Nova Ljubljanska Banka d.d. · LJSE:NLBR
Nova Ljubljanska Banka d.d — NLB Group — FY2020 Earnings Presentation
49 slides from Nova Ljubljanska Banka d.d's earnings presentation, Feb 24, 2021
Slide 1: NLB Group Presentation
NLB Group Presentation Creating a South Eastern European Banking Leader 24 February 2021 Blaž Brodnjak CEO Archibald Kremser CFO Andreas Burkhardt CRO Petr Brunclik COO
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Nova Ljubljanska banka d.d., Ljubljana (the "Company"). This presentation has been prepared solely for the purpose of informative presentation of the business conduct of the Company. This presentation has not been approved by any regulatory authority
Slide 3: Executive Summary
Executive Summary Acquisition of Komercijalna banka a.d., Beograd Preliminary Results for FY 2020 ▪ Transaction completed in Dec 2020 (final price: EUR ▪ Better than expected bottom line results 394.7 million for 83.23% of ordinary shares) ▪ Strict cost discipline underlines focus on cost ▪ Integrat
Slide 4: Acquisition of Komercijalna banka - Strategic and Financial Rationale
Acquisition of Komercijalna banka - Strategic and Financial Rationale
Slide 5: Strategic Rationale: A Transformational Deal to Become a Leading Player in SEE
Strategic Rationale: A Transformational Deal to Become a Leading Player in SEE Franchise value enhancing transaction in Serbia KB enhances NLB Group’s market share and presence across the country Before After KB strengthens our position as one of Serbia‘s leading financial acquisition acquisition se
Slide 6: Financial Rationale: EPS Accretive Acquisition from 2022
Financial Rationale: EPS Accreative Acquisition from 2022 whilst Integration Costs Fully Covered by NGW Takeover offer intention aimed at securing all synergy potential Strong enhancement of Strong contribution of Serbian Post merger after tax synergies shareholder returns. EPS accretive market to G
Slide 7: Dividend Capacity Remains a Key Driver to our Equity Story
Dividend Capacity Remains a Key Driver to our Equity Story Dividend distribution in 2021 – 2023 exceeding EUR 300 million 2021 Dividend: • approval received for EUR 25 million as Ambition to distribute in excess of EUR per ECB‘s limitation currently in place; 300 million in 2021-2023 • ambition to d
Slide 8: Acquisition Details
Acquisition Details @ NLB Group
Slide 9: Consolidation of Komercijalna Banka group in NLB Group 2020 Financials
Consolidation of Komercijalna Banka group in NLB Group 2020 Financials P&L and BS materially benefits from acquisition whilst maintaining CET1 well above requirement Impact of Komercijalna Banka group acquisition on NLB Group financials in 2020 Income statement: Balance sheet: Capital: • Negative go
Slide 10: Pro-forma 2020 Capital Position Remains Above Requirements
Pro-forma 2020 Capital Position Remains Above Requirements Further capital optimisation measures have been identified 22.39% ADDITIONAL CAPITAL IMPACTS: AT1+T2 3.26% • After takeover intention published in February 2021 regulatory capital lower by EUR 43m (35 bps); 0.53% 16.61% • Inclusion of negati
Slide 11: Dedicated Team in Charge of Transformation in Serbia
Dedicated Team in Charge of Transformation to Become the Leading Bank in the Serbian Market by 2025 Management Board members nominated by NLB Dejan Janjatović Vlastimir Vuković Dragiša Stanojević Deputy CEO, CRO and CEO and CMO CFO COO 25 years of banking experiences 20 years of banking experiences
Slide 12: Planned Integration of Two Banks in Serbia by Q2 2022
Planned Integration of Two Banks in Serbia by Q2 2022 Synergy potential almost fully activated by end 2023 Dec 2020 2022 Apr 2022 Sep 2022 Q1 Q1 Q2 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Legal and M&A • Merge Regulatory approvals processes • Ownership consolidation • Organization design • Organization implementation
Slide 13: Integration Costs are Fully Funded by Negative Goodwill
Integration Costs are Fully Funded by Negative Goodwill Approximately 2/3 of integration costs will occur in the first year Integration costs between 2021 and 2025 (EURm) Negative goodwill covers all restructuring charges (EURm) Amount % of total 137.0 IT costs -8.2 26.3% -31.2 HR restructuring -11.
Slide 14: Cost Synergies Play the Lion's Share
Cost Synergies Play the Lion‘s Share, Focusing on Operational Excellence Expected efficiency improvements in excess of EUR 20 million p.a. from 2023 Synergies between 2021 and 2025 (EURm) Total synergies by year (EURm) 21.2 21.3 20.6 Amount % of total (Run-rate 2023) Income synergies/attrition 1.2 6
Slide 15: Unaudited FY 2020 Results
Unaudited FY 2020 Results
Slide 16: Key performance indicators of NLB Group
Key performance indicators of NLB Group Stable core revenues and strict cost discipline Result before impairments and provisions (in EURm) -1% YoY Change in EUR million / % / bps 1-12 2020 1-12 2019 YoY 212.2 210.5 Key Income Statement Data Net operating income(i) 504.5 517.2 -2% Net interest income
Slide 17: Operating Income Performance Resilient Despite COVID-19
Operating Income Performance Resilient Despite COVID-19 Bottom line affected primarily by COVID-19 related provisions Net profit of NLB Group – evolution YoY (in EUR million) -9.4 268.9 Net interest Negative goodwill: income: 27% YoY Assets and liabilities acquired w/o KB • Lower 137.0 measured at t
Slide 18: Loan Dynamics
Loan Dynamics Robust loan growth in subsidiaries continues, with KB acquisition Strategic foreign markets outgrowing Slovenia NLB Group NLB d.d.(1) Strategic foreign markets +25% YoY +62% YoY 7,000 8 6.71% +4% YoY 6.28% w/o KB 6,000 7 5.17% 5.00% 6 5,000 100 +1% YoY 5,027.6 0 -100 4.11% 4.05% 5 4,01
Slide 19: Decisive Response to COVID-19
Decisive Response to COVID-19 By the end 2020 over 80% of moratoria expired On NLB Group level (including Komercijalna Banka group) EUR 2,435 million moratorium approved, 45% to Covid - 19 (in EUR) Non-financial corporations and 54% to Households. Moratorium Moratoria were granted for the period bet
Slide 20: Performance of Expired Portfolio and Remaining Moratorium Overview
Performance of Expired Portfolio and Remaining Moratorium Overview More than 95% of expired moratoria clients are repaying regularly Structures of non-expired loans under moratorium (31 Dec 2020, in %) Stage distibution Non-financial corporations Households Household Housing Stage 1 50.7% 56.6% 18%
Slide 21: Asset Quality
Asset Quality Firmly under control with CoR at 62 bps Active workout drove gross NPL ratio down (Group, EURm) Impairments and provisions (Group, EURm) CoR -20 62 4,000 100 (bps) 3,684 89.2% Release 81.8% 90 3,500 76.1% 77.5% 77.1% 13.3 0.2 72.2% 80 -0.7 3,000 2,798 2,623 -9.1 -8.4 -7.9 -14.3 Establi
Slide 22: Asset Quality of KB Banks After Fair Value Recognition
Asset Quality of KB Banks After Fair Value Recognition High % of Stage 1 Loan portfolio – asset quality under control – the NLB way Credit portfolio(1) by Stage (KB Banks, 31 Dec 2020, EURm) in EUR million Total credit portfolio Retail Corporate Stage1 Stage2 Stage3 FVTPL Stage1 Stage2 Stage3 Stage1
Slide 23: Final Remarks
Final Remarks _ @ NLB Group
Slide 24: KB accelerates our strategic priorities
KB accelerates our strategic priorities • Client activation (850k active clients vs 1.1m client base); Our Customers • Strong potential in corporate SME segment (KB behind market); come first • Product penetration and X-sell in cash and housing loans, credit cards; • Positioning NLB&KB to gain effic
Slide 25: Stronger together against Covid-19
Stronger together against Covid-19 Employees Clients Community ● Strong emphasis on healthcare ● Healthcare promotion and strict ● Donations aimed at mitigating the ◦ The majority of employees (85%) are preventive measures in branches effects of the epidemic working from home (except for branch ◦ To
Slide 26: Outlook
Outlook 2021 2023 Regular income Exceeding EUR 600 million Exceeding EUR 700 million Initial increase in cost base in the year 2021, costs Costs projected around EUR 430 million including Costs below EUR 400 million restructuring charges. CoR 70-90 bps 40-60 bps Loan growth Mid-single digit loan gro
Slide 27: Investor Relations details
Investor Relations details For any further questions please refer to Investor Relations. Nova Ljubljanska banka, d.d., Ljubljana, Trg republike 2, 1000 Ljubljana E: IR@nlb.si W: https://www.nlb.si/investor-relations Contacts: Valerija Pešec, Head of Investor Relations T: +386 1 476 91 22 E: valerija
Slide 28: ERVICES
ERVICES LJUBLJANA =:CSR HINANCALADViCEaRT = DIGITAL CARE ROFESSIONAL 7 Q&A 4 E 8 ¢ CULTURE csr eo BANK GUARANTEE IN HEALTHY BANK = ECOLOGY «1 LUKA::24/ GRAD: ® DONATIONS Hane vee sheet QUALITY OF LIFE SPONSORSHIPS # SOCIAL RESPONSIBILITY EAS Vou our ARAJEVO £22 NLB ORGANIC » 5Ez MLB Ol ae MENTORSHIP
Slide 29: Appendix
ier * SPONSORSHIPS! , Appendix Rott inom mass her > CU LTUREcsr = BANK GUARANTEE BANK OLOGY =x abe LUKA: 24/7 BEOGR DONATIONS Fitaniciat UTERACY ECOLOGY QUALITY OF LIFE = sponsorsuips YOUTH SPORT 2 3 SOCIAL RESPONSIBILITY EASY conan or q SSARAJEVO= E£2NLB ORGANIC » & IMENTORSHIP 2 = 3 one wes Gea Is
Slide 30: Acquisition in Our Home Market
Acquisition in Our Home Market 30
Slide 31: Macroeconomic Environment in Serbia
Macroeconomic Environment in Serbia Robust and diversified economy with resilient COVID-19 response setting pathway for future growth and digital development Lowest GDP contraction in the region: -1.0%(1) in 2020, compared to -6.8% for Eurozone(2) FDI into Serbia rose to USD 4.3 billion in 2019 (8.3
Slide 32: Key Performance Indicators of Komercijalna banka
Key Performance Indicators of Komercijalna banka Komercijalna Banka group(1) Komercijalna Komercijalna Komercijalna Komercijalna Banka group Banka, Beograd Banka, Banja Luka Banka, Podgorica Kombank INvest (consolidated) in EUR million 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Net interest i
Slide 33: Balance Sheet Structure – NLB Group
Balance Sheet Structure – NLB Group Increase of total assets by EUR 4.3 billion due to Komercijalna Banka acquisition (31 Dec 2020, in EURm) 19,565 19,565 Other assets 838 Total equity acquired from KB 2,122 1,364 Other liabilities 435 Subordinated liabilities Bank borrowings 288 322 Financial asset
Slide 34: Diversified Credit Portfolio of KB Group
Diversified Credit Portfolio of KB Group Credit portfolio(1) (KB Banks, 31 Dec 2020, EURm) Credit portfolio (1) by segment Credit portfolio (1) by geography Top 10 industries Institutions Austria INDUSTRY Exposure (%) 164 39 Other Germany Wholesale and retail trade 17.9% 54 SME 41 Agriculture, fores
Slide 35: KB's Market Share and No. of Clients
KB´s Market Share and No. of Clients MARKET SHARE ACTIVE CLIENTS Total RETAIL Placements 8.46% KB Bank Retail * 842,164 Private individuals 8.00% Private individuals 727,104 Agro business 79,180 Housing loans 10.31% Micro business 35,880 Consumer loans 6.77% KB Bank Corporate * 7,324 Overdarfts 14.5
Slide 36: Welcome package
Welcome package For existing and new clients NLB & KB in Serbia From February/March onwards and throughout H1 2021 introduce and strongly promote a Welcome package for existing and new clients which will support the business (especially lending and new customer onboarding). Welcome Welcome Welcome W
Slide 37: Slide 37
Slide 38: Key Performance Indicators of NLB Group
Key Performance Indicators of NLB Group Stable core revenues and strict cost discipline Change in EUR million / % / bps 1-12 2020 1-12 2019 YoY Q4 2020 Q3 2020 Q4 2019 Key Income Statement Data Net operating income(i) 504.5 517.2 -2% 121.2 123.3 129.8 Net interest income 299.6 318.5 -6% 75.1 74.4 79
Slide 39: Net Interest Income Decreased: easing pressure on margins
Lower yields on securities portfolio and loan book, higher Net Interest Income Decreased: easing pressure on margins cost of funding (Tier 2), higher volume of cash and balances Net interest income of NLB Group (in EURm) Net interest margin (in %) with central bank and continued pressure on interest
Slide 40: Net Fees and Commissions on the same level yoy
Net Fees and Commissions on the same level yoy Net non-interest income of the NLB Group (in EURm) • Net fee and commission income on the same level YoY, negative impact of +3% YoY COVID-19 on card operations and payment transactions compensated by increased package fees, higher assets management and
Slide 41: Total Costs: lower employee costs and cost rationalization
Total Costs: lower employee costs and positive effects from cost racionalization projects Costs (in EURm) Effective rationalization of headcount and network -4% YoY # of employees 305.0 293.9 31.0 31.7 -19% w/o KB 8,792 102.8 7,208 6,912 2,591 97.3 6,448 6,372 6,175 6,029 5,887 5,878 5,809 3,572 3,4
Slide 42: Additional Impairments and Provisions due to COVID-19 and KB Acquisition
Additional Impairments and Provisions due to COVID-19 Outbreak and KB Acquisition Impairmants and provisions (in EUR m) Release In 2020, the Group established EUR 48.9 million of net impairments 13.3 0.2 and provisions for credit risk, out of which EUR 18.4 million due to -0.7 changed macroeconomic
Slide 43: Asset Quality – NLB Group
Asset Quality – NLB Group High % of Stage 1 Loan portfolio (measured at amortized cost & FVTPL) Credit portfolio(1) by Stage (Group, 31 Dec 2020, EURm) NLB-G after acquisition of KB Banks Credit portfolio Provisions and FV changes for credit portfolio Stage1 Stage2 Stage3 & FVTPL Stage1 Stage2 Stage
Slide 44: NLB Group Assets by Segment
NLB Group Assets by Segment Well diversified credit portfolio, with substantial retail exposure Credit portfolio(1) by segment (Group, 31 Dec 2020, EURm) NLB-G w/o KB Banks NLB-G after acquisition of KB Banks Institutions Institutions 299 446 State(2) SME 3% SME 2.045 3% 2.661 State(2) 2.687 18% 3.2
Slide 45: NLB Group Assets by Industry & Sectors
NLB Group Assets by Industry & Sectors The portfolio structure comparable to the one before the acquisition of KB Corporate credit portfolio(1) (Group, 31 Dec 2020, EURm) Corporate sector NLB-G Retail sector after acquisition of KB Banks % NLB-G % ∆ industry sector w /o KB Accommodation and food ser
Slide 46: Asset Quality – NLB Group
Asset Quality – NLB Group Diversified credit portfolio, focused on core markets and cautious risk taking Credit portfolio(1) by segment (Group, 31 Dec 2020, EURm) Dec-15 Dec-16 Institutions Dec-17 446 Dec-18 SME Dec-19 2,687 28% 27% Dec-20 w/o KB (2) State 24% 24%24% Dec-20 23% 21%21% 21% 3,290 20%1
Slide 47: Asset Quality – NLB Group
Asset Quality – NLB Group NPLs fully covered by provisions and collateral NPL by geography (Group, 31 Dec 2020) NPL cash coverage(1) (Group, %) Serbia 89% 87% 82% 14% 77% 77% 77% Kosovo 69% 69% 72% 24% 24% Slovenia 12% 15% 12% 25% 4% 6% 7% 9% 32% Croatia 4% 63% 62% 63% 65% 62% 65% 65% 63% 57% Monten
Slide 48: Asset Quality – NLB Group
Asset Quality – NLB Group Diversified credit portfolio, focused on core markets and cautious risk taking Credit portfolio(1) by currency and rate type (Group, 31 Dec 2020) BAM Other MKD 5% 2% 5% RSD No large concentration in any specific industry or client 8% segment EUR 13.7 bn Floating 40% EUR 13.
Slide 49: Sustainability Framework
Sustainability Framework: in 2020, the Group embarked on a path of more intensive integration of sustainability into banking operations STRONG SUPPORTING FOUNDATIONS: 2021 SUSTAINABILITY ROADMAP: SUSTAINABLE OPERATIONS & SUSTAINABLE FINANCE: - Upgrading business strategy with UN SDGs and ESG factors