The Slovenia Times

Cleanining Up Balance Sheets Caused Record Losses of State-owned Banks



For NLB the figures are even worse for the parent company, which was EUR 1.54bn in the red at the end of the year. The results mark a low for the bank, but they also reflect the finalisation of restructuring that included a bailout in mid-December involving a EUR 1.5bn capital injection, and full nationalisation.

The detailed figures show across-the-board deterioration in key indicators. Total assets dropped by 17% to EUR 9.5bn, mostly on account of the transfer of non-performing loans to the Bank Assets Management Company (BAMC). Loans to the non-banking sector dropped by a fifth to EUR 7.74m, though this could largely be a result of the conversion of government deposits into capital, as was the case with NKBM bank.

Crediting of companies plunged by nearly a third to EUR 5.5bn. Net profit before provisioning and one-off events totalled only EUR 15.5m, an 88% drop over the year before.

The bailout however raised the bank's capital ratio, as the Core Tier 1 capital ration stood at 16.7%.

In case of NKBM profit before tax and provisions from continuing operations topped EUR 61.8m, but impairments and provisions amounted to EUR 673.4m. NKBM received fresh capital of EUR 870m as part of the mid-December bailout, which raised its Core Tier 1 capital ratio to 19.1% from 5.26% in the year before.

It also started to offload bad loans to the Bank Assets Management Company (BAMC), but the process is not yet completed so it is unclear to what extend soured loans still weighed down on the bottom line. All other figures in the unaudited results show it has shrunk significantly.

Total assets dropped by almost a tenth to EUR 4.83bn and net interest income, a key source of money for banks, slipped by a quarter to just over EUR 78m. Loans to the non-banking sector plunged 33%, but the bank says this is largely due to the transfer of credit portfolios to the bad bank.

Non-banking deposits dropped 15%, but this is also a consequence of the bailout, as the state converted EUR 361m-worth of loans into capital as part of the bank resolution. Only net gains from securities and foreign exchange trading showed a positive trend, increasing more than two-fold to EUR 57m.

The bank's bottom line was further affected by a EUR 42m recapitalisation of its postal bank subsidiary, PBS, in December, which raised its stake in PBS to 99.1% from 55%.


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