NOVA KREDITNA BANK MARIBOR D.D. - Nova KBM Group´s earnings for H1 2013 eroded by impairment loss...

| | POLISH FINANCIAL SUPERVISION AUTHORITY | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | UNI - EN REPORT No | 41 | / | 2013 | | | | |
| | Date of issue: | 2013-08-29 | | | | | | | | | |
| | Short name of the issuer | | | | | | | | | | |
| | NOVA KREDITNA BANK MARIBOR D.D. | | | | | | | | | | |
| | Subject | | | | | | | | | | |
| | Nova KBM Group´s earnings for H1 2013 eroded by impairment losses | | | | | | | | | | |
| | Official market - legal basis | | | | | | | | | | |
| | Unofficial market - legal basis | | | | | | | | | | |
| | Contents of the report: | | | | | | | | | | |
| | In accordance with provisions of the Code of Best Practice for Warsaw Stock Exchange Listed Companies, the Ljubljana Stock Exchange Rules and the applicable legislation, Nova KBM d.d. hereby publishes the following announcement: The Nova KBM Supervisory Board was yesterday informed of the unaudited results of the Nova KBM Group. For the six-month period ended 30 June 2013, the Group posted a pre-tax, pre-provision profit from continuing operations of ?15.6 million. High impairment losses, but also a declining level of its interest income, caused the Group to report a net loss from continuing operations of ?62.7 million, of which ?44.2 million was incurred by Nova KBM, the parent company within the Group. Among other issues, the supervisors discussed the progress being made in the assessment of the Group´s loan portfolio quality, and in carrying out the stress test. Based on the results of both the loan portfolio review and the stress test, an assessment will be made regarding the volume of bad loans to
be transferred to the state-run Bank Assets Management Company. Despite the difficult economic conditions in Slovenia and globally, the Nova KBM Group is performing well and is prepared to deal with new challenges and opportunities going forward. The results of the Group ? which consists of the parent company (Nova KBM), 11 subsidiary companies operating in Slovenia, Croatia, Serbia and Austria, and one associated company ? were affected by a further deterioration in its loan portfolio. This was reflected in a 17.2% year-on-year increase in impairment losses and provisions incurred by the Group. At the end of June, the Nova KBM Group´s total capital adequacy ratio was 8.27%, with its equity amounting to ?284.5 million. Deposits from the non-banking sector totalled just over ?3.6 billion; roughly the same figure as at the end of 2012. Net loans and advances to customers were slightly above ?3.2 billion, down 5% on the 2012 year-end figure, partially as a result of a reduced lending volume due to a declining
demand for loans, and partially due to additional impairment losses set aside in the first half of the year. Notwithstanding the difficult market environment, Nova KBM managed to retain its market share at 11.6%, as measured by deposits from the non-banking sector, which is higher than its market share in terms of total assets (9.4%). Nova KBM´s market share in loans to the non-banking sector stood at 9.3% at the end of June. ?We at the Nova KBM Group are putting a great deal of effort into reversing the negative performance trends. The Bank and its subsidiaries have prepared their restructuring programmes, which are awaiting the approval of the European Commission. Apart from taking necessary steps to be ready to transfer bad loans to the Bank Assets Management Company, we have intensified the management of our bad loans to improve their recovery rate. A project aimed at improving the Nova KBM Group´s capital base is also being carried out. In addition, we are taking measures to transform both the Bank and
the Nova KBM Group into more efficient financial institutions, and are implementing the RAST project, the purpose of which is to reduce operating costs across all operating segments. The combination of these activities is expected to strengthen the financial position and consolidate the business of both the Bank and the Nova KBM Group. While a considerable amount of work will be required to achieve our ultimate performance objectives, the results may not be obvious for several years given the nature of the changes necessary?, said Aleš Hauc, President of the Nova KBM Management Board, about the measures aimed at improving the Group´s performance. On the condition that the economic climate does not deteriorate further and that the EU does not impose additional requirements on the banking industry, Nova KBM expects to report a profit next year. The supervisors were also informed of the progress of reviews that are being carried out in the Bank. As already announced, the Bank of Slovenia and the Ministry of
Finance have requested an assessment be carried out to determine the quality of the Slovene banking system assets, in addition to requesting 10 banks to conduct stress tests. Oliver Wyman has been appointed to conduct a stress test in Nova KBM, while the quality of Nova KBM´s assets is being assessed by Ernst&Young. The results of both the stress test and the asset quality review are expected to be presented by the end of the year. According to several local and international institutions, a decline of between 1.9% and 2.3% in Slovene economic activity may be expected in 2013. The key factors that will drive the economic development in Slovenia this year are the continuation of public finance consolidation, and the privatisation of state-owned enterprises. The Nova KBM Group will adapt its operations to the current market conditions while focusing on making improvements in cost efficiency, on compliance with regulatory requirements, and on integration of operations within the Group. All the activities will
be carried out in line with the Nova KBM Group´s restructuring programme. This announcement will be available on the Bank's website (www.nkbm.si) as from 29 August 2013. | | | | | | | | | | |
| | Annexes | | | | | | | | | | |
| | File | Description | | | | | | | | | |

REPORT
INFORMATION ABOUT THE ENTITY
SIGNATURE OF PERSONS REPRESENTING THE COMPANY

| | | NOVA KREDITNA BANKA MARIBOR D.D. | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | (fullname of the issuer) | | | | | |
| | | NOVA KREDITNA BANK MARIBOR D.D. | | Banki (ban) | | | |
| | | (short name of the issuer) | | (sector according to clasification of the WSE in Warsow) | | | |
| | | 2505 | | Maribor | | | |
| | | (post code) | | (city) | | | |
| | | Vita Kraigherja | | 4 | | | |
| | | (street) | | (number) | | | |
| | | +386 2 229 22 90 | | +386 2 229 43 33 | | | |
| | | (phone number) | | | (fax) | | |
| | | (e-mail) | | | (web site) | | |
| | | SI94314527 | | 586058000 | | | |
| | | (NIP)
| | | (REGON) | | |

REPORT
INFORMATION ABOUT THE ENTITY
SIGNATURE OF PERSONS REPRESENTING THE COMPANY

REPORT
INFORMATION ABOUT THE ENTITY
SIGNATURE OF PERSONS REPRESENTING THE COMPANY