleagues deserve clear recognition of extraordinary efforts and a resounding gratitude.We have learnt that in times

55、of great uncertainty and concern,things that once seemed unfeasible,undesirable,or even unacceptable,can become possible.In 2020 the Supervisory Board of NLB added members,appointed by the Workers Council,enabling the inclusion of employees in the strategic steering of the Group.The Supervisory Boar

56、d acknowledged the teams efforts and demonstrated trust in the Management Board by extending the mandates of the CEO/CMO,CFO and CRO until July 2026.Our plan for 2021 is to continue to act prudenly to leave COVID-19 behind us as soon as possible,while in parallel to further enhance our capabilities

57、in the field of knowing our clients,in order to provide even more relevant,personalised services,whenever and wherever necessary.Our goal is no longer to just be an excellent distributor of universal financial services,but also one of the most ambitious,technologically-driven banking groups in our h

58、ome region providing top quality experience to our existing and prospective clients.We truly believe that the best for the Group is yet to come and we confidently look forward to the challenges in front of us.We are convinced that we will not only overcome them,but also learn from them and become ev

59、en stronger.With full motivation and energy we will take the Group to another level as one of the most meaningful businesses in the region with great positive impact in the environment and society we live in.This is our home,we respect it and we will support it,nurture it,invest in it,and make sure

60、that it is ready for whatever may come.Yours truly,Management Board of NLBNormalisation of revenues to pre-COVID-19 levels.The acquisition of Komercijalna Banka,Beograd further solidified the Groups presence in all our markets in SEE.We aim to create a regional sustainability platform with an import

61、ant positive impact on environment and society.without the effect of acquisition of Komercijalna Banka,B profit including EUR 137.9 million negative goodwill from acquisition of Komercijalna Banka,Beograd,while net profit would be141.3269.7million EURmillion EURArchibald Kremser CFOAndreas Burkhardt

62、 CROPetr Brunclk COOBla Brodnjak CEO&CMOAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report8CONTENTSStatement by the Chairman of the Supervisory Board of NLB As McKinsey rightfully points out,unlike m

63、any past shocks,the COVID-19 crisis is not a banking crisis;it is a crisis of the real economy,caused by a tiny virus particle.Banks will naturally be affected,as credit losses cascade down their balance sheets.Still,the problems are not self-made.The Group entered the crisis extremely well-capitali

64、sed and is far more resilient than it was 12 years ago.I dare to say we are actually in the best shape ever,when it comes to regulatory capital robustness.However,the road ahead is not so much the road of credit impairments and loan loss provisions,its the road that tackles the real issue of the for

65、gone banking revenue years down the line the foregone revenue for those not adapted.And I wholeheartedly believe that the traditional banks that allow their cost bases to evolve quickly,and digitize their service delivery efficiently,will win.The incumbency of multi-product relationship sales perfor

66、ms better than monoline product-based businesses.The seemingly never-ending cash burn rate of banking FinTechs proves this point.Rest assured,the Group responded extraordinarily well to the first phases of the crisis,keeping employees and customers safe and keeping the financial system operating wel

67、l across all our core markets.Not only that,2020 was a year marked by our strong pursuit of our strategic goals,a set of promises we made in order to deliver for you,our employees,and our society.To Our Shareholders,We grew our capital base and acquired Komercijalna banka a.d.Beograd(Komercijalna Ba

68、nka,Beograd),in what we believe will be a major value accretive transaction,increasing both our DPS and EPS potentials by more than 30%and 20%,respectively,over the course of the next few years.Furthermore,we see opportunities on both the numerator and denominator of our ROE:not only in the capital

69、management exercises we regularly promote,such as RWA consumption and optimisation,but predominantly on the side of an increased productivity.But most of all,we are transitioning towards the core of our strategy,to be the talent magnet for tech and consumer behaviour savvy job-seekers.We will remain

70、 and further strengthen our unique banking play proposition.We will stay focused on our core region,where fragmented geographies sometimes represent some challenges for us,but also provides solid protection from most other regional bank players.In the aftermath of the Komercijalna Banka,Beograd acqu

71、isition,we will hold meaningful market shares in all our core markets.We now simply have to continue focusing on our dividend capacity as the main shareholder value proposition.Primo Karpe Chairman of the Supervisory BoardA simple statement,like Not only we have survived,but we came out leaner,fitte

72、r,and readier to run.for the ride that is ahead of us,and for whatever may come,would probably fit well into the Darwinism of the moment.But it actually describes the year 2020 and our banking business model,as run by your bank,our NLB.Annual Report 2020MB Statement SB Statement Key highlights Acqui

73、sition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report9CONTENTSIf I tell you that we know we have to:(i)speed up our going-to-digital transformation,(ii)take costs out faster,(iii)place a focus on a charge or change commercial policy at the retail level,(iv)further i

74、ncrease of our fee interest ratio with an alternative business mix on the corporate level,(v)quickly integrate Komercijalna Banka,Beograd and optimise this joint market undertaking,and(vi)last but not least,further increase the productivity of our employees,then you know we are aware of the challeng

75、es ahead.Even more,we are aware of our focus in value creation efforts.Additionally,Supervisory Board is committed to promote and monitor the implementation of sustainability governance in the Group,as well as giving special focus on raising the overall level of cyber security resilience.That said,I

76、 believe the Group will deliver on its promises to all of its key constituencies(shareholders,clients,employees,and society),not only in the year of 2021,but over the mid-to long-term cycle as well.2020 business developments The course of the global economy in 2020 was determined by the COVID-19 pan

77、demic,and consequently the Groups region was not able to remain intact because of the pandemic and its economic implications.The Groups region recorded a substantial drop in economic growth,although the implications of the COVID-19 pandemic hit countries of the Groups region disproportionally due to

78、 underlying differences in exposure to the hardest hit sectors.For instance,countries with a strong reliance on the tourism sector were particularly more affected by the imposed COVID-19 containment measures.In general,economic contraction was driven by a reduction in demand,with restrictive contain

79、ment measures negatively affecting all demand components except government consumption that partially offset the reduction.Fiscal measures aimed at mitigating COVID-19 economic implications weighed on fiscal balances and public debts,while external sector was influenced by restrictive measures abroa

80、d.Nevertheless,the pandemic also initiated or accelerated some structural shifts,most notably the digitization of work and consumption which was reflected in an increase of online purchases and working from home.Thereby,the world became much more digital due to the COVID-19 pandemic.But digital or n

81、on-digital,what we could not avoid were the restrictions of regulators(ECB and BoS)regarding dividend payments,therefore the General Meeting of shareholders on 15 June 2020 adopted the decision that the total distributable profit for 2019 in the amount of EUR 228.04 million would remain undistribute

82、d,representing the profit carried forward.We do aim to reverse no-dividend trend with meaningful dividend distribution subject to regulatory approval during this year.2020 a year that will never be forgotten and a year that brought new energy into our business storyIn the financial year 2020,we all

83、faced a challenging environment,due to the already mentioned challenges of the COVID-19 pandemic and following economic hibernation,but for us it was also a year that brought new energy into our business story.The Group has further strengthened the position in SEE market with acquisition of Komercij

84、alna Banka,Beograd,that increased the Groups total assets to almost EUR 20 billion and to a more than 12%market share in the Serbian market.The Group also managed to defend a stable level of profit before impairments and provisions of EUR 210.5 million,supported by non-recurring income from the sale

85、 of NLB Vita and debt securities.Profit after tax amounted to an impressive EUR 269.7 million,and was strongly affected by the acquisition of Komercijalna Banka,Beograd,with positive impact of negative goodwill in the amount of EUR 137.9 million.Without this acquisition the profit after tax of the G

86、roup would amount to a solid EUR 141.3 million,lower than a year before due to additional impairments and provisions related to the COVID-19 pandemic.The Bank reached a profit after tax in the amount of EUR 114.0 million,lower than a year before,but mostly due to retained dividends in the Group memb

87、er banks and established impairments and provisions,both related to the COVID-19 pandemic.All SEE subsidiaries finished the year with a profit and significantly contributed to the Groups result.The operations of the Group were underpinned by strong liquidity and capital positions,with the TCR reachi

88、ng 16.6%,which is above the regulatory requirements,demonstrating the Groups financial resilience.In these COVID-19 circumstances,the Group has been perceived as a safe heaven,and therefore faced growing excess liquidity.The impacts of the pandemic did not cause any material liquidity outflows.The o

89、verall risk appetite profile of the Group continues to be moderately conservative.Despite the crises,the NPL ratio(EBA definition)of the Group remained below 5%,which shows the strong resilience of the Group.The acquired Komercijalna Banka group has a similar business model to the existing NLB Group

90、,and its impact on the Groups risk profile was moderate.The overall slow-down of the economy caused by pandemic,had some negative impacts on the loan portfolio,though its quality remained solid and well diversified.The cost of risk increased due to the impact of the downturn in the macroeconomic env

91、ironment,still,it remains within the set outlook.NLB Group maintains its corporate governance principles in line with the highest standardsThe Supervisory Board performed its work in accordance with applicable laws(predominantly,but not exclusively the Companies Act(ZGD-1)and the Banking Act(ZBan-2)

92、,as well as powers and procedures as set by the Articles of Association of NLB and the Rules of Procedure of the Supervisory Board of NLB.It carried out its function of assuring efficient supervision over the management of NLB and the Group in its duty of careful and scrupulous performance,while adh

93、ering to the internal acts of the Bank.In performing its duties,the Supervisory Board followed the recommendations of the Corporate Governance Code for Listed Companies,exclusively.The Corporate Governance Statement of NLB adopted by the Supervisory Board on its session dated 18 February 2021 reveal

94、s deviations from the mentioned code,as well as explains key aspects of the Banks corporate governance,particularly the composition and work of the Banks Management Board and Supervisory Board and its committees,internal control mechanisms,and internal control functions(Internal Audit,Risk Managemen

95、t,Compliance,Information Security Function and AML/CTF Function).It also provides a description of the implementation of the Diversity Policy related to representation in the management and supervisory bodies and senior management.This statement is published in the business report of this annual rep

96、ort.In 2020,there were seven regular and 12 correspondence sessions.The Supervisory Board received expert assistance from its five operational committees,namely Audit,Risk,Nomination,Remuneration,Operations,and IT.The committees of the Supervisory Board met at its regular meetings and discussed topi

97、cs and adopted decisions related to the areas that they oversee.The Supervisory Board issued approvals to the Management Board related to the Banks business policy and financial plan,adopted NLB Group Annual Report,adopted decisions with regards to the convocation of the General Meeting of sharehold

98、ers,adopted decisions related to management of risk,adopted the annual Internal Audit Plan and annual Plan of Compliance and Integrity,and reported on their activities.The Supervisory Board also adopted decisions on establishment of new companies,cross-border financing and international syndicated f

99、inancing,large exposures,sale of receivables,claim write-offs,the divestment of the Group companies,legal proceedings involving NLB and the Group members,transactions with persons in special relations with the Bank,etc.Supervisory Board endorsed Sustainability programme together with roadmap with ke

100、y milestones in the mid-term period.Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report10CONTENTSAdditionally,the Supervisory Board approved achievements of the Management Board and proposed new goals

101、 for the Management Board,adopted decisions on succession planning for members of the Management Board,and acknowledged new candidates for members of the Supervisory Board.In addition to the already appointed Petr Brunclk,the Supervisory Board in its session in November 2020,also reappointed Bla Bro

102、dnjak as CEO&CMO,Archibald Kremser as CFO,and Andreas Burkhardt as CRO of the Bank.Through the year the Supervisory Board acknowledged regular reports on documents received from the regulator(s),namely BoS and ECB,and on the implementation of the requirements of mentioned regulators,adopted changes

103、to the Corporate Governance Policy of the NLB,and adopted other amendments to the internal policies.The year 2020 was remarkably challenging also from the corporate governance perspective,as NLB,as the first bank in Slovenia,implemented Constitutional Courts decision dated June 2019 that enabled wor

104、kers participation in the management bodies.To that extent,amendments to the Articles of Association of NLB were adopted on the General Assembly of shareholders in June 2020 that changed the composition of the Supervisory Board,that now consists of 12 members,out of which eight are representatives o

105、f the capital and four are employee representatives.At the end of 2020,the Supervisory Board was composed of 11 members,of which eight were representatives of shareholders(in addition to Primo Karpe and Andreas Klingen,members were also Gregor Rok Kastelic,Mark William Lane Richards,Shrenik Dhirajla

106、l Davda,Peter Groznik,David Eric Simon,and Verica Trstenjak)and three were representatives of employees(Sergeja Koar,Bojana teblaj,and Janja abjek Dolinek).The procedure for election of another member of the Supervisory Board worker representative was still ongoing at the end of December 2020.While

107、members of the Supervisory Board have proper and complementary knowledge,experience and skills to perform their duties,they all have different professional,national,and educational backgrounds.All the members of the Supervisory Board have the necessary personal integrity and professional ethics to h

108、old their positions,which was confirmed by the positive Fit&Proper assessment.This provides the assurance that they can carry out their supervisory roles in a responsible manner and make decisions that benefit NLB and add value to the Group.The delivery of critical and assertive opinions has been an

109、d will always remain at the core of our decision-making principles through the expected engaged participation of all the members.Throughout the year,the Supervisory Board has maintained a well-balanced professional relationship with the Management Board and enjoyed timely,comprehensive,and data-supp

110、orted inputs from the latter,enabling the Supervisory Board to adopt all its decisions in line with the professional interests of the Bank,whilst adhering at all times to banking regulations and its statutory powers.The Supervisory Board continued to act in accordance with the highest ethical standa

111、rds of management,considering the prevention of conflict of interest.Throughout the year,there were some potential conflicts of interest identified and all were handled with due care.Supervisory Board members took precautionary measures to avoid any conflicts of interest that might have influenced t

112、heir decisions.Despite extremely demanding times during the COVID-19 pandemic,the Supervisory Board members assess NLBs operations in 2020 as strong and solid and performance of the NLB Management Board as successful and trustworthy.As per that special appreciation needs to be extended to the Manage

113、ment Board and the employees for their contributions and achievements.Additionally,it has to be highlighted that due to COVID-19 and its impact on the performance the voluntary solidaritary salary reduction was introduced for the Supervisory Board,Management Board,and employees holding service contr

114、acts.Review and approval of the NLB Group Annual Report 2020 The NLB Group Annual Report 2020 and unaudited financial statements of NLB Group were examined by the Supervisory Board at the meeting on 18 February 2021.The external audit firm,Ernst&Young d.o.o.,Ljubljana,reported to the Audit Committee

115、 on the findings and 2020 audit procedures on session of the Supervisory Board held on 11 March 2021.Within the legal deadline,the Management Board of NLB submitted to the Supervisory Board the NLB Group Annual Report 2020,including the Business Report and Financial Report,with the audited financial

116、 statements of the Bank,the audited consolidated financial statements of the Group and the auditors opinion.The Supervisory Board considered mentioned reports on 8 April 2021.According to the auditor,the financial statements with accompanying notes present fairly,in all material respects,the financi

117、al position of the Bank and the Group as of 31 December 2020,and their financial performance and cash flows for that year in accordance with the IFRS as adopted by the EU.It was also established that the information contained in the business section of the Annual Report is consistent with the audite

118、d financial statements of the Bank and the Group.For the session dated 8 April 2021,the Supervisory Board also prepared a written report on the verification results for the General Meeting of shareholders.This report was made in accordance with Article 34 of the Articles of Association of NLB and th

119、e second paragraph of Article 282 of the Companies Act(ZGD-1).At the end of its report,the Supervisory Board indicated that as a result of completion of its verification it does not have any comments in relation to the NLB Group Annual Report 2020,and gave its approval to it,therefore it is consider

120、ed adopted.Yours truly,Supervisory Board of NLBPrimo Karpe ChairmanAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report11CONTENTSSloveniaBosnia and HerzegovinaKosovoSerbiaMontenegroNorth MacedoniaNLB,L

121、jubljanaNLB Banka,PrishtinaNLB Banka,SkopjeKomercijalna Banka,BeogradNLB Banka,Banja LukaKomercijalna Banka,Banja LukaNLB Banka,BeogradNLB Banka,SarajevoNLB Banka,PodgoricaKomercijalna Banka,PodgoricaResult after tax in EUR millionTotal active clients of NLB GroupNumber of branches in NLB Group29826

122、9.7We are from this region and understand business environment,customs and,most of all,its people.With our commitment,knowledge,and innovative solutions,the Group takes superior care of its customers and creates a better life,a better future for us all.Welcome to our home.(i)Branch offices of Komerc

123、ijalna Banka,Banja Luka,Komercijalna Banka,Podgorica and Komercijalna Banka,Beograd not included in total number of NLB Group branches.(ii)Number of active clients of Komercijalna Banka,Banja Luka,Komercijalna Banka,Podgorica and Komercijalna Banka,Beograd not included in total number of NLB Group a

124、ctive clients due to different definitions.(iii)Assets under management.(iv)Market share of assets under management in mutual funds.(v)Market share in the Republic of Srpska as at 30 September 2020.(vi)Market share in the Federation of BiH as at 30 September 2020.(vii)Market share as at 30 September

125、 2020.(viii)Data from internal reports of Komercijalna Banka group.(ix)Data from CBs and own calculations.Market position in 2020Macroeconomic indicators for 2020Branches(i)Active clients(ii)Total assets(in EUR million)Net loans to customers(in EUR million)Result after tax(in EUR million)Deposits fr

126、om customers(in EUR million)Market share by total assetsGDP(real growth in%)Unemployment rate(in%)Average inflation(in%)Current account of the balanceof payments(as a%of GDP)Budget deficit/surplus(as a%of GDP)-1.180-668,27011,0274,5958,851114.024.7%298(i)1,874,804(ii)19,5669,64516,397269.71,626(iii)

127、5.534-50-417,2981,586957241,28919.251214,63479643163410.118.6%(v)36136,5116473995225.934231,49087955974813.31964,7355383674321.428141,8666874724962.6-5.5-0.34.9-4.51.216.4-7.00.226.57.3-3.5-7.5-8.5-6.00.215.5-4.7-7.7-8.1-5.2-1.018.0-4.9-4.6-6.7-13.0-0.318.0-15.4-9.9-1.01.69.0-4.3-8.1NLBGroupNLB,Ljub

128、ljanaSloveniaNorthMacedoniaBosnia and HerzegovinaKosovoSerbiaNLBLease&Go,LjubljanaNLBSkladi,LjubljanaNLBBanka,SkopjeNLBBanka,Banja LukaNLBBanka,PrishtinaNLBBanka,SarajevoNLBBanka,PodgoricaNLBBanka,BeogradKomercijalnaBanka,BeogradKombankINvest,BeogradMontenegro5.3%(vi)1946,173236(viii)155(viii)153(vi

129、ii)0.7(viii)KomercijalnaBanka,Banja Luka5.5%(v,ix)11.7%1.9%(vii)203849,4883,907(viii)1,630(viii)3,194(viii)24.9(viii)10.2%(vii,ix)1(viii)1915,491155(viii)104(viii)120(viii)0.5(viii)KomercijalnaBanka,Podgorica3.4%(vii,ix)17.2%16.5%34.9%(iv)Strategic Members Overview Presentation of the NLB Group(i)(i

130、i)1,874,804Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report12CONTENTSBusiness ceased to exist for Vedran Grebo and Samra omor,owners of the touristic agency CoolTour Sarajevo,as it absolutely stopp

131、ed with borders closing during the COVID-19 pandemic.The focus was shifted to local and regional market through offering of the hiking tours to Lukomir Village.The benefit of the tour is in establishing personalised experience through offering knowledgeable local guides and whose roots originate fro

132、m the village,with family members still living in the area.The new situation considerably decreased their assets and required investments in promotion.The#HelpFrame project significantly helped Vedran and Samra reach a wider audience and be recognised as an authentic provider of touristic experience

133、s locally and regionally.Grandfather of Samra omor CoolTour,Bosnia and HerzegovinaShift to local and regional marketAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report13CONTENTSKey Highlights 2.Komerc

134、ijalna Banka group is excluded from calculation.Very solid year with core revenues from lending and fee and commission business at pre-COVID-19 levels.Defending a stable level of profit before impairments and provisions(EUR 210.5 million,-1%YoY),supported by non-recurring income(the sale of NLB Vita

135、 and debt securities).Profit after tax(EUR 269.7 million)strongly affected by the acquisition of Komercijalna Banka,Beograd with positive impact of negative goodwill in the amount of EUR 137.9 million and additional impairments and provisions in the amount of EUR 71.4 million,mostly related to COVID

136、-19 outbreak.Continuing focus on the cost discipline(4%lower costs YoY;CIR 58.3%).Costs remain well contained through all cost categories and geographies.The divestment of insurance company NLB Vita(on 29 May the Bank sold its 50%stake in the share capital of the company in a joint sales process tog

137、ether with the KBC)fulfilled the last commitment to the EC,by which state aid process was officially completed.Acquisition of Komercijalna Banka,Beograd added EUR 4.3 billion to the Groups balance sheet,becoming top 3 market player on the Serbian market.Although business in 2020 has been marked by C

138、OVID-19,the Groups results demonstrated the robustness and resilience of its sustainable business model.Strong deposit base demonstrating client confidence in the Group.Wider array of digital solutions(increased number of digital users and number of digital payments)and improved customer experience.

139、Healthy generation of housing loans.New business opportunities pursued to generate additional revenues.Large share of retail in the credit portfolio structure positively contributing to the diversification and credit portfolio quality.The COVID-19 pandemic impacted the realised cost of risk(62 bps2)

140、,however,remaining within the set outlook.Stable NPE(EBA def.)of 2.3%with confident coverage ratio of 57.3%.Proactive workout approaches and other precautionary measures to minimise potential future losses;NPL reduction recorded.Capital position comfortably above regulatory requirements(TCR of 16.6%

141、,0.3 p.p.higher YoY).Due to acquisition of Komercijalna Banka,Beograd TCR was reduced by 5.7 p.p.Adequate capitalisation throughout 2020 due to inclusion of subordinated Tier 2 bonds into capital,undistributed profit from 2019,minority capital and other capital relief measures.Liquidity position of

142、the Group remains very strong,with high level of unencumbered liquidity reserves.Instant adaptation of processes to ensure higher availability and use of digital channels a wider range of 24/7 accessible digital solutions offered to clients.Supporting clients through the downturn by offering morator

143、iums(EUR 2.4 billion),and new financing(EUR 148.9 million),of which majority is subject to public guarantee schemes(EUR 134.6 million).Most of approved moratoria(81%)already expired.Due to positive experience and effects during the COVID-19,the Bank will continue with work-from-home initiative in th

144、e future.Integration of Komercijalna Banka group enabling synergy extraction.Special focus on stable revenues and cost sustainability.Dividend payout in 2021 will be conditional on regulatory requirements and in line with NLBs capacity.Striving to become regional champion,whereby clients remain the

145、first priority.Continue to serve the community aiming to improve the quality of life in the region.Meeting stakeholder needs and expectations and driving business value through sustainability.Financial PerformanceRobust performance given challenging environment Business OverviewStrengthened market p

146、osition in SerbiaAsset QualityWell diversified asset portfolioCapital&LiquidityWell-capitalised,well above regulatory requirementsResponse to COVID-19 PandemicQuick adaptation of business operations,proactive response to clientsStrategy&OutlookCommitted to pursue its strategic objectives Annual Repo

147、rt 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report14CONTENTS202020192018NLB GroupNLBNLB GroupNLBNLB GroupNLBIncome statement data(in EUR million)Net interest income300139318158313158Net non-interest income(i)20

148、5173199197184167Net non-interest income(BoS)(i)360180219204206175Total costs(i)-294-180-305-191-292-180Operating costs(BoS)(i)-311-188-321-198-309-189Result before impairments and provisions(ii)211131212164205144Impairments and provisions-71-17-1142333Gains less losses from capital investments in su

149、bsidiaries,associates,and joint ventures1-4-5-Result before tax278114215178233177Result of non-controlling interests3-8-8-Result after tax270114194176204165Financial position statement data(in EUR million)Total assets19,56611,02714,1749,80212,7408,811Gross loans to customers10,0334,7537,9384,7187,62

150、74,704Impairments and deviations from FV-388-158-334-129-479-226Net loans to customers9,6454,5957,6054,5897,1484,478Financial assets5,1203,0173,8303,1693,3992,869Deposits from customers16,3978,85111,6127,76110,4647,033Equity1,9531,4511,6861,3331,6161,295Non-controlling interests170-45-41-Total off-b

151、alance sheet items4,6713,6844,2223,6443,9963,473Key financial indicatorsa)Capital adequacyTotal capital ratio16.6%27.1%16.3%22.6%16.7%24.1%Tier 1 ratio14.2%22.3%15.8%21.8%16.7%24.1%CET 1 ratio14.1%22.3%15.8%21.8%16.7%24.1%Total RWA(in EUR million)12,4216,0299,1865,2258,6785,024RWA/Total assets63.5%5

152、4.7%64.8%53.3%68.1%57.0%b)Asset qualityNPL coverage ratio 1(coverage of gross non-performing loans with impairments for all loans)81.8%76.0%89.2%76.2%77.1%65.8%NPL coverage ratio 2(coverage of gross non-performing loans with impairments for non-performing loans)57.3%57.9%65.0%56.7%64.6%57.1%NPL cove

153、rage ratio(EBA definition)(iii)56.9%55.3%64.5%55.5%63.7%55.0%NPL coverage ratio(EBA definition)(BoS)(iv)56.9%55.3%64.5%55.5%63.7%55.0%NPL volume(in EUR million)475208375169622343NPL ratio(internal def.;NPL/Total loans)3.5%3.0%3.8%2.8%6.9%6.3%Net NPL ratio(internal def.;net NPL/Total net loans)1.5%1.

154、3%1.4%1.3%2.6%2.8%NPL ratio(EBA definition)(iii)4.5%4.0%4.6%3.3%7.9%6.8%NPL ratio(EBA definition)(BoS)(iv)3.4%2.8%3.8%2.7%6.8%6.0%Key performance indicators202020192018NLB GroupNLBNLB GroupNLBNLB GroupNLBNPE ratio(EBA definition)2.3%1.9%2,7%2.0%4.7%3.9%Received collaterals/NPL60.7%65.8%66.6%72.0%67.

155、4%71.1%NPL Collateral received/NPL(EBA definition)42.4%43.5%35.4%33.6%41.2%39.9%Credit impairments and provisions/RWA0.5%0.1%-0.1%-0.3%-0.3%-0.6%c)ProfitabilityNet interest margin(BoS)(v)2.0%1.3%2.4%1.7%2.5%1.8%Financial intermediation margin(BoS)(i)4.4%3.1%4.0%3.9%4.1%3.8%Operational business margi

156、n(vi)3.2%2.5%3.8%2.9%3.9%3.0%ROE b.t.15.4%8.2%12.7%13.4%13.2%12.4%ROA b.t.1.8%1.1%1.6%1.9%1.9%2.0%ROE a.t.15.4%8.2%11.7%13.3%11.8%11.6%ROA a.t.1.8%1.1%1.5%1.9%1.6%1.9%d)Business costsOperating costs/Average total assets(BoS)(i)2.1%1.8%2.4%2.2%2.5%2.1%CIR(i)58.3%57.9%59.0%53.9%58.8%55.5%Total costs/R

157、WA(i)2.4%3.0%3.3%3.7%3.4%3.6%Total costs/Total assets(i)1.5%1.6%2.2%2.0%2.3%2.0%e)LiquidityLiquidity assets/Short-term financial liabilities to non-banking sector56.1%65.8%54.7%63.8%54.1%48.2%Liquidity assets/Average total assets51.8%54.9%44.7%52.1%38.0%42.5%f)Other Market share in terms of total as

158、sets-24.7%-23.8%-22.7%LTD58.8%51.9%65.5%59.1%68.3%63.7%Total revenues/RWA(i)4.1%5.2%5.6%6.8%5.7%6.5%Key indicators per shareShareholders(vii)-2,455-2,100-1,716Shares-20,000,000-20,000,000-20,000,000The corresponding value of one share(in EUR)-10-10-10Book value(in EUR)97.672.584.366.780.864.8Interna

159、tional credit ratingsS&PBBB-BBB-BB+FitchBB+BB+BB+Moodys(viii)Baa1Baa2Baa2EmployeesNumber of employees8,7922,5915,8782,6595,8872,690Further details on the definition of certain indicators in this table are available in chapter Alternative Performance Indicators.(i)Data for 2019 and 2018 are adjusted

160、to the changed schemes as prescribed by the BoS(relocation of some items from net other income to other general and administrative expenses).More details are available in note 2.3.of the Audited Financial Statements of NLB Group and NLB d.d.of this report.(ii)Result before impairments and provisions

161、 of NLB Group for the year 2020 does not include Negative Goodwill.(iii)Loans and advances without loans and advances classified as held for sale,cash balances at CBs and other demand deposits.(iv)Loans and advances including cash balances at CBs and other demand deposits.(v)Calculated on the basis

162、of average total assets.(vi)Calculated as Net income from operational business(NII-Tier 2 bonds expenses+Net fee and commission income+Recurring net income from financial operations)/Average total assets.(vii)As per share register of KDD.The shares are listed on Ljubljana Stock Exchange.The Bank of

163、New York Mellon(the GDR Depositary)represented in the share register of KDD as one holder is not the beneficial owner of shares,it holds shares in its capacity as the depositary for the GDR holders.The GDRs representing shares are issued against the deposit of shares and are listed on London Stock E

164、xchange.Therefore,the number in the share register of KDD does not represent all final beneficial owners of the Bank shares.The rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary and individual GDR holders do not have any direct right to either atte

165、nd the general meeting of banks shareholders or to exercise any voting rights under the deposited shares.(viii)Unsolicited rating.Table 1a:Key financial indicators for NLB Group and NLBAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overv

166、iew Risk Management Financial Report15CONTENTS20202019NLB GroupNLB Group(w/o Komercijalna Banka group)NLB GroupNet loans to customers(in EUR million)9,6457,7787,605Financial assets(in EUR million)5,1203,7553,830Deposits from customers(in EUR million)16,39712,95411,612ROE a.t.15.4%8.1%11.7%NPL covera

167、ge ratio 1(coverage of gross non-performing loans with impairments for all loans)81.8%86.9%89.2%NPL coverage ratio 2(coverage of gross non-performing loans with impairments for non-performing loans)57.3%62.6%65.0%NPL volume(in EUR million)475435375NPL ratio(internal def.;NPL/Total loans)3.5%3.9%3.8%

168、NPE ratio(EBA definition)2.3%2.6%2.7%Q1 2020Q2 2020Q3 2020Q4 2020NLB GroupNLB NLB GroupNLB NLB GroupNLB NLB GroupNLB Liquidity Coverage Ratio(LCR)333.4%381.5%321.3%370.1%311.4%357.8%302.9%351.2%High Quality Liquid Assets(HQLA)3,538,3733,274,7513,853,2033,553,9044,187,4413,857,5024,493,3414,119,661Ne

169、t Liquidity Outflows 1,066,212864,1631,208,445967,2261,353,3191,083,8821,495,6111,177,269Performance in 2020Outlook 2021Outlook 2023Regular incomeEUR 504.5 million EUR 600 million EUR 700 millionCostsEUR 293.9 million EUR 430 million(i)10%(RORAC(iii)12%)Loan growth3%(ii)Mid single digit numberHigh s

170、ingle digit CAGR(2021-2023)Cost of risk62 bps(ii)70-90 bps40-60 bpsDividend payout/EUR 92.2 million EUR 300 million(iv)(i)Table 2 illustrates the values and data for each of the four calendar quarters.They are calculated as a simple average of observations on the last calendar day of each month for

171、a period of 12 months before the end of each quarter.Table 1b:Selected indicators presenting performance with and without inclusion of Komercijalna Banka group(i)Initial increase in cost base in 2021;projected costs include restructuring charges.(ii)Komercijalna Banka group is excluded from calculat

172、ion to ensure comparability with previous years.(iii)RORAC calculated as Result after tax excl.Tier 2 bonds expenses divided by average RWA at 15.25%capital requirement.(iv)Cumulative in the period 2021-2023.OutlookTable 2:Information on the LCR(i)(in EUR thousands)Table 3:Market performance and out

173、look for the period 2021-2023Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report16CONTENTSShareholder structure of NLB The Bank shares are listed on the Prime Market sub-segment of the Ljubljana Stock

174、 Exchange(ISIN SI0021117344,Ljubljana Stock Exchange trading symbol:NLBR)and the GDRs,representing shares,are listed on the Main Market of the London Stock Exchange(ISIN:US66980N2036 and US66980N1046,London Stock Exchange GDR trading symbol:NLB and 55VX).Five GDRs represent one share of NLB.Market p

175、erformance of NLBs securities(shares and GDRs)The COVID-19 pandemic weighed heavily on banking sector stocks in 2020.After reaching an annual peak in the middle of February 2020,European banking sector stocks dropped significantly as the COVID-19 pandemic spread.A moderate pick-up in value followed

176、during the summer,but with the arrival of autumn,banking sector stocks returned to levels observed in the middle of March 2020.Despite rising at the end of the year,banking sector stocks still recorded an annual decrease in value of around 25%.The price movement of the Banks stocks did not differ su

177、bstantially in comparison to European banking sector stocks.The Bank stocks experienced approximately a 25%drop in value in 2020.The difference was that the Banks stocks decreased at a higher pace over the summer and reached levels similar to March 2020 already by the end of August 2020.Nevertheless

178、,a subsequent uptick in value caused that by the beginning of September 2020.The Banks stocks price movement was relatively synchronized with the price movement of European banking sector stocks.Similar to those stocks,the price of the Banks stocks rose in the last couple of months in 2020.However,i

179、t should be noted that the substantial drop in price in the FebruaryMarch period was not offset.(i)Information is sourced from NLBs shareholders book accessible at the web services of CSD(Central Security Depository,Slovenian:KDD-Centralna klirinko depotna druba)and available to CSD members.Informat

180、ion on major holdings is based on the self-declarations by individual holders pursuant to the applicable provisions of Slovenian legislation,which requires that the holders of shares in a listed company notify the company whenever their direct and/or indirect holdings pass the set thresholds of 5%,1

181、0%,15%,20%,25%,1/3,50%,or 75%.The table lists all self-declared major holders whose notifications have been received.In reliance of this obligation vested with the holders of major holdings,the Bank postulates that no other entities nor any natural person holds directly and/or indirectly 10 or more

182、percent of the Banks shares.(ii)The Bank of New York Mellon holds shares in its capacity as the depositary(the GDR Depositary)for the GDR holders,and is not the beneficial owner of such shares.The GDR holders have the right to convert their GDRs into shares.The rights under the deposited shares can

183、be exercised by the GDR holders only through the GDR Depositary and individual GDR holders do not have any direct right to either attend the shareholders meeting or to exercise any voting rights under the deposited shares.(iii)The information on GDR ownership is based on self-declarations by individ

184、ual GDR holders as required pursuant to the applicable provisions of Slovenian law.Indices The Banks shares are included in several indices:the SBITOP index and ADRIA prime index of the Ljubljana Stock Exchange,the FTSE Frontier Index,MSCI Frontier and MSCI Slovenia,S&P Eastern Europe BMI,S&P Emergi

185、ng Frontier Super Composite BMI,S&P Extended Frontier 150,S&P Frontier BMI,S&P Frontier Ex-GCC BMI,S&P Slovenia BMI,STOXX All Europe Total Market,STOXX Balkan Total Market,STOXX Balkan Total Market ex-Greece&Turkey,STOXX EU Enlarged Total Market,STOXX Eastern Europe 300,STOXX Eastern Europe 300 Bank

186、s,STOXX Eastern Europe Large 100,STOXX Eastern Europe Total Market,STOXX Eastern Europe Total Market Small,STOXX Global Total Market and STOXX Slovenia Total Market.Investor Relations functionSince the listing of the Banks shares and GDRs in November 2018,the importance of the Investor Relations(IR)

187、function has increased substantially,requiring engagement with investors and the broader community.The Bank participated in varied forms of engagement,such as investor meetings,calls,and conferences,reflecting the diverse nature of the Banks ownership structure.Open and regular communication with in

188、vestors and analysts allowed for dialogue promotion on strategic developments,as well as on the recent financial performance of the Group.The Bank promoted greater awareness and understanding of operating businesses,developments,and events which have an influence on the performance of the Banks shar

189、e price.The IR section of the Banks website is an important communication channel that provides comprehensive information on the Group and share price performance of the Bank.In addition,it enables the effective distribution of information to the market in a clear and consistent manner.IR presentati

190、ons,financial reports,and important information are uploaded to the Banks website in line with IRs Financial Calendar.Since the listing,four analysts released research reports about the Group.The Banks share is covered by analysts from JP Morgan,Deutsche Bank,Wood&Company,Citi,InterCapital,and Raiff

191、eisen Bank International.Figure 1:NLB shares price movement on the Ljubljana Stock Exchange(in EUR)Figure 2:NLB GDRs price movement on the London Stock Exchange(in EUR)ShareholderNumber of sharesPercentage of sharesBank of New York Mellon on behalf of the GDR holders(ii)11,769,97258.85of which Brand

192、es Investment Partners,L.P.(iii)/5 and 5 and 5 and EUR 600 million EUR 700 million EUR 430 million(i)10%(RORAC(ii)12%)Mid-single digit growth rateHigh-single digit CAGR (2021-2023)7090 bps4060 bpsEUR 92.2 million EUR 300 million(iii)Regular incomeCostsROE a.t.Loan growthCost of riskDividend payout 2

193、021Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report29CONTENTSOutlook 2021 The global economy is expected to rebound in 2021.However,economies are likely to continue to be faced with the alternating

194、 relaxations and restrictions until the broad vaccine rollout enables a sustainable easing of containment measures.According to the Banks estimation,the Eurozone economy is seen expanding 4.0%,while GDP in Slovenia could grow by around 4.5%and in the SEE where the Group operates by around 4.8%in 202

195、1.The rebound should be backed by fiscal policies at national and EU levels,accommodative monetary policy,and the gradual reopening of economies.The main driver of the growth should be the revival in consumer and investment spending.The return to growth of the economies of the Groups region should b

196、e underpinned by revival in consumer and capital spending as well as the gradual easing of COVID-19 restrictions across the globe that boosts external demand and releases travel restrictions.Nevertheless,lingering uncertainty regarding the course of the pandemic and the vaccine rollout cloud the out

197、look,in general.The pace of the recovery in the EU trading partners is yet another important factor expected to weigh on the recovery of the Groups region.During the COVID-19 pandemic,the Group has taken the necessary measures to protect its customers and employees by ensuring the relevant safety co

198、nditions and making sure services offered by the Group are provided without disruptions.As the COVID-19 situation continues,it is challenging to predict the full extent and duration of its business and economic implications.To adjust to such circumstances,the Group is aiming to further support its c

199、lients,also by constant development of its digital channels and adjusted scope of services offered to our clients.Following stagnation in 2020,and in line with the economic rebound,moderate loan growth in Retail Banking in Slovenia is expected in 2021,with an emphasis on mortgage lending and a slow

200、recovery in consumer lending.Corporate and Investment Banking in Slovenia is also expected to grow with the predominance of cross-border lending.Growth in Strategic Foreign Markets will remain robust and will greatly improve with the acquisition of Komercijalna Banka,Beograd.The customer deposit bas

201、e will remain high.Revenues are expected to improve,with fee business growth returning to pre-COVID-19 levels.However,net interest income will continue to be under pressure due to shrinking margins in all markets and high balance of low-yield liquidity sources.The Group continues to strive for incre

202、asing margins over time by stimulating loan growth(especially retail)and pursuing new opportunities.In addition,the Bank as at 1 April,2021 started charging retail deposits with balances exceeding EUR 250 thousand;consequently,it is expected that certain portion of retail deposits will be transferre

203、d into asset management and insurance products.The commitment to cost containment remains strong and the Group will continue to pursue a strong cost agenda addressing both labour and non-labour cost elements.Nevertheless,costs are expected to moderately increase in 2021,given pressure on labour cost

204、 inflation throughout the region and continued investment activities into information technology upgrades,amid the growing relevance of digital banking and,last but not least,integration cost associated with the acquisition of Komercijalna Banka,Beograd.After a few years of a negative cost of risk,t

205、he NPL stopped its multi-year declining trend in the Group.Similar to last year,the cost of risk in 2021 should remain within the set outlook at least in the regular course of business,since one-off effects are difficult to predict.The main circumstances influencing cost of risk shall be the length

206、and severity of disruptions of COVID-19 on corporate operations and consumer spending,and the impact of off-setting measures by governments.Further uncertainties and the related economic slowdown might have an additional negative impact on the existing loan portfolio quality,namely as a potential in

207、crease of Stage 2 and Stage 3 exposures.However,due to the quite stable quality of the portfolio in the year 2020,and other precautionary measures to minimise potential future losses,including paying special attention to continuous provision of services to clients and their monitoring,this impact sh

208、ould not be excessive.From a liquidity perspective,the Group did not register any material liquidity outflows,on the contrary,deposits at the Group level are still increasing(in the Bank and in subsidiary banks).The liquidity position of the Group is expected to remain solid even if a highly unfavou

209、rable liquidity scenario materialises,as the Group holds sufficient liquidity reserves in the form of placements at the ECB,prime debt securities,and money market placements.Significant deposit inflows are putting an additional strain on profitability.The capital position represents a strong base to

210、 cover all regulatory capital 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.Also,in 2021 the Group will continue with the activities for further strengthening the capita

211、l position,predominantly by measures to reduce RWAs.Dividend policyThe Banks general intention with regards to the dividend policy is to distribute dividends in excess of the Groups target TCR,which currently amounts to 15.75%.The Banks dividend policy envisages a yearly distribution of dividends in

212、 the approximate amount of 70%of the Groups result,while fulfilling all regulatory requirements,including the Pillar 2 Guidance.Due to the ECB recommendations on dividend distributions during the COVID-19 pandemic for European banks,and also the BoS restriction on dividend distributions applicable f

213、or Slovenian banks with the aim to lower the impact and consequences of the COVID-19 pandemic,the Bank did not pay out any dividends in 2020.Pursuant to the ECB recommendation of 15 December 2020 the dividend distribution in 2021 should remain prudent and below 15%of the cumulated profit for the yea

214、r 2019 and 2020 and not higher than a 20 b.p.CET1 ratio for the year 2020 on consolidated basis,whichever is lower,and for which the distribution is subject to prior ECB approval.The prudent level of distribution for NLB on consolidated level amounts to approximately EUR 25 million,and JST does not

215、object to such a distribution plan.According to the BoS decision of April 2020 on macroprudential restriction on profit distribution,banks in Slovenia are restricted to dividend payouts until April 2021.Based on the new BoS decision on macroprudential restriction on profit distribution of February 2

216、021,the Bank is allowed to distribute dividends only in the case of a positive cumulative profit achieved in Q1 2021,whereas the amount of distribution may not exceed 15%of the banks cumulative profit for years 2019 and 2020 on an individual basis or 0.2%of the Bank CET1 ratio on an individual basis

217、 as at the end of 2020,whereas distribution is also subject to prior BoS notification.In consequence this would mean the split of the envisaged approved dividend portion as per ECB recommendation into two tranches,the second one being paid upon expiry of the BoS decision and taking into account appl

218、icable regulation.In addition to the currently allowed distribution plan,the Bank envisages,subject to regulatory requirements,additional incremental dividends in 2021 to reach a cumulative payout ratio of 70%of the 2020 Group result(without considering the impact of negative goodwill)totaling EUR 9

219、2.2 million.The Bank in the period 2021-2023 envisages the cumulative amount of dividends payout in excess of EUR 300 million.The distributable profit of the Bank as at 31 December 2020 amounts to EUR 341,992,219.43,which consists of net profit for the year 2020 in the amount of EUR 113,952,339.70 a

220、nd retained earnings from previous years in the amount of EUR 228,039,879.73.Once the ECB and BoS restrictions cease to apply,the Bank would resume with regular dividend payouts in line with its capacity and regulatory requirements.Annual Report 2020MB Statement SB Statement Key highlights Acquisiti

221、on of KB Risk factors&Outlook Performance Overview Risk Management Financial Report30CONTENTSSustainabilityImplementation of sustainability into the Group business modelWith the adoption of the Groups Sustainability programme at the end of 2020,the Bank has moved from the raising awareness phase to

222、the phase of actively implementing sustainability elements into the business model.The goal of this organisation-wide initiative is to ensure sustainable financial performance of the Bank by considering social and environmental risks and opportunities in its operations,and to actively contribute to

223、a more balanced and inclusive economic and social system.The Bank in recent years signed Framework Agreements with EBRD and in 2020 Contract of Guarantees with MIGA.Based on this,the Bank and/or Group subsidiaries are obliged to develop ESMS and comply with certain E&S requirements.In 2020,considera

224、ble progress was made in the area of establishing a basic mechanism for E&S screening.Also,the ESMS Officers were appointed in the Group banking subsidiaries.Further actions to strengthen ESMS are in progress.On 4 September,the Bank became a signatory to the UN Principles for Responsible Banking(and

225、 UNEP FI member),which is a unique framework for ensuring that signatory banks strategy and practice align with the vision society has set out for its future in the Sustainable Development Goals and the Paris Climate Agreement.More than 200 banks,which represent around a third of the global banking

226、industry have joined,leading the way towards a future in which the banking community makes a positive contribution to people and the planet that society expects.In 2020,the Group embarked on a path of more intensive integration of sustainability into banking operations.If until this year it was poss

227、ible to detect the activities of banks in the Slovenian financial sector in the direction of more ecologically and socially acceptable operations,the COVID-19 pandemic strengthened banking agendas related to environmental and social risk management,and thus more comprehensive implementation of the E

228、SG factors.The Groups social role is stipulated in its Social and Environmental Policy,3 which has paved the way for more than a decades work on sustainability.However,the Banks ambition is to increasingly focus on sustainability integration and translate it into real value-added.The transition to s

229、ustainable banking requires the adaptation of most processes in the Group,as well as changes in the banking culture.Throughout the year,the Group systematically followed the emerging EU regulations in the field of sustainability,and at the same time regularly monitored recommendations and guidelines

230、 from leading financial institutions and authorities,such as the ECB and the EBA.Plans,how to integrate the new regulation into the Groups operations,are prepared to meet the expectations of key stakeholders.Corporate social responsibility The Groups CSR has been continuously upgraded with projects

231、that follow the UN Sustainable Development Goals(UN SDG).The Groups first such regional project was launched in spring 2020.#HelpFrame project intensively addresses the Banks environmental and social role in all markets of the Group,as the goal is to establish a regional sustainability platform.The

232、project provides advertising space to selected local entrepreneurs,farmers,as well as micro and small companies,thus helping their business to recover from the COVID-19 pandemic.Most of the Banks CSR financial budget was used to mitigate the consequences of the COVID-19 pandemic.Since March 2020,med

233、ical teams have been working around the clock to save the lives of patients infected with the virus,which has spread rapidly to all regions where the Group operates and all of the Group banks participated with financing or procurement of medical supplies.More information on the corporate social resp

234、onsibility and the implementation of sustainability into the Group business model(together with information on the GRI standards)is available in the NLB Group Sustainability Report 2020.In Sept.NLB Group became a signatory to the UN PRB.3.Published on www.nlb.si.Contribution to the SocietySustainabl

235、e FinanceSustainable OperationsOne of the major CSR projects in the Bank was to provide help to young families on their road to their first home with professional advice and material incentives given to hundreds of borrowers.One hundred young families were randomly chosen and helped to take out a ho

236、using loan,and repaid them three monthly instalments in a total amount of a maximum of EUR 1,000 for each family.At the end of the year,the Bank also distributed EUR 140,000 to young borrowers below the age of 40.Despite a drastic decline in public life,the Group maintained most of the agreed sponso

237、rships and donor partnerships in the field of culture and sports.By supporting virtual festivals and events,the Group helped affected artists who were left without income almost overnight.In the field of sports,the Bank remained among the main supporters of all sports federations and clubs,with whic

238、h we have been cooperating for many years.Key impact areas:Environmental Climate Mitigation&Adaptation Biodiversity Resource Efficiency&Circular EconomySocial Gender Equality Human Rights Financial Inclusion Decent EmploymentInternal Change Strategy Alignment Impact and Targets Clients and Customers

239、 Stakeholders Governance and Culture Transparency and AccountabilityNLB Group records sustainable financial performance and actively contributes to a more balanced and inclusive economic and social system.Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlo

240、ok Performance Overview Risk Management Financial Report31CONTENTSThe company Agro Krusha comes from the agricultural village Krusha e Madhe in the municipality of Rahovec,Kosovo.It is led by Emire Duraku,an entrepreneur who together with her family cultivated about 15 hectares planted with vegetabl

241、es for the production of ajvar and pickles.When COVID-19 hit the country,the company suffered a major fallback due to decrease in demand even though the company had reserves from good performance in the past.Knowing the importance of advertising Emire decided to join#HelpFrame project presented to h

242、er by her banking advisor and has received many offers for cooperation since.Emire Duraku B.K.M Agro Krusha,KosovoHelping hand in crisis means a lotAnnual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report3

243、2CONTENTS2016110.07.4%ROE a.t.2017225.114.4%11.8%2018203.611.7%2019193.68.1%(i)2020141.3128.4(i)Overview of Financial PerformanceThe Group achieved a profit in the amount of EUR 269.7 million,39%more than the year before(2019:EUR 193.6 million).The strong result was affected by the acquisition of Ko

244、mercijalna Banka,Beograd,4 with positive impact of negative goodwill in the amount of EUR 137.9 million.Without this acquisition,the profit of the Group would amount to EUR 141.3 million,a 27%lower YoY,affected mostly by additional impairments and provisions related to the COVID-19 outbreak.The Grou

245、ps result is based on the following key drivers:The acquisition of Komercijalna Banka,Beograd with a positive impact of negative goodwill in the amount of EUR 137.9 million and a negative impact of the expected credit losses on the performing portfolio for Komercijalna Banka group5 in the amount of

246、EUR 13.4 million;Lower net interest income YoY(EUR 18.9 million or 6%),mostly related to lower yields due to reinvestment of debt securities,higher volume of cash and balances with the CB,the raised subordinated Tier 2 bonds,and continued pressure on interest margins in the Bank and banking members

247、in SEE continues;Net fee and commission income on the same level YoY,influenced by the COVID-19 outbreak and its negative impact on card operations and payment transactions,but was compensated by increased package fees,higher assets management and bancassurance fees,and achieved discounts on card op

248、erations;Sale of NLB Vita with a positive effect of EUR 11.0 million and sale of debt securities in the Bank with a realised non-recurring profit of EUR 17.1 million;Lower costs YoY due to lower employee costs and positive effects of cost management projects,which remain well contained through all c

249、ost categories and geographies;Additional net impairments and provisions were established in the amount of EUR 71.4 million,out of which EUR 18.4 million due to changed macroeconomic parameters,that incorporate estimated impacts of the COVID-19 outbreak and EUR 13.4 million for expected credit losse

250、s on the performing portfolio for Komercijalna Banka group;Continued loan growth,especially to individuals,despite the COVID-19 outbreak and the negative impact of macroprudential measures on the consumer loans introduced in November 2019,causing an adverse effect on the new production of loans to i

251、ndividuals.An increase was recorded also in the corporate loan book YoY exclusively as a result of COVID-19 impact on ensuring liquidity to clients;A strong TCR of 16.6%while ROE a.t.dropped to 8.1%6(2019:11.7%);As a consequence of the COVID-19 outbreak the NPL credit portfolio stock stopped its mul

252、ti-year declining trend.Besides,changed treatment of excluded interest and acquisition of Komercijalna Banka,Beograd contributed additionally to its increase,while different workout measures positively influenced the stock of NPL.Nevertheless,the gross NPL ratio(EBA def.)decreased from 4.6%to 4.5%Yo

253、Y,while the NPE ratio(EBA def.)decreased by 0.4 p.p.YoY to 2.3%;Liquid assets portfolio amounted to EUR 9,751 million(50%of total assets).without the effect of acquisition of Komercijalna Banka,B profit including EUR 137.9 million negative goodwill from acquisition of Komercijalna Banka,Beograd,whil

254、e net profit would be141.3269.7million EURmillion EURFigure 6:Profit after tax of NLB Group(in EUR million)/ROE after tax(in%)(i)Acquisition of Komercijalna Banka,Beograds contribution to the result after tax;the acquisition effects are excluded from ROE calculation.4.More information is available i

255、n the chapter Acquisition of Komercijalna banka a.d.Beograd.5.Komercijalna Banka,Beograd;Komercijalna Banka,Banja Luka;Komercijalna Banka,Podgorica;Kombank INvest,Beograd.6.Komercijalna Banka group is excluded to ensure comparability with previous years.Annual Report 2020MB Statement SB Statement Ke

256、y highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report33CONTENTSStrong result achieved in all Core segments of the GroupThe Core segments achieved a result before tax of EUR 282.5 million.Strategic Foreign Markets contributed the largest share to re

257、sult before tax in the amount of EUR 178.8 million due to acquisition of Komercijalna Banka,Beograd and its positive effect of negative goodwill in the amount of EUR 137.9 million.Corporate and Investment Banking in Slovenia recorded a profit before tax in the amount of EUR 42.4 million,Retail Banki

258、ng in Slovenia EUR 42.0 million,and Financial Markets in Slovenia EUR 30.8 million.The Other segment recorded a loss before tax in the amount of EUR 11.5 million,mostly due to establishment of provisions for legal risk(EUR 3.8 million)and HR provisions(EUR 3.5 million).Strategic Foreign Markets achi

259、eved the highest net interest income in the amount of EUR 159.3 million,followed by Retail Banking in Slovenia and Corporate and Investment Banking in Slovenia,with EUR 81.4 million and EUR 34.0 million,respectively.Financial Markets in Slovenia contributed EUR 23.5 million to the net interest incom

260、e of the Group.The net non-interest income was the highest in the segment Retail Banking in Slovenia,EUR 89.0 million,followed by Strategic Foreign Markets and Corporate and Investment Banking in Slovenia,EUR 49.8 million and EUR 41.2 million,respectively.Non-core Members:Negative result due to cont

261、inuing divestmentsTotal assets of Non-core Members decreased by EUR 38.3 million and the segment realised a loss before tax of EUR 4.6 million,which is in line with the restructuring plan.Figure 7:Segment results of NLB Group(in EUR million)1.24.2-4.60.27.7-11.534.041.242.423.516.230.881.489.042.0Re

262、tail Bankingin SloveniaCorporate and InvestmentBanking in SloveniaStrategicForeign MarketsFinancialMarkets in SloveniaNon-Core MembersOther159.349.8178.8NGW137.9Key/SME/CrossBorder Corporates&InvestmentBankingRestructuringand Workout29.736.324.14.24.619.0Net interest incomeNet non-interest incomeRes

263、ult before taxIncome statementTable 10:Income statement of NLB Group and NLB(i)in EUR millionNLB Group20202019Change YoYQ4 2020Q3 2020Q2 2020Q1 2020Q4 2019Change QoQNet interest income299.6318.5-18.9-6%75.174.472.777.479.70.61%Net fee and commission income170.3170.3-0.10%45.143.739.042.443.51.53%Div

264、idend income0.10.2-0.1-47%0.00.00.10.00.00.0-50%Net income from financial transactions32.033.8-1.9-6%2.05.720.53.85.8-3.7-65%Net other income2.6-5.78.3-1.0-0.53.90.20.8-0.5-99%Net non-interest income204.9198.76.23%46.148.963.546.450.1-2.8-6%Total net operating income504.5517.2-12.7-2%121.2123.3136.2

265、123.8129.8-2.2-2%Employee costs-165.0-171.26.24%-42.0-40.2-39.8-42.9-48.0-1.9-5%Other general and administrative expenses-97.3-102.85.65%-27.6-23.5-22.5-23.7-32.3-4.2-18%Depreciation and amortisation-31.7-31.0-0.8-2%-8.0-7.8-7.9-8.1-7.7-0.2-2%Total costs-293.9-305.011.04%-77.7-71.4-70.2-74.6-88.0-6.

266、2-9%Result before impairments and provisions210.5212.2-1.7-1%43.551.966.049.241.9-8.4-16%Impairments and provisions for credit risk-62.313.3-75.6-13.2-16.3-4.6-28.2-2.33.019%o/w-KB-13.4-13.4-13.4-13.4-Other impairments and provisions-9.1-14.35.237%-7.9-0.7-0.3-0.2-8.4-7.2-Impairments and provisions-

267、71.4-1.0-70.4-21.1-17.0-4.9-28.3-10.7-4.1-24%Gains less losses from capital investments in subsidiaries,associates,and joint ventures0.94.2-3.3-79%0.00.50.20.20.0-0.5-Negative goodwill137.9137.9-137.9-137.9-Result before tax277.9215.462.529%160.235.461.321.031.2124.9-Income tax-5.2-13.68.462%3.8-3.4

268、-3.9-1.62.27.2-Result of non-controlling interests3.08.2-5.2-63%-1.11.02.01.22.0-2.1-Result after tax269.7193.676.139%165.131.055.418.331.3134.1-Result after tax w/o KB141.3193.6-52.3-27%36.631.055.418.331.35.618%(i)Data for 2019 are adjusted to the changed schemes as prescribed by the BoS(relocatio

269、n of some items from net other income to other general and administrative expenses).More details are available in note 2.3.of the Audited Financial Statements of NLB Group and NLB d.d.Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overvi

270、ew Risk Management Financial Report34CONTENTS(i)Data for 2019 are adjusted to the changed schemes as prescribed by the BoS(relocation of some items from net other income to other general and administrative expenses).More details are available in note 2.3.of the Audited Financial Statements of NLB Gr

271、oup and NLB d.d.Figure 8:Profit after tax of NLB Group(in EUR million)evolution YoY(i)Gains less losses from capital investments in subsidiaries,associates,and joint ventures.(ii)Effect partially also shown on Income tax and Non-controlling interests.2019193.6Netinterestincome-18.9-0.1Net fee&commis

272、sionincomeOther netnon-interestincome6.3Totalcosts11.0Impairmentsandprovisions-56.9Gains andlosses(i)-3.3Incometax6.6Result ofnon-controllinginterests3.02020w/o KB141.3Negativegoodwill137.9KBexpectedcredit losses(ii)-9.42020269.7-27%YoY w/o KBin EUR millionNLB20202019Change YoYQ4 2020Q3 2020Q2 2020Q

273、1 2020Q4 2019Change QoQNet interest income138.9158.1-19.2-12%34.533.633.637.239.11.03%Net fee and commission income104.5104.00.50%27.326.924.226.125.90.52%Dividend income6.371.2-65.0-91%5.50.70.00.00.04.8-Net income from financial transactions28.124.04.217%3.03.618.33.22.6-0.5-14%Net other income33.

274、9-2.636.6-1.50.830.01.61.40.8104%Net non-interest income172.8196.5-23.7-12%37.431.972.531.029.95.517%Total net operating income311.7354.7-43.0-12%72.065.5106.168.169.16.510%Employee costs-102.6-108.66.05%-25.4-25.1-24.9-27.1-31.2-0.3-1%Other general and administrative expenses-60.0-64.54.57%-17.0-14

275、.4-14.1-14.5-21.8-2.7-18%Depreciation and amortisation-17.8-18.00.21%-4.3-4.4-4.5-4.7-4.60.00%Total costs-180.5-191.110.76%-46.8-43.8-43.5-46.3-57.6-2.9-7%Result before impairments and provisions131.2163.5-32.3-20%25.221.662.621.811.53.516%Impairments and provisions for credit risk-9.017.1-26.1-8.5-

276、2.8-0.6-14.22.211.3-Other impairments and provisions-8.3-2.8-5.5-193%-7.90.1-0.50.0-6.2-8.0-Impairments and provisions-17.414.2-31.6-0.6-2.7-1.1-14.2-4.03.3-Result before tax113.9177.7-63.9-36%25.818.961.57.67.46.836%Income tax0.1-1.61.7-2.6-1.2-1.2-0.15.73.9-Result after tax114.0176.1-62.2-35%28.41

277、7.760.37.513.210.761%Result reflects solid revenues despite COVID-19 negative impact on business operations The Group generated EUR 269.7 million of profit after tax,EUR 76.1 million or 39%more YoY and was based on the following key drivers and YoY evolution:Lower net interest income,EUR 18.9 millio

278、n YoY(6%),mostly related to lower yields due to reinvestment of debt securities(realised non-recurring profit of EUR 17.1 million in the Bank),a higher volume of cash and balances with the CB,and the raised subordinated Tier 2 bonds.The pressure on interest margins in the Bank and banking members in

279、 SEE continues.The decline was partially compensated with loan volume growth and growth in net interest income in some members(NLB Banka,Prishtina,NLB Banka,Podgorica and NLB Banka,Beograd);Net fee and commission income on the same level YoY,influenced by the COVID-19 outbreak and its negative impac

280、t on card operations and payment transactions however,was compensated by increased package fees,higher assets management and bancassurance fees,and achieved discounts on card operations;Non-recurring net income from financial transactions was affected by the sale of debt securities in the Bank(EUR 1

281、7.1 million);in 2019 by partial repayment of large exposure measured at fair value through profit and loss in the amount of EUR 5.1 million and revaluation of non-core equity stake in the amount of EUR 6.3 million.Non-recurring net other income was affected by the sale of NLB Vita with a positive ef

282、fect of EUR 11.0 million in May 2020;Total costs were EUR 11.0 million lower(4%)YoY,mostly due to lower employee costs and positive effects from cash management and paperless projects,and cost of services(consulting).Costs remain well contained through all cost categories and geographies;Negative go

283、odwill in the amount of EUR 137.9 million due to acquisition of Komercijalna Banka,Beograd at the end of the year;Additional net impairments and provisions were established in the amount of EUR 71.4 million,out of which EUR 18.4 million due to changed macroeconomic parameters,that incorporate estima

284、ted impacts of COVID-19 outbreak and EUR 13.4 million for expected credit losses on the performing portfolio for Komercijalna Banka group.established impairments and provisions mostly due to COVID-19 outbreak.71.4million EURand in the Bank.One-off effects from thesale of NLB Vita debt securitiesAnnu

285、al Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report35CONTENTSDespite the COVID-19 outbreak,all banks in the Group reported a profit.Lower profit YoY was recorded in all the banks,mainly due to establishme

286、nt of credit impairments and provisions related to COVID-19 outbreak.The result of the Bank decreased by 35%YoY to EUR 114.0 million from EUR 176.1 million achieved in 2019.Banking subsidiaries refrained from paying out dividends due to COVID-19 restrictions,and additional impairments and provisions

287、 related to COVID-19 outbreak were formed which materially lowered the final result.Sale of NLB Vita and debt securities,as well as an efficiently managed cost base partially neutralised the COVID-19 effects.Net interest incomeNet interest income of the Group accounted for 59%of the Groups total net

288、 revenues(2019:62%),decreasing by 6%YoY to EUR 299.6 million.The decrease in interest income was mostly related to lower income from financial assets related to reinvestment of debt securities with lower yields,higher cash volumes and balances with the CB(bearing negative interest in line with the e

289、xpansionary monetary policy),and continued pressure on interest rates achieved on the loan portfolio in the Bank and Group banking members in the SEE region.Higher interest expenses are related to the subordinated Tier 2 bonds raised by the Bank to optimize the capital structure,while interest expen

290、ses for customer deposits were decreased.Net interest income was negatively affected by lower yields on securities,excess liquidity at CB,and higher volume of liabilities,especially subordinated debt.In contrast,there was a positive effect from the increase of interest income from loans to individua

291、ls(due to volume growth,despite lower interest rates),and the decrease of expenses for deposits(due to lower interest rates,despite increased volume).Profit before impairments and provisions of the Group totalled EUR 210.5 million,EUR 1.7 million or 1%lower YoY.In Q2 2020,the result before impairmen

292、ts and provisions was higher due to non-recurring net non-interest income(sale of NLB Vita and debt securities in the Bank),but partially offset by regulatory costs in the Bank(EUR 1.7 million for SRF and EUR 5.5 million for DGS).Net interest margin in the Group decreased 0.37 p.p.YoY and amounted t

293、o 2.11%.The interest margin for the Bank and the Group banking members in the SEE region decreased YoY,totalling 1.44%and 3.33%,respectively.A substantial YoY decrease in the interest margin was recorded due to:the sale of debt securities in H1 2020(realised one-off effect in the amount of EUR 17.1

294、million)and their reinvestment at lower yields,mostly in Q3 2020,in the Bank;higher cost of funding due to subordinated Tier 2 bonds raised by the Bank(EUR 7.3 million);higher cash volumes and balances with the CB bearing negative interest;continued pressure on interest rates in the Bank and banking

295、 members in SEE.(i)Calculated on the basis of average interest bearing assets;without the effect of acquisition of Komercijalna Banka,Beograd for NLB Group and Strategic foreign banks in the period 1-12 2020.-35%-35%-32%-82%-37%-42%-41%176.1114.0NLB32.919.2NLB Banka,Skopje17.110.1NLB Banka,Banja Luk

296、a9.05.9NLB BankaSarajevo19.513.3NLB Banka,Prishtina7.61.4NLB Banka,Podgorica4.12.6NLB Banka,Beograd20192020Q4 201941.940.24.0-2.4Q1 202049.249.8-2.41.7Q2 202066.045.729.8-9.5Q3 202051.950.9-2.43.4Q4 202043.547.1-2.4-1.2+4%QoQNon-recurring net non-interest incomeRegulatory costsResult before impairme

297、nts and provisions w/o non-recurring income and regulatory costsInterest incomeInterest expenses2019318.5364.8-46.32020299.6355.2-55.6Q4 202075.189.3-14.2Q3 202074.488.6-14.2Q4 201979.792.1-12.4-6%YoY+1%QoQ-6%QoQ1-12 20192.48%3.59%1.85%1-3 20202.29%3.43%1.65%1-6 20202.19%3.37%1.54%1-9 20202.14%3.35%

298、1.47%1-12 20202.11%3.33%1.44%NLBNLB GroupStrategic foreign banks2019318.5299.6Balancewith CB-5.5-0.8-1.63.7-0.6-9.62.6-6.8-0.3Loans tobanksLoans tocorporateLoans toindividualsLoans tostateSecuritiesDepositsfromcustomersRefinancingOther2020Figure 9:Profit after tax of NLB Group banks(on a stand-alone

299、 basis,in EUR million)Figure 10:Result before impairments and provisions of NLB Group(in EUR million)Figure 11:Net interest income of NLB Group(in EUR million)Figure 12:Effects on net interest income change(in EUR million)evolution YoYFigure 13:Net interest margin(i)of NLB Group(in%)Annual Report 20

300、20MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report36CONTENTSNet non-interest incomeNet non-interest income reached EUR 204.9 million and increased by EUR 6.2 million or 3%YoY.The YoY dynamic was influenced by the fo

301、llowing factors:Net fee and commission income on the same level YoY.COVID-19 outbreak had negative impact mostly on card operations and payment transactions,but was compensated by increased package fees,higher assets management and bancassurance fees,and achieved discounts on card operations;A decre

302、ase in the last quarter mainly related to the modification losses caused by changes of contractual cash flows for loans subject to COVID-19 moratoria in a total amount of EUR 3.6 million(o/w EUR 2.1 million in NLB Banka,Skopje and EUR 1.1 million in NLB Banka,Beograd);Net non-interest income was pos

303、itively impacted by non-recurring income.Non-recurring net income from financial transaction was affected by the sale of debt securities in the Bank(EUR 17.1 million)and non-recurring net other income by the sale of NLB Vita with a positive effect of EUR 11.0 million in May 2020;In 2019,non-recurrin

304、g net income was affected by partial repayment of a larger exposure measured at fair value through profit and loss in the amount of EUR 5.1 million and revaluation of a non-core equity stake in the amount of EUR 6.3 million.Figure 14:Net non-interest income of NLB Group(in EUR million)(i)(i)Please r

305、efer to note(i)under Table 10.Operating costsTotal costs amounted to EUR 293.9 million and are thus by EUR 11.0 million or 4%lower YoY.The overall decrease was achieved due to lower employee costs(lower number of branches and employees,mainly in the Bank),positive effects from cash management and pa

306、perless projects,and the lower cost of services(consulting).Conversely,the Group recorded higher IT costs,costs of material(mostly due to COVID-19 protection material),and supervisory costs in the Bank.CIR stood at 58.3%,a 0.7 p.p.decrease YoY.The Group established EUR 71.4 million of net impairment

307、s and provisions,out of which EUR 18.4 million due to changed macroeconomic parameters,that incorporate estimated impacts of COVID-19 outbreak.In addition,expected credit losses on the performing portfolio for Komercijalna Banka group in the amount of EUR 13.4 million were created.The Groups cost of

308、 risk was positive(62 bps7),as it was in all Group bank members as well.This can mostly be attributed to established provisions related to the COVID-19 outbreak,although partially neutralised with the successful resolution of business cases in restructuring and workout(net release of approximately E

309、UR 18 million in the Bank).Other impairments and provisions were established in the amount of EUR 9.1 million,of which there were provisions for legal disputes(EUR 4.2 million in the Bank and EUR 1.3 million in NLB Banka,Podgorica)and HR provisions(EUR 3.5 million in the Bank).Establishment of net i

310、mpairments and provisionsFigure 15:Total costs of NLB Group(in EUR million)(i)Figure 16:NLB Group impairments and provisions(in EUR million)(i)Please refer to note(i)under Table 10.Dividend incomeNon-recurring other net non-interest incomeNet fee and commission incomeRecurring other net non-interest

311、 income2019198.7170.34.024.12020204.9170.333.70.8Q4 202046.145.1Q3 202048.943.7Q4 201950.143.52.64.01.83.42.1-1.10.20.1+3%YoY-6%QoQ-8%QoQDepreciation and amortisationEmployee costsOther general and administrative expenses2019305.0171.2102.831.02020293.9165.097.331.7Q4 202077.742.027.68.0Q3 202071.44

312、0.223.57.8Q4 201988.048.032.37.7+9%QoQ-12%QoQ-4%YoYOther impairments and provisionsImpairments and provisions for credit riskKB expected credit losses2019-1.0-14.313.32020-48.9-13.4-71.4-9.1-21.1-7.9-13.40.2Q3 2020-17.0-16.3-0.7Q4 2019-10.7-2.3-8.4EstablishmentReleaseQ4 20207.Komercijalna Banka grou

313、p is excluded from calculation to ensure comparability with previous years(excluded expected credit losses on the performing portfolio for Komercijalna Banka group and loans to customers acquired from Komercijalna Banka group).Annual Report 2020MB Statement SB Statement Key highlights Acquisition of

314、 KB Risk factors&Outlook Performance Overview Risk Management Financial Report37CONTENTSStatement of financial positionTable 11:Statement of financial position of NLB Group and NLBin EUR millionNLB Group31 Dec 202031 Dec 2019Change YoY31 Dec 202030 Sep 202030 Jun 202031 Mar 202031 Dec 2019Change QoQ

315、ASSETSCash,cash balances at central banks,and other demand deposits at banks3,961.82,101.31,860.589%3,961.83,010.93,084.62,095.42,101.3950.932%Loans to banks197.093.4103.6111%197.0112.594.993.693.484.575%Net loans to customers9,644.97,604.72,040.327%9,644.97,749.07,686.77,759.87,604.71,895.924%Gross

316、 loans to customers10,033.37,938.32,095.026%10,033.38,111.18,048.98,125.67,938.31,922.224%-Corporate4,631.73,646.3985.527%4,631.73,702.43,751.73,823.63,646.3929.325%-Individuals5,027.64,013.51,014.125%5,027.64,119.44,002.64,016.14,013.5908.222%-State374.0278.695.534%374.0289.3294.7286.0278.684.729%I

317、mpairments and valuation of loans to customers-388.4-333.6-54.8-16%-388.4-362.1-362.2-365.8-333.6-26.3-7%Financial assets5,119.53,829.71,289.834%5,119.53,783.83,504.83,711.23,829.71,335.835%-Trading book84.924.060.8-84.916.822.625.624.068.1-Non-trading book5,034.73,805.71,229.032%5,034.73,767.03,482

318、.23,685.63,805.71,267.734%Investments in subsidiaries,associates,and joint ventures8.07.50.57%8.07.77.97.77.50.33%Property and equipment,investment property304.0247.956.023%304.0240.0243.6245.4247.963.927%Intangible assets61.739.522.156%61.737.537.637.939.524.265%Other assets268.9250.019.08%268.9204

319、.2231.7337.2250.064.732%TOTAL ASSETS19,565.914,174.15,391.838%19,565.915,145.714,891.914,288.314,174.14,420.129%LIABILITIESDeposits from customers16,397.211,612.34,784.941%16,397.212,408.812,190.811,652.911,612.33,988.432%-Corporate3,949.12,772.01,177.242%3,949.12,915.02,781.22,641.72,772.01,034.135

320、%-Individuals12,023.58,582.93,440.640%12,023.59,197.29,146.98,728.68,582.92,826.331%-State424.5257.4167.165%424.5296.5262.7282.5257.4128.043%Deposits form banks and central banks72.642.829.870%72.649.754.363.142.823.046%Borrowings249.8234.814.96%249.8218.6220.9232.5234.831.214%Other liabilities434.9

321、342.692.327%434.9359.0360.1328.4342.676.021%Subordinated liabilities288.3210.677.837%288.3290.0287.4286.6210.6-1.7-1%Equity1,952.81,685.9266.916%1,952.81,770.81,730.61,678.91,685.9182.010%Non-controlling interests170.345.0125.2-170.348.947.745.945.0121.3-TOTAL LIABILITIES AND EQUITY19,565.914,174.15

322、,391.838%19,565.915,145.714,891.914,288.314,174.14,420.129%in EUR millionNLB31 Dec 202031 Dec 2019Change YoY31 Dec 202030 Sep 202030 Jun 202031 Mar 202031 Dec 2019Change QoQASSETSCash,cash balances at central banks,and other demand deposits at banks2,261.51,292.2969.375%2,261.52,179.32,239.91,355.91

323、,292.282.24%Loans to banks158.3144.414.010%158.3187.8214.2160.3144.4-29.5-16%Net loans to customers4,595.14,589.25.90%4,595.14,554.04,526.24,682.74,589.241.11%Gross loans to customers4,753.14,718.035.01%4,753.14,697.54,671.44,834.14,718.055.61%-Corporate2,168.52,154.514.01%2,168.52,143.72,178.32,303

324、.42,154.524.81%-Individuals2,411.92,376.835.21%2,411.92,381.02,317.62,354.22,376.831.01%-State172.6186.8-14.2-8%172.6172.8175.5176.4186.8-0.20%Impairments and valuation of loans to customers-158.0-128.9-29.1-23%-158.0-143.5-145.3-151.4-128.9-14.5-10%Financial assets3,017.23,168.6-151.4-5%3,017.23,12

325、3.42,847.63,053.23,168.6-106.2-3%-Trading book18.824.1-5.3-22%18.817.022.725.624.11.911%-Non-trading book2,998.43,144.5-146.1-5%2,998.43,106.52,824.93,027.63,144.5-108.1-3%Investments in subsidiaries,associates,and joint ventures750.7353.2397.5113%750.7356.3356.3353.2353.2394.5111%Property and equip

326、ment,investment property100.099.20.81%100.095.697.598.599.24.45%Intangible assets28.126.02.18%28.123.724.224.426.04.419%Other assets115.6128.8-13.2-10%115.6118.7142.8217.6128.8-3.1-3%TOTAL ASSETS11,026.69,801.61,225.012%11,026.610,638.810,448.59,945.99,801.6387.84%LIABILITIESDeposits from customers8

327、,850.87,760.71,090.014%8,850.88,405.68,266.37,834.77,760.7445.25%-Corporate1,916.61,674.9241.714%1,916.61,750.01,640.71,576.01,674.9166.610%-Individuals6,812.45,985.0827.414%6,812.46,529.66,516.56,146.15,985.0282.74%-State121.8100.920.921%121.8125.9109.2112.7100.9-4.1-3%Deposits form banks and centr

328、al banks41.689.8-48.2-54%41.6110.689.5102.389.8-69.0-62%Borrowings143.5164.1-20.6-13%143.5151.6152.7163.6164.1-8.1-5%Other liabilities251.4243.18.33%251.4266.5263.5239.8243.1-15.1-6%Subordinated liabilities288.3210.677.837%288.3290.0287.4286.6210.6-1.7-1%Equity1,451.01,333.2117.89%1,451.01,414.41,38

329、9.21,318.91,333.236.53%TOTAL LIABILITIES AND EQUITY11,026.69,801.61,225.012%11,026.610,638.810,448.59,945.99,801.6387.84%Annual Report 2020MB Statement SB Statement Key highlights Acquisition of KB Risk factors&Outlook Performance Overview Risk Management Financial Report38CONTENTSBalance sheet volu

330、me of the Group increased by EUR 5,391.8 million YoY totaling to EUR 19,565.9 million,with substantial increase related to acquisition of Komercijalna Banka,Beograd.Without its inclusion,the balance sheet volume of the Group would also increase,mainly due to the continued inflow of deposits from ind

331、ividuals(EUR 994.3 million YoY)and corporate(EUR 338.6 million)and higher subordinated debt(EUR 77.8 million).Excess liquidity was deposited on the account with the CB,while the net loans to customers would increase by EUR 173.3 million,predominantly to individuals.Substantial deleveraging of bankin

332、g book securities in H1 2020(EUR 323.5 million)was already reinvested in Q3(EUR 284.8 million),followed by modest deleverage in Q4(EUR 30.0 million).Figure 17:NLB Group total assets by location of NLB Group entities(in%)(i)Figure 18:Total assets of NLB Group(in EUR million)structureFigure 19:NLB Gro

333、up gross loans to customers by Key business activities(in EUR million)(i)Geographical analysis based on the location of NLB Group entities.(i)Including cash for the purchase of Komercijalna Banka,Beograd.(i)Including Gross loans to Corporate and to State.Assets 51.8%of the total assets were related to Group members located in Slovenia(2019:66.0%).The change of the structure is due to increased sha