Ljubljana - Slovenia's largest banking group, NLB, posted EUR 231.5 million in net profit in the first quarter of 2022, more than triple the figure recorded in the same period last year, on the back of the acquisition of the Slovenian subsidiary of Russia's Sberbank in March. The profit of the core company NLB dropped to nearly EUR 33 million.

The group's net profit in the first three months of this year increased by EUR 166.9 million year-on-year, whereas the profit of the core company NLB decreased from EUR 39.3 million to EUR 32.7 million, reads a press release published on Wednesday.

The group posted EUR 174.5 million in total net operating income, up 13% year-on-year. Net interest income grew by 11% to EUR 107.8 million. The net non-interest income reached EUR 66.7 million, and total costs amounted to EUR 102.7 million.

"The supervisory board is satisfied with the group's business results in Q1 2022, especially with the positive effects of the NLB's acquisition of the former Sberbank Banka in Slovenia [the bank has since been renamed 'N Banka']," Primož Karpe, chairman of the supervisory board, said in the press release, noting the positive impact the acquisition had on the entire Slovenian banking system.

He also highlighted the recent integration of NLB Group's banks in Serbia into NLB Komercijalna Banka. The group continues to build on its strong market position in Slovenia and all the markets in South-Eastern Europe where it is present, the release reads.

To further support this the supervisory board appointed three additional members of the NLB management board in the first quarter of the year - Hedvika Usenik, Antonio Argir and Andrej Lasič.

The group's net interest margin of 2.07% was 0.02 percentage points lower year-on-year, and the cost-to-income ratio improved by 3.8 percentage points to 58.9%, including the effects of the Komercijalna Banka integration process.

The result before impairments and provisions was also strong in the first quarter of this year, topping EUR 70 million, up by roughly a quarter year-on-year.

Gross loans to the group's customers grew significantly since the beginning of the year, by 14% to EUR 12,4 million, an increase that was also propelled by the acquisition of N Banka. The buoyant demand came from both individual and corporate clients, and "impressive production of new housing loans (EUR 179.6 million in NLB d.d) compensated reduction in interest rates and supported the growth of net interest income."

The deposit base increased by 5% compared to the end of last year. Deposits in strategic foreign markets declined due to the war in Ukraine, while Slovenia recorded a moderate quarterly growth, excluding the N Banka contribution, the group said.

The group's total capital ratio declined by 0.2 percentage points year-on-year to 15.8%. The number of employees totalled nearly 8,500 at the end of the first quarter, down by 250 year-on-year.

In addition to the latest Q1 results, the group also announced that the S&P credit rating agency upgraded NLB's rating to BBB/A-2 from BBB-/A-3 with a stable outlook.

S&P said that the stable outlook reflected the bank's "sound capitalization and risk performance on the back of economic resilience in the core operating regions despite the war in Ukraine and remaining uncertainties from the pandemic".