Profit Growth Stagnation of NLB bank

NLB generated 427.5 million euros in net profit in the first nine months, which is a tenth more than in the same period last year. In just the third quarter, net profit amounted to 135.5 million euros, which is six percent less than in the same period last year.

This is the first year-on-year decline in profit since the first quarter of last year. However, last year's year-on-year decline was due to one-time events, while this time the results indicate a cooling business cycle. The quarterly profit decline is a result of higher tax liabilities. The banking group's pre-tax profit increased by 2.5 percent year-on-year.

»Both our business results of the last three months and broader economic trends indicate something that the NLB group has been aware of for some time: changes are on the horizon. But at NLB, we not only follow them, but often even set some trends,« comments NLB CEO Blaž Brodnjak.

Net interest income after nine months of operations amounts to 694 million euros, which is 15 percent more than in the same period last year. Non-interest income also increased by a sixth, amounting to 230 million euros.

Slowdown in Revenue Growth

In the third quarter alone, net interest income increased by less than six percent year-on-year, amounting to 233.7 million euros. Net non-interest income increased by 27 percent year-on-year, reaching 86.2 million euros, according to the company's published annual report.

In the third quarter, NLB made impairments and provisions amounting to 2.6 million euros, which is less than in the same period last year, when impairments reached 3.8 million euros. However, unlike last year, the impairments this time did not arise in the credit portfolio but in other financial assets of the group.

In the third quarter, NLB completed the acquisition of Summit Leasing, which did not yet have a noticeable impact on the group's operations, as the process was completed only in mid-September. It also completed the acquisition of the Serbian management company KomBank, which is under the umbrella of NLB funds. However, the attempt to acquire the Austrian bank Addiko was unsuccessful, causing NLB certain costs in the second and third quarters, which are not specifically disclosed in the quarterly report.

Higher Tax Liabilities

The balance sheet total of one of the largest banking groups in the region increased by five percent this year and amounted to 27.2 billion euros at the end of September. Customer loans increased by a sixth this year, amounting to 15.7 billion euros. Customer deposits increased by three percent, amounting to 21.4 billion euros at the end of September.

In the third quarter, NLB calculated 30 million euros in profit tax, while the tax liability in the same period last year was 18 million euros. Over the entire year, the change is smaller. Thus, the tax liability after nine months of operations is 70.6 million euros, which is 22 percent more than in the same period last year.

NLB has also become large enough to be liable for the minimum tax for multinationals, but this did not have a significant impact on the group's tax liabilities. A greater impact was due to the more substantial dividend payout, as can be inferred from the bank's explanations.

In addition, it calculated 24.6 million euros in tax on the bank's balance sheet total, which increases operating costs in the financial statements.