We believe in this
region’s potential
NLB Group Annual Report 2021
Contents
Report format
The Annual Report in PDF format represents its unofficial
version. The Annual Report in ESEF format is pursuant
to Commission Delegated Regulation (EU) 2019/815 and
paragraph one of Article 134 of the Market in Financial
Instruments Act (ZTFI-1) and represents its official version
published on SEOnet.
Forward-looking statements
The expectations, forecasts and statements regarding future
developments that are contained in this report are based on
Statement by the Management Board of NLB . . . . . . . . . . . . . . . . 6
Compliance and Integrity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Statement by the Chairman of the Supervisory Board of NLB 8
Internal Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .121
Strategic Members Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Corporate Governance Statements. . . . . . . . . . . . . . . . . . . . . . . . . 122
Key Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Disclosure on Shares and Shareholders of NLB . . . . . . . . . . . . 144
Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Events After the End of the 2021 Financial Year . . . . . . . . . . . . . 146
Market Performance of NLB’s Shares and GDRs. . . . . . . . . . . . . 18
Reconciliation of Financial Statements in Business and
Financial Part of the Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Alternative Performance Indicators . . . . . . . . . . . . . . . . . . . . . . . . 149
NLB Group Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Organisational Structure of NLB. . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
FINANCIAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
NLB Group Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .342
Definitions and Glossary of Selected Terms. . . . . . . . . . . . . . . . 345
Macroeconomic Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Regulatory Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
BUSINESS REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Risk Factors and Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Impact of COVID-19 on Operations . . . . . . . . . . . . . . . . . . . . . . . . . .34
Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Overview of Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . 40
Segment Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Retail Banking in Slovenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Corporate and Investment Banking in Slovenia. . . . . . . . . . . . . . 67
Strategic Foreign Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Financial Markets in Slovenia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Non-Core Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96
IT and Cyber Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .105
assumptions and are contingent on a number of factors that
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108
will come into play in the future. Consequently, the actual
situation may turn out to be different.
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
2
NLB, Ljubljana
NLB Banka, Banja Luka
NLB Banka, Beograd
Komercijalna Banka, Beograd
NLB Banka, Sarajevo
NLB Banka, Podgorica
NLB Banka, Prishtina
NLB Banka, Skopje
We are – where you are.
Our home is here.
Here are our families, friends, colleagues, neighbours, our favourite athletes, hosts, who know
what kind of coffee we like … All this is our home and we believe in it with all our hearts.
Since we are where you are, we know your potential and understand your commitment –
even when no one else understands it. Where others merely see a spot on the map, we see
a region full of opportunities.
And we believe you deserve each and every one of them.
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Southeast Europe, a region of opportunities.
Southeast Europe, a region of opportunities.
Southeast Europe, a region of opportunities.
Who
we
are
Vision
Our
strategic
focus
Sustainable
banking
The Group, headquartered in Ljubljana, is the
largest banking and financial group in Slovenia
with a strategic focus on selected countries in
SEE, which have a population of approximately
17 million people – our home region.
The Group is comprised of the leading and systemically
most important bank in Slovenia, NLB, seven
subsidiary banks in SEE, several companies providing
ancillary services (asset management, real estate
management, leasing, etc.), and a limited number of
non-core subsidiaries in a controlled wind-down.1
The Group utilises a universal banking
model and supports its clients through retail,
corporate, and investment banking services.
On six out of seven markets where the Group
operates, the market share of member banks
exceeds 10% (measured by total assets).
1 On 1 March 2022 NLB acquired the Slovenian Sberbank banka d.d. Further
information is presented in chapter Events After the End of the 2021 Financial
Year.
The Group will take
Become a regional
In 2021, the Group set the direction of sustainability
care of the financial
champion
activities by publishing the NLB Group Sustainability
needs of its clients
and improve the
quality of life in its
home SEE region.
Putting
clients first
Grow our
market position
Monetize
opportunities
and synergies
Framework and aligning its business model with UN’s
Sustainable Development Goals. The focus was on
decisive implementation of activities in the three pillars:
• Contribution to society
• Sustainable finance
• Sustainable operations
As the first bank from Slovenia to commit to
the UN Principles for Responsible Banking,
the Bank performed an impact analysis and
published regional sustainability targets
(NLB Group Sustainability Report 2021).
The environmental dimension of the ESG was
addressed by upgrading our climate-related and
environmental risk management, integration of EU
Taxonomy regulation, and measuring the carbon
footprint of the Group’s own operations in 2021.
Focus was put on the social dimension, supported by
continuing CSR activities and the #HelpFrame project.
Ratings
2016
S&P: BB-
Fitch: BB-
Moody's: Ba3
CI: BB+
2017
S&P: ↑BB
Fitch: ↑BB
Moody's: ↑Ba1
CI: ↑BBB-
2018
S&P: ↑BB+
Fitch: ↑BB+
Moody's: ↓Baa2
CI: BBB-
2019
S&P: ↑BBB-
Fitch: BB+
Moody's: Baa2
2020
S&P: BBB-
Fitch: BB+
Moody's: ↑Baa1
2021
S&P: BBB-
Moody's: Baa1
NLB has an investment grade rating from S&P and Moody’s.
Note: Moody's:
unsolicited rating.
Contents
4
Antonio Argir
Member of the
Management Board(i)
Andreas Burkhardt
Member of the
Management Board (CRO)
Blaž Brodnjak
CEO and CMO
Hedvika Usenik
Member of the
Management Board(i)
Andrej Lasič
Member of the
Management Board(i)
Archibald Kremser
Member of the
Management Board (CFO)
Note:
(i) Appointed by the Supervisory Board of NLB on 20 January 2022; Mr. Argir, Ms. Usenik and Mr. Lasič are waiting for the relevant consent by the ECB to assume the office of the Management Board member.
Statement by the Management Board of NLB
Dear Stakeholders,
Encouraged by the economic recovery, driven by healthy
of the CHF Law with the Constitution is pending. If legal
Are you well? How many times have you heard or asked this
returned to robust growth, and achieved excellent results
question in 2021, a year marked once again by the grip of
which exceeded set guidance. This growth was based on the
private consumption and strong loan demand, the Group
remedies are unsuccessful, the estimated effects on pre-tax
result will be material but manageable.2
COVID-19 and its consequent impact on the global economy
strong underlying performance of all business segments,
In a remarkable milestone deserving special attention, the
and quality of life? We sincerely hope that you were able to
meaningful contribution from Komercijalna Banka, Beograd,
Bank’s share price gained 67.2 percent YoY on the London
do as we in the Group did: leave the epidemic behind you and
while robust risk management supporting Group’s business
Stock Exchange, 66.4 percent on the Ljubljana Stock
answer with “we are more than just well – actually, we are
operations resulted also in strong asset quality. The Group
Exchange, and received the ‘Prime Market Share of the Year’
stronger than ever.”
generated EUR 236.4 million in profit after tax and increased
award by the Ljubljana Stock Exchange.
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
market shares in all segments, with all banking members
operating in our home region, SEE, reporting solidly positive
Combining dividend payouts, privatisation proceeds, and the
net earnings and contributing 39% to the after tax result.
residual value of the RoS equity stake in NLB, the Bank has
fully repaid the amount it received for the 2013 recapitalization.
The results of the banking members prove once again that
From here on out, we are creating new value for all our
they are becoming an increasingly important factor in Group
shareholders.
business operations, as well as in their respective markets – in
five out of six markets where the Group operates, the market
The Group will continue to prudently grow and increase its
share (by total assets) of member banks exceeds 10 percent.
market shares organically, however, we are closely monitoring
We firmly believe that further intragroup consolidation, which
developments in our home region and will analyse and
is in full swing following the successful merger of NLB Banka,
address any value accretive opportunities for new M&A-
Podgorica and Komercijalna Banka, Podgorica in November,
based growth. The Bank has the capacity to buy banks and/or
as well as the sale of Komercijalna Banka, Banja Luka in
portfolios in any of our existing, as well as other markets in the
December, and the expected merger of NLB Banka, Beograd
region, thus becoming a true regional champion. Accordingly,
and Komercijalna Banka, Beograd in April 2022, will bring
based on the SRB’s resolution scheme for Slovenian Sberbank
additional opportunities to leverage synergies.
banka d.d. and decision of BoS regarding the sale of this bank,
NLB on 1 March 2022 bought 100% of shares of Sberbank
The Group’s strong business performance, together with the
banka d.d. With this acquisition NLB contributed to the
expiration of the BoS’s decision on restricting the dividends
financial stability of the Slovenian banking sector and further
payment, enabled the Bank to fulfil stakeholder expectations
improved NLB’s market position in Slovenia. In the following
with a substantial dividend payout. Keeping its promise, the
months Sberbank banka d.d. will be integrated in NLB Group.
Bank paid out a total of EUR 92.2 million as dividends in 2021,
thereby reaffirming the Group's stable and successful business
In spite of prevailing global geopolitical challenges,
operations, strong capital position, and solid dividend payment
macroeconomic environment, and other impacts influencing our
capacity also for the future. More specifically, the Bank’s
business environment in a Slovenian and wider Group’s region
ambition is a total dividend payment to the shareholders of
context, our outlook for the future is positive.
EUR 210 million in the 2022–2023 period.
Turning our gaze to the future, our focus will be on providing
In February 2022 the Slovenian parliament adopted law
our clients with innovative solutions and the best user
concerning loan agreements in Swiss francs concluded
experience, 24 hours a day, every day. Currently in Slovenia,
by banks operating in Slovenia (including NLB) and
our clients can fulfil almost all their banking needs without
individuals. NLB has used legal remedies against the law.
having to visit a branch, and we strive to apply this digital
The implementation of the law is currently suspended by
Constitutional Court while its final decision on the conformity
2 Further information is available in chapters Events after the end of the 2021
financial year and Outlook 2022.
EUR
236.4
million
net profit of NLB Group.
Contents
6
leadership position to other markets in which our Group
go the extra mile when needed. That is why we strive to
to the successful management of the Group and to meeting the
operates by working on frontend solutions to consolidate
attract, educate, develop, and retain best talents this region
strategic commitments given to you, our stakeholders.
e- and m-banking platforms. Despite many predictions in
has to offer. We are not only focused on the field of IT where
the past decades that banks will cease to exist, we are here
considerable effort has been made to attract the brightest
Nevertheless, it is not only the welfare of our clients, our
stronger than ever, since we have done our homework,
and best IT talent by building a technological hub in Belgrade
employees, and the rest of the stakeholders that is on our
adapted, and started to invest heavily in digitalization, and
that will develop solutions for the whole group, but also in
minds and in our focus, but also the prosperity and the quality
fintech technologies. Nowadays, the Group is no longer just
other vocations of which an institution such as NLB Group has
of life in the entire region. Consequentially, the sustainability
a banking group, but one of the largest IT and data science
no shortage.
companies in the region with an ambition to foster the
of our business operations and practices is increasingly
becoming our priority. The Group is among the first in the
evolution of a local flexible digital ecosystem that offers clients
We believe, that only a satisfied employee, one who feels
financial industry in the SEE to set ambitious ESG goals,
tailormade products and services. The Group is aware of a
the firm’s trust and care for his or her work/life balance and
to withdraw support for projects using exclusively coal
cyber security risks and continuously improves the resilience
potential, will help us address the opportunities that await
technologies, to focus on becoming paperless, to actively
of its operations.
us. That is why we continue to develop our employees and
reduce its carbon footprint, and to work on introducing
All of this fills us with confidence and sets good prospects
their well-being. This is why the Top Employer Institute has
for the future. Our most important stakeholders, our clients,
also recognized us, awarding the Bank the prestigious ‘Top
In the Group, we do not say in vain that this is our home. Here are
understand what we offer them and value our contribution
Employer’ certificate for the seventh consecutive year.
our families, friends, colleagues, neighbours, favourite athletes,
to society. Ultimately, they are ready to recommend our
hosts who know what kind of coffee we like . . . here we can
solutions, services, knowledge, and advice to their families,
We are also happy to report that in February 2022 the
breathe with full lungs, create, experience ups and downs, and
friends, acquaintances, and their community.
Supervisory Board decided to expand the Bank’s Management
expand our ties together. Here are our thoughts and our hearts.
search for new approaches that will confirm our care for
products that promote sustainability and energy efficiency.
Board by adding three new members. After they receive their
That’s why we can see what this region is capable of firsthand and
This, however, could not be secured without a dedicated
respective licences, the Management Board will consist of six
recognise its potential before anyone else. Because where others
team of colleagues who truly care about our mission and
members which will, in our firm opinion, significantly contribute
see just a spot on the map, we see a region of opportunities.
Yours truly,
Management Board of NLB
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
7
Statement by the Chairman of the Supervisory Board of NLB
relentlessly pursue the best brain available out there, so we
systems. Having said that, we are looking forward to the final
can keep up with the fast-paced development to which we are
merger of our two banks in Serbia (Komercijalna Banka,
committed.
Beograd and NLB Banka, Beograd) in April 2022, enabling us
further push into the organic growth on that market.
Group foundations are strong and robust, and we on the
Supervisory Board are of the opinion that the Group will
We are aware the road ahead is filled with challenges.
only grow stronger. If we are to come out of these uncertain
However, the Group will continue to pursue its strategic
times feeling proud of ourselves and our decisions, strong
objectives, focusing mainly on intensive digitalisation and
foundations are an absolute must. At the time this letter was
providing top quality user experience, as well as sustainable
created, we have already acquired the Slovenian Sberbank
operations and development, whilst justifying the expectations
banka d.d., which, albeit early days, I dare to say, has a
of its shareholders through dividend payments.
potential to turn into a textbook case of how the Group can act
rapidly, with logical consistency, and flawless delivery of its
Our focus on EPS and DPS value accretive business decisions
business strategy.
remains intact, and we will never look in any other direction.
Referring to the above, we on the Supervisory Board can
Still, while the past is behind us, with the memory fading
only assure you the Group is transitioning towards the core of
quickly in light of the recent developments, we have to
our strategy, to be the talent magnet for tech and consumer
acknowledge the Group's remarkable business performance
behaviour-savvy jobseekers, who are and will be able to
in 2021 which led to a record high profits. Such an excellent
grasp with the challenges defining the future of banking.
result proved that even in times of economic difficulties,
knowledge, experience, and sound business decisions based
on sustainable principles can generate success.
2021 Business Developments
Following a pandemic-induced contraction in 2020, the
global economy recovered strongly in 2021. The rebound
Primož Karpe
President of the Supervisory Board of NLB
Dear Shareholders,
The times we find ourselves in make me think of the following
quote which adequately reflects the logic we are trying to
pursue at our NLB Group: “In these uncertain times, we don’t
necessarily need more command and control over what we
already exercise in our regular business operations, but we
We believe the Group’s business results prove that its
was particularly strong after the re-opening of economies,
objectives are set prudently and strategically, focusing on
but then the momentum eased throughout the year due to
the innovative, higher recurring growth financial products,
rising headwinds in the form of supply chain bottlenecks,
addressing digital innovation across our key markets.
inflationary pressures, and new COVID-19 outbreaks.
Moreover, the past year has once again reaffirmed the
However, the impact of the pandemic on economic activity
importance of banking members, which are key factor
faded over the course of the year.
do need all possible means to engage everyone’s intelligence
not only in the Group’s business operations, but also in
whilst solving and addressing business challenges as they
arise.” Specifically, after the visible ease of the COVID-19
their respective markets, where the majority of them hold
Similar to global economic trends, the Group’s region
systemically important positions. We firmly believe that further
rebounded sturdily from the pandemic-induced contraction.
impact on business performance and the strong economic
intragroup consolidation will bring additional opportunities to
Private consumption was the main growth driver, and it was
rebound across our entire region which lifted our Group
leverage these synergies and further strengthen our position.
propelled by credit growth, remittances, and pent-up demand.
performance on a record level, we are now awakening to a
This way we will do everything needed to actually spearhead
Tourism-dependent countries benefitted in particular from
world where worldwide sanctions imposed on Russia have
the innovation trends in banking, and not merely defend our
lifting restrictions at home and abroad, which resulted in the
dramatically increased the markets’ volatility, and all the while
market positions in the future at times when some worldwide
rebound in the tourism sector over the summer. Nonetheless,
spill-over sector-specific effects are re-calculated over and
trends indicate that digitalization is set to disrupt the classical
the Group’s region was not immune to the global surge in
over again. Uncertainty looms all over the civilised world.
banking model in the segment of consumer revenue.
commodity prices, rising energy prices and supply-chain
When it comes to our business, we need a calm and focused
The acquisition of Komercijalna Banka, Beograd at the end of
resulted in increasing inflationary pressures.
mind, swift execution ability, and the determination to not
2020 exemplifies that we are able to execute on the complex
stray away from our core business growth strategy, keeping
harmonisation process with NLB standards with regard to
Nevertheless, the economic rebound in 2021 had a positive
the promises to all our stakeholders. We also need to
the alignment of services, financial products, and support
impact on banking systems in the Group’s region with lending
bottlenecks, which coupled with revival in domestic demand
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
8
activity recording a notable revival in corporate, as well as
Net interest margin of 2.07% and operational business
(in addition to Primož Karpe and Andreas Klingen, members
household loans while strong inflow of deposits continued
margin of 3.28% have stabilised with TLTRO recognition of
were also Gregor Rok Kastelic, Mark William Lane Richards,
also in 2021. Positive developments reflected also in the
interest income in Q4 having a marginal positive impact
Shrenik Dhirajlal Davda, David Eric Simon, Verica Trstenjak,
profitability of the banking systems of the Group’s region,
in the last quarter. The cost-to-income ratio increased by
and Islam Osama Zekry) and four were representatives of
which recorded a notable improvement.
four percentage points YoY, to 62.3%, accounting for the
employees (Sergeja Kočar, Bojana Šteblaj, Janja Žabjek
costs of Komercijalna Banka group integration process. The
Dolinšek, and Tadeja Žbontar Rems).
extraordinary results from workout of the legacy NPL book
and material contributions from Komercijalna Banka group
In 2021, the Supervisory Board held seven regular and 12
on top, led to a EUR 35.8 million net release of impairments
correspondence sessions. In its work, the Supervisory Board
2021 Business Performance
The remarkable performance of the Group in 2021 led to a
record high profit of EUR 236.4 million – a substantial growth
from the previous year when excluding the effects from the
acquisition of Komercijalna Banka, Beograd, as unaudited
2021 data shows.
Top line growth continued throughout 2021, net interest
income growing by 37% YoY based on strong loan growth
also contributed by Komercijalna Banka group, adding EUR
98.5 million to that revenue line. With realised higher loan
volumes, the Group recorded growth in net interest income in
most of its markets in the region despite the still challenging
margin environment. Impressive growth in net fee and
commission income, up 39% YoY, further added to the Group’s
performance in 2021. Strong demand for investment products,
such as asset management products and bancassurance, and
at the same time strong income generation from increased
business activities (such as payments), led to increase in fee
and commission income. The Group managed to keep costs
within the guidance, also considering an important part
of Komercijalna Banka group integration costs. The Bank
remains a highly desired employer in the region, while the staff
cost is tightly managed by proactive approach to employment
through sourcing employees from all over the region.
The Group recorded 9% loan growth in 2021, thus exceeding
the full year guidance. Loans to individuals recorded double
digit growth throughout the group (12% or 13% excluding
impact of Komercijalna Banka, Banja Luka sale), driven
by strong production of housing loans in Slovenia and the
healthy demand for consumer loans in strategic foreign
markets. Deposits increased by EUR 1,243.6 million in 2021
on the Group level. Deposits from individuals increased by
a mere 5%, indicating that individuals migrated part of their
savings to alternative investments (e.g., mutual funds). The
strengthened liquidity and capital position, with a CET1 ratio
at 15.5% and TCR at 17.8%, ensure a comfortable capacity for
an ambitious shareholder pay-out and continued drive for
growth opportunities. Despite substantial growth, the Group
has managed to maintain RWA close to 2020 levels, helped
and provisions for credit risk – ending the year at -41 bps
cost of risk. The Group established EUR 27.1 million of other
impairments and provisions, of which EUR 14.8 million for
HR restructuring charges in Serbia and the rest mostly from
litigation charges in Serbia – although the recent dynamic in
the latter is more favourable.
NLB Group maintains its corporate governance
principles in line with the highest standards
The Supervisory Board performed its work in accordance
with applicable laws (predominantly, but not exclusively with
recently changed the Companies Act (ZGD-1) and the Banking
Act (ZBan-3), as well as powers and procedures as set by the
Articles of Association of NLB and the Rules of Procedure of
the Supervisory Board of NLB. It carried out its function of
assuring efficient and active supervision over the management
of NLB and the Group in its duty of careful and scrupulous
performance, while adhering to the internal acts of the Bank.
In performing its duties, the Supervisory Board followed the
recommendations of the Corporate Governance Code for
Listed Companies. The Corporate Governance Statement of
NLB transparently reveals deviations from the mentioned
code, as well as explains key aspects of the Bank’s corporate
governance, particularly the composition and work of the
Bank’s Management Board and Supervisory Board and
its committees, internal control mechanisms, and internal
control functions. It is published in the business part of this
Annual report. The Management Board adopted mentioned
statement on its session dated 1 February 2022 and the
Supervisory Board on its session dated 24 February 2022
and had no comments to it (recommendation 5 of the
aforementioned Code). Next year, the Supervisory Board
will report on implementing new recommendations made
with renewed version of the Corporate Governance Code for
Listed Companies, that will be first used for preparation of the
Corporate Governance Statement for the business year 2022.
of NLB received professional assistance from five operational
committees, namely: The Audit Committee, the Risk Committee,
the Nomination Committee, the Remuneration Committee, and
the Operations and Information Technology Committee. These
committees function as consulting bodies of the Supervisory
Board and in great detail discuss the materials and proposals
of the Management Board related to a particular area. Based
on their findings the Supervisory Board passed appropriate
resolutions. Each of the five committees is composed of at least
three members of the Supervisory Board.
Through the year, the Supervisory Board monitored the
implementation and effectiveness of the NLB Group’s strategy.
The Supervisory Board issued approvals to the Management
Board related to the Bank’s business policy, the Financial Plan,
and the Budget of the NLB Group, adopted the NLB Group
Annual Report, the NLB Group Sustainability Report, the NLB
Group Sustainability Framework, Pillar 3 disclosures for the
NLB Group, periodic business reports, adopted decisions
related to management of risk, reported on cost optimisation
activities, published the annual (and periodic) Internal Audit
Plan and Plan of Compliance & Integrity, adopted yearly
comprehensive opinion of the Internal Audit, adopted
performance assessments and appointments of directors of
Compliance & Integrity, and the Internal Audit.
The Supervisory Board adopted decisions with regards to the
convocation of the two General Meetings of shareholders,
gave consent to termination of office of the Management
Board (Petr Brunclík, COO with the termination of office
with effect on 30 June 2021) and gave consent to nomination
of a candidate for a member of a Supervisory Board. The
Supervisory Board gave consent to renovation of internal
policy on Internal Controls System; Rules and Procedures for
the Sustainability Committee; Review of the Diversity Policy;
New Remuneration Policy for Employees for the NLB and
the NLB Group; The Remuneration Policy of the Members
of Supervisory Board of NLB; and the Members of the
Management Board of NLB. It also gave consent to annual
by inclusion of BiH and Macedonia on EBA's third party
equivalent list, and by conclusion of MIGA guarantees.
At the end of 2021, the Supervisory Board was composed of 12
members, of which eight were representatives of shareholders
MB Statement
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Strategy
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Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
9
self-assessment of employees performing special work and
While members of the Supervisory Board have the proper and
and ensured that it regularly and thoroughly monitored the
approved achievements of the Management Board and
complementary knowledge, experience, and skills to perform
Bank’s and the Group’s operations in 2021 within its powers
proposed new goals for the Management Board.
their duties, they all have different professional, national, and
and efficiently supervised the Bank’s and NLB Group’s
educational backgrounds. All the members of the Supervisory
management and operations.
The Supervisory Board was active in adopting decisions
Board have the necessary personal integrity and professional
on establishment of new companies (in Serbia and North
ethics to hold their positions, which was confirmed by the
Macedonia), cross-border financing and international
positive Fit & Proper assessment. This provides the assurance
syndicated financing, transactions with MIGA, large
that we can carry out our supervisory roles in a responsible
exposures, sale of receivables, claim write-offs, the divestment
manner and make decisions that benefit NLB and add
of the Group companies, legal proceedings involving NLB
value to the Group. The delivery of critical and assertive
and the Group members, transactions with persons in special
opinions has been and will always remain at the core of our
relations with the Bank, Worker’s Council 2021 report, etc.
decision-making principles through the expected engaged
On the session of the Supervisory Board dated 20 January
regularly upgrade the skills and the knowledge required for
participation of all the members. I can assure you we also
2022, following the best practice selection and evaluation
the fulfilment of our duties.
process, the Supervisory Board appointed three additional
new members of the Management Board, namely: Hedvika
The Supervisory Board continued to act in accordance with
Usenik, Antonio Argir, and Andrej Lasič, thus expanding
the highest ethical standards of management, considering
it to six members in total. They all come from NLB or NLB
the prevention of conflict of interest. The Supervisory Board
Group, have extensive experience and proven value
members took precautionary measures to avoid any
creating a positive track record. We believe that the Bank's
conflicts of interest that might have influenced their decisions.
Management Board, supplemented with three new members,
Throughout the year, there were 10 potential conflicts of
is properly equipped for challenge that await us and offers
interest identified at sessions of the Supervisory Board, and
the best combination of various knowledge, experience, and
they were all handled with utmost professional due care.
competencies. A five-year term of office for the new members
will start after they have obtained consent from regulator.
Throughout the year, the Supervisory Board has maintained a
Until then, they will continue to perform the functions of
well-balanced professional relationship with the Management
executive assistants to the Management Board.
Board and enjoyed timely, comprehensive, and data-
Through the year, we acknowledged regular reports on
Board to adopt all its decisions in line with the professional
documents received from the regulator(s), namely the BoS and
interests of the Bank, whilst always adhering to banking
the ECB, and on the implementation of the requirements of
regulations and its statutory powers.
supported inputs from the latter, enabling the Supervisory
mentioned regulators and adopted other amendments to the
internal policies.
Despite extremely demanding times during second year
of COVID-19 pandemic, the Supervisory Board members
Review of the NLB Group Annual Report 2021
Pursuant to Article 282 of the Companies Act (ZGD-1), Article
50 of the Banking Act (ZBan-3), it is the obligation of the
Supervisory Board to examine the Annual Report together
with the auditor's report and the proposal for the allocation
of distributable profit presented by the Management Board.
The NLB Group Annual Report 2021 and unaudited financial
statements of NLB Group were examined by the Audit
Committee and the Supervisory Board at its meetings on 23
February and 24 February 2022.
Within the legal deadline, the Management Board of NLB
submitted to the Supervisory Board the NLB Group Annual
Report 2021, including the Business Report and the Financial
Report, with the audited separate financial statements of
NLB and the consolidated financial statements of the NLB
and its subsidiaries, and the auditor's opinion. According to
the auditor's opinion, in all material respects, the separate
and consolidated financial statements enclosed give a true
and fair view of the financial position of NLB and the NLB
Group as of 31 December 2021, the separate and consolidated
income statement, the separate and consolidated statement
of other comprehensive income, the separate and the
consolidated statement of changes in equity and the separate
and the consolidated statement of cash flows for the year
then ended, in accordance with the International Financial
Reporting Standards as adopted by the European Union.
It was also established based on the review of the business
report that the information contained in the business section
of the Annual Report is consistent with the audited financial
With the aim of ensuring sustainable development, the
assess that the Management Board managed to successfully
statements of the Bank and the NLB Group.
Group strives to actively contribute to a more balanced and
implement the NLB Group Strategy. The very solid financial
inclusive economic and social system through three lines of
results of NLB Group in 2021 enabled the Bank to pay out
Yours truly,
actions: sustainable operations, sustainable finance, and
a total of EUR 92.2 million in dividends to the shareholders,
Corporate Social Responsibility. In 2021, the Group moved
thereby reaffirming NLB Group’s stable and successful
from the awareness-raising phase, to the phase of actively
business operations and strong capital position. The
implementing sustainability elements into the business
Supervisory Board assesses that the NLB Group has
model. Therefore, in 2021, the Bank adopted the NLB Group
successfully utilised the opportunities offered to it by the
Sustainability Framework and put in place the 4-level NLB
supportive economic environment of strong GDP growth
Group Sustainability Governance Structure, which is as follows:
in the region, and that performance and results of the NLB
(i) the Supervisory Board; (ii) the Sustainability Committee
Management Board proved again we can have full trust in our
(consultative body and a decision-making body of the
executive team.
Management Board), (iii) the Sustainability Team, and (iv) the
Supervisory Board of NLB
NLB Group Working Groups. The Supervisory Board adopts
Pursuant to Article 272 of the Companies Act (ZGD-1) and
decisions related to sustainability issues in almost every session.
the above report the Supervisory Board of NLB established
Primož Karpe
Chairman
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
10
Strategic Members Overview
Table 1: Strategic members overview
NLB Group
NLB,
Ljubljana
Slovenia
NLB
Lease&Go,
Ljubljana
Serbia
North
Macedonia
Bosnia and
Herzegovina
Kosovo
Montenegro
NLB
Skladi,
Ljubljana
Komercijalna
Banka,
Beograd
NLB
Banka,
Beograd
KomBank
Invest,
Beograd
NLB
Banka,
Skopje
NLB
Banka,
Banja Luka
NLB
Banka,
Sarajevo
NLB
Banka,
Prishtina
NLB
Banka,
Podgorica(vii)
75
675,310
12,700
5,153
9,660
208.4
26.3%
Market position in 2021
Branches
Active clients
Total assets (in EUR million)
Net loans to customers
(in EUR million)
Deposits from customers
(in EUR million)
Result after tax (in EUR million)
Market share by total assets
Macroeconomic indicators for 2021
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
Current account of the balance
of payments (as a % of GDP)
Budget deficit/surplus
(as a % of GDP)
479(i)
1,891,064(ii)
21,577
10,587
17,641
236.4
-
7.6
2.9
10.7
-1.4
-4.8
-
-
120
100
-
-0.9
-
8.1
2.0
4.8
4.8
-6.5
-
-
2,128(iii)
-
-
9.0
37.3%(iv)
190
28
975,033
142,964
4,165
1,796
3,425
34.8
9.7%
715
512
449
4.3
1.6%(vi)
7.4
4.1
11.1
-4.4
-4.1
-
-
2
-
-
0.0
-
48
47
36
33
22
415,368
213,112
129,954
230,014
84,342
1,771
1,084
1,400
39.0
16.9%
4.0
3.2
15.7
-3.5
-5.4
927
471
760
18.2
728
453
593
10.0
931
635
799
24.4
751
492
610
10.1
19.1%(viii)
5.4%(v)
16.3%
14.1%
5.9
2.0
15.5
-2.8
-2.7
10.4
3.3
24.0
-6.8
-3.6
12.0
2.4
16.6
-16.4
-4.7
(i) Including Komercijalna Banka, Beograd.
(ii) Number of active clients of Komercijalna Banka, Beograd not included in total number of NLB Group active clients due to different definitions.
(iii) Assets under management.
(iv) Market share of assets under management in mutual funds.
(v) Market share in the Federation of BiH as at 30 September 2021.
(vi) Market share as at 30 September 2021.
(vii) Merger of NLB Banka, Podgorica and Komercijalna Banka, Podgorica on 12 November 2021.
(viii) Market share in the Republic of Srpska.
MB Statement
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Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
11
Key Highlights
Financial
Performance
Strong business performance
marked by continuous loan growth,
Business
Overview
increased fee and commission
Leading player in SEE
income, one-off effects and
negative cost of risk
Asset
Quality
Good asset quality trends
with well diversified portfolio,
prudent credit standards
and decisive workout
approach
Capital
& Liquidity
Strengthened capital and
liquidity position ensuring
capital return and continued
growth opportunities
Strategy
Committed to pursue the
strategic objectives
• Profit a.t. amounted to EUR 236.4 million.
• A robust and sustainable universal
• Strong loan growth of 12% YoY to
individuals, with the high production of
new loans (especially housing loans)
and 8% YoY to corporates, compensated
reduction in interest rates, and
supported net interest income.
• The economic rebound led to the
business model with increased
focus on digitalisation and ESG.
• Striving to become a
regional champion.
• Higher availability and
use of digital channels –
a wider range of 24/7 digital
• Positive trends in asset quality
continued, resulting in a further
decline of the NPL ratio, and the
negative cost of risk.
• Well-diversified, stable, and robust
credit portfolio quality.
• Proactive approach to
workouts and more favourable
optimisation of the investment portfolios
solutions offered to clients.
macroeconomic predictions
of households, and the growth of
housing loans, mutual funds, and
bancassurance, hence increasing net
fee and commission income (39% YoY;
14% YoY without the Komercijalna Banka
group contribution).
• The integration process of the
Komercijalna Banka banks with
the NLB banks in Serbia and
Montenegro is progressing as
planned. In Podgorica, the merger
than expected contributed to the
negative cost of risk (-41 bps).
• The stable and low level of
NPE (EBA def.) of 1.7% with a
comfortable NPL coverage ratio of
was successfully completed in
57.9%.
• No asset quality deterioration was
observed in loans with expired
moratoriums.
• Continuous cost discipline.
November 2021, while in Serbia
the merger is on schedule to
be completed in the Q2 2022.
Komercijalna Banka in BiH was
successfully sold in December 2021.
• Non-recurring valuation income in
the amount of EUR 14.8 million from
repayment of exposure, classified as
non-performing, EUR 9.0 million of other
operational income from the settlement
of legal dispute, and EUR 8.1 million loss
from the sale of Komercijalna Banka,
Banja Luka.
• Positive impact of the release of
impairments and provisions for
credit risk (EUR 35.8 million), mostly
due to successful repayment of on-
and off-balance exposures and
changed parameters related to more
favourable macroeconomic forecasts.
EUR 27.1 million net established other
impairments and provisions, due to
restructuring provisions and provisions
for legal risk, mostly related to
Komercijalna Banka, Beograd.
• The capital position was
• The Bank continues to execute
comfortably above regulatory
requirements (TCR of 17.8%, 1.2
p.p. higher YoY). Inclusion of the
negative goodwill recognised at
its strategic initiatives as
well as explore new business
opportunities on both domestic
and other regional markets where
the acquisition of Komercijalna
the Group is not yet present.
Banka, Beograd as of 30 June 2021,
and partial inclusion of the 2021
result on one side and successful
RWA optimisation measures
undertaken on the other, had a
positive impact on the capital
position.
• In 2021, the Bank paid out
a cumulative dividend of
EUR 92.2 million.
• The liquidity position of the Group
remained very strong, with a high
level of unencumbered liquid
assets in total assets (38.3%). The
strong deposit base demonstrated
client confidence in the Group.
• The Bank participated in the ECB
TLTRO III operation. The positive
lending performance will partially
compensate the negative outcome
from holding liquidity reserves.
• The digital leadership position
in Slovenia is being applied
to other markets in which the
Group operates. The vision is
to become one of the best data
science companies in the region
to productively use customer
data and to evolve a local flexible
digital ecosystem offering
products and services for clients.
• Continue to serve the community
aiming to improve the quality
of life in the Group’s region.
Driving business value through
sustainability and commitment
to enhance the management
of environmental and social
risks of its operations, and
meeting stakeholders’ needs and
expectations.
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
12
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Key Performance Indicators
Table 2: Key financial indicators for NLB Group and NLB
Income statement data (in EUR million)
Net interest income
Net non-interest income(i)
Net non-interest income (BoS)(i)
Total costs(i)
Operating costs (BoS)(i)
Result before impairments and provisions(ii)
Impairments and provisions
Gains less losses from capital investments in subsidiaries, associates, and joint ventures
Result before tax
Result of non-controlling interests
Result after tax
Financial position statement data (in EUR million)
Total assets
Gross loans to customers
Impairments and deviations from FV
Net loans to customers
Financial assets
Deposits from customers
Equity
Non-controlling interests
Total off-balance sheet items
Key financial indicators
a) Capital adequacy
Total capital ratio
Tier 1 ratio
CET 1 ratio
Total RWA (in EUR million)
RWA / Total assets
b) Asset quality
NPL coverage ratio 1 (coverage of gross non-performing loans with impairments for all loans)
NPL coverage ratio 2 (coverage of gross non-performing loans with impairments for non-performing loans)
NPL coverage ratio (EBA definition)(iii)
NPL coverage ratio (EBA definition) (BoS)(iv)
NPL volume (in EUR million)
NPL ratio (internal def.; NPL / Total loans)
Net NPL ratio (internal def.; net NPL / Total net loans)
NPL ratio (EBA definition)(iii)
NPL ratio (EBA definition) (BoS)(iv)
NPE ratio (EBA definition)
NPE ratio (EBA definition) (BoS)(v)
Received collaterals / NPL
NPL collateral received / NPL (EBA definition)
Credit impairments and provisions / RWA
2021
2020
2019
NLB Group
NLB
NLB Group
409
258
294
-415
-451
252
9
1
261
11
236
21,577
10,903
-316
10,587
5,208
17,641
2,079
137
4,655
17.8%
15.5%
15.5%
12,667
58.7%
86.1%
57.9%
58.4%
58.4%
367
2.4%
1.0%
3.4%
2.4%
1.7%
1.7%
61.7%
58.8%
-0.3%
139
222
232
-184
-193
178
34
-
211
-
208
12,700
5,250
-97
5,153
3,034
9,660
1,552
-
3,489
24.6%
20.3%
20.3%
6,709
52.8%
75.1%
60.6%
60.8%
60.8%
130
1.5%
0.6%
2.4%
1.5%
1.1%
1.1%
60.0%
63.1%
-0.4%
300
205
360
-294
-311
211
-71
1
278
3
270
19,566
10,033
-388
9,645
5,120
16,397
1,953
170
4,671
16.6%
14.2%
14.1%
12,421
63.5%
81.8%
57.3%
56.9%
56.9%
475
3.5%
1.5%
4.5%
3.4%
2.3%
2.3%
60.7%
42.4%
0.5%
NLB
139
173
180
-180
-188
131
-17
-
114
-
114
11,027
4,753
-158
4,595
3,017
8,851
1,451
-
3,684
27.1%
22.3%
22.3%
6,029
54.7%
76.0%
57.9%
55.3%
55.3%
208
3.0%
1.3%
4.0%
2.8%
1.9%
1.9%
65.8%
43.5%
0.1%
NLB Group
318
199
219
-305
-321
212
-1
4
215
8
194
14,174
7,938
-334
7,605
3,830
11,612
1,686
45
4,222
16.3%
15.8%
15.8%
9,186
64.8%
89.2%
65.0%
64.5%
64.5%
375
3.8%
1.4%
4.6%
3.8%
2.7%
2.7%
66.6%
35.4%
-0.1%
NLB
158
197
204
-191
-198
164
14
-
178
-
176
9,802
4,718
-129
4,589
3,169
7,761
1,333
-
3,644
22.6%
21.8%
21.8%
5,225
53.3%
76.2%
56.7%
55.5%
55.5%
169
2.8%
1.3%
3.3%
2.7%
2.0%
2.0%
72.0%
33.6%
-0.3%
Further details on the definition of certain indicators in this table are available in the chapter Alternative Performance Indicators.
(i) Data for 2019 are adjusted to the changed schemes as prescribed by the BoS (relocation of some items from net other income to other general and administrative expenses).
(ii) Result before impairments and provisions of NLB Group for the year 2020 does not include negative goodwill.
(iii) Loans and advances without loans and advances classified as held for sale, cash balances at CBs and other demand deposits.
(iv) Loans and advances including cash balances at CBs and other demand deposits.
(v) The carrying amount of debt instruments measured at fair value through other comprehensive income (FVOCI) is increased by value adjustments due to impairments.
(vi) Calculated on the basis of average total assets.
(vii) Calculated as Net income from operational business (NII - Tier 2 bonds expenses + Net fee and commission income + Recurring net income from financial operations) / Average total assets.
(viii) As per share register of KDD. The shares are listed on Ljubljana Stock Exchange. The Bank of New York Mellon (the 'GDR Depositary') represented in the share register of KDD as one holder is not the beneficial owner of shares, it holds shares in its
capacity as the depositary for the GDR holders. The GDRs representing shares are issued against the deposit of shares and are listed on London Stock Exchange. Therefore, the number in the share register of KDD does not represent all final beneficial
owners of the Bank shares. The rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary and individual GDR holders do not have any direct right to either attend the general meeting of bank's shareholders
or to exercise any voting rights under the deposited shares.
(ix) Including Komercijalna Banka, Beograd.
(x) Including Komercijalna Banka, Beograd, Komercijalna Banka, Banja Luka and Komercijalna Banka, Podgorica.
(xi) Unsolicited rating.
Contents
13
c) Profitability
Net interest margin (BoS)(vi)
Financial intermediation margin (BoS)(i)
Operational business margin(vii)
ROE b.t.
ROA b.t.
ROE a.t.
ROA a.t.
d) Business costs
Operating costs / Average total assets (BoS)(i)
CIR(i)
Total costs / RWA(i)
Total costs / Total assets(i)
e) Liquidity
Liquidity assets / Short-term financial liabilities to non-banking sector
Liquidity assets / Average total assets
Liquidity Coverage Ratio (LCR)
Net stable funding ratio (NSFR)
f) Leverage ratio
Leverage ratio
g) Other
Market share in terms of total assets
LTD
Total revenues / RWA(i)
Key indicators per share
Shareholders(viii)
Shares
The corresponding value of one share (in EUR)
Book value (in EUR)
Branches
Number of branches
Employees
Number of employees
International credit ratings
S&P
Fitch
Moody's(xi)
2021
2020
2019
NLB Group
NLB
NLB Group
2.0%
3.4%
3.3%
11.8%
1.3%
11.4%
1.1%
2.2%
62.3%
3.3%
1.9%
48.9%
40.2%
252.6%
185.2%
10.2%
-
60.0%
5.3%
-
-
-
103.9
479(ix)
8,185
1.2%
3.1%
2.3%
14.0%
1.8%
13.8%
1.8%
1.6%
50.8%
2.7%
1.4%
59.4%
47.4%
314.5%
171.4%
13.6%
26.3%
53.3%
5.4%
2,571
20,000,000
10
77.6
75
2,510
2.0%
4.4%
3.2%
15.4%
1.8%
15.4%
1.8%
2.1%
58.3%
2.4%
1.5%
56.1%
51.8%
257.5%
165.7%
7.8%
-
58.8%
4.1%
-
-
-
97.6
530(x)
8,792
Rating
BBB-
-
Baa1
Outlook
Stable
-
Stable
Rating
BBB-
BB+
Baa1
NLB
1.3%
3.1%
2.5%
8.2%
1.1%
8.2%
1.1%
1.8%
57.9%
3.0%
1.6%
65.8%
54.9%
336.3%
162.1%
10.3%
24.7%
51.9%
5.2%
2,455
20,000,000
10
72.5
80
2,591
Outlook
Negative
Negative
Stable
NLB Group
2.4%
4.0%
3.8%
12.7%
1.6%
11.7%
1.5%
2.4%
59.0%
3.3%
2.2%
54.7%
44.7%
324.9%
159.5%
8.7%
-
65.5%
5.6%
-
-
-
84.3
318
NLB
1.7%
3.9%
2.9%
13.4%
1.9%
13.3%
1.9%
2.2%
53.9%
3.7%
2.0%
63.8%
52.1%
362.1%
158.9%
9.7%
23.8%
59.1%
6.8%
2,100
20,000,000
10
66.7
93
5,878
2,659
Rating
BBB-
BB+
Baa2
Outlook
Stable
Stable
Positive
Further details on the definition of certain indicators in this table are available in the chapter Alternative Performance Indicators.
(i) Data for 2019 are adjusted to the changed schemes as prescribed by the BoS (relocation of some items from net other income to other general and administrative expenses).
(ii) Result before impairments and provisions of NLB Group for the year 2020 does not include negative goodwill.
(iii) Loans and advances without loans and advances classified as held for sale, cash balances at CBs and other demand deposits.
(iv) Loans and advances including cash balances at CBs and other demand deposits.
(v) The carrying amount of debt instruments measured at fair value through other comprehensive income (FVOCI) is increased by value adjustments due to impairments.
(vi) Calculated on the basis of average total assets.
(vii) Calculated as Net income from operational business (NII - Tier 2 bonds expenses + Net fee and commission income + Recurring net income from financial operations) / Average total assets.
(viii) As per share register of KDD. The shares are listed on Ljubljana Stock Exchange. The Bank of New York Mellon (the 'GDR Depositary') represented in the share register of KDD as one holder is not the beneficial owner of shares, it holds shares in its capacity as the
depositary for the GDR holders. The GDRs representing shares are issued against the deposit of shares and are listed on London Stock Exchange. Therefore, the number in the share register of KDD does not represent all final beneficial owners of the Bank shares. The
rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary and individual GDR holders do not have any direct right to either attend the general meeting of bank's shareholders or to exercise any voting rights under the
deposited shares.
(ix) Including Komercijalna Banka, Beograd.
(x) Including Komercijalna Banka, Beograd, Komercijalna Banka, Banja Luka and Komercijalna Banka, Podgorica.
(xi) Unsolicited rating.
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Outlook
Table 3: Market performance and outlook for the period 2022-2023
Regular income
Exceeding EUR 600 million
EUR 640.9 million
~ EUR 670 million
2021 Guidance
Performance in 2021
2022(iv)
2023
> EUR 700 million
Costs
Cost of risk
Loan growth
Dividend
ROE a.t.
Initial increase in cost base in the year 2021,
costs projected around EUR 430 million
including integration costs
Around -20 bps
Mid-single digit loan growth
EUR 421.4 million(i)
-41 bps
9%
EUR 92.2 million
EUR 92.2 million(ii)
> 10%
11.4%
Costs at 2021 level
~ EUR 400 million
20-30 bps
30-50 bps
High single digit loan growth
High single-digit loan growth
EUR 100 million
~ 10%,
(ROE normalized(iii): 12%)
EUR 110 million
> 10%
(ROE normalized(iii): > 12%)
(i) Including integration costs: EUR 7.8 million G&A costs and EUR 5.9 million HR provisions.
(ii) Further information is available in the chapter Outlook 2022.
(iii) ROE normalized = Result a.t. w/o minority shareholder profit divided by consumed capital. Consumed capital computed as 13.06% of average RWA reduced for minority shareholder capital contribution.
(iv) If legal remedies against the adopted law in February 2022 concerning loan agreements in Swiss francs concluded by banks operating in Slovenia (including NLB) and individuals are unsuccessful, the Bank estimated a negative pre-tax effect on the operations of NLB
and NLB Group should not exceed EUR 70 - 75 million. This would have a limited (up to 55 bps) negative impact on the capital position.
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Shareholder structure of NLB
The Bank’s shares are listed on the Prime Market sub-
Table 4: NLB’s main shareholders as at 31 December 2021(i)
segment of the Ljubljana Stock Exchange (ISIN SI0021117344,
Ljubljana Stock Exchange trading symbol: NLBR) and the
GDRs, representing shares, are listed on the Main Market
Bank of New York Mellon on behalf of the GDR holders(ii)
of the London Stock Exchange (ISIN: US66980N2036 and
of which Brandes Investment Partners, L.P.(iii)
US66980N1046, London Stock Exchange GDR trading symbol:
NLB and 55VX). Five GDRs represent one share of NLB.
of which EBRD(iii)
of which Schroders plc(iii), (iv)
Republic of Slovenia (RoS)
Other shareholders
Total
Shareholder
Number of shares
Percentage of shares
11,357,368
/
/
/
5,000,001
3,642,631
20,000,000
56.79
>5 and <10
>5 and <10
>5 and <10
25.00
18.21
100.00
(i) Information is sourced from NLB’s shareholders book accessible at the web services of CSD (Central Security Depository, Slovenian: KDD - Centralna klirinško depotna družba)
and available to CSD members. The information on major holdings is based on the self-declarations by individual holders pursuant to the applicable provisions of Slovenian
legislation which requires that the holders of shares in a listed company notify the company whenever their direct and/or indirect holdings pass the set thresholds of 5%, 10%,
15%, 20%, 25%, 1/3, 50%, or 75%. The table lists all self-declared major holders whose notifications have been received. In reliance of this obligation vested with the holders of
major holdings, the Bank postulates that no other entities nor any natural person holds directly and/or indirectly 10 or more percent of the Bank’s shares.
(ii) The Bank of New York Mellon holds shares in its capacity as the depositary (the GDR Depositary) for the GDR holders, and is not the beneficial owner of such shares. The
GDR holders have the right to convert their GDRs into shares. The rights under the deposited shares can be exercised by the GDR holders only through the GDR Depositary and
individual GDR holders do not have any direct right to either attend the shareholder’s meeting or to exercise any voting rights under the deposited shares.
(iii) The information on GDR ownership is based on self-declarations by individual GDR holders as required pursuant to the applicable provisions of Slovenian law.
(iv) Further information is available in chapter Events after the end of the 2021 financial year.
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Key Events
January
February
March
April
May
June
July
August
September
October
November
December
January
New member of the Supervisory Board: Tadeja Žbontar
Rems was elected as the member of the Supervisory Board of
the Bank – representative of workers.
‘Top Employer’ certificate: The Top Employers Institute
awarded the Bank the prestigious ‘Top Employer’ certificate
for the 6th consecutive year.
February
Quick loans: Increased accessibility of quick loans for
individuals via video call.
April
Fee for customers balances: The Bank introduced a monthly
fee for average monthly balances of individuals’ assets over a
certain threshold (currently EUR 100,000).
Increased shareholding in KB, Beograd: After the Bank
acquired additional shares, its shareholding in Komercijalna
Banka, Beograd increased to 88.28%.
Change in Management Board: Petr Brunclík, member of the
Management Board and COO, agreed with the Supervisory
Board on the termination of his office taking effect on 30 June.
May
New payment methods: NLB, as the first bank in Slovenia,
introduced the Flik P2M payment method and is offering a
new debit Mastercard for individuals and legal persons.
June
New member of the Supervisory Board: Islam Osama Zekry
was confirmed as a new member of the Supervisory Board.
Dividend payment: The Bank paid the first instalment of
dividends in the amount of EUR 12.0 million.
Bankarium: The first banking museum in Slovenia was
opened for the public.
November
Consolidation of operations in Montenegro: The merger of
NLB Banka, Podgorica and Komercijalna Banka, Podgorica
was completed. 4
July
ECB stress tests: The results of stress tests carried out for
important banks by the ECB to assess the resilience of
financial institutions were disclosed. The result ranks the
Group among banks with solid resilience. 3
Avgust
Advertiser of the Year: Slovenian Chamber of Advertising has
awarded NLB the title Advertiser of the Year for 2020. NLB was
the only bank in history to receive such award in Slovenia.
September
New products in offering: The Bank began offering an
extraordinary overdraft with a gradual decrease and
automatic renewal for individuals, as well as a new health
insurance option.
October
Dividend payment: The Bank paid the second instalment of
dividends in the amount of EUR 12.8 million.
Marketing award: The Marketing Association of Slovenia
awarded the Bank with the main award in the category
‘Determination of Marketing Strategies’ for the project
‘Strategic Initiative of Customer Focus.’
December
Sale of KB, Banja Luka: The Bank successfully sold 100% of its
ordinary shares of Komercijalna Banka, Banja Luka to Banka
Poštanska štedionica, Beograd.
Expanding leasing activities: The Group initiated activities for
expanding leasing operations in Serbia and North Macedonia.
M-bank Klikpro: M-bank Klikpro was upgraded with a new
digital signing solution.
NLB share awarded: NLB shares (NLBR) received the
Ljubljana Stock Exchange Award, ‘Prime Market Share of the
Year.’
Supervisory and Management board transactions with
NLBR shares: Primož Karpe, Chairman of the Supervisory
board, bought 200 ordinary shares of NLB. Blaž Brodnjak,
CEO & CMO and Archibald Kremser, CFO both bought 100
ordinary shares of NLB.
Dividend payment: The Bank paid an additional incremental
dividend in the amount of EUR 67.4 million, contributing to the
2021 cumulative payout of EUR 92.2 million.
3 For more information see the chapter Risk Management.
4 For more information see the chapter Strategic Foreign Markets.
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Market Performance of NLB’s Shares and GDRs
NLB Shares and GDRs
In 2021, European banking sector stocks continued their
higher in comparison to the bottom of 2020. Since peaking in
recovery that was initiated towards the end of 2020. In
November 2021, the Bank’s stock moved slightly lower over the
general, European banking sector stocks managed to
remaining part of the year.
gradually recover all of the pandemic-induced drop from
March 2020 over the course of the year, with some of the
In 2021, the Ljubljana Stock Exchange modified its
banks being among the better performers of the stock market
methodology for calculation of key indices with which a share
rally since the end of 2020. European banking sector stocks
of NLBR increased from 8.71% on 21 December 2020 to 18.05%
recorded an increase in value of around 34% in 2021. However,
on 20 December 2021. The increased weight in local indices
European banking sector stocks finished the year below the
and the strong capital market activity with NLBR in 2021 led to
2021 peak reached in November and even slightly below the
NLB winning the ‘Prime Market Share of the year’ award for
2020 pre-pandemic peak reached in February 2020.
the first time. In October, the Bank signed an agreement with
InterCapital to provide the service of market making in NLBR
The Bank’s stocks more than recovered the pandemic-
shares with the intention of narrowing the bid-ask spread and
increasing liquidity of shares.
induced drop in the Bank’s stock price from March 2020.
The Bank’s stock price recorded an increase of around 66%
in 2021, contrasting the approximately 40% growth in the
Slovenian Blue Chip Index SBI Top, and the 34% growth in
European banking sector stocks in the year. In fact, the Bank’s
stock entirely recovered the pandemic-induced drop from
2020 by the beginning of the summer 2021, and then continued
to gradually move higher over the remaining part of the year.
As such, the Bank’s stock price ended the year approximately
17% higher in comparison to the peak of 2020, and 123%
Table 5: NLB share information
Share information
Total number of shares issued
Highest closing price (in 2021)
Lowest closing price (in 2021)
Closing price as at 30 December 2021(i)
NLB Group book value per share
NLB Group earnings per share (EPS)
Price/NLB Group book value (P/B)
Dividend per share (for the previous business year)
Market capitalisation(i)
(i) No market on 31 December 2021.
31 Dec 2021
20,000,000
EUR 80.6
EUR 42.0
EUR 76.2
EUR 103.9
EUR 11.8
0.73
EUR 4.61
EUR 1,524,000,000
NLB Shares (NLBR) received
the Ljubljana Stock Exchange Award:
Prime
Market Share
of the Year.
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Figure 1: NLB shares’ price movement on the Ljubljana Stock Exchange and NLB GDR’s price movement on the London Stock Exchange (in EUR)
R
D
G
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Ja n 2 0 21
Fe b 2 0 21
M ar 2 0 21
A pr 2 0 21
M a y 2 0 21
Ju n 2 0 21
Jul 2 0 21
A u g 2 0 21
S e p 2 0 21
O ct 2 0 21
N ov 2 0 21
D ec 2 0 21
85.00
80.00
75.00
70.00
65.00
60.00
55.00
50.00
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
s
e
r
a
h
S
Shares (NLBR)
GDR (NLB)
Source: Ljubljana Stock Exchange, Bloomberg.
Indices
Investor Relations’ function
The Bank’s shares are included in several indices: the
The Bank participates in varied forms of engagement, such
SBITOP index, SBITOP TR index, and ADRIA prime index of
as investor meetings, calls, conferences, and roadshows,
the Ljubljana Stock Exchange; the FTSE Frontier Index, MSCI
reflecting the diverse nature of the Bank’s ownership
Frontier, and MSCI Slovenia; the S&P Eastern Europe BMI,
structure. Transparent communication with investors and
S&P Emerging Frontier Super Composite BMI, S&P Extended
analysts allowed for dialogue promotion on strategic
Frontier 150, S&P Frontier BMI, S&P Frontier Ex-GCC BMI, S&P
developments, as well as on the recent financial performance
Slovenia BMI; as well as the STOXX All Europe Total Market,
of the Group. The Bank promoted greater awareness and
STOXX Balkan Total Market, STOXX Balkan Total Market ex-
understanding of operating businesses, developments, and
Greece & Turkey, STOXX EU Enlarged Total Market, STOXX
events which have an influence on the performance of the
Eastern Europe 300, STOXX Eastern Europe 300 Banks,
Bank’s share price. Since the listing, six analysts released
STOXX Eastern Europe Large 100, STOXX Eastern Europe
research reports about the Group. Performance of the Bank is
Total Market, STOXX Eastern Europe Total Market Small,
covered by analysts from JP Morgan, Deutsche Bank, Wood &
STOXX Global Total Market, and STOXX Slovenia Total Market.
Company, Citi, InterCapital, and Raiffeisen Bank International.
IR presentations, financial reports, and important information
are available on the Bank’s website in line with IR’s Financial
Calendar.
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We are your loyal partners.
Great-grandfathers built bridges.
Grandfathers built factories.
Fathers built the internet.
Your goal is to build the future.
New builders of the future are driven by the same pioneer spirit that has accompanied this region for decades.
You also are not going to sit and wait for better times to come along, instead you want to create them yourself.
We are right here by your side, following the trends and always developing new solutions which will inspire and
encourage you to create change. The same way we helped others before you.
Macroeconomic Environment
In 2021, following a pandemic-induced
contraction in 2020, the global economy
recorded a strong although imbalanced
recovery. In general, global economic activity
has managed to surpass pre-pandemic levels,
but the recovery has remained incomplete and
uneven across countries as well as sectors.
5.3%
8.1%
7.6%
economic growth
in the Euro-area
in 2021.
economic growth
in Slovenia
in 2021.
economic growth
in the Group’s
region in 2021.
Global and European
economy
Since the strong rebound resulting from the re-opening, the
momentum has eased throughout the year because the global
rebound has faced several headwinds that have influenced
the momentum. The surge in demand for goods has faced
production chain bottlenecks, and has resulted in supply-
demand imbalances. As a consequence, inflation pressures have
emerged in all economies with disruptions in energy, food, and
commodity markets that have been reflected in increased prices.
Inflationary pressures have been passed on to consumers and
lasted longer than initially expected. The labour market is still yet
to recover completely, but labour shortages have been evident in
several economic sectors. The pandemic continued its grasp on
economic activity also in 2021, but to a much lesser extent than in
the previous year. New outbreaks weighed on economic activity
by extending existing and originating new supply constraints. As
such, business survey measures of output and new orders moved
below their peaks recorded in Q2, while consumer confidence
deteriorated in many countries in the last months of the year.
Nevertheless, global industrial production and retail sales
remained above pre-pandemic levels, although they have also
recorded easing momentum over the course of the year.
In the Euro area, economic activity rebounded sharply in H1 in
line with the improvement in the health situation. The main driver
of the rebound has been private consumption that was fuelled
by the pent-up demand and a reduction in the household saving
ratio. These have been driven by diminishing forced savings
when the restrictions started to be gradually lifted in spring. This
propelled the recovery in services which followed the recovery in
manufacturing. Nevertheless, a sharp resumption in economic
activity has resulted in supply-demand imbalances and has
created vast supply disruptions and bottlenecks. The latter has
influenced momentum slowing down the rebound and causing
economic activity to ease after peaking in the summer. Global
supply chain bottlenecks have been a significant constraint on
industrial production and goods trade throughout the year.
Supply bottlenecks, increasing producer prices, coupled with
a surge in energy prices, and stronger demand as a result of
the reopening of the economy have caused a strong increase
in inflationary pressures. The latter has resulted in a surge in
headline, as well as core inflation rates as inflationary pressures
have become more and more broad-based and have been
mainly passed on to consumers over the course of the year.
The strength of the labour market in 2021 was reflected in the
decreasing unemployment rate throughout the year, while
pockets of labour shortages have emerged and have become a
sector-specific issue.
Monetary policy authorities kept the notion of transitory
inflation for the large majority of the year, but rapid resumption
in economic activity, rising inflation rates, and labour market
conditions improvement forced them to reconsider monetary
policy stances. In the Euro area, the ECB has maintained very
favourable financing conditions in 2021 with TLTRO-III and the
Pandemic emergency purchase programme (PEPP) playing
their parts in supporting the Euro area recovery. Nevertheless,
the pace of purchases under the PEPP have decreased
throughout the year, and at the December meeting, the ECB
outlined the discontinuation plan for the programme. The net
purchases under the programme discontinued in March 2022,
which was in accordance with its design. However, the ECB
has also decided to temporarily increase purchases under the
regular asset purchases programme in order to provide some
sort of a transitional period, but subsequently implemented
a quicker slowdown of the programme. In the US, asset
purchases tapering was announced and outlined in November,
but sustained price pressures prompted the Fed to drop the
notion of transitory inflation and to double the tapering pace,
which also resulted in moving forward the timeline of rate hikes.
At the March meeting, the Fed actually raised the rate by 25 bps,
with additional rate hikes set to follow.
The global economy is expected to continue with the recovery
in 2022. The impact of pandemic on economic activity has
considerably waned over time, and it should further wane over
the coming years, resulting in a restoration of demand patterns
and an easing of supply disruptions and inflationary pressures.
However, the recovery may quite possibly remain unbalanced
across countries and sectors. In the Euro area, the strong output
recovery that is underway is expected to continue in 2022. GDP
growth is expected to moderate to 3.6% in 2022, with forces
of the re-opening set to fade out. Growth in the Euro area will
be primarily driven by strong private consumption in light of
households reducing the saving rate to normal levels on the back
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of further diminishing forced and precautionary savings. Another
in particular, will push up inflation in the coming months. In fact,
driver is business investment, which is expected to recover
inflation could rise even further and remain elevated for longer
substantially, and which will be additionally supported by the
due to commodity price surge and additionally due to second
Next Generation EU funds. The withdrawal of emergency support
round effects, in terms of the impact on the underlying inflation,
measures targeting firms and households should result in a
wage growth and higher inflation expectations. This erodes
tighter fiscal policy stance, while the ECB gives the impression
household purchasing power and together with a squeeze on
of being headed for the exit from the accommodative monetary
company profits, and deteriorated business and consumer
policy. Supply chain bottlenecks and the surge in energy prices
confidence will weigh on economic growth. Consequently, with
are expected to sustain inflationary pressures in 2022 with
elevated downside risks to growth and upside risks to inflation,
inflation being projected to be higher. Strong labour demand
the risks of stagflation have increased.
A macroeconomic snapshot for the
NLB Group’s region
In Slovenia, economic activity surpassed its pre-pandemic level in
2021 on the back of a revival in private consumption, investment,
and strong international demand. The economy expanded rapidly
in H1. Since then, import growth has outpaced export growth and
external trade made a negative contribution to the economic growth.
Nevertheless, this negative contribution was more than offset by
continued growth in private consumption and investment, while the
fiscal policy stance also played its part in supporting the economic
activity. Similarly, to other the Euro area economies, the economy
has not been immune to supply chain bottlenecks and inflationary
pressures. Inflation accelerated in Q3, and continued with acceleration
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and likely further improvement in the labour market is expected
to drive the unemployment lower. However, there are still
some risks to the outlook. Despite the weakened impact of the
pandemic on economic activity, it still represents some degree
of risk. Furthermore, supply bottlenecks could be more severe,
prolonged, and widespread than expected, while the emergence
of new sources of supply bottlenecks is also possible. Protracted
staff shortages could drag on economic activity and exacerbate
supply chain issues. Inflation could continue to surprise on
the upside and turn out higher than expected. If inflation
expectations become entrenched at higher levels, more broad-
based price increases could not be excluded. Moreover, with
costs pressures being passed-through to consumers, inflationary
pressures could become even more widespread. The latter could
undermine households‘ purchasing power and impact the main
growth driver. Geopolitical tensions in Eastern Europe adds yet
another layer to the overall pile of risks to the outlook. The war in
Ukraine has several economic implications resulting in a renewed
downside risks to global growth, with Europe being the most
exposed in this regard. Elevated uncertainty, potential energy
supply disruptions, more widespread commodity shortages and
new supply chain disruptions will weigh on the economy. A surge
in commodity prices, with oil and gas prices accelerating higher
The economy in the
Group’s region
The Group’s region rebounded strongly from the pandemic-
in Q4, with energy prices being the main driver.
induced economic crisis, in line with global economic trends.
Private consumption has been the main driver of the growth in
the Group’s region. Private consumption has been spurred by
In Serbia, after experiencing a mild contraction in 2020, the economy
exceeded the pre-pandemic output level and rebounded strongly
credit growth, remittances, a strong tourism season, and pent-up
in 2021 on the back of a strong increase in private consumption and
demand despite the fact that labour markets in some countries
have still not escaped the impact of the pandemic-induced crisis.
investment, both more than offsetting the negative contribution of net
exports and lower government consumption. Robust wage growth
Private investment has solidified although there have been some
in the year propelled household spending, while a sharp rebound in
differences in dynamics between countries. Strong export demand
oil prices and increase in food prices resulted in an acceleration of
from the EU market and industrial production supported growth
inflation over the course of the year.
in BiH, North Macedonia, and Serbia, while Montenegro and
Kosovo benefited in particular from the rebound in the tourism
sector over the summer. Nevertheless, the Group’s region was not
In North Macedonia, after contraction in Q1, a marked increase in
private consumption propelled a buoyant Q2. Remittance inflow
able to circumvent the global surge in commodity prices, rising
also played its part in boosting private consumption resumption by
energy prices and supply-chain bottlenecks. Coupled with firming
bolstering households’ disposable incomes. Strengthened foreign
domestic demand, this resulted in inflation increasing over the
demand turned out beneficial for the external sector of the economy.
course of the year. Fiscal policy remained accommodative and
Inflation increased over the course of the year with pressures arising
monetary policy rates were kept at historical lows.
mainly due to rising global energy and goods prices, as well as supply
chain disruptions.
Table 6: Movement of key macroeconomic indicators in the Euro area and NLB Group region
GDP
(real grow th in %)
Average inflation
(in %)
Unemployment rate
(in %)
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Euro area
Slovenia
Serbia
N. Macedonia
BiH
Kosovo
Montenegro
1.6
3.3
4.3
3.9
2.8
4.8
4.1
-6.5
-4.2
-0.9
-6.1
-3.2
-5.3
-15.3
5.3
8.1
7.4
4.0
5.9
10.4
12.0
3.6
3.5
3.9
3.4
3.2
3.9
4.8
2.7
3.4
4.1
3.7
3.2
4.2
3.9
1.2
1.7
1.8
0.8
0.6
2.7
0.6
0.3
-0.3
1.6
1.2
-1.1
0.2
-0.3
2.6
2.0
4.1
3.2
2.0
3.3
2.4
5.3
5.7
7.8
6.1
6.0
6.3
5.0
2.2
2.4
4.1
2.5
2.5
2.6
7.6
4.5
11.2
17.3
15.7
8.0
5.0
9.7
16.4
15.9
7.7
4.8
11.1
15.7
15.5
7.2
4.4
10.0
15.1
15.1
25.7
25.9
24.0
23.0
2.0
15.1
17.9
16.6
15.8
7.2
4.4
9.4
14.7
14.7
22.2
15.2
Source: Statistical offices, Focus Economics.
Note: NLB Forecasts are highlighted in grey.
In BiH, a recovery in external markets and the expansion of
domestic private consumption propelled the growth in 2021. Private
consumption was supported by credit growth, wages growth, and
remittances. However, in H2 the rebound in private consumption lost
some momentum, but high public and capital spending bolstered
the domestic economy somewhat. Inflation increased throughout the
year due to rekindled domestic demand and global trends in price
pressures.
In Kosovo, the economy recovered due to strong growth in domestic
and external demand. Lifted restrictions on travel across Europe
boosted tourism inflows. The rebound in the hospitality sector, while
strong remittances inflow upheld private consumption. Surging
exports of goods and services buoyed the economy when private and
public consumption lost momentum in H2. Higher prices for food and
energy have driven up price pressures over the course of the year.
Contents
22
Table 7: Movement of the balance of payment and fiscal indicators in the Euro area and NLB Group region
Current account balance
(% GDP)
Fiscal balance
(% GDP)
Public debt
(% GDP)
Euro area
Slovenia
Serbia
N. Macedonia
BiH
Kosovo
2019
2020
2021
2022
2023
2.3
6.0
-6.9
-3.3
-2.7
-5.7
1.9
7.4
-4.1
-3.4
-3.6
-7.0
2.7
4.8
-4.4
-3.5
-2.8
-6.8
2.5
4.9
-4.3
-2.8
-2.9
-6.8
2.6
4.7
-4.4
-2.7
-2.9
-6.3
Montenegro
-14.3
-26.0
-16.4
-14.4
-13.5
Source: Statistical offices, Focus Economics.
Note: Consensus Forecasts are highlighted in grey.
2019
-0.6
0.4
-0.2
-2.0
1.9
-2.6
-2.9
2020
2021
2022
2023
2019
2020
-7.2
-7.7
-8.0
-8.2
-5.3
-7.1
-10.2
-6.8
-6.5
-4.1
-5.4
-2.7
-3.6
-4.7
-4.0
-4.5
-2.9
-4.6
-1.9
-2.2
-3.7
-2.7
-3.2
-1.7
-3.9
-1.4
-2.1
-2.9
83.6
65.6
51.9
40.7
32.5
17.6
76.5
97.3
79.8
57.0
51.2
36.7
22.4
105.1
2021
99.0
78.7
55.6
53.8
37.3
23.8
92.3
2022
2023
97.5
77.3
55.5
55.4
37.2
25.5
85.7
96.5
76.0
53.4
56.3
36.9
26.3
81.5
In Montenegro, the economy rebounded strongly with the
improvement of the epidemiological situation and the opening
form of the pandemic uncertainties, sturdier and prolonged
labour market is seen as requiring some more time to leave
elevated inflation, and the long-term impact of supply-side
the memory of the crisis completely behind. Downside risk to
of borders which propelled a resumption of tourism. After
bottlenecks. Economic implications of the war in Ukraine add
the outlook relates to the pandemic-related uncertainty and
a sluggish start, tourism picked-up strongly in the summer
yet another layer of uncertainty.
months. The rebound in the tourism sector boosted a surge
of private consumption which was the main driver of the
recovery. Inflation accelerated over the course of the year with
In North Macedonia, the growth in 2022 should be mainly
driven by private consumption, being the key part of the
possible implications on the tourism sector, although its effect
is fading. Downside risk arises due to the overall economic
implications of the war in Ukraine.
higher commodity prices and firming demand driving price
firming domestic demand. Coupled with strengthening foreign
pressures.
demand, it should lead to solid expansion. Nevertheless,
The economic growth in the Group’s region could be
around 3.7% in 2022. The recovery is expected to lose some
Macroeconomic outlook for
NLB Group’s region
In Slovenia, economic activity is expected to continue
growing, with domestic demand envisioned as being the
main driver. Private consumption and investment, propelled
by EU funds, should be key drivers of GDP growth. The labour
market will drive the unemployment rate lower. After the 2021
pick-up in inflation, the acceleration of inflation is expected
to continue in 2022 with high energy prices continuing to
drive the headline inflation for most of the upcoming year.
Buoyant imports growth should outpace exports, resulting
in a negative contribution to the GDP growth of net exports.
Pandemic-related uncertainties, although waning, continue
to weigh on the outlook. Economic implications of the war in
pandemic-related uncertainty, high energy prices, and
momentum as the external boost gradually fades and the
prolonged disruption of supply chains represent the main
base effects wanes. Nevertheless, growth should be mainly
downside risks to the outlook. Economic implications of the
driven by firming private consumption and investment. The
war in Ukraine represent an additional risk to the outlook.
tighter labour market could propel household spending and
In BiH, economic growth should remain solid, being
supported by higher capital and public spending. That said,
wage growth. Further improvement in the tourism sector
should be beneficial, especially for tourism-dependent
countries of the Group’s region. In the mid-term, countries
the pandemic-related uncertainty, slower recovery in export
of the Group’s region should also benefit from the Economic
markets, and political stalemate represent the downside risks
and Investment Plan adopted by the EU, which aims to boost
to the outlook. Higher inflation and economic implications of
more sustainable, green, digital, and people-focused growth.
the war in Ukraine represent an additional risk to the outlook.
However, supply disruptions, and rising commodity and
In Kosovo, the economy should see robust, but cooled-down
economic growth in 2022 due to the lower base effect. Firming
energy prices, which are set to be additionally affected by
the war in Ukraine, represent downside risks to the economic
outlook of the Group’s region. Persistently higher inflation
capital expenditure growth and a tighter labour market are
levels could undermine households’ purchasing power and by
seen as supporting factors for activity with the additional
that private consumption. This would hinder the main growth
beneficial effect of a healthier external backdrop. Pandemic-
driver thus impacting growth. Moreover, political tensions and
Ukraine represent an even greater risk to the outlook.
related uncertainty and lingering political uncertainty are
uncertainty in some countries of the Group’s region cannot
In Serbia, growth is projected to return towards the pre-
pandemic path. Growth should be mainly driven by private
consumption and investment, as well as by more positive
net exports contribution. However, downside risks are in the
downside risks to the outlook. Additional downside risk arises
be disregarded due to its impact on economic confidence,
due to the overall economic implications of the war in Ukraine.
while economic activity in tourism-dependent countries is
In Montenegro, further growth in the tourism sector should
propel the economy to recover the pre-pandemic level, but the
particularly dependent on the path of the pandemic, in the
Group’s region as well as abroad, despite pandemic’s waning
effect on economic activity in general.
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Table 8: Movement of key banking systems indicators in the NLB Group region, 2021
Corporate loans
Household loans
Corporate deposits
Household deposits
Net interest margin
NPL
CAR
in EUR
million
∆ % YoY
9,302
16,166
3,003
4,486
2,335
1,277
6.3
8.8
8.7
2.2
13.7
7.3
in EUR
million
11,263
10,606
3,256
5,336
1,399
1,456
∆ % YoY
5.1
11.1
7.8
5.5
18.6
3.2
in EUR
million
8,998
10,845
2,237
2,830
1,129
1,616
∆ % YoY
12.0
13.0
11.6
17.6
19.7
26.6
in EUR
million
23,953
16,919
4,966
7,513
3,237
2,193
∆ % YoY
2020, in %
2021, in %
in %
∆ pp YoY
in %
∆ pp YoY
6.8
13.6
7.1
6.8
13.8
25.3
1.8
3.0
3.3
2.4
4.5
3.7
1.4
2.7
3.2(i)
2.4(i)
4.5
4.0
1.6
3.5
3.6(i)
5.5(i)
2.3
6.2
-1.0
-0.2
0.2
-1.1
-0.4
0.7
18.2
21.7
17.3(i)
19.2(i)
15.2
18.5
-0.1
-0.7
0.4
0.9
-1.2
0.0
Slovenia
Serbia
N. Macedonia
BiH
Kosovo
Montenegro
Source: Statistical offices, CBs, NLB.
Note: Net interest margin calculated on interest-bearing assets; (i) Q3 2021 data.
The banking system in
the Group’s region
The economic rebound in 2021 also had a positive impact on
the banking system in the Group’s region. Lending activity
recorded a notable revival in both, corporate and household
loans. The majority of countries of the Group’s region
recorded a notable improvement in corporate loans growth,
with Slovenia and BiH bouncing into the positive territory
after recording negative growth in 2020. In Serbia, growth in
rates from the previous year. Kosovo recorded a marked
corporate loans slightly moderated, but remained firm, while
improvement in the household loans growth.
in Kosovo further improvement in corporate loans growth
was recorded. Montenegro and North Macedonia recorded
However, despite a notable improvement in the credit
robust corporate loans growth, representing a remarkable
activity, a strong inflow of deposits continued in 2021. Despite
improvement in comparison to the last year. Considering
remaining robust, corporate and household deposits growth
household loans, the dynamics were similar to the corporate
moderated to some extent in Slovenia and partially in Serbia.
loans. BiH and Slovenia recorded a significant rebound in
In Montenegro, growth in corporate and household deposits
household loans. Montenegro also recorded an improvement,
surged after last year’s outflow of deposits. In Kosovo, already
while Serbia and North Macedonia retained robust growth
high growth in household and corporate deposits increased
Figure 2: LTD ratio in the Euro area and NLB Group region
Montenegro
Kosovo
BiH
N. Macedonia
Serbia
Slovenia
Euro area
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2021
2020
Source: ECB, National CBs, NLB.
further, while North Macedonia and BiH recorded a somewhat
less significant increase in the growth rate of corporate and
household deposits.
The net interest margin of the Group’s region banking systems
exhibit some differences. In general, net interest income was
driven by the increase in growth of lending contributing to
positive quantity effects on the movement of net interest, and
by the negative impact of price effects. The net interest margin
of the banking systems in the Group’s region is largely a
reflection of the two factors.
The capital adequacy of the banking systems remains solid,
well-capitalised, and the general improvement of the NPL
ratio suggest some improvement in the quality of banks’
portfolios.
The LTD ratio decreased in some of the Group’s region
banking systems since the inflow of deposits remained strong.
In general, the growth in deposits outpaced the growth in
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Figure 3: ROE ratio in the Euro area and NLB Group region
Montenegro
Kosovo
BiH
N. Macedonia
Serbia
Slovenia
Euro area
loans, hence offsetting the effect of the revival in the credit
activity. The profitability of the banking systems of the Group’s
region improved, with ROE increasing in all countries of
the Group’s region. Profitability improvement was to the
great extent driven by the net release of impairments and
provisions.
Loans potential outlook
for the Group’s region
Loans to non-financial corporations and household loans
as a percentage of GDP levels of the Group’s region suggest
that the whole Group has the potential for further growth
when compared to the levels of the same categories in the
Euro area. The continued solid economic growth in the
Group’s region bodes well for loans’ potential. The growth
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0%
3%
6%
9%
12%
15%
18%
in the Group’s region should be predominantly driven by
private consumption and fixed investments, both important
components of loans’ potential, and both expected to exhibit
robust growth in 2022. Private consumption, as the most
important component of GDP, is expected to range from
around 3.0% in BiH to 5.9% in Montenegro. Fixed investment is
expected to be somewhere between 3.4% in Montenegro and
8.6% in North Macedonia, with the growth rate in the Group's
region in the upper half of that range. In general, stabilising
private consumption and fixed investment should have a
positive impact on lending activity in the Group’s region.
2021
2020
Source: ECB, National CBs.
Note: Return on average equity (ROAE) used for BiH; Q3 2021 data for BiH, N. Macedonia and Euro area.
Figure 4: Loans to non-financial corporations and household loans in the Euro area and NLB Group region in 2021
Montenegro
Kosovo
BiH
N. Macedonia
Serbia
Slovenia
Euro area
0%
10%
20%
30%
40%
50%
60%
Household loans, % GDP
Loans to non-financial corporations, % GDP
Source: National CBs, National Statistical Offices.
Note: Q3 2021 annualised data for BiH and Kosovo.
Contents
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Regulatory Environment
During 2021, more than 100 changes in the
EU and Slovenian regulatory environments
were adopted with material effects on the
Bank and the Group. The Group strives to
be fully compliant with the existing and new
requirements. Disclosure of the most relevant
changes of legislation and regulation which have
an effect on the Group is presented herein.
The regulatory
environment in Slovenia
The Bank is subject to capital adequacy and liquidity rules
imposed by the EU (CRR/CRD), which govern the activities in
which banks may engage in, and are designed to maintain the
safety and soundness of banks, as well as limit their exposure
to risk. The CRD V was further transposed into the new
Banking Act (ZBan-3), which also regulates the participation
of employees in the management of the Bank, something the
Bank already encourages.
As a financial institution offering benchmark-based products,
the Bank meets its obligations under the Regulation 2016/1011
(BMR) and regularly monitors developments in this area by
adapting its operations to the requirements of regulators and
industry.
Due to the constant care for the interests of its customers,
especially the protection of their data, the legislation in the
field of personal data protection is also important for the
Bank. The Bank strictly adheres to its obligations imposed on
it by GDPR in both Slovenia and the Group. As the Slovenian
law, which would further supplement the regulation, was not
adopted either in 2021, further obligations for the Bank may
arise when the law will be adopted.
In the field of financial markets there were no significant
changes in regulatory environment in 2021. Limited
implications of latest upgrades of the Shareholders’ Rights
Directive (SRD II) that was transposed into the amended
Companies Act, have been duly implemented in the Bank’s
processes. The Bank complies with the provisions of MIFIR/
terrorist financing. At the end of 2021, an amendment to the
Prevention of Money Laundering and Terrorist Financing Act
was proposed that will further remove certain inconsistencies
and ambiguities, relax certain requirements, and introduce
additional tools or options for the implementation of measures
by obliged persons.
Compliance with the Payments Act (PSD2) and regulatory
technical standards, which brought open banking into the
financial environment, required major changes to the Bank’s
information systems. The Bank is constantly monitoring new
regulatory requirements imposed by the regulator, is adapting
to them, and taking into account the best user experience.
Due to the COVID-19 epidemic in 2021, the RoS adopted several
intervention laws and measures which mainly affected the
Bank in the area of credit moratoriums and daily operations.
An ongoing activity from 2019 included the amendment of
policies and contracts due to EBA Guidelines on outsourcing
arrangements, that provide a clear definition of outsourcing
and specify the criteria to assess whether or not an
outsourced activity, service, process, or function (or part of it)
is critical or important.
In the EU’s policy context under the European Green
Deal, ‘sustainable finance’ is understood as finance to
support economic growth while reducing pressures on the
environment, and taking into account social and governance
aspects. The Bank is approaching the development of a
comprehensive policy on sustainable finance, comprising the
action plan on financing transition to low-carbon economy.
MIFID II and EMIR regarding financial markets transactions,
Regarding the upcoming legislation in the corporate
enhanced investor protection, transparency, and reporting
governance area, an amendment to the Companies Act
obligations.
(ZGD-1) is in the process of adoption which will have an impact
on the Bank mainly in the area of relations with shareholders
The Group also takes into account and complies with the
and the exercise of shareholders’ rights, as well as information
regulations in the field of preventing money laundering and
on corporate actions (following SRD2).
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In the Republic of Srpska, a new Decision on the Bank’s
management system was published by the Banking Agency of
the Republic of Srpska, which has replaced five previous by-
laws and therefore required thorough changes of the Bank’s
internal acts. Also, the Law on the Protection from harassment
at work was published in October 2021. Next to these, the
local regulator published several by-laws related to liquidity,
reporting, credit risk management, etc.
In Kosovo, the local CB adopted the Instructions for using the
form on the origin of funds and determining the holder of the
property right and the Guideline on loan restructuring due to
COVID-19. The government of the Republic of Kosovo, and the
Ministry of Finance Labour and Transfers adopted the product
‘Diaspora Bonds’; the Deposit Insurance Fund of Kosovo
(DIFK) adopted the Rules on reporting, calculation, and
collection of premiums, testing the depositor compensation
system, and on administrative sanctions for members of the
DIFK. The Assembly of the Republic of Kosovo adopted the
Law on Electronic identification and trust services in electronic
transactions.
In Montenegro, the main activities in 2021 were dedicated
to the implementation of Law on Credit Institutions, Bank
Recovery and Resolution Law, together with a number of
by-laws for both legal acts. Also important is that some of the
by-laws have been changed before the start of its application.
No less important were the activities on implementation of
by-laws for Deposit Protection Act, as well as the Central Bank
of Montenegro Decision on the Central Register of Transaction
Accounts.
Regulatory environment
in the Group’s region
The regulatory environment in the rest of the region where the
Group operates was dominated by legislative and regulatory
changes related to the COVID-19 pandemic and minimising its
consequences in the financial sector and economies. There
were also local regulatory (prudential and macroeconomic)
measures adopted to ensure stable functioning of the
financial systems.
Serbia continued harmonizing the business environment
with the EU framework through the adoption/amendments
of the new Law on Capital Market, the Law on Electronic
Invoicing, and the Law on Companies (all these to be enforced
successively). The National Bank of Serbia put more scrutiny
on the clients’ complaints and the process of refinancing loans
in the banks. Regulatory activities on COVID-19 continued with
the aim of mitigating the consequences of the pandemic both
for the economy and citizens.
In North Macedonia, COVID-19 pandemic-related laws
focused mostly on social support for vulnerable social groups,
and financial help for the affected companies. The AML law
was amended to transpose the EU legislation in the relevant
area so that Banks could use electronic identification in its
day-to-day activities. The National Bank of the Republic of
North Macedonia adopted the decisions, mostly in order
to harmonize with EU legislation and standards in the
area of required reserves, the methodology for identifying
systemically significant banks, and submitting and publishing
data on the performed activities in the payment operations.
In the Federation of BiH the most important decision of the
regulator in 2021 was the Decision on Internal Governance
System in the Bank, which represents an alignment of local
regulations with EBA Guidelines on Internal Governance.
A new ‘Law on Accounting and Auditing in the Federation of
BiH’ must also be emphasized as it brings new accounting
frame in Federation of BiH. In the area of legal entity
legislation, there are new regulations related to the possibility
of using digitally signed documents in the registration of
a legal entity, but in this very moment technical and legal
support on the level of the state is not yet provided.
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BUSINESS REPORT
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Strategy
Despite the challenging and uncertain
economic environment, the Group has
continued to duly execute its medium-term
strategy. This includes focus on protecting
and strengthening its market position in its
home region, and actively participating in
the growth and consolidation of the market.
Digitalization, client centricity, and cost efficiency
remain some of key strategic orientations
to ensure delivery of the Group’s vision.
Become a regional champion
Putting clients first
The Group aims to further strengthen its role as a systemically
In retail banking, the Group continues to strive to become
important financial institution in the SEE region, and strives
closer to its clients by offering anchor products and the
to become a market leader in all of its core markets and to
most accessible and personalised digital services (e.g.,
have a prominent role in the region’s development. With the
omnichannel, marketplace) that suit their lifestyles. In
completion of the acquisition of Komercijalna Banka, Beograd
corporate banking, the Bank is looking to provide more
in 2020, the Group made an important step in this direction.
complex, cross-border products and services, and to find
The Group believes there is significant potential from the
new entry points in order to suit all its clients’ financial needs.
deal for the whole region given the complementary product
One of the key efforts is improved availability for all clients.
offerings of Komercijalna Banka, Beograd that enable the
The Group has made itself available anywhere and anytime
Group to extend a number of products and services in the
by building a strong customer call centre and upgrading its
Serbian market and increase its cross-border activity. In
portfolio of digital sales channels. These now offer a growing
addition, cost- and capability-related business synergies will
set of banking products and services, both for retail and
be derived from its integration within the Group and which will
corporate clients.
be finished in 2022. It is estimated that the combined synergy
effects could result in over EUR 20 million annually from 2023
onwards. Further business synergies are expected from the
integration of Sberbank banka d.d. in the Group.
Finishing integration of
Komercijalna banka, Beograd
Promoting the ESG agenda
Creating new business expansion
opportunities
Monitoring and increasing
stakeholder value
Becoming a great place to work
Become a
regional
champion
Putting clients
first
Grow our market
position
Monetize
opportunities
and synergies
Digitizing distribution channels
Supporting clients' expansion
Adding new financial products
Building strong customer support
Continuing strategic
transformation initiatives
Establishing diversified horizontal
businesses
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Digitalization
The Group continues to implement comprehensive and
substantial strategic efforts toward digital distribution and
operating models that have been accelerated by the COVID-19
pandemic. The new circumstances related to the pandemic
and the economic uncertainty continue to affect the growth
and acceptance of digital channels by our customers. The
Group was prepared for such a market trend, since it was
The Group regularly engages with all of its stakeholders in
funds for their implementation. With the projects, all major
defining what is material to both them and the Group. A variety
running change efforts are channelled into one overall
of communication channels are used for an open and
strategic transformation program.
transparent dialogue on sustainability related issues. Some
of the most important channels for communications with the
The backbone of the strategy is strengthening customer-
stakeholders (in addition to the regular publicly available
centricity by establishing customer-based market
periodic reports, presentations, and webcasts on the Group
management, improving the understanding of clients,
performance) are the NLB Group Sustainability Report, the
reimagining digital client journeys, and accelerating
CSR and Sustainability e-mail box, the corporate website, and
innovation to provide lifestyle and value chain services to
already the leading provider and innovator in its core markets
social media channels.
strengthen relationships.
before the outbreak.
At the same time, the Group is striving to simplify and
automate processes in order to minimise their time and
costs. The focus on digitalization is to enable quicker and
better customer service, a higher level of internal processes
efficiency, and consequently additional cost savings.
The Group will continue to invest substantially in IT
infrastructure and its capabilities. The focus will be on
The Group’s employees represent its key resource: human
The transformation program also focuses efforts into
capital and are one of its main drivers for creating value.
increased operational efficiency, cost management,
Through the focus on recruitment, management, and the
and the improved utilisation of the Group’s capital.
continual development of employees, they are given the
Simultaneously, overall operational capabilities are
opportunity to thrive by making the most of their talent and
being enhanced by improving human capital, optimising
experiences and adapt to a fast-changing world. They are
IT infrastructure, digitalizing internal processes, and
encouraged to act in a responsive, respectful, and result-
leveraging information capital. To drive the transformation,
driven manner within and outside their work efforts. The
a new change management platform was set up.
ambition is to truly involve the whole organisation in realising
improving the speed IT can deliver results by adopting agile
the Group’s sustainability ambitions.
Brexit’s impact on the
Group’s performance
Due to the limited focus of the Group’s operations beyond the
SEE region, Brexit did not have any significant impact on the
methodology principles, the provision and implementation
of the best online experience for customers in the SEE, and
enhancing capabilities for processing data, modelling, and
the relevance of services to clients. One such example is
the already established technological hub in Belgrade that
develops solutions for the whole Group.
Due to the positive effects of working remotely during the
pandemic, the Group has developed a hybrid working model
(combination of work-from-home and work from the office)
initiative, thus offering more flexibility to its workforce and
achieving cost benefits at the same time.
Grow our market position
The Group is working to protect and strengthen its market
position as a systemic player in its home region. In order to
do this, the Group is monitoring how well it is adding value to
three types of its main stakeholders: shareholders, customers,
and employees. With respect to shareholders, the Group
views its decisions through a lens of maximising its return
on equity. With respect to customers, a net promoter score
(NPS) is monitored and tracked. With respect to employees, an
employee engagement metric is measured and analysed. In
addition to the mentioned key performance indicators, other
supporting indicators and benchmarks are tracked in order
to continually revaluate current projects and utilise those
insights for future decisions.
Monetize opportunities
and synergies
Significant strategic business efforts are undertaken to
Group’s business performance.
achieve business synergies across the Group, both in costs
and operational efficiency. The Group believes these can help
offset significant negative economic effects of the COVID-19
pandemic on the Group’s future business results. The Group
is fully engaged in re-establishing some of the key financial
services (leasing, factoring, etc.), thus diversifying its services
on a horizontal level.
The Bank is simultaneously monitoring additional M&A
opportunities (within consolidation processes in banking
sectors in the SEE) that could add value to the Bank’s
shareholders. It makes sense to actively participate in the
expected growth and consolidation of the market.
Continuing transformation
To facilitate the aforementioned strategic focus and support
continuous transformation in an everchanging environment,
the Group is following an elaborated, comprehensive, and
detailed program plan to deliver its mission and financial
targets. The Group has identified a series of projects and
initiatives, and has also dedicated considerable investment
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Risk Factors and Outlook
Risk factors
Risk factors affecting the business
outlook are (among others):
• The economies’ sensitivity to a potential
slowdown in the Euro area or globally
• Widening credit spreads
• Potential liquidity outflows
• Worsened interest rate outlook
• Potential cyber-attacks
• Regulatory, other legislative and tax
measures impacting the banks
• Geopolitical uncertainties
Special attention is paid to continuous provision of services to
IFRS 9 baseline scenario is based on the NLB monthly
clients, their monitoring, health protection measures, and the
prevention of cyber attacks and potential fraud events. The
Group has established internal controls and other measures
to facilitate their adequate management. However, these
Economic Outlook that was created in April 2021.
• The macroeconomic rationale behind the alternative
scenarios is related to a range of plausible impacts of the
COVID-19 pandemic on economic development during
measures may not always fully prevent potential adverse
the next 3 years. The basis for the alternative scenarios is
effects.
related to the ECB's view of economic development after
the coronavirus outbreak since early 2020. Based on the
The Group is subject to a wide variety of regulations and
ECB illustration of a mild and severe scenario resolution of
laws relating to banking, insurance and financial services.
the pandemic crisis through the lens of possible expected
Respectively, it faces the risk of significant interventions by a
impact on economic activity in the Euro area, the Group
number of regulatory and enforcement authorities in each of
developed both alternative scenarios. In general, the
the jurisdictions in which it operates.
mild scenario envisions a resolution of the health crisis
by the end of 2021 and a long-term reviving process of
the economy, while a severe scenario assumes a more
protracted crisis and permanent losses in economic
The economic momentum in the region where the Group
The SEE region is the Group's most significant geographic
operates was affected by the COVID-19 pandemic. In 2021,
the Group’s region returned to growth on the back of revival
area of operations outside of the RoS and the economic
conditions in this region are therefore important to the Group's
potential. These scenarios were included in the calculation
in private and investment consumption. However, it is not
results of operations and financial condition. As a result of any
possible to assume with a high degree of confidence that such
instability or economic deterioration in this region, the Group's
of ECL in accordance with IFRS 9 as of 30 June 2021. Apart
from this the Group had kept track of the latest economic
economic momentum will continue.
financial condition could be adversely affected.
Lending growth in the corporate segment remained relatively
In this regard, the Group closely follows the macroeconomic
moderate, especially in the current circumstances. On the
indicators relevant to its operations:
other hand, the Group benefited from increased demand for
• GDP trends and forecasts
mortgage loan financing, especially in Slovenia, as well as in
banking subsidiaries. During 2021 impacts of the COVID-19
pandemic did not have a meaningful impact on the credit
portfolio quality. The Group faced a favourable NPL movement
• Economic sentiment
• Unemployment rate
• Consumer confidence
• Construction sentiment
resulting in lower percentage of NPLs and positive effects
• Deposit stability and growth of loans in the banking sector
from on- and off-balance sheet collection. Credit risk is
• Credit spreads and related future forecasts
usually materially increased in times of economic slowdown.
• Interest rate development and related future forecasts
Notwithstanding the established procedures in the Group's
• FX rates
credit risk management, there can be no assurance that they
• Other relevant market indicators
will be sufficient to ensure that the Group's quality of credit
portfolio or the corresponding impairments will remain at the
adequate level in the future.
The investment strategy of the Group, referring to the
Group’s bond portfolio kept for liquidity purposes, adapts
to the expected market trends in accordance with the set
risk appetite. While the Group monitors its liquidity position
and corresponding trends, impacts of credit spread and
interest rate fluctuations on its positions, any significant and
unanticipated movements on the markets or variety of factors,
such as competitive pressures, customer’s confidence or other
certain factors outside the Group's control, could adversely
affect the Group's operations and financial condition.
During 2021, the Group reviewed IFRS 9 provisioning by testing
a set of relevant macroeconomic scenarios to adequately
reflect the current circumstances and the related impacts in
the future. The Group established and developed multiple
scenarios (i.e. baseline, mild and severe) on the level of ECL
calculation:
• The baseline scenario presents a common forecast
macroeconomic view for all countries that are present in
the Group. This scenario is constructed with the purpose
to culminate various outlooks into a unified projection of
macroeconomic and financial variables for the Group. This
is in line with the concept that the Bank has a consolidated
view on the future of economic development in SEE. The
developments and changing official projections.
• The latest set of IFRS 9 scenarios for macroeconomic
variables is applied in the modelling process for the
probability of default (PD) and loss given default (LGD)
estimates. Nevertheless, the focus in macroeconomic
scenarios is on the trajectory of real GDP and the
unemployment rate over the projection horizon from 2021 to
2023. Both variables are included in the modelling process of
PD and LGD, respectively.
The Group established a comprehensive internal stress-testing
framework and early warning systems in various risk areas
with built-in risk factors relevant to the Group’s business model.
The stress-testing framework is integrated into Risk Appetite,
ICAAP, ILAAP, and Recovery Plan to determine how severe and
unexpected changes in the business and macro environment
might affect the Group’s capital adequacy or liquidity position.
Both the stress-testing framework and recovery plan indicators
support proactive management of the Group’s overall risk
profile in these circumstances, including capital and liquidity
positions from a forward-looking perspective.
Risk Management actions that might be used by the Group
are determined by various internal policies and applied
when necessary. Moreover, the selection and application
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of mitigation measures follows a three-layer approach,
the coming years. In the Euro area, output recovery is expected
commodity prices, with oil and gas prices accelerating higher
considering the feasibility analysis of the measure, its impact
to continue in 2022. GDP growth is expected to moderate to
in particular, will push up inflation in the coming months. In fact,
on the Group’s business model, and the strength of available
3.6% in 2022, with the re-opening effects set to fade out. Growth
inflation could rise even further and remain elevated for longer
measure.
Outlook
in the Euro area will be primarily driven by strong private
due to commodity price surge and additionally due to second
consumption and business investment, which is expected
round effects, in terms of the impact on the underlying inflation,
to recover substantially, additionally supported by the Next
wage growth and higher inflation expectations. This erodes
Generation EU funds. The withdrawal of emergency support
household purchasing power and together with a squeeze on
The indicated outlook constitutes forward-looking statements
measures targeting firms and households should result in a
company profits, and deteriorated business and consumer
which are subject to a number of risk factors and are not a
tighter fiscal policy stance, while the ECB gives the impression
confidence will weigh on economic growth. Consequently,
guarantee of future financial performance.
of being headed for the exit from the accommodative monetary
with elevated downside risks to growth and upside risks to
policy. Supply chain bottlenecks and the surge in energy
inflation, the risks of stagflation have increased. Regarding the
The Group is pursuing a range of strategic activities to
prices are expected to sustain inflationary pressures in 2022
Group’s region, the economic growth could be at around 3.7%
enhance its business performance. Interest rate outlook is
with inflation being projected to be higher. However, there are
in 2022. The recovery is expected to lose some momentum.
uncertain given the adaptive monetary policy of the ECB to
still some risks to the outlook. Despite the weakened impact
Nevertheless, growth should be mainly driven by firming
the general economic sentiment. The Bank is committed to
of the pandemic on economic activity, it still represents some
private consumption and investment. Tighter labour market
delivering sound financial performance.
degree of risk. Furthermore, supply bottlenecks could be more
could propel household spending and wage growth while
severe, prolonged, and widespread than expected, while
further improvement in the tourism sector should be beneficial
The measures and potentials outlined in the above strategy
the emergence of new sources of supply bottlenecks is also
especially for tourism-dependent countries. That said, supply
are reflected in the Group’s outlook for the 2022 to 2023 period
possible. Protracted staff shortages could drag on economic
disruptions, and rising commodity and energy prices, which are
(Table 9). Potential effects of acquisition of Sberbank banka
activity and exacerbate supply chain issues. Inflation could
set to be be additionally affected by economic implications of
d.d. are not included in the outlook.
continue to surprise on the upside and even more broad-
the war in Ukraine, represents downside risks to the economic
Outlook 2022
Macroeconomic
The global economy is expected to continue with the recovery
based price increases could not be excluded. The latter could
outlook of the Group’s region because persistently higher
undermine households‘ purchasing power. Geopolitical
inflation levels could undermine households’ purchasing power.
tensions in Eastern Europe adds yet another layer to the
Moreover, political tensions and uncertainty in some countries
overall pile of risks to the outlook. The war in Ukraine has
of the Group’s region cannot be disregarded due to its impact
several economic implications resulting in a renewed downside
on economic confidence while economic activity in tourism-
risks to global growth, with Europe being the most exposed
dependent countries is particularly dependent on the path of
in this regard. Elevated uncertainty, potential energy supply
the pandemic, despite its waning effect on economic activity.
in 2022. The impact of pandemic on economic activity has
disruptions, more widespread commodity shortages and new
considerably waned over time, and it should further wane over
supply chain disruptions will weigh on the economy. A surge in
Table 9: Outlook for the period 2022-2023
Regular income
Costs
Cost of risk
Loan growth
Dividend
ROE a.t.
2022(ii)
~ EUR 670 million
Costs at 2021 level
20-30 bps
Revenues and loan growth
On the back of continuing economic rebound with strong
2023
private consumption and business investment, the Group
> EUR 700 million
~ EUR 400 million
30-50 bps
expects high single digit loan growth in 2022. Retail Banking
in Slovenia is expected so see continuation of strong loan
growth also in 2022, with a healthy demand for mortgage loans.
Corporate and Investment Banking in Slovenia is also expected
to grow on the back of cross-border lending and revival in
investment spending. Strategic Foreign Markets will maintain
High single digit loan growth
High single-digit loan growth
EUR 100 million
EUR 110 million
robust performance with loan growth expected to reach double
(i) ROE normalized = Result a.t. w/o minority shareholder profit divided by consumed capital. Consumed capital computed as 13.06% of average RWA reduced for minority
shareholder capital contribution.
(ii) If legal remedies against the adopted law in February 2022 concerning loan agreements in Swiss francs concluded by banks operating in Slovenia (including NLB) and
individuals are unsuccessful, the Bank estimated a negative pre-tax effect on the operations of NLB and NLB Group should not exceed EUR 70 - 75 million. This would have
a limited (up to 55 bps) negative impact on the capital position.
~ 10%, (ROE normalized(i): 12%)
> 10% (ROE normalized(i): > 12%)
digit growth. Therefore, interest income growth is expected to
be primarily driven by loan book growth, and productive use
of liquid assets. Post COVID-19 opening of the economies and
introduction of high balance fees stimulated demand for fee
generating products and income. All of the above should result
in total regular revenues of around EUR 670 million in 2022.
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Costs and cost of risk
The Group will continue to pursue a strong cost containment
agenda addressing both labour and non-labour cost
elements. Total costs continue to be impacted by a business
environment with a visible labour cost inflation throughout
the region. Additionally, the Group continues with its
investment activities into information technology upgrades,
amid the growing relevance of digital banking. Importantly,
integration costs associated with the acquired Komercijalna
potential adverse negative market movements by further
not include part of the 2021 result in the amount of EUR 100
shortening of the portfolio duration and classification of new
million. Therefore, there will be no effect on the capital in case
investments with longer duration as hold to collect in order
the dividends are paid. The dividend payment in the year
to decrease sensitivity to regulatory capital. High levels of
2022 might be split in two instalments. The Bank envisages
deposit inflows are putting an additional strain on profitability.
cumulative dividend payout of EUR 210 million in the period
2022-2023.
In June 2021 the Bank participated in the ECB TLTRO operation
and has drawn a credit tranche of EUR 750 million. The Bank
is considering early repayment in June 2022. If materialized,
this will not have a material impact on the Group’s liquidity
Banka, Beograd will contribute to total costs in 2022. Based
position.
on this, costs including integration expenses are expected to
remain at 2021 level.
The realised cost of risk in 2021 at -41 bps outperformed
Capital
The capital position represents a strong base to cover all
COVID-19
Despite the COVID-19 related circumstances the Group
ensured continuity of service provision to its clients by
adjusting the Group’s offer, increased use of digital channels,
and enhancing customer experience. The Group is aiming to
further support its clients, by constant development including
creating flexible local digital ecosystem of offering products
previous outlook guidance for 2021 (around -20 bps) due to
regulatory capital requirements, including capital buffers
and services.
very strong development in NPL resolution. It is expected
and other currently known requirements, as well as the Pillar
that resolutions will continue to positively impact cost of
risk in 2022, but with a diminished importance. Based on
2 Guidance. If legal remedies against the adopted law in
February 2022 concerning loan agreements in Swiss francs
assessed environment the expected cost of risk will be in
concluded by banks operating in Slovenia (including NLB) and
Sustainability
The Group has committed to sustainability, and has been
the range of 20 bps to 30 bps, and somewhat lower than
individuals are unsuccessful, the Bank estimated a negative
enhancing the management of environmental and social
expected in the 2023 (30-50 bps).
pre-tax effect on the operations of NLB and NLB Group should
risks of its operations, among others to meet EBRD and MIGA
Loan portfolio quality
The Group anticipates lending growth in all key segments.
Special focus will be given to the retail segment where the
Group experienced strong growth in the previous year. The
Group is very prudent in identifying any increase in credit
risk, as well as proactive in the area of NPL management.
On this basis well diversified and stable quality of credit
portfolio is expected during the year 2022. Potential
moderation of current positive economic trends due to
not exceed EUR 70 - 75 million. This would have a limited (up
standards. It also substantially increased the use of digital
to 55 bps) negative impact on the capital position, leaving
channels, improved customer experience, and aims to create
the Bank’s capital position comfortably above all current
a flexible local digital ecosystem for offering products and
requirements.
services.
The Bank is exploring opportunities for MREL funding,
In 2022, the Group intends to make sustainability more
issuance of Tier 2, and potential issuance of Additional Tier 1
tangible throughout the Group. The resources are shifting
instrument(s) to further strengthen and optimize its capital on
towards a low-carbon economy and engaging with customers
solo and consolidated level. Based on transitional increase
is key in financing the transition. An important step forward
of MREL requirement, the Bank in 2022 intends to strengthen
will be done by expanding the product portfolio with loans
MREL eligible liabilities in the amount of around EUR 400
dedicated to supporting energy efficiency and renewable
COVID-19 uncertainties might have a negative impact on the
million. Also, in 2022 the Group continues with activities to
energy production and introducing digital only card. The
existing loan portfolio quality, but its impact should not be
optimise RWAs.
excessive.
Liquidity
From liquidity perspective, deposits at the Group level
are still increasing (in the Bank and in banking members),
although growth of retail deposits has moderated in H2
2021. The liquidity position of the Group is expected to
remain solid even if a highly unfavourable liquidity scenario
materialises, as the Group holds sufficient liquidity reserves
in the form of placements at the ECB, prime debt securities,
M&A opportunities
The Group might explore further value accretive M&A
Group supports global decarbonization goals and aims to
expand the Group’s measurements of emissions to Scope 3.
Implementation of climate related and environmental risk
management follows ECB and EBA guidelines. Moreover,
participation in ECB climate-risk stress test exercise will
opportunities in its domestic and other regional markets
provide additional important insights, which will surely
where the Group is not yet present with the aim to increase
have an effect on further adaptation of the existing Group’s
shareholders’ value.
Dividends
The Bank’s general intention is to distribute dividends on
business model. Effective integration of sustainability-related
regulatory requirements will be important in 2022 for ESG
disclosures and reporting (e.g. EU Taxonomy, BASEL Pillar III).
The Group plans to make required steps in order to obtain our
first ESG rating. However, all of the above mentioned cannot
be achieved without highly motivated and adequately skilled
and money market placements. Significant attention is given
yearly basis in line with its capacity, while at the same time
to the structure and concentration of liquidity reserves, by
incorporating early warning systems, keeping in mind the
fulfilling all regulatory requirements, including the Pillar 2
teams, hence relevant trainings will be an important part of
Guidance and risk appetite. 2021 YE capital calculation does
the working agenda.
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Impact of COVID-19 on Operations
Following a very demanding year due to the
worldwide impact of the COVID-19 outbreak
having unprecedented effects around the globe,
the year 2021 was in general a return to new
normal and growth. Nevertheless, the disease
is still present and will continue to affect the
economies to various degrees despite increased
Impact on credit
portfolio quality
COVID-19 did not have a meaningful impact on the quality of
the credit portfolio. The support schemes introduced by the
governments in the Group countries providing moratoriums
to eligible clients as part of the COVID-19 pandemic measures
phased out during 2021. As at 31 December 2021, the exposures
medical capabilities and an improved toolbox
where COVID-19 moratoria were granted amounted to
against the struggle with the pandemic.
Though the COVID-19 pandemic, coupled with its implications
on all aspects of life and in particular on the business
environment, was still the region’s and world’s buzzword, the
Group managed to stay well capitalised, very liquid, and as
the business results show, also highly profitable.
EUR 1,681.5 million and represented 10.8% of the Group’s
credit portfolio. The exposure with the remaining COVID-19
moratoria was negligible and amounted to EUR 24.8 million,
while 98.5% of those moratoria already expired by 2021 YE. A
total of 86.4% of exposure with the expired moratoria have no
delays, while 2.1% had delays exceeding 90 days. The Bank is
very prudent in identifying any increase in credit risk.
Measures
The Group continued to take necessary measures to protect its
customers and employees by ensuring safety conditions and
making sure services offered by the Group were provided without
disruption. The vast majority of the products and services offered
by the Group banks are available to clients in digital form without
the need to visit a branch – and 24/7 client support by enhancing
the availability of digital channels was ensured.
The ‘Work from
Home’ initiative
In parallel, the plans to introduce a ‘work from home’ initiative
which pre-dates the COVID-19 pandemic was somehow
accelerated by the overall circumstances in the last two years,
and was well received by the employees. In this respect,
the pandemic provided a further push in the direction of
digitalisation of the Group’s business model.
Resilience of strategic
initiatives
The resilience of the Group’s strategic initiatives was well
demonstrated throughout the outbreak of the COVID-19
of any significant delays in the envisaged execution timelines,
which should positively impact the Group’s future financial and
operational performance.
Impact on sustainability
The COVID-19 pandemic has had a substantial influence
on three of the most significant aspects of sustainability: the
society, economy, and environment. Its heavy economic burden
on societies is likely to leave persistent social scars, such as
greater inequality and poverty, as well as challenges regarding
affordability and access to basic needs. By understanding that
the pandemic has had direct effect on the economy, we have
decided to further support vulnerable groups and exempt
humanitarian organisations from paying commissions.5
Although COVID-19 restrictions of movement and changes
of commuting patterns have altered in the past two years,
with the economy recovery in 2021 global emissions are
rising back to the pre-COVID level, which makes the fight
against climate change even more urgent.6 This also resulted
in important and decisive steps in development of the
sustainability regulatory framework. In this regard, the Group
strengthened the role of sustainability within the Group and
amplified its activities: enhanced environmental and climate
risk management, performed impact and materiality analysis,
began measuring carbon footprint of own operations, and
strengthened corporate governance by establishing NLB
Group Sustainability Committee. For more information, please
refer to the NLB Group Sustainability Report 2021.
The year 2021 has proved that the Group adapted to ‘new
normal’ with distinction. Digitalization, inclusion, and
environmental protection have been some of the most
important drivers for us. We have used them to continue
developing progressive and digitalized services, and products
that support energy efficiency and thus a transition to a low-
carbon society. 7
5 For more information, please refer to chapter Sustainability and subchapter
Corporate Social Responsibility.
6 IEA, 2021: https://www.iea.org/reports/global-energy-review-2021/co2-
emissions.
7 For more information, please refer to chapter Corporate and Investment
pandemic. The new ways of working enabled the avoidance
Banking in Slovenia.
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Sustainability
Sustainability, with a focus on climate issues and
covering other aspects of the environment as well
as broader ESG aspects, is an opportunity for
the Group to meet societal expectations, adapt
Implementation of
sustainability into the
Group business model
to a changing environment, and mitigate certain
With less than a decade left to the 2030 deadline for achieving
risks. This has been demonstrated already in
globally set commitments towards ESG, several key pieces
the widespread actions taken by the Group.
of the EU sustainable finance legislation entered into
force, and the EU Fit for 55 (EU plan to reduce greenhouse
gas emissions by 55% by 2030) unleashed wide-reaching
industrial changes that need to be implemented. The Group
has shaped a number of important developments, with results
such as:
Sustainability Framework
The NLB Group Sustainability Framework was published
as a strategic document that highlights the ambitions and
commitments to the integration of sustainability in the Group’s
business model. Besides providing an alignment of the
Group’s sustainability approach with the UN’s Sustainable
Development Goals (UN SDG), it offers stakeholders a list
of sustainable economic activities promoted by the Group
and therefore sets out the basis for classifying financing as
sustainable. Moreover, the document addresses in detail ESG
risk management, the principles of responsible banking and
business ethics, and the Group’s corporate sustainability
governance structure.
Alignment of the Group’s sustainability
approach with the UN SDG:
SDG 7:
Ensure access to affordable, reliable,
sustainable, and modern energy for all
SDG 8:
Promote sustained, inclusive, and sustainable
economic growth, full and productive
employment, and decent work for all
SDG 12:
Ensure sustainable consumption and production
SDG 3:
Ensure healthy lives and promote well-being for all at all ages
SDG 13:
Take urgent action to combat climate change and its impacts
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Impact analysis & target-setting
In 2020, the Bank signed the United Nations Environment
Programme Finance Initiative’s Principles for Responsible
Banking (UNEP FI PRB) which aims to align bank’s strategy
and practice with the UN SDG and the Paris Climate
Agreement.
Principles for Responsible Banking are as follows:
Principle 1:
Alignment
Principle 2:
Impact & Target Setting
Principle 3:
Clients & Customers
Principle 4:
Stakeholders
the Group considers the Green House Gas Protocol (GHG
Protocol), which represents the world’s most widely used GHG
accounting standard.
Sustainable financing
In 2021, over EUR 60 million of EU Taxonomy eligible long-term
loans were approved by the Bank (large corporates segment):
the Bank financed investments in energy infrastructure,
a telecommunications network, water supply network,
construction of cultural and school facilities, and energy
efficiency. Within the SME segment, sustainable financing
was at modest levels. At the end of 2021, the Bank and the
Group banking members set ambitious sustainable financing
goals for the years 2022–2025. Based on the analysis, the
focus will be on renewable energy sources, solutions for the
carbon footprint reductions, improving energy efficiency, and
supporting a circular economy.
EU Taxonomy
The unfolding of the EU Taxonomy regulation was closely
monitored by the Group representative in the European
Principle 5:
Governance & Culture
Principle 6:
Transparency & Accountability
The Bank will fully implement all six principles and therefore
Banking Federation’s Sustainable Finance working group,
the required steps regarding impact analysis, target-setting &
which covered among other tasks the UNEP FI and EBA
implementation, and accountability by the end of 2024.
project ‘The Application of the EU Taxonomy to Bank Lending.’
In 2022, the EU Taxonomy regulation will be fully implemented
In 2021, the Group conducted an impact analysis
in the Group financing process.
which resulted in target-setting, which represents the
implementation of the second principle for responsible
banking. The impact analysis identifies the most relevant and
significant positive and negative impacts of a bank’s portfolio
on the societies, economies, and environments that the bank
operates in. It is also the essential groundwork needed for
meaningful target-setting.
ESG Risk management
In 2021, substantial effort was made in implementing climate,
environmental, and social risk management requirements
in line with ECB and EBA guidelines. In recent years, the
Bank signed Framework Agreements with the EBRD and the
Contract of Guarantees with MIGA. It was therefore required
to develop a mechanism for environmental and social
Materiality analysis
With the aim to keep the ‘double materiality’ concept in the
screening of current and potential financing applications
against MIGA and EBRD Exclusion List and applicable
focus for the year 2021, the Group also decided for a traditional
environmental and social laws. Consequently, the Group’s
(GRI) materiality analysis as a complement to the impact
existing risk management framework is constantly upgraded
analysis, since GRI materiality and stakeholder identification
with environmental and social elements. As a systemically
can be used to further corroborate impact analysis findings
important institution, the Group is included into 2022 ECB
and so help with the setting of priorities.
Climate Stress test exercise. More information is available in
Carbon footprint
In H2 2021, ‘The NLB Group Carbon Footprint Measurement
and Reporting Policy’ was adopted as an internal policy
Risk Management chapter of this report.
Sustainability training
The Group’s ‘Sustainability on-line training program’ was
on the calculation of the carbon footprint of the Group’s
carefully prepared on the model of similar training programs
own operations, and so provides the key methodological
of the International Finance Corporation (IFC) and is
approach for why and how the carbon footprint reporting
implemented throughout the Group. In the future, the Group
for the Group will be carried out. With reference thereto,
will conduct Sustainability training on a yearly basis.
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NLB Group Sustainability Governance Structure
The NLB Group Sustainability Governance Structure is
anchored at different levels within the Bank and the Group
thus guaranteeing that it receives attention from the highest
decision-making bodies while also being broadly integrated in
our operations.
Sustainability working groups
Ad hoc working groups are being set up in the bank to
introduce various elements of sustainability. Their composition
For more information, please refer to:
• the chapter Risk Management, subchapter Incorporating
ESG Risks
varies according to the area of sustainability considered.
• Note 6 of the Financial part of the report
ESMS Officers have been appointed in our banking
• the chapter Statement of Management of Risk
members who regularly report to the local boards. They are
• the Pillar 3 Disclosures
representatives of risk management line who ensure the ESMS
• the NLB Group Sustainability Report 2021
In the Q3 2021, the NLB Group ‘Sustainability Committee’ was
is properly implemented organisation wide.
established as part of corporate sustainability governance
developments and the first meeting was held in December
2021. It is chaired by the CEO and oversees the integration
of the ESG factors to the Group business model in a focused
and coordinated way across the Group and issues opinions,
recommendations, initiatives, and takes relevant decisions
when needed. The committee has the authority to discuss,
develop, and approve sustainability strategies, policies,
initiatives, methodologies, KPIs, targets, and other relevant
procedures of the NLB Group, and has influence over
sustainability-related strategic objectives.
Apart from anchoring sustainability at different levels within
the Bank in its daily operations (on the Management Board
level, Executive Management level, Group level, and Business
& Country level), NLB has put in place a 4-level NLB Group
Sustainability Governance Structure, namely:
Supervisory Board of the NLB
The Bank has established a comprehensive framework for
sustainable management, starting by sponsoring the matter
at the level of the NLB SB, which, significantly contributes
to the implementation of sustainability. The SB regularly
monitors the implementation of ESG factors and discusses the
topic on regular basis.
Sustainability Committee
It is composed of the highest-level officers and provides
the overall vision and sustainability strategy, it defines key
policies, reviews progress on major initiatives, decides on
specific external partnerships and agreements, and ensures
cohesion of the overall program with the Bank’s mission.
Sustainability Team
The Sustainability Team within Strategy and Business
Development Division of the NLB oversees Group-wide
sustainability agenda and is tasked with driving the culture,
monitoring implementation of the strategy, coordinating
initiatives, measuring the impact, and reporting on the
progress to the Sustainability Committee, the MB, and the SB.
Other sustainability-related topics
Many of these outcomes reflect ongoing, long-term
challenges, but at the same time they reflect the Group’s ability
to reach tangible results in this area. It should be mentioned
that in 2021 several other sustainability-related topics were
addressed, such as:
• digitalization and paperless operations
• remuneration policy
• CSR projects corresponding to UN SDG
Corporate Social
Responsibility
The Group contributes towards wider socio-economic
development through its CSR activities and is responsible to
its clients, employees, and the social environment. The Group
pays special attention to knowledge and lifelong learning.
The key pillars of the socially responsible operations of the
Group are care for its employees and protection of lawfulness
• inclusion & diversity at the level of employees and clients
and integrity, as well as the promotion of entrepreneurship,
• building partnerships & capacities by being involved with
increasing financial literacy, support to professional and
relevant representatives from academia, NGOs, and the real
youth sports, humanitarian activities, the protection of cultural
economy sector
heritage, and care for the environment.
• talent development and care for employees.
Roadmap for 2022
The Group sustainability roadmap for the year 2022 is full of
new challenges. As a UN PRB signatory, the Bank will consider
joining the UNEP FI’s Net Zero Banking Alliance, since it is an
accelerator that provides a dedicated forum to shape the net
zero journey of the banking industry. The Group is responsive
to the desire of investors, supervisors, and its peers and
other stakeholders to align its business model with net zero
objectives. The progress in achieving targets for 2030 and
2050, at the latest, in line with credible 1.5°C scenarios, is
however, not only dependent on the willingness and capacity
of a bank, but to a large extent on a complex sum of factors,
such as the availability of sustainable investments and
activities, transition projects, transformation capacities of the
industry, as well as public and industrial policies supporting
transition.
Every year, the Group strives to increase the share of CSR
activities that pursue UN SDG. The target for 2021 – at least
30% of all CSR activities in every bank member should be
aligned with UN SDG – was achieved, even more, some
member banks even exceeded it. At the same time, the Group
plans, not only to align key CSR topics within Group members,
but also to carry out more joint Group wide CSR projects. In
2021, the main two projects were #HelpFrame and Heartful
opportunities.
Understanding small
entrepreneurs’ challenges -
#HelpFrame project
continued in 2021
The Group’s socially responsible actions have been
The Group's sustainability ambition is anchored in its mission.
continuously upgraded with projects that follow the UN SDG.
This is seen as an opportunity to help businesses not only
The Group’s first such regional project was launched in spring
survive, but also to take initiative and position themselves for
2020. The COVID-19 crisis closed the door to many dreams
future growth. Sustainability is at the centre of our business
model and a pillar for the transformation of the Group.
in previous years. That is why the decision was made to give
a glimmer of hope with the #HelpFrame project for another
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37
year in 2021. The project is our way of giving a helping hand to
local small entrepreneurs who have been most affected by the
NLB Banka, Banja Luka focused on both youth and the
elderly by providing 500 children with disabilities and socially
situation in recent years. As part of the campaign, advertising
endangered families with New Year’s presents, and 500
space was donated to 73 selected entrepreneurs in Slovenia
elderly visitors from elderly centres with Christmas lunch and
and 258 across the whole NLB Group. The participants
bedding.
Following its tradition of the past years, NLB Banka, Sarajevo
supported an orphanage in Tuzla to help children without
parents and families. The public institution, ‘Home for
Children without Parental Care Tuzla’ deals with the care
and upbringing of children without parental care, children
from dysfunctional families, and children found begging
and wandering the streets. They provide all of them with a
home, healthcare, regular education, clothes, and food. They
currently have 56 children of all ages – from babies to high
school students.
NLB Banka, Prishtina also decided on a double donation. The
first went to the National Autism Association in Kosovo (ANAK)
which deals with the identification and support of children
with autism and their families. This time, the organisation
is promoting the talents of children with autism through
paintings. The second donation was donated to the Ideas
Partnership, an organisation that works mainly with Roma,
Ashkali, and Egyptian communities in the field of education,
health, social work, and the environment.
NLB Banka, Podgorica’s donation supported the Rights
Centre for Children, a non-governmental organisation
that is, among others, helping children towards stronger
participation in the decision-making process and ensuring
their voices are heard, but also working with sensitive groups,
such as children from foster families and socially vulnerable
groups.
from 2020 were invited to become ambassadors of last
year's project and to share their positive experiences in the
#HelpFrame.
A world full of heart is a
world full of opportunities
The world is much more beautiful and colourful when
we stand by each other and with full hearts create new
opportunities – opportunities such as those that also arise
with our support. In all markets where the Group operates,
organisations that promote inclusion whether for children, the
elderly, or both with a charitable donation are supported.
In Slovenia, NLB donated to two humanitarian organisations,
Botrstvo and Humanitarček. The NLB donation to Botrstvo
will enable 200 disadvantaged children the opportunity to
develop their talent. In contrast, as many as 97,000 elderly
people live below the poverty line in Slovenia. With the help
of a donation, the Humanitarček association will be able to
provide them with 21,000 hot meals.
NLB Banka, Beograd and Komercijalna Banka, Beograd
donated to the centre for youth integration ‘SOS dečija
sela,’ a non-governmental, humanitarian, and non-profit
organisation that has been working to improve the quality of
life of children and youth without parental care, empowering
families at risk, supporting the economic independence
of young people from vulnerable groups, and providing
emergency assistance to local populations and refugees.
NLB Banka, Skopje also decided to support both children
and the elderly by donating to a healthcare centre for the
elderly in Skopje and the Foundation for Educational and
Cultural Initiatives ‘Step by Step,’ and the Project ‘Be IN, Be
Inclusive, Be Included,’ that strive to improve the educational
opportunities for children with disabilities and contributes
to the development of an inclusive, non-segregated primary
education subsystem.
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We are your neighbours.
Great-grandmothers saved up for hard times.
For grandmothers, education was the best investment.
Mothers invested in their own companies.
As modern women, you invest in dreams.
We support you through all life periods, help you successfully tackle challenges they bring, offer you useful solutions
and a reliable path towards realising the biggest and the most daring of goals. And even though your priorities
change throughout the years, ours remain the same: we help you with the best advice and provide you with new
opportunities at every step.
Overview of Financial Performance
The Group achieved a profit after tax in the
amount of EUR 236.4 million, 67.3% or EUR 95.1
million more than the year before (2020: EUR 141.3
million), if the positive impact of the acquisition of
The Group’s result is based on the following key drivers:
• NLB Skladi achieved 79.8% YoY growth of gross inflows
• Integration of Komercijalna Banka, Beograd, acquired
in mutual funds (EUR 252.4 million) and the assets under
at the end of 2020, merger of NLB Banka, Podgorica and
management from NLB clients is approaching EUR 1.3
Komercijalna Banka, Podgorica in November 2021, and the
billion;
sale of Komercijalna Banka, Banja Luka in December 2021;
• A strong TCR of 17.8%;
Komercijalna Banka, Beograd in 2020 is excluded.
• Strong 12% loan growth to individuals and solid 8% to
• The negative CoR of -41 bps, given good asset quality trends
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corporate, above 10% growth even without Komercijalna
and a decisive workout approach;
Banka, Banja Luka;
• The multi-year declining trend of the non-performing
• Net interest income increased EUR 109.8 million on the
credit portfolio stock continued, mostly due to repayments,
back of the Komercijalna Banka group contribution (EUR
collection, the sale of claims, and cured clients. The
98.5 million). Net interest income without the Komercijalna
combination of successful resolution of NPL and credit
Banka group contribution also increased, based on higher
growth of a high-quality portfolio resulted in the decrease
volumes and increased market shares in the loan book
of gross NPL ratio (EBA def.) from 4.5% to 3.4% YoY, and the
compensating for the reduction in interest rates. In general,
NPE ratio (EBA def.) by 0.6 p.p. YoY to 1.7%;
net interest income was impacted by excess liquidity,
• Unencumbered liquidity reserves portfolio amounted to
which determined a consequently higher volume of cash
EUR 8,280.6 million (38.3% of total assets).
and balances with CBs, with low or negative interest rates;
however, additional interest income was recognised based
on lower interest rates for TLTRO in the Bank in December;
• The economic rebound led to the optimisation of investment
portfolio of households, growth of housing loans, mutual
funds, and bancassurance, which increased net fee and
commission income (high balance deposit fees and net fees
Figure 5: Profit after tax of NLB Group (in EUR million) / ROE after tax (in %)(i)
from asset management and bancassurance);
• Lower non-recurring income, which in 2021 included
ROE a.t.
EUR
236.4 million
of net profit.
valuation income in the amount of EUR 14.8 million from the
repayment of exposure, classified as non-performing, EUR
9.0 million of other operation income from the settlement
of a legal dispute, and EUR 8.1 million loss from the sale of
Komercijalna Banka, Banja Luka; in 2020, the sale of NLB
Vita and debt securities had a positive effect on the result in
the amount of EUR 28.1 million;
• Continuous cost discipline; costs higher due to integration
costs and employee costs;
• Net impairments and provisions for credit risk were
released in the amount of EUR 35.8 million, mostly due
exposures and changed parameters related to more
favourable macroeconomic forecasts. Other impairments
and provisions were established in the amount of EUR
27.1 million, mostly due to restructuring provisions and
provisions for legal risk, mostly related to Komercijalna
Banka, Beograd;
to the successful repayment of on-and off-balance
225.1
14.4%
11.8%
11.7%
8.1%
11.4%
CAGR*
1%
203.6
193.6
269.7
236.4
2017
2018
2019
2020
2021
*Compounded Annual Growth Rate.
(i) Komercijalna Banka group included from 2021 on.
Contents
40
Income statement
Table 10: Income statement of NLB Group and NLB
NLB Group
2021
2020
Change YoY
o/w KB
contribution
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Change QoQ
in EUR million
Net interest income
Net fee and commission income
Dividend income
Net income from financial transactions
Net other income
Net non-interest income
Total net operating income
Employee costs
Other general and administrative expenses
Depreciation and amortisation
409.4
237.2
0.2
38.4
-18.3
257.6
666.9
-231.3
-137.5
-46.5
299.6
170.3
0.1
32.0
2.6
204.9
504.5
-165.0
-97.3
-31.7
Total costs
-415.4
-293.9
Result before impairments and provisions
Impairments and provisions for credit risk
Other impairments and provisions
Impairments and provisions
Gains less losses from capital investments in
subsidiaries, associates, and joint ventures
Negative goodwill
Result before tax
Income tax
Result of non-controlling interests
251.5
35.8
-27.1
8.8
1.1
0.0
261.4
-13.5
11.5
210.5
-62.3
-9.1
-71.4
0.9
137.9
277.9
-5.2
3.0
109.8
66.9
0.1
6.5
-20.8
52.6
162.4
-66.4
-40.3
-14.8
-121.4
41.0
98.1
-18.0
80.1
0.2
-137.9
-16.5
-8.4
8.4
Result after tax
236.4
269.7
-33.3
98.5
42.5
0.2
8.1
-17.9
32.8
131.3
-54.9
-38.3
-13.4
-106.6
24.7
3.4
-24.0
-20.6
0.0
0.0
4.2
2.5
1.5
5.2
37%
39%
101%
20%
-
26%
32%
-40%
-41%
-47%
-41%
19%
-
-198%
-
27%
-
-6%
-162%
-
-12%
107.0
64.6
0.0
5.0
-9.6
60.0
167.0
-63.1
-43.4
-11.7
-118.2
48.8
1.8
-18.3
-16.5
0.2
0.0
32.5
-0.6
1.0
30.9
103.7
58.6
0.1
7.4
-3.8
62.3
166.0
-56.5
-31.7
-11.6
-99.9
66.1
3.3
2.9
6.3
0.5
0.0
72.9
-3.3
3.9
65.7
101.1
59.9
0.0
20.8
-2.0
78.7
179.9
-56.5
-32.6
-11.6
-100.7
79.1
14.8
-11.3
3.5
0.3
0.0
82.9
-4.8
2.9
75.2
97.5
54.1
0.0
5.3
-2.8
56.5
154.0
-55.1
-29.8
-11.6
-96.6
57.5
16.0
-0.5
15.5
0.1
0.0
73.1
-4.7
3.8
75.1
45.1
0.0
2.0
-1.0
46.1
121.2
-42.0
-27.6
-8.0
-77.7
43.5
-13.2
-7.9
-21.1
0.0
137.9
160.2
3.8
-1.1
3.4
6.0
-0.1
-2.4
-5.8
-2.3
1.1
-6.6
-11.7
-0.1
-18.4
-17.3
-1.6
-21.2
-22.8
-0.4
0.0
3%
10%
-65%
-32%
-154%
-4%
1%
-12%
-37%
-1%
-18%
-26%
-47%
-
-
-68%
-
-40.4
-55%
2.7
-2.9
81%
-75%
-53%
64.6
165.1
-34.8
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NLB
Net interest income
Net fee and commission income
Dividend income
Net income from financial transactions
Net other income
Net non-interest income
Total net operating income
Employee costs
Other general and administrative expenses
Depreciation and amortisation
Total costs
Result before impairments and provisions
Impairments and provisions for credit risk
Other impairments and provisions
Impairments and provisions
Result before tax
Income tax
Result after tax
2021
139.1
119.6
79.6
19.0
4.2
222.4
361.5
-107.0
-59.1
-17.5
-183.6
177.9
26.1
7.5
33.6
211.5
-3.0
2020
138.9
104.5
6.3
28.1
33.9
172.8
311.7
-102.6
-60.0
-17.8
-180.5
131.2
-9.0
-8.3
-17.4
113.9
0.1
208.4
114.0
Change YoY
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Change QoQ
in EUR million
0.3
15.1
73.4
-9.2
-29.8
49.6
49.8
-4.4
0.9
0.3
-3.1
46.7
35.1
15.8
50.9
97.6
-3.1
94.5
0%
14%
-
-33%
-88%
29%
16%
-4%
2%
2%
-2%
36%
-
-
-
86%
-
83%
37.4
31.2
74.7
0.8
0.9
107.5
144.9
-28.4
-19.2
-4.3
-52.0
93.0
4.9
5.7
10.6
103.6
-1.1
102.5
34.2
30.0
0.4
1.8
0.3
32.6
66.8
-26.8
-13.0
-4.4
-44.1
22.6
6.3
0.1
6.4
29.0
-0.2
28.8
33.8
30.8
0.0
14.7
0.8
46.3
80.1
-26.0
-13.8
-4.4
-44.3
35.9
3.3
-0.1
3.2
39.0
-1.2
37.9
33.7
27.6
4.5
1.6
2.2
35.9
69.6
-25.8
-13.1
-4.4
-43.2
26.4
11.7
1.8
13.5
39.9
-0.6
39.3
34.5
27.3
5.5
3.0
1.5
37.4
72.0
-25.4
-17.0
-4.3
-46.8
25.2
8.5
-7.9
0.6
25.8
2.6
28.4
3.2
1.2
74.2
-1.0
0.5
74.9
78.2
-1.6
-6.2
0.0
-7.8
70.4
-1.4
5.5
4.2
74.5
-0.9
73.7
9%
4%
-
-55%
160%
-
117%
-6%
-48%
1%
-18%
-
-22%
-
66%
-
-
-
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Result reflects great performance
and important milestones achieved
bancassurance, and arrangement fees for the organisation
of syndicated loans;
• Non-recurring valuation income in the amount of EUR 14.8
million from repayment of exposure, classified as non-
The Group generated EUR 236.4 million of profit after tax, EUR
performing, EUR 9.0 million of other operation income from
33.3 million or 12% less YoY, and was based on the following
the settlement of a legal dispute, and EUR 8.1 million loss
key drivers and YoY evolution:
from the sale of Komercijalna Banka, Banja Luka; YoY lower,
• Net interest income increased EUR 109.8 million, backed
with the sale of NLB Vita and debt securities impacting the
by the Komercijalna Banka group contribution (EUR 98.5
2020 result in the total amount of EUR 28.1 million;
million). Increasing net interest income without the
• Continuous cost discipline; costs higher due to integration
Komercijalna Banka group contribution was impacted by
and employee costs;
excess liquidity which determined a consequently higher
• Net impairments and provisions for credit risk were released
volume of cash and balances with CBs, with low or negative
in the amount of EUR 35.8 million, mostly due to successful
interest rates. Interest income without the Komercijalna
repayment of on-and off-balance exposures and changed
Banka group contribution was higher YoY, based on higher
parameters related to more favourable macroeconomic
volumes and increased market shares in the loan book,
forecasts;
compensating for the reduction in interest rates;
• Other impairments and provisions were established in
• Net fee and commission income increased in all banks, in
the amount of EUR 27.1 million, mostly due to restructuring
the Bank mostly due to repricing of packages, fees for high
provisions and provisions for legal risk, mostly related to
balances, higher net fees from asset management and
Komercijalna Banka, Beograd.
EUR
666.9 million
of total net operating income.
Figure 6: Profit after tax of NLB Group (in EUR million) – evolution YoY
109.8
66.9
-14.2
-121.4
80.1
0.2
-137.9
-8.4
-8.4
24.4
98.5
269.7
11.3
42.5
-4.6
-9.6
-14.9
-106.6
100.7
-20.6
0.2
-137.9
-10.8
2.5
-9.9
1.5
236.4
5.4
2020
Net interest income
Net fee and
commission income
Other net non-
interest income
Total costs
Impairments and
provisions
Gains and
losses(i)
Negative
goodwill
Income tax
Result of non-
controlling interests
2021
NLB Group w/o KB
KB
(i) Gains less losses from capital investments in subsidiaries, associates, and joint ventures.
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Figure 8: Result before impairments and provisions of NLB Group (in EUR million)
79.1
67.2
27.8
-15.9
66.1
70.9
1.6
-6.4
48.8
61.1
-5.8
-6.5
57.5
61.4
43.5
47.1
-2.4
-1.1
-6.3
2.4
Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
Result before impairments and provisions w/o non-
recurring income and regulatory costs
Non-recurring net non-interest income
Regulatory costs
Despite the unstable environment due to COVID-19 pandemic,
Recurring profit before impairments and provisions of the
all banks (active at the end of the year) reported a profit.
Group totalled EUR 225.5 million, EUR 48.7 million or 28%
Higher profit YoY was recorded in all the banks, mainly due
higher YoY. In Q2 2021, the result before impairments and
to the establishment of credit impairments and provisions
provisions was higher due to non-recurring net non-interest
related to COVID-19 outbreak in 2020 and successful
income (EUR 14.8 million valuation income from the repayment
operations in the reporting year.
of exposure classified as non-performing, and EUR 9.0 million
of other operation income from the settlement of a legal
The result of the Bank increased by 83% YoY to EUR 208.4
dispute), but partially offset by regulatory costs in the Bank
million from EUR 114.0 million achieved in 2020, mostly due
(EUR 2.0 million for SRF and EUR 7.5 million for DGS).
to higher dividend pay-out, since banking subsidiaries
were refrained from paying out dividends due to COVID-19
restrictions in 2020, and the net release of impairments
and provisions for credit risk (establishment in 2020 due to
COVID-19 outbreak which materially lowered the final result).
Non-recurring valuation income from repayment of exposure,
classified as non-performing in the amount of EUR 12.9 million
and from the settlement of legal dispute in the amount of EUR
8.6 million influenced 2021 result, while the sale of NLB Vita in
the amount of EUR 35.5 million and the sale of debt securities
in the amount of EUR 17.1 million had a positive impact on the
2020 result.
Figure 7: Profit after tax of NLB Group banks(i) (on a stand-alone basis, in EUR million)
+83%
208.4
114.0
+103%
39.0
19.2
+80%
+70%
18.2
10.1
5.9 10.0
+83%
24.4
13.3
+625%
+65%
34.8
10.1
1.4
2.6 4.3
0.5
-5.8
NLB,
Ljubljana
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
KB,
Beograd
KB,
Banja
Luka
KB,
Podgorica
2020
2021
(i) NLB Banka, Podgorica and Komercijalna Banka, Podgorica merged in November 2021; Komercijalna Banka, Banja Luka was sold on 9 December 2021.
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409.4
111.1
299.6
355.2
366.7
-55.6
-55.8
-12.6
Net interest income
Figure 9: Net interest income of NLB Group (in EUR million)
Figure 10: Net interest margin and Operational business margin of NLB
Group(i) (quarterly data, in %)
3.25%
3.25%
3.32%
3.18%
3.35%
2.03%
2.09%
2.08%
2.02%
2.07%
Net non-interest income
Figure 11: Net non-interest income of NLB Group (in EUR million)
257.6
0.2
26.0
42.5
204.9
33.7
0.1
0.8
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75.1
89.3
-14.2
103.7
28.6
92.5
107.0
26.7
97.0
-14.3
-14.1
-3.1
-2.6
Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021
170.3
194.7
Net interest margin - quarterly
Operational business margin - quarterly
(i) Calculated on the basis of average interest-bearing assets. Komercijalna Banka
group included from 2021 on.
The quarterly net interest margin of 2.07%, as well as the
operational business margin (OBM) of 3.35% in Q4 for the
2020
-5.9
2021
46.1
0.0
2.1
45.1
-1.1
62.3
0.1
2.0
12.9
1.6
8.8
60.0
0.0
1.2
49.8
51.7
-5.8
Q4 2020
Q3 2021
Q4 2021
2020
2021
Q4 2020
Q3 2021
Q4 2021
KB interest income
Interest expenses
Interest income
KB interest expenses
Net interest income of the Group accounted for 61% of the
Group’s total net revenues (2020: 59%), and totalled to EUR
409.4 million. Out of the EUR 109.8 million increase, EUR 98.5
million was contributed by Komercijalna Banka group.
Without Komercijalna Banka group contribution, higher level
of net interest income was achieved YoY, due to higher volume
of securities and loans, despite lower yields, but partially offset
by higher cash volumes and balances with the CB (bearing
negative interest in line with the expansionary monetary policy).
The net interest income was also affected by higher liquidity
position streaming from TLTRO-III secured borrowing and
additional interest income, based on lower interest rates, was
recognised at the end of the year in the Bank.
Interest expenses in most member banks were decreasing
due to lower interest rates for customer deposits. The pressure
on the net interest margins in the Bank and member banks in
SEE continues.
Group was 0.1 p.p. and 0.04 p.p. higher YoY. Despite the
declining trend of interest rates on loans, the interest rate
on corporate and state loans in the Bank slightly increased,
due to the syndicated loan with an attractive interest rate,
repayment of some exposures with low interest rates, and
the higher volume of Cross-border corporate loans bearing
higher interest rates. Interest rate on loans to individuals is
in the declining trend mainly due to changed portfolio mix in
favour of housing loans bearing lower interest rate. On the
QoQ basis, the margins were higher due to TLTRO repricing.
One-off positive effects in
the total amount of
EUR 23.8 million
due to positive valuation effect from the
repayment of exposure, classified as
non-performing and other operation
income from the settlement of a
legal dispute.
Net fee and commission income
Recurring other net non-interest income
KB net fee and commission income
Non-recurring other net non-interest income
Dividend income
Net non-interest income reached EUR 257.6 million of which
EUR 32.8 million were contributed by Komercijalna Banka
group. A major part of the net non-interest income has been
derived from the net fee and commission income, which grew
YoY, mostly in the Bank due to the repricing of the packages,
fee for high balances in the amount of EUR 8.1 million (from
April on also for individuals8), higher net fees from asset
management (79.8% YoY growth of gross inflows in mutual
funds, total of EUR 252.4 million in 2021) and bancassurance
(higher YoY inflows with new distribution terms), and
arrangement fees for organisation of syndicated loans.
The net non-interest income was strongly affected by non-
recurring valuation income in the amount of EUR 14.8 million
from the repayment of exposure classified as non-performing,
EUR 9.0 million of other operation income from the settlement
of a legal dispute, and EUR 8.1 million loss from the sale of
Komercijalna Banka, Banja Luka. The non-recurring items
were higher in 2020 with the sale of NLB Vita and debt
securities in total amount of EUR 28.1 million.
8 Further information is available under the chapter Key Events.
Contents
45
EUR
35.8 million
released impairments and provisions
for credit risk.
Total costs
Impairments and provisions
Figure 12: Total costs of NLB Group (in EUR million)
Figure 13: NLB Group impairments and provisions (in EUR million)
415.4
13.4
33.2
38.3
99.3
54.9
293.9
31.7
97.3
165.0
176.4
8.0
77.7
8.3
99.9
3.3
9.0
3.3
12.6
27.6
42.0
22.7
12.5
44.1
8.4
118.2
30.8
16.0
47.1
CoR
(bps)
62
e
s
a
e
e
R
l
t
n
e
m
h
s
i
l
b
a
t
s
E
-13.4
-41
8.8
3.4
32.4
-3.1
-24.0
6.3
3.6
3.4
-0.4
-0.3
-1.0
2.8
-4.2
-14.1
-16.5
0.2
-13.4
-7.9
-21.1
2020
2021
Q4 2020
Q3 2021
Q4 2021
-48.9
Employee costs
KB employee costs
Other general and administrative expenses
KB other general and administrative expenses
Depreciation and amortisation
KB depreciation and amortisation
Total costs amounted to EUR 415.4 million of which EUR 106.6
-9.1
-71.4
million from Komercijalna Banka group. Without Komercijalna
2020
2021 Q4 2020 Q3 2021 Q4 2021
Banka group contribution the costs increased YoY for EUR 14.9
million due to integration costs and employee costs.
CIR stood at 62.3%, a 4.0 p.p. increase YoY.
KB other impairments and provisions
Other impairments and provisions
Impairments and provisions for credit risk
KB impairments and provisions for credit risk & expected credit losses
The Group released net impairments and provisions for
credit risk (EUR 35.8 million in 2021) mostly due to successful
repayment of on-and off-balance exposures and changed
parameters related to more favourable macroeconomic
forecasts.
Other impairments and provisions were established in the
amount of EUR 27.1 million, of which there were provisions for
legal risk (EUR 16.6 million, to a large extent attributable to
processing fees in Serbia) and restructuring provisions (EUR
14.8 million).9
The Group’s cost of risk was negative (-41 bps), as it was in
most Group bank members.
9 More details are available in Note 5.16. of the Financial part of the report.
MB Statement
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Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
46
Statement of financial position
Table 11: Statement of financial position of NLB Group and NLB
NLB Group
ASSETS
31 Dec 2021
31 Dec 2020
Change YoY
31 Dec 2021
30 Sep 2021
30 Jun 2021
31 Mar 2021
31 Dec 2020
Change QoQ
in EUR million
Cash, cash balances at central banks, and
other demand deposits at banks
5,005.1
3,961.8
1,043.2
26%
5,005.1
4,947.0
4,739.4
3,961.8
58.1
1%
-29%
140.7
211.7
243.4
197.0
3,918.2
205.0
Loans to banks
Net loans to customers
Gross loans to customers
- Corporate
- Individuals
- State
Impairments and valuation of loans to customers
Financial assets
- Trading book
- Non-trading book
Investments in subsidiaries, associates, and joint ventures
Property and equipment
Investment property
Intangible assets
Other assets
TOTAL ASSETS
LIABILITIES
140.7
197.0
10,587.1
9,644.9
10,903.5
10,033.3
4,996.0
5,621.1
286.3
-316.3
5,208.3
7.7
4,631.7
5,027.6
374.0
-388.4
5,119.5
84.9
5,200.6
5,034.7
11.5
247.0
47.6
59.1
271.1
8.0
249.1
54.8
61.7
268.9
-56.3
942.2
870.1
364.3
593.5
-87.7
72.1
88.8
-77.2
166.0
3.5
-2.1
-7.2
-2.6
2.1
21,577.5
19,565.9
2,011.6
Deposits from customers
17,640.8
16,397.2
1,243.6
- Corporate
- Individuals
- State
Deposits form banks and central banks
Borrowings
Other liabilities
Subordinated liabilities
Equity
Non-controlling interests
4,463.7
3,949.1
12,680.8
12,023.5
496.4
71.8
932.6
427.6
288.5
2,078.7
137.4
424.5
72.6
249.8
434.9
288.3
1,952.8
170.3
514.5
657.2
71.8
-0.8
682.8
-7.3
0.2
125.9
-32.9
TOTAL LIABILITIES AND EQUITY
21,577.5
19,565.9
2,011.6
10%
9%
8%
12%
-23%
19%
2%
-91%
3%
44%
-1%
-13%
-4%
1%
10%
8%
13%
5%
17%
-1%
-
-2%
0%
6%
-19%
10%
10,587.1
10,267.0
10,071.4
9,824.5
9,644.9
10,903.5
10,593.7
10,421.8
10,208.2
10,033.3
4,996.0
5,621.1
286.3
-316.3
4,783.9
5,487.4
322.3
-326.7
4,772.7
5,304.8
344.4
-350.4
4,720.8
5,126.6
360.8
-383.7
5,208.3
5,264.7
5,490.9
5,376.4
7.7
10.5
13.5
75.1
4,631.7
5,027.6
374.0
-388.4
5,119.5
84.9
5,200.6
5,254.2
5,477.4
5,301.3
5,034.7
11.5
247.0
47.6
59.1
271.1
8.5
242.1
54.1
53.0
249.0
8.4
243.8
53.3
55.7
281.1
8.1
247.3
54.4
58.2
266.9
8.0
249.1
54.8
61.7
268.9
-71.0
320.2
309.8
212.1
133.7
-36.0
10.4
-56.4
-2.8
-53.6
3.0
4.9
-6.5
6.1
22.1
21,577.5
21,296.9
21,187.3
19,959.0
19,565.9
280.6
17,640.8
17,248.6
4,463.7
4,276.6
17,143.0
4,130.2
16,732.1
4,011.0
16,397.2
3,949.1
12,680.8
12,495.2
12,477.8
12,254.4
12,023.5
496.4
71.8
932.6
427.6
288.5
2,078.7
137.4
476.8
82.0
975.6
412.5
290.2
2,140.5
147.6
535.0
78.0
976.6
466.8
287.6
2,091.4
143.8
466.7
71.9
251.1
428.5
286.8
2,014.1
174.5
424.5
72.6
249.8
434.9
288.3
1,952.8
170.3
392.2
187.1
185.5
19.6
-10.1
-43.0
15.1
-1.7
-61.8
-10.2
21,577.5
21,296.9
21,187.3
19,959.0
19,565.9
280.6
-34%
3%
3%
4%
2%
-11%
3%
-1%
-27%
-1%
36%
2%
-12%
12%
9%
1%
2%
4%
1%
4%
-12%
-4%
4%
-1%
-3%
-7%
1%
MB Statement
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Risk Factors & Outlook
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Performance Overview
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Events After 2021
Financial Report
Contents
47
Investments in subsidiaries, associates, and joint ventures
786.0
750.7
775.5
750.7
750.7
NLB
ASSETS
31 Dec 2021
31 Dec 2020
Change YoY
31 Dec 2021
30 Sep 2021
30 Jun 2021
31 Mar 2021
31 Dec 2020
Change QoQ
in EUR million
Cash, cash balances at central banks, and
other demand deposits at banks
3,250.4
2,261.5
988.9
44%
3,250.4
3,049.8
2,961.4
2,127.3
2,261.5
200.6
Loans to banks
Net loans to customers
Gross loans to customers
- Corporate
- Individuals
- State
Impairments and valuation of loans to customers
Financial assets
- Trading book
- Non-trading book
Property and equipment
Investment property
Intangible assets
Other assets
TOTAL ASSETS
LIABILITIES
199.3
158.3
41.0
5,153.0
4,595.1
557.9
5,250.4
2,411.1
2,694.4
144.9
-97.4
3,034.3
7.7
4,753.1
2,168.5
2,411.9
172.6
-158.0
3,017.2
18.8
3,026.6
2,998.4
86.1
9.2
29.5
151.7
91.7
8.3
28.1
115.6
497.3
242.6
282.4
-27.7
60.6
17.1
-11.1
28.2
35.3
-5.6
0.9
1.3
36.1
12,699.5
11,026.6
1,672.9
Deposits from customers
9,659.6
8,850.8
808.9
- Corporate
- Individuals
- State
Deposits form banks and central banks
Borrowings
Other liabilities
Subordinated liabilities
Equity
2,436.7
7,078.9
144.0
109.3
873.9
216.3
288.5
1,916.6
6,812.4
121.8
41.6
143.5
251.4
288.3
520.1
266.5
22.2
67.7
730.4
-35.2
0.2
1,551.9
1,451.0
100.9
TOTAL LIABILITIES AND EQUITY
12,699.5
11,026.6
1,672.9
26%
12%
10%
11%
12%
-16%
38%
199.3
176.5
5,153.0
4,903.5
5,250.4
5,001.0
2,411.1
2,244.9
2,694.4
2,609.8
144.9
-97.4
146.3
-97.5
162.8
4,787.8
4,916.3
2,245.4
2,514.4
156.5
-128.5
164.3
4,677.5
4,828.4
2,213.4
2,452.3
162.7
-150.9
158.3
4,595.1
4,753.1
2,168.5
2,411.9
172.6
-158.0
22.7
249.5
249.3
166.2
84.6
-1.4
0.2
1%
3,034.3
3,160.2
3,398.6
3,365.2
3,017.2
-125.9
-4%
-59%
7.7
10.4
13.6
23.8
18.8
-2.8
-26%
1%
5%
-6%
11%
5%
31%
15%
9%
27%
4%
18%
163%
-
-14%
0%
7%
15%
3,026.6
3,149.8
3,385.0
3,341.4
2,998.4
-123.2
786.0
86.1
9.2
29.5
151.7
775.5
88.1
9.1
25.3
125.4
89.3
8.3
26.1
121.2
89.7
8.3
26.8
128.6
10.6
-2.0
0.1
4.1
91.7
8.3
28.1
115.6
26.2
12,699.5
12,313.5
12,330.9
11,338.4
11,026.6
386.0
9,659.6
9,243.3
9,272.2
9,056.6
8,850.8
2,436.7
2,158.4
2,070.0
1,996.8
7,078.9
6,994.2
7,060.3
6,924.9
144.0
109.3
873.9
216.3
288.5
90.7
158.3
863.6
233.5
290.2
142.0
142.0
866.3
252.5
287.6
134.9
124.0
143.4
242.0
286.8
1,916.6
6,812.4
121.8
41.6
143.5
251.4
288.3
1,551.9
1,524.6
1,510.3
1,485.5
1,451.0
416.3
278.3
84.6
53.4
-49.0
10.3
-17.2
-1.7
27.4
12,699.5
12,313.5
12,330.9
11,338.4
11,026.6
386.0
7%
13%
5%
5%
7%
3%
-1%
0%
-4%
1%
-2%
1%
16%
21%
3%
5%
13%
1%
59%
-31%
1%
-7%
-1%
2%
3%
MB Statement
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Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
48
Balance sheet volume of the Group increased by EUR 2,011.6
million YoY totalling to EUR 21,577.5 million, mainly due to
the continued inflow of deposits from individuals (EUR
657.2 million YoY), corporate (EUR 514.5 million YoY), and
participation in a liquidity-providing operation by the ECB
in the amount of EUR 750 million (TLTRO-III). Excess liquidity
was in large extent placed on the account at the CB (EUR
1,043.2 million YoY increase) and in gross loans to customers
(EUR 364.3 million to corporate and EUR 593.5 million to
individual clients). However, despite the deposit growth, the
trend of redistribution of deposits to alternative investments
(e.g., mutual funds and bancassurance) is visible. The share of
customers’ deposits accounted for 82% of the total funding,
2.0 p.p. less as at the end of 2020.
Figure 14: Total assets of NLB Group (in EUR million) – structure
+10%
YoY
19,565.9
642.6
5,119.5
21,577.5
636.3
5,208.3
9,644.9
4,158.8
10,587.1
5,145.7
14,174.1
544.9
3,829.7
7,604.7
2,194.7
31 Dec 2019
31 Dec 2020
31 Dec 2021
Cash equivalents, placements with banks and loans to banks
Net loans to customers
Financial Assets
Other Assets
Assets
54.3% of the total assets were related to Group members
located in Slovenia (2020: 51.8%) and 22.2% in Serbia
(2020: 23.4%).
Figure 15: NLB Group total assets by location of NLB Group entities (in %)(i)
23.4%
22.2%
51.8%
54.3%
Slovenia
Serbia
North Macedonia
BiH
Kosovo
Montenegro
8.1%
8.1%
8.5%
7.4%
4.5%
4.3%
3.6%
3.6%
Other
0.1%
0.1%
31 Dec 2020
31 Dec 2021
(i) The geographical analysis includes a breakdown of items with respect to the
country in which individual NLB Group members are located. Komercijalna Banka
group is divided between the countries based on each entity location from 30
September 2021 on, with YE data adjusted to the new methodology.
MB Statement
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Events After 2021
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Contents
49
The lending activity spiked and recorded a significant growth
offers for clients and intensive marketing campaigns. The
Despite the declining trend of interest rates on loans,
in all the banks in 2021. Gross loans to individuals recorded the
volume of consumer loans was slightly lower YoY (EUR 16.1
the average interest rate on corporate and state
highest, 17% YoY increase in Strategic foreign markets (without
million); however, the new production in 2021 amounted to
loan book portfolio in the Bank slightly increased
Komercijalna Banka group banks, but included Komercijalna
EUR 229.1 million and was higher compared to 2020 (EUR
due to changed portfolio structure (conclusion of
Banka, Podgorica on 31 December 2021 due to the merger
196.7 million). Gross loans to corporate and state recorded a
new syndicated loan with an attractive interest rate,
with NLB Banka, Podgorica), while the highest increase
EUR 214.9 million growth YoY, where growth derived from the
repayment of some exposures with low interest rates
of gross loans to the corporate and state was recorded in
corporate segment (EUR 242.6 million), while the state segment
and higher volume of Cross-border corporate loans),
Komercijalna Banka, Beograd, i.e., 16% YoY.
exposures shrank by EUR 27.7 million. Corporate loan growth
bearing higher interest rates. The interest rate on
was distributed across all sub-segments.
loans to individuals is in a declining trend mainly due
Gross loans to individuals in the Bank grew by EUR 282.4
to the changed portfolio mix in favour of housing loans
million YoY, mostly due to an increasing volume of housing
The volume of gross loans to customers in Strategic foreign
bearing lower interest rates.
loans (EUR 280.9 million YoY, with enviable high new
markets increased, with a remarkable new production in lending
production of EUR 557.6 million in 2021, compared to EUR
to individuals, with all the Group member banks recording a
303.1 million in the previous year) related to more attractive
double-digit YoY growth in outstanding loan balances.
Figure 16: NLB Group gross loans to customers dynamics (in EUR million)
NLB Group
NLB(i)
Gross loans to individuals
Strategic foreign markets
w/o KB(i)(ii)
KB Beograd (i)(ii)
+12%
YoY
+13% w/o
KB BL
5,621.1
4.90%
5,027.6
4.92%
4,993.0
34.6
+12% YoY
4.05%
2,411.9
3.84%
2,694.4
+17%
YoY
+14% w/o
KB PG
6.28%
1,743.5
5.83%
2,036.9
1,992.5
44.3
5.87%
+9% YoY
770.2
840.4
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
Gross loans to corporate & state
+6%
YoY
+8% w/o
KB BL
5,005.7
2.72%
4,884.9
120.8
5,282.3
2.98%
+9% YoY
2,341.1
1.85%
2,556.0
1.91%
+10%
YoY
+7% w/o
KB PG
4.11%
1,613.9
4.01%
1,776.5
1,726.1
50.4
3.52%
+16% YoY
846.1
978.4
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
(i) On stand alone basis; (ii) NLB Banka, Podgorica and Komercijalna Banka, Podgorica merged in November 2021; Komercijalna Banka, Banja Luka sold on 9 December 2021; the growth in Strategic foreign market is impacted by the
merger of NLB Banka, Podgorica and Komercijalna Banka, Podgorica (the latter was not included in this segment as at 31 December 2020).
Interest rates
Gross loans
KB Banja Luka
KB Podgorica
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Figure 17: Loan portfolio(i) by segment, geography, currency, and rate type (in EUR million)
Institutions
539
3%
SME
2,881
19%
State(ii)
4,202
27%
EUR 15.5 billion
Corporates
2,298
15%
Retail
consumer
2,427
16%
Retail mortgages
3,195
21%
by segment(iv)
Serbia
2,956
19%
Kosovo
796
5%
Montenegro
618
4%
N. Macedonia
1,309
8%
Other(iii)
730
5%
EUR 15.5 billion
Slovenia
7,871
51%
BiH
1,262
8%
by geography
BAM
5%
Other
2%
MKD
5%
RSD
7%
EUR 15.5 billion
EUR
81%
Floating
37%
EUR 15.5 billion
Fixed
63%
Currency
Interest rate
(i) Loan portfolio also includes reserves at CBs and demand deposits at banks.
(ii) State includes exposures to CBs.
(iii) The largest part represents EU members.
(iv) Segmentation in accordance with the company size defined in the Companies
Act of an individual country in the region.
Despite significant portfolio growth in all NLB Group banks in
2021, there were no major changes in the corporate and retail
credit portfolio structure. The credit portfolio remains well-
diversified, and there is no large concentration in any specific
industry or client segment. The share of retail portfolio in the
whole credit portfolio is quite substantial, with the segment
of mortgage loans still prevailing. The majority of the loan
portfolio refers to euro currency, while the rest originates
from local currencies of the Group banking members. From
interest rate type, more than 63% of the loan portfolio is
linked to a fixed interest rate, and the rest to a floating rate
(mostly to the Euribor reference rate). Lending growth in
the corporate segment remained relatively moderate, while
the retail segment, namely mortgage lending, experienced
considerable growth in 2021.
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Liabilities
Figure 18: Total liabilities of NLB Group – structure (in EUR million)
+10%
YoY
19,565.9
2,123.1
288.3
424.5
434.9
322.4
3,949.1
21,577.5
2,216.1
427.6
1,004.4
288.5
496.4
4,463.7
12,023.5
12,680.8
14,174.1
1,730.9
210.6
277.7
2,772.0
342.6
257.4
8,582.9
31 Dec 2019
31 Dec 2020
31 Dec 2021
Deposits from individuals
Corporate deposits
State deposits
Borrowings and Deposits from banks and central banks
Subordinated liabilities
Other liabilities
Total equity
Total liabilities of the Group increased and amounted to EUR
19,361.4 million. The Group’s funding base is dominated by
customer deposits accounting for 82% in which sight deposits
prevail (87%, compared to 85% as at 2020 YE and 81% as at
2019 YE). The majority of customer deposits (72%) were from
individuals. 55% of deposits were collected in Slovenia (54% at
2020 YE), 22% in Serbia (24% at 2020 YE), and the rest in other
Group banking members in SEE.
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Figure 19: NLB Group deposits from customers dynamics (in EUR million)
NLB Group
NLB(i)
Strategic foreign markets
w/o KB(i)(ii)
KB Beograd(i)(ii)
Deposits from individuals
+5%
YoY
+6% w/o
KB BL
12,680.8
4.90%
+4% YoY
6,812.4
2,411.9
7,078.9
2,694.4
0.16%
0.05%
0.04%
12,023.5
11,963.8
0.17%
59.7
+11%
YoY
+8% w/o
KB PG
2,764.9
0.47%
3,058.1
2,979.6
0.31%
78.5
+10% YoY
2,307.7
2,543.7
0.31%
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
Deposits from corporate & state
+13%
YoY
+16% w/o
KB BL
4,960.1
4,373.7
4,278.7
0.17%
95.0
+27% YoY
2,038.4
2,580.7
0.13%
0.05%
0.03%
+15%
YoY
+11% w/o
KB PG
1,355.4
0.35%
1,552.4
1,508.4
0.22%
44.0
+2% YoY
860.8
880.9
0.18%
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
(i) On stand alone basis; (ii) NLB Banka, Podgorica and Komercijalna Banka, Podgorica merged in November 2021; Komercijalna Banka, Banja Luka sold on 9 December 2021; the growth in Strategic foreign market is impacted by the merger of NLB Banka,
Podgorica and Komercijalna Banka, Podgorica (the latter was not included in this segment as at 31 December 2020).
Interest rates
Deposits
KB Banja Luka
KB Podgorica
Deposits from customers increased by 8% YoY. The largest
The interest rate for deposits has been decreasing due to
of deposits to alternative investments (e.g., mutual funds and
increase of EUR 542.3 million was recorded in the corporate
repricing at lower interest rate and shorter maturity (due
bancassurance) was visible.
and state deposits in the Bank, due to various reasons, i.e., the
term deposits are mostly placed on the accounts). Growth of
increase of balances in investment and pension funds, inflows
deposit base was reflected in higher costs of liquidity surplus,
from takeovers on the market, and incentives due to COVID-19
which was successfully mitigated with a high balance deposit
pandemic. Deposits from individuals increased the most in the
fee, charged by the Bank to corporate and from April on also
Komercijalna Banka, Beograd, EUR 236.0 million.
to individual clients. Consequently, the trend of redistribution
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Figure 20: Deposits from customers by type as at 31 December 2021
Figure 21: LTD ratio movement
Figure 22: NLB Group off-balance sheet items (in EUR million)
20.6%
7.0%
79.4%
93.0%
65.5%
11,612.3
7,604.7
58.8%
60.0%
16,397.2
17,640.8
9,644.9
10,587.1
0%
YoY
4,221.7
916.5
22.9
4,672.7
1,126.4
4,655.3
1,236.7
21.8
35.6
International
Slovenia
Term deposits
Sight deposits
31 Dec 2019
31 Dec 2020
31 Dec 2021
LTD
Net loans (in EUR million)
Deposits (in EUR million)
1,927.5
1,697.7
1,354.8
1,826.7
1,892.2
1,490.8
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The LTD ratio (net) was 60.0% at the Group level; a 1.2 p.p. YoY
increase, due to favourable higher growth of loans compared
to deposits.
31 Dec 2019
31 Dec 2020
31 Dec 2021
Guarantees
Letters of credit - risk bearing
Commitments to extend credit and other risky commitments
Derivatives
Off-balance sheet items of the Group amounted to EUR
4,655.3 million and were comprised of guarantees (27%),
letters of credit (1%), commitments to extend credit and other
risky commitments (41%), and derivatives (32%).
Commitments to extend credit and other risky commitments
were divided between loans (99% corporate), overdrafts (59%
retail and 41% corporate), and cards (89% retail). A majority of
the Group's derivatives were concluded by the Bank either for
the hedging of the banking book or trading with customers.
Contents
54
Capital and capital adequacy
Capital
Figure 23: NLB Group capital (in EUR million)
2,065
297
1,768
1,496
45
1,451
2,252
287
1,966
Figure 24: NLB Group capital ratios and regulatory thresholds (in %)
15.80%
16.28%
15.75%
14.75%
16.63%
15.25%
14.25%
14.12%
17.78%
15.25%
15.47%
14.25%
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2019
31 Dec 2020
31 Dec 2021
Tier 1
Tier 2
Total capital ratio
CET1 ratio
OCR = MDA threshold (Total capital)
OCR+P2G (Total capital)
In 2021, NLB was required to maintain the OCR at the level of
14.25% on a consolidated basis, consisting of 10:
• 10.75% TSCR (8% P1R and 2.75% P2R); and
• 3.5% CBR (2.5% Capital Conservation Buffer, 1% O-SII buffer11
and 0% Countercyclical buffer).
P2G amounts to 1.0% of CET1.
The Bank and Group’s capital covers all the current and
announced regulatory capital requirements, including capital
buffers and other currently known requirements, as well as
the P2G.
Figure 25: NLB Group capital requirements as at 31 December 2021
15.25%
1.00%
3.50%
2.75%
1.55%
0.52%
0.69%
10.75%
6.05%
2.02%
2.69%
8.00%
CET1
4.50%
AT1
1.50%
T2
2.00%
10.55%
2.02%
2.69%
10 Further information on developments in 2022 are available in chapter
Events after the end of the 2021 financial year.
11 The O-SII Buffer will as of 1 January 2023 amount to 1.25%.
Pillar 1
Pillar 2
TSCR
Combined Buffer
P2G
OCR+P2G (Total capital)
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Table 12: NLB Group Capital Requirements and buffers(i)
Pillar 1 (P1R)
Pillar 2 (SREP req. - P2R)
Total SREP Capital Requirement (TSCR)
Combined Buffer requirement (CBR)
Conservation buffer
O-SII buffer
Countercyclical buffer
CET1
AT1
T2
CET1
Tier 1
Total Capital
CET1
Tier 1
Total Capital
CET1
CET1
CET1
CET1
Overall capital requirement (OCR) = MDA threshold
Tier 1
Pillar 2 Guidance (P2G)
OCR + P2G
Total Capital
CET1
CET1
(i) Further information on developments in 2022 are available in the chapter Events After the End of the 2021 Financial Year.
2021
4.5%
1.5%
2.0%
1.55%
2.06%
2.75%
6.05%
8.06%
10.75%
2.5%
1.0%
0.0%
9.55%
11.56%
14.25%
1.0%
10.55%
from 12 March 2020
onwards
as at 1 January till
11 March 2020
4.5%
1.5%
2.0%
1.55%
2.06%
2.75%
6.05%
8.06%
10.75%
2.5%
1.0%
0.0%
9.55%
11.56%
14.25%
1.0%
10.55%
4.5%
1.5%
2.0%
2.75%
2.75%
2.75%
7.25%
8.75%
10.75%
2.5%
1.0%
0.0%
10.75%
12.25%
14.25%
1.0%
11.75%
2019
4.5%
1.5%
2.0%
3.25%
3.25%
3.25%
7.75%
9.25%
11.25%
2.5%
1.0%
0.0%
11.25%
12.75%
14.75%
1.0%
12.25%
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As at 31 December 2021 the TCR for the Group stood at 17.8%
(or 1.2 p.p. higher than as at 31 December 2020), and for NLB
at 24.6% (or 2.5 p.p. lower than as at 31 December 2020). As at
31 December 2021, the CET1 ratio stood at 15.5% (1.4 p.p. YoY
increase). The higher Group total capital adequacy compared
to the end of 2020 derives from higher capital (increase of EUR
187.0 million YoY) which compensated RWA increase of EUR
246.4 million YoY for the Group. Higher RWA derives from the
increase of RWA for operational risk. Total capital increased
mainly due to inclusion of negative goodwill in retained
earnings in the amount of EUR 137.9 million and partial
inclusion of 2021 profit (EUR 136.0 million).
Figure 26: Capital of NLB Group (in EUR million) – evolution YoY
2,065
138
136
13
-63
-37
n.a.
2,252
1.1%
1.1%
0.1%
-0.5%
-0.3%
-0.3%
16.6%
17.8%
31 Dec 2020
NGW
Profit inclusion
KB BG buyout
NCI
OCI and other
RWA impact
31 Dec 2021
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Dividend pay-out
Pursuant to the ECB regulation/BoS decision valid till 30
September 2021, the dividend payout in 2021 was split into two
tranches. The first instalment in the amount of EUR 12.0 million
was paid on 22 June 2021, while the second in the amount of
EUR 12.8 million after expiry of the BoS decision on 18 October
2021. Besides that, the Bank paid on 24 December 2021
Total risk exposure dynamic
Table 13: Total risk exposure for NLB Group
Total risk exposure amount (RWA)
additional incremental dividend in the amount of EUR 67.4
RWA for credit risk
million, contributing to the 2021 cumulative pay-out of EUR 92.2
million.
Central governments or central banks
Regional governments or local authorities
Public sector entities
Institutions
Corporates
Retail
Secured by mortages on
immovable property
Exposures in default
Items associated with particulary high risk
Covered bonds
Claims in the form of CU
Equity exposures
Other items
RWA for market risk + CVA
RWA for operational risk
31 Dec 2021
30 Sep 2021
31 Dec 2020
in EUR million
Change
YoY
Change
QoQ
12,667.4
10,205.2
1,158.5
99.8
47.0
310.2
2,748.7
4,171.0
453.0
179.4
442.5
41.1
19.4
88.5
446.0
1,218.2
1,244.0
12,824.4
10,648.0
1,842.8
126.0
212.7
355.1
2,312.4
4,190.7
397.1
191.8
444.1
40.3
17.6
79.7
437.7
1,229.0
947.3
12,421.0
10,222.9
1,892.2
135.5
248.8
311.7
2,224.2
3,891.8
355.7
231.5
344.2
40.9
18.7
47.1
480.9
1,250.8
947.3
246.4
-17.8
-733.7
-35.6
-201.8
-1.4
524.5
279.2
97.4
-52.0
98.3
0.2
0.8
41.4
-34.9
-32.6
296.7
-157.0
-442.8
-684.3
-26.2
-165.8
-44.8
436.3
-19.7
56.0
-12.4
-1.5
0.8
1.8
8.8
8.2
-10.8
296.7
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The RWA for credit risk decreased by EUR 17.8 million. On
The RWA for market risk decreased by EUR 32.6 million YoY
one hand, the factors to increase were loan growth to the
due to a lower fixed income position in the trading book. In
corporates and retail, new investments in subordinated, state
contrast, RWA for FX risk increased by EUR 35.3 million YoY
and EU institutions bonds. On the other hand, the increase
and RWA for CVA increased by EUR 10.7 million, of which
was compensated by regulatory changes namely inclusion
EUR 10.6 million as a result of new regulatory requirements
of BiH and Macedonia on EBA's third party equivalent list,
which became effective from June 2021 onward (calculation of
legislation criteria changes for the CRR collateral adequacy,
original exposure method (OEM) with residual maturity).
signing of guarantee agreements with MIGA as well as
changed investment policy such as shift of some liquid
The increase in the RWA for operational risks (EUR 296.7 million
assets from the central governments to lower risk-weighted
YoY) derives from the higher three-year average of relevant
counterparties (NLB Banka, Prishtina, NLB Banka, Podgorica)
income, as defined in Article 316 of CRR, which represents the
or optimization of deposits with banks (Komercijalna Banka,
basis for the calculation. The main effect for increased relevant
Beograd). Furthermore, successful recovery of NPL clients,
income was acquisition of Komercijalna Banka, Beograd in 2020.
where the biggest part represented repayments by a large
client, contributed to the RWA decrease, while on the other
Further information on capital and capital adequacy is
hand RWA for high-risk exposures is higher mainly due to new
available in the Note 5.22 to the Audited Annual Financial
project finance loans.
Statements and in Pillar 3 Disclosures.
MREL
The MREL requirement for the Group is based on the Multiple
Point of Entry (MPE) approach. As of 1 January 2024, NLB must
comply with MREL requirement on a consolidated basis at
resolution group level (i.e., NLB Resolution Group, consisting
of NLB and other members of the Group excluding banks)
which amounts to 31.38% of Total Risk Exposure Amount
(TREA) (excluding CBR) and 9.97% of the Leverage Ratio
Exposure (LRE). NLB has to ensure a linear build-up of own
funds and eligible liabilities towards MREL requirement and
its compliance with 25.19% of the TREA (excluding CBR) and
8.03% of the LRE on 1 January 2022.
MREL requirement forms part of Group’s risk appetite and
MREL requirement is regularly analysed and monitored by the
Group.
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Figure 27: LCR quarterly dynamic of NLB Group
Liquidity position
The Group’s liquidity remains strong, with a high level of
unencumbered liquidity reserves in total assets (38.3%) that
is reflected in the LCR ratio standing at 252.6% (31 December
2020: 257.5%). The Group holds a comfortable liquidity position,
with liquidity ratios standing well above the risk appetite limit at
the Group and individual banking member level.
7,000
6,000
n
o
i
l
l
i
m
R
U
E
5,000
4,000
3,000
2,000
1,000
-
257.5%
262.0%
272.6%
272.4%
252.6%
5,003
4,915
5,453
5,286
5,367
1,943
1,876
2,000
1,941
2,125
50.0%
0.0%
31 Dec 2020
31 Mar 2021
30 Jun 2021
30 Sep 2021
31 Dec 2021
Stock of HQLA
Net liquidity outflow
LCR
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300.0%
250.0%
200.0%
150.0%
100.0%
As at 31 December 2021 the Group’s unencumbered liquidity
reserves corresponded to EUR 8,280.6 million (2020: EUR
8,327.0 million) comprised of cash, balances with CB without
minimum reserve requirement, debt securities portfolio, and
credit claims eligible for CB-secured funding operations.
Among other these liquidity reserves provide the basis for
future strategic growth. Encumbered liquidity reserves
(EUR 877.6 million; excluding obligatory reserves), used for
operational and regulatory purposes, are excluded from the
liquidity reserves portfolio.
Figure 28: Evolution of NLB Group unencumbered liquidity reserves (in EUR million)
n
o
i
l
l
i
m
R
U
E
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
8,327.0
8,203.1
8,366.1
8,191.1
8,280.6
59.9%
0.8%
32.2%
7.0%
63.4%
0.7%
29.6%
6.3%
59.7%
57.7%
0.0%
39.1%
1.2%
0.0%
42.0%
0.4%
55.9%
0.0%
43.1%
1.0%
31 Dec 2020
31 Mar 2021
30 Jun 2021
30 Sep 2021
31 Dec 2021
ECB eligible credit claims
Trading book debt securities
Cash & CB reserves
Banking book debt securities
Contents
60
Segment Analysis
Table 14: Core and Non-Core Segments of NLB Group
Retail Banking in Slovenia
includes banking with
individuals and micro
companies, asset
management (NLB
Skladi), and one part
of the subsidiary NLB
Lease&Go that deals with
retail clients, as well as
the contribution to the
result from the associated
company Bankart.
Corporate and Investment
Banking in Slovenia
includes banking with Key
corporate clients and SMEs,
Cross-border corporate
financing, Investment
Banking and Custody,
Restructuring and Workout,
and one part of the
subsidiary NLB Lease&Go
that renders services
to corporate clients.
Core Segments
Non-Core Segment
Strategic Foreign Markets
Financial Markets
in Slovenia
includes the operations
of strategic Group
banks in the strategic
markets (Serbia, North
Macedonia, BiH, Kosovo
and Montenegro).
covers treasury activities
and trading in financial
instruments, while it
also presents the results
of asset and liabilities
management (ALM).
Other
Non-Core Members
accounts for the Bank’s
categories of which
the operating results
cannot be allocated to
specific segments as
well as the subsidiary
NLB Cultural Heritage
Management Institute.
includes the operations of
non-core Group members,
namely REAM and leasing
entities (except NLB
Lease&Go), NLB Srbija,
and NLB Crna Gora.
(in EUR million)
NLB Group
Profit b.t.
Contribution to Group’s
profit b.t.
Total assets
% of total assets
CIR
Cost of risk (bps)
261.4
100%
21,577
100%
62.3%
-41
49.0
19%
2,823
13%
68.1%
26
86.8
33%
2,334
11%
44.4%
-141
113.2
43%
9,798
45%
63.0%
-11
15.8
6%
6,190
29%
35.8%
/
-4.7
-2%
337
2%
177.5%
/
1.3
0%
96
0%
157.4%
/
NLB Group’s main indicator of a segment’s efficiency is net profit before tax. No revenues were generated from transactions with a single external customer that would amount to 10% or more of Group's
revenues.
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Retail Banking in Slovenia
The Bank continues to be the market leader in
retail banking by knowing customers’ needs.
Through anchor loan products and best-suited
offers to different segments, the Bank again
proved its efficiency and gained new clients. The
banking environment is changing considerably
and new approaches and sales channels are
emerging. The Bank continues to be available
through its traditional branch offices, but also
through its mobile branch. Technology enables
the availability of the Bank’s services to clients
Financial performance
Table 15: Performance of the Retail Banking in Slovenia segment
Net interest income
Net interest income from Assets(i)
Net interest income from Liabilities(i)
Net non-interest income
o/w Net fee and commmission income
24/7 via the Contact Centre and digital banking.
Total net operating income
Total costs
Result before impairments and provisions
Impairments and provisions
Net gains from investments in subsidiaries, associates, and JVs'
Result before tax
Net loans to customers
Gross loans to customers
Housing loans
Interest rate on housing Loans
Consumer loans
Interest rate on consumer Loans
Other
Deposits from customers
Interest rate on deposits
Non-performing loans (gross)
Cost of risk (in bps)
CIR
Interest margin
Contribution to NLB Group
Figure 29: Contribution to NLB Group
19%
19%
36%
Result b.t.
Net interest income
Net non-interest
income
(i) Net interest income from assets and liabilities with the use of FTP.
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in EUR million consolidated
Change YoY
2021
79.5
82.7
-3.1
91.5
96.6
171.0
-116.5
54.5
-6.7
1.1
49.0
2020
81.4
78.4
3.0
89.0
82.7
170.4
-114.1
56.2
-15.1
0.9
42.0
2,731.6
2,769.7
1,815.5
2.34%
635.6
6.70%
318.6
7,703.6
0.03%
58.1
2,415.4
2,450.7
1,534.7
2.51%
651.7
6.43%
264.3
7,356.8
0.04%
52.4
-1.9
4.3
-6.1
2.5
13.8
0.7
-2.4
-1.7
8.4
0.2
6.9
316.2
319.0
280.9
-2%
5%
-
3%
17%
0%
-2%
-3%
56%
27%
17%
13%
13%
18%
-0.17 p.p.
-16.1
-2%
0.27 p.p.
54.3
346.8
5.7
-0.01 p.p.
21%
5%
11%
31 Dec 2021
31 Dec 2020
Change YoY
2021
26
68.1%
1.55%
2020
63
67.0%
1.75%
Change YoY
-38
1.1 p.p.
-0.20 p.p.
Contents
62
Net interest income
The net interest income from loans to individuals was EUR 4.3
million higher YoY; the higher volume of housing loans and
higher interest margins on consumer loans was due to higher
volumes of new production and a higher share of loans with a
risk premium and quick loans in the portfolio; lower volumes
on overdrafts had a negative impact on the interest income.
There was also a reduction of the retail deposits margin after
transfer price (FTP) in the amount of EUR 6.1 million YoY.
Net non-interest income
Higher net non-interest income in the amount of
EUR 2.5 million YoY was due to EUR 13.8 million or 17% higher
net fee and commission income related mostly to package
repricing and higher net fees from asset management (high
net inflows in mutual funds of NLB Skladi, EUR 192.8 million)
and bancassurance. In April, the Bank started charging a fee
for high balances for individuals to restrain the deposit inflow
which diverted extra liquidity to other financial products
(mutual funds, investments) and compensated for the negative
interest rates charged for the balances at the CB.
Net impairments and provisions
Net impairments and provisions were established in the
amount of EUR 6.7 million, due to changes in risk parameters.
Loans to customers
The production of new housing loans was record high, EUR
557.6 million in 2021 (2020: EUR 303.1 million).
Deposits from customers
The deposits base increased by EUR 346.8 million (5%) YoY,
with sight deposits prevailing (95% in 2021, compared to 93%
in 2020).
The Bank strengthened
its position in
Lending
and Asset
Management.
Figure 30: NLB’s market share in Retail Banking in Slovenia
30.5%
26.2%
23.1%
21.8%
33.0%
31.0%
29.0%
27.0%
25.0%
23.0%
21.0%
19.0%
17.0%
15.0%
31.3%
26.4%
23.4%
22.5%
30.7%
26.9%
24.7%
24.4%
Distribution channels
Branch office and ATMs network
The Bank’s main sales channel remains its branch network
in Slovenia with 75 branches, and is supported with the ATM
network (538 or a 37.6% market share in Slovenia) of which
89% are contactless.
A higher daily limit of cash withdrawals on ATMs was
31 Dec 2019
31 Dec 2020
31 Dec 2021
enabled to encourage clients to increase use of ATMs, and
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consequently to strengthen the advisory role of branch
offices.
Mobile bank: NLB Bank&Go
The mobile branch NLB Bank&Go, engaged in promoting
the Bank in various cities in Slovenia, is being increasingly
recognised.
Unique 24/7 banking service in Slovenia
Extending the use of video calling for sales and contract
conclusions for almost all of the Bank’s products (consumer
and housing loans with straightforward collateral, Vita and
Generali insurance products, deposits, savings and cards,
onboarding of e- and m-bank) was an important step towards
strengthening the role of the Contact Centre as a 24/7 sales
channel.
The Contact Centre experienced a YoY increases of 11% in total
contacts, mainly due to the 57% increase in video calls.
Despite the broader scope of work, the client experience
remained at a very high level, with an average 2021 NPS for
video call and chat of 71.
Market share in loans to customers
Market share in deposits from customers
Market share in housing loans
Market share in consumer loans
Business performance
The market leader in retail banking
in Slovenia
Leader in Slovenia
Bank remains the leader in the Slovenian market in retail
lending and deposit-taking. An encouraging increase of the
market share is noticed in the category of housing loans,
namely to 24.4% (31 December 2020: 22.5%), which is the result
of a very impressive production of new housing loans in 2021
(market share of 32.2%; 2020: 28.3%).
The Bank remains the leader because of their very well-
established branch and ATM network, the 24/7 Contact centre,
and continuous digitalization improvements.
The Bank retains its role as a market leader in payments
by being a reliable and trustworthy provider of payments
services with a focus on providing a positive user experience.
The private banking arm of the Bank has been positioned as a
leader in this segment in Slovenia for over 20 years.
NLB Skladi is a market-leading asset management company,
whose market share and annual net inflows are increasing
every year.
Contents
63
Figure 31: NLB Contact Centre no. of contacts
+57%
Sustainability
Following the ESG orientation of the Group, special financing
Mobile wallet - NLB Pay
M-wallet NLB Pay usage is increasing at a significant pace
for the purchase of solar panels, power storage and heat
and the application is constantly being upgraded. The most
+11%
pumps was agreed to be offered to clients by one of the
recent updates have been made in line with regulatory
Slovenian retailers, selling technical products.
requirements for Strong Customer Authentication and include
Digital banking
The number of digital users continued to increase (13%
YoY), with the number of active users surpassing 300,000.
The number of m-bank Klikin and e-bank NLB Klik users
increased by 23% (72,076 new users) and 6% (22,771 new users)
Flik Instant Payments for person to person (P2P), person to
merchant (P2M), and person to e-merchant (P2eM) payments.
The application has become a must-have, especially as it is an
easy way to confirm e-commerce purchases.
Figure 34: NLB Pay in numbers
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158,099
863,717
999,460
1,112,933
YoY respectively, which is well demonstrated by the digital
penetration (see the figure below).
100,397
43,289
2019
2020
2021
2019
2020
2021
Video call
Total contacts
The total volume and number of payments processed in
the e-bank and m-bank increased by 32% and 14% YoY,
respectively.
Figure 33: Online and mobile banking penetration
+140%
+188%
Digitalisation and improved client
experience
High level of client satisfaction
The Bank maintained a high level of client satisfaction, as
42%
38%
36%
35%
35%
27%
52%
40%
44,097
36,218
18,402
12,827
7,722
12,577
31 Dec 2018
31 Dec 2019
31 Dec 2020
31 Dec 2021
2019
2020
2021
2019
2020
2021
measured through the Customer Satisfaction Index (CSI). The
E-bank
M-bank
# of users
Volume of transactions (in EUR thousand)
CSI remains stable and well above competition. Furthermore,
clients also express a high level of trust and loyalty.
The Bank also managed to change price perception in
segment of young people, where satisfaction improved (from
74 to 77; 2021 Valicon Client Satisfaction Survey).
Figure 32: Satisfaction with the attitude towards customers
Competitor banks' average 2021
75
NLB 2021
NLB 2020
NLB 2019
NLB 2018
81
83
77
77
24.4%
market share in housing loans.
Digital banks
NLB Klik’s and Klikin’s penetration and
share of active users substantially
increased.
Source: 2021 Valicon Client Satisfaction Survey.
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64
Stable card market share
The Bank’s card market share remained stable with 26.1%
(2020: 26.5%) in the Slovenian market.
New debit Mastercards (NLB Debit Mastercard, NLB Debit
Mastercard World, and NLB Mastercard World Elite) were
introduced to replace the Maestro card, and are part of
the client’s wallet and mobile wallet NLB Pay. The debit
Mastercard offers added value to clients at a time when most
purchases are made online.
SMS Instalments for personal pay-later payment cards
were introduced. The only condition to activate this option
is the activation of SMS Alarm service. This new service
complements instalment purchases for all possible card
transactions (POS and e-commerce purchases, ATM
withdrawals).
Flik Instant payments
The introduction of a new payment method within the local
Slovenian instant payment scheme Flik P2M promotes further
migration from cash to digital payments. Flik P2M is integrated
in the m-wallet NLB Pay and also provides support for iOS
users.
Private banking
Leading private banking provider in Slovenia
Private banking has positioned itself among the leading
Figure 35: Assets under management and the number of private banking clients
Figure 36: Customers’ penetration of ancillary business
1,800
1,580
1,168
1,231
1,309
746.9
752.5
911.1
1,075.1
1,242.9
1,077
554.0
12.9%
13.4%
14.0%
14.9%
15.2%
15.6%
3.7%
1.2%
4.9%
1.5%
6.5%
7.5%
8.3%
9.1%
1.5%
1.7%
1.9%
2.2%
31 Dec 2016 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021
31 Dec 2016 31 Dec 2017 31 Dec 2018 31 Dec 2019 31 Dec 2020 31 Dec 2021
AuM (million EUR)
# of Clients
NLB Skladi
Vita
Generali
Ancillary businesses complementing
banking products
GENERALI Zavarovalnica -
Non-life insurance products
Non-life insurance products, including car and home
insurance, are provided to clients in cooperation with the
NLB Skladi – Slovenia’s largest
GENERALI Zavarovalnica.
asset management company
The market share of NLB Skladi increased to 37.3% (31
December 2020: 34.9%). With EUR 232.8 million of net inflows in
2021, which is the company’s highest annual amount of inflows
ever recorded, the company ranked first among its peers in
Slovenia, accounting for 50.4% of all net inflows in the market.
Fees for high balances of clients’ assets introduced in April
2021 also triggered a partial reallocation of client assets from
deposits and contributed to an additional increase of interest
occurred on asset management products.
Despite challenging circumstances, excellent results were
achieved, namely gross written premiums increased YoY by
19%, and the number of car insurance and home insurance
policies by 19% and 23%.
private banking providers in Slovenia for over 20 years. In
The total assets under management amounted to EUR 2,128.0
2021, its leading position was further strengthened with assets
million (31 December 2020: EUR 1,625.6 million) of which
under management reaching EUR 1.2 billion (16% YoY), and the
EUR 1,610.4 million consisted of mutual funds (31 December
number of clients increased by 14% YoY.
2020: EUR 1,125.5 million) and EUR 517.6 million of the
Throughout the year, private bankers managed to maintain
sales activities on a high level. Results were solid in all areas,
but the best were in mutual fund sales. This can be attributed
to our dedicated team, the positive economic and capital
market environment, and introduction of the fee for high
discretionary portfolio (31 December 2020: EUR 500.1 million).
Vita - insurance company
The insurance company Vita remains the Bank’s strategic
partner. Its products are sold through the Bank’s distribution
network, such as savings and investment insurance products,
balances for individual clients.
risk, and health insurance products.
By offering carefully selected and tailored products and
Vita introduced a new health insurances product – NLB Vita
services, the Bank demonstrates that it is able to take good
Specialist, which among others covers the costs of medical
care of their clients’ wealth.
specialists and more complex diagnostic examinations.
A new Debit
Mastercard
was introduced to replace
the Maestro card.
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65
We are your right hand.
The great-grandfather had the first store on the street.
The grandfather expanded his business onto the entire town.
The father built a national store chain.
For them, there are no limits.
Even small companies have big plans. Yet, business growth demands creativity, passion and hard work. We want to cooperate
with companies that boast such qualities and support them on their path. That is why we offer much more than just banking
services – we share our knowledge with you to build a stronger, more profitable future in the region where determination and
entrepreneurial courage know no limits.
Corporate and Investment Banking in Slovenia
Financial performance
Table 16: Performance of the Corporate and Investment Banking in Slovenia segment
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in EUR million consolidated
Change YoY
The Bank is strengthening its market position
as a systemic player in its home region,
and actively participates in the growth of
markets by supporting sustainable projects.
As a leading player, the Bank also supports
the more complex, cross-border needs of
its clients and diversifies services for them.
Clients’ trust and satisfaction are solid
foundations for future sustainable growth.
31.5%
market share in guarantees and
letters of credit.
Contribution to NLB Group
Figure 37: Contribution to NLB Group
33%
9%
26%
Result b.t.
Net interest income
Net non-interest
income
Net interest income
Net interest income from Assets(i)
Net interest income from Liabilities(i)
Net non-interest income
o/w Net fee and commmission income
Total net operating income
Total costs
Result before impairments and provisions
lmpairments and provisions
Result before tax
Net loans to customers
Gross loans to customers
Corporate
Key/SME/Cross Border Corporates
Interest rate on Key/SME/Cross
Border Corporates loans
Investment banking
Restructuring and Workout
NLB Lease&Go
State
Interest rate on State loans
Deposits from customers
Interest rate on deposits
Non-performing loans (gross)
Cost of risk (in bps)
CIR
Interest margin
(i) Net interest income from assets and liabilities with the use of FTP,
2021
35.7
41.1
-5.4
65.8
38.9
101.5
-45.1
56.4
30.5
86.8
2020
34.0
36.8
-2.8
41.2
33.2
75.2
-41.8
33.4
9.0
42.4
2,047.1
2,167.5
2,006.4
1,827.6
1.79%
0.2
160.8
17.8
160.7
2.20%
1,487.4
0.06%
156.0
2,332.4
2,390.7
2,258.5
2,110.6
1.79%
0.1
88.2
59.6
131.9
2.07%
1,938.2
0.03%
72.5
2021
-141
44.4%
1.76%
31 Dec 2021
31 Dec 2020
Change YoY
1.7
4.3
-2.6
24.6
5.7
26.3
-3.3
23.0
21.5
44.5
285.2
223.1
252.1
283.1
-0.1
-72.6
41.7
-28.8
0.00 p.p.
5%
12%
-93%
60%
17%
35%
-8%
69%
-
105%
14%
10%
13%
15%
-38%
-45%
-
-18%
-0.13 p.p.
450.7
30%
-0.03 p.p.
-83.5
-53%
2020
-44
55.6%
1.90%
Change YoY
-97
-11.1 p.p.
-0.15 p.p.
Contents
67
Net interest income
The interest income from loans to corporate and state was
EUR 4.3 million higher YoY, due to higher volumes, mostly in
Key and Cross-Border Corporates. There was also a reduction
of the deposits margin after transfer price (FTP) in the amount
of EUR 2.6 million YoY.
Non-recurring net non-interest income
Non-recurring net non-interest valuation income in the
amount of EUR 13.0 million from repayment of exposure,
classified as non-performing, and EUR 8.6 million other
operation income from the settlement of a legal dispute.
Net fee and commission income
Higher net fee and commission income YoY, mostly due to a
higher fee for high balances on customers assets (EUR 6.6
million in 2021, EUR 3.3 million higher YoY) and arrangement
fees for organisation of syndicated loans.
Net impairments and provisions
Net impairments and provisions were released in the amount
of EUR 30.5 million due to the repayment of several exposures,
changes in credit ratings, and changed parameters for
collective impairments and provisions related to more
favourable macroeconomic forecasts.
Loans to customers
The volume of loans to corporate increased by EUR 252.1
million YoY, mostly due to newly approved syndicated loans
and increased volumes in the Cross-border Corporates and
NLB Lease&Go.
The Investment Banking and Custody
The Investment Banking and Custody recorded non-interest
income in the amount of EUR 10.8 million and increased
by EUR 1.4 million YoY, mostly due to arrangement fees for
organisation of syndicated loans. The total value of assets
under custody decreased YoY and amounted to EUR 15.9
billion (31 December 2020: EUR 16.2 billion).
Figure 38: NLB’s market share in Corporate Banking in Slovenia
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
30.0%
17.5%
16.5%
31.4%
31.5%
17.3%
17.0%
18.9%
18.3%
The Bank also remains a reliable partner to Slovenian
companies when they want to expand their activities abroad.
Despite substantial loan repayments, the entire portfolio grew
as several new high-quality transactions were concluded
in financing exports and manufacturing, the state, project
finance, acquisitions, factoring, and international finance. In
2021, EUR 1,281.5 million of loans were approved to corporate
31 Dec 2019
31 Dec 2020
31 Dec 2021
and state clients presenting a 23% YoY increase. Market
presence and a proactive approach are also reflected in the
YoY growth of the loan portfolio in all corporate segments,
namely in Key by 7%, SME by 9%, and Cross-border even by
79%. Growth is recorded across all products and services.
As the leading bank in the Slovenian market for the
organisation of syndicated loans, the Bank continues to
successfully support and finance the expansion of Slovenian
companies in the region.
The Bank is also a leading Slovenian bank in the field of trade
finance with products that support the export economy.
Group clients are supported with letters of guarantees,
letters of credit, and purchases of receivables through digital
channels in a safe and fast way, with a market share of 31.5%
(31 December 2020: 31.4%) in guarantees and letters of credit
(including guarantee lines).
Diversified product mix
Bank’s offer
The Bank’s offer of financial services, including lending, cash
management, payment services, as well as capital markets’
advisory services supports various clients’ needs.
Clients can get short-term or long-term financing facilities and
advisory services to find a best-suited financing structure. In this
way, the Bank supports key projects that are important for the
development of the country, as well as the Group’s home region.
Market share in loans to customers
Market share in deposits from customers
Market share in guarantees and letters of credit
Client base
expanded
with additional stable and well
performing groups of companies.
Business performance
Market leader focusing on
customers’ needs
Leading bank servicing corporate
clients in Slovenia
NLB is the leading bank in servicing corporate clients in
Slovenia with a growing client base, and it has an 18.3%
market share in corporate loans (31 December 2020: 17.3%).
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Trade finance solutions
The Bank is a leading Slovenian bank in the field of trade
Basic products & Cards business
New debit Mastercard products (NLB Debit Mastercard
The platform provides security and simplicity, a competitive
edge to providers, and good user experience.
finance with products that also support the export economy,
Business and NLB Debit Mastercard World Business) are now
and represent an important part of the Slovenian economy.
also available to business account holders, replacing the
The trade finance product range and tailor-made solutions
Maestro business card.
are comprehensive and range from traditional trade finance
products, to other modern structures which provide safe
New debit cards are included in the renewed package offer
financing throughout the supply chains.
for legal entities, namely NLB Business Package Basic,
Instant payments
Since 2020, the Bank gradually introduced instant payments,
including instant internal transfers and Flik payments in the
NLB Pay. Instant outgoing payments are now also available to
clients (free of charge) in the m-banking solutions Klikin and
Advanced, and Comprehensive, with a special offer for the
Klikpro.
As a member of the Factor Chain International, the Bank aims
target group of newly established and non-profit clients.
to offer exporters and importers international purchase of
receivables, thus providing them with a modern, fast, and
SMS Instalments for business pay-later payment cards were
easy way of financing, which is an additional incentive for
introduced, the only condition being the activation of an SMS
international business. Special attention is given to letter of
Alarm service. This new service complements the instalment
guarantees by which the Bank supports major infrastructure
purchase for all possible card transactions (POS and
projects in Slovenia and the wider home region. The stronger
e-commerce purchases, ATM withdrawals).
market position reflects the Group’s active advisory approach
towards its customers.
Sustainability
In the process of actively integrating the ESG factors, the Bank
is devoting increasing efforts to identifying new business
opportunities arising from its transition to support circular and
carbon neutral economy.
#HelpFrame, a social environment project with a clearly
defined sustainability component, continued in 2021. In
addition to know-how, advice, and services, advertising
space was also made available to the selected entrepreneurs,
farmers and small and micro companies, thus helping them
present their products and services to potential buyers and
customers.
Figure 39: Transaction volume in acquiring (in EUR million)
+8%
+17%
55
47
2,247
2,348
2,535
Project financing
Recent developments in the real estate market have
opened up new opportunities for project financing. With
14
2019
2020
2021
2019
2020
2021
comprehensive financial solutions, supported by a strong
e-commerce (in EUR million)
POS (in EUR million)
team of experts, the Bank is able to meet even the most
demanding challenges in this area.
Each project is reviewed from different perspectives –
feasibility, costs, and sale, thus trying to minimise risk for both,
A leader in merchant-acquiring
The Bank is a leader in merchant-acquiring by accepting all
the Bank and the client. Clients are also supported in the trade
major payment cards, the local Flik instant payment scheme
finance area, as successful completion of the transaction also
and a modern contactless POS network, with a 36.7% market
requires guarantees to eliminate hidden defects to end users.
share in merchant acquiring.
Favourable financing conditions are offered to the buyer of
Users of e-commerce expect secure and simple online
the property, and a team of mobile bankers is involved to
ensure a successful implementation.
purchases, which is why the Bank offers NLB E-commerce, a
modern payment platform, to its providers and their clients.
Flik payments
With the main goal of decreasing the use of cash, the Flik P2M
payment method is being gradually implemented in all shops
with NLB POS terminals. NLB was the first bank in Slovenia to
enable clients such a service.
Global Payments Innovation (GPI) full on-boarding
The Group, as a first banking group in the region, fully
onboarded the GPI (Global Payment Initiative), i.e., service
from SWIFT, which enables more efficient processing and
easier tracking of international payment orders, thus enabling
considerable improvement and smoother international
payments experience for customers involved in international
business.
Cross border
financing
is becoming increasingly important.
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International corporate business
Collaboration within the Group
Excess liquidity, a rather limited Slovenian market, and the
wish to expand operations with existing and new clients are
the main reasons why cross-border financing is becoming
increasingly important. In the Western Balkans, the Bank is
among others currently supporting selected projects mainly
in the telecommunications and food industry, as well as
renewable energy sources.
loans, which includes also some of world-renowned brands
The Bank helped many companies broaden funding base
and leaders in their industries. The EEA lending portfolio
and arranged the issuance of both long-term and short-term
exceeds EUR 150 million at YE, and is also expected to grow
instruments in the total of EUR 44.3 million on debt capital
further due to very well-established relationships with some of
markets.
the European partnership banks.
Digitalisation of product offering
M-bank Klikpro
The number of m-bank Klikpro users is constantly increasing
(YoY by 17%), which proves that clients are adopting the
The Bank was active in M&A and other financial advisory
engagements. As the sole financial advisor, it successfully
organised the sales process of a leading Slovenian company
in the production of paints. The Bank successfully organised
two takeover bids as well.
Brokerage services and Financial Instruments
In the brokerage services in 2021, the Bank executed clients’
buy and sell orders in the total amount of EUR 902.9 million
At YE, the portfolio, including participating shares of Group
process of digital banking.
subsidiaries lending in such a transaction, already well
exceeds EUR 150 million. The notable potential in the region
can be observed especially in corporate financing focusing
The latest upgrade also included digital signing of documents
(2020: EUR 941.3 million), while in the area of dealing in
for a defined list of products, which will be further extended in
financial instruments, the Bank executed foreign exchange
on renewable energy, infrastructure, and residential project
the following periods.
finance.
Corporate lending in EEA
The Bank also entered into different EU markets and
Mobile wallet NLB Pay
The Bank’s mobile wallet NLB Pay application enables clients
to make contactless, simple, fast, and secure payments on
diversified its cross-border portfolio across the EEA. Most
the contactless POS (in Slovenia and abroad) with the NLB
notable transactions were concluded in Germany, France,
Business Mastercard and NLB Business Maestro cards, and
Austria, and the Netherlands.
also enables instalment payments.
Deals are primary made through participation in syndicated
international facilities or through participation in Schuldschein
Investment banking and
securities services
Arranger of several transactions
In 2021, the Bank organised six syndicated facilities in the
total amount of EUR 652.1 million, where it also acted as the
mandated lead arranger, as an agent, and also as the leading
bank with EUR 275.7 million participation.
spot deals in the total of EUR 946.6 million (2020: EUR 724.0
million) and for EUR 382.5 million (2020: EUR 242.6 million)
worth of transactions involving derivatives.
Good economic conditions in 2021 resulted in more activities
in foreign, non-Euro markets, by the clients. At the same time,
due to higher inflation expectations, more demand for interest
rate hedging was noticed.
Custodian services
The Bank remains one of the top Slovenian players in
custodian services for Slovenian and international customers.
The total value of assets under custody on 31 December 2021
was, together with the fund administration services, EUR 15.9
billion (31 December 2020: EUR 16.2 billion).
Arranging
EUR
652.1 million
of syndicated loans.
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Strategic Foreign Markets
With the merger of two banks in Montenegro
and the finalised sale of one bank in the
Republic of Srpska in 2021, the core part of the
Group in foreign markets now consists of seven
banks and one investment fund company.
They are locally even stronger embedded as
important financial institutions and market
leaders in various business segments. All
Group subsidiary banks have a stable market
position and strong reputation. The market
shares by total assets of subsidiary banks
exceed 10% in five out of six markets.
Financial performance
Table 17: Results of the Strategic Foreign Markets segment
Net interest income
Interest income
Interest expense
Net non-interest income
o/w Net fee and commmission income
Total net operating income
The banks in the Group strategic foreign markets
Total costs
offer a full range of financial services to retail
and corporate clients. In 2021, the Group banks
marked remarkable double-digit growth of gross
loans to customers, especially in housing loans
segments with raised demand for housing loans,
reaching up to 41% YoY (NLB Banka, Sarajevo)
to 55% YoY growth rates (NLB Banka, Beograd).
Result before impairments and provisions
Impairments and provisions
Negative goodwill (KB)
Result before tax
o/w Result of minority shareholders
In 2021 the Group banks accelerated their digital
Net loans to customers
transformation by offering e-identification
Gross loans to customers
(NLB Banka, Skopje), pay mobile card solution,
Individuals
end-to-end automated loan processing
(Komercijalna Banka, Beograd) to robotics
solutions in several internal processes (NLB
Banka, Sarajevo), and implemented SWIFT GPI
services to enable faster, more transparent, and
reliable international transactions to its clients.
Contribution to NLB Group
Figure 40: Contribution to NLB Group
Interest rate on retail loans
Corporate
Interest rate on corporate loans
State
Interest rate on state loans
Deposits from customers
Interest rate on deposits
Non-performing loans (gross)
Cost of risk (in bps)(ii)
CIR
Interest margin(ii)
43%
65%
37%
Result b.t.
Net interest income
Net non-interest
income
(i) Interest rates for 2020 are calculated without Komercijalna Banka group.
(ii) Komercijalna Banka, Beograd is excluded from the calculation.
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in EUR million consolidated
Change YoY
o/w KB
contribution
2021
266.8
299.6
-32.8
95.1
101.6
361.9
-227.9
134.0
-20.8
113.2
11.5
2020
159.3
182.6
-23.3
49.8
54.1
209.1
-109.0
100.1
-59.1
137.9
178.8
3.0
107.5
117.0
-9.5
45.3
47.5
152.9
-118.9
34.0
38.3
-137.9
-65.6
8.4
98.8
111.5
-12.8
33.2
42.3
132.0
-107.3
24.7
-20.6
4.2
1.5
31 Dec 2021
31 Dec 2020(i)
Change YoY
5,441.9
5,632.2
2,877.3
5.83%
2,613.5
3.96%
141.4
3.35%
7,998.8
0.29%
191.7
5,052.4
5,234.8
2,592.9
-
2,443.7
-
198.1
-
7,552.2
-
195.0
389.5
397.4
284.4
169.8
-56.7
446.6
-3.3
-0.45 p.p.
-0.20 p.p.
-0.18 p.p.
-0.14 p.p.
68%
64%
-41%
91%
88%
73%
-109%
34%
65%
-
-37%
-
8%
8%
11%
7%
-29%
6%
-2%
2021
-11
63.0%
2.86%
2020
140
52.1%
3.33%
Change YoY
-151
10.8 p.p.
-0.47 p.p.
Contents
71
Net interest income
Net interest income increased by EUR 8.8 million (6%) YoY
without the Komercijalna Banka group contribution, due to
higher volumes despite a lower interest margin.
Net non-interest income
Net non-interest income increased EUR 12.1 million YoY
without the Komercijalna Banka group contribution, of which
EUR 5.1 million in net fee and commission income due to
normalisation of business after COVID-19 outbreak in 2020.
Net non-interest income in 2021 was negatively affected with
the sale of Komercijalna Banka, Banja Luka (EUR 8.1 million),
while in 2020 with modification losses caused by changes
of contractual cash flows for loans subject to COVID-19
moratoria in 2020.
Total costs
Total costs increased YoY (EUR 11.6 million or 11%) due to a
higher volume of business in all banks and additionally due to
integration costs on the Serbian and Montenegrin markets.
Net impairments and provisions
Net impairments and provisions were established in the
amount of EUR 20.8 million, mostly related to legal and
restructuring provisions, while impairments and provisions for
credit risk of the segment were net released.
Figure 41: Gross loans volume and interest rates in Strategic Foreign Markets
+8% YoY
6.28%
6.71%
5,234.8
2,592.9
5,632.2
2,877.3
2,641.9
2,754.9
3,162.0
1,604.0
1,558.0
4.46%
4.11%
5.83%
3.92%
31 Dec 2019
31 Dec 2020
31 Dec 2021
2019
Individuals
Corporate & state
2020
w/o KB
2021
Gross loans to customers
Gross loans to customers increased by EUR 397.4 million (8%)
YoY, despite EUR 155.4 million decrease attributable to the
sale of Komercijalna Banka, Banja Luka. The most material
increase was in housing loans. The increase of the loan
portfolio was visible in all of the member banks; the largest
increases were recorded in Komercijalna Banka, Beograd
(EUR 202.5 million) and NLB Banka, Skopje (EUR 123.1 million).
Seven
subsidiary banks and
one
investment fund
company.
Profit before tax
EUR
113.2 million
only 37% lower compared to last year,
when the result was higher due to
acquisition of Komercijalna Banka,
Beograd.
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Deposits from customers
Deposits from customers increased by EUR 446.6 million
YoY, despite EUR 154.7 million decrease due to the sale of
Komercijalna Banka, Banja Luka. The growth was recorded in
all member banks, except NLB Banka, Beograd.
Figure 42: Deposit volume and interest rates in Strategic Foreign Markets
+6% YoY
7,552.2
3,856.7
5,211.1
0.58%
0.41%
7,998.8
5,601.9
2,598.0
1,258.7
2,341.1
2,397.0
0.47%
0.35%
0.32%
0.22%
31 Dec 2019
31 Dec 2020
31 Dec 2021
2019
Individuals
Corporate & state
2020
w/o KB
2021
The market shares
(by total assets) of subsidiary
banks exceed
10%
in five out of six markets.
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Komercijalna Banka,
Beograd
The acquisition of Komercijalna Banka, Beograd further
strengthened the Group’s strategic position in Serbia and
has placed NLB as one of the leading (and systemic) banks
on the market. The bank is strongly positioned as a leader
on retail market with more than 1.1 million clients, and a high
market share both in lending (consumer and housing) and
deposits. In corporate segment, the bank was mainly building
relationships with public and large domestic companies.
Nevertheless, the Group recognises that Komercijalna
Banka, Beograd has still important growth potential in all the
segments, which is expected to be realised in the following
period.
NLB finalised harmonisation of Komercijalna Banka, Beograd
with NLB Group standards within six months from acquisition,
while the merger of Komercijalna Banka, Beograd with
NLB Banka, Beograd is planned for the end of April 2022.
It is expected that the merger of the two banks could bring
Macroeconomic Snapshot
In Serbia, the economy lost some steam in Q4 due to
rising price pressures while softer merchandise import
growth suggesting a slight cooldown in domestic demand.
Nevertheless, the economy rebounded from a mild
contraction in 2020 with investment and private consumption
propelling economic activity in 2021.
Figure 43: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
8.0
6.0
4.0
2.0
0.0
-2.0
8.0
6.0
4.0
2.0
0.0
12.0
10.0
8.0
6.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
Economic growth is expected to return towards the pre-
pandemic path, and so, growth is expected at a slower pace
important synergy effects on cost and on revenue side. After
in 2022. The economy should grow on the back of private
finalisation of the merger, the Bank will focus on digitalization
consumption and investment, while government investment
and modernisation of services to establish the bank as one of
and EU funds should further aid the growth. Downside risks
the leaders in service quality. Despite ongoing harmonisation
are in the form of pandemic-related uncertainty, sturdier and
activities and merger process with the NLB Banka, Beograd,
prolonged elevated inflation, the long-term impact of supply-
the bank achieved in 2021 record sales growth in both retail
side bottlenecks and economic implications of the war in
and corporate banking segment and already introduced
Ukraine.
some modern digital solutions (Kombank pay mobile card
solution, end-to-end automated loan processing, etc.).
Contribution to NLB Group
Figure 44: Contribution to NLB Group
10%
22%
18%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
190 branches
281 ATMs
4th
largest bank in the country.
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Financial performance
Business performance
Table 18: Key performance indicators of Komercijalna Banka, Beograd(i)
in EUR thousand
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
Result before tax
Result after tax
Financial position statement indicators
Total assets
Net loans to customers
Gross loans to customers
Deposits from customers
Equity
Key financial indicators
Total capital ratio
Net interest margin
ROE a.t.
ROA a.t.
CIR
NPL volume
NPL ratio (internal def.: NPL/Total loans)
Market share by total assets
LTD
2021
88,570
40,110
-87,979
-7,637
33,064
34,818
4,165,249
1,795,882
1,818,793
3,424,633
634,643
28.6%
2.4%
5.5%
0.9%
68.4%
36,329
1.4%
9.7%
52.4%
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group. For year 2020, comparable data are not available.
The bank realised a profit after tax in the amount of
EUR 34.8 million, ROE a.t. 5.5% and CIR 68.4%. TCR was
stable at 28.6%. The result was driven by the high loan
production growth in retail and corporate. Net interest
income reached EUR 88.6 million, while net non-interest
income was EUR 40.1 million. The total assets amounted to
EUR 4,165.2 million. The NPL ratio was 1.4%.
62% YoY growth, retail housing loans 34% YoY growth) and
growth in total income (9% higher YoY) and growth in net
fees (18% higher YoY). The bank finally managed to defend
the retail loan market share despite the ongoing integration
process. Conversely, deposits growth was 10% YoY of which
foreign currency savings grew EUR 169 million. The bank also
Retail banking
The retail segment, with the largest client base on the local
market, represents the predominant strength of Komercijalna
developed ‘KomBank Pay,’ a mobile wallet for contactless
Banka, Beograd. Since the acquisition, the bank focuses
payments.
strongly on boosting activity in retail area through series of
structural initiatives. These initiatives resulted in significant
growth in gross loans (9% YoY). The Bank recorded the
historically highest loan production growth (cash loans
Figure 45: 2-year market share evolution
11.8%
10.0%
8.5%
6.3%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
11.2%
9.7%
8.4%
6.3%
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
Corporate banking
Corporate banking in the bank was historically concentrated
on servicing public and domestic companies and was holding
a less dominant market position compared to the retail
segment. In the corporate segment, the bank improved its
management structure and processes. This generated 18%
YoY growth in gross loans. In addition, 2021 was a record year
in the bank in terms of new loan production which amounted
to EUR 524.7 million, representing 39% growth YoY, and mainly
coming from large segment clients, noticeably outperforming
the market growth. Additionally, corporate deposits noted a
growth of 8%. The key drivers of income growth were large
corporate and SME loans. Net non-interest income increased
by 3% YoY and net fees recorded growth by 11% YoY.
Additionally, the bank redesigned offer of existing loans
for liquidity and working capital (18 and 36 months), and
introduced reverse factoring (production of EUR 7.4 million).
EUR
33.1 million
result b.t.
9.7%
market share in total assets.
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NLB Banka, Beograd
Financial performance
In 2021, one of the crucial activities for NLB Banka, Beograd
was participation and full support for the ongoing integration
project with Komercijalna Banka, Beograd where the
merger is planned in Q2 2022. After the merger, NLB Banka,
Beograd will cease to exist. The bank was fully engaged in all
initiatives of the integration process. In spite of demanding
Table 19: Key performance indicators of NLB Banka, Beograd(i)
in EUR thousand
2021
2020
Change YoY
Key performance indicators
integration process, the Bank managed to maintain dynamic
Net interest income
23,359
21,822
7.0%
sales activity, where the retail and agro segments produced
outstanding results. The bank increased market shares in
housing and consumer loans, and in the agro segment the
bank managed to strengthen its market position to 14.1%
(2020: 13.6%).
Net non-interest income
6,954
4,812
44.5%
Total costs
-22,170
-20,351
Impairments and provisions
-3,202
-3,591
Result before tax
4,941
4,293
2,692
2,598
Macroeconomic Snapshot and Outlook for Serbia see under
Result after tax
Komercijalna Banka, Beograd.
Financial position statement indicators
Total assets
715,375
686,693
Net loans to customers
511,693
472,170
Gross loans to customers
520,518
482,552
Deposits from customers
449,476
496,288
Equity
77,918
74,205
Key financial indicators
Total capital ratio
Net interest margin
ROE a.t.
ROA a.t.
CIR
19.2%
3.4%
5.5%
0.6%
19.1%
3.4%
3.5%
0.4%
73.1%
76.4%
-3.3 p.p.
16th
largest bank in the country.
-8.9%
10.8%
83.5%
65.2%
4.2%
8.4%
7.9%
-9.4%
5.0%
0.2 p.p.
0.1 p.p.
2.0 p.p.
0.2 p.p.
Contribution to NLB Group
Figure 46: Contribution to NLB Group
2%
6%
3%
NPL volume
NPL ratio (internal def.:
NPL/Total loans)
Market share by total assets(ii)
9,489
1.5%
1.6%
8,718
1.4%
1.9%
8.8%
0.1 p.p.
-0.2 p.p.
LTD
113.8%
95.1%
18.7 p.p.
Banking services provided through:
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
(ii) Data for 2021 as at 30 September 2021.
The bank realised a profit after tax in the amount of
EUR 4.3 million (2020: EUR 2.6 million) and profit before
impairments and provisions in the amount of EUR 8.1 million
(2020: EUR 6.3 million). ROE a.t. was 5.5% (2020: 3.5%), while
CIR decreased to 73.1% (2020: 76.4%). The result was mainly
driven by the increase in business volume. The total assets
28 branches
63 ATMs
Result b.t.
Net interest income
Net non-interest
income
of the bank rose by 4%, the main factor being new loan
production. NPL ratio increased to 1.5% (2020: 1.4%).
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Corporate banking
As a part of the integration strategy for Serbia, large company
production has been moved from NLB Banka, Beograd to
Komercijalna Banka, Beograd, to benefit from the larger
capital base and lower cost of funding, which finally resulted
in the decline in overall gross loans (-1.4%) in NLB Banka,
Beograd. Thus, the corporate portfolio was driven mainly by
production in SME segment, which was on a satisfactory level.
In addition, in the integration process it has been decided
to move corporate sales force and production completely
to Komercijalna Banka, Beograd at the beginning of 2022
(including the micro and agro segments in retail), which was
one of the major organisational initiatives impacting the
corporate team at the end of 2021.
Deposit volumes also declined during the year (-3.1%),
driven on one side by the transfer of large corporates to
Komercijalna Banka, Beograd, while on the other side there
was one additional major impact coming from a synergy
initiative between both banks enabling NLB Banka, Beograd
to offer loans at higher pricing compared to the cost of
deposits NLB Banka, Beograd paid on the market. Due to this,
NLB Banka, Beograd was in the position to gradually release
expensive deposits, which resulted in a decline of deposit
volumes.
EUR
4.9 million
result b.t.
1.6%
market share in total assets.
Business performance
Retail banking
Retail banking recorded double-digit growth in gross loans
(22.3%), while deposits declined by 13.8% compared to 2020.
Retail deposits were mainly in EUR.
In 2021, the retail loan portfolio was dominated by consumer
loans (62.4% of gross retail loans), while housing loans
occupied 36.1% of gross retail loans. The retail loan portfolio
is driven by cash loans (RSD) with still attractive interest rates
(below 7.6%). The interest margin on cash loans was high,
but under significant pressure coming from competition and
falling interest rates in RSD and increasing dinarisation12 in
general. In 2021, the bank put more efforts on housing loans
and achieved a significant 55% YoY growth in this segment,
where the market is very active and competitive with banks
were offering interesting products at attractive prices.
Figure 47: 3-year market share evolution(i)
1.9%
1.8%
2.0%
1.8%
2.0% 2.0%
1.9% 1.9%
2.2%
1.8%
1.6%
1.4%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
(i) Market share data for 2021 as at 30 September 2021.
12 Dinarisation – Strategy of Dinarisation of the Serbian Financial System as
per Memorandum, signed between National Bank of Serbia (NBS) and the
Government of the Republic of Serbia, expected to be implemented in 2022.
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NLB Banka, Skopje
Macroeconomic Snapshot
In North Macedonia, economic growth slowed considerably
On its local market, the bank is in the group of systemically
in Q3 as the base effect faded. Growth in private consumption
important banks. The predominant strength of the bank is
and investment decelerated, while the external sector
the retail segment. However, the bank provides a full range
supported economic activity. In Q4 2021, growth in retail
of financial services to retail and corporate clients. Having
sales eased as inflation further increased, at the same time
a continuous progress in digitalization, the bank achieved
as industrial production figures imply stronger private sector
in 2021 great success in this field, being the first bank in
dynamics.
the country by introducing e-identification, upgrading,
and adjusting the mKlik application for visually impaired
clients and by opening a new, completely digital branch,
offering cashless services. The position of a market leader
in bancassurance was once again confirmed by expanding
the offer, introducing voluntary private health insurance
and a new unique life insurance product in cooperation with
partner insurance company. Besides this, the bank introduced
assets management products for clients, the sale and
trading of shares and funds for individuals and legal entities
in cooperation with an asset management and investment
services company.
Figure 48: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
7.0
3.5
0.0
-3.5
-7.0
8.0
6.0
4.0
2.0
0.0
17.0
15.0
13.0
11.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
GDP should record a solid expansion in 2022 on the back of
private consumption. This should be the main growth driver
of the firming domestic demand, while foreign demand
should also be supportive of the activity. Pandemic-related
uncertainty, high energy prices, and prolonged disruption
of supply chains represent the main downside risks to
the outlook. Economic implications of the war in Ukraine
represent an additional downside risk to the outlook.
Contribution to NLB Group
Figure 49: Contribution to NLB Group
17%
13%
7%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
48 branches
170 ATMs
3rd
largest bank in the country.
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Financial performance
Table 20: Key performance indicators of NLB Banka. Skopje(i)
provisions and higher collected written-off receivables. The total
rated clients, who secured the long-term stability of the
assets of the bank rose by 12%, with a 12% growth in gross loans
portfolio and stable revenue generation. The bank approved
to customers, and a 9% growth in deposits from customers. The
total of EUR 55 million in project financing, out of which
NPL ratio amounted to 4.3% (2020: 5.1%).
almost EUR 20 million was approved solely for green energy
in EUR thousand
2021
2020 Change YoY
Business performance
Key performance indicators
Net interest income
50,386
48,140
4.7%
Net non-interest income
18,043
14,518
24.3%
Retail banking
Retail banking recorded a significant growth in gross loans
investments, while also providing syndicated financing for
several large clients. The bank has successfully concluded the
internationally financed syndicated facility for the shopping
mall in Skopje, opened and operational since October 2021,
as one of the most important projects for the bank and the
Group. The project totalling EUR 72 million, was supported
with participation of five banks – three local banks and two
Total costs
-28,619
-26,497
-8.0%
(12%) substantially over the market average growth, driven by
international banks.
Impairments and provisions
3,244
-15,373
-
Result before tax
43,054
20,788
107.1%
the growth in housing loans (17.5%) and in the deposit base
(9%). The retail loan portfolio was dominated by consumer
loans (54.4% of gross retail loans), while housing loans
Result after tax
39,000
19,222
102.9%
occupied 37.5% of gross retail loans. The interest margin
MB Statement
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Financial Report
Financial position statement indicators
Total assets
1,770,587
1,585,652
Net loans to customers
1,084,075
956,931
Gross loans to customers
1,144,420
1,021,276
Deposits from customers
1,399,501
1,288,824
Equity
243,267
229,777
Key financial indicators
11.7%
13.3%
12.1%
8.6%
5.9%
Total capital ratio
18.0%
15.7%
2.3 p.p.
Net interest margin
ROE a.t.
ROA a.t.
CIR
3.1%
15.9%
2.4%
3.3%
8.8%
1.3%
-0.2 p.p.
7.1 p.p.
1.1 p.p.
41.8%
42.3%
-0.5 p.p.
NPL volume
59,728
63,177
-5.5%
NPL ratio (internal def.:
NPL/Total loans)
4.3%
5.1%
-0.8 p.p.
Market share by total assets
16.9%
16.5%
0.4 p.p.
LTD
77.5%
74.2%
3.2 p.p.
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
The bank realised a profit after tax in the amount of EUR 39.0
million (2020: EUR 19.2 million), and profit before impairments
and provisions in the amount of EUR 39.8 million (2020: EUR
in the retail segment is still high, but under strong pressure
from competition and expansive monetary policy. The key
drivers of income growth were domestic and foreign payment
operations, account management, and card operations.
Figure 50: 3-year market share evolution
20.5%
17.3%
16.0%
14.4%
20.8%
18.0%
16.5%
14.2%
21.6%
18.1%
16.9%
14.9%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
Corporate banking
The upward trend in the corporate segment which started in
May, resulted in a 12% growth in gross loans at the 2021 YE.
Corporate deposits noted a growth of 8%. The key drivers
of income growth were long-term loans, investment, loans
for working capital and the liquidity needs of the companies,
as well as domestic and foreign payment operations and
36.2 million). This very good result in the first post COVID-19 year
account management.
reflected in ROE a.t., which increased to 15.9% (2020: 8.8%), and
CIR, which decreased to 41.8% (2020: 42.3%). TCR increased to
As at 31 December 2021, the bank had a market share of 14.9%
18.0% (2020: 15.7%). The result was driven mostly by retail lending,
in corporate gross loans. The bank increased the portfolio,
payment services, and additionally by lower impairments and
especially in the segment of long-term financing to high-
16.9%
market share in total assets.
EUR
43.1 million
result b.t.
Contents
79
NLB Banka, Banja Luka
The bank in 2021 celebrated its 25th anniversary. The
predominant strength of the bank is its market position in
Macroeconomic Snapshot
In BiH, the economy expanded at a softer pace in Q3, partly
due to a less favourable base effect. Private consumption
recorded the largest slowdown in growth rate amid rising
the corporate and retail segments, and a very strong deposit
inflation. Higher growth in public and capital spending
base. The bank introduced new banking solutions and
propelled the domestic economy. In Q4, a further rise in
products for clients largely contributing to a high share of net
consumer prices and pandemic-related restrictions further
non-interest income (37.7% of fee and commissions income in
weighed on private consumption.
net income).
Figure 51: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
6.0
3.0
0.0
-3.0
-6.0
6.0
4.0
2.0
0.0
-2.0
16.0
14.0
12.0
10.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
The economy is expected to record a solid growth in 2022,
supported by higher capital and public spending while the
relaxation of restrictive pandemic-related measures at
home and abroad should further bolster economic activity.
Pandemic-related uncertainty, slower recovery in export
markets, and political tensions represent the downside risks to
the outlook. Additional downside risk to the outlook has arisen
due to the war in Ukraine.
Contribution to NLB Group
Figure 52: Contribution to NLB Group
7%
5%
5%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
47 branches
71 ATMs
2nd
largest bank in the Republic of Srpska.
MB Statement
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Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
80
Financial performance
Table 21: Key performance indicators of NLB Banka, Banja Luka(i)
released impairments and provisions as a result of successful
row, which also effected the loan portfolio in this segment.
NPL management. Net non-interest income represents 39.5%
The Banking Agency of Republic of Srpska (BARS) maintains
of total income, the highest among NLB Group banking
reliefs, moratoriums, and grace periods for clients directly and
subsidiaries. The total assets of the bank rose by 16%, with
indirectly affected by the negative effects from the pandemic.
in EUR thousand
a 9% growth in net loans to customers, predominantly to
2021
2020 Change YoY
individuals, and a 20% growth in deposits from customers,
respectively. The NPL ratio decreased to 1.3% (2020: 2.3%).
Key performance indicators
Net interest income
20,087
18,589
Net non-interest income
13,128
11,477
Total costs
-15,182
-13,874
Impairments and provisions
1,379
-5,009
Result before tax
Result after tax
19,412
18,180
11,183
10,122
Financial position statement indicators
8.1%
14.4%
-9.4%
-
73.6%
79.6%
Total assets
927,152
796,486
16.4%
Net loans to customers
471,144
430,713
Gross loans to customers
488,672
450,708
9.4%
8.4%
Business performance
Retail banking
Retail banking recorded double digit growth in gross loans
(14%) and deposits (10%). The retail loan portfolio was
dominated by housing loans (51.9% of gross retail loans), while
consumer loans participated with 43.5% of gross retail loans.
Growth in gross retail loans was recorded, mainly due to
growth in consumer loans (8%) and housing loans (13%). The
key drivers of income growth were new loan production and
card operations.
Deposits from customers
759,915
633,507
20.0%
The focus remains in further growth of retail portfolio, with
Equity
97,149
99,872
-2.7%
special emphasis on introducing additional services for
Key financial indicators
customers, especially in the field of digitalisation.
Total capital ratio
16.9%
17.3%
-0.5 p.p.
Figure 53: 3-year market share evolution
Net interest margin
2.4%
2.5%
-0.1 p.p.
ROE a.t.
ROA a.t.
CIR
17.0%
10.8%
6.2 p.p.
2.1%
1.3%
0.8 p.p.
45.7%
46.1%
-0.4 p.p.
NPL volume
9,371
13,703
-31.6%
NPL ratio (internal def.:
NPL/Total loans)
1.3%
2.3%
-1.0 p.p.
Market share by total assets
19.1%
18.6%
0.4 p.p.
LTD
62.0%
68.0%
-6.0 p.p.
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
20.1%
18.8%
16.4%
14.8%
18.6%
20.1%
17.5%
13.8%
20.4%
19.1%
18.4%%
14.3%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
The bank realised a profit after tax in the amount of EUR 18.2
million (2020: EUR 10.1 million), and profit before impairments
and provisions in the amount of EUR 18.0 million (2020: EUR
Corporate banking
Corporate banking recorded a growth in deposits (22%),
16.2 million). ROE a.t. was 17.0% (2020: 10.8%) and CIR dropped
as well as in gross loans to corporate (3%). The pandemic
to 45.7% (2020: 46.1%). TCR also dropped to 16.9% (2020:
situation had a huge influence in reducing the demand for
17.3%). The main drivers of the result were higher income and
investments and new projects for the second year in the
19.1%
market share in total assets.
EUR
19.4 million
result b.t.
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Komercijalna Banka,
Banja Luka
The sale process of Komercijalna Banka, Banja Luka was
concluded on 9 December 2021, therefore after that date the
bank was no longer part of NLB Group. Until 9 December
2021 Komercijalna Banka, Banja Luka was part of the core
segment, one of the stand-alone member banks of the Group,
therefore the key performance indicators of the bank for 2021
are represented in the table below.
Table 22: Key performance indicators of Komercijalna Banka, Banja Luka(i)
in EUR thousand
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
Result before tax
Result after tax
2021
4,885
1,655
-5,393
-607
540
495
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group. For year 2020 comparable data are not available.
MB Statement
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Sustainability
Performance Overview
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Events After 2021
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82
NLB Banka, Sarajevo
Macroeconomic Snapshot
In BiH, the economy expanded at a softer pace in Q3, partly
The predominant strength of the bank is in consumer lending
due to a less favourable base effect. Private consumption
and the development of innovative retail products largely
recorded the largest slowdown in growth rate amid rising
contributing to a high share of net non-interest income (33%
inflation. Higher growth in public and capital spending
of fee and commission income in net income). Improving
propelled the domestic economy. In Q4, a further rise in
customer experience was achieved with the introduction of
consumer prices and pandemic-related restrictions further
new digital products and robotic process automation (RPA)
weighed on private consumption.
solutions.
Figure 54: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
6.0
3.0
0.0
-3.0
-6.0
6.0
4.0
2.0
0.0
-2.0
16.0
14.0
12.0
10.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
The economy is expected to record a solid growth in 2022,
supported by higher capital and public spending while
relaxation of restrictive pandemic-related measures at
home and abroad should further bolster economic activity.
Pandemic-related uncertainty, slower recovery in export
markets, and political tensions represent the downside risks to
the outlook. Additional downside risk to the outlook has arisen
due to the war in Ukraine.
Contribution to NLB Group
Figure 55: Contribution to NLB Group
4%
4%
4%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
36 branches
84 ATMs
7th
largest bank in the Federation of BiH.
MB Statement
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Financial Report
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83
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Financial performance
Table 23: Key performance indicators of NLB Banka. Sarajevo(i)
ROE a.t. increased to 10.7% (2020: 7.0%), and CIR increased to
57.7% (2020: 56.5%). Net interest income was at the same level
as in 2020, while net interest margin dropped to 2.8% (2020:
2.9%). Net non-interest income was higher than previous year,
in EUR thousand
mainly due to higher net income from financial operations.
2021
2020
Change YoY
The bank intensified activities on less risky products such as
trade finance and with good results compensated missing
Corporate banking
The corporate banking segment recorded a growth in gross
loans (14%) and deposits (9%). Focus was on increasing the
client loan portfolio with acquisition of new creditworthy
clients. Also, a positive trend was in the volume of guarantees
portfolio, mainly due to the introduction of a new product
Key performance indicators
Net interest income
Net non-interest income
Total costs
17,795
10,256
-16,183
17,826
8,902
-15,113
Impairments and provisions
-920
-5,063
Result before tax
Result after tax
10,948
10,012
6,552
5,895
Financial position statement indicators
Total assets
727,860
647,150
Net loans to customers
452,977
399,146
Gross loans to customers
473,118
420,274
Deposits from customers
593,026
521,639
Equity
87,838
89,808
Key financial indicators
-0.2%
15.2%
-7.1%
81.8%
67.1%
69.8%
12.5%
13.5%
12.6%
13.7%
-2.2%
Total capital ratio
16.9%
17.9%
-1.1 p.p.
Net interest margin
ROE a.t.
ROA a.t.
CIR
2.8%
10.7%
1.5%
2.9%
7.0%
0.9%
-0.2 p.p.
3.7 p.p.
0.6 p.p.
57.7%
56.5%
1.1 p.p.
NPL volume
19,046
24,691
-22.9%
NPL ratio (internal def.:
NPL/Total loans)
3.1%
Market share by total assets(ii)
5.4%
4.5%
5.2%
-1.4 p.p.
0.2 p.p.
LTD
76.4%
76.5%
-0.1 p.p.
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
(ii) Data for 2021 as at 30 September 2021.
The bank realised a profit after tax in the amount of EUR 10.0
million (2020: EUR 5.9 million), and profit before impairments
and provisions in the amount of EUR 11.9 million (2020: EUR 11.6
million). The higher profit was the result of higher net non-
interest income. TCR stood at 16.9% and was above the
‘Guarantee Line.’
regulatory required minimum. Total assets of the bank rose by
12%, with 13% growth in net loans and 14% growth in deposits.
The NPL ratio decreased to 3.1% (2020: 4.5%).
Business performance
Retail banking
Retail banking recorded growth in gross loans (12%) and
deposits (8%). Growth in gross retail loans was driven by
growth of housing and consumer loans. Significant growth
of housing loans of 41% was the result of increased demand,
many campaigns and increased engagement of employees.
The share of housing loans in total retail loans increased by
4 p.p., to 20.5%. The average interest rate in the retail segment
is decreasing (2021: 5.73%; 2020: 6.26%).
The bank continued with activities aimed to increase the
active number of e- and m-banking users; the number of
active users for e- and m-Bank in 2021 increased by 60%, and
the number of transactions by 72%.
Figure 56: 3-year market share evolution(i)
Deposits from corporates increased. In December, the bank
introduced a fee for vista deposits above EUR 0.3 million for
legal entities, with the exception of the government and public
enterprises. The aim was to reduce the concentration of a
vista corporate deposits.
13
5.4%
market share in total assets.
6.1%
5.3%
5.3%
5.1%
6.3%
5.2% 5.2%
6.6%
5.5%
5.4%
5.0%
5.4%
13 Data for 2021 as at
30 September 2021.
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
interest income and release of impairments and provisions.
(i) Market share data for 2021 as at 30 September 2021.
EUR
10.9 million
result b.t.
Contents
84
NLB Banka, Prishtina
Macroeconomic Snapshot
In Kosovo, the pace of economic expansion softened in Q3,
On its market, the bank is the market leader and had above
although it remained strong. The deceleration reflected
average growth in 2021. The predominant strength of the bank
softer domestic demand with private and public consumption
is in providing a full spectrum of financial services to retail and
increasing at a slower pace. Exports of goods and services
corporate clients, and being a market leader in innovations
propelled the economy in Q3. In Q4, domestic demand
on the local banking sector. A noticeable boost has been
seems to have cooled amid rising inflation and falling
observed in e-banking usage resulting in an increased
remittances inflows. Nevertheless, in 2021 remittances inflows
number of e-banking users by 17.8%.
largely surpassed pre-pandemic levels, thus representing a
considerable domestic demand aid. Diaspora inflows were in
general a significant driver of the economic growth, especially
when pandemic-related restrictive measures were eased.
Figure 57: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
12.0
6.0
0.0
-6.0
8.0
6.0
4.0
2.0
0.0
26.0
24.0
22.0
20.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
The economy should record a robust although cooled-down
economic growth in 2022 due to the lower base effect. Firming
capital expenditure growth and a tighter labour market are
seen supporting activity, assisted by the beneficial effect of
healthier external backdrop. Pandemic-related uncertainty
and lingering political uncertainty are downside risks to
the outlook. The war in Ukraine and its overall economic
implication represents additional downside risks to the
outlook.
Contribution to NLB Group
Figure 58: Contribution to NLB Group
10%
9%
3%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
33 branches
99 ATMs
2nd
largest bank in the country.
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Financial performance
Table 24: Key performance indicators of NLB Banka, Prishtina(i)
to 17.3% (2020: 17.8%) due to dividend payout. The result was
The bank offered fast, safe, and reliable execution of
mainly driven by the increase of the business volumes. The
payments, and competitive pricing led to an increased
total assets of the bank rose by 6%, the main factors were
number of payments contributing to the non-interest income
the amount of net loans to customers and deposits from
growth. Cooperation on the Group level resulted in the
in EUR thousand
customers. The NPL ratio decreased to 1.9% (2020: 2.3%).
financing of the construction of a major locally recognised
2021
2020
Change YoY
Key performance indicators
Net interest income
34,459
32,286
Net non-interest income
7,374
6,392
6.7%
15.4%
Total costs
-13,546
-12,289
-10.2%
Impairments and provisions
-1,064
-11,345
90.6%
Result before tax
27,223
15,044
Result after tax
24,436
13,334
Financial position statement indicators
Total assets
930,545
879,064
Net loans to customers
634,529
559,223
Gross loans to customers
672,376
596,076
Deposits from customers
798,790
748,315
Equity
98,856
98,335
Key financial indicators
81.0%
83.3%
5.9%
13.5%
12.8%
6.7%
0.5%
Total capital ratio
17.3%
17.8%
-0.5 p.p.
Net interest margin
3.8%
3.9%
-0.1 p.p.
ROE a.t.
ROA a.t.
CIR
22.4%
14.5%
8.0 p.p.
2.7%
1.6%
1.1 p.p.
32.4%
31.8%
0.6 p.p.
NPL volume
15,614
17,519
-10.9%
NPL ratio (internal def.:
NPL/Total loans)
1.9%
2.3%
-0.3 p.p.
Market share by total assets
16.3%
17.2%
-0.9 p.p.
LTD
79.4%
74.7%
4.7 p.p.
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
The financial result of the bank remained solid, although
Business performance
Retail banking
In 2021, the bank recorded growth in gross loans (17%) and
deposits (12%). The retail loan portfolio was dominated by
housing loans (70.7% of gross retail loans), while consumer
loans occupied 26.3% of gross retail loans. Growth in gross
retail loans was recorded, mainly due to the increased volume
of housing loans (21% growth). The key drivers of income
growth were housing loans.
The growth in retail was mainly driven by several partnership
agreements with construction and trade companies to finance
its products. New m-Klik features were also introduced.
Figure 59: 3-year market share evolution
18.8%
18.3%
17.9%
17.6%
19.5%
19.0%
18.5%
18.0%
17.5%
17.0%
16.5%
16.0%
15.5%
15.0%
18.9%
18.7%
17.5%
17.4%
17.2%
16.9%
16.7%
16.3%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
Corporate banking
Corporate banking recorded growth in gross loans (10%),
influenced by COVID-19. The net profit amounted to EUR
which was mainly due to the cross-selling of products through
24.4 million (2020: EUR 13.3 million), while the profit before
existing corporate clients targeting new retail and SME clients
impairments and provisions increased to EUR 28.3 million
as well. A discouraging approach on deposits was reflected
(2020: EUR 26.4 million). ROE a.t. was 22.4% (2020: 14.5%), while
in a 7% decrease compared to 2020 YE. The key drivers of
CIR minimally increased to 32.4% (2020: 31.8%). TCR decreased
income growth were loans for fixed assets and overdrafts.
project contributing largely to clean energy production from
renewable sources.
16.3%market share in total assets.
EUR
27.2 million
result b.t.
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Sustainability
Performance Overview
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Events After 2021
Financial Report
Contents
86
NLB Banka, Podgorica
Macroeconomic Snapshot
In Montenegro, the economy accelerated in Q3 due to robust
On 12 November 2021, the merger of NLB Banka, Podgorica
public consumption and surging export growth as the tourism
and Komercijalna Banka, Podgorica was completed and the
sector fared well. In Q4, industrial output growth gained some
bank continues to operate under the franchise of NLB Banka,
steam, while the tourism sector continued to record strong
Podgorica. On its local market, the bank is categorised as one
increases in arrivals. Rising inflation resulted in eased retail
of the systemically important banks. The merged bank (NLB
sales.
Banka, Podgorica) is the second largest financial institution
in Montenegro. As the first positive effect of the merger, NLB
Klik, web and e-banking app are offering new and upgraded
functionalities to the clients.
The predominant strength of the bank is seen in the segment
of retail housing and consumer loans, where the bank is an
important player on the local market. It achieved the highest
housing loans growth in 2021 amongst all banking members.
The year was marked by several campaigns promoting digital
channels, with a focus on cards, packages, and NLB Pay.
Also, expanding the number of partners, the ‘NLB Loan on
the spot’ campaign continued. After implementing the new
payment service SWIFT GPI, the bank became the only bank
in Montenegro connected to the SWIFT GPI platform with the
aim of improving SWIFT payments for both banks and clients,
providing faster implementation, transparency of transaction
costs, and real-time transaction status information.
Figure 60: GDP growth, Inflation, Unemployment
GDP (real growth in %)
Average inflation (in %)
Unemployment rate (in %)
16.0
8.0
0.0
-8.0
-16.0
6.0
4.0
2.0
0.0
-2.0
18.0
16.0
14.0
12.0
2020
2021
2022
2020
2021
2022
2020
2021
2022
Outlook
The economic growth is expected to ease in 2022 due to a
fading base effect. Further growth in the tourism sector should
propel the economy to recover towards the pre-pandemic
level with the easing of pandemic-related restrictions also
supporting domestic and foreign demand. The key downside
risk to the outlook is related to the pandemic-uncertainty and
its effect on the tourism sector due to Montenegrin economy’s
considerable dependence on this sector of the economy. The
war in Ukraine has emerged as an additional negative risk to
the outlook.
Contribution to NLB Group
Figure 61: Contribution to NLB Group
4%
5%
2%
Result b.t.
Net interest income
Net non-interest
income
Banking services provided through:
22 branches
65 ATMs
2nd
largest bank in the country.
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Financial performance
Table 25: Key performance indicators of NLB Banka, Podgorica(i)
The result was driven by the double-digit growth of the loan
portfolio to individuals being the main net interest income
driver. The total assets increased by 40%, mainly due to
merger. In 2021, mainly due to the merger, the bank increased
in EUR thousand
the volume of new NPL. The NPL ratio increased to 7.0%
2021
2020
Change YoY
(2020: 5.8%).
Business performance
Corporate banking
Corporate banking segment recorded growth in gross
loans (42%) and deposits (36%) due to merger effect. The
loan portfolio predominantly consisted of large corporates
portfolio, which increased by 40% YoY. The growth in gross
loans was recorded mainly due to merger effect and an
increase of SME loans and used overdrafts by 47%. The
increase in overall interest income in corporate segment
comes from increase in volumes.
MB Statement
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Performance Overview
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Financial Report
Key performance indicators
Net interest income
21,953
20,598
6.6%
Net non-interest income
6,161
3,741
64.7%
Total costs
-17,351
-13,622
-27.4%
Impairments and provisions
613
-8,887
Result before tax
Result after tax
11,376
10,050
1,830
1,387
Financial position statement indicators
Total assets
751,351
537,629
Net loans to customers
491,579
367,168
Gross loans to customers
514,308
386,525
Deposits from customers
609,792
431,657
Equity
92,643
68,556
Key financial indicators
-
-
-
39.8%
33.9%
33.1%
41.3%
35.1%
Total capital ratio
16.3%
16.2%
0.1 p.p.
Net interest margin
ROE a.t.
ROA a.t.
CIR
4.0%
13.1%
1.7%
4.1%
2.0%
0.3%
-0.1 p.p.
11.1 p.p.
1.4 p.p.
61.7%
56.0%
5.7 p.p.
NPL volume
42,166
27,280
54.6%
NPL ratio (internal def.:
NPL/Total loans)
7.0%
5.8%
1.2 p.p.
Market share by total assets
14.1%
11.7%
2.4 p.p.
LTD
80.6%
85.1%
-4.4 p.p.
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group.
The bank realised profit after tax in the amount of EUR 10.1
million (2020: EUR 1.4 million) and profit before impairments
and provisions in the amount of EUR 10.8 million (2020: EUR
10.7 million). Compared to previous year, positive development
is visible in the segment of net impairments and provisions
cost. ROE a.t. increased to 13.1% (2020: 2.0%), while CIR
increased to 61.7% (2020: 56.0%). TCR was slightly higher
compared to last year and reached 16.3% (2020: 16.2%).
Retail banking
Retail banking recorded growth in gross loans (30%) and
deposits (41%) mainly due to merger effect, and the positive
During 2021, a credit line from the EBRD was launched for the
purpose of implementing the project ‘Women in Business’
(WiB), which aims to support women in business and their
effect of the tourist season in July and August. A major part of
business.
the retail loan portfolio was dominated by housing loans (60%
of gross retail loans), while consumer loans occupied 40% of
gross retail loans. Growth in gross retail loans was recorded
mainly by increase in housing loans volume by 36%, whereas
consumer loans grew by 23%, boosted by the merger and Q4
campaign period.
The bank expanded its offer to citizens by launching the
bancassurance product, thus enabling the clients to buy
online quickly, easily, cheaply, and completely safely, accident
and property insurance policies. The bank offered a cash loan
to individuals in the maximum amount of EUR 25,000 for up to
10 years and in this way offered the market a cash loan with
the largest amount and the longest repayment period. In a
joint project, the bank and Mastercard provided the first self-
service payment terminal in Montenegro.
Figure 62: 3-year market share evolution
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
16.9%
12.6%
11.9%
8.3%
18.1%
12.8%
11.7%
8.7%
22.9%
14.5%
14.1%
11.9%
31 Dec 2019
31 Dec 2020
31 Dec 2021
Market share by total assets
Market share in loans to corporate
Market share in loans to individuals
Market share in deposits from customers
14.1%market share in total assets.
EUR
11.4 million
result b.t.
Contents
88
Komercijalna Banka,
Podgorica
On 12 November 2021, the merger of Komercijalna Banka,
Podgorica with NLB Banka, Podgorica was completed. Until
12 November 2021 Komercijalna Banka, Podgorica was part of
the core segment, one of the standalone member banks of the
Group, so, the key performance indicators of the bank for 2021
are represented in the below table.
Table 26: Key performance indicators of Komercijalna Banka, Podgorica(i)
in EUR thousand
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
Result before tax
Result after tax
2021
5,306
537
-6,049
-5,658
-5,864
-5,761
(i) Data on a stand-alone basis as included in the consolidated financial statements
of the Group. For year 2020 comparable data are not available.
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We are always available.
Great-grandmothers paid with cash.
Grandmothers paid with cheques.
Mothers pay digitally.
What will the next generation come up with?
In order to keep up with the ever faster global changes, we develop solutions with the same features as the modern
world: they are fast, efficient, handy and smart. With innovative digital solutions, we ensure that all banking services
are available anyplace, anytime, while at the same time we use advanced safety technology to help protect privacy.
Financial Markets in Slovenia
The segment is focused on the Group’s
activities on international financial markets,
including treasury operations. In the
challenging environment of low interest rates
on financial markets, continuous focus was
on prudent liquidity reserves management.
Financial performance
Table 27: Performance of the Financial Markets in Slovenia segment
Net interest income
o/w ALM(i)
Net non-interest income
Total net operating income
Total costs
Result before impairments and provisions
lmpairrrents and provisions
Result before tax
Balances with Central banks
Banking book securities
Interest rate on banking book securities
Wholesale funding
Interest rate on wholesale funding
Subordinated liabilities
Interest rate on subordinated liabilities
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in EUR million consolidated
Change YoY
2021
26.4
17.1
-2.3
24.1
-8.6
15.5
0.3
15.8
2020
23.5
16.5
16.2
39.6
-7.6
32.0
-1.3
30.8
2.9
0.6
-18.4
-15.5
-1.0
-16.6
1.6
-15.0
31 Dec 2021
31 Dec 2020
Change YoY
2,982.2
2,977.5
0.68%
873.5
-0.46%
288.5
3.70%
1,998.1
2,945.8
0.77%
143.5
0.54%
288.3
3.64%
984.2
31.7
730.0
0.2
-0.09 p.p.
-1.00 p.p.
0.06 p.p.
12%
4%
-
-39%
-14%
-52%
-
-49%
49%
1%
-
0%
Contribution to NLB Group
Figure 63: Contribution to NLB Group
6%
6%
Result b.t.
Net interest income
(i) Net interest income from assets and liabilities with the use of FTP.
Net interest income
Net interest income was EUR 2.9 million (12%) higher YoY,
mostly due to the changed FTP policy which partially
transferred the costs of placing the excess liquidity from
treasury to the retail and corporate segments to de-stimulate
the deposit collection. Otherwise, the revenues from
treasury activities were YoY lower due to significantly lower
reinvestment yields of banking book securities and excess
liquidity, additionally reflected in the negative effect from
higher placements with the CB at negative interest rates.
Net non-interest income
Lower net non-interest income, EUR 18.4 million YoY, due to the
one-off effect from the sale of debt securities, which positively
impacted performance in 2020.
Assets increase mostly offset
by wholesale funding
Increase in balances with CBs (EUR 984.2 million YoY) mostly
due to increase in wholesale funding by EUR 730.0 million
derived from participation in the ECB‘s liquidity providing
operation TLTRO-III (EUR 750 million). Banking book securities
registered a minor increase by EUR 31.7 million or 1%.
Contents
91
Focus
The Group’s liquidity management focuses on ensuring a
sufficient level of liquidity reserves to settle all due liabilities,
minimising the cost of maintaining liquidity and optimising
the structure of liquidity reserves. To ensure an appropriate
level of liquidity for different situations, emergencies and crisis
conditions are anticipated and therefore described in the
liquidity contingency plan.
Organisation
Liquidity management in the Group is decentralised. Each
Group member manages its own liquidity on operational and
strategic levels, while Financial Markets in Slovenia manage
liquidity of the Bank.
77%government securities in the Group’s
banking book portfolio.
Figure 64: Banking book securities portfolio of NLB Group by asset class and geographical structure as at 31 December 2021
Business performance
Liquidity management
The Group’s ALM
Focus
The purpose of the Group ALM process is to strategically
manage the Group’s balance sheet with respect to the
interest rate, currency, and liquidity risk considering the
macroeconomic environment and financial markets
development.
Organisation
Monitoring and management of the Group’s exposure to
market risk is decentralised. Uniform guidelines and limits
for each type of risk are set for individual Group member.
The exposure of an individual Group member is regularly
monitored and reported to the Group ALCO.
Balance sheet management
From the interest rate risk perspective, the surplus liquidity
position of the Group contributed to further growth of fixed
interest rate loans, mostly housing loans, and investments
in high quality debt securities. In terms of funding, the non-
banking sector deposits continued to increase in the form
of sight deposits and savings accounts, partly as a result
of the increased propensity to save due to the COVID-19
pandemic. The Group manages its positions and stabilises
its interest margin by actively adjusting pricing policy and by
charging maintenance fees, whereas for managing interest
rate risk exposure the Group keeps outstanding plain vanilla
N. Macedonia
derivatives. Active profitability management has been
supported by a highly disciplined deposit pricing policy,
enabling the response to a very competitive loan market all
over the Group’s strategic markets.
Slovenia
Serbia
Other
The Group’s FX risk is measured and managed with the use
of a combination of a sensitivity analysis, VaR, and stress test
scenarios. In terms of the liquidity risk management, each
Group member is responsible for ensuring adequate liquidity
via the necessary sources of funding and their appropriate
diversification, and for managing liquid assets and fulfilling
the requirements of regulations governing liquidity.
Geographical structure
Finland
Austria
Netherlands
Germany
Belgium
France
3%
3%
4%
4%
4%
7%
7%
13%
0%
5%
10%
24%
30%
15%
20%
25%
30%
Asset class distribution
Corporate
Subodrinated debt
Agency
GGB
0%
1%
2%
3%
Covered bond
7%
Senior Unsecured
10%
Government sec.
77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
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Liquid assets
For settling due liabilities, the Group uses its liquid assets,
which are comprised of liquidity reserves (see the subchapter
Liquidity Position in the chapter Overview of Financial
Performance) and other liquid assets. The latter includes
funds held on accounts with other banks and money market
placements which are according to LCR calculation treated as
inflows. Likewise, liquid assets are managed by each Group
member on its own.
Banking book securities portfolio
At year-end, the banking book debt securities portfolio
constituted 23.7% of the Group’s total assets. The purpose
of the banking book securities is to provide liquidity, along
with stabilisation of the interest margin, and interest rate
risk management. The portfolio is well diversified from the
Characteristics of banking book
securities portfolio
The average maturity of banking book securities is
approximately 3.5 years as at year-end.
The average yield achieved in 2021 on the Group’s banking
book securities portfolio was 0.68% (2020: 0.77%).
Wholesale funding
Purpose
Wholesale funding activities in the Group are conducted with
the aim of achieving diversification, improving structural
liquidity and capital position, and fulfilling regulatory
requirements, especially ensuring compliance with the MREL
geographical, asset class and maturity profile perspective.
requirement.
From 2020, the Group turned its attention to the new and fast-
developing market of ESG bonds. Currently, these bonds have
a small share in the whole portfolio (EUR 106.2 million), but it is
expected to grow in the future.
The Bank was not active on the wholesale market in 2021, but
has instead optimized its long-term funding structure with the
repayment of certain credit lines.
Table 28: Maturity profile of NLB Group’s banking book securities as at 31 December 2021
Domestic securities
(the Group strategic markets)
- Slovenia
- Other SEE
International securities
Total
2022
489.3
53.3
435.9
498.8
988.0
2023-2024
2025-2026
2027+
774.4
100.7
673.7
706.3
741.9
172.4
569.5
541.4
498.2
329.4
168.8
810.1
1,480.7
1,283.3
1,308.3
in EUR million
Total
2,503.8
655.9
1,847.9
2,556.5
5,060.3
3.5 years
average maturity of the Group’s banking
book securities portfolio.
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Non-Core Members
The Non-Core Members segment includes
the operations of non-core Group members.
The main objective in the Non-Core segment
remains a rigorous wind-down of all non-core
portfolios and the consequent reduction of
costs. The implementation of the wind-down
has been pursued with a variety of measures,
including the sales of portfolios, sales of non-
core entities, sales of individual assets, the
collection or restructuring of individual assets,
and active management of real-estate assets.
Financial performance
Table 29: Results of the Non-Core Members segment
Net interest income
Net non-interest income
Total net operating income
Total costs
Result before impairments and provisions
lmpairrrents and provisions
Result before tax
Segment assets
Net loans to customers
Gross loans to customers
Investment property and property &
equipment received for repayment of loans
Other assets
Non-performing loans (gross)
Result before tax
The segment recorded EUR 1.3 million profit before tax. The
higher net non-interest income was achieved also due to the
positive effect attributable to the segment from the settlement
of a legal dispute (EUR 0.4 million).
Total assets decreased
A decrease of the total assets of the segment YoY (EUR 35.3
million) was in line with the divestment strategy of the non-
core segment.
EUR 41.1
million
reduction of gross loans to
customers in 2021.
2021
1.3
5.9
7.2
-11.4
-4.1
5.4
1.3
2020
1.2
4.2
5.4
-12.9
-7.4
2.9
-4.6
0.1
1.6
1.8
1.5
3.3
2.5
5.8
31 Dec 2021
31 Dec 2020
Change YoY
95.9
24.3
53.9
65.6
6.0
45.0
131.2
45.0
95.0
70.2
16.0
71.3
-35.3
-20.7
-41.1
-4.6
-10.0
-26.3
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in EUR million consolidated
Change YoY
11%
39%
33%
12%
44%
89%
-
-27%
-46%
-43%
-7%
-63%
-37%
Contents
94
Business performance
Active management of real estate
assets
Divestment process
The divestment process of still remaining NPL exposures at the
Bank or at the non-core subsidiaries’ level is being facilitated
through a specialised team for repossessing, managing, and
divesting collateral real estate. Real estate expertise and
services are offered to the Group members assisting them in
implementation of the most efficient divestment manner of the
remaining non-performing portfolio or the repossession of
the collateral real-estates.
Value-preserving strategies
The main task is to ensure value-preserving strategies for the
real estate management, respectively the collateral value of
NPL claims by either temporarily repossessing real-estate or
ensuring a value-preserving divestment process of the real-
estate or a claim. From 2015 to 2021, real-estate transactions
with a total sales value of EUR 193.8 million were executed
or supported, and directly or indirectly contributed to a EUR
622.6 million of NPL reduction, of which EUR 122.5 million in
2021 alone.
EUR 25.1
million
the total sales value of real-estate
transactions executed or supported
by the real-estate team in 2021.
The wind-down of the Non-Core
segment in 2021 included:
• Divestment of non-core Group members
• Sale of the Bank’s equity participations
• Active management of real-estate assets
Divestment of non-core
Group members
Liquidation process
A liquidation process was initiated in all non-core leasing
and trade finance subsidiaries and some real estate
subsidiaries. In 2021, the liquidation processes of BH-RE d.o.o.
Sarajevo and Prvi faktor d.o.o. Sarajevo were completed,
and the companies were deleted from the court register. The
divestment process has been running with thoughtful cost
management and well-established collection procedures.
Decrease of non-core portfolio
New business has been suspended in all non-core Group
members which are in the process of being wound-down. The
decrease of the cumulative non-core subsidiaries’ portfolio
remains ongoing through regular repayments and collection
measures.
Sale of NLB’s equity participations
Numbers
At the 2021 YE, the overall asset volume of equity participations
is at EUR 0.20 million (2020: EUR 0.28 million).
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making, steering, and mitigation processes
and the competence centre for seven banking subsidiaries.
within the Group, with the aim of proactively
supporting its business operations. The Group
Figure 65: Risk profile of NLB Group as at 31 December 2021
Risk Management
The self-funded model, strong liquidity,
and a solid capital position continued in
2021, demonstrating the Group’s financial
resilience. Efficient management of risks
and capital is crucial for the Group to
sustain long-term profitable operations.
A robust Risk Management framework is
comprehensively integrated into decision-
is engaged in contributing to sustainable
finance by incorporating environmental,
social, and governance risks into its business
strategies, risk management framework,
and internal governance arrangements.
-41 bps
negative Cost of risk on Group level.
The Group has a well-diversified business model. In
other non-financial risks are less important from materiality
accordance with its strategic orientations, it intends to be a
perspective. The Group integrates and manages ESG risks
sustainably profitable, predominantly working with clients on
within the aforementioned types of risks, namely credit and
its core markets, providing innovative but simple customer-
operational risk, as part of its risk management framework.
oriented solutions, and actively contributing to a more
Liquidity risk tolerance is low. The Group must maintain an
balanced and inclusive economic and social system. Efficient
appropriate level of liquidity at all times, and also pursue an
managing of risks and capital is crucial for the Group to
appropriate structure of the sources of financing.
sustain long-term profitable operations. Risk Management
in the Group is in charge of managing, assessing, and
monitoring risks within the Bank as the main entity in Slovenia,
Table 30: NLB Group’s Key Risk Appetite indicators (KRIs)
KRIs
TCR
CET1 ratio
LCR
NSFR
Cost of Risk
NPL (EBA def.)
NPE (EBA def.)
Interest rate risk (EVE)
31 Dec 2021
17.8%
15.5%
252.6%
185.2%
-41 bps
3.4%
1.7%
-6.4%
COVID-19 did not have a meaningful impact on the quality of
the credit portfolio. Its impacts caused moderate credit quality
deterioration, which resulted in an increase of Stage 2 and
Stage 3 exposures. In Q2 2021, a reversal was observed, mainly
63.2%
due to successful recovery of on- and off-balance sheet NPLs.
Respectively, the Group’s credit portfolio quality remained
solid, with stable rating structure and portfolio diversification.
Lending growth in the corporate segment remained relatively
moderate, while the retail segment, namely mortgage lending,
experienced a considerable growth in 2021.
The Group is compliant with EBA guidelines on payment
moratoria and is very prudent in identifying any increase in
credit risk. The vast schemes introduced by the governments
in the Group countries providing moratoriums to eligible
clients as part of the COVID-19 pandemic measures were
0.8% 2.2%
7.1%
10.4%
13.2%
3.1%
Credit risk
Concentration risk
Credit spread risk
Interest rate risk in banking book
Operational risk
Market risk
Business and Strategic risk
Based on the Group’s business strategy, credit risk is the
phasing out during the 2021. Apart from the moratoria, the
dominant risk category, followed by credit spread and
Group provided additional liquidity by granting new loans to
interest rate risk in the banking book and operational risk.
creditworthy clients to help them with the specific situation
Management of credit risk focuses on moderate risk-taking,
due to the COVID-19 crisis.
striving to assure a diversified credit portfolio, adequate credit
portfolio quality, the sustainable cost of risk, and optimal
The cost of risk was negative (-41 bps) due to very strong
return considering the risks assumed. The Group has limited
exposure to other aforementioned risks, while market risk and
development in NPL resolution and more favourable
macroeconomic situation compared to the 2020 YE. The
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Group faced favourable NPL movement due to repayments in
the segment of large corporate clients, and other successfully
resolved smaller exposures in the region. During the year, the
Group reviewed IFRS 9 provisioning by testing a set of relevant
macroeconomic scenarios to adequately reflect the current
circumstances and the related impacts in the future. The
Group established and developed multiple scenarios on the
The Bank is, as a systemic bank, involved in the Single
Supervisory Mechanism.
analysis into the decision-making process at strategic and
operating levels, diversification to avoid large concentration,
optimal capital usage and allocation, appropriate risk-
adjusted pricing, and overall compliance with internal rules
Supervision is under the jurisdiction of the Joint Supervisory
and regulations.
Team of:
Risk Management focuses on managing and mitigating
level of ECL calculation.
ECB
BoS
risks in line with the Group’s Risk Appetite and Risk Strategy,
Though COVID-19 coupled with its implications on the
representing the foundation of the Group’s Risk Management
framework. Within these frameworks, the Group monitors
business environment, the Group faced growing excess
ECB regulations are followed by the Group, where the Group
a range of risk metrics in order to assure the Group’s risk
liquidity and managed to stay well capitalised. The Group
subsidiaries operating outside Slovenia are compliant with
profile is in line with its Risk Appetite. In addition, the Group
is perceived as safe heaven and therefore faced growing
the rules set by the local regulators. Third party equvivalent
is constantly enhancing its Risk Management system, where
excess liquidity, and impacts of the pandemic did not cause
are approved in Serbia, BiH and North Macedonia, resulting
consistent incorporation of ICAAP, ILAAP, Recovery plan,
any material liquidity outflows. Significant attention was put
in alignment of local regulation with CRR rules.
and other internal stress-testing capabilities into the Risk
into the structure and concentration of liquidity reserves by
incorporating early warning systems, while keeping in mind
the potential adverse negative market movements. Excess
liquidity and market demand for fixed interest rate products
resulted in moderate interest rate and credit spread risk
exposure, which stayed within the risk appetite tolerance
toward this risk. The Group’s liquidity and capital position
remained strong in both the Group and banking member
levels.
In 2021, the Group was included into ECB Stress test exercise.
On 30 July, the results of stress tests carried out for important
banks by the ECB to assess the resilience of the financial
institutions have been disclosed. Under the adverse scenario,
CET1 ratio (fully loaded) would fall by maximum 483 bps
(published range 300-599 bps) after three years without
mitigation measures from the 2020 YE. The Group’s results of
adverse depletion were lower than for peer group and SSM
sample banks. Besides, the Group’s data quality and accuracy
were assessed as above average. Final results of the bottom-
up stress test showed that even in a very unfavourable market
conditions defined by the EBA and ECB, the Group holds
sufficient resilience in terms of capitalisation. The qualitative
outcomes were included in the determination of capital
requirements by ECB, namely setting Pillar 2 Guidance.14
14 Further information is available in chapter Events After the End of 2021
Financial Year.
Across the Group, risks are assessed, monitored, managed,
or mitigated in a uniform manner, as defined in the Group’s
Risk management standards, also considering the specifics
of the markets in which individual Group members operate.
Risk Management and control is performed through a
clear organisational structure with defined roles and
responsibilities. The organisation and delineation of
competencies is designed to prevent conflicts of interest,
ensure a transparent and documented decision-making
process, subject to an appropriate upward and downward
flow of information.
Business line Risk Management in NLB is, by encompassing
several professional areas, in charge of:
• formulating and controlling the Group’s Risk Management
policies,
• setting limits,
• overseeing the harmonisation,
• regular monitoring of risk exposures and limits based on
centralised reporting at the Group level.
The Group puts great emphasis on the risk culture and
awareness across the entire Group. The Group’s Risk
Management framework is forward-looking and tailored to its
business model and corresponding risk profile. The main risk
principles and limits are set forth by the Group’s Risk Appetite
and Risk Strategy, and designed in accordance with business
strategy. The Group performs risk identification process on
regular basis, as part of the ICAAP and ILAAP frameworks. In
this process all topical risks, including ESG related ones, are
comprehensively assessed, monitored and mitigated where
necessary. Special focus is placed on the inclusion of risk
Management system is essential. Moreover, the Group puts
great emphasis on their integration into the overall Risk
Management system in order to assure proactive support for
informed decision-making.
Figure 66: NLB Group’s Risk Management framework
Business strategy
Risk identification
Risk Appetite (Limit system)
Capital and Financial planning
ICAAP
&
ILAAP
inputs
ILAAP
• Economic and normative
assessment of liquidity
• Stress tests
• Liquidity contingency
plan (LCP)
ICAAP
• Economic and
normative
assessment of
capital
• Stress tests
Results
Recovery plan
Assessment of liquidity and capital (significant
deterioration)
The uniform stress-testing programme, which includes
internally developed models, stress scenarios, and sensitivity
analysis, was further complemented. In 2021, the Group
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established its own ESG stress testing concept to identify
also incorporating normative and economic perspectives
Figure 67: NLB Group’s Pillar 2 Requirement evolution
the most relevant financial vulnerabilities stemming from
as part of the established ICAAP process. As at 31 December
climate risk. Such a stress-testing framework is the subject
2021, the Group had a very solid capital position and TCR
of a regular internal validation cycle and related procedures
of 17.8% (1.2 p.p. higher than at the 2020 YE). The CET1 ratio,
where the Group established comprehensive validation
representing the capital of highest quality, stood at 15.5% (1.4
framework. Namely, the Group supports a strong validation
p.p. YoY increase).
governance process and controls over applied selected risk
approaches and internal models.
The higher Group total capital adequacy compared to
the previous year derives from higher capital (increase of
The business and operating environment, relevant for
EUR 186.8 million YoY, mainly due to inclusion of negative
the Group operations is changing, with trends such as
goodwill in retained earnings) which compensated the RWA
3.50%
3.50%
3.25%
2.75%
2.75%
2.60%
changing customer behaviour, emerging new technologies
increase of EUR 58.2 million YoY for the Group. Loan growth
2017
2018
2019
2020
2021
2022(i)
and competitors, actively contributing to a more balanced
to the corporates and retail and new investments in bonds
(i) Applicable as of 1 March 2022.
and inclusive economic and social system, and increasing
contributed to an increase of RWA for credit risk. On the other
new regulatory requirements. It should be noted that Risk
hand, the increase was compensated by collateral adequacy
MREL requirement forms part of Group’s risk appetite,
Management is continuously adapting with the aim of
due to third party equivalent, agreements with MIGA,
detecting and managing new potential emerging risks.
changed investment policy and successful recovery of NPLs.
whereby its fulfilment is regularly analysed and monitored.
NLB complies all interim targets. More information on MREL is
Additionally, the closing trading position of Komercijalna
available in the chapter Capital and Capital Adequacy.
Proactive Risk
Management in 2021
Prudent capital level position and
achieved interim MREL targets
One of the key aims of Risk Management is to preserve a
prudent level of the Group’s capital position. The Group
monitors its capital position at the Group and individual
subsidiary bank level in accordance with the Risk Appetite,
Figure 68: NLB Group’s LCR
Banka, Beograd resulted in a decrease in RWA for market
risks. RWA for operational risk increased due to higher income
of the Group arising from the acquisition of Komercijalna
Banka, Beograd.
As at 31 December 2021, the Group meets all fully loaded
regulatory requirements. Moreover, enhanced overall
corporate governance in the recent years led to a lower P2R,
which decreased from 3.5% in 2018 to 2.75% applicable in
2021 and 2.60% applicable as of 1 March 2022, while Pillar 2
Guidance remains at low level of 1%.
450%
400%
350%
300%
250%
200%
150%
100%
31 D ec 2 0 2 0
31 Ja n 2 0 21
28 Fe b 2 0 21
31 M ar 2 0 21
3 0 A pr 2 0 21
31 M a y 2 0 21
3 0 Ju n 2 0 21
31 Jul 2 0 21
31 A u g 2 0 21
3 0 S e p 2 0 21
31 O ct 2 0 21
3 0 N ov 2 0 21
31 D ec 2 0 21
LCR NLB Group
Maintaining a solid level and
structure of liquidity
Maintaining a solid level and structure of liquidity represents
the next very important risk target. The liquidity position of
the Group remained stable, and the impacts of the pandemic
did not cause any material liquidity outflows. Strong liquidity
position is held at the Group and individual subsidiary bank
levels. Group LCR slightly decreased to 252.6% (by 4.9 p.p. YoY),
but remained well above the risk appetite limit (130%). The
level of the unencumbered eligible liquid reserves remained at
a high level, representing 38.3% of total assets. The Group has
sufficient liquidity reserves in the form of placements with the
ECB, prime debt securities, and money market placements.
Even in the event of the combined adverse stress scenario, the
Group would survive at least three months under such stress
conditions. The core funding base of the Group predominately
represents retail customer deposits with very stable and
constantly growing base. LTD increased to 60.0% (31
December 2020: 58.8%), remaining at very comfortable level.
In June, the Bank participated in the 8. ECB operation, namely
TLTRO III and had drawn a credit tranche of EUR 750 million
maturing in three years. With TLTRO, the ECB continues to
support lending to enterprises and households. The Bank was
successful in achieving the lending performance threshold
in the special reference period, the positive effect from this
transaction will partially compensate the negative outcome
from holding liquidity reserves.
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Figure 69: NLB Group structure of the credit portfolio(i) (gross loans) by segment (in EUR million) and rating(ii)
Institutions
539
State(iii)
4,202
SME
2,881
61% 63% 65%
63%
60%
EUR 15.5 billion
Corporates
2,298
A
Highest
quality
Retail
consumer
2,427
Retail housing
3,195
31 Dec 2018
31 Dec 2019
31 Dec 2020 w/o KB
31 Dec 2020
31 Dec 2021
28% 30% 28%
33%
32%
NPLs
4%
3%
3%
4%
3%
3% 2% 2% 2% 1%
4% 2% 2% 2% 1%
B
C
D
E
Default
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(i) Loan portfolio also includes reserves at CBs and demand deposits at banks.
(ii) Rating A, B and C are performing exposures. Rating A: investment grade clients with high financial stability; Rating B: clients with high ability to repay their obligations, a significant aggravation of the economic environment would cause problems to them; Rating C:
performing clients with increased level of risk who may encounter problems with settlement of liabilities in the future; Ratings D and E are NPLs: Default clients (article 178 of CRR), including clients in delay >90days and other clients considered ‘unlikely to pay’ with delays
below 90 days. The numbers may not add up to 100% due to rounding.
(iii) State includes exposures to CBs.
Maintaining the adequate credit
portfolio quality
Maintaining the adequate credit portfolio quality is the
most important goal, with the focus on cautious risk-taking
and quality of new loans leading to a diversified portfolio
of customers. The Group is constantly developing a wide
range of advanced approaches in the segment of credit risk
assessment in line with best banking practices to further
enhance the existing risk management tools, while at the
same time enabling greater customer responsiveness. The
restructuring approach in the Group is focused on the early
detection of clients with potential financial difficulties and their
proactive treatment.
The Group is actively present on SEE markets by financing
the existing and new creditworthy clients. The Group’s
lending strategy focuses on its core markets of retail, SME,
and selected corporate business activities within the region
and EU. On the Slovenian market, the focus is on providing
appropriate solutions for retail, medium-sized companies,
and small enterprise segments, whereas on the corporate
segment, the Bank established cooperation with selected
corporate clients (through different types of lending or
investment instruments). All other banking members in the
SEE region, where the Group is present, are universal banks,
mainly focused on the retail, medium-sized companies, and
small enterprise segments. Their primary goal is to provide
comprehensive services to clients by applying prudent Risk
Management principles.
Lending growth in the corporate segment remained relatively
moderate, while the SME and retail segment experienced a
considerable growth in 2021 after a temporary slowdown in
2020 due to COVID-19 circumstances. The current structure
of credit portfolio (gross loans) consists of 36.2% retail clients,
14.8% large corporate clients, and 18.5% SMEs and micro
companies, while the remainder of the portfolio consists
of other liquid assets. The credit portfolio remains well
diversified, and there is no large concentration in any specific
industry or client segment. The share of retail portfolio in the
whole credit portfolio is quite substantial with still prevailing
segment of mortgage loans.
The majority of the Group’s loan portfolio is classified as
Stage 1 (94.2%), the remaining portfolio as Stage 2 (3.4%), and
Stage 3 and FVTPL (2.4%). The portfolio quality remains very
stable with increasing Stage 1 exposures and a relatively low
percentage of NPLs. The percentage of Stage 1 loan portfolio
Proactive
risk
management
in 2021.
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99
Table 31: Overview of NLB Group loan portfolio by industry as at 31 December 2021
Corporate sector
Retail sector
Corporate sector by industry
Accommodation and food service activities
Administrative and support service activities
Agriculture, forestry and fishing
Arts, entertainment and recreation
Construction industry
Education
Electricity, gas, steam and air conditioning
Finance
Human health and social work activities
Information and communication
Manufacturing
Mining and quarrying
Professional, scientific and techn. act.
Public admin., defence, compulsory social.
Real estate activities
Services
Transport and storage
Water supply
Wholesale and retail trade
Other
Total Corporate sector
Retail
consumer
43%
EUR 5.6 billion
Retail
mortgages
57%
Figure 70: NLB Group loan portfolio (measured at amortised cost) by stages as
at 31 December 2021
Stage 3
Stage 2
3%
2% FVTPL
0%
NLB Group
156.3
108.1
310.7
22.7
434.6
13.3
318.2
120.2
37.9
244.1
1,091.1
50.4
175.4
172.4
251.3
12.0
573.3
43.9
1,043.1
0.5
%
3.0%
2.1%
6.0%
0.4%
8.4%
0.3%
6.1%
2.3%
0.7%
4.7%
21.1%
1.0%
3.4%
3.3%
4.9%
0.2%
11.1%
0.8%
20.1%
0.0%
5,179.5
100.0%
in EUR million
∆ 2021
15.1
-13.6
22.0
1.7
60.9
-0.8
60.1
-47.5
-12.1
10.2
105.0
-29.6
3.7
-47.0
29.7
-1.9
-18.8
2.8
120.0
-1.3
258.4
remains almost at the same level as at 2020 YE, i.e., at 95.6%
in the Retail segment, while in the Corporate segment, despite
to eligible clients as part of the COVID-19 pandemic measures
had been phasing out during the 2021.
the adverse economic conditions, improved to the level
of 87.4%, which is a result of cautious lending policy and
As at 31 December 2021, the exposures where COVID-19
successful closure of NPL.
moratoria have been granted amounted to EUR 1,681.5
million, representing 10.8% of the Group’s credit portfolio. The
COVID-19 did not have a meaningful impact on the quality
exposure with remaining COVID-19 moratoria is negligible and
of the credit portfolio. The vast schemes introduced by the
amounts to EUR 24.8 million, while 98.5% of those moratoria
governments in the Group countries providing moratoriums
have already expired by 2021 YE. A total of 86.4% of exposure
Stage 1
94%
Institutions
3%
State
29%
Corporates
31%
Retail
37%
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Table 32: NLB Group loan portfolio by stages as at 31 December 2021
Stage1
Credit portfolio
Stage2
Stage3 & FVTPL
Stage1
Stage2
Stage3 & FVTPL
Provisions and FV changes for credit portfolio
in EUR million
Credit
portfolio
Share of
Total
YTD
change
Credit
portfolio
Share of
Total
YTD
change
Credit
portfolio
Share of
Total
YTD
change
Provision
Volume
Provision
Coverage
Provision
Volume
Provision
Coverage
Total NLB Group
14,638.0
94.2%
1,987.2
532.4
o/w Corporate
4,525.5
87.4%
o/w Retail
o/w State
5,371.1
95.6%
4,202.4
100.0%
o/w Institutions
538.9
100.0%
389.9
591.9
912.3
93.2
412.2
120.2
-
-
3.4%
8.0%
2.1%
-
-
-27.6
-14.6
-13.1
-
-
371.4
241.7
129.7
-
-
2.4%
4.7%
2.3%
-
-
-104.3
-116.8
12.6
-
-
70.4
50.6
18.3
1.3
0.2
0.5%
1.1%
0.3%
0.0%
0.0%
34.0
26.6
7.4
-
-
6.4%
6.5%
6.2%
-
-
Provisions
& FV
changes
Coverage
with
provisions
and FV
changes
212.1
136.0
76.0
-
-
57.1%
56.3%
58.6%
-
-
Figure 71: NLB Group Corporate and Retail loan portfolio (valued at amortised cost) by stages
Stage 1 by segment (in EUR million)
Stage 2 by segment (in EUR million)
Stage 3 by segment (in EUR million)
+9%
YoY
4,526
4,136
3,207 3,170
2,811
+12%
YoY
5,371
4,779
3,822
3,936
3,492
-3%
YoY
445
367
427
427
412
-10%
YoY
133
104
133
133
120
520
-33%
YoY
359
324
286
242
+11%
YoY
101 87
111
117
130
Corporate
Retail
Corporate
Retail
Corporate
Retail
31 Dec 2018
31 Dec 2019
31 Dec 2020 w/o KB
31 Dec 2020
31 Dec 2021
with expired moratoria have no delays, while 2.1% had delays
exceeding 90 days. The Bank is very prudent in identifying any
New NPLs formation and NPL
increase in credit risk.
management
In addition to moratoria, the governments in Serbia and
Slovenia provided public guarantee schemes for new
financing of clients whose business has been materially
impacted due to the COVID-19 pandemic. As at 31 December
2021, these loans amounted to EUR 177.2 million; none of the
guarantees have been exercised.
At the end of 2020, Komercijalna Banka group was acquired
and their NPL were included as an additional NPL formation
in net value (based on consolidation rules), which, along with
the COVID-19 related circumstances, resulted in the NPL
formation of EUR 148 million or 1.1% of the total portfolio. In
2021, NPL formation amounted to EUR 143 million or 0.9%
1.7%NPE (EBA def.)
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Figure 72: % of Days past due for expired COVID-19 moratoria in NLB Group
88.9%
86.4%
84.8%
81.8%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
14.1%
11.5% 9.3%
7.4%
2.4%
2.2%
1.6%
2.1%
1.7%
1.5%
2.1%
2.1%
NO DELAYS
1-30 DPD
31-90 DPD
>90 DPD
30 Sep 2020
31 Dec 2020
30 Sep 2021
31 Dec 2021
of the total portfolio and was influenced by harmonisation
portfolio stock continued, mostly due to repayments, collection,
process in Komercijalna Banka group. Nevertheless, the
sale of claims, and cured clients. The non-performing credit
total amount of NPL decreased during 2021. Proactive non-
portfolio stock in the Group decreased at 2021 YE in comparison
performing management, including successful repayment of
with 2020 YE to EUR 367.4 million (2020 YE: EUR 474.7 million).
on- and off-balance sheet exposures, and more favourable
The combined result of contraction in non-performing credit
macroeconomic situation across the region than initially
portfolio stock and credit growth of a higher quality portfolio
expected, resulted in a negative cost of risk.
led to 2.4% of NPLs, while the internationally more comparable
Figure 73: NLB Group gross NPL formation (in EUR million)
Formation / gross loans (stock)
0.7%
0.7%
0.6%
60
37
21
64
36
16
2
12
56
35
20
1.1%
148
78
60
0.9%
143
80
58
2017
Corporate
2018
2019
2020
SME
Retail
10
5
2021
NPE ratio, based on the EBA methodology, stood at 1.7%. The
Group’s indicator gross NPL ratio, defined by the EBA, is equal
to 3.4% and is below the regulatory defined threshold for
establishment of NPL strategy framework.
Figure 74: NLB Group NPL, NPL ratio and Coverage ratio 1(i) (in EUR million)
76.1%
77.5%
77.1%
89.2%
86.1%
81.8%
4,000
3,500
3,000
2,500
2,000
1,500
1,299
13.8%
844
9.2%
622
6.9%
1,000
500
0
375
3.8%
475
3.5%
367
2.4%
31 Dec
2016
31 Dec
2017
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
100
90
80
70
60
50
40
30
20
10
0
in case of need, and to efficiently work out exposures with
no realistic recovery prospects. This extensive knowledge
base is available throughout the Group, and risk units, as
well as restructuring and workout teams are properly staffed
and have the capacity to deal, if needed, with considerably
increased volumes in a professional and efficient manner.
An important Group strength is the NPL coverage ratio 1
(coverage of gross NPLs with impairments for all loans),
which remains high at 86.1%. Furthermore, the Group’s NPL
coverage ratio 2 (coverage of gross NPLs with impairments
for NPL) stands at 57.9%, which is well above the EU average
as published by the EBA (45.1% for Q3 2021). As such, it
enables a further reduction in NPLs without significantly
influencing the cost of risk in the coming years. The decrease
in coverage indicators at the end of 2020 was influenced
by the special treatment of NPLs from the acquired entities.
NPLs of Komercijalna Banka group are initially recognised at
fair value, without any additional credit loss allowances. The
latter is also reflected in the lower coverage ratio CR2 than the
NLB Group banks average at the end of 2021 in Komercijalna
Banka, Beograd and NLB Banka, Podgorica, which merged
with Komercijalna Banka, Podgorica in November 2021.
The Group strives to ensure the best possible collateral for
long-term loans, namely mortgages in most cases. Thus,
the real-estate mortgage is the most frequent form of loan
collateral for corporate and retail clients. In the corporate
loans, it is followed by government and corporate guarantees.
In retail loans, the other most frequent types of loan collateral
are loan insurances by insurance companies and guarantors.
The Group is following the ECB guidelines to banks on NPLs
with regards to the evaluation of collateral. The establishment
of market values for collateral for NPLs is by means of
individual evaluation when NPL status is established. The value
of collateral is then regularly monitored on a yearly level and
updated by either independent evaluation (over prescribed
threshold) or with the use of statistical re-evaluation for smaller
values of NPL. For statistical re-evaluation the indexes from the
government agency or other relevant official data sources are
Precisely set targets in the Group’s NPL Strategy and various
proactive workout approaches facilitated the management of
the non-performing portfolio. The Group’s approach to NPL
management puts a strong emphasis on restructuring and use
of other active NPL management tools, such as foreclosure
of collateral, the sale of claims, and pledged assets. In 2021,
the multi-year declining trend of the non-performing credit
Coverage ratio 1
NPL ratio
NPLs
used. The value of collateral is with statistical approach always
(i) By internal definition.
Due to extensive experience gained in the last few years
in dealing with clients with financial difficulties, resulting
primarily from legacy portfolios, the Group has developed
an extensive knowledge base both in the prevention of
financial difficulties for clients, to restructure viable clients
updated only downwards, never upwards. Only if the individual
appraisal shows a higher value of collateral, the upwards re-
evaluation would be performed. If the data from statistics would
show significant decline in the real estate market, individual
evaluations for such types of real estate would be performed
and values corrected accordingly.
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Table 33: NPL, NPL ratio(i) and Coverage ratio by NLB Group members
NLB Group member
NLB, Ljubljana
NLB Banka, Skopje
NLB Banka, Podgorica
NLB Banka, Sarajevo
NLB Banka, Prishtina
NLB Banka, Banja Luka
NLB Banka, Beograd
Komercijalna Banka, Beograd
Total NLB Group banks
Total NLB Group
(i) By internal definition.
NPL
31 Dec 2021
% NPL
31 Dec 2021
NPL CR 1
31 Dec 2021
NPL CR 2
31 Dec 2021
in EUR thousands
130,392.1
59,728.3
42,165.7
19,045.5
15,613.7
9,371.2
9,489.0
36,342.9
322,148.4
367,409.1
1.5%
4.3%
7.0%
3.1%
1.9%
1.3%
1.5%
1.4%
2.0%
2.4%
75.1%
101.2%
54.0%
106.3%
243.2%
189.3%
93.4%
63.5%
89.7%
86.1%
60.6%
64.7%
39.1%
87.6%
91.6%
61.0%
57.6%
21.7%
57.2%
57.9%
The Group’s interest rate positions were slightly affected by
moratoriums during the year 2021, which were mostly short-
term, from 3 to 6 months, and consequently not very material.
The Group places excess liquidity mainly into banking book
securities with fixed IR, while in current negative interest rate
environment there is also higher demand for products with
fixed IR. The interest rate exposure to interest rate risk remains
modest, within the risk appetite limits. If market interest rates
would increase, the net interest income of the Group would be
positively affected, whereas if they decreased, negative effects
would be lower due to zero floor clauses included in a number
of loan contracts. When assessing EVE sensitivity, the Group
members apply different scenarios. For most members, the
worst-case regulatory scenario is in the case of increase of IR
by 200 bps. From the EVE perspective, the estimated capital
sensitivity of 200 bps equals -6.4% of the Group’s capital.
Robust operational risk
management
In the area of operational risk management, where the Group
has established robust operational risk culture, the main
qualitative activities refer to the reporting of loss events and
identification, assessment, and management of operational
Low market risk in the trading book
Regarding market risks in the trading book, the Group
pursues a low-risk appetite for market risk in the trading book.
The exposure to trading (according to the CRR) is only allowed
to be carried by the parent Bank as the main entity of the
Group and is very limited. During the year 2021, the position of
trading book of Komercijalna Banka, Beograd decreased to
the minimum extent. The Bank intends to further maintain a
small trading portfolio, mainly to monitor market signals in the
global markets. Respectively, it does not constitute a material
risk to the Group’s operations, while its tolerance for interest
rate and credit spread risk in trading book is very low.
The Group carries its main business activities in euros, and the
subsidiary banks, in addition to their domestic currencies, also
operate in euros, which is the reporting currency of the Group.
The Group’s net open FX position from transactional risk is
low, and at less than 1.10% of capital. Regarding structural FX
positions on a consolidated level, assets and liabilities held
in foreign operations are converted into euro currency at the
closing FX rate on the balance sheet date. FX differences of
non-euro assets and liabilities are recognised in the other
comprehensive income, and therefore affect shareholder’s
equity and CET1 capital.
Proactive management of interest
rate risk in the banking book
The Group’s exposure to interest rate risk is moderate and
arises mainly from banking book positions. In the recent years,
risks. On this basis, constant improvements of control
the Group recorded the growth of fixed interest rate loans and
activities, processes, and/or organisation are performed.
the long-term banking book securities on the assets side, and
Besides that, the Group also focuses on proactive mitigation,
the transformation of deposits from term to sight as a result of
prevention, and minimisation of potential damage. Special
the low interest rate environment and excessive liquidity.
attention is dedicated to the stress-testing system, based on
Figure 75: NLB Group’s EVE evolution
-9.0%
-8.0%
-7.0%
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
-7.0%
-7.2%
-7.2%
-5.5%
-6.1%
-6.1%
-4.8%
-3.7%
-8.1%
-7.3%
-7.1%
-7.1%
-6.4%
31 Dec
2018
31 Mar
2019
30 Jun
2019
30 Sep
2019
31 Dec
2019
31 Mar
2020
30 Jun
2020
30 Sep
2020
31 Dec
2020
31 Mar
2021
30 Jun
2021
30 Sep
2021
31 Dec
2021
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103
a scenario analysis referring to the potential high severity,
ESG risks do not represent a new risk category, but rather an
are prepared to be used in the event of natural disasters, IT
low frequency events, and modelling data on loss events.
aggravating factor for the existing types of risks. The Group
disasters, and the undesired effects of the environment to
Furthermore, key risk indicators, servicing as an early warning
integrates and manages them within the established risk
mitigate their consequences.
system for the broader field of operational risks (such as HR,
management framework, namely in the area of credit and
processes, systems, and external conditions) are regularly
operational risk. The management of ESG risks follows ECB
As systemically important institution, the Group is included into
monitored, analysed, and reported, with the aim to improve
and EBA guidelines with tendency of their comprehensive
2022 ECB Climate Stress test exercise. Preparation activities in
the existing internal controls and enabling reacting on time.
integration into all relevant processes. The availability of ESG
the Group for the purpose of this exercise, consisting of three
During the COVID-19 pandemic in Slovenia and the SEE, the
Nevertheless, the Group strives to obtain relevant clients’
ECB intends to assess how banks are prepared for dealing
Group has taken necessary measures to protect its customers
data as prerequisite for adequate decision-making and
with financial and economic shocks stemming from climate
and employees by ensuring the relevant safety conditions
corresponding proactive management of ESG risks.
risk. The exercise will be conducted in the first half of 2022
and making sure that the services offered by the Group are
after which the ECB will publish aggregate results in July 2022.
data in the region where the Group operates is still lacking.
modules, are already underway. By performing this exercise
provided without any disruption. The Group continuously
In recent years, the Bank signed Framework Agreements
offered necessary services to clients, especially through digital
with the EBRD, the Contract of Guarantees with MIGA and
Further information on risk management is available in the
channels (mobile banking, video calls, telebanking), which
committed to the UN Principles of Responsible Banking.
Note 6 of the Financial part of the report, Pillar 3 Disclosures
the Group continues to develop at an accelerated pace. A
Consequently, the Group established mechanism for
and NLB Group Sustainability Report 2021.
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crisis management team is established in the Bank and other
environmental and social screening of current or potential
banking members with full engagement of the Management
financing applications against the MIGA and EBRD Exclusion
Board members. Special attention was paid to continuous
List and applicable environmental and social laws. The
provision of services to clients, their monitoring, health
management of ESG risks addresses the Group’s overall credit
protection measures, and the prevention of cyber fraud.
approval process and related credit portfolio management.
In addition, the Group was also diligently managing other,
with the Group’s ESMS. Beside addressing ESG risks in all
non-financial risks, referring to the Group’s business model
relevant stages of the credit-granting process relevant ESG
or arising from other external circumstances, within the
criteria were also considered in the collateral evaluation
Sustainable financing is implemented in accordance
established ICAAP process.
Incorporating ESG risks
The Group is engaged in contributing to sustainable
finance by incorporating ESG risks into its business
process. On portfolio level the Group does not face any large
concentration towards specific NACE industrial sectors
exposed to climate risk, whereby the role of transitional risk is
more prevailing.
The Group carefully considers potential reputation and
strategies, risk management framework, and internal
liability risks which could arise from sustainable financing of
governance arrangements. With the adoption of the NLB
its clients. Special attention is given to the approval of new
Group Sustainability programme, the Group implemented
products and monitoring of fulfilment of relevant criteria
sustainability elements into its business model. NLB Group
by the clients. Additional key risk indicators have been
Sustainability Committee oversees the integration of the ESG
addressed, servicing as an early warning system in the area
factors into the NLB Group business model. Thus, sustainable
of ESG risks. Besides, physical risks, as part of ESG risks in
finance integrates ESG criteria into Group’s business and
the area of operational risk, are addressed in the Group’s
investment decisions for the lasting benefit of Group’s clients
business continuity management (BCM). BCM is carried out to
and society.
protect lives, goods, and reputation. Business continuity plans
Contents
104
IT and Cyber Security
The Group continues to provide its clients
sustainable and efficient services supported
through highly reliable and secure technology
platforms. The Bank continues to actively pursue
its technology transformation programme. In
line with the refreshed IT strategy introduced
in 2020, the IT team began delivering on
outlined roadmaps and also successfully
delivered a proof of concept for a consolidated
core banking system. The Group is aiming to
centralise and unify governance, applications,
IT infrastructure and reliability
High performance confirmed with numbers
IT performance is monitored through a set of relevant
indicators that are linked to the Balanced Scorecard (BSC)
system. The indicators show a high performance of IT
operations and successful risk management in this area.
The availability of the information system in the Bank is at
very high level of 99.98% (2020: 99.92%), and the share of
unplanned interruptions is very low, 0.02% (2020: 0.08%). In
2021, the number of days without system/service interruptions
were at 83.6% (2020: 78.5%). Harmonised Service Level
Agreements (SLA) are in place with users of the information
and infrastructure. The Bank also continued to
system, which the Bank managed to fulfil in a very high
rollout an effective online collaboration solution
throughout the Group and enabled a majority
of employees to work from home without
interruption to operations. Due to the general
cyber security risks increase, special focus, extra
resources, and investments were made to raise
the overall level of cyber security resilience.
99.98%the availability in NLB.
proportion. High IT operational performance was also
recorded in the Group members (between 99.90% and
99.99%).
Main IT initiatives
Transformation
The main focus was the transformation of IT in terms of
organisation, a group perspective, processes, people, and
technology. IT supported a more agile way of delivery, to
better partnering with business, and as a result be more
efficient and effective. It also hired new leaders and experts
especially in the areas of IT security and digital banking.
Change of delivery approach
The team managed to reach important achievements in
following new strategic directions in terms of solution delivery.
Managed to migrate first applications from mainframe to
distributed systems, selected multiple new cloud solutions
instead of on-premise, and strengthened resources in digital
and front-end delivery.
Core systems consolidation
IT followed the core banking system strategy and successfully
delivered the proof of concept for consolidated core banking
system. Based on the success of the proof of concept, the core
system consolidation project in Slovenia business entity was
initiated.
Application architecture
Application architecture is focused on the Group solution
and majority of new solution selections are done as a Group
standard with related Group roadmaps. The IT team has
made significant progress in simplifying applications with the
key achievement being the retirement of the KRAT core system
for syndicated loans.
Group-wide capabilities extended
Group-wide capabilities were significantly extended (mainly in
the Group competence centre in Belgrade, Serbia) for the new
digital banking platform, enterprise integration platform, the
business process management platform development within
the region, and the cyber security and infrastructure group.
The competence centre has 46 employees.
Data management
The Bank achieved several new milestones in the
implementation of a Group-wide data management platform
which encompasses an enterprise data warehouse, advanced
analytics, risk management analytics, profitability, data
governance, and consolidated Group regulatory reporting.
In October 2021, the NLB initiative Leveraging information
capital: Fin-tech architecture at the heart of the traditional
1,366,984
digital users in the Group.
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Figure 76: Digital penetration of the Group’s banks as at 31 December 2021
59%
16%
25%
11%
10%
19%
NLB Banka,
Beograd
NLB Banka,
Sarajevo
NLB Banka,
Podgorica
NLB Banka,
Prishtina
NLB Banka,
Banja Luka
NLB Banka,
Skopje
50%
NLB
22%
Komercijalna
Banka,
Beograd
bank, developed as part of the Data Management Project
of the Group, was selected as one of the top 6 finalists in
Gartner’s Eye on Innovation Awards competition.
Cyber security
Strengthening team and
Outlook
In the coming years, the Bank is expected to continue to
invest in newly adopted technologies to support the business
strategy, especially in the areas of digital, data, and customer
relationship management (CRM), consolidating the Group’s
infrastructure, simplifying core systems and to achieving
superior client experience in terms of quality, innovation,
reliability, and security.
implementing new solutions
The Group is giving special focus to cyber security, and
consequently assuring the confidentiality, integrity, and
the availability of data, information, and IT systems that
support banking services and products for clients. Cyber
security in the Group is constantly tested and upgraded by
security assessments, independent reviews, and penetration
testing. Cyber security is regularly discussed at the Bank’s
IT Strategy 2020-2024
At the end of the 2020, a refreshed IT Strategy was adopted that also incorporates the Group dimension.
Build the best digital
banking IT team in
the SEE region.
Vision
Main principles
•
increase client satisfaction in all segments with new
digital omnichannel platform, digitize client journeys and
interactions (CRM), and achieve operational excellence;
• have an effective IT architecture using cloud solutions
•
and open-source software where possible;
introduce a new way of agile development and
DevOps transformation leading to shorter releases
cycles, automated testing, and less manual tasks;
Enable the best client and
employee experiences
through reliable, effective,
secure, accessible, and
scalable IT solutions.
Mission
•
• ensure the necessary development capacity - hire right talents
with the digital skills and looking forward to execute change;
introduce modern collaboration tools
and digitize internal processes;
leverage the investment made in the data platform;
•
• assure quality, security, and availability of
the IT systems and applications;
• have a highly motivated, effective, and satisfied IT
team working closely with the business side.
Strengthening
the team and extra investments in
cyber
security.
Information Security Steering Committee, Operational Risk
Committee, and Management Board meetings. During
2021, the Group increased its capacity in terms of human
resources by hiring specialists in different domains. The Group
now has a group team on two locations, in Ljubljana and
Belgrade. Beside increasing capacity in human resources,
improvement was made in detection capabilities by fine tuning
detection systems, as well as by performing hardening on
network devices across the Group. The threat intelligence
process was established and new IT Security strategy was
adopted focusing on unification of IT security systems and
centralisation of processes. A new Group vulnerability
management platform was selected. A technical measures
guideline, as the Group standard for tools and processes, was
also adopted and rolled out to the Group.
All employees educated, continuous
information exchange
All employees in the Group are continuously educated about
the importance of information/cyber security, as well as social
engineering techniques. The Group banks are providing
employees and customers with security notifications,
especially for the occurrence of threats in the (global)
environment with potential impact on the banks’ IT systems,
services, products, and clients. The Bank is also testing the
awareness of its employees with social engineering attack
simulations. Threat intelligence data is shared by the Group
team to all Group members with information on the latest
threats and recommendations on mitigation measures.
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We are on your team.
The first generation opened clubs.
The next generation won all the national championships.
The third generation raised regional champions.
We will help this generation reach for the stars.
Nothing connects, strengthens the bonds of cooperation or teaches how to win and lose with dignity as well as sport
does. Especially in a region with such diversely rich sporting history. Since we believe that sport boasts an immense
power for connecting, enhancing physical and spiritual well-being and inclusion, we are proud to support top athletes
and young sports prodigies on a regional level, among those are girls from U13 football team NK Radomlje. This way,
we are becoming one of the largest sponsors of sport in the region.
Human Resources
As a market leader, the Group realises that
investing in employees is crucial. Engaged
employees contribute significantly to business
goals and results. That’s why the Group continued
with its long-lasting tradition of investing in
employee development, along with searching for
new approaches and introducing new practices
to improve organisational culture, leadership,
and employee experience. COVID-19 pandemic
impacts were felt throughout the year and
so the health and safety environment was of
the highest priority. The Group continuously
enabled the majority of non-branch employees
to work from home, and on average 32% of
employees did so. Due to the COVID-19 situation,
the development activities took place in an
online environment and remained focused on
the challenges of remote work and leadership.
Table 34: NLB Group headcount by countries as at 31 December 2021 and 2020
Country
Slovenia
Serbia
North Macedonia
BiH(i)
Kosovo
Montenegro(ii)
Germany
Switzerland
Croatia
Group Total
31 Dec 2021
2,619
(NLB: 2,510,
other: 109)
2,901
877
942
463
374
1
2
6
8,185
Employee Headcount
Number of employees reduced
The Group continued with optimisation of processes and right
sizing its staffing level. Due to the acquisition of Komercijalna
Banka, Beograd and its subsidiaries in December 2020, the
number of employees at the 2020 YE rose to 8,792 but has
downsized throughout the year to reach 8,185 at the 2021 YE.
Work from home
During the year, the COVID-19 pandemic still influenced
business operations and work was organised in a way to
minimise the risk of infections. The Group continuously
enabled employees, whose presence in the Group’s premises
was not essential to business process, to work from home
(remotely) (the Group: 32%, NLB: 47%). All decisions related
to health and safety were made on time and following the
epidemiological circumstances.
Strive to Be ‘Top Employer’
The Group is continuing to strengthen its HR practises based
on feedback from reputable institutions and benchmarks
31 Dec 2020
2,691
(NLB: 2,591,
other: 100)
Changes YoY
-72
(NLB: -81,
other: 9)
3,198
877
1,086
463
467
1
2
7
8,792
-297
0
-144
0
-93
0
0
-1
-607
(i) The sale process of Komercijalna Banka, Banja Luka was concluded in December 2021.
(ii) The merger of NLB Banka, Podgorica and Komercijalna Banka, Podgorica was completed in November 2021.
‘Top
Employer’
for the 7th consecutive year.
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with best-in-class HR practises. The Bank was once again
recognised as a ‘Top Employer’ by the Dutch Top Employer
Institute for the 7th consecutive year, demonstrating a high
level of expertise and contribution in the areas from people
strategy, leadership, digitalization, talent acquisition and
development, performance management, sustainability, and
a lot more. The Bank will continue ensuring an even more
stimulating work environment in the future.
Continuing a longstanding
tradition of investing
in employees
Organisational culture
Organisational culture is an important driving force of
company development and success, that’s why the Group has
decided to take an active and comprehensive approach to
develop it. Measurement of the organisational culture gave a
roadmap on how to grow and further enhance constructive
organisational styles. This includes involving employees
from all backgrounds, areas, and levels in focus groups, and
provides in-depth insights on the actions that need to be taken
Employment – Hackathon
The strategic direction of the Bank defines employment of new
In first 10 months, the most often enrolled courses were from
areas of IT Development, Data Analytics & Science, Office
profiles needed on a Group level. As a trendsetter, the Bank
Productivity and Personal Development.
organised two NLB Hackathons (one for Data Science, and
second one for Open Finance) to recognise talents in its home
region and promote the Bank as a desirable employer.
Well-being & Health
Engagement of employees
A crucial part of success is the motivation and engagement of
employees. In 2021, a total of 72% of employees participated
in the survey.15 Compared to the year 2020, the percentage of
engaged employees (loyal and psychologically committed to
Creating a work environment
The Group is always committed to offering knowledge on
good health, creating a work environment that enables quality
interpersonal relationships, and promoting activities that
enhance the good health and satisfaction of employees.
the organisation) rose by 10% to 53%.
Figure 77: NLB Group Employee Engagement 2021
Engaged
Not engaged
Actively disengaged
Prepared to Tackle
Future Challenges
Promoting healthy habits and new
health and safety measures
During the pandemic, emphasis was placed on developing
healthy habits. Health trainings were organised to help
employees cope with mental side of new reality and
emphasise benefits of regular physical activity.
53%
36%
11%
The Group continued to make sure that prescribed protective
measures are followed and equipment (masks, gloves, and
disinfectants) was available to employees and clients. It also
encouraged working from home.
to ensure even higher engagement and success in the areas
of leadership, employee empowerment, and interpersonal
Various training activities to embrace changes
The Group strives for high quality and standards of a
cooperation.
Leadership development
Significant influence on employee satisfaction derives from
their working environment, and leaders on all levels have
a significant role in creating a productive atmosphere. The
modern learning organisation. Due to the rapidly changing
environment, the Group expanded its offer of trainings with
access to future skills topics, made training more accessible
and on demand, while also still offering classical channels of
training and workshops.
Group is actively developing leadership competencies of
senior management to align with the activities of changing
Trainings, e-learning
Due to COVID-19, most of the trainings were conducted online.
organisational culture. Ensuring the succession for
The emphasis of online programmes was focused on various
managerial positions is also of key importance throughout the
topics from the Banking & Financial area, Leadership &
Group and one of the strategic activities.
Management, Sales, IT, to Personal Development, Compliance
Developing talent
Among its employees, the Group identified talents in the
fields of leadership, professional, and young talents. They
are provided additional opportunities, knowledge, and skills
needed to manage and lead in challenges of the future, as
well as individual development activities.
Developing NLB Employer Brand
To attract top talent throughout the region, the Group has
identified the need to develop the Employer Brand actively.
The Group has done internal and external surveys, interviews,
and multiple focus groups to identify the relevant employer
value proposition.
and the Work Environment, and ESG & Social Responsibility.
Along with these areas, the Group also made substantial
investment in training employees in Data Analytics & Science
across the Group.
Online learning with access to 7,000+ courses
On 1 March, the Group enabled employees’ access to the
online learning platform Udemy for Business. The aim was to
empower employees over their own development and give
them opportunities to upskill or reskill, and be better prepared
for upcoming challenges.
15 NLB Banka, Beograd and Podgorica were exempt from the survey due to the
integration activities with Komercijalna Banka.
On average
32%
of the Group's employees
worked from home in the period
of pandemic.
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Remuneration system as a motivation for
engaged and committed employees
For an employee working in the companies within the Group, salary is composed of:
Fixed part
Determined according to the complexity of the work for which the
employee has concluded a contract of employment.
Variable part
Depends on the employee’s performance for reaching set goals.
Empoyees are awarded:
1.
2.
quarterly or half-yearly compensation and
annual rewards related to the business performance of the bank in which they work.
Performance assessment is done by the head of the employee’s organisational unit using a top-
down approach to evaluate the employee’s achievements in relation to goals set for a particular
assessment period (quarter or half-year). The goals are set according to the ‘SMART’ method,
meaning that they have to be specific, measurable, achievable, relevant, and time-bound.
Diversity Policy
Framework
The policy sets the framework in the area of diversity and representation of both genders in the Supervisory Board and
Management Board and the senior management. With the policy, the Bank also sets the framework for diversity with regards to
education, range of knowledge, skills and experience, age, gender, and international experience.
Objectives
• Cover an adequately wide range of knowledge, skills, and expert experience of its members, and be composed with regard to the
following criteria: experience, reputation, management of any conflicts of interest, independence, available time, and collective
suitability of the body as a whole.
• International experience of its members in different areas.
• Diversity as regards gender representation.
• Diversity as regards the age structure, which should reflect the age structure in the Bank to the largest extent possible.
The goals of the Policy shall also be reasonably applied to the provision of diversity of the wider management.
Table 35: Diversity - review of management bodies and senior management in 2021 and plan for 2022
Wide range of knowledge, skills
and professional experience
International experience of the
members in different areas
Age structure
Supervisory Board of NLB
Management Board of NLB
Senior Management of NLB
2021
Plan for 2022
2021
Plan for 2022
2021
Plan for 2022
High
High
20-30 = 0
30-40 = 0
40-50 = 1
50-60 = 8
60+ = 3
High
High
0
0
1
6
5
High
High
20-30 = 0
30-40 = 0
40-50 = 3
50-60 = 0
60+ = 0
High
High
High
High
Medium High
Medium High
0
0
5
1
0
20-30 = 1
30-40 = 5
40-50 = 19
50-60 = 13
60+ = 0
1
5
19
13
0
Share of women
42%
42%
0%
16.7%
45%
45%
Remuneration policy for members
of the Supervisory Board and
Management Board of NLB
Members of the Supervisory Board may receive remuneration
that is compliant with the relevant resolutions of the Bank’s
General Meeting.
Members of the Management Board receive remuneration
consisting of a fixed part of the salary and a variable part of
the salary. The variable part of remuneration is allocated and
paid in the form of cash and/or instruments.
Remuneration policy for employees
in NLB and in the Group
In 2021, a refreshed Remuneration Policy for employees in
NLB and in the Group was adopted where the basic principles
represent the framework for rewarding employees in NLB and
the Group. The remuneration policy defines fixed and variable
remuneration, the goal-setting system and performance
criteria (KPIs), and sets out the conditions for the allocation
and payment of the variable part of remuneration.
8,185
employees in the Group family.
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Corporate Governance
Corporate governance of the Bank is based
on legislation of the RoS, particularly (but not
exclusively) the provisions of the changed
Companies Act (ZGD-1) and the Banking Act
Rules and Procedures
Corporate governance of the Bank includes the processes
is designed jointly by the Management Board and the
Supervisory Board of the Bank. Therein are publicly disclosed
commitments to shareholders, clients, creditors, employees,
through which Bank objectives are set and pursued (directed
and other stakeholders as a whole, how the Bank will be
and controlled), and lately it is becoming an efficient way to
supervised and managed, as well as decision which corporate
(ZBan-3), the Decision of the BoS on Internal
channel investor-driven initiatives related to sustainability.
governance code the Bank should follow (https://www.nlb.si/
Governance, the Management Body and
the Adequate Internal Capital Assessment
Procedure for Banks and Savings Banks, the
Corporate governance with its principles identifies the
distribution of rights and responsibilities among different
stakeholders in the Bank (Management and Supervisory
Board, shareholders, creditors, auditors, regulators, and
corporate-governance). The Corporate Governance Policy of
NLB should be read together with the NLB Group Corporate
Governance Policy in which the corporate governance
principles and mechanisms of the Group members (NLB
relevant EBA Guidelines on internal governance,
other stakeholders), and include the rules and procedures for
excluded) are defined and governed.
the EBA Guidelines on the assessment of the
making decisions in corporate affairs. The most important
suitability of members of the management
body and key function holders, the EBA
Guidelines on remuneration practices, and
the EU regulations regarding ESG.
rules and procedures are:
Articles of Association of NLB
In accordance with the applicable Banking Act (ZBan-3) and
Companies Act (ZGD-1), the Articles of Association of NLB the
Bank has a two-tier governance system, according to which
the Bank is managed by the Management Board and its
operations are supervised by the Supervisory Board (https://
www.nlb.si/corporate-governance), while shareholders
exercise their rights on meetings of shareholders.
Corporate Governance Statement of NLB
Apart from the binding legal framework, the Bank also follows
NLB Group Code of Conduct
In the NLB Group Code of Conduct (Code), values, mission,
and core principles of conduct are defined together with
set guidelines to which the Group is committed. The Code
describes the values and the basic principles of ethical
business conduct that the Group respects, promotes, and
expects to be followed in the whole Group (https://www.nlb.si/
code-of-conduct). Operating with integrity and responsibility
is a key element of the Group’s corporate culture. It is
important to achieve business goals as well as the way to
achieve them. The Group demands that every employee,
regardless of their job or location of work and every other
stakeholder of the Group, complies with the highest standards
the Corporate Governance Code for Listed Companies (valid
of integrity. The key for achieving these standards is strong
since 1 January 2017). The Code defines the governance,
culture of compliance practiced by the Group.
management, and leadership principles based on the ‘comply
or explain’ principle of companies listed on the Slovenian
Remuneration Policy for the members
regulated market (https://www.ljse.si). Deviations from the
recommendations of the mentioned code are published in the
Corporate Governance Statement of NLB, which is adopted
by the NLB Supervisory Board. The mentioned statement
is prepared according to Article 70 (paragraph 5) of the
Companies Act (ZGD-1) and is part of the Business Report in
the NLB Group Annual Report. The mentioned statement is
also published on the Bank’s webpage (https://www.nlb.si/
corporate-governance), as well as on the webpage of the
Ljubljana Stock Exchange – SEOnet (https://seonet.ljse.si).
Corporate Governance Policy of the NLB and
NLB Group Corporate Governance Policy
The corporate governance framework of the Bank, being
the Corporate Governance Policy of NLB (November 2020),
of the Supervisory Board and
Management Board of NLB
In accordance with the fifth paragraph of Article 294a of the
Companies Act, the Bank publicly posted on its website the
Remuneration Policy for the Members of the Supervisory
Board of NLB and the Members of the Management Board
of NLB (version 1), which was adopted by the Supervisory
Board of NLB on 15 October 2021 and approved by the
General Meeting of Shareholders of NLB on its session on 16
December 2021 (https://www.nlb.si/corporate-governance).
The resolution was legitimately passed with the necessary
majority of the votes cast.
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Policy on the Provision of Diversity of the
Management Body and Senior Management
Policy on the Provision of Diversity of the Management Body
and Senior Management regarding selection of members
of the Supervisory Board, the Management Board and B-1
level was confirmed on General Meeting of Shareholders on
10 June 2019. With mentioned policy the Bank follows high
standards of adequate representation of both sexes in the
managing bodies.
In 2020 and January 2021, the Workers’ Council of NLB elected
and appointed employee representatives as members
of the Supervisory Board of NLB, thus four employee
representatives were appointed. As part of employee
participation in the Bank’s management, the appointment of
four representatives brings additional diversity at all levels,
including the achievement of gender quotas in the Bank’s
governing bodies, and employees’ representatives with their
diverse work experience will be able to contribute to better
employee involvement in governing bodies. The Supervisory
Board yearly follows the implementation of the goals set by
mentioned policy.
NLB Group Sustainability Governance Structure
NLB became the first bank in Slovenia to commit to the UN
Principles for Responsible Banking (September 2020). These
principles represent a single framework for a sustainable
banking industry and are aligned with the 2015 Paris Climate
Agreement and with the objectives of the UN Sustainable
Development Goals (UN SDGs) that cover three dimensions
of sustainability: economic, social, and environmental.
In that respect, the Bank upgraded the Corporate Social
Responsibility (CSR) activities with more consistent adherence
to the 2030 Agenda of the UN SDGs.
In 2021, however, the Group moved from raising awareness
to actively implementing sustainability elements into the
business model and established sustainable operations in
the Framework for Sustainable Operations of the NLB Group
(https://www.nlb.si/sustainability). The framework defines the
Bank’s corporate sustainability strategy, vision and mission,
commitment to the UN SDG, sustainable economic activities,
ESG risk management, sustainability governance structure,
responsible banking, and business ethics.
During the year, the Bank also gradually built mechanisms to
ESG factors and indirect economic factors are
assure very important and comprehensive steps in integrating
comprehensively recognised and managed according to
sustainability into banking operations, the so-called ESMS.
GRI (Global Reporting Initiative – Global Standards (GRI GS))
The ESMS is a set of policies, procedures, tools, and internal
standards. Key ESG information is published in the following
capacity to identify and manage a financial institution’s
chapters of this report or other related webpages:
exposure to the environmental and social risks of its clients/
investees. Significant changes in the lending process of the
Group are one of the most important consequences of the
Environment (E):
- In Sustainability chapter
introduction of the ESMS. The risk policies were upgraded to
- In separately published NLB Group Sustainability Report
follow ECB and EBA guidelines.
2021 published on the Bank’s webpage
- the chapter Risk Management, subchapter Incorporating
The Bank anchored ESMS at different levels within the Bank
ESG Risks
and the Group thus guaranteeing that it receives attention
- the chapter Statement of Management of Risk
from the highest decision-making bodies in the Bank
in Note 6 of the Financial part of the report
and in the Group members. With the establishment of the
Sustainability Committee in the fall of 2021, which is a new
advisory Body to the Management Board, the Bank built a
4-level NLB Group Sustainability Governance Structure, as
follows:
Supervisory
Board of the NLB
Sustainability
Committee
Social (S):
- In Human Resources chapter
- In the diversity and remuneration chapters in a separate
report on Pillar 3 Disclosures according to Basel Standards
Governance (G):
- In this chapter of report
- In the Corporate Governance Statement of NLB of this
report and on the Bank’s webpage https://www.nlb.si/
corporate-governance and on the webpage of the Ljubljana
Stock Exchange https://seonet.ljse.si
Sustainability
Team
Sustainability
working groups
More information is available on https://www.nlb.si/
nlb-sustainability-framework.pdf and in this report, in
Sustainability chapter.
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There were two General Meetings of Shareholders in 2021.
The shareholders of the Bank gathered on 36th General
Meeting on 14 June. Due to COVID-19 pandemic, for the first
time the General Meeting was hybrid, as it was held live and
The Supervisory Board
The Supervisory Board supervises the
online. The shareholders took note of the approved NLB
management of the Bank and its duty of diligent
Group Annual Report 2020, the Report of the Supervisory
Board of NLB on the results of the examination of the NLB
Group Annual Report 2020, and Information on the income
of members of the Management Board and Supervisory
Board of the Bank for the previous business year.
The shareholders decided on the allocation of distributable
profit for 2020. The distributable profit of the Bank as at 31
December 2020 was EUR 341,992,219.43.
and prudent conduct in line with powers defined
in Companies Act (ZGD-1) and according to
provisions of the Banking act (ZBan-3), other
regulations, and internal rules of the Bank (the
Articles of Association of NLB and Rules of
Procedures of the Supervisory Board of NLB).
In accordance with Articles of Association the
Supervisory Board consists of 12 members, of
The General Meeting of NLB granted discharge to the
which eight members represent the interests
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Bank’s Governing Bodies
The Bank’s corporate governance is based on a two-tier
system in which the Management Board manages the Bank,
while its daily operations are supervised by the Supervisory
Board.
General Meeting of Shareholders
Supervisory Board
Management Board
General Meeting of Shareholders
The shareholders exercise their rights related
members of the management and supervisory bodies for the
2020 financial year, adopted amendments and supplements
to the Articles of Association, and appointed Islam Osama
Zekry as a new member of the Supervisory Board.
At the 37th General Meeting of Shareholders that was
summoned for 16 December 2021, the shareholders decided
on additional allocation of distributable profit for 2020.
to the Bank’s operations at General Meetings.
The Bank paid out in three instalments a total of EUR 92.2
The Bank’s General Meeting passes decisions in
accordance with the legislation and the Bank’s
Articles of Association. Decisions adopted by the
million of dividends to the shareholders in 2021.
At the General Meeting, the shareholders also voted on
the Remuneration Policy for the Members of the Supervisory
General Meeting include, among others: adopt
Board of NLB and the Members of the Management Board
and amend the Articles of Association, use of
of NLB.
distributable profit, grant a discharge from liability
to the Management and Supervisory Board,
More information on the work of the General Meeting of the
Shareholders activities is available in Corporate Governance
changes to the Bank’s share capital, appoint and
Statement of NLB.
discharge members of the Supervisory Board,
remuneration of members of the Supervisory and
Management Board and authorisation regarding
the characteristics of issues of securities.
of shareholders, and four members represent
the interests of employees. Members of the
Supervisory Board of the Bank representing the
interests of shareholders are elected and recalled
by the Bank’s General Meeting from persons
proposed by shareholders or the Supervisory
Board of the Bank. Members of the Supervisory
Board of the Bank representing the interests
of employees are elected and recalled by the
Workers’ Council of the Bank. All Supervisory
Board members must be independent experts.
Number of members:
Diversity:
12 (8 are
representatives of
capital, while 4 are
representatives of
workers)
In SB 5 out of 12
members are female
(41.67%)
There were two changes in the composition of the Supervisory
Board in 2021. The Workers Council of the Bank elected
Tadeja Žbontar Rems as a member of the Supervisory Board
(representative of workers). Her term of office runs from
22 January 2021. Islam Osama Zekry was elected as a new
member of the Supervisory Board on the General Meeting of
Shareholders on 14 June 2021.
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113
At 31 December 2021, the Supervisory Board had the following members:
Representatives of capital
Representative of employees
Primož Karpe, M.Sc.
Chairman
Term of office: 2016-2020,
renewed term 2020-2024
Andreas Klingen
Deputy Chairman
Term of office: 2015-2019,
renewed term 2019-2023
Link to CV
Link to CV
Membership in NLB
Supervisory Board
committees:
• Nomination Committee
(Chairman)
Membership in NLB
Supervisory Board
committees:
• Nomination Committee
(Deputy Chairman)
• Audit Committee (Member)
• Operations and IT
• Risk Committee (Chairman)
• Operations and IT
Committee (Member)
Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• Angler d.o.o. - Director
David Eric Simon
Member
Term of office: 2016-2020,
renewed term 2020-2024
Link to CV
Membership in NLB
Supervisory Board
committees:
• Audit Committee
(Chairman)
• Risk Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• Jihlavan a.s. - Chairman
of the Supervisory Board
• Czech Aerospace industries
sro - Legal representative
• Central Europe Industry
Partners a.s. - Sole Member
of the Supervisory Board
Membership in management
bodies of related or
unrelated companies:
• Credit Bank of Moscow
- Member of the
Supervisory Board(i)
• Kyrgyz Investment and
Credit Bank CISC - Member
of the Board of Directors
• Nepi Rockcastle
plc - Member of the
Board of Directors
(i) Till 14 March 2022.
Islam Osama Zekry, Ph.D.
Member
Term of office:
2021-2025
Link to CV
Membership in NLB
Supervisory Board
committees:
• Operations and IT
Committee (Deputy
Chairman)
• Risk Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• CIB Housing association,
Egypt - President of the
Supervisory Board
• Egyptian AI Council
(Ministry of Communication
and Information
Technology) – Member of
the Supervisory Board
Shrenik Dhirajlal
Davda, M.Sc.
Member
Term of office: 2019-2023
Link to CV
Membership in NLB
Supervisory Board
committees:
• Risk Committee
(Deputy Chairman)
• Remuneration
Committee (Member)
• Audit Committee
(Deputy Chairman)
Membership in management
bodies of related or
unrelated companies(i):
• PJSC Ukrgasbank -
Independent Member of
the Supervisory Board
(i) Since 8 March 2022 also: IPSO,
UK - Lay Member of the Board.
Mark William Lane
Richards, M.Sc.
Member
Term of office: 2019-2023
Link to CV
Membership in NLB
Supervisory Board
committees:
• Operations and IT
Committee (Chairman)
• Remuneration Committee
(Deputy Chairman)
• Risk Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• Vencap International pic
Ukraine (UK) - Director
• BPL Global (Lloyds of
London insurance Broker)
- Non-Executive Director
• Sheffield Haworth Ltd -
Non-Executive Director
Gregor Rok Kastelic
Member
Term of office: 2019-2023
Verica Trstenjak, Ph.D.
Member
Term of office: 2020–2024
Bojana Šteblaj, M.Sc.
Member
Term of office: 2020–2024
Sergeja Kočar, M.Sc.
Member
Term of office: 2020–2024
Link to CV
Link to CV
Membership in NLB
Supervisory Board
committees:
• Nomination Committee
(Member)
• Remuneration
Membership in NLB
Supervisory Board
committees:
• Nomination Committee
(Member)
• Remuneration
Committee (Member)
Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• None
Membership in management
bodies of related or
unrelated companies:
• None
Janja Žabjek Dolinšek, M.Sc.
Member
Term of office: 2020–2024
Tadeja Žbontar Rems, M.Sc.
Member
Term of office: 2020–2024
Link to CV
Membership in NLB
Supervisory Board
committees:
• Operations and IT
Link to CV
Membership in NLB
Supervisory Board
committees:
• Operations and IT
Committee (Member)
Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• None
Membership in management
bodies of related or
unrelated companies:
• None
Further information about the work and composition of the
Link to CV
Link to CV
Supervisory Board is available in the chapter Corporate
Governance Statement of NLB.
Membership in NLB
Supervisory Board
committees:
• Remuneration Committee
(Chairman)
• Audit Committee (Member)
• Risk Committee (Member)
Membership in management
bodies of related or
unrelated companies:
• None
Membership in NLB
Supervisory Board
committees:
• Nomination Committee
(Member)
Membership in management
bodies of related or
unrelated companies:
• European Union
Agency for fundamental
rights – Member of the
Management Board
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Committees of the Supervisory Board
The Supervisory Board appoints committees that
Audit Committee
Audit Committee
Risk Committee
Risk Committee
prepare proposals for resolutions passed by the
Supervisory Board, ensures their implementation,
and performs other expert tasks. The Bank’s
Supervisory Board has five collective decision-
making and advisory committees, namely:
Nomination
Nomination
Committee
Committee
Remuneration
Remuneration
Committee
Committee
Operations and
Operations and
Information
Information
Technology (IT)
Technology (IT)
Committee
Committee
David Eric
Simon,
Chairman
Andreas
Klingen,
Chairman
Primož Karpe,
Chairman
Gregor Rok
Kastelic,
Chairman
Mark William
Lane Richards,
Chairman
Shrenik
Dhirajlal
Davda,
Deputy
Chairman
Shrenik
Dhirajlal
Davda,
Deputy
Chairman
Andreas
Klingen,
Deputy
Chairman
Mark William
Lane Richards,
Deputy
Chairman
Islam Osama
Zekry,
Deputy
Chairman
Primož Karpe,
Member
Islam Osama
Zekry,
Member
Verica
Trstenjak,
Member
Shrenik
Dhirajlal Davda,
Member
Andreas
Klingen,
Member
Gregor Rok
Kastelic,
Member
Mark William
Lane Richards,
Member
Bojana Šteblaj,
Member
Bojana Šteblaj,
Member
Primož Karpe,
Member
David Eric
Simon,
Member
Sergeja Kočar,
Member
Sergeja Kočar,
Member
Janja
Žabjek
Dolinšek,
Member
Further information about the work and composition of the
Committees of the Supervisory Board is available in the
chapter Corporate Governance Statement of NLB.
Gregor Rok
Kastelic,
Member
Tadeja
Žbontar Rems,
Member
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The Management Board
At the end of 2021, the composition of the Management Board was as follows16:
The Management Board represents the Bank
and manages its daily operations, independently
and at its own discretion, as provided for by the
applicable laws and the Articles of Association
of NLB. In accordance with the Articles of
Association, the Management Board has three
to seven members (the president and up to six
members) which are appointed and dismissed
by the Supervisory Board. The president
and members of the Management Board are
appointed for a five-year term of office and may
be reappointed or dismissed early in accordance
with the law and Articles of Association.
Number of members:
Mandate:
three members
five-year term
of office
The Supervisory Board of NLB and, member of the
Management Board and Chief Operating Officer (COO) Petr
Brunclík, agreed on the termination of office with effect on
30 June 2021. The decision was brought about by personal
reasons. As of 22 April 2021, his tasks were taken over by other
members of the NLB’s Management Board.
Further information about the work and composition of the
Management Board is available in the chapter Corporate
Governance Statement of NLB.
Andreas Burkhardt
CRO
Term of office: 2016-2021,
renewed term 2021-2026
Link to CV
Other important functions
and achievements:
• 20 years of experience in the
area of banking, especially in
the area of Central Europe.
Direct responsibility:
• Internal Audit
• Compliance and Integrity
• Global Risk and Credit Risk
– Corporate and Retail
• Workout and Legal Support
• Restructuring
• Evaluation and Control
• Financial Instruments Processing
• Corporate Customer Delivery
• Retail Banking Processing
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Board of Directors:
NLB Lease&Go
NLB Bank, Banja Luka
NLB Bank, Sarajevo
Archibald Kremser
CFO
Term of office: 2016-2021,
renewed term 2021-2026
Link to CV
Other important functions
and achievements:
• More than 21 years of experience
in the financial services
industry in Austria, CEE, and
SEE focusing on finance and
asset management, strategy,
and corporate development,
as well as performance
improvement assignments.
Direct responsibility:
• Financial Accounting
• Controlling
• Financial Markets
• Group Real Estate Management
• Group Steering
• IT Architecture
• IT Delivery
• Data Management
• IT Shared Service Centre
• NLB Group IT Security
Governance
• IT Infrastructure
• Procurement
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Board of
Directors:
NLB Banka, Podgorica
Komercijalna Banka, Beograd
Blaž Brodnjak
CEO & CMO
Term of office: 2016-2021,
renewed term 2021-2026
Link to CV
Other important functions
and achievements:
• More than 21 years of experience at
managerial positions on all levels
of international banking groups.
• Was a chairman or member
of the supervisory boards of 13
commercial banks in six countries,
three insurance companies in
three countries, leading asset
management company in Slovenia
and multinational production group.
Direct responsibility:
• Strategy and Business Development
• Legal and Secretariat
• Communication
• HR and Organisation Development
• Investment Banking and Custody
• Retail and Private Banking,
Corporate Banking
• Payment Processing
• Cash Processing
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Supervisory Board:
NLB Banka, Skopje
• Chairman of the Board of Directors:
NLB Banka, Prishtina
• Member of the Board of Directors:
Komercijalna Banka, Beograd
• President of the Association
of Banks in Slovenia
• President of the Board of
Governors: AmCham Slovenia
• Member of Executive Committee of
the Handball Federation of Slovenia
• Member of the Board of Directors:
Cedevita Olimpija (from
1 February 2022)
16 Further information is available in the chapter Events After the End of the 2021 Financial Year.
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Collective decision-making bodies
Different committees, commissions, boards, and working bodies may be appointed by the Management Board for execution of individual tasks within powers of the Management Board.
Corporate Credit Committee
Assets and Liabilities
Management Committee
of the NLB Group
NLB Operational Risk
Committee
The Change the Bank
Committee
The Group Real Estate
Management Committee
The Sales Committee
Private Individual Credit
Committee
Chairman: CRO
Chairman: CFO
Chairman: CRO
Chairman: CEO
Chairman: CFO
Chairman: Executive
Assistant to MB for CIB area
Chairman: Director of
Credit Risk – Retail
Number of members: 8
The Committee determines
credit ratings and makes
decisions on the reclassification
of clients and approves
commercial banking investment
transactions and limits that are
beyond the competencies of
the directors. The Committee
adopts decisions on investment
transactions in commercial
banking within the statutory
powers in the areas of corporate
banking in the Bank (all
companies, banks, and financial
institutions), operations with
clients in intensive care, and NPL.
As a rule, committee meetings
are convened once a week.
Number of members:
equal to the number of the
appointed members of
the Management Board
The Committee
monitors conditions in
the macroeconomic
environment and analyses
the balance, changes to
and trends in the assets
and liabilities of the Bank
and the Group companies,
drafts resolutions and
issues guidelines for
achieving the structure of
the Bank’s and the Group’s
balance sheet. Committee
meetings are generally
convened once a month.
Number of members: 16
The Committee
is responsible for
monitoring, guiding, and
supervising operational
risk management in the
Bank, and for transferring
this methodology to the
Group members. As a
rule, the Committee meets
once every two months.
Number of members:
equal to the number of the
appointed members of
the Management Board
The Committee is
responsible for adopting
decisions related to the
development portfolio with
the aim of transforming
the Bank and decisions
related to adopting the
development guidelines.
As a rule, the Committee
meetings are convened
once a month.
Number of members: 3
Number of members: 13
Number of members: 5
The Sales Committee
adopts decisions on
the management of the
range of products and
services and the relations
with the clients in the
area of sales. As a rule,
Committee meetings are
convened once a week.
The Committee decides
on the approval of loans
and other investment
proposals, the conditions
of which deviate from
standard banking products
and services, and which
represent additional risks
for the Bank. As a rule,
meetings are convened
when necessary.
The Committee is in
charge of giving opinions
on acquisition/purchase
price of real property and
additional investments
in real property provided
as collateral for NPL,
the selling price of own
real property, and the
acquisition/purchase
price for the real property
mortgaged in the sale
of receivables. As a rule,
Committee meetings are
convened once a week.
The Management Board also appointed working bodies that operate at a lower level:
Committee for New and Existing
Products
Group Real Estate Management
Sub Committee
Committee for Business IT
Architecture
Data Management Committee
Anti - Money Laundering
Commission
Corporate Customer Acceptability
Committee
Advisory bodies of the Bank’s Management Board
The Watch List Committee
The Risk Committee
NLB Group Non-Performing Assets Divestment
Committee
NLB Group Sustainability Committee
Chairman: CRO
Chairman: CRO
Chairman: Director of Workout and Legal Support
Chairman: CEO
Number of members: 7
Number of members: 12
Number of members: 7
Number of members: 17
The Watch List Committee is a body which monitors
the progress of activities for clients on the Watch list. As
a rule, committee meetings are convened quarterly.
The Risk Committee monitors and periodically
reviews matters related to risk and commercial
risk and prepares materials for the Management
Board to obtain decisions. As a rule, committee
meetings are convened quarterly.
The NLB Group Non-Performing Assets Divestment
Committee monitors operations of Non-Core Group
Members and issues opinions, recommendations,
and initiatives. The Committee shall discuss
the strategies regarding optimal management
of the Group members and shall monitor
realisation of their strategic objectives. As a rule,
committee meetings are convened quarterly.
Committee oversees the integration of the ESG
factors to the NLB Group business model in a
focused and coordinated way across the company
and issues opinions, recommendations, initiatives
and takes relevant decisions when needed. As a
rule, committee meetings are convened quarterly.
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NLB Group’s Corporate
Governance
As the parent bank, NLB implements the
corporate governance of the Group members
in compliance with EU and BoS legislation, the
The Group is governed:
In recent years, the concept of corporate governance of the
Group has been upgraded, and the role of members of the
Management Board of the Bank in management of other
In accordance with fundamental corporate rules
Group members strengthened. The target composition of
through various bodies of the Group members:
• By voting at general meetings of the Group members
• By exercising supervision through the supervisory bodies of
supervisory bodies in the Group members was established,
the functioning of the supervisory bodies optimised, and
the reporting and standards related to the harmonisation of
the Group members
operations simplified.
local legislation, and regulatory requirements
• With proposals for appointing the management of the
applicable to respective Group members,
while also considering internal rules, ECB
Guidelines, and other applicable regulations.
The roles, authorisations, and responsibilities of individual
bodies and organisational units, as well as the manner to
coordinate their operations to achieve the set business
goals, are stipulated comprehensively in the NLB Group
Corporate Governance Policy. In the Bank, the Group
Steering Department is the principal partner of the Bank’s
Management Board in the governance of strategic and non-
strategic Group companies, and is responsible for appropriate
corporate governance, the alignment of strategies, and the
objectives achieved by subsidiaries.
Group members
• With proposals for appointing representatives of the Bank to
supervisory bodies
• Through participation of Bank’s representatives in various
committees and commissions of the Group members
Through mechanisms that ensure efficient
business monitoring and governance, such as:
• Harmonisation of operations in accordance with the so-
called ‘competence line principle’
• NLB Group Management Board Meetings, NLB Group
Leadership meetings, NLB Group ALCO meetings, etc.
• Development activities carried out via cross-functional
working groups, group projects, competence centres,
centres of excellence, etc.
• Through additional supervision of NLB Group members
carried out by control functions (risk management, internal
audit, compliance, AML, information, and physical security)
and external supervising authorities (ECB, local regulators,
external auditors).
In line with strategic aspirations, the concept of ‘country
managers’ was fully introduced with the main goal to support
and steer the Group members, as well as to be a strong link
between Group members and the Bank. They also facilitate
best practice sharing on different levels. Stream coordinators
were introduced to address the facilitation of more in-depth
knowledge of competence lines and greater integration
between streams and the Group members, the increasing
transmission of current information, needs, and other
requirements from the Group members, and exploitation of
synergies at the Group level and coordination of regional
projects.
Legal and organisational structure of the banking
group, including a description of the internal
governance arrangements, the arrangements with
regard to close links and the arrangements regarding
the governance of subsidiaries are available on the
Bank’s webpage (http://www.nlbgroup.si/profile).
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Compliance and Integrity
The Group addresses the challenges of high
regulation and strict regulatory requirements
with a systematic approach to mitigating
compliance risks. It is important to ensure
that employees and decision-makers
know and understand the purpose and
objectives of the regulations. The Group is
continuously strengthening the compliance
function and diligence of its operations.
compliance risks are mitigated.
Group-wide ethics and
integrity standards
Within the framework of the programme of ensuring business
compliance, the Group also deals with the ethics and integrity
A culture of compliance is integrated into the day-to day
of the organisation. For that reason, all of the employees are
business of the Bank to support its operations, to contribute
included in yearly training and awareness-raising activities
to its strong internal control environment, and to ensure that
in the areas of general ethics, anticorruption, anti-money
laundering, information security, etc. The values of the Group,
embedded in the Group Code of Conduct, provide guidance
and principles of expected behaviour regarding ethical
conduct and require appropriate conduct from all employees
at any level of the organisation, including its contractors.
The regime on inside
information (MAR)
In line with the Market Abuse Regulation (MAR), and other
relevant regulations, the Bank has a system in place on the
level of the Bank and its entire Group for managing and
publicly disclosing inside information in a manner that enables
it to comply with the obligations related to inside information
identification and disclosure in accordance with the rules and
regulations applicable at any time. Also, the Bank has a system
in place implementing the market abuse prevention regime
in accordance with MAR to prevent insider trading, market
manipulation, and illegal disclosure of inside information.
537
new laws, draft laws, regulations,
and other information regarding
regulatory environment of the
Bank reviewed.
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Fraud prevention
and investigation
Physical / technical
security
AML/CTF
Business ethics and
corporate integrity
Privacy data
protection and
information security
Oversight,
monitoring, steering,
and managing the
Group compliance
function and
programme(i)
Identification,
assessment, and
management of
compliance, and
integrity risks at the
Bank and the
Group levels
The Compliance
and Integrity in the
Bank addresses the
following risk areas:
Regulatory compliance
Corruption prevention
Fit and proper
assessment
procedures (as part of
assessing reputation,
financial strength,
time availability, and
conflict of interests)
Conflict of interests,
gifts and hospitality
management
(i) Established by standards for compliance and integrity for the Group and implementation of monitoring by off-site data analysis and onsite visits.
Prevention of Money
Laundering and Terrorism
Financing and Financial
Sanctions Compliance
Information security and
personal data protection
The information security area, inter alia, focused on
implementation of measures for increasing the level of
information/cyber security, as well testing the cyber security
The Bank complies with national regulations on Anti-Money
resilience of information systems (pen-tests).
Laundering and Combating the Financing of Terrorism
(AML/CFT), including the European Banking Authority
Furthermore, in line with the plan, several internal
(EBA), BoS and other competent authorities’ guidelines and
assessments/compliance checks according to ISO/IEC 27001
standards. The RoS is a member of the EU, and thus subject
standard were carried out in 2021, including assessment
to the European AML/CFT Directives, the means by which
of information security at outsourcing providers. Special
the EU transposes the Financial Action Task Force (FATF)
obligatory e-trainings for all employees in the area of
recommendations throughout the EU. For the Bank, it is of
information security and social engineering were prepared
paramount importance to effectively mitigate the risk of
money laundering, financing of terrorism and breaches of
and executed all as part of prevention measures in this area.
financial sanctions. For these reasons, the rules, procedures,
The Bank runs its operations in line with GDPR requirements,
and technology in AML/CFT area are subject to strict and
including the retention and processing of personal data, dedicated
unified policies and standards. The same principles are also
applied for setting out the Bank’s framework on financial
sanctions. In the previous year, the Bank upgraded and
introduced further enhancements of AML governance in
line with directions set by the BoS. Through the system of
Data Privacy Officer, education, and training of employees. The
new Slovenian Personal Data Protection Act (ZVOP-2) was not
adopted in 2021 as expected. If necessary, further alignments will
be made when the national legislation is in place.
regular reporting and constant onsite and off-site control, the
headquarters effectively monitors the implementation and
Prevention
execution of standards throughout the Group.
The Bank regularly performs customer due diligence,
following the risk-based approach and, in the case of
enhanced risk, performs additional measures both in
Based on the assessment of compliance risks (so-called ECRA
– Enterprise Compliance Risk Assessment) the management of
the Bank and in particular Compliance and Integrity can plan its
activities; all with the aim to reduce or mitigate the compliance
and integrity risks. As part of compliance programme,
the segment of ‘Know your customer,’ as well as ongoing
Compliance and Integrity is also involved, inter alia, in risk
monitoring of the transactional activities. In the case of
assessments regarding new and changed products, fit and
detected deviations, also considering the AML/CTF indicators,
proper assessments for key function holders, outsourcing, and
the AML unit of the Bank ensures the review and, if required by
other changes materially affecting the Bank’s business.
AML/CFT legislation, reports the customers and transactions
to the competent Financial Intelligence Unit. In its Acceptance
As a standard Compliance function, several workshops
Policy, the Bank has also adopted additional measures to
and compulsory e-education on ethics, the prevention of
prevent onboarding of customers that do not correspond to its
corruption, conflicts of interest, protection of personal data,
risk appetite. The Bank also ensures a high level of awareness
AML/CTF, Information Security, Physical Security, and other
on the AML/CFT area and the area of financial sanctions with
relevant topics related to everyday work were prepared.
regular training of all employees of the Bank.
For all employees, yearly e-trainings are mandatory on
subjects such as prevention of insider trading and market
manipulation, ethics, anti-corruption, mitigation of conflict
of interests, personal data protection, information security,
and similar themes. The Group seeks to promote a corporate
culture that facilitates compliance, and by continuously
raising awareness, for example through communication via its
monthly compliance newsletter, detailing not only important
regulatory changes, but also current information and case
studies on different compliance and ethics topics.
169
compliance processes and other
reviews.
39
cases investigated.
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Internal Audit
Internal Audit reviews key risks in the Group’s
operations, advises management at all levels,
and deepens understanding of the Bank’s
operations. It provides independent and impartial
Internal Audit is the independent, objective, and advisory
control body responsible for a systematic and professional
assessment of the effectiveness of risk management
procedures, completeness, and functionality of internal
control systems, and the management of the Group
assurance regarding the management of key
operations on an ongoing basis. The Internal Audit provided
The highest standards
were followed
Internal Audit and other internal audit services in the Group
operate in accordance with the:
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risks, management of the Bank, operation
of internal controls, and thereby strengthens
and protects the value of the Bank.
69
planned and extraordinary
audits conducted in the Bank.
impartial assurance to the Management Board and
Supervisory Board on the management of risks in key areas,
i.e., cyber security, Linux and Windows server platforms,
restructuring – retail, ICAAP process, personal accounts,
outsourcing process, liquidity and credit risk management,
lending processes (loans to retail – overdraft facilities,
credit cards facilities, non-performing loans, leveraged
transactions), corporate real estate management, cash
management in branches, and others.
Performed audits
The Internal Audit performs its tasks and responsibilities on its
own discretion and in compliance with the annual audit plan
as approved by the Management Board and confirmed by the
Supervisory Board. Based on its internal methodology and
comprehensive risk analysis for 2021, the Internal Audit of NLB
conducted 43 audit assignments (of that, three audits on a
Group level), seven were postponed due to objective reasons.
Furthermore, auditors conducted 27 branch inspections,
one joint audit with the local auditors, and two internal audit
quality reviews, both in the Group. Auditors were also involved
in several strategic projects as advisor. The majority of the
recommendations given in 2021 were implemented within the
agreed deadlines.
Implementation of
uniform rules
Internal Audit increases efficiency. It focuses on monitoring
the implementation of audit recommendations, training and
education, updating the internal audit charter and manual,
advising management, and ensuring high quality and
professional operations of the internal audit function within
the Group. The Internal Audit also introduces uniform rules of
operation of the internal audit function and regularly monitors
the compliance with these rules within the Group.
International
Standards
for the
Professional
Practice
of Internal
Auditing
Banking Act (ZBan-3) or other
relevant laws which regulate the
operations of a Group member
Code of Ethics of
an Internal Auditor
Code of
Internal
Auditing
Principles
28
Internal Audit experts.
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Corporate Governance Statements
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Statement of Management’s
Responsibility
In accordance with the provisions of Article 134 (2nd
paragraph) of the Market and Financial Instruments Act17,
the Management Board hereby confirms the statements
made in the business report, which are in accordance with
the attached financial statements as at 31 December 2021, and
represent the actual and fair financial standing of the Bank
and the NLB Group as well as their operating results in the
year that ended 31 December 2021.
The Management Board confirms that the business report
gives a fair view of developments and operating results of the
Bank and the Group and their financial standings, including
a description of the key types of risks and Group companies
included in the consolidation are exposed as a whole.
Ljubljana, 11 April 2022
Management Board of NLB
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
17 (ZTFI-1, Official Gazzete of the RoS, No. 77/18, 17/19 – corr., 66/19 in 123/21).
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9. Corporate consultancy regarding capital structure,
operational strategy and related matters, and
consultancy and services in connection with corporate
mergers and acquisitions
10. Monetary intermediation on interbank markets
11. Advice on portfolio management
12. Safekeeping of securities and other related services
13. Credit rating services: collecting, analysing and
disseminating information regarding creditworthiness
14. Leasing of safe deposit boxes
15. Investment services and transactions, and ancillary
investment services in accordance with the Market and
Financial Instruments Act (ZTFI)
It may perform the following additional financial services,
pursuant to Article 6 of the ZBan-3:
1.
insurance agency service pursuant to the law governing
the insurance industry
4. custodian services according to the law governing
investment funds and management companies
5. credit brokerage for consumer and other types of loans
Authorisation to perform banking services is published on the
official web page of the BoS
(https://www.bsi.si/en/financial-stability/institutions-under-
supervision/banks-in-slovenia/8/nova-ljubljanska-banka-
dd-ljubljana).
Authorisation to Perform
Banking Services
In accordance with the provisions of Article 14 (1st paragraph)
of the Regulation on Books of Accounts and Annual Reports
of Banks and Savings Banks (Official Gazette of the RoS, No.
184/21) adopted by the BoS on the basis of the authorisation
from Article 109 of the Banking Act,18 (ZBan-3), NLB hereby
lists all types of financial services which, in accordance with
the authorisation of the BoS, took place during the period for
which the business report was prepared.
NLB has the authorisation to perform banking services
pursuant to Article 5 of the ZBan-3. Banking services are the
acceptance of deposits and other repayable funds from the
public and the granting of credits for its own account.
The bank has an authorisation to perform mutually
recognised and additional financial services.
It may perform the following mutually recognised financial
services, pursuant to Article 5 of the ZBan-3, namely:
1. Accepting deposits and other repayable funds from the
public
2. Granting of loans, including:
•
consumer loans
• mortgage loans
•
•
purchase of receivables with or without recourse
(factoring)
financing of commercial transactions, including export
financing based on the purchase of non-current non-
past-due receivables at a discount and without recourse,
secured by financial instruments (forfeiting)
4. Payment services
5.
Issuing and managing other payment instruments (e.g.
travellers’ cheques and bank bills of exchange), insofar
as such services are not included in the services referred
to in the previous point
6.
Issuing of guarantees and other commitments
7. Trading for own account or for the account of clients:
•
•
•
•
•
in money-market instruments
in foreign legal tender, including currency exchange
transactions
in standardized futures and options
in currency and interest-rate instruments
in transferable securities
8. Participation in securities issues and the provision of
associated services
18 Official Gazette of the RoS, No. 92/21 and 123/21.
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Corporate Governance
Statement of NLB
Pursuant to Article 70, paragraph 5, of the Companies
Act (ZGD-1)19 NLB hereby gives the following Corporate
Governance Statement of NLB as a part of the Business
Report of the NLB Group Annual Report 2021. The main
function of this statement is the prompt informing of investors
on the coherence of the Bank’s corporate governance system.
1. STATEMENT OF COMPLIANCE
WITH THE CORPORATE
GOVERNANCE CODE
standards of ethical business conduct, and serves as the
Corporate Governance of this annual report, as well as in the
guideline for all our relationships regardless of whether
Corporate Governance Policy of NLB (November 2020) published
it involves clients, competitors, business partners, state
on the NLB’s website (https://www.nlb.si/corporate-governance).
authorities, regulators, shareholders, or internal relationships
Information on the Diversity Policy and Remuneration Policy is also
between employees. At the same time, it is the basis of the
described in the Pillar 3 Disclosures according to Basel standards
Group values and basic principles of conduct which provide
(https://www.nlb.si/financial-reports).
specific conduct guidelines to its employees. The aim of this
approach is to ensure compliance with all applicable laws,
regulations, and standards. It is published on the Bank’s web
page (https://www.nlb.si/compliance-and-integrity).
Compliance with the aforementioned Code is explained in
the Corporate Governance Statement of NLB on ‘comply or
explain basis,’ in which the Bank provides explanation regarding
2. COMPLIANCE WITH THE
SLOVENIAN CORPORATE
GOVERNANCE CODE FOR
LISTED COMPANIES
deviations, reasoning for non-compliance with a certain
The Bank does not follow or partially implements or adhere
recommendation, or alternative practices performed mostly due
to different, in most cases stricter, banking regulations with
NLB, as a public company whose shares are listed on Prime
to stricter banking regulation. The statement refers to the Bank’s
regard to the following recommendations:
Market of the Ljubljana Stock Exchange, hereby discloses the
system of corporate governance from the beginning to the end of
compliance with the Slovenian Corporate Governance Code for
financial year, which also corresponds to the beginning and the
Listed Companies, adopted by the Ljubljana Stock Exchange
end of the calendar year (from 1 January until 31 December).
and Slovene Directors’ Association, on 27 October 2016 (valid
from 1 January 2017) as the code that applies for the bank.
Corporate Governance Statement of NLB is included in the
Information contained in this point represents a 'Statement of
Business Report of the NLB Group Annual Report (published
Compliance with the Corporate Governance Code' as defined in
on https://www.nlb.si/financial-reports), and is also published
Recommendation no. 8.5: In the reasoning of the proposals for the
General Meeting, NLB does not cite eventual conflicts of interest
because they are already included into the Fit & Proper procedure.
Recommendation no. 10.1: In assessing candidate’s eligibility
for a Supervisory Board member, statutory criteria are
Article 24 of the Ljubljana Stock Exchange Rules, dated 27 May
as a separate report on the Bank’s website under chapter
applied, however candidates don’t have a certificate
2020 (https://ljse.si/en/rules-and-regulations/252).
on Corporate Governance (https://www.nlb.si/corporate-
evidencing their specialised professional competence for
1.1. References to the Code on
Corporate Governance
governance), as well as on the website of the Ljubljana Stock
membership on a Supervisory Board, such as the Certificate
Exchange (https://seonet.ljse.si).
of the Slovenian Directors’ Association, or any other relevant
certificate. However, all strict conditions must be fulfilled
The recommended best corporate governance practices
NLB strives to increase the level of its business transparency
according to banking legislature.
contribute to a transparent and understandable corporate
and informs the shareholders and other expert community
governance system, which promotes both domestic and foreign
in line with Guidelines on Disclosure for Listed Companies
investor confidence, as well as the confidence of employees,
(Ljubljana Stock Exchange, 18 December 2020) on electronic
other stakeholders (regulators, suppliers, etc.), and the general
communications system of the Ljubljana Stock Exchange
public. A decision on which code the Bank will follow was made
(https://ljse.si/en/rules-and-regulations/252) and in line with
jointly by the Management Board and the Supervisory Board
Rules and Regulation of the Luxembourg Stock Exchange, as
Recommendation no. 12.2: The Rules of Procedure of the
Supervisory Board of NLB do not include the list of all types
of transactions for which the Management Board needs prior
approval of the Supervisory Board, but refer to Article 24 of the
Articles of Association. The mentioned rules also do not include
of the Bank by adopting the Corporate Governance Policy of
well as in line with Rules of the London Stock Exchange through
the Supervisory Board evaluation, education, and training
NLB (November 2020). In 2022, the Group will actively analyse
Regulatory News Services (RNS) of the London Stock Exchange.
of the members of the Supervisory Board. The mentioned
the changes made with a renewed version of the Slovenian
provisions are part of other internal documents or decisions of
Corporate Governance Code for Listed Companies, that will
The Corporate Governance system of the Bank and all
the managing bodies.
be the first used for preparation of the Corporate Governance
relevant information on Bank’s management that exceeds the
Statement of NLB for the business year 2022.
requirements of article 70 of the Companies Act (ZGD-1) are
published in the chapter of Risk Management of this annual
NLB also has its own corporate governance code. The NLB
report, where ESG Risk Management for the year 2021 is
Group Code of Conduct is a standardised document for all
described, as well as in the Sustainability chapter of this annual
Recommendation no. 12.3: The Rules of Procedure of the
Supervisory Board of NLB do not include the scope of topics
and timeframe to be respected by the Management Board in
its periodic reporting of the Supervisory Board. However, the
members of the Group that defines values, lays down the
report, and the NLB Group Sustainability Report 2021 (https://www.
scope of topics and time frames of periodic reporting to the
nlb.si/sustainability). Some other aspects about the functioning
Supervisory Board are included in annual Action Plan of the
19 The Companies Law (ZGD- 1; Official Gazette of the RoS, No. 65/09 and
of the Bank’s managing bodies are described in the chapter of
Supervisory Board and Articles of Association. Professional
consecutive changes).
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services of the Bank take care that timely information is
EUR 50,000 and does not exceed one third of his/her total
on the web page of the Ljubljana Stock Exchange
provided to the Supervisory Board.
remuneration for such year, ZBan-3 allows for an exception
(https://seonet.ljse.si).
Recommendation no. 15.3: NLB does not follow this
recommendation because the President of the Supervisory
from the requirement that a part of variable remuneration
must be paid in Instruments. On 15 October 2021, the
Supervisory Board of the bank adopted a new Remuneration
Board is at the same time President of the Nominations
Policy of Members of the Management Board of NLB and the
Committee.
Recommendation no. 17.1: In 2021, the Supervisory Board
members (representatives of capital and representatives
of workers) did not receive attendance fees, but received
Members of the Supervisory Board of NLB, which was also
adopted by the General Meeting of shareholders of the Bank
on 16 December 2021. The voting on mentioned policy by the
General Meeting of shareholders was consultative.
payments for performing their function based on the decisions
of the General Meeting of shareholders dated 21 October
Recommendation no. 25.3: The Bank does not follow the
recommendation on rotation of audit companies (at least once
2019 and 15 June 2020. Remuneration of the members of the
every seven years); however, the Bank complies with the Banking
Supervisory Board is regulated by the Remuneration Policy
Law (ZBan-3) that allows longer period. However, the audit firm
for the Members of the Supervisory Board of NLB and the
did replace the audit partner responsible for the audit of NLB
Members of the Management Board of NLB adopted by the
and the Group financial statements for year 2020 and 2021.
Supervisory Board on 15 October 2021 and by the General
Meeting of shareholders on 16 December 2021. The voting on
mentioned policy by the General Meeting of shareholders was
Recommendation no. 27.4: NLB draws up its financial
calendar which is published on Banks’ website (https://www.
consultative.
nlb.si/financial-calendar) and includes the date of the Annual
General Meeting, however, it doesn’t provide information on
Recommendations no. 21.4 to 21.6: In 2021, NLB did not pay
variable remuneration in the form of NLB’s shares to any
the dividend payment date. The dividend payment date is
announced in the publication of the Agenda and Proposed
member of the NLB Management Board, nor do stock option
Resolutions to be passed at the Annual General Meeting
3. MAIN FEATURES OF INTERNAL
CONTROL AND RISK
MANAGEMENT SYSTEMS IN
RELATION TO FINANCIAL
REPORTING
NLB is governed by the provisions of the Capital Requirements
Regulation (CRR), with amendment, together with all
applicable delegated acts, Banking Act (ZBan-3) and the
Regulation on Internal Governance Arrangements, the
Management Body and the Internal Capital Adequacy
Assessment Process for Banks and Savings Banks regulating,
and relevant EBA Guidelines, among other, the Bank’s
obligation to set up, maintain appropriate internal control,
and risk management systems. Due to the above, the NLB has
developed a steady and reliable internal governance system
encompassing the following:
• a clear organisational structure with precisely defined
transparent and consistent internal relations in the area of
plans and comparable financial instruments make up most
(https://www.nlb.si/general-meetings). The dividend payment
responsibility;
of the variable remuneration of any member of the NLB
date is determined based on KDD Operations Rules (Central
• effective risk management processes for identifying,
Management Board. In relation to the payment of variable
Securities Clearing Corporation).
measuring or assessing, managing, and monitoring risks,
including risk appetite, risk strategy, ICAAP, ILAAP, recovery
remuneration in ordinary or preference shares of NLB, or
share linked instruments, or equivalent non-cash instruments
NLB complies with the recent changes introduced by the
Banking Act (ZBan-3)20 that came into force on 23 June
2021. In accordance with point 3 of the second paragraph
Recommendation no. 29.2: The Bank performs the corporate
sustainability reporting according to Global Reporting
plan, and the reporting of risks to which the Group is
exposed or could be exposed in its operations;
Initiative Standards (GRI). Another institution suitable for
• incorporating main strategic risk guidelines into annual
independent external assessment of corporate sustainability
business plan review, budgeting process, and other relevant
of Article 190 of the ZBan-3, at least 50% of the variable
reporting will verify the correctness of information in the
decision-making;
remuneration of (among other) each member of the NLB
corporate sustainability report presumably for business year
• suitable internal control mechanisms that include
Management Board shall comprise ordinary or preference
2022 (this also includes GRI standards). However, the bank
appropriate administrative and accounting procedures;
shares of NLB, or share linked instruments, or equivalent
already adopted a decision that in 2022 an independent
• the appropriate remuneration policies and practices that
non-cash instruments (hereinafter collectively: Instruments).
external verification of the work of calculating the carbon
are in line with prudent and effective risk management, and
This requirement applies to both the non-deferred and the
footprint will be performed by renowned natural science and
thus promote risk management.
deferred part of variable remuneration (which are different
technology research institute in Slovenia.
from recommendations 21.4 and 21.6, which provide that
variable remuneration given as shares, as well as the
execution of stock options and any other rights to acquire
Recommendation no. 29.9: NLB does not publish the rules of
procedure of its bodies (Management Board and Supervisory
Internal control mechanisms
3.1.
Suitability of the internal control mechanisms are determined
by the independence, quality and validity of:
shares or be remunerated based on share price movements,
Board and its committees) on its website. However, each year
• the rules for and controls of the implementation of the
must not be made possible for at least three years after such
the Bank discloses the composition, competences, and work of
Bank's organisational procedures, business procedures,
rights were awarded). When the variable remuneration of an
its managing bodies in the Corporate Governance Statement of
and work procedures (internal controls) and
individual Identified Staff for a particular year does not exceed
NLB and publishes it in the NLB Group Annual Report, on Bank's
• the internal control functions and departments (internal
website (https://www.nlb.si/corporate-governance), as well as
control functions).
20 Banking Act (ZBan-3; Official Gazette of the RS, No 92/21).
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Internal Controls
3.1.1.
In August 2021, the Bank upgraded a system of internal
the completeness, functionality, and adequacy of the
operations. In addition to that, the Internal Audit carries out
internal control system. Internal audit is completely
regular control of the quality of operation of the other internal
controls by adopting a revised Policy Internal Control System
independent of both the first line and the second-level
audit departments in the Group and takes care of constant
that is harmonized with international regulatory requirements
control functions.
development of the internal auditing function.
and standards (CRR, Banking Act, BIS, COSO, regulation of the
BoS, EBA et al). A system of internal controls means a set of
In the event of deficiencies, irregularities of breaches
Pursuant to the provisions of the law, the Bank has organised
rules, procedures, and organisational structures aimed at:
identified in the process of implementation of internal
the internal audit as an independent organisational unit,
• ensuring efficient and consistent implementation of NLB's
controls the breaches are discussed at the Operational
primary responsible to the Supervisory Board of the NLB and
strategies and operations,
Risk Committee (which is collective decision-making body
secondary to the Management Board of the Bank.
• ensuring efficient and consistent processes and procedures
appointed by the Management Board of the Bank that is
in the NLB,
established for execution of individual tasks within powers
The Supervisory Board of NLB must issue its approval of the
• protection of the value of NLB's assets,
of the Management Board of the Bank). The mentioned
appointment, remuneration, and dismissal to the Head of the
• ensuring the reliability and integrity of accounting and
committee adopts decisions so that appropriate actions are
Internal Audit, which ensures their independence and so, the
management data and information,
taken and informs the Management Board of the Bank about
independence of the work of the Internal Audit.
• ensuring the operation and operation of the NLB in
deficiencies and actions taken on that behalf.
accordance with all applicable rules and regulations.
The system of internal controls in NLB is designed to ensure
Internal Control Functions
3.1.2.
The internal control functions are part of the system of the
b) The Risk Management Function
The Risk Management Function is organised according to the
Charter of the Risk Management Function of NLB adopted by the
that for each key risk there is a process or other measure to
internal governance in the Bank. Internal control functions
Management Board, in agreement with the Supervisory Board
reduce or manage that risk and that process or measure is
include:
effective for that purpose.
The aforementioned policy introduces a new description of
a) The Internal Audit Function
The Internal Audit function is organised according to
of NLB. The Charter on Functioning of the Risk Management
Function of NLB is the framework document on understanding
and role of the risk management function; it defines the
purpose, validity, and method of operation, as well as the
the three lines of defence, namely:
the Charter on the Internal Audit of NLB adopted by the
authorisations and responsibilities of the risk management
1. First-level (or line) controls are implemented into business
Management Board on 13 November 2018 (and supplemented
function according to the requirements of the Banking Act (ZBan-
and non-business organisational units (OU): controls
on 13 August 2019), to which the Supervisory Board of NLB
3) and the Regulation on Internal Management Arrangements,
are designed to ensure the proper implementation
gave its approval (30 November 2018 and 6 September 2019).
Management Body, and Internal Capital Adequacy Assessment
of business activities, i.e., the Bank's operations.
Process for Banks and Savings Banks.
Supervision in each individual business area is carried
The Charter of the Internal Audit of NLB is the umbrella
out by the competent organisational unit (OU), which is
document about the understanding and role of the
The risk management function represents an important part
responsible for the implementation of procedures;
Internal Audit in NLB, which defines the purpose, powers,
of overall management and governance system in the Group.
responsibilities, and tasks of the Internal Audit in line with
This function in NLB is organised within the Risk stream,
2. Second-level controls are divided between Risk
the International Standards for the Professional Practice of
covered by the member of the Management Board in charge
Management and Compliance control functions
Internal Auditing. The Charter lays down the position of the
of risk (Chief risk officer - CRO). The risk stream covers the
(including AML/CTF and Information security
Internal Audit in the organisation, including the nature of
following organisational units:
management) that carry out independent controls and
the relationship between the functional responsibility of the
• Global Risk
supervision over the operation of the first line of defence.
Head of the Internal Audit to the supervisory body, grants
The business compliance function sees to the supervision
authorisations to internal auditors for accessing records,
of the correct implementation and ensuring compliance
employees, premises, and equipment relevant for performing
• Credit Risk – Corporate
• Credit Risk - Retail
• Evaluation and Control
(line controls) with the regulatory framework, its
their tasks, and defines the area and activities of the Internal
• Restructuring
consistent interpretation at the Group level, as well as
Audit.
to identifying, assessing, preventing, and monitoring
• Work-out and Legal support
overall risks to compliance and integrity in the NLB. The
The Management Board has set up an independent internal
The risk management function is performed by the Global
risk management function directs risk management and
audit function which gives assurances and advice about risk
Risk. In accordance with the competences, authorisations,
control by defining policies and methodologies for risk
management, internal controls system, and management of
and responsibilities Global Risk is represented by its General
assessment and management;
the NLB. The mission and the principal task of the Internal
Manager. The Global Risk is in functional and organisational
3. The third level of controls is performed by the internal
audit function, which assesses and regularly checks
issuing objective assurances based on risk assessment,
with consultancy and deep understanding of the Bank’s
are adopted and where potential conflict of interest may
arise with the risk management function. The head of the risk
Audit is to consolidate and secure the value of the Bank by
terms separate from other functions where business decisions
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management function has direct access to the Management
Compliance and Integrity is an organisational unit of the Bank,
source applications, and archiving pursuant to the laws and
Board of the NLB and at the same time unhindered and
placed directly under the Bank’s Management Board in the
internal regulations. Furthermore, the policy precisely defines
independent access to the Supervisory Board of NLB and the
organisational structure. The Bank adopted Integrity and
primary accounting controls, performed in the scope of
Risk Committee of the Supervisory Board of the NLB.
Compliance Policy of the NLB and the NLB Group (Version 1,
analytical bookkeeping, and secondary accounting controls,
In members of the Group, the risk management function is
the activities of the compliance function in the Bank. Separate
accounting controls. With an efficient mechanism of controls
organised according to the local legislation, considering
policies regulate different areas which are organised within
in accounting reporting, NLB ensures:
the bases for set-up, organisation, and activities in risk
the Compliance and Integrity in NLB. Supervision over
• A reliable decision-making and operation support system
management in the members, as defined in the document
compliance of operations is within the competence of the
• Accurate, complete, and timely accounting data, the
'Risk Management Standards in the NLB Group.' The
Compliance and Integrity. This enables the Compliance
resulting accounting, and other reports of the Bank
described standards on risk management provide the
and Integrity to operate independently from other Bank’s
• Compliance with legal and other requirements.
December 2016), which regulates the method and scope of
i.e., checking the efficiency of implementation of primary
members of the Group the bases with which they have to align
departments.
their organisation, strategic risk-taking guidelines, internal
Financial statements of NLB and consolidated financial
policies, methodologies, and reporting system.
The director of Compliance and Integrity does not perform
statements of the NLB Group are audited by the auditing
any other function at the Bank that could possibly lead to
company Ernst & Young d.o.o., Ljubljana. The mentioned
Risk management and control is performed through a
conflict of interests. To ensure his independence, the director
auditing company was appointed as the auditor of NLB by the
clear organisational structure with defined roles and
reports to the Management Board and to a specific member
General Meeting of shareholders of the Bank for the financial
responsibilities. The organisation and delineation of
of the Bank’s Management Board responsible for compliance
years 2018 to 2022 (27 June 2018). The auditing company
competencies is designed to prevent conflicts of interest,
area (including information security, personal data protection,
verifies the business report in accordance with the provisions
ensure a transparent and documented decision-making
and AML/CTF functions), which additionally ensures
of the Companies Act (ZGD-1).
process, subject to an appropriate upward and downward
independence of operation of the Compliance and Integrity.
flow of information. The competence line Risk Management in
NLB, encompassing several professional areas, is in charge
As information security, AML/CTF, and Group AML functions
for formulating and controlling the Group’s risk management
are organised within Compliance and Integrity, CISO for NLB,
policies, setting limits, overseeing the harmonisation, regular
Group CISO, DPO (Data Protection Officer), head of AML/
monitoring of risk exposures, and limits based on centralised
CTF area for NLB and head of Group AML are ensured full
reporting at the Group level.
independence through equal reporting lines as the director
of Compliance and Integrity and have direct access and
The Group puts great emphasis on the risk culture and
separate reporting line to the Bank’s Supervisory Board.
awareness across the entire Group. Group’s Risk Management
Following NLB’s model, the compliance function has been
framework is forward-looking and tailored to its business
established in the core members of the Group, as well based
model and corresponding risk profile.
on the Group standards for the compliance and integrity area.
Through specific binding standards in the area of compliance
c) The Compliance Function, Information Security Function,
and integrity, there is a harmonised system of standards and
and AML/CTF Function
Compliance and Integrity in the Group in its role as internal
practices in the area of compliance and integrity in place in
the entire NLB Group, in core and non-core members.
control function performs control activities with respect to the
main following areas:
• anti-money laundering and counter-terrorist financing
(separately for NLB and the Group)
• information security and data protection,
• personal data protection,
• regulatory compliance management,
• prevention of fraud and internal investigations,
• security,
• development of compliance risk methodologies, and setting
and monitoring ethics and integrity standards;
• harmonisation of policies and practices within the Group
(Competence line Compliance and Integrity).
3.2. Financial reporting
With the aim of ensuring appropriate financial reporting
procedures, NLB pursues the adopted Policy on Accounting
Controls. The accounting controls are provided through
the operation of the complete accounting function with
the purpose of ensuring quality and reliable accounting
information, and thereby accurate and timely financial
reporting. The principal identified risks in this area are
managed with an appropriate system of authorisations, a
segregation of duties, compliance with accounting rules,
documenting of all business events, a custody system, posting
on the day of a business event, in-built control mechanisms in
4. INFORMATION ON POINT 4,
PARAGRAPH 5, OF THE ARTICLE
70 OF THE ZGD-1 regarding
points 3, 4, 6, 8, and 9 of
paragraph 6 of the same article
Explanation regarding significant direct and indirect
ownership of the company’s securities in the sense of
achieving a qualified stake as determined by the act
regulating acquisitions
(Point 3 of the sixth paragraph of Article 70 of the ZGD-1)
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MB Statement
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Significant direct and indirect ownership of the company’s
Notwithstanding the provision mentioned in the first
applicable laws and Articles of Association. Each member
securities in terms of achieving a qualifying holding as defined
paragraph, approval for the transfer of shares is not required
of the Management Board of the Bank may prematurely
in the Takeovers Act (as of 31 December 2021).
if the acquirer of the shares has acquired them for the account
resign her/his term of office with a period of notice of three
Shareholder
Number of
shares
Percentage
of shares
Nature of
ownership
of third parties, so that it is not entitled to exercise voting rights
months. A written notice shall be delivered to the Chair of
from these shares at its sole discretion, while at the same time
the Supervisory Board of the Bank. The notice term may
committing to the Bank, it will not exercise voting rights on
be shorter than three months if requested by the resigning
RoS
5,000,001
25.00
shares
the basis of the instructions of an individual third party for
member of the Management Board of the Bank in his/her
Brandes Investment
Partners, L.P.(i)
EBRD(i)
Schroders plc(i), (ii)
/
/
/
>5 and <10 GDRs
>5 and <10 GDRs
>5 and <10 GDRs
(i) In the form of GDRs.
(ii) Further information is available in chapter Events after the end of the 2021
financial year.
More information on the Bank’s Share Capital is available on
the website: https://www.nlb.si/shares.
Explanation regarding the holders of securities that carry
special control rights
(Point 4 of the sixth paragraph of Article 70 of the ZGD-1)
The Bank did not issue any securities carrying special
controlling rights.
Explanation regarding restrictions related to voting rights, in
particular: (i) restrictions of voting rights to a certain stake or
certain number of votes, (ii) deadlines for executing voting
rights, and (iii) agreements in which, based on the company’s
cooperation, the financial rights arising from securities are
separated from the rights of ownership of such securities
(Point 6 of the sixth paragraph of Article 70 of the ZGD-1)
The shares of the Bank are freely transferable, subject to the
provisions of the Articles of Association of the Bank which
require the approval of the Supervisory Board, namely for the
transfer of shares of the Bank by which the acquirer, together
with the shares held by the holder before such an acquisition
and the shares held by third parties for the account of the
whose account it has acquired the shares if, together with the
notice and is subject to the approval of the Supervisory Board
instructions for voting, it does not receive a written guarantee
of the Bank.
from that person that this person has shares for his own
account, and that this person is not, directly or indirectly, a
A member of the Bank’s Management Board may only be
holder of more than 25% of the Bank’s voting rights.
a person who fulfils the legally prescribed conditions for a
The acquirer who exceeds the share of 25% of the Bank’s
who obtained a licence from the BoS or the ECB, if executing
shares with voting rights and does not require the issuance
the competences and tasks from Item (e) of paragraph 1 of
of approval for the transfer of shares, or does not receive the
Article 4 of Regulation (EU) no. 1024/2013 for the performance
approval of the Bank, may exercise the voting right from 25%
of the function of a bank’s management board member
of the shares with the voting rights.
under the law regulating banking. The Bank assesses
management board member under the law on banking and
every candidate following the Bank’s Policy governing the
There are no restrictions other than those mentioned and
Fit & Proper assessment prior to the appointment.
those that are regulatory.
Explanation on the (i) company’s rules on appointment or
The Supervisory Board
The Supervisory Board of the Bank consists of a total of 12
replacement of members of the management or supervisory
members, of which eight members represent the interests
bodies, and (ii) changes to company’s Articles of Association
of shareholders and four members represent the interests
(Point 8 of the sixth paragraph of Article 70 of the ZGD-1)
of employees. Members representing the interests of
shareholders shall be elected and recalled by the Bank’s
The appointment or replacement of members of the
General Meeting from persons proposed by shareholders or
management or supervisory bodies
the Supervisory Board of the Bank and members representing
the interests of employees shall be elected and recalled by
The Management Board
The Management Board of the Bank is comprised of three
the Workers’ Council of the Bank. Members of the Supervisory
Board representing the interests of shareholders are elected
to seven members, one of whom is appointed President
by an ordinary majority of votes cast by shareholders.
of the Management Board of the Bank. The number of
Management Board members is determined by a resolution
The term of office of the Supervisory Board members
of the Bank’s Supervisory Board. The President and other
commences on the day their appointment enters into force
members of the Management Board are appointed and
(start of term of office) and lasts up until the end of the Bank's
recalled by the Supervisory Board of the Bank; the President
Annual General Meeting of shareholders which decides on the
of the Management Board may propose to the Chair of
use of accumulated profit for the fourth business year since
acquirer, exceeds the share of 25% of the Bank’s voting
the Supervisory Board of the Bank to appoint or recall
the start of their term of office, unless otherwise stipulated
shares. Approval for the transfer of shares is issued by the
an individual member or the remaining members of the
at the time of appointment of individual members. In this
Supervisory Board.
Management Board of the Bank.
context, the first year is deemed the business year in which the
members of the Supervisory Board of the Bank started their
The Bank rejects the request for approval of transfer shares
The President and members of the Management Board
term of office.
if the acquirer, together with the shares held by the acquirer
shall be appointed for a period of five years and may be
before the acquisition and the shares held by third parties for
re-appointed for another term of office. The President
The general meeting of the Bank may dismiss an individual
the account of the acquirer, exceeded the 25% share of the
and members of the Management Board may be recalled
or all members of the Supervisory Board (representatives of
Contents
Bank with voting rights, increased by one share.
prior to the expiry of their term of office in accordance with
shareholders) even before the expiration of their term of office.
129
A resolution on a dismissal shall be valid if adopted with at
treasury shares are disposed of for the purpose of paying the
of Association stipulate a larger majority or other conditions
least a three-quarter majority of all votes cast.
variable part of remuneration to the employees of NLB in the
(adoption and amendments of the Articles of Association,
form of NLB’s shares. In 2021, however, NLB did not purchase
issue of convertible bonds or other equity securities, exclusion
The Supervisory Board of the Bank shall at its first meeting
treasury shares.
after an appointment elect from among its members a Chair
and at least one Deputy Chair of the Supervisory Board of
the Bank. A member representing the interests of employees
cannot be elected Chair or Deputy Chair of the Supervisory
Board of the Bank. All the supervisory board members shall
be independent professionals as defined by the Articles of
Association.
A member of the Bank’s Supervisory Board may only be a
person who fulfils the legally prescribed conditions for a
supervisory board member under the law on banking and
who obtained a licence from the BoS or the ECB, if executing
the competences and tasks from Item (e) of paragraph 1 of
Article 4 of Regulation (EU) no. 1024/2013 for the performance
of the function of a bank’s supervisory board member
under the law regulating banking. The Bank assesses every
candidate following the Bank’s Policy governing Fit & Proper
assessment prior to the appointment.
Amendments to Articles of Association
A qualified majority of at least 75% (seventy-five per cent)
of the votes cast by shareholders at the general meeting of
the Bank’s shareholders is required for the adoption of any
amendments of the Articles of Association.
Explanation regarding the authorisation of the members
of the management, particularly authorisations to issue or
purchase own shares
5.
INFORMATION ON THE WORK
AND KEY POWERS OF THE
SHAREHOLDERS’ MEETING
AND OF ITS KEY POWERS,
AND A DESCRIPTION OF
SHAREHOLDERS’ RIGHTS
AND THE METHOD OF THEIR
EXERCISING
Competences of the Bank’s General Meeting are stipulated in
the Companies Act (ZGD-1), the Banking Act (ZBan-3), and the
Articles of Association of the Bank. The General Meeting is a
body of the Bank through which shareholders exercise their
rights, which include among others: decisions on corporate
changes (amendments of the Articles of Association, increase
or decrease of share capital) and legal restructuring (mergers,
acquisitions), adopting decisions on all statutory issues
in respect of appointing and discharging members of the
Supervisory Board (representatives of shareholders), and
appointment of an auditor, distribution decisions (appropriation
of distributable profit), and the granting of discharge from
liability to the Management and Supervisory Board.
of pre-emptive right of existing shareholders, decrease
in share capital, the status restructuring of the Bank, or
liquidation of the Bank and discharge of Supervisory Board
members).
The shareholders have the right to participate at the general
meeting of the Bank, the voting right, pre-emptive right to
subscribe for new shares in case of share capital increase, the
right to profit participation (dividends), and the right to a share
in surplus in the event of liquidation or bankruptcy of the Bank
and the right to be informed.
According to Article 296 of the Companies Act, NLB informs
shareholders on their rights as shareholders in an Information
on the Rights of Shareholders that is published among the
documents for convocation of each General Meeting (i.e., on
expansion of the agenda, proposals by shareholders, voting
proposals by shareholders, and the shareholders right to be
informed).
There were two General Meetings of shareholders in 2021. The
shareholders of NLB gathered on 36th General Meeting on
14 June 2021. Due to COVID-19 pandemic, for the first time the
General Meeting was hybrid, as it was held live and online. The
shareholders took note of the approved NLB Group Annual
Report 2020, the Report of the Supervisory Board of NLB
on the results of the examination of the NLB Group Annual
Report 2020, and Information on the income of members of
the Management Board and Supervisory Board of NLB for the
(Point 9 of the sixth paragraph of Article 70 of the ZGD-1)
The General Meeting is convened by the Management Board.
previous business year.
With the aim of ensuring NLB treasury shares for the payment
of variable part of the remuneration to the employees
of NLB in the form of NLB shares, the General Meeting
of shareholders of NLB on 10 June 2019, authorised the
The General Meeting may be convened by the Supervisory
Board in cases where the Management Board fails to convene
the General Meeting or where a convocation is necessary to
ensure unhindered operations of the Bank. The Supervisory
Board may amend the agenda of the General Meeting
Management Board for redeeming treasury shares in the
convened in line with the bylaws.
period of 36 months from the adoption of the resolution at the
The shareholders decided on the allocation of distributable
profit for 2020. The distributable profit of NLB as of 31
December 2020 was EUR 341,992,219.43. Distributable profit in
the amount of EUR 24,800,000.00 was about to be paid to the
shareholders as dividends in two instalments. In accordance
with the recommendation of the ECB, the Regulation of the
General Meeting. The authorisation is valid for acquiring up
As a rule, the General Meeting of the Bank shall be convened
BoS and adopted resolution of the General Meeting the first
to 36,542 NLB treasury shares, while the total percentage of
at the registered office of the Bank, yet it may also be
instalment of dividends in the total amount of EUR 12 million
shares acquired based on this authorisation, together with
convened at another venue specified by the convenor. The
was paid on 22 June 2021 (EUR 0.60 per share), while the
the treasury shares already in possession of NLB, may not
Management Board may stipulate that shareholders may
second instalment of dividends in the total amount of EUR 12.8
exceed 10% of NLB share capital (2,000,000 shares). When
attend or vote before or at the General Meeting by electronic
million (EUR 0.64 per share) was paid on 18 October 2021.
disposing its treasury shares which NLB acquired based
means without physical presence. The General Meeting of
on this authorisation, the pre-emptive right of the existing
shareholders shall adopt resolutions by simple majority of the
The General Meeting of NLB granted discharge to the
shareholders to acquire shares is excluded in full in case
votes cast, unless the applicable laws or the Bank’s Articles
members of the Management Board and Supervisory
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130
Board for the 2020 financial year and adopted amendments
Andreas Burkhardt, CRO, and Petr Brunclík, COO, since the
the Group, the internal control system organisation, and
and supplements to the Articles of Association of NLB and
Supervisory Board reappointed the president and members
gives consent to the Annual Plan of the Internal Audit and
appointed Islam Osama Zekry as a new member of the
of the Supervisory Board (Blaž Brodnjak as the CEO, Archibald
to financial transactions defined in Articles of Association.
Supervisory Board.
Kremser as the CFO, and Andreas Burkhardt as the CRO of
The Supervisory Board acts in accordance with the highest
NLB) on its session on 12 November 2020.
At the 37th General Meeting of shareholders on 16 December 2021,
the shareholders decided on additional allocation of distributable
On 21 April 2021, the Supervisory Board of NLB and Petr
profit for 2020, as the BoS's decision restricting the payment of
Brunclík agreed on the termination of office that went into
dividends expired at the end of September 2021. Therefore, an
effect on 30 June 2021. As at 22 April 2021, his tasks were taken
additional EUR 67.4 million of distributable profit (EUR 3.37 per
over by other members of the NLB Management Board.
share) was paid to the shareholders on 24 December 2021.
NLB paid out a total of EUR 92.2 million as dividends (or 4.61
EUR per share) to shareholders in 2021 (EUR 12 million on 22
Material changes that occurred in the Management Board
after the end of the business year 2021 are described in special
statement at the end of this Corporate Governance Statement
June, EUR 12.8 million on 18 October and EUR 67.4 million on
of NLB.
24 December), thereby reaffirming NLB Group's stable and
successful business operations and strong capital position.
At the General Meeting, the shareholders also voted on
the Remuneration Policy for the Members of the Supervisory
Board of NLB and the Members of the Management Board of
NLB required by the latest amendments to the Companies Act,
applicable to all the companies whose securities are traded
on an organised market. In the future, NLB will put it forward
to vote at the General Meeting upon any material amendment
or at least every four years.
6. INFORMATION ABOUT THE
COMPOSITION AND WORK
OF THE MANAGEMENT AND
SUPERVISORY BODY AND ITS
COMMITTEES
6.1. The Management Board
Composition of the Management Board
The Management Board is the decision-making and
representation body of the Bank. It manages the company, makes
business decisions autonomously and independently, adopts
the development strategy, ensures sound and effective risk
management, acts with the highest professional integrity, protects
Work of the Management Board
In 2021, the Management Board continued to work on the
implementation of the NLB Group Strategy. The very solid
financial results of NLB Group in 2021 enabled the Bank to pay
out a total of EUR 92.2 million as dividends to the shareholders
in 2021 (EUR 12 million on 22 June, EUR 12.8 million on 18 October,
and EUR 67.4 million on 24 December), thereby reaffirming
NLB Group's stable and successful business operations and
strong capital position. Combining these dividend pay-outs,
privatisation proceeds, and the residual value of the RoS,
NLB has fully repaid the amount it received for the 2013
recapitalisation. After successful acquisition of Komercijalna
Banka, Beograd in December 2020, the Management Board
immediately started working on its harmonisation with NLB
Group's standards. The Management Board worked on
intensive digitalisation and emphasis on top quality user
experience, as well as a commitment to sustainable operations
and development. The Management Board worked on a
commitment to sustainable operations and development and
implementation of the ESG factors and their inclusion in the
NLB Group business model. All year long, the Management
Board took all necessary actions in order to lower the impact
and consequences of COVID-19 epidemic in the Group.
A detailed information on composition and the amount of
remuneration of the Management Board can be found in
Appendices C.1 and C.3 of this statement.
business secrets, and is held accountable for the legality of the
Bank’s operations within the limits set by the relevant regulations.
6.2. The Supervisory Board
In accordance with the two-tier governance system,
ethical standards of management, considering the prevention
of conflicts of interest. The Supervisory Board performs its
tasks in accordance with the provisions of the applicable
legislation governing the operations of banks and companies,
the Bank’s Articles of Association, and its Rules of Procedure
of the Supervisory Board of NLB. The Supervisory Board may
engage legal and other consultants and institutions required
by itself or its committees to perform their tasks.
Composition of the Supervisory Board
In accordance with changes made to the Articles of
Association of NLB (June 2020) that enabled workers’
participation in the Bank’s management bodies, the
Supervisory Board consists of 12 members, out of which eight
are representatives of the capital, and four are employee
representatives (elected and appointed by the Workers
Council of NLB).
At the beginning of 2021, the Supervisory Board of NLB
consisted of 11 members, of which eight were representatives
of shareholders (in addition to Primož Karpe, President and
Andreas Klingen, Deputy members were also Mark William
Lane Richards, Shrenik Dhirajlal Davda, Peter Groznik, David
Eric Simon, Gregor Rok Kastelic, and Verica Trstenjak), and
three were representatives of employees (Sergeja Kočar,
Bojana Šteblaj, and Janja Žabjek Dolinšek). In January 2021,
however, the Workers Council of NLB elected Tadeja Žbontar
Rems as a member of the Supervisory Board of the NLB – the
representative of the workers. With the mentioned election,
the composition of the Supervisory Board was complete.
Because the term of office of member of the Supervisory
Board Peter Groznik expired in the middle of the year, the
General Meeting of shareholders on 14 June 2021 elected Islam
Osama Zekry as a new member of the Supervisory Board.
Statement of Independence of the Members of the
Supervisory Board
In accordance with the Article 20 of the Articles of
Association of the NLB all Supervisory Board, members
must be independent experts. Persons representing the
interests of employees in the Supervisory Board of the Bank
At the beginning of 2021, the Management Board of the Bank
Management Board related to the Banks’ business policy
employment relationship with the Bank upon fulfilling certain
consisted of Blaž Brodnjak, CEO, Archibald Kremser, CFO,
and financial plan, approves the strategy of the Bank and
terms and conditions.
the Bank’s Supervisory Board issues approvals to the
are considered independent despite the existence of an
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A statement of independence, in which they declare
• NLB Group Risk Appetite; NLB Group Risk Strategy; Regular
• The Nomination Committee
themselves on their meeting of the criteria of conflict of
risk reports for NLB and NLB Group; Outcome of the
• The Remuneration Committee
interest, is provided by a candidate for a function of a member
Pragmatic SREP 2020; NLB Group Recovery Plan for 2021;
• The Operations and IT Committee
of the Supervisory Board, upon each change that would
Report on the Top 50 groups of clients by exposure in the
mean change of his/her independence status once yearly.
NLB Group, Restructuring TOP 20; Revised ILAAP – Internal
Committees are composed of at least three members of the
It is published on the Bank’s webpage (https://www.nlb.si/
liquidity adequacy process; Revised ICAAP – Internal
Supervisory Board. The Worker’s Council can nominate one
corporate-governance).
Capital Adequacy Process; Reputation Risk Management;
Supervisory Board member – a representative of the workers
Foreclosed Strategy for 2021 – 2025;
into each committee. The member of the Committee may only
Work of the Supervisory Board
In 2021, the Supervisory Board met at seven regular and
• Internal Audit’s Annual Report for 2020; Internal Audit
be appointed from among the members of the Supervisory
Plan (2022 & long - term plan, Action Plan for Compliance
Board. The term of office of Chair, the Deputy Chair, and
12 correspondence sessions. Upon receiving reports from
&Integrity for 2022; Regular periodic reports on Internal
members of the Committee should not exceed their term of
its committees, the Supervisory Board acquainted itself or
Audit; Compliance and Security, and on Information Security
office as Supervisory Board members. The responsibilities of
adopted the following most important decisions:
Assurance in NLB;
committees are defined in Rules of Procedure of the particular
• NLB Group Strategy Implementation Progress Report;
• Reports on the Documents received from the BoS and the
Committee of the Supervisory Board of NLB.
• Annual NLB Group Report for 2020; Report of the
ECB; Reports on the implementation of the requirements
Supervisory Board of NLB on the Results of Examining the
of the BoS and ECB and on the implementation of the
Composition of the aforementioned Committees in 2021 is
Annual NLB Group Report for 2020; Corporate Governance
requirements;
described in detail in the Appendix C.2 of this statement.
Statement of NLB; Risk Management Statement of NLB;
• Renovation of Internal Act on Internal Controls System; Rules
Annual Report of Internal Audit for 2020; Comprehensive
and Procedures for the Sustainability Committee; Review of
Opinion of the Internal Audit for 2020;
the Diversity Policy; New Remuneration Policy for employees
6.3.1. The Audit Committee of the Supervisory Board of NLB
The Audit Committee monitors and prepares draft resolutions
• The Corporate Social Responsibility Report for 2020;
for the NLB and the NLB Group; The Remuneration Policy
for the Supervisory Board on accounting reporting, internal
The NLB Group Sustainability Programme; ESC Internal
of the Members of Supervisory Board of NLB and the
control and risk management, internal audit, compliance, and
Documentary Framework (Lending Policies); NLB Group
Management Board of NLB;
external audit, and as well monitors the implementation of
Sustainability Framework; Confirmation of Pillar III
• Investment Relations periodic Reports; NLB Workers’
regulatory measures.
disclosures of the NLB Group for 2020;
Council Report;
• Proposals to convene the regular General Meeting of
• Implementation of IT Strategy; Data Centres in the NLB
shareholders for 14 June 2021 and extraordinary meeting for
Group; Strategy update; IT Security KPI’s update; Status of IT
16 December 2021;
• Information on the Supervisory Board election; Membership
in the committees of the Supervisory Board; Conflict of
interest Management; Information of departure of the
member of the Management Board; Self-assessment of
the collective suitability of the members of the Supervisory
Board; Supervisory Board self-assessment and Action
– periodic Reports; Cor Banking System Consolidation;
• Consent to legal transactions with MIGA, Washington,
Serbia Merger Scenarios; Information on Project Matthew;
Expected sale of a subsidiary bank; large exposures,
sale of receivables, write-offs of claims, approvals of
transactions with persons in special relations with the Bank;
establishment of new companies in Serbia and Macedonia,
Plan; Achievements of the goals of the Management Board
etc.
in 2020; Annual self-assessment of employees performing
special work; Information on award of variable part of
salary of the members of the Management Board and
employees performing special work; Future setup of the
Governing Body; Fit & Proper assessment for candidates for
membership of the Supervisory Board – representatives of
employees;
Composition and the amount of remuneration of the
Supervisory Board members is described in the Appendices
C.2 and C.4 of this statement.
6.3. The Supervisory Board Committees
All five Committees for the Supervisory Board function as
• Internal audit
• Compliance of operations
• Appointments of the Director of Global Risk and the Director
consulting bodies of the Supervisory Board of NLB and
• External audit
of Compliance & Integrity and their performance;
discuss the material and proposals of Management Board
• NLB Group Financial Plan 2021 and financial projections
of NLB for the Supervisory Board meetings related to a
2022-2025; Interim Reports on the NLB Group Operations;
particular area. The Supervisory Board has the following
Benchmark analysis of the NLB Group; NLB Group Budget
committees.
2022 and Financial Projections 2023 – 2025; Information on
cost optimisation;
• The Audit Committee
• The Risk Committee
At the end of 2021, the composition of the committee was
as follows: David Eric Simon (Chairman), Shrenik Dhirajlal
Davda (Deputy Chairman), Primož Karpe, Gregor Rok
Kastelic (members). Changes in membership of the committee
that occurred during the year are reflected in the chart on
Supervisory Board Committees (C4 below).
The Audit Committee’s tasks are defined by relevant law, the
Bank’s Articles of Association, Rules of Procedure of the Audit
Committee of the Supervisory Board of NLB, resolutions of
the Supervisory Board and other regulations, from which the
Committee especially monitors and prepares proposals of
resolutions for the Supervisory Board for the area:
• Accounting and financial reporting
• Internal control and risk management
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There were seven regular sessions and three correspondence
• NLB Group Recovery plan for 2021
There were seven regular sessions and one correspondent
sessions of the Audit Committee in 2021. The following is a
• NLB Group Non-performing Exposure and Foreclosed
session of the Nomination Committee in 2021. The following
summary of key topics considered by the Audit Committee:
Assets Strategy for 2020 -2024 and semi-annual
is a summary of key topics considered by the Nomination
• NLB Group 2020 Annual Report, Overall Opinion of Internal
implementation reports
Committee:
Audit for 2020; Corporate Governance Statement of NLB;
• Reputation risk management – management mechanisms
• The Supervisory Board election process and candidate
Statement on Management of Risk of the NLB, NLB Group
• Information on Pillar III Disclosures of the NLB Group
selection; Bases for the Fit & Proper assessments of
on Sustainable Operations in 2020;
for 2020; and Acknowledgement of quarterly Pillar III
candidates; The suitability matrix – the self-assessment of the
• Regular interim reports on the operations of the NLB Group,
Disclosures
collective suitability of the Members of the Supervisory Board;
Business Performance Indicatory for NLB and NLB Group,
• Quarterly Information on status of information security in
• The Management Board expansion process; New
quarterly Internal Audit Reports, Compliance and Integrity
NLB and NLB Group
organisational structure;
Reports, Reports on Information security assurance in NLB;
• Report on Top 50 groups of clients by exposure in the NLB
• Review of the Diversity Policy; Rules and Procedures for the
• Audit Plan 2021, Internal Audit Plan (2022 & long-term), Action
Group; Report on Top 20 largest restructuring cases
selection of candidates.
Plan for Compliance and Integrity for 2022;
• Initiation of procurement process for selection of statutory
• Regular reports on overdue material recommendations
auditor for financial years from 2023 onwards; Auditing of
6.3.4. The Remuneration Committee of the
of the Internal Audit; Reports on the documents received
the electronic (ESEF) format of financial statements
Supervisory Board of NLB
from the BoS and ECB and on the implementation of the
• Issuing subordinated Tier 2 bonds
The Remuneration Committee carries out expert and
requirements of the BoS and ECB; Policy of the Internal
• Proposals for the issuance of prior consent of the
independent assessments of the remuneration policies and
Controls System; Rules of Procedure of the NLB Group
Supervisory Board of NLB for a legal transaction based
practices and formulates initiatives for measures related
Sustainable Committee;
on which the Bank’s total exposure to individual client or
to improving the management of the Bank’s risks, capital,
• Performance assessment of the Director of the Compliance
a group of related clients would reach or exceed 10% of
and liquidity; prepares proposals for remuneration-related
and Integrity and the Director of the Internal Audit;
the Bank’s eligible capital; consents to early repayments;
decisions of the Supervisory Board; and supervises the
• Self-assessment of the Audit Committee.
approval of overdraft on business account of a client and
remuneration of senior management performing the risk
final write-offs of receivables
management and compliance functions.
6.3.2. The Risk Committee of the Supervisory Board of NLB
The Risk Committee monitors and drafts resolutions for the
Supervisory Board in all risk areas relevant to the Bank’s
• Report on the material court proceedings for NLB and NLB
Group members
At the end of 2021, the composition of the committee was as
follows: Gregor Rok Kastelic (Chairman), Mark William Lane
operations. It is consulted on the Group’s current and future risk
6.3.3. The Nomination Committee of the
Richards (Deputy Chairman), Shrenik Dhirajlal Davda, Sergeja
appetite, the corresponding risk profile and risk management
Supervisory Board of NLB
Kočar, and Bojana Šteblaj (members). Changes in membership
strategy, and helps carry out control over senior management
The Nomination Committee drafts proposed resolutions for
of the committee that occurred during the year are reflected in
concerning implementation of the risk management strategy.
the Supervisory Board concerning the appointment and
the chart on Supervisory Board Committees (C3 below).
dismissal of the Management Board members; recommends
At the end of 2021, the composition of the committee was as
candidates for Supervisory Board members; recommends
There were four regular and five correspondence sessions
follows: Andreas Klingen (Chairman), Shrenik Dhirajlal Davda
to the Supervisory Board the dismissal of members of
of the Remuneration Committee in 2021. The following is a
(Deputy Chairman), Islam Osama Zekry, Mark William Lane
the Management Board and the Supervisory Board
summary of key topics considered by the Remuneration
Richards, Gregor Rok Kastelic, David Eric Simon (members).
(representatives of capital); prepares the content of executive
Committee:
Changes in membership of the committee that occurred
employment contracts for the President and members of
• Annual self-assessment of employees performing special
during the year are reflected in the chart on Supervisory
the Management Board; evaluates the performance of the
work in accordance with the Remuneration Policy;
Board Committees (C4 below).
Management Board and the Supervisory Board; and assesses
• Realisation of goals of Management Board of NLB for 2020
the knowledge, skills, and experience of individual members
and proposal for goals for 2021;
There were five regular sessions of the Risk Committee in 2021.
of the Management Board and Supervisory Board and the
• Information on the award of variable part of salary to
Following is a summary of key topics considered by the Risk
bodies as a whole.
Committee:
members of the Management Board and employees
performing special work in control function for the year
• Statement of Management of Risk of the NLB
At the end of 2021, the composition of the committee was as
2020;
• NLB Group Risk Appetite
follows: Primož Karpe (Chairman), Andreas Klingen (Deputy
• Proposal for the payment of the non-deferred part of the
• Regular quarterly risk reports of NLB and the NLB Group
Chairman), Verica Trstenjak, Sergeja Kočar, Bojana Šteblaj
variable pay for 2019 and payment of the deferred variable
• NLB Group Risk Strategy;
(members). Changes in membership of the committee
part of salary for 2016 and 2017 for the Bank's Management
• Internal liquidity adequacy process (ILAAP), The Internal
that occurred during the year are reflected in the chart on
Board;
Capital Adequacy Assessment Process (ICAAP) in NLB Group
Supervisory Board Committees (C4 below).
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• Proposal of new Remuneration Policy of members of
Supervisory Board of NLB and members of the Management
Implementation and the results achieved by the diversity
the Supervisory Board of NLB and members of the
Board of NLB (for the Supervisory Board members the policy
policy during the reporting period:
Management Board of NLB.
is based on previously adopted resolutions of the General
Meeting) that was changed due to recent amendments to
6.3.5. The Operations and IT Committee of
the Companies Act (ZGD-1), and is to be followed by all the
a) The Supervisory Board
We estimate that the goals for 2021 were achieved, as the
the Supervisory Board of NLB
companies whose securities are traded on the regulated
members of the Supervisory Board as a whole met at a high
The Committee shall monitor and prepare draft resolutions
market.
for the Supervisory Board, whereby the main tasks that it
performs are the following: monitors the implementation of
the IT Strategy, Information Security Strategy, and Operations
policy is published on the NLB website (https://www.nlb.si/
in 2022. It is also estimated that the representation of women is
In accordance with the Companies Act (ZGD-1) mentioned
international experience in various fields; which is maintained
level the requirements related to the set of knowledge, skills,
professional experience, and requirements related to relevant
Strategy; monitors key operations and IT KPI’s and service
quality indicators; monitors key operations and IT projects
and initiatives; monitors operating risks in the area of
Operations, IT and Security; monitors the recommendations
for ensuring and increasing the level of information/cyber
security issued by CISO, addresses the report on potential
violations, events, and incidents in the area of IT security;
and monitors the Target Operating Model implementation in
the areas of IT, the Security Operating System, Competence
Centre, and Operations.
At the end of 2021, the composition of the committee was as
follows: Mark William Lane Richards (Chairman), Islam Osama
Zekry (Deputy Chairman), Andreas Klingen, Primož Karpe,
Tadeja Žbontar Rems, Janja Žabjek Dolinšek (members).
There were five sessions of the Operations and IT Committee
2021. The Operations and IT Committee acknowledged itself
with:
• IT Strategy progress update; IT Strategy implementation
activities
• Cash Processing Optimisation update; Cost optimisation
update
• Report on further progress of the Leveraging Information
Capital project
• New digital platform DEMO; Information on projects
• KB IT Security update; GCC Belgrade – status of activities
and plan
• Date centres in Belgrade; Proof on concept on Core Banking
System; Consolidation of the Core Banking System
• Budgeting Group activities
6.4. Remuneration Policy for the Members of the
Supervisory Board of NLB and Members
of the Management Board of NLB
corporate-governance), together with the date and voting
42% of the share, and it is planned in this amount for 2022.
results. Remuneration of the members of the Management
Board and the members of the Supervisory Board for 2021 can
Regarding the age structure, it is also considered appropriate,
be found in Appendices C3 and C.4 of this statement and in
as the members of the Supervisory Board are represented
the chapter on the Related Party Transactions of this annual
in the age groups from 40 to 60+, which is also planned for
report (Financial report).
7. DESCRIPTION POLICY ON THE
PROVISION OF DIVERSITY OF
THE MANAGEMENT BODY AND
SENIOR MANAGEMENT
2022, with a slight increase in the share of members in the age
group above 60 years (from 3 members to 5).
b) The Management Board
We estimate that the goals for 2021 have been achieved as the
members of the Management Board as a whole meet at a high
level the requirements related to the set of knowledge, skills,
professional experience, and requirements related to relevant
international experience in various fields; this is also planned
Policy on the Provision of Diversity of the Management Body
for 2022.
and Senior Management was adopted by the General Meeting
of shareholders on 10 June 2019. With mentioned Policy, NLB
defines target diversity pursued with respect to adequate
representation of members of the Management Board and
the Supervisory Board and Senior Management from the
perspective of education, range of knowledge, skills and
experience, age, gender, and international experience, as
appropriate for the NLB with regard to its characteristics.
The Bank implements the principles of this policy through other
policies and procedures, namely Policy on the selection of
suitable candidates for members of the Supervisory Board and
the Policy on the selection of suitable candidates for members
of the Management Board, as well as procedures of the
There were no women represented in the Management
Board in 2021, however, the plan for 2022 was that the share of
women would increase to 16.7% or one woman was expected
to be represented among the members of the Management
Board. As stated below this goal was realised already in
January 2022.
Regarding the age structure, in 2021 all members of the
Management Board were in the age group of 40 to 50,
however, in 2022 with additional members elected to the
Management Board caused that the representation of
this class increased (from 3 to 5), and one member of the
Management Board will move to the age group from 50 to 60
Nomination Committee of the Supervisory Board. Key criteria for
years.
the selection of candidates were supplemented by criteria that
include experience, reputation, management of potential conflict
of interests, independence, time availability, and conditions for
achieving collective suitability of the Supervisory Board.
c) Senior Management
For 2021, we estimate that the goals were achieved, as
senior management at a high level met the requirements
relating to the range of knowledge, skills, and professional
experience. Regarding the requirements related to
international experience in various fields, it is estimated
The General Meeting of shareholders on 16 December 2021
Mentioned diversity policy is periodically reviewed by the
adopted the Remuneration Policy of the members of the
Nomination Committee of the Supervisory Board.
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134
that senior management has largely relevant international
December 2020) NLB hereby states that the following changes
user experience. Also, the fact that the bank is implementing
experience, which is planned to the same extent in 2022. It is
occurred between the end of accounting period up to the
its commitment to sustainable operations and development,
also estimated that 45% of women in senior management
publication of this statement.
appropriate and will be maintained as such in 2022.
which all require and will require also in the future even more
comprehensive, coordinated, and efficient management, both
On 20 January 2022, the Supervisory Board appointed three
of individual business areas and the Group as a whole, as well
Regarding the age structure, it is also considered appropriate,
new members to the Management Board, namely Hedvika
as exploitation of all the synergies within the Group.
as senior management in the age structure is very dispersed
Usenik, Antonio Argir, and Andrej Lasič. They all come from
and is thus represented in all age groups from 20 to 60 years,
NLB or the Group, have extensive experience and proven
The Bank's Management Board, supplemented with three new
which is maintained in the same ratio in 2022.
value creating a track record. All three of them are currently
members, is properly equipped for this challenge and offers
Additional information on the framework, objectives, and
Usenik for Retail and Private Banking, Antonio Argir for the
competencies. A five-year term of office for the new members
chart with set goals of the Diversity Policy can be found in the
NLB Group, and Andrej Lasič for Corporate and Investment
will start after they have obtained a licence of the banking
executive assistants to the NLB Management Board: Hedvika
the best combination of various knowledge, experience, and
chapter Human Resources of this annual report.
Banking.
regulator, so until then they will continue to perform the
functions of executive assistants to the Management Board.
Statement on changes that occurred between the end of
The reasons that the Supervisory Board adopted a decision
accounting period up to the publication of this statement
to enlarge the Management Board from three to six
Ljubljana, 11 April 2022
In accordance with Guidelines on Disclosure for Listed
Komercijalna Banka, Beograd, that the Group's strategy also
Companies, Point 6.3.2 (Ljubljana Stock Exchange, 18
focuses on intensive digitalisation and emphasis on top quality
members are the fact that NLB has successfully acquired the
Supervisory Board of NLB
Management Board of NLB
Primož Karpe
Chairman
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
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Table 36: Composition of Management in financial year 2021 (C.1)
Name and Surname
Position held
(President, Member)
Area of work
covered within the
Management Board
First appointment to
the position
Conclusion of the
position/term of
office
Citizenship
Year of birth
Qualification
Professional profile
Blaž Brodnjak
President
CEO
6 July 2016
6 July 2026
Slovene
1974
MBA
Banking/Finance
Membership in supervisory
bodies in companies not
related to the company
Banks' Association
of Slovenia,
AMCham Slovenia,
Handball Federation
of Slovenia
Andreas Burkhardt
Member
Archibald Kremser
Member
Petr Brunclík
Member
CRO
CFO
COO
18 September 2013
6 July 2026
31 July 2013
6 July 2026
German
Austrian
18 May 2020
30 June 2021
Czech
1971
1971
1979
MBA
MBA
MSc
Banking/Finance
Banking/Finance
Information
technologies and
applied informatics
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Gender
Citizenship
Year of birth Qualification
Professional
profile
Independence
under Article 23 of
the Code (YES/NO)
Existence of
conflict of
interest, in the
business year
(YES/NO)
Membership in
supervisory bodies in
other companies or
institutions
Table 37: Composition of Supervisory Board and Committees in financial year 2021 (C.2)
Name and
Surname
Position held
(Chairman,
Deputy
Chairman,
Member)
First
appointment to
the position
Conclusion of
the position /
term of office
Representative
of the company's
capital structure /
employees
Primož Karpe
Chairman
10 February
2016
2024
Andreas
Klingen
Deputy
Chairman
22 June 2015
2023
David Eric
Simon
Member
4 August 2016
2024
Peter Groznik
Member
8 September
2017
14 June 2021
Mark William
Lane Richards
Member
10 June 2019
2023
Shrenik
Dhirajlal
Davda
Gregor Rok
Kastelic
Verica
Trstenjak
Member
10 June 2019
2023
Member
10 June 2019
2023
Member
15 June 2020
2024
Sergeja Kočar Member
17 June 2020
2024
Bojana Šteblaj Member
17 June 2020
2024
Janja Žabjek
Dolinšek
Member
20 November
2020
2024
Tadeja Žbontar
Rems
Member
22 January 2021 2025
Islam Osama
Zekry
Member
14 June 2021
2025
(i) Till 14 March 2022.
(ii) Since 8 March also: IPSO, UK.
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company's
capital structure
Representative
of the company’s
employees
Representative
of the company’s
employees
Representative
of the company’s
employees
Representative
of the company’s
employees
Representative
of the company's
capital structure
Attendance at
SB session in
regard to the
total number
of SB session
(for example
5/7) applicable
on his/her
mandate
7/7
7/7
male
Slovene
1970
MSc
Banking/
Finance
male
German
1964
University
Degree
Banking/
Finance
7/7
male
British
1948
Higher
National
Diploma in
Business
Studies
3/3
male
Slovene
1971
PhD
Banking/
Finance
Finance,
industry,
investment
banking
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
male
British
1966
MSc
Banking/
Finance
YES
male
British
1960
MSc
Finance
YES
male
Slovene
1968
MSc
Banking/
Finance
female
Slovene
1962
PhD
Law
YES
YES
female
Slovene
1968
MSc
Management
YES
female
Slovene
1962
MSc
Management
YES
female
Slovene
1957
MSc
female
Slovene
1957
MSc
YES
YES
YES
YES
YES
YES
4/4
male
Egyptian
1977
PhD
IT
IT
IT
YES
Angler d.o.o.
Kyrgyz Investment
and Credit Bank
CISC, Credit Bank
of Moscow(i), Nepi
Rockcastle plc
Jihlavan a.s., Czech
Aerospace industries
sro, Central Europe
Industry Partners a.s.
MSIN d.o.o., Ljubljana,
CETIS d.d., Ljubljana
BPL Global (Lloyds
of London insurance
Broker), Sheffield
Haworth Ltd, Vencap
International pic
Ukraine (UK)
PJSC Ukrgasbank(ii)
EU Agency for
Fundamental
Rights, Vienna
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
YES
NO
CIB Housing
association,
Egypt, Egyptian AI
Council (Ministry
of Communication
and Information
Technology)
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Name and Surname
Membership in committees (audit,
nominal, income committee, etc.)
First appointment to the position
Conclusion of the position/term of
office
Chairman/Deputy Chairman/
Member
Attendance at sessions of SB's
Committees in regard to the total
number of SB's session (applicable
on his/her mandate)
Nomination Committee
19 February 2016
Nomination Committee
6 October 2017
14 June 2021
Shrenik Dhirajlal Davda
Remuneration Committee
Gregor Rok Kastelic
Remuneration Committee
Mark William Lane Richards
Remuneration Committee
Peter Groznik
Bojana Šteblaj
Sergeja Kočar
Primož Karpe
Andreas Klingen
Peter Groznik
Verica Trstenjak
Sergeja Kočar
Bojana Šteblaj
David Eric Simon
Primož Karpe
Shrenik Dhirajlal Davda
Gregor Rok Kastelic
Janja Žabjek Dolinšek
Andreas Klingen
Peter Groznik
Shrenik Dhirajlal Davda
David Eric Simon
Remuneration Committee
Remuneration Committee
Remuneration Committee
Nomination Committee
Nomination Committee
Nomination Committee
Nomination Committee
Audit Committee
Audit Committee
Audit Committee
Audit Committee
Audit Committee
Risk Committee
Risk Committee
Risk Committee
Risk Committee
Mark William Lane Richards
Risk Committee
Gregor Rok Kastelic
Islam Osama Zekry
Tadeja Žbontar Rems
Risk Committee
Risk Committee
Risk Committee
28 June 2019
28 June 2019
26 June 2020
26 June 2020
8 April 2021
26 June 2020
15 April 2016
26 June 2020
26 June 2020
8 April 2021
7 April 2016
15 April 2016
28 June 2019
28 June 2019
28 January 2021
19 February 2016
6 October 2017
8 July 2021
7 April 2016
28 June 2019
26 June 2020
8 July 2021
28 January 2021
Mark William Lane Richards
Operational and IT Committee
28 June 2019
Shrenik Dhirajlal Davda
Operational and IT Committee
28 June 2019
Operational and IT Committee
28 June 2019
Operational and IT Committee
15 April 2016
Andreas Klingen
Primož Karpe
Bojana Šteblaj
Operational and IT Committee
26 June 2020
12 April 2021
Tadeja Žbontar Rems
Operational and IT Committee
8 April 2021
Janja Žabjek Dolinšek
Operational and IT Committee
8 April 2021
Islam Osama Zekry
Operational and IT Committee
8 July 2021
2024
2025
2025
2023
2023
2024
14 June 2021
2024
2024
2024
2023
2024
2024
2024
2024
2024
2023
2023
12 August 2021
2023
14 June 2021
2025
2024
2023
2023
2025
12 August 2021
2023
8 July 2021
2023
2024
Member
Member/Chairman
Deputy Chairman
Member
Member
Member
Chairman
Deputy Chairman
Member
Member
Member
Member
Chairman
Member
Member/Deputy Chairman
Member
Member
Chairman
Member/Deputy Chairman
Deputy Chairman
Member
Member
Member
Member
Member
Chairman
Deputy Chairman
Member
Member
Member
Member
Member
Deputy Chairman
4/4
4/4
4/4
4/4
2/2
3/3
7/7
7/7
3/7
7/7
7/7
2/2
7/7
7/7
7/7
7/7
4/4
6/6
3/3
2/2
6/6
6/6
6/6
2/2
2/2
5/5
5/5
4/5
5/5
2/2
3/3
3/3
2/2
External member in committees (audit, nominal, income committee, etc.) - The Banking Act (ZBan-2) that came into effect on 13 May 2015 contains provision stipulating that, irrespective of provision of Companies Act (ZGD-1)
only members of the Supervisory Board can be appointed to Supervisory committees.
Name and Surname
none
Attendance at sessions of SB's
Committees in regard to the
total number of SB's session
(for example 5/7)
Gender
Qualification
Year of birth
Professional profile
Membership in supervisory
bodies in companies not
related to the company
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Table 38: Composition and amount of remuneration of the Management Board members in the financial year 2021 (C.3)
Name and
Surname
Position held
(President,
Member)
Fixed income
- gross (1)
Variable income - gross
on the basis of
quantity criteria
on the basis of
quality criteria
Deferred income
(3)
Severance pay
(4)
Total (2)
Bonuses (5)
‘Draw- back’ (6)
Total gross
(1+2+3+4+5-6)
Total net(i)
Blaž Brodnjak
President
441,770.20
43,750.00
43,750.00
87,500.00
42,710.85
Archibald
Kremser
Andreas
Burkhardt
Member
Member
420,808.88
41,666.67
41,666.67
83,333.34
42,710.85
405,091.54
40,104.17
40,104.17
80,208.34
42,710.85
0.00
0.00
0.00
2,310.19
34,116.83
32,671.82
Petr Brunclík
Member
221,963.09
7,316.72
7,316.72
14,633.44
0.00
385,000.00
30,091.68
0.00
0.00
0.00
0.00
574,291.24
241,568.49
580,969.90
244,905.39
560,682.55
237,273.57
651,688.21
327,310.24
(i) This chart does not include other benefits and cost refunds.
Table 39: Composition and amount of remuneration of members of the Supervisory Board and committee members in the financial year 2021 (in EUR) (C.4)
Name and Surname
Position held (Chairman,
deputy Chairman,
member, external
member of Committee)
Payment for the
performance of services -
gross per year (1)
Attendance fees for SB
and committees - gross
per year (2)
Total gross (1+2)
Total net(i)
Travel expenses
Benefits
Primož Karpe
Chairman
Andreas Klingen
Deputy Chairman
Islam Osama Zekry
Member
David Eric Simon
Peter Groznik
Mark William
Lane Richards
Member
Member
Member
Shrenik Dhirajlal Davda
Member
Gregor Rok Kastelic
Member
Verica Trstenjak
Sergeja Kočar
Bojana Šteblaj
Member
Member
Member
Janja Žabjek Dolinšek
Member
Tadeja Žbontar Rems
Member
96,000.00
90,000.00
38,607.52
81,000.00
32,800.00
81,000.00
72,000.00
81,000.00
65,790.32
11,855.76
15,655.26
6,839.40
26,656.31
-
-
-
-
-
-
-
-
-
-
-
-
-
96,000.00
90,000.00
38,607.52
81,000.00
32,800.00
81,000.00
72,000.00
81,000.00
65,790.32
11,855.76
15,655.26
6,839.40
26,656.31
74,400.00
90,000.00
25,432.70
62,775.00
23,855.44
53,358.72
47,430.00
53,358.72
43,339.32
8,622.69
11,386.05
4,974.27
19,387.12
4,629.06
4,946.99
5,704.85
5,251.42
0.00
2,642.98
2,367.17
758.31
0.00
0.00
0.00
0.00
0.00
447.47
447.47
447.47
447.47
0.00
447.47
447.47
447.47
447.47
447.47
447.47
447.47
447.47
(i) After the prepayment of income taxes which is not taken into account in potential subsequent balancing payments of personal income taxes.
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MB Statement
SB Statement
Key Highlights
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Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Statement of
Management of Risk
NLB’s Management Board and Supervisory Board provide
herewith a concise statement of the Risk Management
according to Article 17 of the Decision on Internal Governance
Arrangements, the Management body and the Internal
Capital Adequacy Assessment Process for Banks and Savings
banks (Official Gazette of the RoS, no. 73/2015 and 115/2021),
Regulation (EU) 575/2013, article 435 (Risk management
objectives and policies), point (e) and (f), as well as EBA
Guidelines on Internal Governance (EBA/GL/2021/05), and EBA
Guidelines on Disclosure requirements (EBA GL/2016/11).
Risk Management in the Group, representing an important
element of the Group’s overall corporate governance, is
implemented in accordance with the set strategic guidelines,
established internal policies, and procedures which take into
account the European banking regulations, the regulations
adopted by the BoS, the current EBA guidelines, and the
relevant good banking practices. EU regulations are followed
by the Group, where the Group subsidiaries operating
outside Slovenia are also compliant with the rules set by the
local regulators. The Group gives high importance to the
risk culture and awareness of all relevant risks within the
entire Group. Maintaining risk-awareness is engrained in the
business strategy of the Group. The business and operating
environment, relevant for the Group’s operations, is changing
with trends such as changing customer behaviour, emerging
new technologies and competitors, sustainable financing, and
increasing new regulatory requirements. Respectively, Risk
Management is continuously adapting with aim to detect and
manage new potential emerging risks.
The Group uses the ‘three lines of defence framework’ as an
important element of its internal governance, whereby the
Risk Management function acts as a second line of defence.
The Group’s has enhanced overall corporate governance
which reflects in the lowering of the SREP requirement in
recent years. A robust and comprehensive Risk Management
framework is defined and organised with regard to the
Management tools enable adequate oversight of the Group’s
limits or target values are regularly reported to the respective
risk profile, proactively support its business operations, and
committees and/or the Management Board of the Bank, the
its management by incorporating escalation procedures
Risk Committee of the Supervisory Board, and the Supervisory
and using different mitigation measures when necessary.
Board of the Bank.
In this respect, the Group is constantly enhancing and
complementing the existing methods and processes in all Risk
Additionally, the Group established a comprehensive stress
Management segments.
testing framework and other early warning systems in different
risk areas, with the intention to contribute to setting and
The Group is engaged in contributing to sustainable finance
pursuing the Group’s business strategy, to support decision-
by incorporating environmental, social and governance
making on an ongoing basis, to strengthen the existing internal
(ESG) risks into its business strategies, risk management
controls, and to enable a timely response when necessary.
framework, and internal governance arrangements. With the
The stress-testing framework includes all material types of risk
adoption of the NLB Group Sustainability programme, the
and different relevant stress scenarios or sensitivity analysis,
Group implemented sustainability elements into its business
according to the vulnerability of the Group’s business model.
model. The goal of this strategic, organisation-wide initiative
Stress-testing has an important role when assessing the
is to ensure sustainable financial performance of the Group
Group’s resilience to stressed circumstances, namely from
by considering ESG risks and opportunities in its operations,
profitability, capital adequacy, and forward-looking perspective
and to actively contribute to a more balanced and inclusive
about liquidity. As such, it is embedded into the Group’s Risk
economic and social system. Thus, sustainable finance
Management system, namely Risk appetite, ICAAP, ILAAP, and
integrates ESG criteria into Group’s business and investment
the Recovery plan, as an important component of sound Risk
decisions for the lasting benefit of Group’s clients and
Management. Beside internal stress-testing, the Group as a
society. The NLB Group Sustainability Committee oversees
systemically important bank also participates in the regulatory
the integration of the ESG factors to the Group business
stress test exercises carried out by the ECB.
model. The management of ESG risks addresses the Group’s
overall credit approval process and related credit portfolio
The Group is one of the largest Slovenian banking and
management. It follows ECB and EBA guidelines with tendency
financial groups with an important presence in the SEE
of their comprehensive integration into all relevant processes.
region. In accordance with its strategic orientations intends
The availability of ESG data in the region where the Group
to be a sustainably profitable, predominantly working with
operates is still lacking, nevertheless the Group strives to
clients on its core markets, providing innovative but simple
obtain relevant clients’ data as prerequisite for adequate
customer-oriented solutions and actively contributing to a
decision-making.
more balanced and inclusive economic and social system.
The Group has a well-diversified business model. Efficient
The Group plans a prudent risk profile, optimal capital usage,
managing of risks and capital is crucial for the Group to
and profitable operations in the long run, considering the
sustain long-term profitable operations. Based on the Group’s
risks assumed. The Business strategy, the Risk appetite, the
business strategy, credit risk is the dominant risk category,
Risk strategy, and the key internal risk policies of the Group,
followed by credit spread risk on banking book portfolio,
approved by the Management Board and the Supervisory
interest rate risk in banking book, operational risk, liquidity
Board of NLB, specify the strategic objectives and guidelines
risk, market risk, and other non-financial risks. Regular risk
concerning risk assumption, and the approaches and
identification and their assessment is performed within ICAAP
methodologies of monitoring, measuring, mitigating,
process with the aim of assuring their overall control and
and managing all types of risk at different relevant levels.
effective Risk Management on an ongoing basis.
Group’s business and risk profile, based on a forward-looking
Moreover, the main strategic risk guidelines are consistently
perspective to meet internally set strategic objectives and
integrated into the regular business strategy review, the
Managing risks and capital efficiently at all levels is crucial
all external requirements. A proactive Risk Management
budgeting process, and other strategic decisions, whereby
for the Group’s sustained long-term profitable operations.
and control system is primarily based on the Risk appetite
informed decision-making is assured. The Group is regularly
Management of credit risk, representing the Group’s most
and Risk strategy, which are consistent with the Group’s
monitoring its target risk appetite profile and internal capital
important risk, focuses on the taking of moderate risks –
Business strategy, and focused on early risk identification and
allocation, representing the key component of proactive
diversified credit portfolio, adequate credit portfolio quality,
Contents
efficient Risk Management. Set governance and different Risk
management. Risk limits usage and potential deviations from
sustainable cost of risk and ensuring an optimal return
140
considering the risks assumed. The liquidity risk tolerance is
• improvement in the quality of the credit portfolio, sufficient
• Transactional FX risk 1.10% of capital,
low. The Group must maintain an appropriate level of liquidity
NPL coverage, sustainable credit risk volatility, sustainable
• Net losses from operational risk 1.6% of capital requirement
at all times to meet its short-term liabilities, even if a specific
cost of risk across the economic cycle, sustainable industry
for operational risk.
stress scenario is realised. Further, with the aim of minimising
concentration, sustainable exposure to project financing,
this risk, the Group pursues an appropriate structure of
• maintenance of a solid liquidity position, maintaining stable
COVID-19 did not have a meaningful impact on the quality
sources of financing. The Group limited exposure to credit
customers’ deposits as the main funding base,
of the credit portfolio. The Group is compliant with EBA
spread risk, arising from the valuation risk of debt securities
• diversification of risk in exposures to banks and
guidelines on payment moratoria and is very prudent in
portfolio servicing as liquidity reserves, to the moderate level.
sovereigns,
The Group’s basic orientation in the management of interest
• limited exposure to credit spread risk,
rate risk is to limit unexpected negative effects on revenues
• limited exposure to interest rate risk,
identifying any increase in credit risk. The vast schemes
introduced by the governments in the Group countries
providing moratoriums to eligible clients as part of the
and capital that would arise from changed market interest
• limited exposure to foreign exchange risk,
COVID-19 pandemic measures had been phasing out during
rates and, therefore, a moderate tolerance for this risk is
• sustainable tolerance to net losses from operational risk.
the 2021. With respect to the COVID-19 pandemic and its
stated. When assuming operational risk, the Group pursues
implications on the business environment, the Group faced
the orientation that such risk must not significantly impact
Sustainable ESG financing in accordance with Environmental
growing excess liquidity and managed to stay well capitalised.
its operations. Risk appetite for operational risks is low to
and Social Management System (ESMS) will be integrated
moderate, with a focus on mitigation actions for important
in the Group's Risk appetite statement in the year 2022.
Consequently, the Group concluded the year 2021 as self-
risks and key risk indicators servicing as an early warning
Additional key risk indicators and targets in the area of ESG
funded, with a strong liquidity and solid capital position,
system. The conclusion of transactions in derivative financial
are going to be addressed based on NLB Group Sustainability
demonstrating the Group’s financial resilience. The acquired
instruments at NLB is primarily limited to servicing customers
programme and ESMS.
and hedging Bank’s own positions. In the area of currency
Komercijalna Banka group has a similar business model to
the Group’s, and so, its impact on the Group’s risk profile at
risk, the Group thus pursues the goals of low to moderate
The values of the most important risk appetite indicators
the end of the year 2020 was moderate with no other major
exposure. The tolerance for all other risk types, including non-
of the Group, as at the end of year 2021, reflecting the
impacts during the year 2021. Otherwise, there were no other
financial risks, is low with a focus on minimising their possible
interconnection between strategic business orientations, risk
transactions of sufficiently material nature to impact on the
impacts on the Group’s operations. ESG risks do not represent
strategy, and targeted risk appetite profile, were following:
Group’s risk profile or distribution of the risks on the Group
a new risk category, but rather an aggravating factor for the
• Total capital ratio 17.8%,
level.
existing types of risks, such as credit and operational risk. The
• Tier 1 capital ratio 15.5%,
Group integrates and manages them within the established
• Common Equity Tier 1 ratio (CET1) 15.5%,
A Condensed Statement of the management of risk is
risk management framework.
• Leverage ratio 10.2%,
• Cost of risk -41 bps,
also published on the Bank’s intranet with the aim of strict
adherence of the Banks’ employees at daily operations of the
The main NLB Group Risk Appetite Statement objectives are
• The share of non-performing exposure (NPE%) by EBA 1.7%,
Bank, as regards the definition and importance of a consistent
following:
• Non-performing loans coverage ratio 2 (NPL CR 2) 57.9%,
tendency of the adopted risks, and ways to take into account
• preservation of regulatory capital adequacy,
• Loan-to-deposit ratio (LTD) 60.0%,
when adopting its daily business decisions.
• preservation of internal capital adequacy,
• fulfilment of the MREL requirement,
• maintenance of low leverage,
• LCR 252.6%,
• NSFR 185.2%,
• EVE sensitivity (of 200 bps) -6.4% of capital,
Ljubljana, 11 April 2022
Supervisory Board of NLB
Management Board of NLB
Primož Karpe
Chairman
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
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Statement on Non-
financial Operation
In line with Article 70.c of the Companies Act (ZGD-1), 21 the
Bank reports on non-financial operation separately from the
NLB Group Annual Report 2021. The Bank’s disclosures of non-
financial operation are prepared in NLB Group Sustainability
Report 2021 (https://www.nlb.si/sustainability), by applying
the GRI Sustainability Reporting Standards (GRI) and thus
ensuring compliance with the requirements of the regulations
regarding the disclosure of non-financial information.
As part of the NLB Group Sustainability Report 2021, the Bank
publishes UNEP FI PRB Self-Assessment Report on how the
Bank is implementing the UN Principles for Responsible
Banking (UN PRB). The UN PRB set out the banking industry’s
role and responsibility in shaping a sustainable future and in
aligning the banking sector with the objectives of the UN SDGs
and the 2015 Paris Climate Agreement.
Ljubljana, 11 April 2022
Management Board of NLB
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
21 Official Gazette of the RoS, No. 65/09, 33/11, 91/11, 32/12, 57/12, 44/13 –
Resolution of the Constitutional Court 82/13, 55/15, 15/17, 22/19 – Business
Secret Act, 158/20 – Integrity and Corruption Prevention Act-C and 18/21).
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We are attentive to what
you cherish the most.
52 years ago, we celebrated Earth Day for the first time.
40 years ago, we introduced recycling.
2 years ago, we committed to low-carbon economy.
What will the next generations commit to?
The rising importance of environmental and social issues plays an important role in the quality of life in our local
region. By incorporating sustainability in our banking services, we not only strengthen relations with our clients,
employees, suppliers, investors and broader communities, but also take care of present and future generations.
We do not perceive sustainability as merely a letter on a piece of paper, but as a string of decisions, measures
and actions that will provide new opportunities for the generations to follow.
Disclosure on Shares and Shareholders of NLB
1. Information pursuant to the
Companies Act (ZGD-1), Article 70,
paragraph 6
rights on the basis of the instructions of an individual third
party for whose account it has acquired the shares if, together
with the instructions for voting, it does not receive a written
guarantee from that person that this person has shares on his
own account and that this person is not, directly or indirectly, a
holder of more than 25% of the Bank’s voting rights.
1.1 Structure of the Bank’s share capital
The Bank has issued only ordinary registered no-par value
The acquirer who exceeds the share of 25% of the Bank’s
shares with voting rights, and does not require the issuance
shares, the holders of which have a voting right and the
of approval for the transfer of shares, or does not receive the
right to participate at the General Meeting of the Bank’s
approval of the Bank, may exercise the voting right from 25%
shareholders, the pre-emptive right to subscribe for new
of the shares with the voting rights.
shares in case of a share capital increase, the right to profit
1.8 The company’s rules on the appointment
or replacement of management and
supervisory board members and
changes of the articles of association
This information is included in the chapter Corporate
Governance Statement of NLB.
1.9 Authorisations given to management,
particularly authorisations to issue
or purchase own shares
This information is included in the chapter Corporate
participation (dividends), the right to a share in the surplus in
There are no restrictions other than those mentioned and
Governance Statement of NLB.
the event of liquidation or bankruptcy of the Bank, and the
those that are regulatory.
right to be informed. All shares belong to a single class and
are issued in book-entry form.
Information regarding the shareholder structure of NLB (as at
31 December 2021) is available in the subchapter Shareholder
Structure of NLB in the chapter Key Highlights.
1.2 All restrictions relating to the transfer of
shares and the restrictions on voting rights
The shares of the Bank are freely transferable, subject to the
provisions of the Articles of Association of the Bank which require
1.3 Qualifying holdings
This information is included in the chapter Corporate
Governance Statement of NLB.
1.4 Securities carrying special controlling rights
This information is included in the chapter Corporate
Governance Statement of NLB.
1.5 The employee share scheme, if used by the
1.10 All major agreements to which the company
is a party and which take effect, are
changed or cancelled following a change
in control over the company resulting from
a bid, as laid down by the Act governing
M&A, and the effects of such agreements
There are no major agreements to which the Bank is a party,
and which would take effect, be changed, or cancelled
following a change in control over the Bank resulting from a
company, for shares to which the scheme
bid.
the approval of the Supervisory Board, namely for the transfer
relates and about the method of exercising
of shares of the Bank by which the acquirer, together with the
shares held by the holder before such an acquisition and the
shares held by third parties for the account of the acquirer,
exceeds the share of 25% of the Bank’s voting shares. Approval
for the transfer of shares is issued by the Supervisory Board.
The Bank rejects the request for approval of transfer shares
if the acquirer, together with the shares held by the acquirer
before the acquisition and the shares held by third parties for
the account of the acquirer, exceeded the 25% share of the
Bank with voting rights, increased by one share.
control over this scheme, if the controlling
rights are not exercised directly by employees
The Remuneration policy for employees performing special
work defines the payments with financial instruments
according to the applicable banking law, however, there was
no payout in instruments in 2021.
1.11 All agreements between the Bank and its
management or supervision bodies or its
employees which envisage compensation
if, due to a bid as laid down by the Act
governing M&A, these persons resign, are
dismissed without a well-founded reason,
1.6 Explanation regarding restrictions
or their employment is terminated
related to voting rights
This information is included in the chapter Corporate
Governance Statement of NLB.
Notwithstanding the provision mentioned in the first
paragraph, approval for the transfer of shares is not required
if the acquirer of the shares has acquired them on the account
of third parties, so that it is not entitled to exercise voting
rights from these shares at its sole discretion, while at the
1.7 All agreements among shareholders
which are known to the company and
could result in restrictions relating to the
transfer of securities or voting rights
same time committing to the Bank, it will not exercise voting
The Bank is not aware of such agreements.
In line with the employment contracts of the members of the
Management Board, in case the Supervisory Board recalls a
member of the Management Board ‘for other business and
economic reasons,’ such a member of the Management Board
of NLB is entitled to compensation for early termination of
his term of office. The member of the Management Board
shall not be entitled to compensation for early termination
of the term of office if he is employed in the Bank or in the
Group after the termination of the term of office. In the event
of resignation, the member of the Management Board shall
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not be entitled to any compensation for early discontinuation
of the term of office, unless otherwise decided by the
Supervisory Board.
3. Stock option agreements
The Bank has no stock option agreements in relation with
2. Number of shares held by
members of the Supervisory
Board and Management Board
Table 40: Number of shares held by members of the Supervisory Board and
Management Board
listed shares.
4. Dividend taxation
Withholding tax
In 2021 a Slovenian payer was required to deduct and withhold
the amount of Slovenian corporate or personal income tax from
dividend payments made to the certain categories of payees:
Shares held as at
31 December 2021
• Individuals: 27.5%
• Intermediaries: 27.5%
Number
%
• Legal entities (other than Intermediaries): 15%
Name of member of
Supervisory Board
Primož Karpe
Andreas Klingen
David Eric Simon(i)
Islam Osama Zekry
Gregor Rok Kastelic
Shrenik Dhirajlal Davda
Mark William Lane Richards
Verica Trstenjak
Sergeja Kočar
Bojana Šteblaj
Janja Žabjek Dolinšek
Tadeja Žbontar Rems
Name of member of
Management Board
Blaž Brodnjak
Archibald Kremser
Andreas Burkhardt
Petr Brunclík
1,136
1,198
582
0.006%
0.006%
0.003%
—
—
—
—
—
61
—
—
—
Number
—
—
—
—
—
0.000%
—
—
—
%
1,500
0.008%
791
451
278
0.004%
0.002%
0.001%
In 2022, the tax rate for individuals and intermediaries has
changed from 27.5% to 25%.
There are some exemptions if dividends are
paid to intermediaries and legal entities
For the purposes of Slovenian tax legislation, the GDR
depositary will qualify as an intermediary. Therefore, the
dividends paid by the custodian to the GDR depositary will
be subject to the deduction and withholding of Slovenian
tax at the rate of 25% (in 2021 27.5%). A holder, an owner of a
GDR or a beneficial owner will be entitled, if and to the extent
applicable, to claim a refund of the withholding tax.
In the case of legal entities, the exemptions are related to the
characteristics of the legal entities.
Application of Double Tax Treaties
If the payee is not an intermediary, Slovenian tax authorities
may approve the application of a lower tax rate specified in
the double tax treaty between the RoS and the country of
residence of the payee if the Slovenian payer provides certain
information on the payee and a confirmation that the payee is
a resident for taxation purposes in such a country, issued by
the tax authorities of such a country.
(i) David Eric Simon holds 2,910 GDRs, which is equal to 582 shares (as 1 share
represents 5 GDRs).
Refund of Withholding Tax
If the Slovenian tax was deducted and withheld at a higher tax
rate than it would be paid if a Slovenian payer would make the
dividend payment directly to such person as a payee or higher
tax rate, than the one specified in the double tax treaty, the
payee of the dividend is entitled to the refund of the overpaid
tax. The tax refund is enforced by filing a claim to the Financial
Administration of the RoS.
Legal persons
Dividends with respect to the shares received by a legal
person who is a Slovenian resident are exempt from Slovenian
corporate income tax (davek od dohodkov pravnih oseb).
Individuals
The amount of tax withheld from a dividend payment received
by an individual constitutes the final amount of Slovenian
Personal Income Tax (dohodnina) with respect to such a
dividend payment.
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Events After the End of the 2021 Financial Year
Management Board change
On 20 January, the Supervisory Board appointed Hedvika
Usenik, Antonio Argir and Andrej Lasič as members of the
Management Board, thus expanding it to six members in total.
Their five-year term of office will start after they have obtained
their respective licences. Until then, they will continue to act as
executive assistants to the Management Board.
Swiss Francs Law adopted
On 2 February, the Slovenian National Assembly adopted
the Law on limitation and distribution of foreign exchange
risk between creditors and borrowers concerning loan
agreements in Swiss francs (CHF Law). The CHF Law affects all
loan agreements denominated in Swiss francs (regardless of
whether the agreements are still in force) concluded between
banks operating in Slovenia (including NLB) as lenders and
individuals as borrowers in the period from 28 June 2004 to 31
December 2010, and provides for a cap on the exchange rate
between Swiss francs and the Euro to be set at 10% volatility
and shall be applied from the conclusion of any of the affected
loan agreements. NLB intends to use all legal remedies against
the CHF Law before the Constitutional Court and, if necessary,
in front of relevant European forums. In this respect, the
banks (including NLB) on 28 February filed an initiative with
the Constitutional Court of the RoS to initiate proceedings to
assess the constitutionality of the CHF Law and a proposal for
its temporary suspension of enforcement. The Constitutional
assessment of the CHF Law and if outlined legal remedies are
Key information of the acquired bank
unsuccessful, the Bank estimated a negative pre-tax effect on
the operations of NLB and NLB Group should not exceed EUR
70 - 75 million. The Bank considers this as a non-adjusting event
after the reporting period.
New SREP Decision
On 2 February, the ECB issued a new SREP decision for the
Bank under which it has reduced the P2R from 2.75% to 2.60%,
Income Statement
Net interest income
Net fee and commission income
Other income
Total income
while P2G remains at 1.00%. The new SREP decision applies as
Expenses
of 1 March. Consequently, the Bank is as of this date required
Pre-provision income
to maintain the OCR at the level of 14.10% on a consolidated
Provisions and impairments
basis, consisting of (i) 10.60% TSCR, and (ii) 3.5% CBR.
Geopolitical tensions in Ukraine
In February, Russian Federation began a military invasion of
Ukraine. Group has limited exposure to Russian Federation
and Ukraine which mainly derives from NLB’s investment
in Russian sovereign bonds in the approximate amount of
Profit before tax
Profit after tax
Balance Sheet
Total assets
Loans and advances to customers
Deposits from non-bank customers
EUR 20 million. The manner and timing of their settlement
Shareholders' equity
in the given circumstances is not determined yet. Since the
beginning of the tensions, the credit spreads widening was
observed, which is currently impacting the Bank’s FVOCI
positions. Further information is available in Note 9 of the
Financial part of this report.
Sberbank banka d.d. acquisition
On 1 March, the Single Resolution Board (SRB) in coordination
Ratios(i)
Net interest margin(ii)
Business operating margin(ii)
ROE a.t.
NPL ratio(iii)
CET1 ratio
in EUR million
2021
Unaudited
2020
30
12
-1
43
-29
13
-11
1
1
1,839
1,200
1,340
184
1.61
2.29
0.52
5.5
18.8
26
14
2
43
-30
13
1
13
10
1,721
1,153
1,274
195
in %
1.49
2.49
5.4
4.4
18.7
Court of the RoS adopted a decision on 10 March to suspend in
with local regulator BoS decided to adopt a resolution scheme
whole the implementation of the CHF Law. The implementation
in respect of Slovenian Sberbank banka d.d. (Sberbank).
of the law has been suspended until the final decision of the
Resolution scheme envisaged the application of the sale of
Constitutional Court on the conformity of the CHF Law with the
business tool for Sberbank and BoS issued a decision for the
Constitution. During this time the deadlines set for individual
sale of 100% shares issued by Sberbank. Under the resolution
liabilities of the banks do not apply. Until the final decision of
scheme, and following a marketing procedure, the SRB has
the Constitutional Court on the constitutionality of the CHF Law
decided to transfer all the shares issued by the Sberbank to
is made, the NLB will act in accordance with the applicable
NLB. Therefore as of 1 March NLB became a 100% owner of
legislation and courts’ decisions, and will, at the same time,
Sberbank. In the following months activities for integration of
exercise all legal remedies at its disposal. Based on the
Sberbank within NLB Group will be carried out.
Source:
Sberbank banka d.d. reports: for 2020 Annual report, for 2021 data from Sberbank
banka d.d.
Notes:
(i) Ratios as calculated by Sberbank banka d.d.
(ii) Based on total assets.
(iii) Non-performing loans and other financial assets / classified loans and other
financial assets (excluding balances with central bank accounts and sight deposits
with banks).
Further information about the acquisition of Sberbank banka
d.d. is available on the Bank’s website under Investor News.
Supervisory and Management board
transactions with NLBR shares
Between 25 February and 23 March, Primož Karpe, President
of the Supervisory Board, Sergeja Kočar, Member of the
Supervisory Board, Blaž Brodnjak, CEO and CMO, and
Andreas Burkhardt, CRO together acquired 468 ordinary
shares of NLB ISIN: SI0021117344, LJSE ticker NLBR.
Notification of major holdings
On 7 March the shareholding of Schroders in the Bank
changed from 5.061% to 4.95%.
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Reconciliation of Financial Statements in
Business and Financial Part of the Report
Table 41: Income Statement of NLB Group for the annual period ended 31 December 2021
in EUR million
Financial report
in EUR thousands
Notes
Business report
Net interest income
Net fee and commission income
Dividend income
Net income from financial transactions
Net other income
Net non-interest income
Total net operating income
Employee costs
Other general and administrative expenses
409.4
237.2
Interest and similar income
Interest and similar expenses
Fee and commission income
Fee and commission expenses
0.2
Dividend income
Gains less losses from financial assets and liabilities not
measured at fair value through profit or loss
Gains less losses from financial assets and liabilities held for trading
38.4
Gains less losses from non-trading financial assets
mandatorily at fair value through profit or loss
Fair value adjustments in hedge accounting
Foreign exchange translation gains less losses
Gains less losses from modification of financial assets
Gains less losses on derecognition of non-financial assets
Other net operating income
Cash contributions to resolution funds and deposit guarantee schemes
Gains less losses from non-current assets held for sale
Net gains or losses on derecognition of investments in
subsidiaries, associates and joint ventures
Administrative expenses
(18.3)
257.6
666.9
(231.3)
(137.5)
Depreciation and amortisation
(46.5)
Depreciation and amortisation
Total costs
Result before impairments and provisions
Impairments and provisions for credit risk
Other impairments and provisions
Impairments and provisions
Gains less losses from capital investment in
subsidiaries, associates, and joint ventures
Result before tax
Income tax
(415.4)
251.5
35.8
(27.1)
8.8
1.1
Provisions for credit losses
Impairment of financial assets
Provisions for other liabilities and charges
Impairment of non-financial assets
Share of profit from investments in associates and joint
ventures (accounted for using the equity method)
261.4
Profit before income tax
(13.5)
Income tax
Result of non-controlling interests
11.5
Attributable to non-controlling interests
Result after tax
236.4
Attributable to owners of the parent
477,829
(68,469)
332,589
(95,413)
223
167
21,194
16,838
167
345
(263)
2,681
23,221
(35,140)
248
(9,298)
257,559
666,919
(368,851)
(46,528)
(415,379)
251,540
8,504
27,331
(22,670)
(4,407)
8,758
1,108
261,406
(13,538)
11,464
236,404
4.1.
4.1.
4.3.
4.3.
4.2.
4.4.
4.5.
4.6.
5.5.a)
4.7.
4.12.
4.8.
4.10.
4.15.
5.12.b)
4.9.
4.11.
4.13.
4.14.
4.13.
4.14.
5.12.d)
4.16.
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Table 42: Statement of Financial Position of NLB Group as at 31 December 2021
Business report
ASSETS
Cash, cash balances at central banks, and
other demand deposits at banks
Loans to banks
Net loans to customers
Financial assets
- Trading book
- Non-trading book
in EUR million
Financial report
in EUR thousands
5,005.1
Cash, cash balances at central banks and other demand deposits at banks
140.7
Financial assets measured at amortised cost - loans and advances to banks
Financial assets measured at amortised cost - loans and advances to customers
10,587.1
5,208.3
Non-trading financial assets mandatorily at fair value
through profit or loss - part (only loans)
7.7
Financial assets held for trading
Non-trading financial assets mandatorily at fair value
through profit or loss - part (without loans)
5,200.6
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost - debt securities
Investments in subsidiaries, associates, and joint ventures
11.5
Investments in associates and joint ventures
Property and equipment, investment property
Intangible assets
294.6
Property and equipment
Investment property
59.1
Intangible assets
Other assets
271.1
Current income tax assets
Financial assets measured at amortised cost - other financial assets
Derivatives - hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
TOTAL ASSETS
LIABILITIES
Deposits from customers
Deposits from banks and central banks
Borrowings
Deferred income tax assets
Other assets
Non-current assets held for sale
21,577.5
Total assets
17,640.8
Financial liabilities measured at amortised cost - due to customers
71.8
932.6
Financial liabilities measured at amortised cost -
deposits from banks and central banks
Financial liabilities measured at amortised cost -
borrowings from banks and central banks
Financial liabilities measured at amortised cost - borrowings from other customers
Financial liabilities held for trading
Financial liabilities measured at amortised cost - other financial liabilities
Derivatives - hedge accounting
Other liabilities
427.6
Provisions
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Subordinated liabilities
Equity
Non-controlling interests
TOTAL LIABILITIES AND EQUITY
288.5
Financial liabilities measured at amortised cost - subordinated liabilities
2,078.7
Equity and reserves attributable to owners of the parent
137.4
Non-controlling interests
21,577.5
Total liabilities and equity
5,005,052
140,683
10,587,121
-
5,208,325
7,678
21,161
3,461,860
1,717,626
11,525
247,014
47,624
59,076
122,229
568
7,082
3,948
38,977
91,221
7,051
21,577,496
17,640,809
71,828
858,531
74,051
7,585
206,878
35,377
119,404
5,878
3,045
49,468
288,519
2,078,733
137,390
21,577,496
Notes
5.1.
5.6.b)
5.6.c)
5.3.a)
5.2.a)
5.3.a)
5.4.
5.6.a)
5.12.d)
5.8.
5.9.
5.10.
5.6.d)
5.5.b)
5.5.c)
5.17.
5.13.
5.7.
5.15.a)
5.15.a)
5.15.b)
5.15.b)
5.2.b)
5.15.d)
5.5.b)
5.16.
5.17.
5.19.
5.15.c)
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Alternative Performance Indicators
The Bank has chosen to present these APIs, either because
they are in common use within the industry or because they
are commonly used by investors and as such are useful
for disclosure. The APIs are used internally to monitor and
manage operations of the Bank and the Group, and are
not considered to be directly comparable with similar KPIs
presented by other companies. The Bank’s APIs are described
below together with definitions.
Cost of risk – Calculated as the ratio between credit
impairments and provisions annualized from the income
Cost-to-income ratio (CIR) – Indicator of cost efficiency,
calculated as the ratio between the total costs and total net
statement and average net loans to customers.
operating income.
Table 43: NLB Group cost of risk calculation(iii)
Table 44a: NLB Group and NLB CIR calculation
in EUR million
NLB Group
2021
2020
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
Numerator
Numerator
Credit impairments and provisions(i)
-40.8
47.6
Total costs
415.4
293.9
305.0
183.6
180.5
191.1
Denominator
Denominator
Average net loans to customers(ii)
10,080.9
7,696.1
Total net operating income
Cost of risk (bps)
-41
62
Cost to income ratio (CIR)
666.9
62.3%
504.5
58.3%
517.2
59.0%
361.5
50.8 %
311.7
57.9%
354.7
53.9%
(i) NLB internal information. Credit impairments and provisions are annualized,
calculated as all established and released impairments on loans and provisions
for off balance (from the income statement) in the period divided by the number
of months for reporting period and multiplied by 12. The net established Credit
impairments and provisions are shown with a positive sign, and the net released
Credit impairments and provisions are shown with a negative sign.
(ii) NLB internal information. Average net loans to customers are calculated as sum
of the balance of the previous year end (31 December) and monthly balances of the
last day of each month from January to month t divided by (t+1).
(iii) Komercijalna Banka group included from 2021 on.
CIR is adjusted for 2019 to changed schemes prescribed by the BoS.
Table 44b: NLB Group’s banking subsidiaries CIR calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
in EUR million
Komercijalna
Banka,
Beograd
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
Numerator
Total cost
28.6
26.5
15.2
13.9
16.2
15.1
13.5
12.3
17.4
13.6
22.2
20.4
88.0
Denominator
Total net
operating
income
Cost to income
ratio (CIR)
68.4
62.7
33.2
30.1
28.1
26.7
41.8
38.7
28.1
24.3
30.3
26.6
128.7
41.8% 42.3% 45.7% 46.1%
57.7% 56.5% 32.4% 31.8%
61.7% 56.0%
73.1% 76.4%
68.4%
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FVTPL – Financial assets measured mandatorily at fair
value through profit or loss (FVTPL) represent the minor part
IFRS 9 classification into stages for loan portfolio:
• Stage 3 – An impaired portfolio: NLB Group recognises
lifetime allowances for these financial assets. The definition
(0.002% December 2021; 0.30% December 2020) of the loan
IFRS 9 requires an expected loss model, where an allowance
of default is harmonised with the EBA guidelines.
portfolio (before the deduction of fair value for credit risk;
for the expected credit losses (ECL) are formed. Loans
loans with contractual cash flows that are not solely payments
measured at amortised costs (AC) are classified into the
A significant increase in credit risk is assumed: when a credit
of principal and interest on the principal amount outstanding).
Classification into stages is calculated in the internal data
following stages (before deduction of loan loss allowances):
• Stage 1 – A performing portfolio: no significant increase of
rating significantly deteriorates at the reporting date in
comparison to the credit rating at initial recognition; when a
source, by which the NLB Group measures the loan portfolio
credit risk since initial recognition, NLB Group recognises an
financial asset has material delays over 30 days (days past
quality, and which is also published in the Business Report of
allowance based on a 12-month period;
due are also included in the credit rating assessment); if NLB
Annual and Interim Reports.
• Stage 2 – An underperforming portfolio: a significant
Group expects to grant the client forbearance or if the client is
increase in credit risk since initial recognition, NLB Group
placed on the watch list.
recognises an allowance for a lifetime period;
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Table 45a:NLB Group Stage 1 calculation
Table 45d: NLB Group Stage 1 in the Corporate segment calculation
Table 45g: NLB Group Stage 1 in the Retail segment calculation
in EUR million
NLB Group
2021
in EUR million
NLB Group
2021
Numerator
Numerator
Numerator
Total (AC) loans in Stage 1
14,638.0
Total (AC) loans in Stage 1 to Corporates
4,525.5
Total (AC) loans in Stage 1 to Retail
Denominator
Total gross loans and advances
IFRS 9 classification into Stage 1
15,541.8
94.2%
Denominator
Total gross loans to Corporates
Corporates - IFRS 9 classification into Stage 1
5,179.5
87.4%
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 1
in EUR million
NLB Group
2021
5,371.1
5,621.1
95.6%
Table 45b: NLB Group Stage 2 calculation
Table 45e: NLB Group Stage 2 in the Corporate segment calculation
Table 45h: NLB Group Stage 2 in the Retail segment calculation
in EUR million
NLB Group
2021
in EUR million
NLB Group
2021
Numerator
Numerator
Numerator
Total (AC) loans in Stage 2
532.4
Total (AC) loans in Stage 2 to Corporates
412.2
Total (AC) loans in Stage 2 to Retail
Denominator
Denominator
Total gross loans and advances
15,541.8
Total gross loans to Corporates
IFRS 9 classification into Stage 2
3.4%
Corporates - IFRS 9 classification into Stage 2
5,179.5
8.0%
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 2
Table 45c: NLB Group Stage 3 calculation
Table 45f: NLB Group Stage 3 in the Corporate segment calculation
Table 45i: NLB Group Stage 3 in the Retail segment calculation
in EUR million
NLB Group
2021
Numerator
Numerator
Total (AC) loans in Stage 3
371.1
Total (AC) loans in Stage 3 to Corporates
Denominator
Denominator
Total gross loans and advances
15,541.8
Total gross loans to Corporates
IFRS 9 classification into Stage 3
2.4%
Corporates - IFRS 9 classification into Stage 3
in EUR million
NLB Group
2021
241.4
5,179.5
4.7%
Numerator
Total (AC) loans in Stage 3 to Retail
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 3
in EUR million
NLB Group
2021
120.2
5,621.1
2.1%
in EUR million
NLB Group
2021
129.7
5,621.1
2.3%
Contents
150
Leverage ratio – its calculation uses Tier 1 as the numerator,
and the denominator is the total exposure of all active balance
sheet and off-balance-sheet items after the adjustments are
made in the context of which the exposures from individual
derivatives, exposures from transactions of security funding,
and other off-balance sheet items are especially pointed
out. The leverage ratio is a non-risk based supplementary
measure to the risk-based capital requirements. A minimum
leverage ratio requirement is 3%. The purpose of the leverage
ratio is to limit the size of the Bank balance sheets, and with a
special emphasis on exposures which are not weighted within
the framework of the existing capital requirement calculations.
Table 46: NLB and NLB Group leverage ratio
Numerator
Tier I
Denominator
2021
NLB
2020
in EUR million
NLB Group
2019
2021
2020
2019
1,362.7
1,347.0
1,137.6
1,965.6
1,768.1
1,451.2
Total Leverage Ratio exposure measure
Leverage ratio
10,041.1
13.6%
13,058.8
10.3%
11,705.2
9.7%
19,229.5
22,603.9
10.2%
7.8%
16,671.3
8.7%
Liquidity coverage ratio – LCR refers to high liquid assets held
by the financial institution to cover its net liquidity outflows
over a 30-calendar day stress period.
The LCR requires financial institutions to maintain a sufficient
reserve of high-quality liquid assets (HQLA) to withstand a
crisis that puts their cash flows under pressure. The assets
to hold must equal to or greater than their net cash outflow
over a 30-calendar-day stress period (having at least 100%
coverage). The parameters of the stress scenario are defined
under Basel III guidelines. The calculations presented below
are based on internal data sources.
Table 47: NLB Group LCR calculation
31 Dec
2021
30 Nov
2021
31 Oct
2021
30 Sep
2021
31 Aug
2021
31 Jul
2021
30 Jun
2021
31 May
2021
30 Apr
2021
31 Mar
2021
29 Feb
2021
31 Jan
2021
31 Dec
2020
31 Dec
2019
31 Dec
2021
31 Dec
2020
31 Dec
2019
NLB Group
in EUR million
NLB
Numerator
Stock of HQLA
5,367.1
5,333.4
5,222.9
5,285.7
5,346.8
5,350.7
5,452.8
4,976.0
4,941.4
4,915.3
4,871.5
5,027.8
5,003.0
3,985.0
4,698.7
4,323.4
3,701.3
Denominator
Net liquidity outflow
2,125.0
2,064.7
1,993.4
1,940.5
1,899.7
1,966.5
2,000.2
1,915.8
1,918.6
1,876.4
1,889.0
1,945.5
1,943.1
1,226.4
1,493.9
1,285.4
1,022.1
LCR
252.6% 258.3% 262.0% 272.4%
281.4%
272.1% 272.6% 259.7% 257.6% 262.0% 257.9% 258.4% 257.5% 324.9%
314.5% 336.3%
362.1%
Based on the European Commission’s Delegated Act on LCR.
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Net loan-to-deposit ratio (LTD) – Calculated as the ratio between
net loans to customers and deposits from customers. There is no
regulatory defined limitation on the LTD, however, the aim of this
measure is to restrict extensive growth of the loan portfolio.
Table 48a: NLB Group and NLB LTD calculation
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2021
31 Dec 2020
31 Dec 2019
in EUR million
Numerator
Net loans to customers
10,587.1
9,644.9
7,604.7
5,153.0
4,595.1
4,589.2
Denominator
Deposits from customers
17,640.8
16,397.2
Net loan to deposit ratio (LTD)
60.0%
58.8%
11,612.3
65.5%
9,659.6
8,850.8
7,760.7
53.3%
51.9%
59.1%
Table 48b: NLB Group’s banking subsidiaries LTD calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
in EUR million
Komercijalna
Banka, Beograd
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
Numerator
Net loans to customers
1,084.1
956.9
471.1
430.7
453.0
399.2
634.5
559.2
491.6
367.3
511.7
472.2
1,795.9
Denominator
Deposits from customers
1,399.5
1,288.8
759.9
633.5
593.0
521.6
798.8
748.3
609.8
431.7
449.5
496.3
Net loan to deposit ratio (LTD)
77.5%
74.2%
62.0%
68.0%
76.4%
76.5%
79.4%
74.7%
80.6%
85.1%
113.8%
95.1%
3,424.6
52.4%
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Net interest margin on the basis of interest-bearing assets
– Calculated as the ratio between net interest income
annualized and average interest-bearing assets.
Table 49: NLB Group’s banking subsidiaries net interest margin on the basis of interest bearing assets calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
Komercijalna
Banka, Beograd
in EUR million
Numerator
Net interest income(i)
Denominator
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
50.4
48.1
20.1
18.6
17.8
17.8
34.5
32.3
22.0
20.6
23.4
21.8
Average interest bearing assets(ii)
1,605.3
1,453.0
844.3
756.7
645.0
611.9
900.6
817.7
550.2
499.9
678.3
643.1
Net interest margin on interest bearing assets
3.1%
3.3%
2.4%
2.5%
2.8%
2.9%
3.8%
3.9%
4.0%
4.1%
3.4%
3.4%
2021
88.6
3,742.6
2.4%
(i) Net interest income is annualized, and calculated as the sum of interest income and interest expenses in the period divided by the number of days in the period and multiplied by the number of days in the year.
(ii) NLB internal information. Average interest-bearing assets for individual bank members are calculated as the sum of balance of previous year end (31 December) and monthly balances of the last day of each month from January to reporting month t divided by (t+1).
Net interest margin on the basis of interest-bearing assets
(quarterly) – Calculated as the ratio between the net interest
income annualized and average interest-bearing assets.
Table 50: NLB Group net interest margin on the basis of interest bearing assets calculation (quarterly)(iii)
Numerator
Net interest income(i)
Denominator
in EUR million
NLB Group
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
424.6
411.3
405.7
395.4
298.7
Average interest bearing assets(ii)
20,526.7
20,314.4
19,459.1
18,902.8
14,739.7
Net interest margin on interest bearing assets (quarterly)
2.07%
2.02%
2.08%
2.09%
2.03%
(i) Net interest income (quarterly) is annualized, calculated as the sum of interest income and interest expenses in the period divided by the number of days in the quarter and
multiplied by the number of days in the year.
(ii) NLB internal information. Average interest-bearing assets (quarterly) for the NLB Group are calculated as the sum of monthly balances (t) for the corresponding quarter and
monthly balance at the end of the previous quarter divided by (t+1).
(iii) Komercijalna Banka group included from 2021 on.
Net interest margin on total assets – Calculated as the ratio between net interest income annualized, and average total assets.
Table 51: NLB Group and NLB net interest margin on total assets calculation
Numerator
Net interest income(i)
Denominator
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
409.4
299.6
318.5
139.1
138.9
158.1
Average total assets(ii)
20,659.0
15,086.2
Net interest margin on total assets
2.0%
2.0%
13,311.7
2.4%
11,853.9
10,336.2
9,206.3
1.2 %
1.3 %
1.7 %
(i) Net interest income is annualized, and calculated as sum of interest income and interest expenses in the period divided by the number of days in the period and multiplied by
the number of days in the year.
(ii) NLB internal information. Average total assets for the NLB Group are calculated as sum of balance of the previous year end (31 December) and monthly balances of the last
day of each month from January to month t divided by (t+1). Average total assets for NLB are calculated as the sum of total assets of the previous year end (31 December) and
daily balances in the period (from 1 January to day d – the last day in reporting month) divided by (d+1).
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NPE – NPE includes risk exposure to D- and E-rated clients
(includes loans and advances, debt securities, and off-balance
of all exposures to clients in Finrep18, before deduction of
allowances for the ECL; the ratio is in gross terms.
exposures, which are included in report Finrep 18; before
the deduction of allowances for the ECL). Non-performing
Where Non-Performing Exposure includes risk exposure to
exposures measured by fair value loans through P&L (FVTPL)
D- and E-rated clients (includes loans and advances, debt
are taken into account at fair value increased by the amount
securities, and off-balance exposures, which are included
of negative fair changes for credit risk.
in report Finrep 18; before the deduction of allowances for
the ECL). The share of NPEs is calculated on the basis of an
NPE per cent. (on-balance and off-balance)/Classified
on-balance and off-balance exposures – NPE per cent. in
internal data source, with which the NLB Group monitors the
portfolio quality. The calculations presented below are based
accordance with EBA methodology: NPE as a percentage
on internal data sources.
Table 52: NLB and NLB Group NPE (Eba def.) calculation
Numerator
Total Non-Performing on-balance and
off-balance Exposure in Finrep18
Denominator
Total on-balance and off-balance
exposures in Finrep18
2021
NLB
2020
in EUR million
NLB Group
2019
2021
2020
2019
159.5
235.1
221.0
415.5
513.0
432.7
13,869.9
12,223.1
11,087.8
24,328.0
22,042.3
16,228.5
NPE per cent.
1.1%
1.9%
2.0%
1.7%
2.3%
2.7%
NPE – NPE indicator according to the BoS calculation
differs from the EBA methodology in the treatment of debt
instruments measured at FVOCI. The carrying amount of
debt instruments measured at FVOCI is increased by value
adjustments due to impairments.
Table 53: NLB and NLB Group NPE (Eba def.) (Bos) calculation
Numerator
Total Non-Performing on-balance and
off-balance Exposure in Finrep18
Denominator
Total on-balance and off-balance
exposures in Finrep18, where carrying
amount of FVOCI is increased by value
adjustments due to impairments
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
159.5
235.1
221.0
415.5
513.0
432.7
13,872.1
12,225.5
11,089.5
24,339.2
22,051.0
16,233.3
NPE per cent.
1.1%
1.9%
2.0%
1.7%
2.3%
2.7%
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NPL – Non-performing loans include loans to D- and E-rated
clients, namely loans at least 90 days past due, or loans
gross terms. Where non-performing loans are defined as
loans to D- and E-rated clients, namely loans at least 90 days
unlikely to be repaid without recourse to collateral (before
past due, or loans unlikely to be repaid without recourse to
deduction of loan loss allowances).
collateral (before deduction of loan loss allowances). The
share of non-performing loans is calculated on the basis of an
internal data source, with which the NLB Group monitors the
loan portfolio quality.
NPL per cent. – The share of non-performing loans in total
loans: non-performing loans as a percentage of total loans
to clients before deduction of loan loss allowances; ratio in
Table 54a: NLB NPL calculation
in EUR million
NLB
2021
2020
2019
Numerator
Total Non-Performing Loans
130.4
208.4
169.5
Denominator
Total gross loans
8,522.5
6,980.8
5,989.9
NPL per cent.
1.5%
3.0%
2.8%
Table 54b: NLB Group NPL calculation
2021
2020
2019
2018
2017
2016
NLB Group
in EUR million
Numerator
Total Non-Performing Loans
367.4
474.7
374.7
622.3
844.5
1,299.2
Denominator
Total gross loans
15,541.8
13,686.6
NPL per cent.
2.4%
3.5%
9,793.5
3.8%
9,017.2
6.9%
9,130.4
9.2%
9,443.7
13.8%
Table 54c: NLB Group’s banking subsidiaries NPL calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
Komercijalna
Banka, Beograd
in EUR million
NLB Group’s
banking
subsidiaries
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2021
59.7
63.2
9.4
13.7
19.0
24.7
15.6
17.5
42.2
27.3
9.5
8.7
36.3
322.1
Numerator
Total Non-
Performing Loans
Denominator
Total gross loans
1,383.8
1,239.1
NPL per cent.
4.3%
5.1%
734.7
1.3%
590.2
2.3%
621.0
3.1%
553.4
4.5%
802.0
1.9%
768.2
2.3%
602.0
470.0
7.0%
5.8%
618.1
1.5%
605.5
1.4%
2,610.1
1.4%
15,894.4
2.0%
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NPL coverage ratio 1 – The coverage of the gross non-
performing loans portfolio with loan loss allowances on the
entire loan portfolio - loan impairment in respect of non-
performing loans. It shows the level of credit provisions that the
entity has already absorbed into its profit and loss accounts
with respect to the total of impaired loans. The NPL coverage
ratio 1 is calculated on the basis of an internal data source, with
which the NLB Group monitors the quality of loan portfolio.
Table 55a: NLB NPL coverage ratio 1 calculation
in EUR million
NLB
2021
2020
2019
97.9
158.4
129.2
Numerator
Loan loss allowances
entire loan portfolio
Denominator
Total Non-Performing Loans
130.4
208.4
169.5
NPL coverage ratio 1 (NPL CR 1)
75.1%
76.0%
76.2%
Table 55b: NLB Group NPL coverage ratio 1 calculation
NLB Group
in EUR million
2021
2020
2019
2018
2017
2016
316.5
388.4
334.2
479.6
654.8
988.7
Numerator
Loan loss allowances
entire loan portfolio
Denominator
Total Non-Performing Loans
NPL coverage ratio 1 (NPL CR 1)
367.4
86.1%
474.7
81.8%
374.7
89.2%
622.3
77.1%
844.5
77.5%
1,299.2
76.1%
Table 55c: NLB Group's banking subsidiaries NPL coverage ratio 1 calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
Komercijalna Banka,
Beograd
NLB Group’s banking
subsidiaries
in EUR million
2021
Numerator
Loan loss allowances
entire loan portfolio
Denominator
Total Non-Performing Loans
NPL coverage ratio 1 (NPL CR 1)
60.5
59.7
101.2%
17.7
9.4
189.3%
20.3
38.0
22.8
19.0
106.3%
15.6
243.2%
42.2
54.0%
8.9
9.5
93.4%
23.1
289.0
36.3
63.5%
322.1
89.7%
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NPL coverage ratio 2 – The coverage of the gross non-
performing loans portfolio with loan loss allowances on the
non-performing loans portfolio. The NPL coverage ratio 2 is
calculated on the basis of an internal data source, with which
the NLB Group monitors the loan portfolio quality.
Table 56a: NLB and NLB Group NPL coverage ratio 2 calculation
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
Numerator
Loan loss allowances non-performing loan portfolio
79.0
120.7
96.2
212.9
272.1
243.7
Denominator
Total Non-Performing Loans
130.4
208.4
169.5
367.4
474.7
374.7
NPL coverage ratio 2 (NPL CR 2)
60.6%
57.9%
56.7%
57.9%
57.3%
65.0%
Table 56b: NLB Group’s banking subsidiaries NPL coverage ratio 2 calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
Komercijalna
Banka, Beograd
2021
in EUR million
NLB Group’s
banking
subsidiaries
Numerator
Loan loss allowances non-performing loan portfolio
Denominator
Total Non-Performing Loans
NPL coverage ratio 2 (NPL CR 2)
38.7
59.7
64.7%
5.7
9.4
61.0%
16.7
14.3
16.5
19.0
87.6%
15.6
91.6%
42.2
39.1%
5.5
9.5
57.6%
7.9
184.2
36.3
21.7%
322.1
57.2%
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Net NPL Ratio – The share of net non-performing loans in
total net loans: non-performing loans after deduction of
loss allowances on the non-performing loans portfolio as
a percentage of total loans to clients after the deduction of
loan loss allowances; the ratio is in net terms. The calculations
presented below are based on internal data sources.
Table 57: NLB and NLB Group Net NPL Ratio calculation
2021
NLB
2020
in EUR million
NLB Group
2019
2021
2020
2019
Numerator
Net volume of non-performing loans
51.4
87.8
73.3
154.5
202.7
131.0
Denominator
Total Net Loans
Net NPL ratio per cent. (%Net NPL)
8,424.7
0.6%
6,822.4
5,860.7
15,225.4
13,298.2
9,459.2
1.3%
1.3%
1.0%
1.5%
1.4%
Received collaterals for NPLs/NPL – The coverage of the
gross non-performing loans portfolio with collateral for non-
performing loans. The collateral market value is used for this
calculation. The calculations presented below are based on
internal data sources.
Table 58: NLB and NLB Group Received collaterals for NPLs/NPL calculation
2021
NLB
2020
in EUR million
NLB Group
2019
2021
2020
2019
78.2
137.2
122.1
226.6
288.1
249.7
Numerator
Gross volume of Non-Performing
Loans covered by collaterals
Denominator
Total Non-Performing Loans
Received collaterals for NPLs / NPL
130.4
60.0%
208.4
65.8%
169.5
72.0%
367.4
61.7%
474.7
60.7%
374.7
66.6%
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Non-performing loans and advances (EBA def.) – Non-
performing loans include loans and advances in accordance
with EBA Methodology that are classified as to D and E,
namely loans at least 90 days past due, or loans unlikely to be
repaid without recourse to collateral (before deduction of loan
loss allowances).
Gross NPL ratio (EBA def.) – The gross NPL ratio is the
ratio of the gross carrying amount of non-performing loans
and advances to the total gross carrying amount of loans
and advances, in accordance with the EBA methodology
(report Finrep18). For the purpose of this calculation, loans
and advances classified as held for sale, cash balances at
CBs, and other demand deposits are excluded from both the
denominator and the numerator. The calculations presented
below are based on internal data sources.
Table 59: NLB and NLB Group Gross NPL ratio (EBA def.) calculation
Numerator
Gross volume of Non-Performing Loans and
advances without loans held for sale, cash
balances at CBs and other demand deposits
Denominator
Gross volume of Loans and advances in Finrep18
without loans held for sale, cash balances
at CBs and other demand deposits
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
131.2
199.1
164.3
375.1
466.0
372.9
5,498.9
4,958.8
4,923.3
11,128.8
10,340.6
8,127.5
Gross NPL ratio per cent. (% NPL)
2.4%
4.0%
3.3%
3.4%
4.5%
4.6%
Gross NPL ratio (EBA def.) (BoS) – The gross NPL ratio is the
ratio of the gross carrying amount of non-performing loans
and advances to the total gross carrying amount of loans and
advances, in accordance with the EBA methodology (report
Finrep18). Cash balances at CBs and other demand deposits
are included in the calculation. The indicator for the banking
sector in the EU is published quarterly by the EBA in the Risk
dashboard. The calculations presented below are based on
internal data sources.
Table 60: NLB and NLB Group Gross NPL ratio (EBA def.) (BoS) calculation
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
Numerator
Gross volume of Non-Performing Loans and advances
131.2
199.1
164.3
375.1
466.0
372.9
Denominator
Gross volume of Loans and advances in Finrep18
8,615.3
7,028.2
6,050.9
15,668.8
13,795.3
9,888.1
Gross NPL ratio per cent. (% NPL)
1.5%
2.8%
2.7%
2.4%
3.4%
3.8%
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NPL coverage ratio (EBA def.) – The NPL coverage ratio is
the ratio of the amount of accumulated impairment, negative
changes in fair value due to credit risk to the non-performing
loans and advances, in accordance with the EBA methodology
(report Finrep18). Loans and advances classified as held for
sale, cash balances at CBs and other demand deposits are
excluded both from the denominator and from the numerator.
Table 61: NLB and NLB Group NPL coverage ratio (EBA def.) calculation
Numerator
Volume of allowances and value adjustments for credit
losses on Non-Performing loans and advances(i)
Denominator
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
79.8
110.1
91.2
219.1
265.3
240.4
Gross volume of Non-Performing loans and advances(i)
131.2
199.1
164.3
375.1
466.0
372.9
NPL coverage ratio per cent. (% CR)
60.8%
55.3%
55.5%
58.4%
56.9%
64.5%
(i) Without loans and advances classified as held for sale, cash balances at CBs, and other demand deposits.
NPL coverage ratio (EBA def.) (BoS) – The NPL coverage
ratio is the ratio of the amount of accumulated impairment,
negative changes in fair value due to credit risk to the non-
performing loans and advances, in accordance with the EBA
methodology (report Finrep18). Cash balances at CBs and
other demand deposits are included in the calculation.
Table 62: NLB and NLB Group NPL coverage ratio (EBA def.) (BoS) calculation
Numerator
Volume of allowances and value adjustments for credit
losses on Non-Performing loans and advances
Denominator
NLB
NLB Group
2021
2020
2019
2021
2020
2019
in EUR million
79.8
110.1
91.2
219.1
265.3
240.4
Gross volume of Non-Performing loans and advances
131.2
199.1
164.3
375.1
466.0
372.9
NPL coverage ratio per cent. (% CR)
60.8%
55.3%
55.5%
58.4%
56.9%
64.5%
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Collateral received/NPL (EBA def.) – The NPL collateral ratio
is the ratio of the collateral received for non-performing loans
the EBA methodology (report Finrep18). The calculation is
provided on single loan basis. The NPLs where the amount of
and advances to the gross carrying amount of collateralized
collateral received exceeds the net non-performing of each
non-performing loans and advances, in accordance with
loan exposure are the subject of calculation.
Table 63: NLB and NLB Group NPL coverage ratio (EBA def.) calculation
Numerator
Volume of collateral received up to the carrying
amount of each loan or advance
Denominator
Gross volume of collateralized Non-
Performing loans and advances
NLB
2020
2021
in EUR million
NLB Group
2019
2021
2020
2019
12.2
38.6
12.9
36.7
61.3
23.9
19.4
88.8
38.2
62.5
144.6
67.4
NPL coverage ratio per cent. (% CR)
63.1%
43.5%
33.6%
58.8%
42.4%
35.4%
Net stable funding ratio (NSFR) – The net stable funding ratio
is a liquidity risk standard requiring financial institutions to
‘Available stable funding’ is defined as the portion of capital
and liabilities expected to be reliable over the time horizon
hold enough stable funding to cover the duration of their long-
considered by the NSFR, which extends to one year. The
term assets.
NSFR is defined as the amount of available stable funding
relative to the amount of required stable funding, and is
amount of such stable funding required of a specific institution
is a function of the liquidity characteristics and residual
maturities of the various assets held by that institution, as
well as those of its off-balance-sheet (OBS) exposures. The
based on the current Basel Committee guidelines. This ratio
calculations presented below are based on internal data
should be equal to at least 100% on an on-going basis.
sources.
Table 64: NLB Group NSFR calculation
Numerator
NLB
NLB Group
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2021
31 Dec 2020
31 Dec 2019
in EUR million
Amount of available stable funding
10,815.8
9,455.7
8,251.6
18,446.7
16,514.6
11,957.9
Denominator
Amount of required stable funding
6,309.5
5,833.7
5,193.9
9,960.8
9,966.8
7,495.5
NSFR
171.4%
162.1%
158.9%
185.2%
165.7%
159.5%
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EVE (Economic Value of Equity) method – EVE method is a
measure of sensitivity of changes in market interest rates on
the economic value of financial instruments. EVE represents
the present value of net future cash flows and provides a
comprehensive view of the possible long-term effects of
changing interest rates at least under the six prescribed
standardised interest rate shock scenarios or more if
necessary, according to the situation on financial markets.
Calculations take into account behavioural and automatic
options, as well as the allocation of non-maturing deposits.
The assessment of the impact of a change in interest rates of
200 bps on the economic value of the banking book position:
Table 65: NLB Group EVE calculation
Numerator
Interest risk in banking book – EVE
-126,651
-135,133
-134,173
-140,567
-128,370
-98,185
-59,547
-68,129
-88,355
-102,319
-77,841
-105,256
-102,397
31 Dec 2021
30 Sep 2021
30 Jun 2021
31 Mar 2021
31 Dec 2020 30 Sep 2020 30 Jun 2020 31 Mar 2020
31 Dec 2019 30 Sep 2019
30 Jun 2019
31 Mar 2019
31 Dec 2018
Denominator
Equity (Tier I)
1,972,485
1,903,800
1,879,365
1,734,545
1,765,000
1,622,945
1,616,921
1,426,936
1,451,176
1,424,020
1,425,298
1,460,078
1,458,318
EVE as % of Equity
-6.4%
-7.1%
-7.1%
-8.1%
-7.3%
-6.1%
-3.7%
-4.8%
-6.1%
-7.2%
-5.5%
-7.2%
-7.0%
NLB Group
in EUR thousand
Operational business margin (OBM) – Calculated as the ratio
between operational business net income annualized and
average assets.
Table 66: NLB Group and NLB OBM calculation
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
Numerator
Operational business net income(i)
678.1
490.3
502.1
274.3
257.7
268.6
Denominator
Average total assets(ii)
OBM (cumulative)
20,659.0
15,086.2
3.3%
3.2%
13,311.7
3.8%
11,876.0
10,336.3
2.3%
2.5%
9,215.3
2.9%
(i) Operational business net income is annualized, and calculated as operational business income in the period divided by the number of days in the period and multiplied by the
number of days in the year. Operational business income consists of net interest income (excluding interest expenses from subordinated securities), net fees and commissions
and net gains and losses from financial assets and liabilities held for trading that derive from foreign exchange trading.
(ii) NLB internal information. Average total assets is calculated as a sum of balance as at the end of the previous year end (31 December) and monthly balances of the last day of
each month from January to month t divided by (t+1).
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Operational business margin (OBM) (quarterly) – Calculated
as the ratio between operational business net income
annualized and average assets.
Table 67: NLB Group OBM (quarterly) calculation(iii)
NLB Group
in EUR million
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Numerator
Operational business net income(i)
718.0
675.1
676.3
642.1
499.8
Denominator
Average total assets(ii)
OBM (quarterly)
21,414.5
3.35%
21,232.1
3.18%
20,357.0
3.32%
19,749.0
3.25%
15,378.5
3.25%
(i) Operational business net income (quarterly) is annualized, and calculated as operational business income in the period divided by the number of days in the quarter and
multiplied by the number of days in the year. Operational business income consists of net interest income (excluding interest expenses from subordinated securities), net fees and
commissions and net gains and losses from financial assets and liabilities held for trading that derive from foreign exchange trading.
(ii) NLB internal information. Average total assets is calculated as a sum of balance as at the end of the previous year end (31 December) and monthly balances of the last day of
each month from January to month t divided by (t+1).
(iii) Komercijalna Banka group included from 2021 on.
Return on equity before tax (ROE b.t.) – Calculated as the ratio
between result before tax annualized and average total equity
(including non-controlling interests).
Table 68: NLB Group and NLB ROE b.t. calculation
Numerator
Result before tax(i)
Denominator
Average total equity(ii)
ROE b.t.
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
261.4
277.9
215.4
211.5
113.9
177.7
2,222.8
11.8%
1,808.1
15.4%
1,700.7
12.7%
1,507.2
14.0%
1,384.6
8.2%
1,328.7
13.4%
(i) The result before tax is annualized, and calculated as the result before tax in the period divided by the number of months for the reporting period and multiplied by 12.
(ii) NLB internal information. Average total equity (including non-controlling interests) is calculated as the sum of the balance as at end of the previous year end (31 December) and
monthly balances of the last day of each month from January to month t divided by (t+1).
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Return on equity after tax (ROE a.t.) – Calculated as the ratio
between result after tax annualized and average equity.
Table 69a: NLB Group and NLB ROE a.t. calculation
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
NLB Group
in EUR million
NLB
2021
2020
2019
2018
2017
2021
2020
2019
236.4
269.7
193.6
203.6
225.1
208.4
114.0
176.1
2,069.9
1,751.2
1,658.0
1,729.9
1,566.7
1,507.2
1,384.6
1,328.7
11.4%
15.4%
11.7%
11.8%
14.4%
13.8%
8.2%
13.3%
(i) The result after tax is annualized, and calculated as the result after tax in the period divided by the number of months for the reporting period and multiplied by 12.
(ii) NLB internal information. Average equity is calculated as the sum of the balance as at the end of the previous year end (31 December) and monthly balances of the last day of
each month from January to month t divided by (t+1).
Table 69b: NLB Group (w/o Komercijalna Banka group) ROE a.t. calculation
NLB Group (w/o Komercijalna Banka group)
in EUR million
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
(i)(ii) Please refer to the notes under Table 69a.
Table 69c: NLB Group’s banking subsidiaries ROE a.t. calculation
2020
141.3
1,741.1
8.1%
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
NLB Banka, Skopje
NLB Banka, Banja Luka
NLB Banka, Sarajevo
NLB Banka, Prishtina
NLB Banka, Podgorica
NLB Banka, Beograd
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
39.0
19.2
18.2
10.1
10.0
5.9
24.4
13.3
10.1
1.4
4.3
2.6
245.4
15.9%
219.4
8.8%
106.7
93.3
93.5
84.3
108.9
92.1
76.5
68.2
77.4
74.2
17.0%
10.8%
10.7%
7.0%
22.4%
14.5%
13.1%
2.0%
5.5%
3.5%
(i)(ii) Please refer to the notes under Table 69a.
in EUR million
Komercijalna
Banka, Beograd
2021
34.8
630.2
5.5%
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Return on assets (ROA b.t.) – Calculated as the ratio between
result before tax annualized and average total assets.
Table 70: NLB Group and NLB ROA b.t. calculation
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
261.4
277.9
215.4
211.5
113.9
177.7
Numerator
Result before tax(i)
Denominator
Average total assets(ii)
20,659.0
15,086.2
ROA b.t.
1.3%
1.8%
13,311.7
1.6%
11,876.0
10,336.3
1.8%
1.1%
9,215.3
1.9%
(i) The result before tax is annualized, and calculated as the result before tax in the period divided by the number of months for the reporting period and multiplied by 12.
(ii) NLB internal information. Average total assets is calculated as the sum of the balance as at the end of the previous year end (31 December) and the monthly balances of the
last day of each month from January to month t divided by (t+1).
Return on assets (ROA a.t.) – Calculated as the ratio between
result after tax annualized and average total assets.
Table 71a: NLB Group and NLB ROA a.t. calculation
Numerator
Result after tax(i)
Denominator
Average total assets(ii)
ROA a.t.
NLB Group
2021
2020
2019
2021
in EUR million
NLB
2020
2019
236.4
269.7
193.6
208.4
114.0
176.1
20,659.0
15,086.2
1.1%
1.8%
13,311.7
1.5%
11,876.0
10,336.3
1.8%
1.1%
9,215.3
1.9%
(i) The result after tax is annualized, and calculated as the result after tax in the period divided by the number of months for the reporting period and multiplied by 12.
(ii) NLB internal information. Average total assets is calculated as the sum of balance as at the end of the previous year end (31 December) and monthly balances of the last day of
each month from January to month t divided by (t+1).
Table 71b: NLB Group’s banking subsidiaries ROA a.t. calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
39.0
19.2
18.2
10.1
10.0
5.9
24.4
13.3
10.1
1.4
4.3
2.6
Numerator
Result after tax(i)
Denominator
Average total assets(ii)
1,658.6
1,507.2
ROA a.t.
2.4%
1.3%
874.5
2.1%
784.9
1.3%
673.5
1.5%
639.3
0.9%
906.0
2.7%
824.9
1.6%
593.5
1.7%
541.0
0.3%
696.3
0.6%
662.8
0.4%
(i)(ii) Please refer to the notes under Table 71a.
in EUR million
Komercijalna
Banka, Beograd
2021
34.8
4,029.4
0.9%
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Total capital ratio (TCR) – TCR is the own funds of the
institution expressed as a percentage of the total risk
exposure amount.
Table 72a: NLB Group and NLB TCR calculation
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2021
31 Dec 2020
31 Dec 2019
in EUR million
Numerator
Total capital (Own funds)
2,252.5
2,065.5
1,495.8
1,647.3
1,631.6
1,182.2
Denominator
Total risk exposure Amount (Total RWA)
12,667.4
12,421.0
Total capital ratio
17.8%
16.6%
9,185.5
16.3%
6,708.5
6,028.8
24.6%
27.1%
5,225.1
22.6%
Table 72b: NLB Group’s banking subsidiaries TCR calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Banka,
Beograd
Komercijalna
Banka, Beograd
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
31 Dec
2020
31 Dec
2021
in EUR million
243.6
190.6
77.1
78.4
75.0
74.6
112.3
103.2
70.0
52.1
87.7
84.5
555.8
Numerator
Total capital
Denominator
Total risk exposure Amount (Total RWA)
1,354.4
1,212.5
456.7
452.3
445.0
416.4
647.9
579.7
429.3
321.5
456.3
443.1
Total capital ratio
18.0%
15.7%
16.9%
17.3%
16.9%
17.9%
17.3%
17.8%
16.3%
16.2%
19.2%
19.1%
1,946.7
28.6%
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NLB Group Chart
Nova Ljubljanska banka d.d., Ljubljana
CORE MEMBERS
NON-CORE MEMBERS
Banks
Financial institutions
Companies
Financial institutions
Companies
Foreign countries
Slovenia
Slovenia
Slovenia
Slovenia
NLB Banka, Beograd
100%
100%
NLB Skladi, Ljubljana
Bankart, Ljubljana(ii)
100%
100%
45.64%
45.64%
NLB Banka, Sarajevo
NLB Lease&Go, Ljubljana
97.35%
97.35%
100%
100%
NLB Cultural Heritage
Management Institute
100%
100%
NLB Banka, Podgorica (iii)
75.90%
99.87%
NLB Banka, Prishtina
82.377%
82.377%
NLB Banka, Banja Luka
99.85%
99.85%
NLB Banka, Skopje
86.97%
86.97%
Komercijalna Banka,
Beograd
88.28%
88.28%
KomBank Invest, Beograd
100%
100%
Legend:
The chart shows voting rights shares.The Group includes entities according to the definition in the Financial Conglomerates Act (Article 2).
Subsidiary
% direct share
% indirect share at the
group level
Associate
% direct share
% indirect share at the
group level
Joint venture
% direct share
% indirect share at the
group level
Notes:
(i) 90% direct ownership Prvi Faktor, Ljubljana in liquidation, 5% NLB, 5% SID banka d.d.
(ii) Abanka merged into Nova KBM, which currently has a 29.22% share in Bankart. This is over the 25% threshhold set in the Founding
agreement - no shareholder other than NLB can have more than 25% capital share in Bankart.
(iii) 75.90% direct ownership NLB; 23.97% Komercijalna Banka, Beograd.
(iv) 100% direct ownership NLB Lease&Go d.o.o., Ljubljana
NLB Leasing Ljubljana-
in liquidation(iv)
100%
100%
PRO-REM, Ljubljana in
liquidation
100%
100%
Optima Leasing, Zagreb in
liquidation
100%
100%
OL Nekretnine, Zagreb in
liquidation
100%
100%
Prvi faktor, Ljubljana in
liquidation
50%
50%
Prvi faktor, Beograd in
liquidation(i)
90%
95%
Prvi faktor, Zagreb in
liquidation
100%
100%
S-REAM, Ljubljana
100%
100%
REAM, Zagreb
100%
100%
ARG-Nepremičnine, Horjul
75%
75%
Foreign countries
Foreign countries
NLB InterFinanz, Zürich in
liquidation
100%
100%
NLB InterFinanz, Beograd in
liquidation
100%
100%
NLB Leasing, Beograd in
liquidation
100%
100%
LHB AG, Frankfurt
100%
100%
NLB Crna Gora, Podgorica
100%
100%
REAM, Beograd
100%
100%
REAM, Podgorica
100%
100%
Tara Hotel, Budva
12.71%
100%
SPV 2, Beograd
100%
100%
NLB Srbija, Beograd
100%
100%
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Organisational Structure of NLB
SUPERVISORY BOARD
MANAGEMENT BOARD
Internal Audit
Strategy and Business Development
Compliance and Integrity
Legal and Secretariat
Group Steering
Worker´s Council(i)
Communication
Human Resources and Organization Development
Global Risk
Group Real Estate Management
Sales Development and Management
IT Architecture
Credit Risk - Corporate
Controlling
CSA & Cross-border Financing
IT Delivery
Credit Risk - Retail
Financial Accounting and Administration
Large Corporates
Data Management
Evaluation and Control
Financial Markets
Small and Mid Corporates
IT Shared Service Centre
Restructuring
CFO
Trade Finance Services
NLB Group IT Security Governance
Workout and Legal support
CRO
Understanding of the tasks and responsibilities of Global Risk, Compliance and
Integrity and Internal Audit is taken into account in accordance to the definitions of
the (currently valid) Banking Act (ZBan-3).
(i) Worker´s Council is independent organisational unit with no subordinate or
superior organisational units and it operates in accordance with ZSDU.
Investment Banking and Custody
IT Infrastructure
Private Banking
Procurement
KC 24/7
Payments Processing
Distribution Network
Cash Processing
Area Branch Ljubljana
Financial Instruments Processing
Area Branch Northwest and Central Slovenia
Corporate Customer Delivery
Area Branch Northeast Slovenia
Retail Banking Processing
Area Branch Southeast Slovenia
COO
Area Branch Southwest Slovenia
Micro Enterprises
Mobile Banking
CMO
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We believe you deserve
every opportunity.
First, we liked your résumé.
Then, you fascinated us with your enthusiasm.
After that, we saw great potential in you.
Now, we will make sure you utilise it to the fullest.
We believe that a satisfied and efficient employee is one who successfully aligns their private and professional life,
while at the same time preserves the feeling that their potential is recognised and respected. With intensive investments
into the upgrading of the potential of our employees, we have raised a company of enthusiastic experts from across
the region who firmly believe in their work and mission. Just like Nino, Ljubica and Matej from our Ljubljana IT office.
FINANCIAL REPORT
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Contents
Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
2.13. Allowances for financial assets . . . . . . . . . . . . . . . . . . . . . . 192
Statement of management’s responsibility . . . . . . . . . . . . . . 177
2.14. Forborne loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
3.
4.
Changes in the composition of the NLB Group . . . . . 203
Notes to the income statement. . . . . . . . . . . . . . . . . . . . 204
Statement of comprehensive income
for the annual period ended 31 December . . . . . . . . . . . . . . . . 179
Statement of financial position as at 31 December . . . . . . . .180
Statement of changes in equity
for the annual period ended 31 December . . . . . . . . . . . . . . . . 182
2.15. Repossessed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
4.1.
Interest income and expenses . . . . . . . . . . . . . . . . . . . . . . 204
2.16. Offsetting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
4.2. Dividend income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
2.17.
Sale and repurchase agreements . . . . . . . . . . . . . . . . . . . 195
4.3.
Fee and commission income and expenses. . . . . . . . . 205
2.18. Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
4.4. Gains less losses from financial assets
Statement of cash flows
for the annual period ended 31 December . . . . . . . . . . . . . . . . 184
2.19.
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
and liabilities not measured at fair value
through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Notes to the financial statements. . . . . . . . . . . . . . . . . . . . . . . . . 186
2.20.
Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
4.5. Gains less losses from financial assets
and liabilities held for trading . . . . . . . . . . . . . . . . . . . . . . . 207
1.
2.
General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
2.21. Non-current assets and disposal
groups classified as held for sale . . . . . . . . . . . . . . . . . . . . 196
4.6. Gains less losses from non-trading
Summary of significant accounting policies . . . . . . . . 186
2.22. Accounting for leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
financial assets mandatorily at fair value
through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
2.1.
Statement of compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
2.23. Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . 197
4.7.
Foreign exchange translation gains less losses . . . . . 208
2.2.
Basis for presenting the financial statements . . . . . . . . 186
2.24. Borrowings, deposits, and issued
debt securities with characteristics of debt . . . . . . . . . . 197
4.8. Other net operating income . . . . . . . . . . . . . . . . . . . . . . . . 209
2.3.
Comparative amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
4.9. Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
2.4.
Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
with characteristics of equity . . . . . . . . . . . . . . . . . . . . . . . . 197
4.10. Cash contributions to resolution funds
2.25. Other issued financial instruments
2.5.
Business combinations, goodwill,
and bargain purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
2.6.
Investments in subsidiaries,
associates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . 188
2.7.
A combination of entities or
businesses under common control . . . . . . . . . . . . . . . . . . 188
2.8.
Foreign currency translation . . . . . . . . . . . . . . . . . . . . . . . . 188
2.9.
Interest income and expenses . . . . . . . . . . . . . . . . . . . . . . . 188
2.10. Fee and commission income . . . . . . . . . . . . . . . . . . . . . . . . 189
2.26. Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
2.27. Contingent liabilities and commitments. . . . . . . . . . . . . . 197
and deposit guarantee schemes. . . . . . . . . . . . . . . . . . . . . .211
4.11. Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . .211
2.28. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
of financial assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
4.12. Gains less losses from modification
2.29. Fiduciary activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
4.13. Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
2.30. Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
4.14.
Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
2.31. Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
4.15. Gains less losses from non-current
2.32. Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
2.33. Critical accounting estimates and
assets held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
4.16.
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
2.11. Dividend income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
judgments in applying accounting policies . . . . . . . . . . 199
4.17. Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
2.12. Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189
2.34.
Implementation of the new and revised
International Financial Reporting Standards . . . . . . . . 201
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5.
Notes to the statement of financial position . . . . . . . . 215
5.17. Deferred income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
5.1.
Cash, cash balances at central banks,
and other demand deposits at banks . . . . . . . . . . . . . . . . 215
5.18.
Income tax relating to components
of other comprehensive income . . . . . . . . . . . . . . . . . . . . 269
5.2.
Financial instruments held for trading . . . . . . . . . . . . . . 216
5.19. Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
5.3. Non-trading financial instruments
measured at fair value through profit or loss . . . . . . . . 217
5.20. Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
5.4.
Financial assets measured at fair value
through other comprehensive income . . . . . . . . . . . . . . . 218
5.5. Derivatives for hedging purposes. . . . . . . . . . . . . . . . . . . 220
5.6.
Financial assets measured at amortised cost. . . . . . . .223
5.7. Non-current assets held for sale . . . . . . . . . . . . . . . . . . . .226
5.8.
Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .226
5.9.
Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .229
5.21. Accumulated other comprehensive
income and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
5.22. Capital adequacy ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
5.23. Off-balance sheet liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 273
5.24. Funds managed on behalf of third parties . . . . . . . . . . .275
6.
Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
6.1.
Credit risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .278
5.10.
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
6.2. Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .297
5.11.
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
6.3.
Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
5.12.
Investments in subsidiaries,
associates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . .234
5.13. Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .243
5.14. Movements in allowance
for the impairment of financial assets . . . . . . . . . . . . . . .244
5.15. Financial liabilities,
measured at amortised cost . . . . . . . . . . . . . . . . . . . . . . . . 255
5.16. Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .258
6.4. Management of non-financial risks. . . . . . . . . . . . . . . . . . 316
6.5.
Fair value hierarchy of financial and
non-financial assets and liabilities . . . . . . . . . . . . . . . . . . . 317
6.6. Offsetting financial assets and financial liabilities . . .328
7.
8.
9.
Analysis by segment for NLB Group. . . . . . . . . . . . . . . .329
Related-party transactions. . . . . . . . . . . . . . . . . . . . . . . .333
Events after the reporting date . . . . . . . . . . . . . . . . . . . . 341
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Independent auditor’s report
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MB Statement
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Risk Factors & Outlook
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176
Statement of management’s
responsibility
The Management Board hereby confirms its responsibility
the requirements of the Slovenian Companies Act and the
statements of NLB Group and NLB, together with the
for preparing the consolidated financial statements of NLB
Banking Act so as to give a true and fair view of the financial
accompanying notes, have been prepared on a going-
Group and the financial statements of NLB for the year ending
position of NLB Group and NLB as at 31 December 2021, and
concern basis for NLB Group and NLB, and in line with
on 31 December 2021, and for the accompanying accounting
their financial results and cash flows for the year then ended.
valid legislation and the International Financial Reporting
policies and notes to the financial statements.
Standards as adopted by the European Union.
The Management Board also confirms that the appropriate
The Management Board is responsible for the preparation
accounting policies were consistently applied, and that
The Management Board is also responsible for appropriate
and fair presentation of these financial statements in
the accounting estimates were prepared according to
accounting practices, the adoption of appropriate measures
accordance with the International Financial Reporting
the principles of prudence and good management. The
for safeguarding assets, and the prevention and identification
Standards as adopted by the European Union, and with
Management Board further confirms that the financial
of fraud and other irregularities or illegal acts.
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Management Board of NLB
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
Contents
177
Income statement for the annual period ended 31 December
NLB Group
in EUR thousands
NLB
Interest income calculated using the effective interest method
Other interest and similar income
Interest and similar income
Interest expenses calculated using the effective interest method
Other interest and similar expenses
Interest and similar expenses
Net interest income
Dividend income
Fee and commission income
Fee and commission expenses
Net fee and commission income
Gains less losses from financial assets and liabilities not measured at fair value through profit or loss
Gains less losses from financial assets and liabilities held for trading
Gains less losses from non-trading financial assets mandatorily at fair value through profit or loss
Fair value adjustments in hedge accounting
Foreign exchange translation gains less losses
Net gains or losses on derecognition of investments in subsidiaries, associates and joint ventures
Gains less losses on derecognition of non-financial assets
Other net operating income
Administrative expenses
Cash contributions to resolution funds and deposit guarantee schemes
Depreciation and amortisation
Gains less losses from modification of financial assets
Provisions for credit losses
Provisions for other liabilities and charges
Impairment of financial assets
Impairment of non-financial assets
Negative goodwill
Share of profit from investments in associates and joint ventures (accounted for using the equity method)
Gains less losses from non-current assets held for sale
Profit before income tax
Income tax
Profit for the year
Attributable to owners of the parent
Attributable to non-controlling interests
Notes
4.1.
4.1.
4.2.
4.3.
4.3.
4.4.
4.5.
4.6.
5.5.a)
4.7.
5.12.b)
4.8.
4.9.
4.10.
4.11.
4.12.
4.13.
4.13.
4.14.
4.14.
5.12.c)
5.12.d)
4.15.
4.16.
2021
467,500
10,329
477,829
(53,171)
(15,298)
(68,469)
409,360
223
332,589
(95,413)
237,176
167
21,194
16,838
167
345
(9,298)
2,681
23,221
(368,851)
(35,140)
(46,528)
(263)
8,504
(22,670)
27,331
(4,407)
-
1,108
248
261,406
(13,538)
247,868
236,404
11,464
2020
347,636
7,552
355,188
(41,208)
(14,407)
(55,615)
299,573
111
232,432
(62,152)
170,280
17,689
9,794
6,598
720
739
(471)
1,300
7,549
(262,226)
(16,674)
(31,715)
(3,577)
(482)
(8,077)
(61,799)
(996)
137,858
874
10,853
277,921
(5,165)
272,756
269,707
3,049
2021
170,002
9,183
179,185
(25,142)
(14,904)
(40,046)
139,139
79,616
155,217
(35,623)
119,594
24
4,596
13,492
167
700
-
53
13,747
(166,079)
(9,535)
(17,522)
-
8,028
(72)
18,067
7,547
-
-
(94)
211,468
(3,047)
208,421
208,421
-
Earnings per share/diluted earnings per share (in EUR per share)
4.17.
11.8
13.5
10.4
The notes are an integral part of these financial statements.
2020
167,611
7,493
175,104
(21,883)
(14,334)
(36,217)
138,887
6,259
136,691
(32,234)
104,457
16,970
4,741
6,815
720
(1,108)
-
12
5,794
(162,613)
(7,103)
(17,848)
-
599
(7,645)
(9,633)
(685)
-
-
35,234
113,853
99
113,952
113,952
-
5.7
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Statement of comprehensive income for the annual period ended 31 December
Net profit for the year after tax
Other comprehensive income after tax
Items that will not be reclassified to income statement
Actuarial gains/(losses) on defined benefit pensions plans
Fair value changes of equity instruments measured at fair value through other comprehensive income
Share of other comprehensive income/(losses) of entities accounted for using the equity method
Income tax relating to components of other comprehensive income
Items that have been or may be reclassified subsequently to income statement
Foreign currency translation
Translation gains/(losses) taken to equity
Debt instruments measured at fair value through other comprehensive income
Valuation gains/(losses) taken to equity
Transferred to income statement
Share of other comprehensive income/(losses) of entities accounted for using the equity method
Income tax relating to components of other comprehensive income
Total comprehensive income for the year after tax
Attributable to owners of the parent
Attributable to non-controlling interests
The notes are an integral part of these financial statements.
Notes
5.16.c)
5.4.c)
5.18.
5.4.c)
4.4., 4.14.
5.18.
NLB Group
NLB
in EUR thousands
2021
247,868
(30,168)
(1,377)
3,072
(30)
(1)
611
611
(37,394)
(40,081)
2,687
-
4,951
217,700
207,854
9,846
2020
272,756
(2,147)
878
3,809
(41)
(534)
(703)
(703)
6,555
7,733
(1,178)
(11,026)
(1,085)
270,609
266,907
3,702
2021
208,421
(15,281)
(115)
(383)
-
94
-
-
(17,359)
(17,187)
(172)
-
2,482
193,140
193,140
-
2020
113,952
3,817
700
202
-
(171)
-
-
3,810
7,522
(3,712)
-
(724)
117,769
117,769
-
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Statement of financial position as at 31 December
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Derivatives - hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
Investments in subsidiaries
Investments in associates and joint ventures
Tangible assets
Property and equipment
Investment property
Intangible assets
Current income tax assets
Deferred income tax assets
Other assets
Non-current assets held for sale
Total assets
Financial liabilities held for trading
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Derivatives - hedge accounting
Provisions
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Total liabilities
Equity and reserves attributable to owners of the parent
Share capital
Share premium
Accumulated other comprehensive income
Profit reserves
Retained earnings
Non-controlling interests
Total equity
Total liabilities and equity
The notes are an integral part of these financial statements.
Notes
5.1.
5.2.a)
5.3.a)
5.4.
5.6.a)
5.6.b)
5.6.c)
5.6.d)
5.5.b)
5.5.c)
5.12.a)
5.12.d)
5.8.
5.9.
5.10.
5.17.
5.13.
5.7.
5.2.b)
5.3.b)
5.15.a)
5.15.b)
5.15.a)
5.15.b)
5.15.c)
5.15.d)
5.5.b)
5.16.
5.17.
5.19.
5.20.
5.21.a)
5.21.b)
5.21.a)
NLB Group
31 Dec 2020
3,961,812
84,855
42,393
3,514,290
in EUR thousands
NLB
31 Dec 2020
2,261,533
18,831
35,106
1,716,351
31 Dec 2021
3,250,437
7,682
12,360
1,585,751
1,503,087
197,005
9,619,860
113,138
-
13,844
-
7,988
249,117
54,842
61,668
4,369
31,789
97,140
8,658
19,565,855
15,485
-
72,633
158,225
16,397,167
91,560
288,321
182,095
61,161
125,059
1,002
4,475
45,632
17,442,815
200,000
871,378
21,127
13,522
846,762
1,952,789
170,251
2,123,040
1,436,424
199,287
5,145,153
92,404
568
7,082
781,540
4,483
86,122
9,181
29,453
3,761
31,902
11,853
4,089
12,699,532
7,602
352
109,329
873,479
9,659,605
406
288,519
102,527
35,377
49,363
-
-
21,039
11,147,598
200,000
871,378
8,768
13,522
458,266
1,551,934
-
1,551,934
19,565,855
12,699,532
1,277,880
158,320
4,564,178
54,503
-
13,844
749,060
1,662
91,675
8,300
28,105
1,923
29,214
11,664
4,454
11,026,603
15,500
-
41,635
143,464
8,850,755
13
288,321
88,969
61,161
63,790
-
-
22,001
9,575,609
200,000
871,378
24,102
13,522
341,992
1,450,994
-
1,450,994
11,026,603
31 Dec 2021
5,005,052
7,678
21,161
3,461,860
1,717,626
140,683
10,587,121
122,229
568
7,082
-
11,525
247,014
47,624
59,076
3,948
38,977
91,221
7,051
21,577,496
7,585
-
71,828
858,531
17,640,809
74,051
288,519
206,878
35,377
119,404
5,878
3,045
49,468
19,361,373
200,000
871,378
(10,552)
13,522
1,004,385
2,078,733
137,390
2,216,123
21,577,496
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The Management Board has authorised for issue the financial statements and the accompanying notes.
Archibald Kremser
CFO
Andreas Burkhardt
CRO
Blaž Brodnjak
CEO & CMO
Ljubljana, 11 April 2022
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Statement of changes in equity for the annual period ended 31 December
NLB Group
Notes
Balance as at 1 January 2021
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Dividends paid
Transactions with non-controlling
interests (note 3.)
Transfer of fair values reserve
Other
Accumulated other comprehensive income
Share
capital
Share
premium
5.20.
200,000
5.21.a)
871,378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Fair value
reserve of
financial assets
measured at
FVOCI
Foreign
currency
translation
reserve
5.21.b)
42,496
-
(28,005)
(28,005)
-
149
(3,274)
-
5.21.b)
(17,724)
-
540
540
-
-
-
-
Other
5.21.b)
(3,645)
-
(1,085)
(1,085)
-
-
(4)
-
in EUR thousands
Profit
reserves
Retained
earnings
Equity
attributable to
owners of the
parent
Equity
attributable to
non-controlling
interests
Total
equity
5.21.a)
13,522
-
-
-
-
-
-
-
846,762
1,952,789
170,251
2,123,040
236,404
236,404
-
(28,550)
236,404
207,854
(92,200)
(92,200)
11,464
(1,618)
9,846
(7,710)
247,868
(30,168)
217,700
(99,910)
10,168
3,278
(27)
10,317
(34,997)
(24,680)
-
(27)
-
-
-
(27)
Balance as at 31 December 2021
200,000
871,378
11,366
(17,184)
(4,734)
13,522
1,004,385
2,078,733
137,390
2,216,123
NLB Group
Notes
Balance as at 1 January 2020
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Acquisition of subsidiaries
Transfer of fair values reserve
Share
capital
Share
premium
5.20.
200,000
5.21.a)
871,378
-
-
-
-
-
-
-
-
-
-
Balance as at 31 December 2020
200,000
871,378
in EUR thousands
Accumulated other comprehensive income
Fair value
reserve of
financial assets
measured at
FVOCI
5.21.b)
47,880
-
(2,833)
(2,833)
-
(2,551)
42,496
Foreign
currency
translation
reserve
5.21.b)
(17,055)
-
(669)
(669)
-
-
Other
5.21.b)
(4,332)
-
702
702
-
(15)
Profit
reserves
Retained
earnings
Equity
attributable to
owners of the
parent
Equity
attributable to
non-controlling
interests
Total
equity
5.21.a)
13,522
-
-
-
-
-
574,489
1,685,882
45,015
1,730,897
269,707
-
269,707
(2,800)
269,707
266,907
3,049
653
3,702
272,756
(2,147)
270,609
-
2,566
-
-
121,534
121,534
-
-
(17,724)
(3,645)
13,522
846,762
1,952,789
170,251
2,123,040
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NLB
Notes
Balance as at 1 January 2021
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Dividends paid
Transfer of fair values reserve
Share
capital
5.20.
200,000
-
-
-
-
-
Share
premium
5.21.a)
871,378
-
-
-
-
-
Balance as at 31 December 2021
200,000
871,378
Accumulated other comprehensive income
Fair value reserve
of financial assets
measured at FVOCI
5.21.b)
27,694
-
(15,177)
(15,177)
-
(53)
12,464
Other
5.21.b)
(3,592)
-
(104)
(104)
-
-
Profit
reserves
5.21.a)
13,522
-
-
-
-
-
(3,696)
13,522
NLB
Notes
Balance as at 1 January 2020
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Share
capital
5.20.
200,000
-
-
-
Share
premium
5.21.a)
871,378
-
-
-
Balance as at 31 December 2020
200,000
871,378
The notes are an integral part of these financial statements.
Accumulated other comprehensive income
Fair value reserve
of financial assets
measured at FVOCI
5.21.b)
24,444
-
3,250
3,250
27,694
Other
5.21.b)
(4,159)
-
567
567
Profit
reserves
5.21.a)
13,522
-
-
-
(3,592)
13,522
in EUR thousands
Retained
earnings
Total
equity
5.20.
341,992
208,421
-
208,421
(92,200)
53
458,266
Retained
earnings
5.20.
228,040
113,952
-
113,952
341,992
1,450,994
208,421
(15,281)
193,140
(92,200)
-
1,551,934
in EUR thousands
Total
equity
1,333,225
113,952
3,817
117,769
1,450,994
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Statement of cash flows for the annual period ended 31 December
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Interest paid
Dividends received
Fee and commission receipts
Fee and commission payments
Realised gains from financial assets and financial liabilities not at fair value through profit or loss
Net gains/(losses) from financial assets and liabilities held for trading
Payments to employees and suppliers
Other receipts
Other payments
Income tax (paid)/received
Cash flows from operating activities before changes in operating assets and liabilities
(Increases)/decreases in operating assets
Net (increase)/decrease in trading assets
Net (increase)/decrease in non-trading financial assets
mandatorily at fair value through profit or loss
Net (increase)/decrease in financial assets measured at fair
value through other comprehensive income
Net (increase)/decrease in loans and receivables measured at amortised cost
Net (increase)/decrease in other assets
Increases/(decreases) in operating liabilities
Net increase/(decrease) in deposits and borrowings measured at amortised cost
Net increase/(decrease) in other liabilities
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Receipts from investing activities
Proceeds from sale of property, equipment, and investment property
Proceeds from sale of subsidiaries, net of cash and cash equivalents
Proceeds from non-current assets held for sale
Proceeds from disposals of debt securities measured at amortised cost
Payments from investing activities
Purchase of property, equipment, and investment property
Purchase of intangible assets
Purchase of subsidiaries, net of cash acquired and increase in subsidiaries’ equity
Increase in associates and joint ventures’ equity
Purchase of debt securities measured at amortised cost
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from financing activities
Issuance of subordinated debt
Payments from financing activities
Dividends paid
Repayments of subordinated debt
Net cash flows from financing activities
Effects of exchange rate changes on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
The notes are an integral part of these financial statements.
Notes
5.12.b)
3., 5.12.c)
5.15.c)
5.15.c)
2021
541,219
(69,578)
635
332,575
(92,102)
171
21,563
(382,529)
27,516
(51,129)
(8,617)
319,724
(964,998)
68,965
36,500
(57,015)
(1,020,944)
7,496
2,108,374
2,106,985
1,389
1,463,100
495,174
5,077
(47,832)
966
536,963
(832,512)
(23,013)
(12,704)
(24,437)
(2,900)
(769,458)
(337,338)
-
-
(100,503)
(100,503)
-
(100,503)
14,640
1,025,259
4,136,412
5,176,311
NLB Group
in EUR thousands
NLB
2020
372,903
(52,921)
787
232,607
(65,728)
17,993
10,919
(260,259)
13,642
(20,629)
(6,645)
242,669
(366,831)
1,838
(12,667)
(150,006)
(207,260)
1,264
1,338,778
1,338,591
187
1,214,616
478,251
5,341
-
39,078
433,832
108,232
(27,626)
(15,020)
452,770
(326)
(301,566)
586,483
119,222
119,222
(45,000)
-
(45,000)
74,222
(2,176)
1,875,321
2,263,267
4,136,412
2021
214,866
(43,343)
56,606
152,288
(33,927)
24
5,404
(170,986)
17,723
(16,026)
(1,603)
181,026
(469,788)
2,471
35,792
90,215
(598,138)
(128)
1,589,861
1,589,415
446
1,301,099
478,851
12
15,310
791
462,738
(697,976)
(9,093)
(6,889)
(40,046)
(2,900)
(639,048)
(219,125)
-
-
(92,200)
(92,200)
-
(92,200)
3,219
989,774
2,261,791
3,254,784
2020
207,188
(31,881)
6,261
133,743
(32,972)
17,274
5,634
(164,558)
8,627
(9,490)
3,779
143,605
(105,859)
1,838
(12,564)
(77,098)
(18,357)
322
1,043,991
1,044,255
(264)
1,081,737
402,729
2,258
-
39,078
361,393
(602,939)
(15,089)
(10,663)
(397,729)
(326)
(179,132)
(200,210)
119,222
119,222
(45,000)
-
(45,000)
74,222
(2,080)
955,749
1,308,122
2,261,791
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Cash and cash equivalents comprise:
Cash, cash balances at central banks, and other demand deposits at banks
5.1.
5,005,946
3,962,686
3,250,784
2,261,791
Loans and advances to banks with original maturity up to three months
Debt securities measured at fair value through other comprehensive income with original maturity up to three months
Total
142,319
28,046
146,223
27,503
4,000
-
-
-
5,176,311
4,136,412
3,254,784
2,261,791
NLB Group
NLB
in EUR thousands
Notes
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
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Notes to the financial
statements
1. General information
Nova Ljubljanska banka d.d. Ljubljana (hereinafter: ‘NLB’
or ‘the Bank’) is a Slovenian joint-stock entity providing
universal banking services. NLB Group consists of NLB and
its subsidiaries located in nine countries, mainly in Slovenia
and the SEE market. Information on NLB Group’s structure
is disclosed in note 5.12. Information on other related party
relationships of NLB Group is provided in note 8.
NLB is incorporated and domiciled in Slovenia. The address
of its registered office is Trg Republike 2, 1000 Ljubljana. NLB’s
shares are listed on the Ljubljana Stock Exchange, and the
global depositary receipts (‘GDR’), representing ordinary
shares of NLB, are listed on the London Stock Exchange. Five
GDRs represent one share of NLB.
As at 31 December 2021 and as at 31 December 2020, the
largest shareholder of NLB with significant influence is the
Republic of Slovenia, owning 25.00% plus one share.
All amounts in the financial statements and in the notes to
the financial statements are expressed in thousands of euros
unless otherwise stated.
2. Summary of significant
accounting policies
The principal accounting policies adopted for the preparation
of the separate and consolidated financial statements are set
out below. The policies have been consistently applied to all
The separate and consolidated financial statements are
This document contains both the separate financial
comprised of the income statement and statement of
statements of NLB, and the consolidated financial statements
comprehensive income, the statement of financial position, the
of NLB Group. The presented accounting policies apply
statement of changes in equity, the statement of cash flows,
to both sets of financial statements, with the exception of
significant accounting policies, and the notes.
policies described in notes 2.4. and 2.5., which only apply to
2.2. Basis for presenting the financial statements
The financial statements have been prepared on a going-
concern basis, under the historical cost convention as
modified by the revaluation of financial assets measured at
fair value through other comprehensive income, financial
assets, and financial liabilities at fair value through profit or
loss, including all derivative contracts, hedged items in fair
value hedge accounting relationships, non-current assets
held for sale, and investment property.
the consolidated financial statements and policies described
in note 2.6., where differences in the accounting treatment for
investments in subsidiaries, and associated and joint ventures
between separate and consolidated financial statements are
described. Data relating to separate financial statements is
marked ‘NLB,’ while data relating to consolidated financial
statements is marked ‘NLB Group.’
2.3. Comparative amounts
Except when a standard or an interpretation permits or
requires otherwise, all amounts are reported or disclosed
The preparation of financial statements in accordance with
with comparative amounts. Where IAS 8 applies, comparative
the IFRS requires the use of estimates and assumptions that
figures have been adjusted to conform to the changes in
affect the reported amounts of assets and liabilities, the
presentation in the current year.
disclosure of contingent assets and liabilities on the date
of the financial statements, and the reported amounts of
Compared to the presentation of the financial statements for
revenue and expenses during the reporting period. Although
the year ended 31 December 2020, the classification of certain
these estimates are based on management’s best knowledge
line items in the Statement of Financial Position changed due
of current events and activities, actual results may ultimately
to changes prescribed by the Bank of Slovenia. Additionally,
differ from those estimates. Accounting estimates and
there was a change in the line item ‘Interest and similar
underlying assumptions are reviewed on an ongoing basis.
expenses’ in the Income statement, where two lines were
Revisions of accounting estimates are recognised in the
added with more detailed presentation of interest expenses.
period in which the estimate is revised. Critical accounting
Comparative amounts have been adjusted to reflect these
estimates and judgements in applying accounting policies are
changes in the presentation.
disclosed in note 2.33.
31 Dec 2020
NLB Group
NLB
Notes
Old
presentation
Current
presentation
Change
Old
presentation
Current
presentation
Change
Statement of financial position:
in EUR thousands
the years presented, except for changes in accounting policies
Other financial liabilites
5.15.d)
resulting from the application of new standards or changes to
Accrued salaries
standards.
2.1. Statement of compliance
The principal accounting policies applied in the preparation
of the separate and consolidated financial statements were
prepared in accordance with the International Financial
Accounting Standards (hereinafter: ‘the IFRS’) as adopted
by the European Union (hereinafter: ‘EU’). Additional
requirements under the national legislation are included
where appropriate.
Unused annual leave
Other liabilities
Accrued salaries
Unused annual leave
Income statement:
Interest expenses calculated using
the effective interest method
Other interest and similar expenses
19,068
6,137
-
-
(19,068)
(6,137)
9,807
2,497
5.19.
-
-
-
-
19,068
6,137
19,068
6,137
(41,208)
(41,208)
(14,407)
(55,615)
(14,407)
-
-
9,807
2,497
(9,807)
(2,497)
9,807
2,497
(21,883)
(21,883)
(14,334)
(36,217)
(14,334)
-
-
-
-
-
Interest and similar expenses
4.1.
(55,615)
-
(36,217)
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‘Accrued salaries’ and ‘Unused annual leave’ are included
NLB Group treats transactions with non-controlling interests
A contingent consideration classified as equity is not re-
under the line item ‘Other liabilities’; before changing the
as transactions with equity owners of NLB Group. For
measured and its subsequent settlement is accounted for
classification, these line items were included under the line
purchases of subsidiaries from non-controlling interests, the
within equity. A contingent consideration classified as an asset
item ‘Other financial liabilities.’
difference between any consideration paid and the relevant
or liability that is a financial instrument and within the scope of
share acquired of the carrying value of net assets of the
IFRS 9 Financial Instruments, is measured at fair value at each
‘Interest expenses calculated using the effective interest
subsidiary is deducted from the equity. For sales to non-
reporting date and changes in fair value are recognised in the
method’ and ‘Other interest and similar expenses’ were not
controlling interests, the differences between any proceeds
statement of profit or loss in accordance with IFRS 9. Other
disclosed separately before the change, they were shown
received and the relevant share of non-controlling interests
contingent considerations that are not within the scope of
under the line item ‘Interest and similar expenses.’
are also recorded in the equity. All effects are presented in the
IFRS 9 are measured at fair value at each reporting date and
line item ‘Equity Attributable to Non-controlling Interest.’
changes in fair value are recognised in profit or loss.
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2.4. Consolidation
In the consolidated financial statements (NLB Group),
subsidiaries which are directly or indirectly controlled by NLB
have been fully consolidated. Subsidiaries are consolidated
from the date on which effective control is transferred to NLB
Group.
NLB controls an entity when all three elements of control are
met:
• it has power over the entity;
• it is exposed or has rights to variable returns from its
involvement with the entity; and
• it has the ability to use its power over the entity to affect the
amount of the entity’s returns.
NLB reassesses whether it controls an entity if facts and
circumstances indicate there are changes to one or more
of the three elements of control. If the loss of control of a
subsidiary occurs, the subsidiary is no longer consolidated
from the date that the control ceases.
Where necessary, the accounting policies of subsidiaries
have been amended to ensure consistency with the policies
adopted by NLB. The financial statements of consolidated
subsidiaries are prepared as at the parent entity’s reporting
date. Non-controlling interests are disclosed in the
consolidated statement of changes in equity. Non-controlling
interest is that part of the net results, and of the equity of
a subsidiary, attributable to interests which NLB does not
own, either directly or indirectly. NLB Group measures
non-controlling interest on a transaction-by-transaction
basis, either at fair value, or by the non-controlling interest’s
proportionate share of net assets of the acquiree.
Inter-company transactions, balances, and unrealised gains
on transactions between NLB Group entities are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of impairment of the asset transferred.
2.5. Business combinations, goodwill,
and bargain purchases
For each business combination, NLB Group elects whether to
measure the non-controlling interests in the acquiree at fair
NLB Group accounts for business combinations using the
value or at the present ownership instruments’ proportionate
acquisition method when the acquired set of activities and
share in the recognised amounts of the acquiree’s identifiable
assets meets the definition of a business and control is
net assets at the date of acquisition. All other components
transferred to the Group. In determining whether a particular
of non-controlling interests are measured at their
set of activities and assets is a business, the Group assesses
acquisition-date fair values, unless another measurement
whether the set of assets and activities acquired includes, at a
basis is required by IFRSs.
minimum, an input and substantive process and whether the
acquired set has the ability to produce outputs. The acquired
Goodwill is measured as the excess of the aggregate of the
process is considered substantive if it is critical to the ability to
consideration transferred measured at fair value, the amount
continue producing outputs; and the inputs acquired include
of any non-controlling interest in the acquiree, and the fair
an organised workforce with the necessary skills, knowledge,
value of an interest in the acquiree held immediately before
or experience to perform that process or it significantly
the acquisition date over the net amounts of the identifiable
contributes to the ability to continue producing outputs and
assets acquired, as well as the liabilities assumed. Any
is considered unique or scarce or cannot be replaced without
negative amount, a gain on a bargain purchase (or ‘negative
significant cost, effort, or delay in the ability to continue
goodwill’), is recognised in profit or loss after management
producing outputs.
reassesses whether it has identified all the assets acquired
and all the liabilities and contingent liabilities assumed, and
The consideration transferred is measured at the fair value
reviews the appropriateness of their measurement.
of the assets transferred, equity interest issued, liabilities
incurred or assumed, including the fair value of assets or
Goodwill is tested annually for impairment. For the purpose
liabilities from contingent consideration arrangements and
of impairment testing, goodwill arising from a business
fair value of any pre-existing equity interest in subsidiary.
combination is, from the acquisition date, allocated to the
However, this excludes amounts related to the settlement
Group’s cash-generating units (CGUs) or groups of CGUs that
of pre-existing relationships which are recognised in profit
are expected to benefit from the synergies of the combination.
or loss. Acquisition-related costs such as advisory, legal,
Where goodwill has been allocated to a cash-generating unit
valuation, and similar professional services are recognised
in profit or loss as well. Transaction costs incurred for issuing
(CGU) and part of the operation within that unit is disposed
of, the goodwill associated with the disposed operation
equity instruments are deducted from the equity, and all
is included in the carrying amount of the operation when
other transaction costs associated with the acquisition are
determining the gain or loss on disposal. Goodwill disposed
expensed.
in these circumstances is measured based on the relative
values of the disposed operation and the portion of the cash-
Identifiable assets acquired and liabilities assumed in a
generating unit retained.
business combination are, with limited exceptions, measured
initially at their fair values at the acquisition date.
The goodwill of associates and joint ventures is included in the
carrying value of investments.
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187
In a business combination achieved in stages, NLB Group
merged entities as reported in the consolidated financial
• assets and liabilities for each statement of financial position
remeasures its previously held equity interest in the acquiree
statements. No goodwill is recognised on mergers of NLB
presented are translated at the closing rate on the reporting
at its acquisition-date fair value and recognises the resulting
Group entities.
date;
gain or loss, if any, in profit or loss.
• income and expenses for each income statement are
2.6.
Investments in subsidiaries,
associates and joint ventures
In the separate financial statements (NLB), investments in
subsidiaries, associates and joint ventures are accounted
for with the cost method. Dividends from subsidiaries,
joint ventures, or associates are recognised in the income
statement when NLB’s right to receive the dividend has been
established.
In the consolidated financial statements, investments in
associates, are accounted for using the equity method of
accounting. These are generally undertakings in which NLB
Group holds between 20% and 50% of the voting rights, and
over which NLB Group exercises significant influence, but does
not have control.
Joint ventures are entities over whose activities NLB Group
has joint control, established by contractual agreement. In the
consolidated financial statements, investments in joint ventures
are accounted for using the equity method of accounting.
NLB Group’s share of its associates’ and joint ventures’ post-
acquisition profits or losses is recognised in the consolidated
income statement, and its share of other comprehensive
income is recognised in other comprehensive income. The
cumulative post-acquisition movements are adjusted against
the carrying amount of the investment. When NLB Group’s
share of losses in an associate and joint venture equals
or exceeds its interest in the associate and joint venture,
including any other unsecured receivables, NLB Group does
not recognise further losses unless it has incurred obligations
or made payments on behalf of the associate and joint
venture. NLB Group resumes recognising its share of those
profits only after its share of the profits equals the share of
losses not recognised (note 5.12.d).
Mergers of entities within NLB Group do not affect the
translated at average exchange rates; and
consolidated financial statements.
• components of equity are translated at the historical rate.
2.8. Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of NLB
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(i.e., the functional currency). The financial statements are
presented in euros, which is NLB Group’s presentation
currency.
Transactions and balances
Foreign currency transactions are translated into the
functional currency at the exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions, and from
Goodwill and fair value adjustments arising from the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the closing rate.
In the consolidated financial statements, exchange differences
arising from the translation of the net investment in foreign
operations are recognised in other comprehensive income.
When control over a foreign operation is lost, the previously
recognised exchange differences on translations to a
different presentation currency are reclassified from other
comprehensive income to profit and loss for the year. On
the partial disposal of a subsidiary without loss of control,
the related portion of accumulated currency translation
differences is reclassified as a non-controlling interest within
the translation of monetary assets and liabilities denominated
the equity.
in foreign currencies, are recognised in the income statement,
except when deferred in other comprehensive income as
qualifying cash flow hedges.
Interest income and expenses
2.9.
Interest income and expenses for all financial instruments
measured at amortised cost, and financial assets measured
Translation differences resulting from changes in the
at fair value through other comprehensive income are
amortised cost of monetary items denominated in foreign
recognised in the income statement for all interest-bearing
currency and classified as financial assets measured at fair
instruments on an accrual basis using the effective interest
value through other comprehensive income, are recognised in
method. Interest income on all trading assets and financial
the income statement.
assets mandatorily required to be measured at fair value
through profit or loss is recognised using the contractual
Translation differences on non-monetary items, such as equity
interest rate. The effective interest method is used to calculate
instruments at fair value through profit or loss, are reported
the amortised cost of a financial asset or financial liability,
as part of the fair value gain or loss in the income statement.
and to allocate the interest income or interest expenses over
Translation differences on non-monetary items, such as equity
the relevant period. The effective interest rate is the rate that
instruments classified as financial assets, measured at fair value
exactly discounts estimated future cash payments or receipts
through other comprehensive income, are included together
over the expected life of the financial instrument, or a shorter
with valuation reserves in the valuation (losses)/gains taken to
other comprehensive income and accumulated in the equity.
period (when appropriate) to the gross carrying amount of the
financial asset or to the amortised cost of a financial liability.
Interest income includes coupons earned on fixed-yield
NLB Group’s subsidiaries, associates and joint ventures are
presented in note 5.12.
Gains and losses resulting from foreign currency purchases
investments and trading securities, and accrued discounts
and sales for trading purposes are included in the income
and premiums on securities. The calculation of the effective
statement as gains less losses from financial assets and
interest rate includes all fees and points paid or received by
2.7. A combination of entities or businesses
liabilities held for trading.
parties to the contract and all transaction costs, but excludes
future credit risk losses.
under common control
A merger of entities within NLB Group is a business
combination involving entities under common control.
For such mergers, members of NLB Group apply merger
accounting principles, and use the carrying amounts of
NLB Group entities
The financial statements of all NLB Group entities that have a
Interest income is calculated by applying the effective interest
functional currency different from the presentation currency
are translated into the presentation currency as follows:
rate to the gross carrying amount of financial assets other
than credit-impaired assets.
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When a financial asset becomes credit-impaired and is,
therefore, classified in Stage 3, interest income is calculated by
applying the effective interest rate to the net amortised cost of the
financial asset. If the financial asset cures and is no longer credit-
impaired, interest income is again calculated on a gross basis.
2.12. Financial instruments
a) Classification and measurement
Financial instruments are initially measured at fair value plus
or minus, in the case of a financial instrument not measured
at fair value through profit or loss, transaction costs that are
directly attributable to the acquisition or issue of the financial
In the case of purchased or originated credit-impaired financial
instrument. Subsequent measurement depends on the
assets (POCI), the credit-adjusted effective interest rate is
applied to the amortised cost of the financial asset from initial
classification of the instrument.
recognition. The credit-adjusted effective interest rate is the
Financial assets
interest rate that, at initial recognition, discounts the estimated
future cash flows (including credit losses) to the amortised cost
of the purchased or originated credit-impaired financial asset. At
NLB Group level, most POCI exposures relate to initial recognition
All debt financial assets need to be assessed based on a
combination of the Group’s business model for managing
the assets and the instruments’ contractual cash flow
characteristics. Measurement categories of financial assets
of non-performing exposures in case of business combination.
are as follows:
2.10. Fee and commission income
Fees and commissions mainly include fees received from
credit cards and ATMs, customer transaction accounts,
payment services, investment funds, and commissions from
guarantees. Fee and commission income are recognised at
an amount that reflects the consideration to which the Group
expects to be entitled in exchange for providing the services.
The performance obligations, as well as the timing of their
satisfaction, are identified, and determined, at the inception
of the contract. The Group’s revenue contracts do not include
multiple performance obligations.
When the Group provides a service to its customers,
consideration is invoiced and generally due immediately
upon satisfaction of a service provided at a point in time.
When the service is provided over time, the consideration is
invoiced and due in line with contractual provisions.
The Group has generally concluded that it is the principal in
its revenue arrangements because it typically controls the
services before transferring them to the customer.
Fees and commissions that are integral to the effective interest
rate of financial assets and liabilities are presented within
interest income or expenses.
2.11. Dividend income
Dividends are recognised in the income statement within the
line item ‘Dividend income’ when NLB Group’s right to receive
payment has been established and an inflow of economic
benefits is probable. In the consolidated financial statements,
dividends received from associates and joint ventures reduce
the carrying value of the investment.
• Financial assets, measured at amortised costs (AC);
• Financial assets at fair value through other comprehensive
income (FVOCI);
• Financial assets held for trading (FVTPL); and
• Non-trading financial assets, mandatorily at fair value
through profit or loss (FVTPL).
Financial assets are measured at AC if they are held within a
business model for the purpose of collecting contractual cash
flows (‘held to collect’), and if cash flows are solely payments
of principal and interest on the principal amount outstanding.
After initial recognition, they are measured at the amortised
cost using the effective interest method and are subject to
impairment. Interest income calculated using the effective
interest method, foreign exchange gains and losses, and
impairment are recognised in profit or loss. Each of them is
presented as a separate line item in the income statement. Any
gain or loss on derecognition is recognised in profit or loss in
line item ‘Gains less losses from financial assets and liabilities
not classified at fair value through profit or loss.’
Debt financial instruments are measured at FVOCI if they are
held within a business model for the purpose of both collecting
contractual cash flows and selling (‘held to collect and sell’),
and if cash flows are solely payments of principal and interest
on the principal amount outstanding. FVOCI results in the debt
instruments being recognised at fair value in the statement
of financial position and at the AC in the income statement.
Interest income is calculated using the effective interest
method, foreign exchange gains and losses, and impairments
are recognised separately in the income statement. Other
net gains and losses are recognised in other comprehensive
income, until the instrument is derecognised. At derecognition
of the debt financial instrument, the cumulative gains and
losses previously recognised in other comprehensive income
are reclassified to the income statement under the line item
‘Gains less losses from financial assets and liabilities not
classified at fair value through profit or loss.’
Equity instruments that are not held for trading may be
irrevocably designated as FVOCI, with no subsequent
reclassification of gains or losses to the income statement.
Dividends are recognised as income in profit or loss unless
the dividend clearly represents a recovery of part of the cost
of the investment, in which case, such gains are recorded
in other comprehensive income. Other net gains and losses
are recognised in other comprehensive income and are
never reclassified to profit or loss. In NLB Group, the most
material equity instrument irrevocably designated as FVOCI
is investment in National Resolution Fund (note 5.4.a). NLB
Group decided to use this presentation alternative because
the fund was established based on the law and it has a highly
regulated investment strategy in order to ensure safety, low
risk, and the high liquidity of the fund.
All other financial assets are mandatorily measured at FVTPL,
including financial assets within other business models such
as financial assets managed at fair value or held for trading
and financial assets with contractual cash flows that are not
solely payments of principal and interest on the principal
amount outstanding. Net gains and losses, including any
interest or dividend income, are recognised in profit or loss.
IFRS 9 includes an option to designate financial assets
at fair value through profit or loss if doing so eliminates
or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring
assets or liabilities or recognising the gains or losses on them
on different bases.
Financial liabilities
Financial liabilities are subsequently measured at the
amortised cost or at fair value through profit or loss, when
they are held for trading, derivative instruments, or the fair
value designation is applied.
Upon initial recognition, financial liability may be irrevocably
designated as measured at fair value through profit or loss
if that eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise arise from
measuring assets or liabilities or recognising the gains or
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losses on them on different bases, or if the liabilities are part of
• Debt securities are divided into three business models:
Accounting policy for modified financial assets
a group of financial instruments which are managed and their
• the first group of debt securities presents ‘held for trading’
When contractual cash flows of a financial asset are modified,
performance evaluated on a fair value basis in accordance
category;
NLB Group assesses if the terms and conditions have been
with a documented risk management or investment strategy.
• debt securities in the second group are held under a
modified to the extent that, substantially, it becomes a new
Changes in the fair value of financial liabilities designated as
of collecting the contractual cash flows and sale of
considered when making such assessment:
measured at fair value through profit or loss are recognised
financial assets, and forms part of the Group’s liquidity
• reason for modification of cash flows (commercial or client’s
business model ‘held to collect and sale’ with the intention
financial asset. The following factors are, amongst others,
in profit or loss, with the exception of movement in the fair
reserves;
financial difficulties);
value due to changes of NLB Group’s own credit risk. Such
• the third part of debt securities is held within the
• change in currency of the loan;
changes are presented in other comprehensive income with
business model for holding them with objective to collect
• introduction of an equity feature;
no subsequent reclassification to the income statement.
contractual cash flows.
• replacement of initially agreed debtor with a new debtor
that is not related party to initial debtor; and
Other financial liabilities are subsequently measured at
With regard to debt securities within the ‘held to collect’
• if the modification changes the result of the SPPI test.
amortised cost using the effective interest method. Interest
business model, the sales which are related to the increase of
expenses and foreign exchange gains and losses are
the issuers’ credit risk, concentrations risk, sales made close
If the modification results in derecognition of a financial asset,
recognised in profit or loss. Any gain or loss on derecognition
to the final maturity, or sales in order to meet liquidity needs in
the new financial asset is initially recognised at fair value, with
of financial liability is recognised in profit or loss. In the event
a stress case scenario are permitted. Other sales, which are
the difference recognised as a derecognition gain or loss,
of derecognition of a financial liability measured at amortised
not due to an increase in credit risk may still be consistent with
to the extent that an impairment loss has not already been
cost, the gains and losses are recognised in the line item
a held to collect business model if such sales are incidental to
recorded. If the modification does not result in cash flows that
‘Gains less losses from financial assets and liabilities not
the overall business model, and:
are substantially different, the modification does not result
classified at fair value through profit or loss.’ Gains and losses
• are insignificant in value both individually and in aggregate,
in derecognition. In such cases, NLB Group recalculates the
on disposals of financial liabilities designated as measured at
even when such sales are frequent;
gross carrying amount of the financial asset and recognises
fair value through profit or loss are also presented separately
• are infrequent even when they are significant in value.
modification gain or loss in the income statement. The gross
from those held for trading.
Assessment of NLB Group’s business model
characteristics (the SPPI test – solely payment of principal
A review of instruments’ contractual cash flow
carrying amount is recalculated as the present value of the
renegotiated or modified contractual cash flows that are
discounted at the financial asset’s original effective interest
NLB Group has determined its business model separately
and interest on the principal amount outstanding)
rate (or credit-adjusted effective interest rate for purchased or
for each reporting unit within NLB Group, and is based on
The second step in the classification of the financial assets in
originated credit-impaired financial assets).
observable factors for different portfolios that best reflect how
portfolios being ‘held to collect’ and ‘held to collect and sell’
the Group manages groups of financial assets to achieve its
relates to the assessment of whether the contractual cash
business objective, such as:
flows are consistent with the SPPI test. The principal amount
b) Reclassification
Financial assets can be reclassified when and only when NLB
• how the performance of the business model and the
reflects the fair value at initial recognition less any subsequent
Group’s business model for managing those assets changes.
financial assets held within that business model are
changes, e.g., due to repayment. The interest must represent
The reclassification takes place from the start of the reporting
evaluated and reported to key management personnel;
only the consideration for the time value of money, credit risk,
period following the change. Such changes are expected to
• the risks that affect the performance of the business model
other basic lending risks, and a profit margin consistent with
be very infrequent, and none occurred during the presented
and, in particular, the way those risks are managed;
• how the managers of the business are compensated (e.g.,
whether the compensation is based on the fair value of the
basic lending features. If the cash flows introduce more than
de minimis exposure to risk or volatility that is not consistent
with basic lending features, the financial asset is mandatorily
assets or on collection of contractual cash flows); and
measured at fair value through profit or loss.
• the expected frequency, value, and timing of sales.
periods. Financial liabilities shall not be reclassified.
c) Day one gains or losses
The best evidence of fair value at initial recognition is the
transaction price (i.e., the fair value of the consideration given
NLB Group reviews the portfolio within ‘held to collect’ and
or received), unless the fair value of that instrument is evidenced
The business model assessment is based on reasonably
‘held to collect and sale’ for standardised products on a level
by a comparison with other observable current market
expected scenarios without taking worst-case and stress case
of a product and for non-standardised products on a single
transactions in the same instrument (i.e., without modification
scenarios into consideration. In general, the business model
exposure level. The Group has established a procedure for
or repackaging), or based on a valuation technique whose
assessment of the Group can be summarised as follows:
SPPI identification as part of regular investment process with
variables only include data from observable markets.
• Loans and deposits given are included in a business model
defined responsibilities for primary and secondary controls.
‘held to collect’ since the primary objective of NLB Group for
Special emphasis is put on new and non-standardised
If the transaction price on a non-active market is different
the loan portfolio is to collect the contractual cash flows;
characteristics of loan agreements.
than the fair value from other observable current market
transactions in the same instrument or is based on a valuation
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190
technique whose variables only include data from observable
pricing models are used, inputs are based on market-based
statement together with any changes in the fair value of the
markets, the difference between the transaction price and fair
measurements at the reporting date.
hedged asset or liability that are attributable to the hedged
value is recognised immediately in the income statement (‘day
one gains or losses’).
g) Derivative financial instruments and hedge accounting
Derivative financial instruments – including forward
and related hedged items are reflected in ‘Fair Value
Adjustments in Hedge Accounting’ in the income statement.
risk. Effective changes in the fair value of hedging instruments
In cases where the data used for valuation are not fully
and futures contracts, swaps, and options – are initially
Any ineffectiveness from derivatives is recorded in ‘Gains Less
observable in financial markets, day one gains or losses are
recognised in the statement of financial position at fair
Losses on Financial Assets and Liabilities Held for Trading.’
not recognised immediately in the income statement. The
value. Derivative financial instruments are subsequently re-
timing of recognition of deferred day one gains or losses is
measured at their fair value. Fair values are obtained from
If a hedge no longer meets the hedge accounting criteria,
determined individually. It is either amortised over the life of
quoted market prices, discounted cash flow models, or pricing
the adjustment to the carrying amount of the hedged item
the transaction, deferred until the instrument’s fair value can
models, as appropriate. All derivatives are carried at their fair
for which the effective interest method is used is amortised
be determined using market observable inputs, or realised
value within assets when the derivative position is favourable
to profit or loss over the remaining period to maturity. The
through settlement.
to NLB Group, and within liabilities when the derivative
adjustment to the carrying amount of a hedged equity
position is unfavourable to NLB Group.
security is included in the income statement upon disposal of
d) Derecognition
A financial asset is derecognised when the contractual rights
The method of recognising the resulting fair value gain or loss
to the cash flows from the financial asset expire, or when the
depends on whether the derivative is designated as a hedging
the equity security.
Cash flow hedge
financial asset is transferred, and the transfer qualifies for
instrument and, if so, the nature of the item being hedged. NLB
The effective portion of changes in the fair value of derivatives
derecognition. A financial liability is derecognised only when
Group designates certain derivatives as either:
that are designated and qualify as cash flow hedges is
it is extinguished, i.e., when the obligation specified in the
• hedges of the fair value of recognised assets or liabilities or
recognised in other comprehensive income. The gain or loss
contract is discharged, cancelled, or expires.
firm commitments (fair value hedge);
relating to the ineffective portion is immediately recognised in
e) Write-offs
NLB Group writes off financial assets in their entirety or a
• hedges of highly probable future cash flows attributable to a
the income statement.
recognised asset or liability, or a highly probable forecasted
transaction (cash flow hedge); or
Amounts accumulated in equity are recycled as a
portion thereof when it has exhausted all practical recovery
• hedges of a net investment in a foreign operation (net
reclassification from other comprehensive income to the
efforts and has no reasonable expectations of recovery. Criteria
investment hedge).
income statement in the periods when the hedged item affects
indicating that there is no reasonable expectation of recovery
the profit or loss.
include default period, quality of collateral, and different stages
Hedge accounting is used when certain criteria are met.
of enforcement procedures. NLB Group may write off financial
NLB Group and NLB have exercised the option to continue
When a hedging instrument expires or is sold, or when a
assets that are still subject to enforcement activities, but this
applying the existing IAS 39 hedge accounting requirements
hedge no longer meets hedge accounting criteria, any
does not affect its rights in the enforcement procedures. NLB
in accordance with the policy choice permitted under IFRS 9.
cumulative gain or loss existing in other comprehensive
Group still seeks to recover all amounts it is legally entitled to in
However, disclosures that are required by the IFRS 9 related
income and previously accumulated in equity at that time
full. A write-off reduces the gross carrying amount of a financial
amendments to IFRS 7 ‘Financial Instruments: Disclosures’ are
remains in other comprehensive income and in equity, and
asset and allowance for the impairment. Any subsequent
implemented.
recoveries are credited to credit loss expenses. Write-offs and
is recognised in profit or loss only when the forecasted
transaction is ultimately recognised in the income statement.
recoveries are disclosed in note 5.14.a).
At the inception of the transaction, NLB Group documents the
When a forecasted transaction is no longer expected to
f) Fair value measurement principles
The fair value of financial instruments traded on active
relationship between hedged items and hedging instruments,
occur, the cumulative gain or loss that was reported in other
as well as its risk management objective, valuation
comprehensive income is immediately transferred to the
methodology, and strategy for undertaking various hedge
income statement.
markets is based on the price that would be received to sell
transactions. NLB Group also documents its assessment, both
the assets or transfer liability (exit price) being measured at
at the hedge inception and on an ongoing basis, of whether
Hedge of a net investment in a foreign operation
the reporting date, excluding transaction costs. If there is no
the derivatives used in hedging transactions are highly
Hedges of net investments in foreign operations are
active market, the fair value of the instruments is estimated
effective in offsetting changes in fair values or cash flows of
accounted for in consolidated financial statements similar to
using discounted cash flow techniques or pricing models.
hedged items. The actual results of a hedge must always fall
cash flow hedges. Any gain or loss on the hedging instrument
If discounted cash flow techniques are used, estimated future
cash flows are based on management’s best estimates; and
Fair value hedge
within a range of 80–125%.
relating to the effective portion of the hedge is recognised
directly in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the consolidated income
the discount rate is a market-based rate at the reporting
Changes in the fair value of derivatives that are designated
statement in ‘Gains Less Losses on Financial Assets and
date for an instrument with similar terms and conditions. If
and qualify as fair value hedges are recognised in the income
Liabilities Held for Trading.’ Gains and losses accumulated in
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other comprehensive income are included in the consolidated
• Stage 3 – impaired portfolio: NLB Group recognises lifetime
The ECL for Stage 1 financial assets is calculated based on
income statement when the foreign operation is disposed of
allowances for these defaulted financial assets.
12-month PDs or shorter period PDs, if the remaining maturity
as part of the gain or loss on the disposal.
of the financial asset is shorter than 1 year. The 12-month
2.13. Allowances for financial assets
a) Expected credit losses for collective allowances
IFRS 9 applies an expected loss model that provides an
unbiased and probability-weighted estimate of credit losses
by evaluating a range of possible outcomes that incorporates
forecasts of future economic conditions. The expected loss
model requires NLB Group to recognise not only credit losses
The Bank has aligned its definition of credit impaired assets
PD already includes the macroeconomic impact effect.
under IFRS 9 to the new European Banking Authority (EBA)
Allowances in Stage 1 are designed to reflect expected credit
definition of non-performing loans (NPLs) as at 31 December
losses that had been incurred in the performing portfolio but
2020. The Bank uses a unified definition of past due and
have not been identified.
default exposures; defaulted clients are rated D, DF, or E
based on the internal rating system and contains the clients
The ECL for Stage 2 financial assets is calculated based on
with material delays over 90 days, as well as the clients that
lifetime PDs (LPD) because their credit risk has increased
were assessed as unlikely to pay. All facilities of retail clients
significantly since their initial recognition. This calculation is
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that have already occurred, but also losses that are expected
obtain a unified credit rating.
to occur in the future. An allowance for expected credit losses
(ECL) is required for all loans and other debt financial assets
not measured at FVTPL, together with loan commitments and
financial guarantee contracts.
In the general model, the allowance is based on the expected
credit losses associated with the probability of default in the
next 12 months unless there has been a significant increase
in credit risk since initial recognition, in which case, the
allowance is based on the probability of default over the life
of the financial asset (LECL). When determining whether the
risk of default increased significantly since initial recognition,
the Group considers reasonable and supportable information
that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and
analysis, based on the Group’s historical data, experience,
expert credit assessment, and incorporation of forward-looking
information. In 2021, the NLB Group made improvements to the
SICR (significant increase of credit risk) identification concept
by including additional qualitative indicators as well as by
development of numeric LPD (lifetime probability of default)
concept for part of the portfolio where this was feasible
Classification into stages
NLB Group prepared a methodology for ECL defining the
criteria for classification into stages, transition criteria
between stages, models for risk indicators calculation,
forward-looking scenarios, and the validation of models. The
Group classifies financial instruments into Stage 1, Stage 2, and
Stage 3, based on the applied ECL allowance methodology as
described below:
• Stage 1 – performing portfolio: no significant increase of
credit risk since initial recognition, NLB Group recognises an
allowance based on 12-month period;
also based on a forward-looking assessment that considers
a number of economic scenarios in order to recognise the
A significant increase in credit risk is assumed:
probability of losses associated with the predicted macro-
• when a credit rating significantly deteriorates at the
economic forecasts.
reporting date in comparison to the credit rating at initial
recognition (which is accompanied with the increase of
For financial instruments in Stage 3, the same treatment
Probability of default (PD) indicator),
is applied as for those considered to be credit impaired.
• when threefold increase of LPD since initial recognition is
Exposures below the materiality threshold obtain collective
detected,
allowances using a PD of 100%. Financial instruments will be
• when a financial asset has material delays over 30 days
transferred out of Stage 3 if they no longer meet the criteria
(days past due are also included in the credit rating
of being credit-impaired after a probation period. Special
assessment),
treatment applies for purchased or originated credit-impaired
• if NLB Group grants the forbearance to the borrower,
financial instruments (POCI), where only the cumulative
• if the facility is placed on the watch list or intensive care list,
changes in lifetime expected losses since the initial recognition
• if a retail client obtained COVID-19 moratoria and is placed
are recognised as a loss allowance.
on the watch list.
The calculation of collective allowances is performed by
As COVID-19 moratoria granted to the bank clients in the past
multiplying the EAD (exposure at default) at the end of each
years have mostly expired, these exposures no longer need
month with an appropriate PD and LGD (loss-given default).
specific treatment, and so SICR identification is carried out in
The obtained result for each month is discounted to the
the same manner as for any other exposures.
present time using the original effective interest rate of the
facility. For Stage 1 exposures, the ECL only takes a 12-month
The methodology of credit rating for banks and sovereign
period into account, while for Stage 2 or 3 all potential losses
classification depends on the existence or non-existence of a
until the maturity date are included. Risk parameters are
rating from international credit rating agencies Fitch, Moody’s,
calculated separately for each of the three possible scenarios.
or S&P. Ratings are set on a basis of the average international
The final ECL for each facility is calculated as a weighted
credit rating. If there are no international credit ratings, the
average ECL for each scenario.
classification is based on the internal methodology of NLB
Group.
The EAD represents the anticipated outstanding amount
owed by the obligor, which is determined as the sum of
The classification into stages is based on the facility level,
on-balance exposure and expected future drawings of the
nevertheless occurring delays on one facility may trigger the
off-balance exposure. The drawings are assessed by applying
Stage deterioration of other facilities of the same client. When
the CCF (credit conversion factor) based on the Bank’s historic
the SICR criteria no longer exist, the facility may be transferred
experience with similar types of facilities.
to a more favourable stage subject to the prescribed cure
• Stage 2 – underperforming portfolio: significant increase
period of three months.
in credit risk (SICR) since initial recognition, NLB Group
recognises an allowance for lifetime period; and
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192
The PD is the estimation of likelihood of default over a given
scenario relies on the NLB monthly Economic Outlook created
in economic potential. These scenarios are included in the
time horizon. The estimation is performed separately for each
in April 2021.
unique segment (corporate clients by size, institutions, central
calculation of expected credit losses under IFRS 9. Apart from
this important innovation, we had to keep track of the latest
government) or by product group (mortgage, consumer
The macroeconomic rationale behind the alternative scenarios is
economic developments and changing official projections.
loans and other retail products). Through the cycle, the PD is
related to a range of plausible effects of the COVID-19 pandemic
supplemented with the forward-looking aspect using three
on economic development during the next three years (the
This latest set of IFRS 9 scenarios for macroeconomic
possible scenarios.
so-called ‘post-COVID-19 period’). The basis for the alternative
variables is applied in the modelling process for the
scenarios is related to the ECB’s view of economic development
probability of default (PD) and loss given default (LGD)
The LGD parameter reflects the expected loss the facility
after the coronavirus outbreak in early 2020. Based on the
estimates. Nevertheless, our focus in macroeconomic
will incur in case of the event of default. The LGD value is
ECB illustration of a mild and severe scenario resolution of the
scenarios is on the trajectory of real GDP and the
assessed based on the Bank’s historic data on repayments
pandemic crisis through the lens of the possible expected impact
unemployment rate over the projection horizon from 2021 to
from different types of collateral (hair-cuts are calculated
on economic activity in the euro area, the Group developed both
2023. Both variables are included in the modelling process of
for homogenic groups of collateral), as well as other types of
alternative scenarios. In general, the mild scenario envisions
PD and LGD, respectively.
repayments such as regular/partial repayments, repayments
a resolution of the health crisis by the end of 2021 and a long-
from legal proceedings, the sale of receivables, and others.
term reviving process of the economy, while a severe scenario
Macroeconomic scenarios for explanatory variables,
Through the cycle, the LGD is supplemented with the forward-
assumes a more protracted crisis and permanent losses
developed for each country in the NLB Group (in %):
looking aspect to reflect the expected changes in the
macroeconomic parameters using three possible scenarios.
Risk parameter calculations are based on the data from
each subsidiary, while the calculations and modelling are
performed centrally. In the case where the data samples are
not sufficiently large, hurdle rates are applied based on the
regulatory or other benchmarks.
Expected Life
When measuring ECL, the Bank must consider the maximum
contractual period over which the Bank is exposed to credit
risk. For certain revolving credit facilities that do not have
a fixed maturity, the expected life is estimated based on
the period over which the Bank is exposed to credit risk
Slovenia
Real GDP
Unemployment rate
Bosnia and Herzegovina
Real GDP
Unemployment rate
Montenegro
Real GDP
and where the credit losses would not be mitigated by
Unemployment rate
management actions.
Forward-looking information
In 2021, the Group reviewed IFRS 9 provisioning by testing a set
of relevant macroeconomic scenarios to adequately reflect the
current circumstances and the related impacts in the future.
NLB Group established and developed multiple scenarios
(i.e., baseline, mild, and severe) on the level of ECL calculation.
The baseline scenario presents our forecast macroeconomic
view for all countries present in the NLB Group. This scenario
is constructed to culminate various outlooks into a unified
projection of macroeconomic and financial variables for the
NLB Group. This approach is in line with the concept that the
NLB Group has a consolidated view of the future of economic
North Macedonia
Real GDP
Unemployment rate
Serbia
Real GDP
Unemployment rate
Kosovo
Real GDP
development in Southeast Europe (SEE). The IFRS 9 baseline
Unemployment rate
Mild scenario
Baseline scenario
Severe scenario
2021
7.2
4.8
2021
4.8
16.7
2021
10.4
15.7
2021
6.4
16.2
2021
8
9.1
2021
7.2
24.3
2022
4.4
4.4
Mild scenario
2022
3.8
14.7
Mild scenario
2022
5.5
14.2
Mild scenario
2022
4.4
14.7
Mild scenario
2022
4.9
8
Mild scenario
2022
4.9
22.2
2023
3.7
3.9
2023
3.1
13.9
2023
3.7
13.5
2023
3.7
13.9
2023
4.2
7.4
2023
4.2
21.3
2021
4.5
5
2021
3
17.5
2021
6.5
16.5
2021
4
17
2021
5
9.5
2021
4.5
25.5
2022
4
5
Baseline scenario
2022
3.5
16.5
Baseline scenario
2022
5
16
Baseline scenario
2022
4
16.5
Baseline scenario
2022
4.5
9
Baseline scenario
2022
4.5
25
2023
3.5
4.5
2023
3
16
2023
3.5
15.5
2023
3.5
16
2023
4
8.5
2023
4
24.5
2021
2.3
5.2
2021
1.5
18.3
2021
3.3
17.3
2021
2
17.8
2021
2.5
9.9
2021
2.3
26.7
2022
2023
2.1
5.7
Severe scenario
2022
1.9
18.9
Severe scenario
2022
2.7
18.4
Severe scenario
2022
2.1
18.9
Severe scenario
2022
2.4
10.3
Severe scenario
2022
2.4
28.7
4.2
5.2
2023
3.6
18.3
2023
4.2
17.7
2023
4.2
18.3
2023
4.8
9.7
2023
4.8
28
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NLB Group formed three probable scenarios with an
operations is considered along with the sale of collateral
of forbearance status, except in cases, where detailed review
associated probability of occurrence for forward-looking
that is not crucial for future business. In the case of the ‘gone
and analysis sufficiently justify that the client is not in financial
assessment of risk provisioning in the context of IFRS 9. The
concern’ principle, the repayments are based on expected
difficulties. If to receivables due from the client the status of
scenarios are weighted 20-60-20, where both alternative ones
cash flows from the sale of collateral. The expected payment
restructuring is introduced, the debtor must be classified in
(i.e., mild and severe) receive a weight of 20%. The assigned
from the collateral is calculated from the appraised market
the rating group C or lower.
weight for the baseline scenario is 60%.
value of the collateral, the haircut used as defined in the
Recalculation is performed annually of all risk parameters.
liabilities are also assessed individually and, where necessary,
were developed by the European Banking Authority (EBA).
IFRS 9 macroeconomic scenarios incorporate the forward-
related allowances are recognised as liabilities.
These definitions aim to achieve comprehensive coverage
looking and probability-weighted aspects of ECL impairment
of exposures to which forbearance measures have been
Haircut Methodology, and discounted. Off-balance sheet
The definitions of forborne loans closely follow definitions that
calculation. Both features may change when material changes
The carrying amount of financial assets measured at
extended.
in the future development of the economy are recognised and
amortised cost is reduced through an allowance account
not embedded in previous forecasts. Then all the parameters
and the loss is recognised in the income statement line item
The accounting treatment of forborne loans depends
are recalculated according to new weight and projections.
‘Impairment of financial assets.’ If the amount of allowances
on the type of restructuring. When NLB Group embarks
for ECL decreases subsequently due to an event occurring
on a forborne loan via the modified terms of repayment
The favourable macroeconomic environment has the most
after the impairment was recognised (e.g., repayment in the
proceeding from extending the deadline for the repayment
significant impact on expected credit losses in 2021. This
collection process exceeds the assessed expected payment
of the principal and/or interest, and/or a forbearance of the
change in macroeconomic scenarios affects forward-looking
from collateral), the reversal of the loss is recognised as a
repayment of the principal, and/or interest or a reduction
values of risk parameters during the post-COVID-19 period.
reduction in the allowance account, and the gain is recognised
in the interest rate, and/or other expenses, it adjusts the
Risk parameter overlays and mark-ups
in the same income statement item. For off-balance
carrying amount of the forborne loan on the basis of the
exposures, the amount of ECL is recognised in the statement
discounted value of the estimated future cash flows under
NLB Group implemented overlays and mark-ups on forward-
of financial position in the line item ‘Provisions’ and in the
the modified terms, and recognises the resulting effect in
looking PD and LGD, respectively. PD overlay measures are
income statement in the line item ‘Provisions for credit losses.’
profit or loss. In the event of the reduction of a claim against
implemented to address prediction errors from the back-
the debtor via the reduction in the amount of the claims as a
testing exercise in particular segments and rating categories.
The ECLs for debt instruments measured at fair value through
result of a contractually agreed debt waiver and ownership
In addition, mark-ups on the LGD risk parameter are applied
other comprehensive income do not reduce the carrying
restructuring or debt to equity swap, NLB Group derecognises
by NLB Group members due to the particularities of the local
amount of these financial assets in the statement of financial
the claim in the part relating to the write-down or the
market.
position, which remains at fair value. Instead, an amount equal
contractually agreed upon debt waiver. The new estimate of
Effects of changed risk parameters
to the allowance that would arise if the assets were measured
the future cash flows for the residual claim, not yet written
at amortised cost is recognised in other comprehensive
down, is based on an updated estimate of the probability of
Effects of changed risk parameters on the amount of expected
income as an accumulated impairment amount, with a
loss. NLB Group considers the debtor’s modified position, the
credit losses are disclosed in notes 5.14. and 5.16.b).
corresponding charge to profit or loss. The accumulated loss
economic expectations, and the collateral of the forborne
b) Individual assessment of allowances for impaired
the profit or loss upon derecognition of the assets, or when
by taking possession of other assets (i.e., property, plant and
recognised in other comprehensive income is recycled to
loan. When NLB Group is embarking on the forborne loan
financial assets
NLB Group assesses impairments of financial assets
separately for all individually significant assets classified in
Stage 3. The materiality threshold is set at EUR 0.5 million
exposure for legal entities and EUR 0.1 million for private
persons on the level of NLB, while the Group members apply
lower thresholds applicable to their portfolio size. All other
financial assets obtain collective allowances.
The amount of loss is measured as the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, which are discounted to the estimation
date. The scenario of expected cash flows can be based on
the ‘going concern’ assumption, where the cash flow from
the amount of allowances for ECL decreases due to an event
equipment, securities, and other financial assets), including
occurring after the impairment was recognised.
investments in the equity of debtors obtained via debt-
2.14. Forborne loans
A forborne loan (or restructured financial asset) arises as
a result of a debtor’s inability to repay a debt under the
originally agreed terms, either by modifying the terms of the
original contract (via an annex) or by signing a new contract
under which the contracting parties agree the partial or
total repayment of the original debt. Loans with deferral of
payment approved in line with the national legislation on
intervention measures in response to SARS-CoV-2 (COVID-19)
pandemic until 30 September 2020 are not forborne loans.
Loans with deferrals of payment under COVID-19 measures
approved after 30 September 2020 are subject of assignment
to-equity swaps, it recognises the acquired assets in the
statement of financial position at fair value, recognising the
difference between the fair value of the asset and the carrying
amount of the eliminated claim in profit or loss.
Forborne exposures may be identified in both the performing
and non-performing parts of the portfolio. Where the
forborne loan is classified in the non-performing part of
the portfolio, it can be reclassified to the performing part if
exposure is no longer considered as impaired or defaulted, if
determined amounts were repaid, if one year has passed from
the latest of the events defined (introduction of forbearance,
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classification in the non-performing part, repayment of
realisable value. The effect of impairment is recognised as the
Depreciation is calculated on a straight-line basis over
the last overdue amount, end of the grace period) and
impairment of other assets and the reversal of impairment as
the assets’ estimated useful lives. The following annual
after the introduction of forbearance there have been no
income from the reversal of the impairment of other assets.
depreciation rates were applied:
overdue amounts or doubts concerning the repayment of
the entire exposure, under the terms and conditions after the
forbearance. The absence of doubt is confirmed by analysis of
the financial situation of the debtor.
2.16. Offsetting
Financial assets and liabilities are offset, and the net amount
reported in the statement of financial position when there is
NLB Group and NLB
Buildings
a legally enforceable right to offset the recognised amounts,
Leasehold improvements
The forborne status is withdrawn when:
and there is an intention to settle on a net basis, or to realise
• at least a 2-year probation period has passed since the
the asset and settle the liability simultaneously.
latest of:
• the moment of extending the restructuring measures or
• the forborne exposure was deemed performing;
• regular payments of the principal or interest were made, in
a substantial total amount, during at least half the probation
period;
• no exposure, in the probation period, is more than 30 days
in default of more than EUR 100;
• the client fulfils determined financial indicators.
In the case of a deferral of payment approved due to the
COVID-19 crisis, the probation period is extended for the
period of deferral.
2.17. Sale and repurchase agreements
Securities sold under sale and repurchase agreements
(repos) are retained in the financial statements, and the
counterparty liability is recognised in financial liabilities
measured at an amortised cost. Securities sold subject to sale
and repurchase agreements are reclassified in the financial
statements as pledged assets when the transferee has the
right by contract or custom to sell or re-pledge the collateral.
Securities purchased under agreements to resell (reverse
repos) are presented as loans to other banks or customers, as
appropriate.
In financial statements, the difference between the sale and
2.15. Repossessed assets
In certain circumstances, assets are repossessed following the
repurchase price is treated as interest and accrued over
the life of the repo agreements using the effective interest
foreclosure on loans that are in default. Repossessed assets are
method.
initially recognised in the financial statements at their fair value
and classified in the appropriate category according to their
purpose and are sold as soon as it is feasible in order to reduce
exposure (note 6.1.l). After initial recognition, repossessed
assets are measured and accounted for in accordance
2.18. Property and equipment
All items of property and equipment are initially recognised
at cost. They are subsequently measured at cost less any
accumulated depreciation and any accumulated impairment
with the policies applicable to the relevant asset categories.
loss.
Repossessed assets mainly represent items of real estate that
NLB Group classifies within investment properties measured in
Each year, NLB Group assesses whether there are indications
accordance with an IAS 40 Investment property (note 2.20.), and
that property and equipment may be impaired. If any such
2
5
14.3
10
12.5
in %
5
25
50
33.3
25
-
-
-
-
-
Computers
Furniture and equipment
Motor vehicles
Depreciation does not begin until the assets are available for use.
The assets’ residual values and useful lives are reviewed and
adjusted if appropriate on each reporting date. Gains and
losses on the disposal of items of property and equipment
are determined as the difference between the sale proceeds
and their carrying amount and are recognised in the income
statement.
Maintenance and repairs are charged to the income
statement during the financial period in which they are
incurred. Subsequent costs that increase future economic
benefits are recognised in the carrying amount of an asset,
and the replaced part, if any, is derecognised.
2.19. Intangible assets
Intangible assets include software licenses, goodwill (note
2.5.), and identifiable intangible assets acquired in a business
combination. Intangible assets other than goodwill, have a
finite useful life and are in the statement of financial position
stated at cost, less accumulated amortisation and impairment
losses. Amortisation is calculated on a straight-line basis at
rates designed to write-down the cost of an intangible asset
other assets measured in accordance with IAS 2 Inventories.
indication exists, the recoverable amounts are estimated. The
over its estimated useful life. The core banking system is
Real estate obtained as collateral from the foreclosure of
to sell and value in use. If the recoverable amount exceeds
loans and receivables, classified as other assets are initially
the carrying value, the assets are not impaired. If the carrying
period of three to five years. Amortisation does not begin until
the assets are available for use.
recoverable amount is the higher of the fair value less costs
amortised over a period of 10 years, and other software over a
recognised at fair value less costs to sell (realisable value),
amount exceeds the recoverable amount, the difference is
wherein only the direct costs of sales can be considered. At
recognised as an impairment loss in the income statement.
The identifiable intangible assets acquired in a business
subsequent measurement, the realisable value is verified
combination and recognised separately from goodwill, are
at least annually. Valuations of the fair value of real estate
Items of a largely independent property and equipment
recorded at fair value on the acquisition date if the intangible
are performed by certified real estate appraisers. The real
which do not generate cash flows are included in the cash-
asset is separable or arises from contractual or other legal
estate is impaired when the carrying value exceeds the
generating unit and later tested for possible impairment.
rights. After initial recognition, intangible assets acquired in a
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business combination are measured in accordance with IAS
Liabilities directly associated with disposal groups are
value guarantees, the exercise price of a purchase option if
38 Intangible Assets. Additionally identified intangible assets
reclassified and presented separately in the statement of
there exists a reasonable certainty for it to be exercised, and
acquired in a business combination in December 2020 (note
financial position.
5.12.c) relate to core deposits and trade name. Their useful
life is assessed to be 5 years. Amortisation of a trade name
is calculated on a straight-line basis, while for core deposits
accelerated amortisation is applied, since it better reflects the
pattern of asset’s consumption.
2.20. Investment properties
Investment properties include properties held to earn rentals,
2.22. Accounting for leases
A lease is a contract, or part of a contract, which creates
enforceable rights and obligations and conveys the right
to control the use of an identified asset for a period of
time in exchange for consideration. Thus, IFRS 16 requires
determination whether a contract is, or contains, a lease.
or to increase the value of a long-term investment, rather than
NLB Group as a lessee
to be used by NLB Group. Investment properties are carried
NLB Group recognises a liability to make lease payments and
at fair value determined by a certified appraiser. Fair value is
an asset representing the right to use the underlying asset
based on current market prices. Any gain or loss arising from a
(i.e., the right-of-use asset) during the lease term for all leases,
change in the fair value is recognised in the income statement.
except for short-term leases and leases of low-value. Short-
payments of penalties for terminating the lease, if the lease
term reflects exercising the option to terminate. Subsequently
(after the commencement date), NLB Group measures the
lease liability by:
• increasing the carrying amount to reflect interest on the
lease liability;
• reducing the carrying amount to reflect the lease payments
made;
• remeasuring the carrying amount to reflect any
reassessment or lease modifications.
In the statement of financial position, lease liabilities are
presented in line item ‘Other financial liabilities.’
2.21. Non-current assets and disposal
groups classified as held for sale
date have a lease term of 12 months or less without the option
to purchase the underlying asset. Leases of underlying assets
Non-current assets and disposal groups are classified as held
for sale if their carrying amount will be recovered through
with a value, when new, lower or equal to EUR 5 thousand
are defined as low value leases, and are thus recognised as
Payments under operating leases are recognised as income
on a straight-line basis over the period of the lease. Assets
leased under operating leases are presented in the statement
of financial position as investment property or as property
a sale transaction rather than through continuing use. This
expenses on a straight-line basis over the lease term.
and equipment.
term leases are defined as those which at the commencement
NLB Group as a lessor
condition is deemed to be met only when the sale is highly
probable, and the asset is available for immediate sale in its
Right-of-use assets
present condition. Management must be committed to the
At the commencement date, NLB Group measures the
sale, which should be expected to qualify for recognition as a
right-of-use asset at cost, reduced by any accumulated
completed sale within one year from the date of classification.
depreciation and impairment losses, and adjusted for any
Non-current assets and disposal groups classified as held
remeasurement of lease liabilities. The cost of right-of-use
for sale are measured at the lower of the assets’ previous
assets consists of the amount of lease liabilities recognised,
carrying amount and fair value less costs to sell.
initial direct costs incurred, an estimate of costs to be incurred
by the lessee in dismantling, and removing the underlying
NLB Group classifies a lease as a finance lease when the
risks and rewards incidental to ownership of a leased asset
lie with the lessee. When assets are leased under a finance
lease, the present value of the lease payments is recognised
as a receivable. Income from finance lease transactions is
amortised over the lifetime of the lease using the effective
interest method. Finance lease receivables are recognised at
an amount equal to the net investment in the lease, including
In the case of business combinations, NLB Group measures
asset to the condition required by the terms and conditions
the unguaranteed residual value.
an acquired non-current asset (or disposal group) that
of the lease and lease payments made at or before the
is classified as held for sale at the acquisition date in
commencement date less any lease incentives received. After
Sale-and-leaseback transactions
accordance with IFRS 5 Non-current Assets Held for Sale and
the commencement date, NLB Group measures the right-of-
Discontinued Operations at fair value less costs to sell.
use asset using a cost model and recognises depreciation
of the right-of-use assets, on a straight-line basis over the
During subsequent measurement, certain assets and liabilities
lease term, and (separately) interest on the lease liabilities.
of a disposal group that are outside the scope of IFRS 5
measurement requirements are measured in accordance
with the applicable standards (e.g., deferred tax assets,
In the statement of financial position, right-of-use assets are
presented in the line item ‘Property and equipment.’
NLB Group also enters into sale-and-leaseback transactions
(in which NLB Group is primarily a lessor) under which the
leased assets are purchased from, and then leased back to
the lessee. These contracts are classified as finance leases or
operating leases, depending on the contractual terms of the
leaseback agreement.
assets arising from employee benefits, financial instruments,
Lease liabilities
investment property measured at fair value, and contractual
At the commencement date, NLB Group measures the lease
rights under insurance contracts). Tangible and intangible
liability at the present value of the lease payments that are
assets are not depreciated. The effects of sale and valuation
not paid at that date. The lease payments consist of fixed
are included in the income statement as a gain or loss from
payments, variable lease payments that depend on an
non-current assets held for sale.
index or a rate, amounts expected to be paid under residual
Leases recognised in a business combination
In all leases acquired in a business combination, the acquiree
is the lessee. For such leases, NLB Group applies the IFRS 16
initial measurement provisions (with exceptions for leases with
remaining term of 12 months or less and low value leases) and
recognises the acquired lease liability as if the lease contract
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was a new lease at the acquisition date. The right-of-use asset
is measured at an amount equal to the recognised liability.
There are no favourable or unfavourable terms of the leases
relative to market terms, which would require the adjustment
of the right-of-use assets.
2.23. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and
cash equivalents comprise cash and balances with central
banks and other demand deposits at banks, debt securities
held for trading, loans to banks, and debt securities not held
for trading with an original maturity of up to three months.
Cash and cash equivalents are disclosed under the cash flow
statement.
2.24. Borrowings, deposits, and issued debt
securities with characteristics of debt
Loans and deposits received and issued debt securities are
2.26. Provisions
Provisions are recognised when NLB Group has a present
legal or constructive obligation as a result of past events,
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation,
and a reliable estimate of the amount of the obligation can
be made. They are recognised in the amount that is the best
estimate of the expenditure required to settle the present
obligation at the end of the reporting period. When the effect
of the time value of money is material, NLB Group determines
the level of provisions by discounting the expected cash flows
at a pre-tax rate reflecting the current rates specific to the
liability.
2.27. Contingent liabilities and commitments
Financial and non-financial guarantees
Financial guarantees are contracts that require the issuer to
documents that are in line with the conditions and deadlines
set out in the letter of credit.
A commitment may also take the form of a letter of credit
confirmation, which is usually done at the request or
authorisation of the issuing (opening) bank and constitutes a
firm commitment by the confirming bank, in addition to that of
the issuing bank, which independently assumes a commitment
to the beneficiary under certain conditions.
Other contingent liabilities and commitments
Other contingent liabilities and commitments represent
undrawn loan commitments to extend credit, uncovered
letters of credit, and other commitments.
The nominal contractual values of guarantees, letters of
credit, and undrawn loan commitments where the loan
make specific payments to reimburse the holder for a loss it
agreed to be provided is on market terms, are not recognised
initially recognised at fair value. Borrowings are subsequently
incurs because a specific debtor fails to make payments when
in the statement of financial position.
measured at the amortised cost. The difference between the
due, in accordance with the terms of debt instruments. Such
value at initial recognition and the final value is recognised
financial guarantees are given to banks, financial institutions,
in the income statement as interest expenses, applying the
and other bodies on behalf of the customer to secure loans,
effective interest rate.
overdrafts, and other banking facilities.
Contingent liabilities recognised in a business combination
A contingent liability recognised in a business combination is
initially measured at its fair value. After initial recognition, it is
measured at the higher of:
Repurchased own debt is disclosed as a reduction of
The issued guarantees covering non-financial obligations of
• the amount that would be recognised in accordance with
liabilities in the statement of financial position. The difference
the clients represent the obligation of the Bank (guarantor) to
IAS 37 Provisions, Contingent Liabilities and Contingent
between the book value and the price at which own debt was
pay if the client fails to perform certain works in accordance
Assets; or
repurchased is disclosed in the income statement.
with the terms of the commercial contract.
• the amount initially recognised less, if appropriate, the
2.25. Other issued financial instruments
with characteristics of equity
Financial and non-financial guarantees are initially
with the principles of IFRS 15 Revenue from Contracts with
recognised at fair value, which is usually evidenced by the fees
Customers. This requirement does not apply to contracts
Upon initial recognition, other issued financial instruments
received. The fees are amortised to the income statement over
accounted for in accordance with IFRS 9.
cumulative amount of income recognised in accordance
are classified in part or in full as equity instruments if the
the contract term using the straight-line method. NLB Group’s
contractual characteristics of the instruments are such
liabilities under guarantees are subsequently measured at the
that NLB Group must classify them as equity instruments in
greater of:
accordance with IAS 32 Financial Instruments: Presentation.
• the initial measurement, less amortisation calculated to
An issued financial instrument is only considered an equity
recognise fee income over the period of guarantee; or
instrument if that instrument does not represent a contractual
• ECL provisions as set out in note 2.13.
obligation for payment.
Issued financial instruments with characteristics of equity are
Documentary letters of credit
Documentary (and standby) letters of credit constitute a
recognised in equity in the statement of financial position.
written and irrevocable commitment of the issuing (opening)
Transaction costs incurred for issuing such instruments are
bank on behalf of the issuer (importer) to pay the beneficiary
deducted from equity reserves. The corresponding interest is
(exporter) the value set out in the documents by a defined
recognised directly in profit reserves.
deadline:
• if the letter of credit is payable on sight; and
The carrying value of an issued financial instrument with
• if the letter of credit is payable for deferred payment, the
characteristics of equity is presented in the statement of
bank will pay according to the contractual agreement when
changes in equity in the line item ‘Other Equity Instruments.’
and if the beneficiary (exporter) presents the bank with
2.28. Taxes
Income tax expenses comprises current and deferred income tax.
Current corporate income tax in NLB Group is calculated on
taxable profits at the applicable tax rate in the respective
jurisdiction. The corporate income tax rate for 2021 in Slovenia
was 19% (2020: 19%).
Current and deferred taxes are recognised in profit or loss,
except to the extent that they relate to a business combination
or taxes related to effects recognised directly in equity
(deferred tax related to the fair value re-measurement
of financial assets measured at fair value through other
comprehensive income, cash flow hedges, and actuarial gains
and losses on defined benefit pension plans is charged or
credited directly to other comprehensive income).
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Deferred income tax is calculated using the balance sheet
income statement when the service has been provided (see
passage of time. For post-employment benefits, actuarial
liability method for temporary differences arising between the
also note 2.10.). Fee and commission income charged for this
gains and losses from the effect of changes in actuarial
tax bases of assets and liabilities, and their carrying amounts
type of service is broken down by items in note 4.3.b). Further
assumptions and experience adjustments (differences
for financial reporting purposes.
details on transactions managed on behalf of third parties are
between the realised and expected payments) are recognised
Deferred tax assets are recognised if it is probable that future
disclosed in note 5.24.
in other comprehensive income under the line item ‘Actuarial
Gains/(Losses) on Defined Benefit Pensions Plans,’ and will
taxable profit will be available in the foreseeable future
Based on the requirements of Slovenian legislation, NLB
not be recycled to the income statement. Actuarial gains
against which the temporary differences can be utilised.
Group has, in note 5.24., additionally disclosed the assets and
and losses that relate to other employment benefits are
liabilities on accounts used to manage financial assets from
recognised in the income statement as defined benefit costs.
Deferred tax assets and liabilities are measured at tax rates
fiduciary activities, i.e., information related to the receipt,
In the statement of financial position, liabilities for short-
enacted or substantively enacted at the end of the reporting
processing, and execution of orders and related custody
term employee benefits are included in the line item ‘Other
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period that are expected to apply to the period when the asset
activities.
is realised, or the liability is settled. At each reporting date,
NLB Group reviews the carrying amount of deferred tax assets
and assesses future taxable profits against which temporary
taxable differences can be utilised.
Deferred tax assets for temporary differences arising from
impairments of investments in subsidiaries, associates and
joint ventures are recognised only to the extent that it is
probable that:
• the temporary differences will be reversed in the
foreseeable future; and
• taxable profit will be available.
2.30. Employee benefits
Employee benefits include:
• short-term employee benefits (such as salaries,
compensations, annual holiday allowance, separation
allowance, and non-monetary benefits);
• reimbursement of commuting costs, meal allowance,
compensation for use of own resources);
• retirement indemnity bonuses (post-employment benefits);
• other employment benefits (jubilee long-service benefits,
liabilities,’ while liabilities for post-employment benefits and
other employment benefits (jubilee long-service benefits) are
included in the line item ‘Provisions.’
In the case of a business combination employee benefits
are recognised and measured in accordance with IAS 19
Employee Benefits, i.e., not at fair value.
2.31. Share capital
Dividends on ordinary shares
Dividends on ordinary shares are recognised in equity in the
voluntary supplementary pension insurance);
period in which they are approved by NLB’s shareholders.
• variable remuneration.
Slovenian tax law does not set deadlines by which uncovered
Short-term employee benefits are recognised in the period to
Treasury shares
If NLB or another member of NLB Group purchases NLB’s
tax losses must be utilised.
In the case of business combination deferred tax balances are
recognised if related to temporary differences and carry-
forwards of an acquiree that exist at the acquisition date or
if they arise as a result of the acquisition. Income taxes are
measured in accordance with IAS 12 Income Taxes.
A tax on financial services is a tax on fees, paid for prescribed
financial services rendered (financial services, exempt from
value added tax (with the exception of securities transactions)
and the services of insurance brokers and agents), paid in
Slovenia. The tax rate is 8.5% (2020: 8.5%) and the tax is paid
monthly. Given that the tax on financial services is classified
as a sales tax, it reduces accrued revenues in the financial
statements.
which they relate and included in the income statement line
shares, the consideration paid is deducted from the total
item ‘Administrative expenses.’ Among others they include the
shareholders’ equity as treasury shares. If such shares are
payment of contributions for pension and disability insurance,
subsequently sold, any consideration received is included in
which according to local legislation (for employer) amount to
equity. If NLB’s shares are purchased by NLB itself or other
8.85% of the gross salaries.
NLB Group entities, NLB creates reserves for treasury shares
According to legislation, employees retire after they fulfil
certain conditions according to Pension and Disability
Insurance Act (ZPIZ), they are entitled to a lump-sum
Share issue costs
Costs directly attributable to the issue of new shares are
severance payment. Employees are also entitled to a long-
recognised in equity as a reduction in the share premium
service bonus for every 10 years of service in NLB.
account.
in equity.
These obligations are measured at the present value of future
cash outflows considering future salary increases and other
conditions, and then apportioned to past and future employee
service based on the benefit plan’s terms and conditions.
2.32. Segment reporting
Operating segments are reported in a manner consistent with
internal reporting to the Management Board, which is the
executive body that makes decisions regarding the allocation
of resources and assesses the performance of a specific
2.29. Fiduciary activities
NLB Group provides asset management services to its clients.
Service costs are included in the income statement in the
segment.
line item ‘Administrative expenses’ as defined benefit costs,
Assets held in a fiduciary capacity are not reported in NLB
while interest expenses on the defined benefit liability are
Group’s financial statements as they do not represent assets
recognised in the line item ‘Interest and similar expenses.’
of NLB Group. Fee and commission income and expenses
These interest expenses represent the change during the
relating to fiduciary activities are generally recognised in the
period in the defined benefit liability that arises from the
Transactions between organisational units (OUs) are
managed under normal operating conditions. Interest income
among individual OUs in the parent bank (NLB) is allocated
using a fund transfer pricing method and shown within the
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net interest income of each OU. Net non-interest income is
of risk parameters combining the historic movements with
In year 2020, the volatility of prices on various markets
allocated to the OU that actually provides the service that
the future macroeconomic predictions for three separate
increased as a result of the spread of COVID-19. Therefore,
generates income. Direct costs are attributed to the segment
scenarios. The models used to estimate future risk parameters
NLB Group decided to sell some securities with increased
that is directly related to the provided service and indirect
are validated and back-tested on a regular basis to make loss
credit spreads as part of its strategy to manage the credit
costs (costs which service centres provide for profit centres)
estimations as realistic as possible.
are attributed to the segment for which the service is provided,
risk. Most of these securities were classified as measured at
fair value through other comprehensive income (EUR 250,297
whereas overhead costs are allocated according to general
NLB Group performs regular stress-testing as part of the
thousand at NLB Group and EUR 222,586 thousand at NLB),
keys. External net income is the net income of NLB Group
ICAAP process normative approach, where the 3-year budget
while EUR 120,131 thousand of sold securities were measured
from the consolidated income statement. Income tax is not
is tested for adverse circumstances. The selected stress
at amortised cost. The total realised gains due to sales of
allocated between segments. Analysis by segment for NLB
scenario predicts adverse economic circumstances as a result
securities amount to EUR 17,815 thousand at NLB Group and
Group is presented in note 7.a).
of the prolonged COVID-19 pandemic.
EUR 17,096 thousand at NLB (note 4.4.).
In accordance with IFRS 8, NLB Group has the following
In terms of credit risk, the scenario has an unfavourable impact
Due to increased frequency and values of sales of securities
reportable segments: Retail Banking in Slovenia, Corporate
on default rates (transfer of assets from performing to default)
measured at amortised cost, NLB Group reassessed whether
and Investment Banking in Slovenia, Strategic Foreign
and loss rates (expected losses after occurrence of default).
there has been a change in its business model for managing
Markets, Financial Markets in Slovenia, Non-core members,
Furthermore, a transfer of assets within the performing sub-
financial assets. Sales were made due to an increase in the
and Other Activities.
portfolio to rating classes with worse default probabilities is
assets’ credit risk, and are therefore consistent with a held to
2.33. Critical accounting estimates and
judgments in applying accounting policies
NLB Group’s financial statements are influenced by
accounting policies, assumptions, estimates, and
envisaged. Based on the existing exposures (static balance
collect business model because the credit quality of financial
sheet assumption), additional allowances for expected credit
assets is relevant to NLB Group’s ability to collect contractual
losses are assessed on existing default exposures and new
cash flows. Credit risk management activities that are aimed
default flows, as well as on the remaining performing portfolio.
at minimising potential credit losses due to credit deterioration
are integral to such a model.
management’s judgment. NLB Group makes estimates and
The results of the stress scenario for NLB Group shows an
assumptions that affect the reported amounts of assets and
increase of credit risk impairments in the first year of stress
Furthermore, the sales were made as a response to COVID-19
liabilities within the next financial year. All estimates and
assumptions required in conformity with the IFRS are best
estimates undertaken in accordance with the applicable
standard. Estimates and judgments are evaluated on a
by EUR 139.6 million (2020: EUR 134.7 million), and an increase
situation and the increased volume of sales is not expected to
in the coverage of the credit portfolio by impairments by 0.98
persist. It is expected, that future sales volumes will be lower in
percentage points (2020: 0.90 percentage points).
frequency and value. So, no change in our business model has
been made.
continuing basis, and are based on past experience and other
factors, including expectations with regard to future events.
b) Fair value of financial instruments
The fair values of financial investments traded on the active
The fair values of derivative financial instruments are
a) Allowances for expected credit losses on loans and
advances
NLB Group monitors and checks the quality of the loan
market are based on current bid prices (financial assets) or
determined on the basis of market data (mark-to-market), in
offer prices (financial liabilities).
accordance with NLB Group’s methodology for the valuation
of financial instruments. The market exchange rates, interest
The fair values of financial instruments that are not traded on
rates, yield, and volatility curves used in valuations are based
portfolio at the individual and portfolio levels to continuously
the active market are determined by using valuation models.
on the market snapshot principle. Market data are saved daily
estimate the necessary allowances for ECL. NLB Group
creates individual allowances for individually significant
financial assets attributed to Stage 3. Such an assignment is
based on information regarding the fulfilment of contractual
obligations or other financial difficulties of the debtor, and
other important facts. Individual assessments are based on
These include a comparison with recent transaction prices,
at 4 p.m., and later used for the calculation of the fair values
the use of a discounted cash flow model, valuation based on
(market value, NPV) of financial instruments. NLB Group
comparable entities, and other frequently used valuation models.
applies market yield curves for valuation, and fair values are
These valuation models at their best estimate reflect current
additionally adjusted for credit risk of the counterparty.
market conditions at the measurement date, which may not be
representative of market conditions either before or after the
The fair value hierarchy of financial instruments is disclosed in
the expected discounted cash flows from operations and/or
measurement date. Management reviewed all applied models
note 6.5.
the assessed expected payment from collateral.
as at the reporting date to ensure they appropriately reflect
Allowances are assessed collectively for financial assets
market and the applied credit spread. Changes in assumptions
assigned to Stage 1 or 2, or for financial assets in Stage 3
regarding these factors could affect the reported fair values
joint ventures
The process of identifying and assessing the impairment of
with exposure below the materiality threshold. The ECL in
of financial instruments held for trading, and financial assets
investments in subsidiaries, associates and joint ventures is
this group of assets are estimated based on expected value
measured at fair value through other comprehensive income.
inherently uncertain, as the forecasting of cash flows requires
current market conditions, including the relative liquidity of the
c) Impairment of investments in subsidiaries, associates and
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the significant use of estimates, which themselves are sensitive
on the cost of equity allocated to an individual investment.
to the assumptions used. The review of impairment represents
The discount rate reflects the impact of a range of financial
management’s best estimate of the facts and assumptions
and economic variables, including the risk-free rate and
such as:
risk premium. The value of variables used is subject to
• Future cash flows from individual investments present the
fluctuations outside management’s control. The pre-tax
estimated cash flow for periods for which adopted business
discount rate is between 9.66 and 15.88% (31 December
plans are available. For core members, estimated cash
2020: between 9.66 and 15.88%).
flows are based on a five-year business plan. For non-core
members, estimated cash flows are based on a period in
For strategic NLB Group members in 2021 and 2020, there
line with the strategy of divestment. The business plans of
were no indications of impairment for equity investments.
individual entities are based on an assessment of future
economic conditions that will impact an individual member’s
In 2021, NLB impaired equity investments in non-core
business and the quality of the credit portfolio;
members in the amount of EUR 458 thousand (2020: EUR 582
• The growth rate in cash flows for the period following the
thousand).
adopted business plan is between 2.6 and 3.7%;
• The target capital adequacy ratio of an individual bank is
between 14 and 17%;
d) Employee benefits
Liabilities for certain employee benefits are calculated by an
• The discount rate derived from the capital asset pricing
independent actuary. The main assumptions included in the
model that is used to discount future cash flows is based
actuarial calculation are as follows:
Actuarial assumptions
Discount factor
Wage growth based on inflation, promotions,
and wage growth based on past years of service
Other assumptions
NLB Group
2021
2020
0.5% - 4.3%
0.3% - 4.0%
2021
0.6%
NLB
2020
0.3%
1.8% - 4.8%
1.0% - 4.0%
2.5% - 3.0%
2.6% - 3.0%
Number of employees eligible for benefits
7,014
7,996
2,444
2,572
A sensitivity analysis of significant actuarial assumptions for post-employment benefit:
31 Dec 2021
NLB Group
NLB
Discount rate
Future salary
increases
Discount rate
Future salary
increases
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
Impact on provisions for employee benefits
- post-employment benefits (in %)
(5.3)
5.7
5.5
(5.1)
(5.1)
5.5
5.5
(5.2)
31 Dec 2020
NLB Group
NLB
Discount rate
Future salary
increases
Discount rate
Future salary
increases
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
+0.5 b.p.
-0.5 b.p.
Impact on provisions for employee benefits
- post-employment benefits (in %)
(4.9)
3.8
5.3
(4.8)
(5.2)
3.4
5.6
(5.3)
The minimum discount rate is considered to be 0%.
Individual analysis is done by changing one assumption for
+ / - 0.5 percentage points, while all other assumptions stay
the same.
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The breakdown of actuarial gains and losses for post-employment benefit by causes
Actuarial gains and losses due to changed financial assumptions
Actuarial gains and losses due to changes in demographic assumptions
Actuarial gains and losses due to experience
Total actuarial gains and losses for the year
The weighted average duration of liabilities in years
NLB Group
NLB
in EUR thousands
2021
251
(1,211)
(417)
(1,377)
2020
606
134
138
878
2021
292
151
(558)
(115)
2020
473
200
27
700
Post-employment benefit
NLB Group
NLB
2021
2020
9.4 - 19.0
10.5 - 18.7
2021
11.0
2020
11.1
e) Taxes
NLB Group operates in countries governed by different
Accounting standards and amendments to existing
free rate. The Phase 2 amendments include a practical
standards effective for annual periods beginning on
expedient to require contractual changes, or changes to
laws. The deferred tax assets recognised as at 31 December
1 January 2021 that were endorsed by the EU and adopted by
cash flows that are directly required by the reform, to be
2021 are based on profit forecasts and take the expected
manner of recovery of the assets into account. Changes
in assumptions regarding the likely manner of recovering
assets or changes in profit forecasts can lead to the
recognition of currently unrecognised deferred tax assets
or derecognition of previously created deferred tax assets.
NLB Group
• IFRS 4 (amendment) – Insurance Contracts – deferral of
IFRS 9 is effective for annual periods beginning on or after
1 January 2021. Currently IFRS 4 requires insurance entities
to apply IFRS 9 – Financial Instruments from 1 January
2021, and amendments allow them to defer the application
If NLB profit projections used for estimation of the amount
of IFRS 9 until the annual period beginning on or after
of deferred tax assets which are expected to be reversed in
1 January 2023. The amendment will not impact NLB Group’s
treated as changes to a floating interest rate equivalent
to a movement in a market rate of interest. The practical
expedient is also required for entities applying IFRS 4 –
Insurance Contracts that are using the exemption from
IFRS 9 – Financial Instruments (and therefore, apply IAS
39 – Financial Instruments: Recognition and Measurement)
and for IFRS 16 – Leases, to lease modifications required by
the IBOR reform. The amendments permit changes required
foreseeable future (i.e., within 5 years) would change by 10%,
consolidated financial statements. There is no impact on
by the IBOR reform to be made to hedge designations and
the estimated amount of deferred tax assets would change by
NLB Group’s and NLB’s financial statements.
hedge documentation under both IFRS 9 and IAS 39 without
approximately EUR 3.2 million (notes 4.16. and 5.17.).
2.34. Implementation of the new and revised
International Financial Reporting Standards
During the current year, NLB Group adopted all new
and revised standards and interpretations issued by the
International Accounting Standards Board (hereinafter:
‘the IASB’) and the International Financial Reporting
Interpretations Committee (hereinafter: ‘the IFRIC’), and
• IFRS 9 (amendment), IAS 39 (amendment), IFRS 7
(amendment), IFRS 4 (amendment) and IFRS 16 (amendment)
– Interest Rate Benchmark Reform – Phase 2 are effective
for annual periods beginning on or after 1 January 2021 with
the hedging relationship being discontinued. Under IFRS
7 – Financial instrument: Disclosures amendments an entity
will be required to disclose information about new risks
arising from the reform and how it manages the transition
to alternative benchmark rates. The Phase 2 amendments
earlier application permitted. Unlike Phase 1, which focused
apply only to changes required by the interest rate
on issues of the impact of the reform on financial reporting
benchmark reform to financial instruments and hedging
in the period before the replacement of the existing interest
relationships. Additional information about interest rate
rate benchmark with a risk-free interest rate, Phase 2
benchmark reform is provided in note 5.5.d).
that are endorsed by the EU that are effective for annual
focuses on issues that affect financial reporting when an
accounting periods beginning on 1 January 2021.
existing interest rate benchmark is replaced with a risk-
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beyond 30 June 2021 is effective for annual periods
beginning on or after 1 April 2021. The amendment extended
Accounting standards and amendments to existing
after 1 January 2022. The amendments modify the standard
• IFRS 16 (amendment) – Covid-19-Related Rent Concessions
standards that were endorsed by the EU, but not adopted
regarding costs a company should include as the cost of
early by NLB Group
New and revised accounting standards and interpretations
fulfilling a contract when assessing whether a contract is
onerous. The amendments specify that the ‘cost of fulfilling’
the availability of the practical expedient by one year so
endorsed by the EU that are not mandatory for annual
a contract comprises the ‘costs that relate directly to the
that it applies to rent concessions for which any reduction
accounting periods beginning on 1 January 2021, were
contract.’ The costs that relate directly to a contract can
in lease payments affects only payments originally due on
not adopted early by NLB Group. These standards and
either be incremental costs of fulfilling that contract or
or before 30 June 2022, provided the other conditions for
amendments are not expected to have a material impact
an allocation of other costs that relate directly to fulfilling
applying the practical expedient are met. There is no impact
on the consolidated financial statements of NLB Group
contracts. NLB Group and NLB do not expect an impact on
on NLB Group’s and NLB’s financial statements.
in the future reporting periods and on foreseeable future
their financial statements.
transactions. NLB Group plans to adopt the accounting
standards and amendments listed below for reporting periods
• Annual Improvements to IFRS Standards 2018-2020
commencing on or after the effective date.
(amendments) are effective for annual periods beginning on
• IFRS 3 (amendment) – Business Combinations – Reference
to the Conceptual Framework is effective for annual periods
beginning on or after 1 January 2022. The amendments
update a reference in IFRS 3 to the Conceptual Framework
or after 1 January 2022. The amendments to IFRS 9 clarify
which fees and costs should be included in the ‘10 per cent’
test for derecognition of a financial liability. The amendment
to IFRS 16 – Leases removes from the example the illustration
of the reimbursement of leasehold improvements by the
Accounting standards and amendments to existing
standards, but not endorsed by the EU
• IAS 1 (amendment and deferral of effective date) –
Presentation of Financial Statements: Classification
of Liabilities as Current or Non-current is effective for
annual periods beginning on or after 1 January 2023. The
amendments clarify that liabilities are classified as either
current or non-current, depending on the rights that exist at
for Financial Reporting without changing the accounting
lessor in order to resolve any potential confusion regarding
the end of the reporting period. Classification is unaffected
requirements for business combinations. Furthermore, the
amendments add an exception to the recognition principle
for liabilities and contingent liabilities within the scope of IAS
37 Provisions, Contingent Liabilities and Contingent Assets
the treatment of lease incentives. The amendments to IFRS
1 – First-time Adoption of International Financial Reporting
Standards permits a subsidiary that becomes a first-time
adopter of IFRS Standards later than its parent to measure
by the expectations of the entity or events after the reporting
date. The amendment also clarifies what IAS 1 means when it
refers to the ‘settlement’ of a liability. NLB Group and NLB do
not expect an impact on their financial statements.
or IFRIC 21 Levies. The amendments also clarify existing
cumulative translation differences at amounts included in
guidance for contingent assets.
• IAS 16 (amendment) – Property, Plant and Equipment:
Proceeds before Intended Use is effective for annual periods
beginning on or after 1 January 2022. The amendment prohibits
the consolidated financial statements of the parent, based
on the parent’s date of transition to IFRS Standards. The
amendments to IAS 41 – Agriculture remove the requirement
to exclude cash flows for taxation when measuring fair value
• IAS 1 (amendment) – Presentation of Financial Statements
and IFRS Practice Statement 2 – Disclosure of Accounting
policies is effective for annual periods beginning on or after
1 January 2023. The amendments to IAS 1 require companies
under IAS 41. This amendment is intended to align with the
to disclose their material accounting policy information
the deduction from the cost of an item of property, plant and
requirement in the standard to discount cash flows on a post-
rather than their significant accounting policies. The
equipment of any proceeds from the sale of produced items
while the asset is being prepared for its intended use. The
proceeds from selling such items, and the cost of producing
those items, are recognised in profit or loss. It also clarifies that
tax basis. This will ensure consistency with the requirements
in IFRS 13 – Fair Value Measurement. NLB Group and NLB do
not expect an impact on their financial statements.
amendments to IFRS Practice Statement 2 provide guidance
on how to apply the concept of materiality to accounting
policy disclosures. NLB Group and NLB do not expect an
an entity is ‘testing whether the asset is functioning properly’
• IFRS 17 (new standard including amendments) – Insurance
when it assesses the technical and physical performance of
the asset. The financial performance of the asset is not relevant
Contracts is effective for annual periods beginning on or after
1 January 2023. The new standard provides a comprehensive
to this assessment. The amendment further requires separate
principle-based framework for the measurement and
disclosure of the amounts of proceeds and costs relating
presentation of all insurance contracts. The new standard will
impact on their financial statements.
• IAS 8 (amendment) – Accounting policies, Changes in
Accounting Estimates and Errors: Definition of Accounting
Estimates is effective for annual periods beginning on
or after 1 January 2023. The amendments clarify how
to items produced that are not an output of the entity’s ordinary
replace IFRS 4 Insurance Contracts and requires insurance
companies should distinguish changes in accounting
activities. It is also necessary to disclose the line item in the
contracts to be measured using current fulfilment cash
policies from changes in accounting estimates. That
statement of comprehensive income where the proceeds are
flows, and for revenue to be recognised – as the service is
distinction is important because changes in accounting
included. NLB Group and NLB do not expect an impact on their
provided over the coverage period. The additionally issued
estimates are applied prospectively only to future
financial statements.
amendments to IFRS 17 simplify some requirements and
transactions and other future events, but changes
• IAS 37 (amendments) – Provisions, Contingent Liabilities and
Contingent Assets: Onerous Contracts – Cost of Fulfilling
a Contract is effective for annual periods beginning on or
explanation of financial performance, and provide additional
in accounting policies are generally also applied
transition reliefs to reduce the complexity of applying
retrospectively to past transactions and other past events.
standard for the first time. NLB Group and NLB do not expect
NLB Group and NLB do not expect an impact on their
an impact on their financial statements.
financial statements.
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• IAS 12 (amendment) - Income Taxes: Deferred Tax related
to Assets and Liabilities arising from a Single Transaction is
effective for annual periods beginning on or after 1 January
2023. IAS 12 specifies how a company accounts for income
tax, including deferred tax, which represents tax payable
or recoverable in the future. In specified circumstances,
companies are exempt from recognising deferred tax when
they recognise assets or liabilities for the first time. The
amendments clarify that the exemption does not apply and
that companies are required to recognise deferred tax on
such transactions. NLB Group and NLB do not expect an
impact on their financial statements.
• IFRS 17 (amendment) – Insurance contracts: Initial
Application of IFRS 17 and IFRS 9 – Comparative
Information is effective for annual periods beginning on or
after 1 January 2023. The amendment is a transition option
relating to comparative information about financial assets
presented on initial application of IFRS 17. The amendment
is aimed at helping entities to avoid temporary accounting
mismatches between financial assets and insurance
contract liabilities, and therefore improve the usefulness of
comparative information for users of financial statements.
NLB Group and NLB do not expect an impact on their
financial statements.
3. Changes in the composition
of the NLB Group
Changes in 2021
Capital changes:
• In April 2021, NLB increased the share of voting rights in
the takeover bid for the remaining shares of Komercijalna
banka a.d. Beograd from 83.23% to 87.999% and also
acquired 15.328% of preference shares. This increased
NLB’s share in total shareholding of the bank from 81.42% to
86.42%. The increase in capital investment was recognised
in the amount of EUR 23,098 thousand.
• In May 2021, NLB increased the share of voting rights in the
public offering of ordinary shares of Komercijalna banka
a.d. Beograd from 87.999% to 88.28%. This increased NLB’s
share in total shareholding of the bank from 86.42% to
86.70%. The increase in capital investment was recognised
in the amount of EUR 1,337 thousand.
• In May 2021, NLB acquired the remaining shares of minority
shareholders of NLB Banka a.d., Beograd and increased
its ownership from 99.997% to 100%. The increase in
capital investment was recognised in the amount of EUR 2
thousand.
• An increase in equity reserves in the form of a cash
contribution in the amount of EUR 300 thousand in REAM
d.o.o., Beograd to ensure regular business operations.
• In October 2021, NLB increased its business share in Bankart
d.o.o., Ljubljana from 40.08% to 45.64%.
• In November 2021, Komercijalna banka a.d. Podgorica
merged with NLB Banka a.d. Podgorica. After this merger,
Komercijalna banka a.d. Beograd has 23.97% shareholding
of NLB Banka a.d. Podgorica, while NLB d.d. has 75.90%.
• In December 2021, an increase in share capital in the form of
a cash contribution in the amount of EUR 15,309 thousand in
NLB Lease&Go, leasing, d.o.o., Ljubljana for the purpose of
achieving NLB Group’s leasing strategy.
• In December 2021, NLB increased its ownership in settlement
agreement in relation to the put and call option of shares
of NLB Banka sh.a., Prishtina from 81.21% to 82.38%. The
increase in capital investment was recognised in the amount
of EUR 223 thousand.
Other changes:
• In April 2021 company BH-RE d.o.o., Sarajevo – u likvidaciji
was liquidated. In accordance with a court order, company
was removed from the court register.
• In September 2021, NLB sold its 0.002% ownership interest in
Komercijalna banka a.d. Banja Luka to Komercijalna banka
a.d. Beograd.
• In November 2021, Prvi Faktor d.o.o., Sarajevo - u likvidaciji
was liquidated. In accordance with a court order, the
company was removed from the court register.
• In December 2021, Komercijalna banka a.d. Beograd sold its
subsidiary Komercijalna banka a.d. Banja Luka.
• In December 2021, NLB sold its subsidiary NLB Leasing
d.o.o., Ljubljana – v likvidaciji to NLB Lease&Go, leasing,
d.o.o., Ljubljana.
Changes in 2020
Capital changes:
• In December 2020, NLB acquired an 83.23% ordinary
shareholding in Komercijalna banka a.d. Beograd, which
represents 81.42% of total shareholding in the bank.
• In December 2020, NLB acquired 1 ordinary share of
Komercijalna banka a.d. Banja Luka which represents a
0.002% share of their capital.
• In December 2020, NLB acquired additional shares
of Bankart d.o.o., Ljubljana and thereby increased its
ownership from 39.44% to 40.08%.
• An increase in share capital in the form of a debt-to-equity
conversion in the amount of EUR 1,800 thousand in NLB
Leasing Podgorica d.o.o. – u likvidaciji.
Other changes:
• In April 2020, NLB established the non-financial cultural
heritage institute named ‘NLB Zavod za upravljanje kulturne
dediščine, Ljubljana.’
• In May 2020, NLB established financial company named
‘NLB Lease&Go, leasing, d.o.o., Ljubljana.’
• In May 2020, all the suspensive conditions under the joint
NLB and KBC Insurance NV sale agreement signed in
December 2019 were met, therefore the sale of NLB’s 50%
stake in the share capital of NLB Vita d.d., Ljubljana was
completed (note 4.15.).
• In December 2020, BH-RE d.o.o., Sarajevo – beginning of
the liquidation procedure entered in the court register.
• In December 2020, NLB sold its subsidiaries NLB Leasing
d.o.o., Sarajevo - u likvidaciji and NLB Leasing Podgorica
d.o.o., Podgorica - u likvidaciji.
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4. Notes to the income statement
Interest income and expenses
4.1.
Analysis by type of assets and liabilities
Interest and similar income
5.15.b).
NLB Group
NLB
in EUR thousands
The item ‘Negative interest’ classified under the line item
‘Other interest and similar income’ mainly includes the interest
from targeted longer-term refinancing operations in the
2021
2020
2021
2020
amount of EUR 3,979 thousand for NLB Group and NLB (note
Interest income calculated using the effective interest method
467,500
347,636
170,002
167,611
Loans and advances to customers at amortised cost
412,449
312,695
144,081
140,203
Securities measured at amortised cost
Financial assets measured at fair value through other comprehensive income
Loans and advances to banks measured at amortised cost
Deposits with banks and central banks
Other interest and similar income
Financial assets held for trading
Negative interest (note 5.15.b)
Non-trading financial assets mandatorily at fair value through profit or loss
Other
Total
Interest and similar expenses
Interest expenses calculated using the effective interest method
Due to customers
Borrowings from banks and central banks
Borrowings from other customers
Subordinated liabilities
Deposits from banks and central banks
Lease liabilities (note 5.11.a)
Other interest and similar expenses
Derivatives - hedge accounting
Negative interest
Financial liabilities held for trading
Interest expenses on defined employee benefits (note 2.30., 5.16.c)
Other
Total
14,049
40,347
416
239
10,329
4,757
3,980
780
812
16,165
18,180
383
213
7,552
5,408
3
1,800
341
10,150
11,733
3,937
101
9,183
4,455
3,981
744
3
12,736
10,704
3,882
86
7,493
5,408
5
1,739
341
The item ‘Negative interest’ classified under the line item
‘Other interest and similar expenses’ includes the interest from
deposits with banks and central banks in the amount of EUR
11,692 thousand for NLB Group (2020: EUR 7,178 thousand), and
EUR 8,826 thousand for NLB (2020: EUR 5,912 thousand). It also
includes interest from deposits with financial organisations
in the amount of EUR 336 thousand for NLB Group and NLB
(2020: EUR 411 thousand) and interest from securities with
a negative yield due to the purchase with a premium in the
amount of EUR 683 thousand for NLB Group and NLB (2020:
EUR 845 thousand).
Other interest income in year 2021 for NLB Group in the
477,829
355,188
179,185
175,104
amount of EUR 809 thousand relates to interests in relation to
a refund of VAT from the Slovenian Tax Authority, while EUR
341 thousand in year 2020 for NLB Group and NLB relates to
a refund of corporate income tax from the Italian Tax Authority
(note 4.16.).
53,171
25,575
1,797
1,205
41,208
20,541
880
941
25,142
3,067
1,647
-
21,883
3,835
774
-
10,548
10,040
10,548
10,040
865
470
15,298
10,279
12,711
4,222
202
595
78
294
14,407
9,439
8,434
4,789
100
79
6
29
14,904
10,279
9,845
4,222
48
355
27
39
14,334
9,439
7,168
4,789
30
76
68,469
55,615
40,046
36,217
Net interest income
409,360
299,573
139,139
138,887
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4.2. Dividend income
Financial assets measured at fair value through
other comprehensive income
- related to investments held at the end of reporting period
Investments in subsidiaries
Investments in associates and joint ventures
Non-trading financial assets mandatorily at
fair value through profit or loss
Total
NLB Group
NLB
2021
2020
2021
2020
in EUR thousands
184
184
-
-
39
223
83
83
-
-
28
111
-
-
79,136
441
39
79,616
-
-
5,561
670
28
6,259
4.3. Fee and commission income and expenses
a) Fee and commission income and expenses relating to activities of NLB Group and NLB
Fee and commission income
Fee and commission income relating to financial
instruments not at fair value through profit or loss
Credit cards and ATMs
Customer transaction accounts
Other fee and commission income
Payments
Investment funds
Guarantees
Agency of insurance products
Other services
Total
Fee and commission expenses
Fee and commission expenses relating to financial
instruments not at fair value through profit or loss
Credit cards and ATMs
Other fee and commission expenses
Payments
Insurance for holders of personal accounts and gold cards
Investment banking
Guarantees
Other services
Total
NLB Group
NLB
2021
2020
2021
2020
in EUR thousands
93,644
90,212
77,248
27,095
13,918
8,642
10,445
321,204
63,940
66,311
50,325
19,286
11,781
6,338
4,639
38,389
57,147
22,751
8,694
7,831
7,010
4,484
35,634
49,566
21,109
5,931
7,282
5,241
3,434
222,620
146,306
128,197
67,860
46,473
27,952
25,581
11,567
3,650
3,468
1,026
4,535
6,134
1,034
2,272
778
2,528
917
1,015
664
957
808
909
760
524
712
817
92,106
59,219
32,313
29,303
Net fee and commission income related to banking activities
229,098
163,401
113,993
98,894
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b) Fee and commission income and expenses relating to fiduciary activities
Fee and commission income related to fiduciary activities
Receipt, processing, and execution of orders
Management of financial instruments portfolio
Initial or subsequent underwriting and/or placing of financial
instruments without a firm commitment basis
Custody and similar services
Management of clients’ account of non-materialised securities
Safe-keeping of clients’ financial instruments
Advice to companies on capital structure, business
strategy, and related matters and advice, and services
relating to mergers and acquisitions of companies
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
1,942
2,118
264
5,290
1,595
26
150
1,583
1,237
327
4,842
1,797
-
26
1,655
-
264
5,247
1,595
-
150
1,435
-
327
4,909
1,797
-
26
Total
11,385
9,812
8,911
8,494
Fee and commission expenses related to fiduciary activities
Fee and commission related to Central Securities
Clearing Corporation and similar organisations
Fee and commission related to stock exchange and similar organisations
Total
3,188
119
3,307
2,876
57
2,933
3,191
119
3,310
2,874
57
2,931
Net fee income related to fiduciary activities
8,078
6,879
5,601
5,563
Total fee and commission income
Total fee and commission expenses
332,589
232,432
95,413
62,152
155,217
35,623
136,691
32,234
Total a) and b)
237,176
170,280
119,594
104,457
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4.4. Gains less losses from financial assets and liabilities not measured at fair value through profit or loss
Debt instruments measured at fair value through other comprehensive income
- gains
- losses
Debt instruments measured at amortised cost
- gains
Financial liabilities measured at amortised cost
- losses
Total
During 2020, NLB Group and NLB sold securities measured at
amortised cost in the amount of EUR 120,131 thousand due to
increased credit risk caused by COVID-19 (note 2.33.b).
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
171
(4)
-
-
167
5,244
(178)
12,749
(126)
17,689
24
-
-
-
24
4,525
(178)
12,749
(126)
16,970
4.5. Gains less losses from financial assets and liabilities held for trading
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
28,160
(7,114)
776
(616)
(199)
749
(562)
21,194
31,628
(21,139)
10,799
(5,795)
23,022
(18,623)
797
(392)
(170)
(909)
(21)
9,794
460
(571)
(484)
749
(562)
4,596
797
(392)
867
(909)
(21)
4,741
Foreign exchange trading
- gains
- losses
Debt instruments
- gains
- losses
Derivatives
- currency
- interest rate
- securities
Total
Interest income from financial assets held for trading is
included in the income statement line item ‘Interest and similar
income’ and interest expenses from financial liabilities held for
trading in line item ‘Interest and similar expenses’ (note 4.1.).
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4.6. Gains less losses from non-trading financial assets mandatorily at fair value through profit or loss
Equity securities
- gains
- losses
Debt securities
- gains
- losses
Loans and advances to customers
- gains
Total
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
2,208
(1,049)
5
(63)
15,737
16,838
4,003
(2,656)
14
(49)
5,286
6,598
1,157
(855)
-
-
13,190
13,492
3,043
(1,587)
-
-
5,359
6,815
Material exposure that was restructured in 2014, and classified
Interest income from non-trading financial assets mandatorily
as non-performing, was repaid in April 2021. This resulted in
at fair value through profit or loss is included in the income
positive valuation effect in the amount of EUR 14,837 thousand
statement line item ‘Interest and similar income’ (note 4.1.).
at NLB Group level and EUR 13,033 thousand at the NLB level.
4.7. Foreign exchange translation gains less losses
Financial assets and liabilities not measured as
at fair value through profit or loss
Financial assets measured at fair value through profit or loss
Other
Total
NLB Group
NLB
in EUR thousands
2021
359
37
(51)
345
2020
836
(131)
34
739
2021
714
37
(51)
700
2020
(1,011)
(131)
34
(1,108)
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4.8. Other net operating income
Other operating income
Income from non-banking services
- cash transportation
- operating leases of movable property
- IT services
- other
Rental income from investment property
Revaluation of investment property to fair value (note 5.9.)
Sale of investment property
Other operating income
Total
Other operating expenses
Expenses related to issued service guarantees
Revaluation of investment property to fair value (note 5.9.)
Other operating expenses
Total
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
6,528
3,241
1,074
426
1,787
3,558
4,447
778
14,335
29,646
453
858
5,114
6,425
6,390
2,994
1,003
438
1,955
2,572
1,006
234
2,728
12,930
1,328
136
3,917
5,381
5,884
3,250
471
1,098
1,065
567
411
-
10,633
17,495
453
105
3,190
3,748
5,595
2,994
470
891
1,240
471
884
164
1,508
8,622
1,328
87
1,413
2,828
Other net operating income
23,221
7,549
13,747
5,794
Other operating income in year 2021 includes settlement of
Other operating expenses mainly include expenses associated
legal dispute in the amount of EUR 8,978 thousand in the NLB
with donations, penalties and damages, and licences.
Group and EUR 8,559 thousand in NLB.
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4.9. Administrative expenses
Employee costs
Gross salaries, compensations, and other short-term benefits
Defined contribution scheme
Social security contributions
Defined benefit expenses (note 5.16.c)
Post-employment benefits
Other employee benefits
Total
Other general and administrative expenses
Material
Services
Intellectual services
Costs of supervision
Costs of other services
Tax expenses
Membership fees and similar
Business travel
Marketing
Buildings and equipment
Electricity
Rents and leases
Maintainance costs
Costs of security
Insurance for tangible assets
Other costs related to buildings and equipment
Technology
Maintainance of software and hardware
Licences
Data assets and subscription costs
Other technology costs
Communications
Postal services
Telecommunication and internet
Other communication costs
Other general and administrative costs
Total
Total administrative expenses
NLB Group
in EUR thousands
NLB
2021
2020
2021
2020
205,821
15,065
10,363
73
126
(53)
145,878
10,297
8,236
545
423
122
94,433
6,891
5,715
(59)
(27)
(32)
90,063
6,689
5,546
304
239
65
231,322
164,956
106,980
102,602
5,806
40,193
16,504
4,628
19,061
7,584
823
502
11,407
27,085
5,960
1,928
7,450
6,015
851
4,881
30,599
12,949
9,895
2,518
5,237
11,377
4,859
4,131
2,387
2,153
137,529
368,851
4,529
28,136
10,176
3,926
14,034
2,688
852
399
8,131
20,996
4,045
1,916
6,500
3,599
930
4,006
21,979
10,184
7,961
1,998
1,836
8,259
4,027
2,152
2,080
1,301
1,521
17,896
5,468
2,493
9,935
932
307
129
5,641
11,676
2,357
283
4,347
1,821
166
2,702
15,107
6,053
6,332
1,655
1,067
4,770
2,935
669
1,166
1,120
97,270
262,226
59,099
166,079
2,117
18,484
6,194
2,257
10,033
1,002
337
136
5,086
11,952
2,277
390
4,714
1,791
167
2,613
14,655
7,164
5,054
1,383
1,054
5,509
3,581
724
1,204
733
60,011
162,613
Number of employees
8,185
8,792
2,510
2,591
Costs of other services include costs for cash transport and
insurance, archiving services, personal insurance costs,
legal costs and fees, and session fees to the members of the
Supervisory Board.
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In the presented years, NLB Group and NLB paid the following expenses related to the services of the statutory auditor:
NLB Group
2021
2020
679
161
34
874
542
55
42
639
in EUR thousands
NLB
2020
211
55
42
308
2021
232
119
34
385
External audit services
Audit of annual report
Other audit services
Other non-audit services
Total
Additionally, to the services included in the table above, the
statutory auditor in 2021 performed also some services related
to the expected issuance of subordinated instrument in the
amount of EUR 325 thousand (2020: EUR 75 thousand).
4.10. Cash contributions to resolution funds and deposit guarantee schemes
Cash contributions to deposit guarantee schemes
Cash contributions to resolution funds
Total
4.11. Depreciation and amortisation
Amortisation of intangible assets (note 5.10.)
Depreciation of property and equipment:
- own property and equipment (note 5.8.b)
- right-of-use assets (note 5.11.a)
Total
NLB Group
NLB Group
2020
15,022
1,652
16,674
2020
10,112
17,062
4,541
31,715
2021
33,148
1,992
35,140
2021
16,211
21,607
8,710
46,528
in EUR thousands
NLB
2020
5,451
1,652
7,103
in EUR thousands
NLB
2020
6,908
10,092
848
17,848
2021
7,543
1,992
9,535
2021
6,022
10,610
890
17,522
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4.12. Gains less losses from modification of financial assets
2021
2020
12-month
expected
credit
losses
Lifetime
ECL not
credit -
impaired
Lifetime
ECL credit-
impaired
Total
12-month
expected
credit
losses
Lifetime
ECL not
credit -
impaired
Lifetime
ECL credit-
impaired
Total
in EUR thousands
NLB Group
Financial assets modified
during the period
Amortised cost before modification
15,569
5,259
Net modification gains/(losses)
(48)
(12)
4,435
(203)
25,263
416,341
27,798
8,756
452,895
(263)
(3,094)
(357)
(126)
(3,577)
NLB Group
Financial assets modified since initial recognition
Gross carrying amount of financial assets for which loss allowance
has changed to 12-month measurement during the period
in EUR thousands
31 Dec 2021
31 Dec 2020
162
1,690
4.13. Provisions
Guarantees and commitments (note 5.16.b)
Restructuring provisions (note 5.16.d)
Provisions for legal risks (note 5.16.e)
Other provisions (note 5.16.f)
Total
NLB Group
NLB
in EUR thousands
2021
(8,504)
14,797
7,873
-
14,166
2020
482
3,500
4,696
(119)
8,559
2021
(8,028)
-
72
-
(7,956)
2020
(599)
3,500
4,230
(85)
7,046
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4.14. Impairment charge
Impairment of financial assets
Cash balances at central banks, and other demand deposits at banks
Loans and advances to banks measured at amortised cost (note 5.14.a)
Loans and advances to individuals measured at amortised cost (note 5.14.a)
Loans and advances to other customers measured at amortised cost (note 5.14.a)
Debt securities measured at fair value through other comprehensive income (note 5.14.b)
Debt securities measured at amortised cost (note 5.14.b)
Other financial assets measured at amortised cost (note 5.14.a)
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
117
57
13,414
(44,639)
2,854
(383)
1,249
344
47
29,007
25,972
3,888
547
1,994
89
27
6,830
(24,840)
(148)
(17)
(8)
124
14
13,219
(4,611)
635
224
28
Total impairment of financial assets
(27,331)
61,799
(18,067)
9,633
Impairment of investments in subsidiaries, associates and joint ventures
Investments in subsidiaries
Investments in associates and joint ventures
Total
Impairment of other assets
Property and equipment (note 5.8.)
Intangible assets (note 5.10.)
Other assets
Total
-
-
-
216
936
3,255
4,407
-
-
-
204
-
792
996
(7,522)
79
(7,443)
-
-
(104)
(104)
552
30
582
-
-
103
103
Total impairment of non-financial assets
4,407
996
(7,547)
685
Total impairment
(22,924)
62,795
(25,614)
10,318
In 2021, NLB impaired equity investments in non-core
In 2020, impairment of financial assets includes EUR 13,447
subsidiaries and an associate in total amount of EUR
thousand of 12-month expected credit losses for Stage 1
458 thousand (2020: EUR 582 thousand). The release of
financial assets, acquired through a business combination
impairments in amount of EUR 7,901 thousand relates to sale
(note 5.12.c). Of that, EUR 10,434 thousand relates to financial
of non-core subsidiary (note 3.). In 2020, NLB did not release
assets measured at amortised cost, EUR 2,932 thousand
any impairments of equity investments.
to financial assets measured at fair value through other
comprehensive income, and EUR 81 thousand to cash
Impairments of investments in subsidiaries and associates are
balances at central banks and other demand deposits at
included in the segment ‘Non-core members.’
banks.
4.15. Gains less losses from non-current assets held for sale
Gains less losses on derecognition of subsidiaries, associates and joint ventures
Gains less losses from property and equipment
Total
NLB Group
NLB
in EUR thousands
2021
-
248
248
2020
11,006
(153)
10,853
2021
-
(94)
(94)
2020
35,454
(220)
35,234
In May 2020, all the suspensive conditions under the joint NLB
share capital of NLB Vita was completed. The effect of sale is
and KBC Insurance NV sale agreement signed in December
included in the segment ‘Retail Banking in Slovenia.’
2019 were met, therefore, the sale of NLB’s 50% stake in the
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4.16. Income tax
Current income tax
Income tax related to previous period
Deferred income tax (note 5.17.)
Total
NLB Group
in EUR thousands
NLB
2021
16,961
-
(3,423)
13,538
2020
11,972
(3,569)
(3,238)
5,165
2021
3,159
-
(112)
3,047
2020
4,010
(3,569)
(540)
(99)
Income tax differs from the amount of tax determined by applying the Slovenian statutory tax rate as follows:
Profit before tax
Tax calculated at prescribed rate of 19%
Income not assessable for tax purposes
Expenses not deductible for tax purposes
Effect of unrecognised deferred tax assets on
impairments of subsidiaries and associates
Tax reliefs
Effect of unrecognised deferred tax assets on tax losses
Effects of different tax rates in other countries
Withholding tax suffered in other countries for which
no tax credit was available in Slovenia
Adjustment to tax in respect of prior periods
Other
Total
NLB Group
in EUR thousands
NLB
2021
261,406
49,667
(12,685)
6,510
(32,036)
(463)
10,675
(11,345)
3,156
50
9
13,538
2020
277,921
52,805
(26,300)
3,838
(9,016)
(1,902)
(4,351)
(6,273)
114
(3,457)
(293)
5,165
2021
211,468
40,179
(14,900)
1,160
(36,446)
-
9,886
-
3,156
3
9
3,047
2020
113,853
21,632
(4,359)
1,662
(8,652)
(1,649)
(4,985)
-
114
(3,569)
(293)
(99)
Each member of NLB Group (disclosed in note 5.12.a) is taxable
Non-taxable income of NLB Group for 2020 mostly relates
as required by local tax legislation. Income tax rates within
to the gain from a bargain purchase (negative goodwill) of
NLB Group range from 9–32%.
Komercijalna banka Beograd.
A tax rate of 19% was applied in Slovenia in 2021 (2020: 19%).
In 2020, NLB received EUR 3,569 thousand corporate income
tax refund and EUR 341 thousand interest from the Italian Tax
For the year 2021, NLB realised tax loss due to the utilisation of
Authority. The refund is related to the closing of Trieste Branch
previously tax non-deductible expenses for impairments in the
(officially closed in 2017) and is the consequence of tax non-
subsidiary, which was divested in 2021. The effects of the sale
deductible impairments of financial assets, recognised by the
of the subsidiary are included into the effect of unrecognised
Trieste Branch in the year 2013. The refund procedure started
deferred tax assets on impairments of subsidiaries and
in 2016 and was successfully concluded in 2020.
associates, and the effects of new tax loss are included into
effect of unrecognised deferred tax assets on tax losses.
NLB recognised deferred tax assets accrued on the basis of
Non-taxable income of NLB relates mostly to dividends.
estimates, is expected to be reversed in the foreseeable future (i.e.,
Non-taxable dividend income in 2021 amounts to EUR 75,635
within five years). Due to some uncertainties regarding external
thousand (2020: EUR 5,947 thousand).
factors (regulatory environment, market situation, etc.), a lower
range of expected outcomes was considered for the purposes of
temporary differences in an amount that, given future profit
deferred tax assets calculation. The estimated amount of deferred
tax assets, expected to be reversed in foreseeable future, was not
changed in 2021 and stays the same as in 2020.
NLB did not recognise deferred tax assets arising from tax
losses and tax reliefs. NLB recognised deferred tax assets on all
temporary differences, except for impairments of non-strategic
capital investments and valuation of financial instruments where
deferred tax assets are recognised in the amount that, taking into
account other recognised deferred tax assets reaches the total
amount of deferred tax assets, for which a reversal is expected
within five years. The deferred tax assets with respect to which
simultaneously deferred tax liabilities are recognised are excluded
from this calculation (e.g., deferred tax assets for temporary non-
deductible expenses for impairment of debt securities measured
at fair value through other comprehensive income and deferred
tax assets related to fair value hedge accounting).
NLB Group members did not recognise deferred tax assets for tax
losses if there is uncertainty about whether the tax losses can be
utilised, because it is not probable that future taxable profits will be
available against which the deferred tax assets can be utilised.
The tax authorities may audit operations of NLB Group entities.
In general, tax inspection, which may result in the emergence
of additional tax liability, default interest, and penalties, may
be initiated at any time within four to six years from the date of
tax statement or from the year in which tax should have been
assessed. NLB is not aware of any circumstances that could
give rise to a potential material tax liability in this respect.
In 2018, the Financial Administration of the Republic of
Slovenia (FURS) granted NLB special tax status for a period
of three years. This status was extended in March 2021 for
another three years. The purpose of the status is to establish
cooperation between FURS and the taxpayers, with the aim of
encouraging voluntary compliance and reduce administrative
burdens on financial supervision. FURS cooperates with NLB
and responds quickly to resolve NLB’s tax compliance issues,
which reduces NLB’s tax risks and uncertain tax positions.
The effective tax rate of NLB Group relating to operations in
2021, calculated as a ratio of the tax expenses and profit before
tax is 5.2% (2020: 1.9%). NLB Group profit before tax for the
year 2020 includes non-taxable gain from a bargain purchase
(negative goodwill) of EUR 137,858 thousand. Without this one-
off event, the effective tax rate of NLB Group in 2020 would be
3.7%. The effective tax rate for NLB is 1.4% (2020: -0.1%).
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4.17. Earnings per share
Earnings per share are calculated by dividing the net profit by
Diluted earnings per share are the same as basic earnings per
the weighted average number of ordinary shares in issue, less
share for NLB Group and NLB, since subordinated loans and
treasury shares.
issued debt securities have no future conversion options, and
consequently there are no dilutive potential ordinary shares.
Net profit attributable to the owners of the parent (in EUR thousands)
Weighted average number of ordinary shares (in thousands)
Basic earnings per share (in EUR per share)
Diluted earnings per share (in EUR per share)
NLB Group
NLB
2021
236,404
20,000
11.8
11.8
2020
269,707
20,000
13.5
13.5
2021
208,421
20,000
10.4
10.4
2020
113,952
20,000
5.7
5.7
5. Notes to the statement of financial position
5.1. Cash, cash balances at central banks, and other demand deposits at banks
Balances and obligatory reserves with central banks
Cash
Demand deposits at banks
Allowance for impairment
Total
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
4,133,104
509,596
363,246
3,149,775
2,982,576
1,998,297
507,970
304,941
178,045
90,163
192,405
71,089
5,005,946
3,962,686
3,250,784
2,261,791
(894)
(874)
(347)
(258)
5,005,052
3,961,812
3,250,437
2,261,533
Slovenian banks are required to maintain a compulsory
Group maintain a compulsory reserve in accordance with
reserve with the Bank of Slovenia relative to the volume and
local legislation. NLB and other banks in NLB Group fulfil their
structure of their customer deposits. Other banks in NLB
compulsory reserve deposit requirements.
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5.2. Financial instruments held for trading
a) Financial assets held for trading
Derivatives. excluding hedging instruments
Swap contracts
- currency swaps
- interest rate swaps
Options
- interest rate options
- securities options
Forward contracts
- currency forward
Total derivatives
Securities
Bonds
- Republic of Serbia
- other non-EU members
Total securities
Total
- quoted securities
of these debt instruments
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
6,665
438
6,227
54
53
1
959
959
7,678
-
-
-
-
7,678
-
-
13,597
400
13,197
786
-
786
1,666
1,666
16,049
68,806
66,356
2,450
68,806
84,855
68,806
68,806
6,675
448
6,227
54
53
1
953
953
7,682
-
-
-
-
7,682
-
-
13,932
735
13,197
786
-
786
1,663
1,663
16,381
2,450
-
2,450
2,450
18,831
2,450
2,450
The notional amounts of derivative financial instruments are disclosed in note 5.23.b).
b) Financial liabilities held for trading
Derivatives. excluding hedging instruments
Swap contracts
- currency swaps
- interest rate swaps
Options
- interest rate options
Forward contracts
- currency forward
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
6,609
716
5,893
53
53
923
923
7,585
13,932
777
13,155
-
-
1,553
1,553
15,485
6,626
733
5,893
53
53
923
923
13,947
792
13,155
-
-
1,553
1,553
7,602
15,500
The notional amounts of derivative financial instruments are disclosed in note 5.23.b).
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5.3. Non-trading financial instruments measured at fair value through profit or loss
a) Financial assets mandatorily at fair value through profit or loss
Assets
Shares
Investment funds
Bonds
Loans and advances to companies
Total
- quoted securities
of these debt instruments
- unquoted securities
of these equity instruments
b) Financial liabilities measured at fair value through profit or loss
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
4,472
12,428
4,261
-
21,161
4,261
4,261
16,900
16,900
4,171
10,989
2,157
25,076
42,393
2,157
2,157
15,160
15,160
4,472
4,171
-
-
7,888
12,360
-
-
4,472
4,472
-
-
30,935
35,106
-
-
4,171
4,171
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
Liabilities
Loans and advances to companies
-
-
352
-
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5.4. Financial assets measured at fair value through other comprehensive income
a) Analysis by type of financial assets measured at fair value through other comprehensive income
Bonds
- governments
- Republic of Slovenia
- other EU members
- Republic of Serbia
- other non-EU members
- banks
- other issuers
Shares
National Resolution Fund
Treasury bills
- Republic of Slovenia
- other EU members
- Republic of Serbia
- other non-EU members
Commercial bills
Total
of these debt securities
of these equity securities
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
3,251,826
2,477,285
314,929
462,459
1,196,724
503,173
739,935
34,606
22,109
44,490
105,866
6,475
69,836
-
29,555
37,569
3,461,860
3,395,261
66,599
3,260,940
2,527,240
417,238
384,474
1,258,775
466,753
716,459
17,241
22,925
44,874
135,102
57,531
24,015
8,483
45,073
50,449
3,514,290
3,446,491
67,799
1,526,237
1,598,760
766,688
270,423
331,676
5,021
159,568
724,943
34,606
219
44,490
14,805
-
14,805
-
-
-
1,585,751
1,541,042
44,709
879,856
334,819
370,484
-
174,553
701,663
17,241
273
44,874
72,444
45,007
7,011
-
20,426
-
1,716,351
1,671,204
45,147
Allowance for impairment (note 5.14.b)
(12,016)
(9,482)
(3,001)
(3,141)
- quoted securities
of these debt instruments
of these equity instruments
- unquoted securities
of these debt instruments
of these equity instruments
3,205,277
3,204,745
532
256,583
190,516
66,067
3,307,103
3,306,400
703
207,187
140,091
67,096
1,541,042
1,541,042
-
44,709
-
44,709
1,671,204
1,671,204
-
45,147
-
45,147
The credit quality analysis for financial assets and contingent
liabilities is disclosed in note 6.1.j) and movements in allowance
for the impairment of debt securities in note 5.14.b).
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b) Movements of financial assets measured at fair value through other comprehensive income
NLB Group
NLB
2021
2020
2021
2020
Debt securities Equity securities
Debt securities Equity securities
Debt securities Equity securities
Debt securities Equity securities
in EUR thousands
Balance as at 1 January
3,446,491
67,799
2,091,805
49,623
1,671,204
45,147
1,611,711
44,946
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Changes in fair values
Disposal of subsidiary (note 5.12.b)
Balance as at 31 December
1,194
-
1,455,823
31
-
-
(406)
1,267,281
1,856,445
94
17,614
-
-
-
219,733
-
-
-
-
-
1,045,700
(1,468,240)
(4,297)
(1,790,053)
(3,341)
(338,929)
(55)
(999,844)
40,310
8,367
(52,085)
(36,599)
-
-
3,066
-
17,370
(10,895)
14,944
-
-
-
3,809
-
11,696
8,452
(31,114)
-
-
-
(383)
-
9,894
(11,007)
14,750
-
-
-
-
-
-
-
201
-
3,395,261
66,599
3,446,491
67,799
1,541,042
44,709
1,671,204
45,147
As at 31 December 2021 and as at 31 December 2020, NLB
gain in the amount of EUR 53 thousand (2020: NLB Group and
at amortised cost’ because the conditions of the bankruptcy
Group and NLB do not have any equity instruments measured
NLB did not realise any gain or loss by selling equity securities
proceedings were not met. At the time of conversion, NLB
at fair value through other comprehensive income obtained
measured at fair value through other comprehensive income).
Group transferred EUR 1,002 thousand from accumulated
by taking possession of collateral in the statement of financial
Realised gain in year 2021 was transferred to retained
other comprehensive income into retained earnings
position (note 6.1.l).
earnings (note 5.4.c).
(note 5.4.c).
By selling equity securities measured at fair value through
Equity investment obtained by taking possession of collateral
other comprehensive income in 2021, NLB Group realised a
in amount of EUR 3,289 thousand was during year 2020
net gain in the amount of EUR 3,362 thousand, and NLB a net
converted back to the line item ‘Financial assets measured
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c) Accumulated other comprehensive income related to financial assets measured at fair value through other comprehensive income
NLB Group
NLB
2021
2020
2021
2020
Debt securities Equity securities
Debt securities Equity securities
Debt securities Equity securities
Debt securities Equity securities
in EUR thousands
3,726
45,480
27,242
452
24,156
288
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Disposal of subisidiaries (note 5.12.b)
- valuation and impairment
- deferred income tax (note 5.17.)
39,924
(7)
(1,916)
193
6
-
-
Net gains/(losses) from changes in fair value
(38,158)
3,066
Gains/losses transferred to net profit on disposal (note 4.4.)
Impairment (note 4.14.)
Transfer of gains/losses to retained earnings (5.4.b)
Deferred income tax (note 5.17.)
Share of other comprehensive income of associates and joint ventures
Balance as at 31 December
(167)
2,854
-
4,758
-
7,481
-
-
(3,362)
(179)
-
3,257
16
-
-
7,717
(5,066)
3,888
-
(1,085)
(11,026)
39,924
2,836
32
-
-
-
-
-
-
-
-
3,809
(17,187)
(383)
-
-
(1,002)
(401)
(1,548)
3,726
(24)
(148)
-
2,482
-
12,365
-
-
(53)
83
-
99
-
-
-
7,522
(4,347)
635
-
(724)
-
27,242
-
-
-
202
-
-
-
(38)
-
452
5.5. Derivatives for hedging purposes
NLB Group entities measure exposure to interest rate risk
on a hedged item for a fixed interest rate. All cash flow hedges
Hedge accounting principles were not applied in economic
are made on liability items, while fair value hedges are used
hedges using CIRS. Thus, the effects of valuation are disclosed
using repricing gap analysis and by calculating the sensitivity
on asset items.
in the income statement in the line item ‘Gains less losses from
financial assets and liabilities held for trading.’
of the statement of financial position and off-balance-sheet
items in terms of the economic value of equity. The portfolio
duration is used as a measure of risk in the management of
securities in the banking book.
NLB Group entities use various derivatives such as interest
rate swaps (IRS) and currency interest rate swaps (CIRS) to
close open positions in an individual maturity bucket. Micro
and macro fair value hedges are used for that purpose, i.e.,
the swapping of a fixed interest rate on a hedged item for
a variable interest rate. Micro cash flow hedges are also
Hedge accounting principles (fair value and cash flow hedging)
were applied in the hedging of interest rate risk using interest
Sources of hedge ineffectiveness may arise, but are not limited
rate swaps. These hedge relationships are designated in such
to the discount rates used for valuation of derivatives at fair
a way that the characteristics of the hedging instrument and
value, and notional and timing differences, as well differences
those of the hedged item match (i.e., the principal terms match),
in the amortisation plan between hedged items and the
while the dollar-offset method is used to regularly measure
hedging instrument. Hedge effectiveness is assessed monthly,
hedge effectiveness retrospectively. Prospective testing of
by comparing changes in the fair value of the hedged item
hedge effectiveness is carried out regularly for macro hedges
that are attributable to a hedged risk with changes in the fair
where the characteristics of both items in the hedge relationship
value of the hedging instrument.
do not fully match by comparing the change in the fair value of
occasionally used, i.e. the swapping of a variable interest rate
both items to the shift in the yield curve.
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a) Fair value adjustment in hedge accounting recognised in profit or loss
NLB Group and NLB
Fair value hedge
Net effects from hedging instruments
- interest rate swap for micro hedge
- interest rate swap for macro hedge
Net effects from hedged items
- loans measured at amortised cost - micro hedge
- bonds measured at amortised cost - micro hedge
- bonds measured at fair value through OCI - micro hedge
- loans measured at amortised cost- macro hedge
2021
167
26,406
19,547
6,859
(26,239)
(105)
(5,443)
(13,929)
(6,762)
in EUR thousands
2020
720
(12,348)
(7,537)
(4,811)
13,068
(128)
1,116
7,227
4,853
In both years presented, all fair value hedges were effective,
NLB Group applied a hedge of a net investment in a foreign
with actual results of the hedge ratio within a range of 80–125%,
operation in years 2011 and 2012, and at that time recognised
therefore, no discontinuation of the hedge accounting was required.
a EUR 754 thousand gain on the hedging instrument in other
comprehensive income (note 5.21.b). This gain will be included
As at 31 December 2021 and 2020, NLB Group and NLB had
in the consolidated income statement when the foreign
no relationships designated for cash flow hedge accounting
operation is disposed of as a part of the gain or loss on the
or for hedge of a net investment in a foreign operation.
disposal.
b) Notional amounts of interest rate swaps
NLB Group and NLB
Fair value hedge
31 Dec 2021
31 Dec 2020
Notional amount
in EUR thousands
Fair value
Asset
Liability
572,455
573,753
568
-
35,377
61,161
c) Accumulated fair value adjustments arising from the
statement of financial position as a hedged item, except for
corresponding continuing hedge relationships
The table below presents accumulated fair value adjustments
macro fair value hedges. In such relationships, hedged items
are presented in the line item ‘Financial assets measured at
arising from the corresponding continuing hedge
amortised cost,’ while the accumulated fair value adjustment
relationships, irrespective of whether there has been a change
is presented in a separate line item ‘Fair value changes of the
in the hedge designation during the year. The accumulated
fair value adjustment is presented in the same line of
hedged items in portfolio hedge of interest rate risk.’
NLB Group and NLB
Micro fair value hedges
Fixed rate corporate loans measured at AC
Fixed rate bonds measured at AC
Fixed rate bonds measured at FVOCI
Macro fair value hedges
Fixed rate retail loans
2021
in EUR thousands
2020
Carrying amount of
hedged items
Accumulated amount
of FV adjustments on
the hedged item
Carrying amount of
hedged items
Accumulated amount
of FV adjustments on
the hedged item
479,574
1,662
117,368
360,544
145,638
145,638
23,783
60
8,426
15,297
7,082
7,082
498,397
2,667
117,839
377,891
154,050
154,050
43,571
165
14,182
29,224
13,844
13,844
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d) IBOR reform
NLB Group closely monitors the development of Benchmark
In May 2021, the Euro RFR Working Group produced its
NLB Group activities for implementation of LIBOR transition
recommendations on EURIBOR fallback trigger events
were as follows:
Interest Rate Reform and is actively preparing for the changes
and €STR-based EURIBOR fallback rates. Our mid-term
• review of outstanding LIBOR referencing loans,
imposed by the regulation. In 2018, NLB formed a special
activities are expected to undertake on the implementation
• identification of alternative reference rate to be used for
working group which deals with the preparation for the
of more precise fallback provisioning, based on these
loan portfolio,
discontinuation of some important reference interest rates
recommendations. NLB identified potential €STR-based
• analysis of how the alternative reference rate will be
and reports on this to NLB Group ALCO.
fallbacks for EURIBOR, in line with the current market
calculated and how to calculate any economic difference
consensus on those fallbacks and intends to proceed
between LIBORs and the selected alternative reference
NLB Group no longer offers new products that would be
with the activities for inclusion on EURIBOR fallbacks into
rates,
tied to reference rates in termination. The exception are
all new EURIBOR-based contracts. In the next step, the
• consideration of IT system accommodation with alternative
products related to EURIBOR, which is not scheduled for
Bank is expected to include fallback provisions also in
reference rates,
discontinuation. Therefore, NLB Group’s attention was focused
legacy contracts. The exact timing depends on regulatory
• documentation of the transition of the loans.
on the modification of new contractual relationships with
development and best market practice.
customers in which EURIBOR occurs and the amendment of
In February 2021; the European Commission adopted an
existing contractual relationships with customers in which
NLB as a supervised entity, is required to comply with the
amendment to the existing EU BMR and in October 2021;
other benchmarks in termination appear.
Benchmark regulation and, as a user of benchmarks, must
the European Commission published the Implementing
EURIBOR (likely) discontinuation
Due to timely transition to the new hybrid EURIBOR methodology
produce and maintain a robust written plan setting out
Regulation on the designation of a statutory replacement for
the actions NLB would take in the event that a benchmark
certain settings of CHF LIBOR and for EONIA.
materially changes or ceases to be provided. NLB has
which meet the BMR requirements, EURIBOR can continue to be
prepared a plan, which sets out an inexhaustive/summary
CHF LIBOR transition to SARON Compound Rate was
used in new and legacy contracts for the foreseeable future.
action list, and will continue to closely follow market standards
successfully implemented in due time.
to identify alternative benchmarks that could be referenced in
EU supervised entities are bound to include robust fallback
substitute of existing benchmarks.
clauses into contractual documentation with the clients. In
November 2019, the Euro risk-free rates (RFR) Working Group
published high level recommendations for fallback provisions
LIBOR (imminent) discontinuation.
Since many LIBOR settings ceased to exist at the beginning
The table below indicates the nominal amount and weighted
average maturity of derivatives in hedging relationships that
will be affected by the IBOR reform, analysed on an interest
rate basis. The derivative hedging instruments provide a close
for products referencing EURIBOR. The inclusion of robust
of 2022, the Bank accelerated the process of winding-down
approximation to the extent of the risk exposure NLB Group
fallback language is a requirement in contracts subject to the
the exposures in a most efficient way. Incremental LIBOR
manages through hedging relationships.
EU Benchmark Regulation. The Bank already incorporated
transactions were not allowed unconditionally.
the generic fallback clause into all new EURIBOR (both retail
and corporate) contracts.
NLB Group and NLB
2021
2020
Nominal amount
(in EUR thousands)
Weighted average
maturity (years)
Nominal amount
(in EUR thousands)
Weighted average
maturity (years)
Interest rate swaps
EURIBOR (3 months)
EURIBOR (6 months)
USD LIBOR (6 months)
186,472
371,866
14,117
4.23
7.00
0.98
186,471
374,254
13,028
5.18
7.83
1.99
As can be seen from the table, the majority of long-term
maturities, when a change of EURIBOR could be expected.
derivatives in hedging relationships are exposed to
As at 31 December 2021, derivatives with remaining maturity
EURIBOR, therefore, the uncertainty arising from interest rate
of five or more years amount to EUR 272,730 thousand
benchmark reform derives mainly from derivatives with longer
(31 December 2020: EUR 310,730 thousand).
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5.6. Financial assets measured at amortised cost
Analysis by type
Debt securities
Loans and advances to banks
Loans and advances to customers
Other financial assets
Total
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
1,717,626
140,683
10,587,121
122,229
1,503,087
197,005
9,619,860
113,138
1,436,424
199,287
5,145,153
92,404
1,277,880
158,320
4,564,178
54,503
12,567,659
11,433,090
6,873,268
6,054,881
The credit quality analysis for financial assets and contingent liabilities is disclosed in note 6.1.j).
a) Debt securities
Governments
Companies
Banks
Financial organisations
Allowance for impairment (note 5.14.b)
Total
b) Loans and advances to banks
Loans
Time deposits
Reverse sale and repurchase agreements
Purchased receivables
Allowance for impairment (note 5.14.a)
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
1,317,248
79,852
295,653
28,178
1,720,931
(3,305)
1,717,626
1,173,718
86,946
220,988
25,120
1,506,772
(3,685)
1,503,087
1,041,787
72,632
295,653
28,178
1,438,250
(1,826)
953,881
79,732
220,988
25,120
1,279,721
(1,841)
1,436,424
1,277,880
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
10,200
130,602
-
79
140,881
(198)
140,683
9,809
128,074
59,263
-
197,146
(141)
197,005
117,490
81,900
-
79
199,469
(182)
199,287
95,070
63,405
-
-
158,475
(155)
158,320
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c) Loans and advances to customers
Loans
Overdrafts
Finance lease receivables (note 5.11.b)
Credit card business
Called guarantees
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
10,310,300
9,490,734
5,006,871
4,501,991
352,018
108,715
129,330
2,731
322,622
49,517
125,725
3,542
174,063
152,487
-
59,305
1,333
-
52,156
916
10,903,094
9,992,140
5,241,572
4,707,550
Allowance for impairment (note 5.14.a)
(315,973)
(372,280)
(96,419)
(143,372)
Total
10,587,121
9,619,860
5,145,153
4,564,178
Analysis of loans and advances to customers by sector
Governments
Financial organisations
Companies
Individuals
Total
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
281,010
141,709
368,400
158,871
143,864
226,144
170,742
177,198
4,645,112
4,159,496
2,118,210
1,838,468
5,519,290
4,933,093
2,656,935
2,377,770
10,587,121
9,619,860
5,145,153
4,564,178
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d) Other financial assets
Analysis by type of other financial assets
Receivables in the course of settlement and other temporary accounts
Credit card receivables
Debtors
Fees and commissions
Receivables to brokerage firms and others for the
sale of securities and custody services
Accrued income
Dividends
Prepayments
Other financial assets
Allowance for impairment (note 5.14.a)
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
40,436
22,670
8,227
7,303
613
1,715
-
1,526
45,965
128,455
(6,226)
122,229
32,484
20,260
6,316
6,563
611
1,327
-
447
50,683
118,691
(5,553)
113,138
23,945
15,270
1,311
3,041
610
1,690
20,493
-
27,197
93,557
(1,153)
92,404
15,906
11,383
1,307
2,871
610
1,296
-
-
22,460
55,833
(1,330)
54,503
Receivables in the course of settlement are temporary
Other financial assets include receivables to pension funds
balances which will be transferred to the appropriate item in
for early retirement payments, receivables from insurance
the days following their occurrence.
Analysis of other financial assets by sector
companies, claims in enforcement procedures, claims from
refunds, claims for subsidies from related transactions, paid
duties, and court fees.
Banks
Government
Financial organisations
Companies
Individuals
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
33,325
43,432
15,979
5,994
23,499
122,229
35,431
41,576
14,488
3,912
17,731
113,138
34,131
23,769
12,818
647
21,039
92,404
8,069
22,537
7,257
580
16,060
54,503
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e) Movement of called non-financial guarantees
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Called guarantees
Paid guarantees
Write-offs
Balance as at 31 December
NLB Group
in EUR thousands
NLB
2021
1,838
(1)
1,541
(1,904)
(757)
717
2020
1,859
(2)
2,376
(1,932)
(463)
1,838
2021
440
-
1,207
(470)
(757)
420
2020
365
-
2,261
(1,723)
(463)
440
5.7. Non-current assets held for sale
The line item ‘Non-current assets held for sale’ includes
business premises and assets received as collateral that are
in the process of being sold. As at 31 December 2021, the value
of assets received by taking possession of collateral and
included in non-current assets held for sale by NLB Group
amounted to EUR 699 thousand (31 December 2020: EUR 699
thousand). As at 31 December 2021 and as at 31 December
2020, NLB did not have any non-current assets obtained by
taking possession of collateral and included in non-current
assets held for sale (note 6.1.l).
Analysis of movements of non-current assets held for sale
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Transfer from/(to) property and equipment (note 5.8.)
Transfer from/(to) other assets
Transfer from/(to) investment property (note 5.9.)
Disposals
Valuation
Balance as at 31 December
NLB Group
in EUR thousands
NLB
2021
8,658
3
-
97
605
20
(22)
(1,952)
(358)
7,051
2020
43,191
(3)
1,969
89
2,779
-
(17)
(39,089)
(261)
8,658
2021
4,454
-
-
-
518
-
-
(547)
(336)
4,089
2020
5,532
-
-
-
2,626
-
-
(3,484)
(220)
4,454
In May 2020, all the suspensive conditions under the joint NLB
share capital of NLB Vita was completed. The effect of sale
and KBC Insurance NV sale agreement signed in December
in year 2020 is included in the segment ‘Retail Banking in
2019 were met, therefore, the sale of NLB’s 50% stake in the
Slovenia.’
5.8. Property and equipment
a) Analysis by type
Own property and equipment
Right-of-use assets (note 5.11.)
Total
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
223,593
23,421
247,014
223,598
25,519
249,117
82,905
3,217
86,122
88,495
3,180
91,675
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b) Movement of own property and equipment
NLB Group
NLB
Land &
Buildings
Computers
Other equipment
Total
Land &
Buildings
Computers
Other equipment
Total
for own use
in operating
lease
for own use
in operating
lease
in EUR thousands
Cost
Balance as at 1 January 2021
345,769
81,729
98,838
4,309
530,645
197,043
49,580
49,355
3,514
299,492
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Effects of translation of foreign operations
to presentation currency
Additions
Disposals
Impairment (note 4.14.)
Transfer to/from investment property (note 5.9.)
Transfer to/from non-current assets
held for sale (note 5.7.)
Disposal of subsidiary (note 5.12.b)
Balance as at 31 December 2021
Depreciation and impairment
62
3,987
(1,385)
(126)
4,377
(5,707)
(119)
346,858
17
7,296
(8,710)
-
-
-
30
4,871
(8,393)
-
-
-
(201)
80,131
(617)
94,729
-
1,948
(648)
-
-
-
-
109
18,102
(19,136)
(126)
4,377
(5,707)
(937)
-
3,321
-
-
(2,423)
(2,089)
-
-
1,513
(7,194)
-
-
-
-
-
1,510
(4,722)
-
-
-
-
-
9
(4)
-
-
-
-
-
6,353
(11,920)
-
(2,423)
(2,089)
-
5,609
527,327
195,852
43,899
46,143
3,519
289,413
Balance as at 1 January 2021
173,404
53,822
76,897
2,924
307,047
135,343
32,905
39,944
2,805
210,997
Effects of translation of foreign operations
to presentation currency
Disposals
Depreciation (note 4.11.)
Impairment (note 4.14.)
Transfer to/from investment property (note 5.9.)
Transfer to/from non-current assets
held for sale (note 5.7.)
Disposal of subsidiary (note 5.12.b)
7
(684)
7,124
90
(2,676)
(5,102)
(3)
10
(8,634)
8,733
-
-
-
(98)
Balance as at 31 December 2021
172,160
53,833
26
(7,577)
5,196
-
-
-
(127)
74,415
-
(152)
554
-
-
-
-
43
(17,047)
21,607
90
(2,676)
(5,102)
(228)
-
-
3,825
-
(2,083)
(1,571)
-
-
(7,194)
4,376
-
-
-
-
-
(4,248)
2,086
-
-
-
-
-
(3)
323
-
-
-
-
-
(11,445)
10,610
-
(2,083)
(1,571)
-
3,326
303,734
135,514
30,087
37,782
3,125
206,508
Net carrying value
Balance as at 31 December 2021
174,698
26,298
20,314
2,283
223,593
60,338
13,812
8,361
394
82,905
Balance as at 1 January 2021
172,365
27,907
21,941
1,385
223,598
61,700
16,675
9,411
709
88,495
Contents
227
NLB Group
NLB
Land &
Buildings
Computers
Other equipment
Total
Land &
Buildings
Computers
Other equipment
Total
for own use
in operating
lease
for own use
in operating
lease
in EUR thousands
Cost
Balance as at 1 January 2020
313,168
70,744
95,673
6,186
485,771
198,313
44,635
51,628
5,441
300,017
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Disposals
Impairment (note 4.14.)
Transfer to/from investment property (note 5.9.)
Transfer to/from non-current assets held for sale (note 5.7.)
(101)
40,173
5,888
(5,843)
(43)
(756)
(6,717)
(20)
1,773
10,254
(961)
-
-
-
(40)
3,249
6,945
(6,955)
-
-
-
Disposal of subsidiary (note 3.)
-
(61)
(34)
-
-
1,255
(3,132)
-
-
-
-
(161)
45,195
24,342
(16,891)
(43)
(756)
(6,717)
(95)
-
-
-
-
-
5,299
(13)
-
-
(6,556)
-
5,378
(433)
3,356
(5,629)
104
(2,031)
-
-
-
-
-
-
-
-
-
-
-
-
14,137
(8,106)
-
-
(6,556)
-
Balance as at 31 December 2020
345,769
81,729
98,838
4,309
530,645
197,043
49,580
49,355
3,514
299,492
Depreciation and impairment
Balance as at 1 January 2020
Effects of translation of foreign operations
to presentation currency
Disposals
Depreciation (note 4.11.)
Impairment (note 4.14.)
Transfer to/from investment property (note 5.9.)
173,763
48,808
79,515
4,625
306,711
135,328
29,440
43,762
4,367
212,897
(25)
(2,427)
6,271
161
(401)
(17)
(948)
6,040
-
-
-
(40)
(6,651)
4,103
-
-
-
-
(82)
(2,349)
(12,375)
-
-
648
17,062
3,945
-
-
-
-
161
(401)
-
-
(3,938)
(3,930)
(91)
-
-
(431)
3,896
-
-
-
-
-
(5,600)
1,782
-
-
-
-
-
(2,031)
469
-
-
-
-
-
(8,062)
10,092
-
-
(3,930)
-
Transfer to/from non-current assets held for sale (note 5.7.)
(3,938)
Disposal of subsidiary (note 3.)
-
(61)
(30)
Balance as at 31 December 2020
173,404
53,822
76,897
2,924
307,047
135,343
32,905
39,944
2,805
210,997
Net carrying value
Balance as at 31 December 2020
172,365
27,907
21,941
1,385
223,598
61,700
16,675
9,411
709
88,495
Balance as at 1 January 2020
139,405
21,936
16,158
1,561
179,060
62,985
15,195
7,866
1,074
87,120
As at 31 December 2021, the value of assets received by
taking possession of collateral and included in property and
equipment by NLB Group amounted to EUR 13,559 thousand
(31 December 2020: EUR 13,268 thousand), and in NLB to EUR 7
thousand (31 December 2020: EUR 7 thousand) (note 6.1.l).
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5.9.
Investment property
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Disposals
Transfer from/(to) property and equipment (note 5.8.)
Transfer from/(to) non-current assets held for sale (note 5.7.)
Transfer from/(to) other assets
Net valuation to fair value (note 4.8.)
Disposals of subisidiaries (note 5.12.b)
Other
Balance as at 31 December
NLB Group
NLB
in EUR thousands
2021
54,842
19
-
-
(4,075)
(7,053)
22
1,397
3,589
(1,215)
98
2020
52,316
(24)
19,643
717
(2,493)
355
17
(16,559)
870
-
-
2021
8,300
-
-
-
-
340
-
137
306
-
98
2020
9,303
-
-
-
(2,031)
-
-
231
797
-
-
47,624
54,842
9,181
8,300
As at 31 December 2021, the value of assets received by
to EUR 4,176 thousand (31 December 2020: EUR 4,079
taking possession of collateral and included in investment
thousand) (note 6.1.l).
property by NLB Group amounted to EUR 36,009 thousand (31
December 2020: EUR 36,130 thousand), and in NLB amounted
Operating expenses arising from investment properties:
Leased to others
Not leased to others
Total
in EUR thousands
NLB Group
NLB
2021
1,103
231
1,334
2020
1,157
242
1,399
2021
291
183
474
2020
383
194
577
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5.10. Intangible assets
in EUR thousands
NLB Group
Software
licenses
Other
intangible
assets
Goodwill
Total
NLB
Software
licenses
Cost
Balance as at 1 January 2021
246,687
13,200
32,336
292,223
201,614
Effects of translation of foreign operations to presentation currency
Additions
Write-offs
Disposal of subsidiary (note 5.12.b)
13
14,866
(15,527)
(432)
11
-
-
-
-
-
-
-
24
-
14,866
7,370
(15,527)
(7,956)
(432)
-
Balance as at 31 December 2021
245,607
13,211
32,336
291,154
201,028
Amortisation and impairment
Balance as at 1 January 2021
Effects of translation of foreign operations to presentation currency
Amortisation (note 4.11.)
Impairments (note 4.14.)
Write-offs
Disposal of subsidiary (note 5.12.b)
201,748
8
11,944
936
(15,435)
(204)
-
7
4,267
-
-
-
28,807
230,555
173,509
-
-
-
-
-
15
16,211
936
-
6,022
-
(15,435)
(7,956)
(204)
-
Balance as at 31 December 2021
198,997
4,274
28,807
232,078
171,575
Net carrying value
Balance as at 31 December 2021
46,610
8,937
3,529
59,076
29,453
Balance as at 1 January 2021
44,939
13,200
3,529
61,668
28,105
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Cost
Balance as at 1 January 2020
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5,12.c)
Additions
Write-offs
Disposal of subsidiary (note 3.)
in EUR thousands
NLB Group
Software
licenses
Other
intangible
assets
Goodwill
Total
NLB
Software
licenses
228,692
(34)
4,921
14,150
(844)
(198)
-
-
13,200
-
-
-
32,336
261,028
192,581
-
-
-
-
-
(34)
18,121
14,150
(844)
(198)
-
-
9,033
-
-
Balance as at 31 December 2020
246,687
13,200
32,336
292,223
201,614
Amortisation and impairment
Balance as at 1 January 2020
Effects of translation of foreign operations to presentation currency
Amortisation (note 4,11.)
Write-offs
Disposal of subsidiary (note 3.)
Balance as at 31 December 2020
Net carrying value
192,679
(22)
10,112
(826)
(195)
201,748
-
-
-
-
-
-
28,807
221,486
166,601
-
-
-
-
(22)
10,112
(826)
(195)
-
6,908
-
-
28,807
230,555
173,509
Balance as at 31 December 2020
44,939
13,200
3,529
61,668
28,105
Balance as at 1 January 2020
36,013
-
3,529
39,542
25,980
Other intangible assets represent additionally identified
intangible assets in a business combination, namely core
deposits and trade name (note 5.12.c).
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5.11. Leases
a) NLB Group as a lessee
Right-of-use assets
Land and buildings
Vehicles
Furniture and equipment
Total
Lease liabilities
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
19,545
390
3,486
23,421
24,324
22,758
959
1,802
25,519
26,359
2,244
960
13
3,217
3,256
2,240
912
28
3,180
3,212
In the statement of financial position, right-of-use assets are
and in NLB EUR 1,245 thousand (2020: EUR 1,808 thousand).
included in the line item ‘Property and equipment’ and lease
Due to the acquisition of subsidiaries in 2020, the right-of-use
liabilities are included in the line item ‘Other financial liabilities.’
assets in NLB Group increased by EUR 9,576 thousand.
Additions to the right-of-use assets during 2021 in NLB Group
The income statement shows the following amounts relating
amounted to EUR 10,172 thousand (2020: EUR 4,736 thousand)
to leases:
in EUR thousands
NLB Group
NLB
2021
2020
2021
2020
7,159
444
1,107
8,710
2021
(470)
(606)
(1,050)
108
3,299
571
671
4,541
465
410
15
890
441
391
16
848
NLB Group
NLB
in EUR thousands
2020
(294)
(719)
(771)
92
2021
(29)
(179)
(157)
-
2020
(39)
(266)
(151)
-
Depreciation of right-of-use assets (note 4.11.)
Land and buildings
Vehicles
Furniture and equipment
Total
Interest expenses on lease liabilities (note 4.1.)
Expenses relating to short-term leases (included in administrative expenses)
Expenses relating to leases of low-value assets that are not shown
above as short-term leases (included in administrative expenses)
Income from sub-leasing right-of-use assets
(included in other operating income)
The total cash outflow for leases in 2021 in NLB Group was EUR
9,397 thousand (2020: EUR 4,865 thousand) and in NLB EUR
933 thousand (2020: EUR 897 thousand).
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NLB Group leases various offices, branches, vehicles, and
of the finance lease agreements are concluded for a non-
other equipment used in its business. Rental contracts for
cancellable period of between 48 and 60 months. By paying
offices and branches generally have lease terms between
the last instalment at the end of the contract, the leasing
5 to 20 years, while some contracts are made for indefinite
object becomes the lessee’s property. The financial leasing
periods. Contracts for indefinite periods are included in
receivables are secured by the object of financing. NLB Group
measurement of the liability in accordance with planning
does not have finance lease contracts with variable payments
projections. Normally, a lease term of 5 years is assumed, with
not included in the measurement of the net investment in the
the exemption of business premises on strategic locations
lease.
where management assesses a different (longer) lease term.
Vehicles and other equipment generally have lease terms
The investment properties are leased to lessee under
between 1 to 5 years. There are several lease contracts that
operating leases with rentals payable monthly. There are no
include extension and termination options. These options are
variable lease payments that depend on an index or rate. The
negotiated by management to align with the Group’s business
investment properties generally have lease terms between 2
needs. Lease payments to be made under reasonably certain
to 10 years. Some contracts are made for indefinite period.
extension options are included in measurement of the liability.
Lease terms are negotiated on an individual basis and
finance lease receivables included in the allowance for
contain a range of different terms and conditions. The
loan impairment amounted to EUR 436 thousand (as at 31
lease agreements do not impose any covenants other than
December 2020 EUR 884 thousand).
As at 31 December 2021, the allowance for unrecoverable
the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for
Finance leases
borrowing purposes.
Loans and advances to customers in NLB Group include
finance lease receivables.
NLB Group also has certain leases of other equipment with
lease term of 12 months or less, and equipment with low value.
The following table sets out a maturity analysis of lease
For these leases, NLB Group applies the short-term lease
receivables, showing the undiscounted lease payments to be
and lease of low-value assets recognition exemptions. Lease
received after the reporting date.
payments on short-term leases and leases of low-value assets
are recognised as an expenses on a straight-line basis over
the lease term.
NLB Group
For calculation of the net present value of the future lease
Less than one year
payments, NLB Group applies the internal transfer price for
retail deposits as a discount rate.
NLB Group and NLB do not have expenses relating to variable
payments and gains or losses arising from sale and leaseback
transactions.
A maturity analysis of lease liabilities is disclosed in note 6.3.f).
b) NLB Group as a lessor
Finance and operating leases of motor vehicles and operating
leases of business premises and POS terminals represent the
majority of agreements in which NLB Group acts as a lessor.
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Most of the lease agreements entered into by NLB Group
as lessor contracts are finance lease agreements. Most
1,957 thousand).
2021
36,465
25,723
21,276
16,435
10,375
8,604
in EUR thousands
2020
23,287
11,506
7,734
5,159
3,243
2,719
53,648
(4,131)
49,517
Total undiscounted lease receivable
118,878
Unearned finance income
Net investment in the lease
(10,163)
108,715
During 2021, NLB Group recognised interest income on lease
receivables in the amount of EUR 3,452 thousand (2020: EUR
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Operating lease
A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date:
Less than one year
One to two years
Two to three years
Three to four years
Four to five years
More than five years
Total
NLB Group
NLB
in EUR thousands
2021
2,757
1,396
817
597
430
1,211
2020
3,082
1,863
1,497
1,411
1,308
1,759
7,208
10,920
2021
375
348
346
342
301
1,029
2,741
2020
399
364
341
333
331
243
2,011
NLB Group realised rental income arising from: investment
NLB realised rental income arising from: investment
properties in the amount of EUR 3,558 thousand (2020: EUR
2,572 thousand); and movable property in the amount of EUR
properties in the amount of EUR 567 thousand (2020:
EUR 471 thousand); and movable property in the amount of
1,074 thousand (2020: EUR 1,003 thousand).
EUR 471 thousand (2020: EUR 470 thousand) (note 4.8.).
5.12. Investments in subsidiaries, associates and joint ventures
a) Analysis by type of investment in subsidiaries
NLB
Banks
Other financial organisations
Enterprises
Total
in EUR thousands
31 Dec 2021
31 Dec 2020
696,538
671,880
29,720
55,282
21,819
55,361
781,540
749,060
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Data of subsidiaries as included in the consolidated financial statements of NLB Group as at 31 December 2021:
Nature of
Business
Country of
Incorporation
Equity as at
31 Dec 2021
Profit/(loss)
for 2021
NLB’s
shareholding %
NLB’s voting
rights %
NLB Group’s
shareholding %
NLB Group’s
voting rights %
in EUR thousands
Core members
NLB Banka a.d., Skopje
NLB Banka a.d., Podgorica
NLB Banka a.d., Banja Luka
Banking
Banking
Banking
North Macedonia
Montenegro
Bosnia and
Herzegovina
NLB Banka sh.a., Prishtina
Banking
Kosovo
NLB Banka d.d., Sarajevo
NLB Banka a.d., Beograd
Komercijalna banka a.d., Beograd
KomBank Invest a.d., Beograd
NLB Skladi d.o.o., Ljubljana
NLB Lease&Go, leasing, d.o.o., Ljubljana
Banking
Banking
Banking
Finance
Finance
Finance
NLB Zavod za upravljanje kulturne dediščine, Ljubljana
Cultural heritage
management
Non-core members
NLB Leasing d.o.o., Beograd - u likvidaciji
NLB Leasing d.o.o., Ljubljana - v likvidaciji*
Optima Leasing d.o.o., Zagreb - "u likvidaciji"
Finance
Finance
Finance
Bosnia and
Herzegovina
Serbia
Serbia
Serbia
Slovenia
Slovenia
Slovenia
Serbia
Slovenia
Croatia
Tara Hotel d.o.o., Budva
Real estate
Montenegro
PRO-REM d.o.o., Ljubljana - v likvidaciji
Real estate
Slovenia
OL Nekretnine d.o.o., Zagreb - u likvidaciji
Real estate
Croatia
REAM d.o.o., Podgorica
REAM d.o.o., Beograd
SPV 2 d.o.o., Beograd
S-REAM d.o.o., Ljubljana
REAM d.o.o., Zagreb
NLB Srbija d.o.o., Beograd
NLB Crna Gora d.o.o., Podgorica
NLB InterFinanz AG, Zürich in Liquidation
NLB InterFinanz d.o.o., Beograd
LHB AG, Frankfurt
*100% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana.
Real estate
Montenegro
Real estate
Serbia
Real estate
Serbia
Real estate
Slovenia
Real estate
Croatia
Real estate
Serbia
Finance
Finance
Finance
Finance
Montenegro
Switzerland
Serbia
Germany
243,267
92,643
97,149
98,856
87,838
77,918
634,643
1,345
14,966
16,342
814
5,985
18,058
1,258
16,802
19,966
1,319
1,696
1,844
831
2,197
1,025
32,259
3,130
12,395
3
2,221
39,000
10,050
18,180
24,436
10,012
4,293
34,818
4
8,969
(921)
436
40
2,545
(94)
(223)
154
(93)
44
(217)
9
850
5
188
2,375
1,725
-
489
86.97
75.90
99.85
82.38
97.34
100
86.70
-
100
100
100
100
-
-
12.71
100
-
100
100
100
100
-
100
100
100
-
100
86.97
75.90
99.85
82.38
97.35
100
88.28
-
100
100
100
100
-
-
12.71
100
-
100
100
100
100
-
100
100
100
-
100
86.97
99.87
99.85
82.38
97.34
100
86.70
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
86.97
99.87
99.85
82.38
97.35
100
88.28
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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Data of subsidiaries as included in the consolidated financial statements of NLB Group as at 31 December 2020:
Nature of
Business
Country of
Incorporation
Equity as at
31 Dec 2020
Profit/(loss)
for 2020
NLB’s
shareholding %
NLB’s voting
rights %
NLB Group’s
shareholding %
NLB Group’s
voting rights %
in EUR thousands
Core members
NLB Banka a.d., Skopje
NLB Banka a.d., Podgorica
NLB Banka a.d., Banja Luka
NLB Banka sh.a., Prishtina
NLB Banka d.d., Sarajevo
NLB Banka a.d., Belgrade
Komercijalna banka a.d., Belgrade
Komercijalna banka a.d., Banja Luka
Komercijalna banka a.d., Podgorica
KomBank Invest a.d., Belgrade
NLB Skladi d.o.o., Ljubljana
NLB Lease&Go, leasing, d.o.o., Ljubljana
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Banking
Finance
Finance
Finance
NLB Zavod za upravljanje kulturne dediščine, Ljubljana
Cultural heritage
management
Non-core members
NLB Leasing d.o.o., Ljubljana - v likvidaciji
Optima Leasing d.o.o., Zagreb - "u likvidaciji"
NLB Leasing d.o.o., Belgrade - u likvidaciji
Finance
Finance
Finance
North Macedonia
Montenegro
Bosnia and
Herzegovina
Kosovo
Bosnia and
Herzegovina
Serbia
Serbia
Bosnia and
Herzegovina
Montenegro
Serbia
Slovenia
Slovenia
Slovenia
Slovenia
Croatia
Serbia
Tara Hotel d.o.o., Budva
Real estate
Montenegro
PRO-REM d.o.o., Ljubljana - v likvidaciji
Real estate
Slovenia
OL Nekretnine d.o.o., Zagreb - u likvidaciji
Real estate
Croatia
BH-RE d.o.o., Sarajevo - u likvidaciji
Real estate
Bosnia and
Herzegovina
REAM d.o.o., Podgorica
REAM d.o.o., Belgrade
SPV 2 d.o.o., Belgrade
S-REAM d.o.o., Ljubljana
REAM d.o.o., Zagreb
NLB Srbija d.o.o., Belgrade
Real estate
Montenegro
Real estate
Real estate
Serbia
Serbia
Real estate
Slovenia
Real estate
Croatia
Real estate
Serbia
NLB Crna Gora d.o.o., Podgorica
Real estate
Montenegro
NLB InterFinanz AG, Zürich in Liquidation
NLB InterFinanz d.o.o., Belgrade
LHB AG, Frankfurt
Finance
Finance
Finance
Switzerland
Serbia
Germany
Changes in ownership interest in subsidiaries of NLB Group in 2021 and 2020 are presented in note 3.
229,777
68,556
99,872
98,335
89,808
74,205
19,222
1,387
10,122
13,334
5,895
2,598
609,943
(9,050)
31,045
20,689
1,342
10,487
1,938
378
17,568
1,346
5,940
17,025
20,870
1,409
7
1,652
1,762
820
1,349
2,108
32,046
755
10,783
3
1,732
(1,309)
(1,224)
-
5,490
(1,062)
368
720
(996)
19
(204)
353
(127)
(14)
(166)
(145)
8
(236)
92
1,149
139
986
(3)
(432)
86.97
99.83
99.85
81.21
97.34
99.997
81.42
0.002
-
-
100
100
100
100
-
100
12.71
100
-
-
100
100
100
100
-
100
100
100
-
100
86.97
99.83
99.85
81.21
97.35
99.997
83.23
0.002
-
-
100
100
100
100
-
100
12.71
100
-
-
100
100
100
100
-
100
100
100
-
100
86.97
99.83
99.85
81.21
97.34
99.997
81.42
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
86.97
99.83
99.85
81.21
97.35
99.997
83.23
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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Data of subsidiaries with significant non-controlling interests, before intercompany eliminations
Komercijalna banka,
Beograd
NLB Banka,
Skopje
in EUR thousands
NLB Banka,
Prishtina
Non-controlling interest in equity in %
Non-controlling interest's voting rights in %
Income statement and statement
of comprehensive income
2021
13.30
11.72
2020*
18.58
16.77
2021
13.03
13.03
Revenues
156,710
-
87,864
Profit/(loss) for the year
Attributable to non-controlling interest
Other comprehensive income
Total comprehensive income
Attributable to non-controlling interest
Paid dividends to non-controlling interest
34,818
4,631
(10,117)
24,701
3,285
-
(9,050)
39,000
(1,681)
2,145
(6,905)
(1,283)
-
5,082
(759)
38,241
4,983
3,222
2020
13.03
13.03
81,673
19,222
2,505
898
20,120
2,622
-
2021
17.62
17.62
51,509
24,436
4,306
(311)
24,125
4,252
4,160
2020
18.79
18.79
47,699
13,334
2,505
74
13,408
2,519
-
Statement of financial position
Current assets
Non-current assets
Current liabilities
1,859,605
1,455,793
719,846
690,387
446,182
443,289
2,305,644
2,441,294
1,050,742
895,265
484,363
435,775
3,266,253
2,978,959
1,335,444
1,176,539
756,702
689,776
Non-current liabilities
264,353
308,185
191,877
Equity
634,643
609,943
243,267
Attributable to non-controlling interest
84,408
113,327
31,698
179,336
229,777
29,940
74,987
98,856
17,421
90,953
98,335
18,477
*Since the acquisition of Komercijalna banka, Beograd was concluded on 30 December 2020, only 12-month expected credit losses and attributable deferred taxes are
included in NLB Group’s income statement for 2020.
MB Statement
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b) Disposal of Komercijalna banka a.d. Banja Luka
In December 2021, Komercijalna banka a.d. Beograd sold
its subsidiary Komercijalna banka a.d. Banja Luka. The
assets and liabilities derecognised from NLB Group financial
statements as a result of the disposal are as follows:
in EUR thousands
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- loans and advances to customers
- other financial assets
Tangible assets
Property and equipment
- own property and equipment (note 5.8.b)
- right-of-use assets
Investment property (note 5.9.)
Intangible assets (note 5.10.)
Current income tax assets
Other assets
Total assets
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- due to customers
- borrowings from other customers
- other financial liabilities
Provisions
Deferred income tax liabilities
Other liabilities
Total liabilities
Net assets of subsidiary
Total disposal consideration
Cash and cash equivalents in subisidiary sold
Cash outflow on disposal
Consideration for disposal of the subsidiary
Carrying amount of net assets disposed of
Transfer of FV OCI revaluation reserve to P&L
Loss from disposal of subsidiary in consolidated financial statements
- Non-controlling interest
- Attributable to owners of the parent
Effect of sale of Komercijalna banka a.d. Banja Luka is included in the segment ‘Strategic Foreign Markets.’
75,699
36,599
131,928
381
2,438
709
1,729
1,215
228
29
1,026
249,543
15,514
172,900
25,120
2,289
361
61
277
216,522
33,021
22,000
(69,832)
(47,832)
22,000
33,021
1,723
(9,298)
(1,237)
(8,061)
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c) Acquisition of Komercijalna banka a.d. Beograd
On 30 December 2020, NLB acquired an 83.23% ordinary
represents 81.42% of total shareholding in Komercijalna banka
a.d. Beograd. At the date of acquisition, the acquired bank had
shareholding in Komercijalna banka a.d. Beograd, which
the following subsidiaries:
Subsidiaries
Komercijalna banka a.d. Podgorica, Montenegro
Komercijalna banka a.d. Banja Luka, Bosnia and Herzegovina
Investment Management Company KomBank Invest a.d. Beograd, Serbia
Komercijalna banka
Beograd’s ownership
100%
99.998%
100%
NLB’s direct
ownership
-
0.002%
-
Serbia has long been a strategically important market for NLB
adding more than 800,000 active retail customers and the
Group in the context of the strategy to be the leading international
largest distribution network in the country of 203 branches to
bank headquartered in and focused on the SEE region. Whilst in
NLB’s existing operations.
all countries of Group’s operations NLB has a top three market
position, in Serbia (the largest market by population) it was, until
Purchase consideration amounted to EUR 394,718 thousand
the execution of this transaction, sub-scale.
and was fully paid in cash. There are no contingent
As a result of the transaction, NLB became the third largest
banking group in Serbia with the acquisition of Komercijalna
in acquired entities amounted to EUR 847,488 thousand,
therefore the net inflow of cash amounted to EUR 452,770
banka increasing NLB’s market share from approximately
thousand (included in statement of cash flows within
2% by total assets to over 12% as at 30 September 2020. The
payments from investing activities).
consideration arrangements. At acquisition date, cash
business operations of NLB Group in Serbia will be (besides
the Slovenian market) the largest and most important one,
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The assets and liabilities recognised as a result of the acquisition are as follows:
Cash, cash balances at central banks and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income (note 5.4.b)
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Tangible assets
Property and equipment (notes 5.8.b and 5.11.a)
Investment property (note 5.9.)
Intangible assets (note 5.10.)
Current income tax assets
Deferred income tax assets
Other assets
Non-current assets held for sale (note 5.7.b)
Total assets
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- other financial liabilities
Provisions (note 5.16.)
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Total liabilities
Net identifiable assets acquired (100%)
Less: non-controlling interests
Net assets acquired (NLB Group share)
Consideration given
Bargain purchase (negative goodwill)
in EUR thousands
836,408
66,356
5,628
1,284,895
7,214
46,981
1,877,349
23,250
54,771
19,643
18,121
153
1,125
17,604
1,969
4,261,467
35,895
8,788
3,443,478
29,295
49,072
34,537
4
2,112
4,176
3,607,357
654,110
(121,534)
532,576
394,718
137,858
NLB Group recognises non-controlling interests in Komercijalna
of EUR 137,858 thousand, which is recognised in income
banka Beograd at the non-controlling interest’s proportionate
statement under line item ‘Negative goodwill.’ The main
share of the acquired entity’s net identifiable assets.
reasons for negative goodwill are current market conditions,
when banks are generally valued below their net book values.
Acquisition of Komercijalna banka Beograd resulted in a gain
from a bargain purchase (negative goodwill) in the amount
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As a result of the acquisition, NLB Group’s off-balance sheet
The valuation techniques used for measuring the fair value of
liabilities increased by EUR 377,361 thousand:
material assets and liabilities acquired were as follows:
in EUR thousands
Assets acquired
Valuation technique
Short-term guarantees
- financial
- non-financial
Long-term guarantees
- financial
- non-financial
Commitments to extend credit
Letters of credit
Other
Total
19,431
15,437
3,994
88,123
34,467
53,656
266,832
1,440
1,535
377,361
In 2020, acquisition-related costs amounted to EUR 1,643
thousand and are included within administrative expenses.
NLB obtained all the necessary information for measuring
fair values, therefore no amounts in 2020 financial statements
were measured and recognised on a provisional basis.
Discounted cash flow approach: Since these are performing loans, it was assumed that they would be repaid by future
cash flows in accordance with amortisation schedules. Credit risk was considered for loans which are classified in
Stage 2 in Komercijalna banka’s local financial statements, by reducing future cash flows accordingly. Also prepayment
risk was estimated for two retail products namely cash loans and housing loans which have the longest maturity.
Performing loans
As a discount rate, average weighted interest rate for new transactions in the market for the same products, currency and
clients (sector) were used. The source was Serbian central bank (NBS) statistical database, which provided a history of
interest rates data by various products, currencies, maturities, type of interest rates, and size of customer for new loans.
Non-performing loans
Discounted cash flow approach: Since these are non-performing loans, it could generally not be assumed
that they would be repaid with cash flows from client’s regular business. Instead, gone concern principle was
used, taking into account liquidation value of collateral as expected cash flows. Appropriate haircuts for age
of valuations, type of collateral, type of location, and type of real estate were used to estimate the liquidation
value of collateral, which was then discounted for a period of 4 years, with the required yield of 20%.
Only exceptionally, also cash flows from regular business were considered, also discounted with the required yield of 20%.
Debt securities
For debt securities classified in Level 1 of fair value hierarchy, fair values were determined by an observable market
price in an active market for an identical asset. For valuing debt securities in Level 2, income approach was used,
based on the estimation of future cash flows discounted to the present value. The input parameters used in the
income approach were the risk-free yield curve and the spread over the yield curve (credit, liquidity, country).
Three approaches were used for estimating the value of real estate - the income capitalisation approach, the sale comparison
approach and the residual land value approach. Each views the valuation from different perspectives and considers data
from different market sources. The most suitable approach depends on the characteristics and use of individual real estate.
The income capitalization approach: Values property by the amount of income - cash flow that it can potentially generate.
The value of the property is derived by converting the expected income generated from a property into a present value
estimate using market capitalization rate. This method is commonly used for valuing income-generating properties.
Real estate
The sale comparison approach: Values property by comparing similar properties that have been sold recently. This approach
is sometimes referred to as the ‘direct sales comparison approach.’ The reliability of an indication found by this method
depends on the quality of comparable data found in the marketplace and application of adequate adjustments for individually
appraised real estate. When sale transactions are not available, the direct sales comparison approach is not applicable.
Residual land value approach: is a method for calculating the value of development land. It is performed by
subtracting from the total value of a development project, all costs associated with the development project,
including profit but excluding the cost of the land. It is applicable only for development/construction land.
Core deposits
Acquired core deposit accounts typically provide a low-cost source of funds to the buyer. To replace these
established, low-cost deposit accounts in a timely manner, the buyer’s alternative would be to utilise higher-
cost funds at current market rates. Core deposits value is measured by the present value of the difference, or
spread, between the core deposit’s ongoing cost and the cost of a market alternative replacement.
Trade name
The trade name was valued by applying the relief-from-royalty method under the income approach. This method is based
upon the application of an appropriate royalty rate on the respective revenues to estimate the Fair Value for the trade
name. This method assumes that, by virtue of having ownership of the trade name rather than licensing one for use
Liabilities acquired
Valuation technique
Deposits
Discounted cash flow approach: Aggregated future cash flows were discounted by applying market interest rates
for term deposits. Future cash flows were grouped into 11 groups according to the type of client and currency. As
a discount rate, average weighted interest rate for new transactions in the market in 2020 was applied.
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The fair value of acquired loans and advances to customers
Since the transaction was closed on 30 December 2020, only
is EUR 1,877,349 thousand, of which EUR 1,836,970 thousand
12-month expected credit losses for Stage 1 financial assets in
relates to performing portfolio and EUR 40,379 thousand
the amount of EUR 13,447 thousand and attributable deferred
to non-performing portfolio. The latter was recognised as
taxes in the amount of EUR 1,864 thousand are included in NLB
purchased or originated credit-impaired financial assets
Group income statement. If the acquisition has occurred on 1
(POCI). The gross contractual amount for performing loans
January 2020, management estimates that consolidated revenue
and advances to customers is EUR 1,827,721 thousand and for
(excluding negative goodwill) would have been between EUR
this exposure 12-month expected credit losses in the amount
750 and 760 million and consolidated profit for the year would
of EUR 10,349 thousand were recognised through the income
have been between EUR 260 and 265 million. The exact result is
statement. The gross contractual amount for non-performing
difficult to assess due to some changed circumstances during the
loans and advances to customers is EUR 149,654 thousand,
year, especially the COVID-19 pandemic.
and it is expected that approximately EUR 75 million of the
contractual cash flows will not be collected.
d) Analysis by type of investment in associates and joint ventures
Carrying amount of the NLB Group's interest
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
NLB Group
NLB
in EUR thousands
Other financial organisations
Enterprises
Total
NLB Group’s associates
11,525
-
11,525
7,988
-
7,988
4,282
201
4,483
1,382
280
1,662
Nature of
Business
Country of
Incorporation
Shareholding % Voting rights % Shareholding % Voting rights %
2021
2020
Bankart d.o.o., Ljubljana
Card processing
Slovenia
ARG - Nepremičnine d.o.o., Horjul
Real estate
Slovenia
45.64
75.00
45.64
75.00
40.08
75.00
40.08
75.00
By contractual agreement between the shareholders, NLB
The carrying amount of interests in associates included in the
does not control ARG-Nepremičnine, Horjul, but does have a
consolidated financial statements of NLB Group:
significant influence. Therefore, the entity is accounted as an
associate.
Carrying amount of the NLB Group's interest
NLB Group's share of:
- Profit for the year
- Other comprehensive income
- Total comprehensive income
in EUR thousands
2020
7,988
874
(41)
833
2021
11,525
1,108
(30)
1,078
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In 2021, NLB Group did not recognise a share of profit of an
losses of an associate that as at 31 December 2021 amounted
associate in the amount of EUR 65 thousand (2020: EUR 31
to EUR 2,199 thousand (31 December 2020: EUR 2,264
thousand), as it still has the cumulative unrecognised share of
thousand).
NLB Group’s joint ventures
Prvi Faktor Group, Ljubljana
Finance
Nature of Business
Country of
Incorporation
Slovenia
2021
2020
Voting rights%
Voting rights%
50
50
In 2021, NLB Group did not recognise a share of profit of a joint
joint venture as at 31 December 2021 amounted to EUR 14,825
venture in the amount of EUR 435 thousand (2020: EUR 556
thousand (31 December 2020: EUR 15,259 thousand).
thousand). The cumulative unrecognised share of losses of a
e) Movements of investments in associates
NLB Group
Balance as at 1 January
Increase in capital share
Share of result before tax
Share of tax
Net gains/(losses) recognised in other comprehensive income
Dividends received
Balance as at 31 December
5.13. Other assets
Assets. received as collateral (note 6.1.l)
Deferred expenses
Inventories
Claim for taxes and other dues
Prepayments
Total
in EUR thousands
2020
7,499
326
1,036
(162)
(41)
(670)
7,988
2021
7,988
2,900
1,339
(231)
(30)
(441)
11,525
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
75,450
10,046
2,173
1,826
1,726
91,221
76,017
9,157
7,858
2,949
1,159
97,140
4,827
6,202
42
621
161
4,926
5,976
180
467
115
11,853
11,664
Assets, received as collateral on NLB Group in the amount
(31 December 2020: EUR 4,926 thousand) consist of real estate
of EUR 74,717 thousand (31 December 2020: EUR 75,151
(note 6.1.l).
thousand), and on NLB in the amount of EUR 4,827 thousand
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5.14. Movements in allowance for the impairment of financial assets
a) Movements in allowance for the impairment of loans and receivables measured at amortised cost
NLB Group
Notes
12-month expected credit losses
Loans and advances to banks
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL not credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Of which: Purchased or originated credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Balance as at
1 Jan 2021
Effects of
translation
of foreign
operations to
presentation
currency
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
Disposal of
subsidiary
Balance as at
31 Dec 2021
Repayments
of written-off
receivables
in EUR thousands
4.14.
9
(13,005)
2,476
115
6,975
(240)
7
-
14,152
4,036
202
(8,554)
(3,515)
-
-
(164)
(8)
(54)
(35)
(231)
(7)
(5,598)
25,606
(15,160)
(521)
(202)
-
-
-
8
1,770
(1,157)
(3,243)
(602)
(66,532)
(847)
(702)
(2,312)
(9)
4.14.
48
(7,479)
(4,292)
(70)
898
(1,960)
9
7,868
1,641
(112)
-
-
-
-
5
20
(2)
1
4
-
14
587
-
1
-
(1)
-
(3)
31
10
(3)
21
(3)
2,135
6,226
(142)
1,701
4,849
-
5.6.b), c), d)
4.14.
-
(214)
(777)
(1)
(35)
(137)
-
(123)
(425)
-
-
-
-
198
18,336
50,961
476
7,398
26,624
36
76,047
136,607
5,714
(157)
613
(608)
-
-
-
-
-
-
-
7,449
42,272
470
-
-
-
141
25,044
49,475
276
8,151
32,682
30
61,305
195,623
5,247
-
1,319
4
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NLB Group
Notes
12-month expected credit losses
Loans and advances to banks
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL not credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Of which: Purchased or originated credit-impaired
Loans and advances to other customers
Other financial assets
Balance as at
1 Jan 2020
Effects of
translation
of foreign
operations to
presentation
currency
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
Disposal of
subsidiary
Balance as at
31 Dec 2020
Repayments
of written-off
receivables
in EUR thousands
95
21,613
35,115
177
6,103
27,076
27
47,737
184,800
4,702
1,887
3
(1)
(22)
(9)
(1)
(3)
(2)
1
(22)
67
(9)
-
-
-
12,806
5,004
63
(11,149)
(8,675)
(17)
(1,610)
3,624
(46)
-
-
4.14.
62
(9,062)
7,803
80
7,250
4,955
(143)
4.14.
(15)
(290)
1,597
(21)
5,925
9,334
166
-
(1)
(6)
(22)
(3)
(4)
(4)
29,353
(20,159)
1,689
11,750
2,395
(568)
1
(31,254)
(2,258)
-
-
98
16
-
-
5.6.b), c), d)
4.14.
-
-
(18)
-
28
(2)
-
4,317
27,584
485
-
-
-
-
(11)
-
-
-
-
-
(1,046)
(38)
-
-
141
25,044
49,475
276
8,151
32,682
30
61,305
195,623
5,247
1,319
4
-
-
-
-
-
-
-
5,858
9,565
499
-
-
Column Increases/(Decreases) for year 2020 also includes
thousand for Loans and advances to other customers and
12-month expected credit losses recognised at acquisition of
in the amount of EUR 54 thousand for Other financial assets
Komercijalna banka in the amount of EUR 2,150 thousand for
(notes 4.14. and 5.12.c).
Loans and advances to individuals, in the amount of EUR 8,198
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NLB
Notes
12-month expected credit losses
Loans and advances to banks
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL not credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Of which: Purchased or originated credit-impaired
Loans and advances to other customers
Other financial assets
Balance as at
1 Jan 2021
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
155
8,973
16,664
73
2,351
8,936
2
22,855
83,593
1,255
1,319
4
-
3,881
4,740
14
(2,181)
(2,651)
-
(1,700)
(2,089)
(14)
-
-
4.14.
27
(4,914)
(5,419)
41
2,007
(2,715)
(1)
8,779
(659)
129
1,339
2
-
(156)
(1)
(12)
(27)
(3)
-
(6,020)
(33,269)
(280)
-
-
4.14.
-
(4,281)
(5,915)
(57)
270
(1,799)
-
7,566
349
-
-
-
in EUR thousands
Balance as at
31 Dec 2021
Repayments
of written-off
receivables
5.6.b), c), d)
4.14.
-
-
32
3
1
19
-
17
(815)
-
(1,820)
-
182
3,503
10,101
62
2,421
1,787
1
31,497
47,110
1,090
838
6
-
-
-
-
-
-
-
2,597
8,682
120
-
-
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Balance as at
1 Jan 2020
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
NLB
Notes
12-month expected credit losses
Loans and advances to banks
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL not credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Lifetime ECL credit-impaired
Loans and advances to individuals
Loans and advances to other customers
Other financial assets
Of which: Purchased or originated credit-impaired
Loans and advances to other customers
Other financial assets
141
7,195
13,529
55
1,396
9,792
9
15,576
71,277
1,777
1,856
3
-
6,107
3,254
68
(4,953)
(3,261)
(1)
(1,154)
7
(67)
-
-
4.14.
32
(6,509)
(3,388)
(22)
3,422
(2,516)
(7)
14,318
(2,677)
411
(537)
1
-
(1)
(6)
(2)
(3)
(4)
-
(6,227)
(7,159)
(864)
-
-
4.14.
(18)
2,181
3,303
(25)
2,491
4,925
1
(365)
(119)
(2)
-
-
in EUR thousands
Balance as at
31 Dec 2020
Repayments
of written-off
receivables
5.6.b), c), d)
4.14.
-
-
(28)
(1)
(2)
-
-
707
22,264
-
-
-
155
8,973
16,664
73
2,351
8,936
2
22,855
83,593
1,255
1,319
4
-
-
-
-
-
-
-
2,319
4,139
328
-
-
The contractual amount outstanding on financial assets
EUR 2,251 thousand in NLB Group (31 December 2020: EUR
that were written off during the year ending 31 December
4,162 thousand) and EUR 1,265 thousand in NLB (31 December
2021 and that are still subject to enforcement activity for NLB
2020: EUR 2,537 thousand) represents interest receivables that
Group amounted to EUR 76,252 thousand (31 December 2020:
have not been recognised in the income statement prior to the
EUR 42,738 thousand), and for NLB amounted to EUR 8,136
write-off.
thousand (31 December 2020: EUR 9,773 thousand), of which
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b) Movements in allowance for the impairment of debt securities
NLB Group
Notes
12-month expected credit losses
Debt securities measured at amortised cost
Debt securities measured at fair value
through other comprehensive income
Lifetime ECL not credit-impaired
Debt securities measured at amortised cost
Debt securities measured at fair value
through other comprehensive income
Lifetime ECL credit-impaired
Debt securities measured at fair value
through other comprehensive income
NLB Group
Notes
12-month expected credit losses
Debt securities measured at amortised cost
Debt securities measured at fair value
through other comprehensive income
Lifetime ECL not credit-impaired
Debt securities measured at fair value
through other comprehensive income
Lifetime ECL credit-impaired
Debt securities measured at fair value
through other comprehensive income
Balance as at
1 Jan 2021
Effects of
translation
of foreign
operations to
presentation
currency
Transfers
Increases/
(Decreases)
Changes in
models/risk
parameters
in EUR thousands
Disposal of
subsidiary
Balance as at
31 Dec 2021
Foreign
exchange
differences
and other
movements
4.14.
4.14.
5.6.a), 5.4.a)
3,685
8,656
-
28
798
1
2
-
-
-
(32)
-
32
-
-
997
81
16
24
-
(1,400)
2,731
4
18
-
2
18
-
-
-
-
(340)
-
-
-
3,253
11,148
52
70
798
Balance as at
1 Jan 2020
Effects of
translation
of foreign
operations to
presentation
currency
Transfers
Increases/
(Decreases)
Changes in
models/risk
parameters
3,140
4,757
42
798
(2)
2
-
-
-
-
-
-
4.14.
343
4,156
(6)
-
4.14.
204
(253)
(9)
-
Foreign
exchange
differences
and other
movements
in EUR thousands
Balance as at
31 Dec 2020
5.6.a), 5.4.a)
-
(6)
1
-
3,685
8,656
28
798
Column Increases/(Decreases) for year 2020 includes also
of EUR 2,932 thousand for Debt securities measured at fair
12-month expected credit losses recognised at acquisition of
value through other comprehensive income (notes 4.14. and
Komercijalna banka in the amount of EUR 32 thousand for
5.12.c).
Debt securities measured at amortised cost and in the amount
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NLB
Notes
12-month expected credit losses
Debt securities measured at amortised cost
Debt securities measured at fair value through other comprehensive income
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income
Balance as at
1 Jan 2021
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign exchange
differences and
other movements
1,841
2,343
798
4.14.
456
(22)
-
4.14.
(473)
(126)
-
2
8
-
NLB
Notes
12-month expected credit losses
Debt securities measured at amortised cost
Debt securities measured at fair value through other comprehensive income
Lifetime ECL credit-impaired
Debt securities measured at fair value through other comprehensive income
Balance as at
1 Jan 2020
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign exchange
differences and
other movements
4.14.
16
626
-
4.14.
208
9
-
1,617
1,714
798
-
(6)
-
in EUR thousands
Balance as at
31 Dec 2021
5.6.a), 5.4.a)
1,826
2,203
798
in EUR thousands
Balance as at
31 Dec 2020
5.6.a), 5.4.a)
1,841
2,343
798
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c) Explanation of how significant changes in the gross carrying amount of financial instruments contributed to changes in the loss allowance
Movement of gross carrying amount of loans to banks
12-month expected credit losses
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Decreases/Increases
Exchange differences on monetary assets
Balance as at 31 December
Movement of gross carrying amount of loans and advances to individuals
NLB Group
in EUR thousands
NLB
2021
197,146
(7)
-
(61,245)
4,987
140,881
2020
93,498
(99)
46,981
56,616
150
197,146
2021
158,475
-
-
41,094
(100)
199,469
2020
144,493
-
-
13,829
153
158,475
Individuals
Balance as at 1 January 2021
Effects of translation of foreign
operations to presentation currency
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4.12.)
Disposal of subsidiary
Balance as at 31 December 2021
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
NLB Group
NLB
4,777,413
1,268
(39,411)
666,437
(164)
1,930
(31)
(34,891)
5,372,551
132,987
(8)
4,604
(16,708)
(35)
27
(6)
(626)
120,235
117,193
26
34,807
(8,010)
(15,160)
32
(2)
(601)
128,285
5,027,593
2,295,630
1,286
-
641,719
(15,359)
1,989
(39)
(36,118)
5,621,071
-
(17,729)
291,509
(156)
1,671
-
-
64,675
-
5,230
(3,888)
(27)
45
-
-
51,644
-
12,499
(764)
(6,020)
37
-
-
2,570,925
66,035
57,396
2,694,356
Individuals
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
NLB Group
NLB
Balance as at 1 January 2020
3,822,266
103,734
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Excluded interest
Modification losses (note 4.12.)
Balance as at 31 December 2020
(20)
843,675
(88,975)
203,520
(1)
(1,983)
-
(1,069)
4,777,413
(1)
-
44,785
(15,470)
(3)
(88)
30
-
132,987
87,488
-
5,753
44,190
(4,342)
(20,159)
(54)
4,317
-
117,193
4,013,488
2,301,339
34,826
40,627
(21)
849,428
-
183,708
(20,163)
(2,125)
4,347
(1,069)
-
-
(50,790)
44,914
(1)
168
-
-
-
-
36,066
(6,216)
(3)
2
-
-
-
-
14,724
1,812
(6,227)
3
705
-
5,027,593
2,295,630
64,675
51,644
2,411,949
in EUR thousands
Total
2,411,949
-
-
286,857
(6,203)
1,753
-
-
in EUR thousands
Total
2,376,792
-
-
-
40,510
(6,231)
173
705
-
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In year 2021, the loss allowance for loans and advances to
EUR 7,324 thousand at NLB Group level and by EUR 4,307
impaired assets. When a financial asset becomes credit-
individuals increased by EUR 7,281 thousand at NLB Group
thousand at NLB level. At the NLB Group level, the gross
impaired and is, therefore, classified in Stage 3, interest
level, while at NLB level it increased by EUR 3,242 thousand.
carrying amount increased by EUR 1,014,105 thousand, mainly
income is calculated by applying the effective interest rate
Even though the gross carrying amount increased mainly in
due to acquisition of subsidiaries, while at the NLB level it
to the net amortised cost of the financial asset. Part of the
Stage 1 due to new exposures, the increase of loss allowance
increased by EUR 35,157 thousand.
was observed mostly in Stage 3. The main reason for this were
contractually due interest for Stage 3 exposures that is
not included in the income statement (so-called ‘excluded
changes in risk parameters, which increased loss allowance
Acquisition of subsidiaries (note 5.12.c) contributed EUR
interest’) has been in previous periods presented as a
for Stage 3 loans and advances to individuals in the amount
849,428 thousand to the gross carrying amount of loans
decrease of gross carrying amount of financial assets. In
of EUR 7,868 thousand at NLB Group level and EUR 7,566
and advances to individuals on NLB Group level. For the
year 2020, the Bank of Slovenia changed the instructions
thousand at NLB level.
performing part of this portfolio, 12-month expected credit
for reporting of monetary financial institutions and regards
losses in the amount of EUR 2,150 thousand were recognised.
excluded interest as part of gross carrying amount, even
In year 2020, the loss allowance for loans and advances
if not recognised in the income statement. Therefore, NLB
to individuals increased by EUR 19,047 thousand at NLB
The gross carrying amount also increased due to changed
Group changed the presentation as at 31 December 2020 and
Group level, while at NLB level it increased by EUR 10,012
presentation of excluded interest. NLB Group calculates
increased gross carrying amount and impairments for EUR
thousand. The main reasons for the increase were changed
interest income by applying the effective interest rate to the
4,347 thousand on the Group level and EUR 705 thousand on
risk parameters, which increased loss allowance by
gross carrying amount of financial assets other than credit-
the NLB level.
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Movement of gross carrying amount of loans and advances to other customers
Other customers
Balance as at 1 January 2021
Effects of translation of foreign
operations to presentation currency
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4.12.)
Disposal of subsidiary
Balance as at 31 December 2021
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
NLB Group
NLB
4,219,862
1,220
(110,801)
608,913
(8)
3,620
(17)
(92,304)
4,630,485
427,166
82
85,364
(98,209)
(231)
235
(6)
(2,217)
412,184
317,519
852
25,437
(34,880)
(66,532)
159
(201)
(3,000)
239,354
4,964,547
1,982,033
193,835
119,733
2,295,601
2,154
-
475,824
(66,771)
4,014
(224)
(97,521)
5,282,023
-
(13,004)
379,138
(1)
3,109
-
-
-
11,931
(82,687)
(3)
228
-
-
-
1,073
(15,037)
(33,269)
137
-
-
-
-
281,414
(33,273)
3,474
-
-
2,351,275
123,304
72,637
2,547,216
in EUR thousands
NLB Group
NLB
in EUR thousands
Other customers
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
Balance as at 1 January 2020
3,270,058
367,283
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Excluded interest
Modification losses (note 4.12.)
Balance as at 31 December 2020
(2,407)
993,295
(169,871)
130,986
(6)
(168)
-
(2,025)
4,219,862
(197)
-
108,995
(48,552)
(4)
(2)
-
(357)
427,166
261,339
(126)
34,626
60,876
(35,202)
(31,254)
(3)
27,389
(126)
317,519
3,898,680
2,049,210
154,600
106,762
2,310,572
(2,730)
1,027,921
-
-
-
(100,324)
47,232
(31,264)
(173)
27,389
(2,508)
36,267
(6)
(3,114)
-
-
-
-
77,761
(38,342)
(4)
(180)
-
-
4,964,547
1,982,033
193,835
-
-
22,563
(24,596)
(7,159)
(121)
22,284
-
119,733
-
-
-
(26,671)
(7,169)
(3,415)
22,284
-
2,295,601
In year 2021, the gross carrying amount of loans and advances
(decrease of loss allowance at NLB Group level for EUR 4,611
11,029 thousand at NLB Group level and by EUR 8,109 thousand
to other customers increased by EUR 317,476 thousand at NLB
thousand and at NLB level for EUR 7,365 thousand).
at NLB level. At the NLB Group level, the gross carrying
Group level and EUR 251,615 thousand at NLB level, mostly in
amount increased by EUR 1,065,867 thousand, mainly due to
Stage 1 due to increased exposure. Regardless of that, loss
In year 2020, the loss allowance for loans and advances to
acquisition of subsidiaries, while at the NLB level it decreased
allowance decreased (for EUR 63,588 thousand at NLB Group
other customers increased by EUR 30,789 thousand at NLB
by EUR 14,971 thousand.
level and EUR 50,195 thousand), with main reasons being
Group level, while at NLB level it increased by EUR 14,595
write-offs (EUR 66,771 thousand at NLB Group level and EUR
thousand. The main reasons for the increase were changed
33,273 thousand at NLB level) and changes in risk parameters
risk parameters, which increased loss allowance by EUR
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Acquisition of subsidiaries (note 5.12.c) contributed EUR
1,027,921 thousand to the gross carrying amount of loans
Movement of gross carrying amount of other financial assets
thousand), with main reason being write-offs in the amount
of EUR 292 thousand.
and advances to customers on NLB Group level. For
The loss allowance for other financial assets in year 2021 on
the performing part of this portfolio, 12-month expected
NLB Group level moved in line with gross carrying amount
The loss allowance for other financial assets in year 2020
credit losses in the amount of EUR 8,183 thousand were
and increased by EUR 673 thousand. At NLB level, gross
moved in line with gross carrying amount and increased by
recognised.
carrying amount increased by EUR 37,724 thousand, but
EUR 647 thousand at NLB Group level, while at the NLB level it
most of this increase relates to receivables with very short
decreased by EUR 511 thousand.
The gross carrying amount also increased for EUR 27,389
maturity (of that EUR 20,492 thousand to receivables towards
thousand at NLB Group level and for EUR 22,284 thousand at
a subsidiary for dividends declared in 2021). Therefore,
NLB level due to changed presentation of excluded interest.
the loss allowance in 2021 slightly decreased (by EUR 177
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Movement of gross carrying amount of debt securities measured at amortised cost
NLB Group
in EUR thousands
NLB
2021
2020
2021
2020
12-month expected
credit losses
Lifetime ECL
not credit - impaired
12-month expected
credit losses
12-month expected
credit losses
12-month expected
credit losses
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Other
Transfers
Balance as at 31 December
1,506,772
74
-
769,067
(564,041)
13,144
1,348
(5,444)
(7,209)
1,713,711
-
11
-
-
-
-
-
-
7,209
7,220
1,656,988
1,279,721
1,486,783
(325)
7,214
303,670
(477,592)
16,130
(429)
1,116
-
-
-
639,735
(486,630)
9,504
1,364
(5,444)
-
-
-
181,235
(401,685)
12,701
(429)
1,116
-
1,506,772
1,438,250
1,279,721
Contents
253
Movement of gross carrying amount of debt securities measured at fair value through other comprehensive income
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
NLB Group
NLB
in EUR thousands
Balance as at 1 January 2021
Effects of translation of foreign
operations to presentation currency
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Disposal of subisidiary
Balance as at 31 December 2021
3,407,394
1,204
1,455,823
(1,481,974)
40,310
8,367
(35,023)
3,396,101
203
-
-
(19)
-
-
-
184
798
3,408,395
1,639,915
-
-
-
-
-
-
1,204
1,455,823
(1,481,993)
40,310
8,367
(35,023)
-
219,733
(352,824)
11,696
8,452
-
798
3,397,083
1,526,972
-
-
-
-
-
-
-
-
798
1,640,713
-
-
-
-
-
-
-
219,733
(352,824)
11,696
8,452
-
798
1,527,770
in EUR thousands
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
NLB Group
NLB
Balance as at 1 January 2020
2,055,362
220
798
2,056,380
1,583,603
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Balance as at 31 December 2020
(421)
1,267,281
1,856,445
(1,777,748)
17,370
(10,895)
3,407,394
-
-
-
(17)
-
-
203
-
-
-
-
-
-
(421)
1,267,281
1,856,445
(1,777,765)
17,370
(10,895)
-
-
1,045,700
(988,275)
9,894
(11,007)
798
3,408,395
1,639,915
-
-
-
-
-
-
-
-
798
1,584,401
-
-
-
-
-
-
-
-
1,045,700
(988,275)
9,894
(11,007)
798
1,640,713
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5.15. Financial liabilities, measured at amortised cost
Analysis by type of financial liabilities, measured at the amortised cost
Deposits from banks and central banks
Borrowings from banks and central banks
Due to customers
Borrowings from other customers
Subordinated liabilities
Other financial liabilities
Total
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
71,828
858,531
72,633
158,225
109,329
873,479
41,635
143,464
17,640,809
16,397,167
9,659,605
8,850,755
74,051
288,519
206,878
91,560
288,321
182,095
406
288,519
102,527
13
288,321
88,969
19,140,616
17,190,001
11,033,865
9,413,157
a) Deposits from banks and central banks and amounts due to customers
Deposit on demand
- banks and central banks
- other customers
- governments
- financial organisations
- companies
- individuals
Other deposits
- banks and central banks
- other customers
- governments
- financial organisations
- companies
- individuals
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
56,427
52,250
94,323
41,635
15,319,112
13,633,889
8,982,546
8,128,950
401,295
303,858
307,082
192,224
3,653,713
3,223,612
109,228
265,900
1,870,118
86,276
137,204
1,551,952
10,960,246
9,910,971
6,737,300
6,353,518
15,401
20,383
2,321,697
2,763,278
95,062
125,310
380,815
1,720,510
117,428
134,716
398,595
2,112,539
15,006
677,059
34,801
71,582
229,093
341,583
-
721,805
35,515
34,474
192,955
458,861
17,712,637
16,469,800
9,768,934
8,892,390
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b) Borrowings from banks and central banks and other customers
Loans
- banks and central banks
- other customers
- governments
- financial organisations
- companies
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
858,531
74,051
20,607
52,958
486
932,582
158,225
91,560
20,183
70,956
421
249,785
873,479
406
-
-
406
873,885
143,464
13
-
-
13
143,477
As at 31 December 2021, NLB Group and NLB had EUR 94,115
threshold in the special reference period and will use the
threshold. Since the threshold was achieved and early
thousand in undrawn borrowings (31 December 2020: EUR
140,713 thousand).
positive effect from this transaction to partially compensate
for the negative carry of liquidity reserves. Based on
repayment in June 2022 is still expected, no changes in
estimates of payments due to revised assessment were
In June 2021, the Bank participated in the ECB TLTRO III.8
early repayment in June 2022.
operation and had drawn a credit tranche of EUR 750,000
Group recognised in 2021 interest income in the amount of
EUR 3,979 thousand (note 4.1.). The carrying amount of the
thousand for three years. With targeted longer-term
NLB Group accounts for this loan according to the
loan as at 31 December 2021 amounts to EUR 746,021 thousand.
currently available information, the Bank plans to opt for
needed. By applying the effective interest rate of -1%, NLB
refinancing operations, the ECB continues to support the
requirements of IFRS 9. Expected effective interest rate was
access of enterprises and households to bank loans. The
estimated based on the expectations of early repayment
Bank was successful in achieving the lending performance
in June 2022 and achieving the lending performance
c) Subordinated liabilities
Subordinated bonds
Total
NLB Group and NLB
31 Dec 2021
31 Dec 2020
in EUR thousands
Currency
Due date
Interest rate
Carrying amount
Nominal value
Carrying amount
Nominal value
EUR
EUR
EUR
06.05.2029
4.2% to 06.05.2024, thereafter 5Y MS + 4.159% p.a.
19.11.2029
3.65% to 19.11.2024, thereafter 5Y MS + 3.833% p.a.
05.02.2030
3.4% to 05.02.2025, thereafter 5Y MS + 3.658% p.a.
45,903
119,577
123,039
288,519
45,000
120,000
120,000
285,000
45,867
119,480
122,974
288,321
45,000
120,000
120,000
285,000
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All issued subordinated bonds represent non-convertible
Tier 2 instruments (note 5.22.). In the event of bankruptcy
b) with the same priority (pari passu) as, and proportionally
with the obligations arising from other instruments which
or liquidation of the issuer, obligations arising from Tier 2
qualify as Tier 2 instruments or have the same priority of
instruments shall be repaid:
repayment as the Tier 2 instruments;
a) after repayment of all unsubordinated obligations
c) in priority to the obligations arising from shares or other
of the Issuer, as well as at all subordinated obligations
instruments which qualify as Common Equity Tier 1 capital
(if any) which are expressed to rank in priority to Tier 2
instruments or additional Tier 1 instruments or have the same
instruments;
priority of repayment as these instruments.
Movement of subordinated liabilities
NLB Group and NLB
Balance as at 1 January
Cash flow items:
- new issued subordinated liabilities
- repayment of subordinated liabilities
- repayment of interest
Non-Cash flow items:
- accrued interest
- other
Balance as at 31 December
2021
288,321
(10,350)
-
-
(10,350)
10,548
10,548
-
288,519
in EUR thousands
2020
210,569
67,383
119,222
(45,000)
(6,839)
10,369
10,243
126
288,321
In September 2019, NLB entered into a loan agreement
after obtaining approval from the ECB. As such, approval
relating to a EUR 45 million of subordinated loan intended for
had not been granted by 23 December 2019, and it was not
the inclusion into additional capital to strengthen and optimise
reasonably expected to be granted in the near future, NLB
its capital structure. NLB may, according to valid legislation,
announced the prepayment of the loan, which was exercised
only include the loan in calculation of additional capital
in January 2020.
d) Other financial liabilities
Items in the course of settlement
Debit or credit card payables
Suppliers
Lease liabilities (note 5.11.a)
Accrued expenses
Fees and commissions
Liabilities to brokerage firms and others for
securities purchase and custody services
Other financial liabilities
Total
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
57,934
27,325
17,514
24,324
25,852
1,609
297
52,023
206,878
46,395
22,883
20,993
26,359
21,314
1,100
2,459
40,592
182,095
5,940
24,638
12,049
3,256
12,909
1,504
202
42,029
102,527
4,412
20,135
15,768
3,212
10,635
967
2,443
31,397
88,969
Other financial liabilities mainly include liabilities to
initiatives, received warranties, and obligation for purchase
insurance companies, liabilities for received EIB financial
of securities.
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5.16. Provisions
a) Analysis by type of provisions
Provisions for guarantees and commitments (note 5.23.a)
Stage 1
Stage 2
Stage 3
Employee benefit provisions
Restructuring provisions
Provisions for legal risks
Other provisions
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
33,441
12,912
1,640
18,889
21,447
19,217
45,288
11
42,174
15,796
2,767
23,611
20,707
15,565
46,602
11
20,560
3,909
141
16,510
14,206
11,131
3,466
-
28,543
7,510
732
20,301
14,220
15,354
5,673
-
119,404
125,059
49,363
63,790
Provisions for guarantees and commitments represent
foreign currency savings, based on numerous process and
expected credit losses in accordance with IFRS 9, employee
content-related reasons, NLB has all along objected to these
benefits are recognised in accordance with IAS 19, while all
claims. Two key reasons NLB is not liable for the old foreign
other provisions are recognised according to IAS 37.
currency savings are that it was only founded on the basis of
Legal risks
the Constitutional Act on 27 July 1994 (at the time the savings
were deposited with LB Branch Zagreb, NLB did not yet exist),
Provisions for legal risks are formed based on expectations
and NLB did not assume any such obligations.
regarding the probable outcome of legal disputes. As at 31
December 2021, NLB Group was involved in 38 (31 December
Moreover, this is a former Yugoslavia succession matter, as the
2020: 39) legal disputes with material claims against Group
governments of the Republic of Slovenia and the Republic of
members in the total amount of EUR 404,001 thousand,
Croatia agreed in a Memorandum of Understanding signed
excluding accrued interest (31 December 2020: EUR 292,098
in 2013 whose intent was to find a solution to the transferred
thousand). As at 31 December 2021, NLB was involved in 16 (31
foreign currency savings of Ljubljanska banka in Croatia
December 2020: 18) legal disputes with material monetary
(LB) on the basis of the Agreement on Succession Issues. The
claims against NLB. The total amount of these claims,
Memorandum also said that the Republic of Croatia would
excluding accrued interest, was EUR 180,077 thousand (31
ensure the stay of all the proceedings commenced by the PBZ
December 2020: EUR 179,996 thousand).
and the ZaBa in relation to the transferred foreign currency
savings until the issue was finally resolved.
In connection with legal risks, the largest amount of material
monetary claims relates to civil claims filed by Privredna
Despite the agreement in the Memorandum of Understanding
banka Zagreb (the PBZ) and Zagrebačka banka (the ZaBa)
to stay all of the proceedings commenced, the Court of Appeal,
against NLB, referring to the old savings of LB Branch Zagreb
the County Court of Zagreb, ruled in six claims (as explained
savers, which were transferred to these two banks in a
below in detail) in favour of the plaintiff. In four of those cases,
principal amount of approximately EUR 171 million (as per 31
NLB filed a constitutional suit after extraordinary legal measure
December 2021). Due to the fact the proceedings had been
of NLB with the Supreme Court of the Republic of Croatia was
pending for such a long time, the penalty interest already
exceeds the principal amount. As NLB is not liable for the old
not successful, and in two NLB filed an extraordinary legal
measure with the Supreme Court of the Republic of Croatia.
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Contrary to the decisions of the court described above in
In the other cases, with respect to which court procedures
another case, a claim filed by the PBZ was refused and the
described above are pending, final court decisions have not yet
judgment became final in favour of NLB. The extraordinary
been issued.
legal measure with the Supreme Court of the Republic of
Croatia, filed by the plaintiff, was dismissed by the Supreme
The table below summarises the amounts according to final
Court on 16 June 2015.
court decisions (not including penalty interest).
Date of the ruling
Plaintiff
Principal
amount
Costs of the
proceedings
Measures taken by NLB
May 2015
PBZ
254.76 EUR
15,781.25 HRK
Constitutional suit against the final judgement, as NLB found the court decision contrary to the legislation in force and
constitutional principles and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic
of Croatia. Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 21 May 2018.
April 2018
PBZ
222,426.39 EUR
253,283.37 HRK
September 2017
ZaBa
492,430.53 EUR
748,583.75 HRK
November 2017
PBZ
220,115.98 EUR
688,268.12 HRK
December 2018
PBZ
3,855,173.35 SEK
679,926.08 HRK
March 2019
PBZ
9,185,141.76 USD
3,198,760.00 HRK
Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in
the revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles,
and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia.
Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 5 October 2021.
Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in
the revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles,
and as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia.
Constitutional Court of the Republic of Croatia rejected the constitutional appeal of NLB d.d. on 5 October 2021.
NLB challenged the judgments with the extraordinary legal measure (revision) on the Supreme Count of the Republic of
Croatia and later, if necessary, will challenge the judgments with all other available remedies of the obligations of the
old foreign currency savings in accordance with Slovenian Constitutional Law are not the liabilities of NLB.
Constitutional suit against the court decisions (including the decision of the Supreme Court of the Republic of Croatia in the
revision proceeding), as NLB found the court decision contrary to the legislation in force and constitutional principles and
as well contrary to the Memorandum concluded between the Republic of Slovenia and the Republic of Croatia.
NLB challenged the judgment with the extraordinary legal measure (revision) on the Supreme Count of the Republic of
Croatia and later, if necessary, will challenge the judgment with all other available remedies of the obligations of the
old foreign currency savings in accordance with Slovenian Constitutional Law are not the liabilities of NLB.
The NLB Shareholders’ Meeting provided the Management
the Succession Fund of the Republic of Slovenia (Sklad
has to contest the claims made against it in court proceedings
Board of NLB with instructions how to act in the event of
Republike Slovenije za nasledstvo, javni sklad, hereinafter:
in relation to transferred foreign currency deposits, and use
existing or potential new final decisions by Croatian courts
‘the Fund’), shall compensate NLB for the sums recovered
against court decisions that are disadvantageous for NLB,
against LB and NLB regarding the transferred foreign
from NLB by enforcement of final judgements delivered
all reasonable legal remedies and to continue to actively
currency deposits, especially not to voluntarily settle the
by Croatian courts with regard to the transferred foreign
challenge the judicial decisions of the courts of the Republic
adjudicated amounts, and also gave some additional
currency deposits, that is the principle amount, accrued
of Croatia in relation to transferred foreign currency deposits
instructions on the usage of legal remedies and regarding the
management of the property from that perspective.
interest, expenses of court, attorney’s expenses and other
expenses of the plaintiff, and expenses related to enforcement
on the basis of which enforcement took place, leading, on
the basis of ZVKNNLB, to the compensation of the sums
On 19 July 2018, the National Assembly of the Republic of
its own costs or for the difference between the book value
case from May 2015, the Succession Fund of the Republic of
Slovenia passed the ‘Act for Value Protection of Republic of
of its assets sold in enforcement proceedings and the price
Slovenia has already compensated the sums recovered from
with the accrued interest, and shall not compensate NLB for
recovered from NLB by enforcement. In the aforementioned
Slovenia’s Capital Investment in Nova Ljubljanska banka
obtained for such assets in enforcement proceedings. There
NLB by enforcement.
d.d., Ljubljana’ (Zakon za zaščito vrednosti kapitalske
shall be no compensation for any voluntarily made payments
naložbe Republike Slovenije v Novi Ljubljanski banki d.d.,
by NLB. In accordance with the ZVKNNLB and pursuant to
All procedures relating to the receivables of PBZ and ZaBa, as
Ljubljana, hereinafter: ‘the ZVKNNLB’) which entered into
the agreement between NLB and the Fund, as envisaged by
well as NLB’s view on this matter were also discussed with the
force on 14 August 2018. In accordance with the ZVKNNLB,
the ZVKNNLB (which was concluded on 14 August 2018), NLB
ECB as the supervisor of both Croatian banks.
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Provisions for legal risks for claims filed by PBZ and ZaBa are
impact due to protection provided by the ZVKNNLB. For final
not formed, since NLB believes that based on the factual and
judgements, NLB Group recognised the liabilities and related
legal evaluation there are greater prospects for the court
assets which currently amount to approximately EUR 22
proceedings to end in favour of NLB than the opposite.
million. They are included within other financial assets (note
5.6.d) and other financial liabilities (note 5.15.d).
Regardless of the negative judgements, in the financial
statements NLB Group did not recognise the negative
b) Provisions for guarantees and commitments
Movements in provisions for guarantees and commitments
NLB Group
Notes
12-month expected credit losses
Guarantees and commitments
Lifetime ECL not credit-impaired
Guarantees and commitments
Lifetime ECL credit-impaired
Guarantees and commitments
Of which: Purchased or originated credit-impaired
Guarantees and commitments
Balance as at
1 Jan 2021
Effects of
translation of
foreign operations
to presentation
currency
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
4.13.
4.13.
Foreign
exchange
differences
and other
movements
15,796
2,767
23,611
5,057
1
-
1
-
1,388
(1,337)
(2,810)
(730)
(358)
(659)
(4,239)
-
(755)
(37)
277
-
(4)
4
48
42
NLB Group
Notes
12-month expected credit losses
Guarantees and commitments
Lifetime ECL not credit-impaired
Guarantees and commitments
Lifetime ECL credit-impaired
Guarantees and commitments
Of which: Purchased or originated credit-impaired
Guarantees and commitments
Balance as at
1 Jan 2020
Effects of
translation of
foreign operations
to presentation
currency
Acquisition of
subsidiaries
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
12,909
2,444
24,068
1,984
(4)
(5)
1
-
1,049
-
1,249
1,249
4.13.
1,863
(99)
(1,293)
659
(300)
(359)
-
1,838
4.13.
(676)
727
(40)
-
in EUR thousands
Disposal of
subsidiary
Balance as at
31 Dec 2021
5.16.a)
12,912
1,640
(122)
(6)
(150)
18,889
-
4,344
in EUR thousands
Balance as at
31 Dec 2020
Foreign
exchange
differences
and other
movements
5.16.a)
15,796
2,767
23,611
5,057
(4)
-
(15)
(14)
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NLB
Notes
12-month expected credit losses
Guarantees and commitments
Lifetime ECL not credit-impaired
Guarantees and commitments
Lifetime ECL credit-impaired
Guarantees and commitments
Of which: Purchased or originated credit-impaired
Guarantees and commitments
NLB
Notes
12-month expected credit losses
Guarantees and commitments
Lifetime ECL not credit-impaired
Guarantees and commitments
Lifetime ECL credit-impaired
Guarantees and commitments
Of which: Purchased or originated credit-impaired
Guarantees and commitments
Balance as at
1 Jan 2021
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
in EUR thousands
Balance as at
31 Dec 2021
7,510
732
20,301
3,808
530
(123)
(407)
-
4.13.
(1,451)
(340)
(3,698)
186
4.13.
(2,683)
(129)
273
-
3
1
41
47
5.16.a)
3,909
141
16,510
4,041
Balance as at
1 Jan 2020
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
in EUR thousands
Balance as at
31 Dec 2020
6,145
653
22,365
1,984
193
136
(329)
-
4.13.
947
(418)
(1,622)
1,838
4.13.
228
363
(97)
-
(3)
(2)
(16)
(14)
5.16.a)
7,510
732
20,301
3,808
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Movement of contractual amounts of guarantees and commitments in off-balance sheet
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
NLB Group
NLB
in EUR thousands
Balance as at 1 January 2021
2,824,750
103,950
46,270
2,974,970
1,896,418
Effects of translation of foreign
operations to presentation currency
Increases/(Decreases)
Foreign exchange differences
Transfers
Disposal of subsidiary
Balance as at 31 December 2021
687
219,688
2,733
(685)
(19,202)
3,027,971
24
(4,666)
101
(1,752)
(121)
97,536
9
(9,309)
51
2,437
(460)
720
205,713
2,885
-
(19,783)
-
4,769
2,570
9,815
-
38,998
3,164,505
1,913,572
73,255
-
(14,315)
92
(9,930)
-
49,102
34,907
2,004,580
-
(8,167)
48
115
-
-
(17,713)
2,710
-
-
26,903
1,989,577
in EUR thousands
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
12-month expected
credit losses
Lifetime ECL not
credit - impaired
Lifetime ECL
credit-impaired
Total
NLB Group
NLB
Balance as at 1 January 2020
2,108,271
112,616
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Increases/(Decreases)
Foreign exchange differences
Transfers
(543)
369,847
368,553
(3,615)
(17,763)
(56)
-
(147)
8,473
Balance as at 31 December 2020
2,824,750
103,950
73,196
(3)
7,514
(163)
9,290
46,270
2,294,083
1,575,211
62,429
69,640
1,707,280
(602)
377,361
308,053
(3,925)
-
-
-
346,086
(3,702)
(21,177)
2,974,970
1,896,418
-
-
(6,940)
(147)
17,913
73,255
-
-
(37,834)
(163)
3,264
-
-
301,312
(4,012)
-
34,907
2,004,580
(16,936)
(43,564)
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c) Movements in employee benefit provisions
Post-employment benefits
Balance as at 1 January
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Disposal of subsidiaries
Additional provisions (note 4.9.)
Provisions released (note 4.9.)
Interest expenses (note 4.1.)
Utilised during year (payments)
Actuarial gains and losses
Balance as at 31 December
Other employee benefits
Balance as at 1 January
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additional provisions (note 4.9.)
Provisions released (note 4.9.)
Interest expenses (note 4.1.)
Utilised during year
Balance as at 31 December
NLB Group
in EUR thousands
NLB
2021
18,162
-
-
(83)
1,957
(1,831)
177
(532)
1,377
19,227
2021
2,545
-
-
222
(275)
25
(297)
2,220
2020
15,320
(2)
3,374
-
983
(560)
76
(151)
(878)
18,162
2020
2,384
(1)
179
234
(112)
24
(163)
2,545
NLB Group
2021
12,695
-
-
-
723
(750)
43
(45)
115
12,781
2021
1,525
-
-
100
(132)
5
(73)
1,425
2020
13,165
-
-
-
672
(433)
27
(36)
(700)
12,695
in EUR thousands
NLB
2020
1,578
-
-
103
(38)
3
(121)
1,525
Other employee benefits include NLB Group’s obligations for jubilee long-service benefits.
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d) Movements in restructuring provisions
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Disposal of subsidiaries
Additional provisions (note 4.13.)
Utilised during year
Balance as at 31 December
NLB Group
NLB
in EUR thousands
2021
15,565
11
-
14,797
(11,156)
19,217
2020
14,500
(1)
(50)
3,500
(2,384)
15,565
2021
15,354
-
-
-
(4,223)
11,131
2020
14,182
-
-
3,500
(2,328)
15,354
Following the acquisition of Komercijalna banka a.d.
Significant amount of restructuring provisions relates also
Beograd in December 2020, NLB Group prepared a plan for
to NLB, which has in previous periods adopted a business
optimisation of operations, including anticipated merger
strategy and initiated key strategic initiatives, aiming
of banks in Serbia and decreased number of employees.
Therefore in 2021, Serbian banks recognised restructuring
among others towards a leaner organisation, optimisation
of processes, implementation of a new IT strategy with a
provisions in the amount of EUR 14,797 thousand, of which EUR
focus on digitalisation and simplification, and adjustment of
6,868 thousand were already utilised during the year. The rest
the organisational structure. These initiatives will result in
is expected to be paid to employees leaving the bank within
decreased number of employees in the coming years.
the next twelve months.
e) Movements in provisions for legal risks
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Disposal of subsidiaries
Additional provisions (note 4.13.)
Provisions released (note 4.13.)
Utilised during year
Balance as at 31 December
NLB Group
NLB
in EUR thousands
2021
46,602
40
-
-
16,632
(8,759)
(9,227)
45,288
2020
16,627
(8)
28,686
(119)
6,355
(1,659)
(3,280)
46,602
2021
5,673
-
-
-
1,881
(1,809)
(2,279)
3,466
2020
2,211
-
-
-
4,411
(181)
(768)
5,673
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f) Movements in other provisions
Balance as at 1 January
Additional provisions (note 4.13.)
Provisions released (note 4.13.)
Utilised during year
Balance as at 31 December
5.17. Deferred income tax
a) Analysis by type of deferred income taxes
NLB Group
NLB
in EUR thousands
2021
11
-
-
-
11
2020
162
34
(153)
(32)
11
2021
2020
-
-
-
-
-
85
-
(85)
-
-
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
Deferred income tax assets
Valuation of financial instruments and capital investments
33,002
Impairment of financial assets
Provisions for liabilities and charges
Depreciation and valuation of non-financial assets
Fair value adjustments of financial assets
measured at amortised cost
Unpaid dividends
Tax losses
Tax reliefs
Other
5,879
10,128
3,505
320
3,876
253
945
62
37,729
3,190
8,489
4,063
938
-
-
1,179
111
31,696
917
2,660
112
-
3,876
-
-
-
37,650
947
3,138
140
-
-
-
-
-
Total deferred income tax assets
57,970
55,699
39,261
41,875
Deferred income tax liabilities
Valuation of financial instruments
Depreciation and valuation of non-financial assets
Impairment of financial assets
Fair value adjustments of financial assets
measured at amortised cost
Other
Total deferred income tax liabilities
Net deferred income tax assets
Net deferred income tax liabilities
12,026
1,374
3,960
3,338
1,340
22,038
38,977
(3,045)
21,023
1,515
3,271
592
1,984
28,385
31,789
(4,475)
6,620
169
570
-
-
7,359
31,902
-
11,871
193
597
-
-
12,661
29,214
-
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Included in the income statement
- valuation of financial instruments and capital investments
- impairment of financial assets
- provisions for liabilities and charges
- depreciation and valuation of non-financial assets
- tax losses
- unpaid dividends
- tax reliefs
- fair value adjustments of financial assets
measured at amortised cost
- other
Included in other comprehensive income
- valuation and impairment of financial assets measured
at fair value through other comprehensive income
- actuarial assumptions and experience
Included in equity - transfer of fair value reserve
- valuation of financial assets measured at fair
value through other comprehensive income
NLB Group
NLB
in EUR thousands
2021
3,423
(1,024)
2,260
1,453
(338)
253
3,876
(234)
(3,413)
590
4,950
4,772
178
368
368
2020
3,238
308
3,108
54
(336)
-
-
-
-
104
(1,619)
(1,486)
(133)
-
-
2021
112
(3,241)
(30)
(489)
(4)
-
3,876
-
-
-
2,576
2,565
11
-
-
2020
540
308
163
75
(6)
-
-
-
-
-
(895)
(762)
(133)
-
-
Temporary differences on which NLB did not recognise
reversed in five years are presented in the table below,
deferred tax assets, as related deferred tax assets would
together with non-recognised deferred tax assets.
exceed the amount of deferred tax assets expected to be
NLB
Tax loss
Tax reliefs
Impairments and valuation of capital
investments and financial instruments
in EUR thousands
31 Dec 2021
31 Dec 2020
Temporary
difference
Non-recognised
deferred tax assets
Temporary
difference
Non-recognised
deferred tax assets
974,902
4,329
73,359
185,231
823
13,938
922,898
-
242,861
175,351
-
46,144
Tax loss on which NLB did not recognise deferred tax assets,
NLB Group did not recognise deferred tax assets on
as at 31 December 2021 amounts to EUR 974,902 thousand
temporary differences arising from the impairments of
(31 December 2020: 922,898 thousand). Slovenian tax law
does not set deadlines by which uncovered tax losses must be
investments in subsidiaries and associates where it is not
probable that the temporary difference will reverse in the
utilised, but the use of tax loss is limited to 50% of the actual
foreseeable future. These temporary differences amount to
tax base. Other banking members have no unrecognised
EUR 315,531 thousand as at 31 December 2021 (31 December
deferred tax assets for tax losses.
2020: EUR 347,040 thousand).
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b) Movements in deferred income taxes
Deferred income tax assets
Provisions for
liabilities and
charges
Valuation
of financial
instruments and
capital investments
Depreciation and
valuation of non-
financial assets
Impairment of
financial assets
Unpaid
dividends
Tax losses
Tax relief
Fair value
adjustments of
financial assets
measured at
amortised cost
NLB Group
Balance as at 1 January 2020
4,109
36,286
Effects of translation of foreign operations
to presentation currency
(Charged)/credited to profit and loss
(Charged)/credited to other comprehensive income
Acquisition of subsidiaries
Balance as at 31 December 2020
Effects of translation of foreign operations
to presentation currency
(Charged)/credited to profit and loss
(Charged)/credited to other comprehensive income
Disposal of subisidiaries
Balance as at 31 December 2021
4
54
(133)
4,455
8,489
8
1,453
178
-
10,128
-
188
1,240
15
37,729
-
(3,368)
(1,359)
-
33,002
1,087
-
(156)
-
3,132
4,063
1
(480)
-
(79)
3,505
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,179
1,179
-
3,876
253
(234)
-
-
-
-
-
-
3,876
253
945
910
2
2,247
-
31
3,190
4
2,791
-
(106)
5,879
NLB
-
-
-
-
938
938
-
(618)
-
-
320
Balance as at 1 January 2020
(Charged)/credited to profit and loss
(Charged)/credited to other
comprehensive income
Balance as at 31 December 2020
(Charged)/credited to profit and loss
(Charged)/credited to other
comprehensive income
Balance as at 31 December 2021
Provisions for
liabilities and
charges
Valuation
of financial
instruments and
capital investments
Depreciation and
valuation of non-
financial assets
Impairment
of financial
assets
Unpaid
dividends
3,196
75
(133)
3,138
(489)
11
2,660
36,244
188
1,218
37,650
(3,367)
(2,587)
31,696
154
(14)
-
140
(28)
-
112
784
163
-
947
(30)
-
917
-
-
-
-
3,876
-
3,876
in EUR thousands
Other
Total
-
-
104
-
7
111
2
(51)
-
-
62
42,392
6
2,437
1,107
9,757
55,699
15
3,622
(1,181)
(185)
57,970
in EUR thousands
Total
40,378
412
1,085
41,875
(38)
(2,576)
39,261
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Deferred income tax liabilities
Balance as at 1 January 2020
Effects of translation of foreign operations to presentation currency
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Acquisition of subsidiaries
Balance as at 31 December 2020
Effects of translation of foreign operations to presentation currency
Charged/(credited) to profit and loss
Charged/(credited)to other comprehensive income
Disposal of subisidiaries
Balance as at 31 December 2021
Balance as at 1 January 2020
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Balance as at 31 December 2020
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Balance as at 31 December 2021
Impairment
of financial
assets
Valuation
of financial
instruments and
capital investments
Depreciation and
valuation of non-
financial assets
NLB Group
3,270
(7)
(861)
696
173
3,271
1
531
157
-
3,960
11,159
-
(120)
2,030
7,954
21,023
3
(2,344)
(6,656)
-
12,026
1,296
(2)
180
-
41
1,515
1
(142)
-
-
1,374
Other
-
-
-
-
1,984
1,984
1
(641)
-
(4)
1,340
Fair value adjustments
of financial assets
measured at
amortised cost
-
-
-
-
592
592
1
2,795
-
(50)
3,338
Impairment
of financial
assets
NLB
Valuation
of financial
instruments and
capital investments
Depreciation and
valuation of non-
financial assets
477
-
120
597
-
(27)
570
10,131
(120)
1,860
11,871
(126)
(5,125)
6,620
201
(8)
-
193
(24)
-
169
in EUR thousands
Total
15,725
(9)
(801)
2,726
10,744
28,385
7
199
(6,499)
(54)
22,038
in EUR thousands
Total
10,809
(128)
1,980
12,661
(150)
(5,152)
7,359
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5.18. Income tax relating to components of other comprehensive income
2021
NLB Group
NLB
Before tax
Tax expense
Net of tax
Before tax
Tax expense
Net of tax
in EUR thousands
Actuarial gains and losses
Financial assets measured at fair value through
other comprehensive income
Share of associates and joint ventures
Total
2020
Actuarial gains and losses
Financial assets measured at fair value through
other comprehensive income
Share of associates and joint ventures
Total
5.19. Other liabilities
Accrued salaries
Unused annual leave
Deferred income
Taxes payable
Payments received in advance
Other liabilities
Total
(1,377)
(34,322)
(30)
(35,729)
178
4,772
-
4,950
(1,199)
(29,550)
(30)
(30,779)
(115)
(17,742)
-
(17,857)
11
2,565
-
2,576
(104)
(15,177)
-
(15,281)
in EUR thousands
NLB Group
NLB
Before tax
Tax expense
Net of tax
Before tax
Tax expense
Net of tax
878
10,364
(11,067)
175
(133)
(1,486)
-
(1,619)
745
8,878
(11,067)
(1,444)
700
4,012
-
4,712
(133)
(762)
-
(895)
567
3,250
-
3,817
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
18,615
6,032
11,374
9,450
3,997
-
49,468
19,068
6,137
12,364
5,009
2,195
859
45,632
9,050
2,425
5,257
3,999
308
-
21,039
9,807
2,497
5,391
4,107
199
-
22,001
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5.20. Share capital
The share capital of NLB amounts to EUR 200,000 thousand
and did not change in 2021. It is comprised of 20,000,000 no-
par-value ordinary registered shares, with the corresponding
value of EUR 10.0 for one share. All issued shares are fully paid
and there are no un-issued authorised shares. As at 31 December
2021, the major shareholder of NLB with significant influence is
the Republic of Slovenia, owning 25.00% plus one share.
The book value of a NLB share on a consolidated level as at 31
December 2021 was EUR 103.9 (31 December 2020: EUR 97.6),
and on solo level was EUR 77.6 (31 December 2020: EUR 72.5).
It is calculated as the ratio of net assets’ book value excluding
other equity instruments issued and the number of shares.
Distributable profit as at 31 December 2021 amounts to EUR
458,266 thousand (31 December 2020: EUR 341,992 thousand),
consists of NLB net profit for 2021 in the amount of EUR
208,421 thousand (2020: EUR 113,952 thousand), the transfer of
fair value reserve in the amount of EUR 53 thousand on the
derecognition of equity financial instruments measured at
fair value through OCI and retained earnings from previous
years in the amount of EUR 249,792 thousand. Its allocation
will be subject to a decision by the Bank’s General Assembly.
The proposal for the General Assembly will be prepared by
unless such voting instructions are accompanied with a
the Management and the Supervisory Board, considering
confirmation that the person giving such instructions is the
restrictions imposed by the regulators, Group’s risk appetite,
beneficial owner of the shares in respect of which votes are
target capital adequacy at Group’s level and actual prevailing
to be exercised and does not hold in the aggregate, directly
capital position at the time of the proposal.
or indirectly 25% or more NLB shares with voting rights.
The shares give to their holders the right to vote at the NLB’s
The shares also give their holders the right to be informed, as
meeting of shareholders where, as a rule, each share entitles
well as the pre-emptive right to subscribe for new shares on a
its holder to one vote. Nevertheless, a shareholder who
pro rata basis in case of a share capital increase, the right to
acquires shares which, together with the shares already held
a pro-rata share of remaining assets in case of bankruptcy or
by such shareholder or by a third person on behalf of such
liquidation or NLB and the right to receive a dividend. In 2021,
shareholder, represent more than 25% of the NLB’s share
NLB paid dividends for previous year in the amount of 4.61 EUR
capital, may only exercise its voting rights under such shares
per share (2020: NLB did not pay out any dividends for previous
if NLB’s Supervisory Board approves such an acquisition.
year), which decreased retained earnings for EUR 92,200
The Supervisory Board’s approval may only be rejected if,
thousand.
following such an acquisition, such a person would hold
shares representing more than 25% of NLB’s issued share
As at 31 December 2021 and 31 December 2020, NLB holds
capital plus one share. The approval shall be considered
no own shares. In June 2019, the General Assembly of NLB
given if not expressly rejected in 20 days. No such approval
authorised the Management Board that in the period of 36
is necessary in respect of the shares acquired by a person
months from the adoption of the shareholders’ resolution, it
on behalf of third persons provided that such a person is
can buy own shares of the Bank for the payment of variable
not entitled to exercise the voting rights arising out of such
remuneration to certain employees as required by the
shares at its own discretion and undertakes to NLB that it will
Banking Act and other relevant regulations. NLB did not buy
not exercise the voting rights based on voting instructions
any own shares based on this authorisation.
5.21. Accumulated other comprehensive income and reserves
a) Reserves
The share premium account as at 31 December 2021 and 31
As at 31 December 2021 and 31 December 2020, profit reserves
In 2021, NLB recorded a net profit in the amount of EUR 208,421
December 2020 comprises paid-up premiums in the amount
in the amount of EUR 13,522 thousand relate entirely to legal
thousand (2020: net profit EUR 113,952 thousand) which is
of EUR 822,173 thousand and the revaluation of share capital
reserves in accordance with the Companies Act.
included in the retained earnings as at 31 December 2021.
from previous years in the amount of EUR 49,205 thousand.
b) Accumulated other comprehensive income
Financial assets measured at fair value through
other comprehensive income - debt securities
Financial assets measured at fair value through other
comprehensive income - equity securities
Actuarial defined benefit pension plans
Foreign currency translation
Hedge of a net investment in a foreign operation
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
8,540
2,826
(5,488)
(17,184)
754
(10,552)
38,852
3,644
(4,399)
(17,724)
754
21,127
12,365
99
(3,696)
-
-
27,242
452
(3,592)
-
-
8,768
24,102
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NLB Group
NLB
reflecting a different quality of capital:
in EUR thousands
European banking capital legislation – CRD IV, is based on the
Basel III guidelines. The legislation defines three capital ratios
5.22. Capital adequacy ratios
Paid up capital instruments
Share premium
Retained earnings - from previous years
Profit eligible - from current year
Accumulated other comprehensive income
Other reserves
Minority interest
Prudential filters: Additional Valuation Adjustments (AVA)
(-) Goodwill
(-) Other intangible assets
(-) Insufficient coverage for non-performing exposures
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
200,000
200,000
200,000
200,000
871,378
767,152
135,968
(10,091)
13,522
27,905
(3,498)
(3,529)
(39,116)
(90)
871,378
552,146
63,635
21,588
13,522
71,562
(3,632)
(3,529)
871,378
249,845
39,613
8,768
13,522
-
(1,606)
-
(33,222)
(18,829)
-
(10)
871,378
228,040
21,658
24,102
13,522
-
(1,755)
-
(9,914)
-
COMMON EQUITY TIER 1 CAPITAL (CET1)
1,959,601
1,753,448
1,362,681
1,347,031
Minority interest
Additional Tier 1 capital
TIER 1 CAPITAL
5,950
5,950
14,614
14,614
-
-
-
-
1,965,551
1,768,062
1,362,681
1,347,031
Capital instruments and subordinated loans eligible as Tier 2 capital
Minority interest
TIER 2 CAPITAL
TOTAL CAPITAL
RWA for credit risk
RWA for market risks
RWA for credit valuation adjustment risk
RWA for operational risk
284,595
2,344
286,939
284,595
12,806
297,401
-
-
284,595
284,595
2,252,490
2,065,463
1,647,276
1,631,626
10,205,172
10,222,923
5,411,433
4,805,127
1,206,363
1,250,563
698,463
657,088
11,850
200
1,244,023
947,342
11,850
586,781
200
566,385
TOTAL RISK EXPOSURE AMOUNT (RWA)
12,667,408
12,421,028
6,708,527
6,028,800
Common Equity Tier 1 Ratio
Tier 1 Ratio
Total Capital Ratio
15.5%
15.5%
17.8%
14.1%
14.2%
16.6%
20.3%
20.3%
24.6%
22.3%
22.3%
27.1%
• Common Equity Tier 1 ratio (ratio between common or CET1
capital and risk-weighted exposure amount or RWA), which
must be at least 4.5%;
• Tier 1 capital ratio (Tier 1 capital to RWA), which must be at
least 6%; and
• Total capital ratio (total capital to RWA), which must be at
least 8%.
In addition to the aforementioned ratios which form the
Pillar 1 requirement, NLB must meet other requirements
and recommendations that are imposed by the supervisory
institutions or by the legislation:
• The Pillar 2 Requirement (SREP requirement): bank-specific,
obligatory requirement set by the supervisory institution
through the SREP process (together with the Pillar 1
requirement it represents the minimum total SREP capital
requirement – TSCR);
• The applicable combined buffer requirement (CBR): a
system of capital buffers to be added on top of TSCR –
breaching of the CBR is not a breach of capital requirement,
but triggers limitations in the payment of dividends and
other distributions from capital. Some of the buffers are
specific, set by the supervisory institution (CBR and TSCR
together form the overall capital requirement – OCR);
• Pillar 2 Capital Guidance: capital recommendation set
by the supervisory institution through the SREP process.
It is bank-specific and is a recommendation, and not
obligatory. Any non-compliance does not affect dividends
or other distributions from capital; however, it might lead to
intensified supervision and the imposition of measures to
re-establish a prudent level of capital (including preparation
of capital restoration plan).
284,595
284,595
prescribed by law for all banks and some of them are bank-
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10.75%
will be no effect on the capital in case the dividends are paid.
NLB’s overall capital requirement on the consolidated level
SREP requirement
Pillar 1 (P1R)
Pillar 2 (P2R)
Total SREP Capital Requirement (TSCR)
Combined buffer requirement (CBR)
Conservation buffer
O-SII buffer
Countercyclical buffer
Overall capital requirement (OCR) = MDA threshold
Pillar 2 Guidance (P2G)
OCR + P2G
CET1
AT1
T2
CET1
Tier 1
Total Capital
CET1
Tier 1
Total Capital
CET1
CET1
CET1
CET1
Tier 1
Total Capital
CET1
CET1
2021
4.5%
1.5%
2.0%
1.55%
2.06%
2.75%
6.05%
8.06%
10.75%
2.5%
1.0%
0.0%
9.55%
11.56%
14.25%
1.0%
10.55%
From 12 March
2020 onwards
As at 1 January
till 11 March 2020
4.5%
1.5%
2.0%
1.55%
2.06%
2.75%
6.05%
8.06%
10.75%
2.5%
1.0%
0.0%
9.55%
11.56%
14.25%
1.0%
10.55%
4.5%
1.5%
2.0%
2.75%
2.75%
2.75%
7.25%
8.75%
2.5%
1.0%
0.0%
10.75%
12.25%
14.25%
1.0%
11.75%
The Overall Capital Requirement (OCR) amounted to 14.25%
As at 31 December 2021, NLB Group capital ratios on a
for NLB on the consolidated basis, consisting of:
consolidated basis stand at:
• 10.75% TSCR (8% Pillar 1 Requirement and 2.75% Pillar 2
Requirement); and
• 15.5% CET1 ratio,
• 15.5% Tier 1 ratio,
• 3.5% CBR (2.5% Capital Conservation buffer, 1% O-SII buffer
• 17.8% Total Capital ratio.
and 0% Countercyclical buffer).
In the scope of regulatory risks, which include credit
Pillar 2 Guidance (P2G) which should be comprised entirely of
risk, operational risk, and market risk, NLB Group uses a
CET1 capital, remains at a relatively low level 1.0%.
standardised approach for credit and market risks, while
the calculation of capital requirement for operational risks
The Pillar 2 Requirement for 2022 decreased by 0.15 p.p. to
is made according to a basic indicator approach. The same
2.60%, as a result of better overall SREP assessment.
approaches are used for calculating the capital requirements
The capital adequacy of NLB and NLB Group at the end of year
of the capital requirement for operational risks where the
2021 remains strong in accordance with risk appetite orientations,
standardised approach is used.
at a level which covers all the current and announced regulatory
capital requirements, including capital buffers and other
As at 31 December 2021, the Total Capital Ratio for NLB Group
currently known requirements, as well as the P2G.
stood at 17.8% (or 1.2 p.p. higher than at the end of 2020), and
for NLB on a standalone basis, except for the calculation
for NLB at 24.6% (or 2.5 p.p. lower than at the end of 2020). As at
31 December 2021, the CET1 ratio stood at 15.5% (1.4 p.p. higher
than at the end of 2020). The higher NLB Group total capital
adequacy compared to the end of 2020 derives from higher
capital (increase of EUR 187.0 million compared to 31 December
2020) which compensated RWA increase of EUR 246.4 million
compared to 31 December 2020 for the Group. Higher RWA
derives mainly from the increase of RWA for operational risk.
Total capital increased mainly due to inclusion of Negative
goodwill in retained earnings in the amount of EUR 137.9 million
and partial inclusion of 2021 profit (EUR 136.0 million). The capital
calculation as at 31 December 2021 does not include part of the
2021 result in the amount of EUR 100.0 million. Therefore, there
The RWA for credit risk decreased by EUR 17.8 million compared
to 31 December 2020. On one hand, the factors for increase
were loan growth to the corporates and retail, new investments
in subordinated, state, and EU institutions bonds. On the
other hand, the increase was compensated by regulatory
changes, namely the inclusion of Bosnia and Herzegovina
and Macedonia on EBA’s third party equivalent list, legislation
criteria changes for the CRR collateral adequacy, signing
of agreements with MIGA as well as changed investment
policy such as the shift of some liquid assets from the central
governments to lower risk weighted counterparties (NLB Banka,
Prishtina, NLB Banka, Podgorica) or optimisation of deposits
with banks (Komercijalna banka, Beograd). Furthermore,
successful recovery of NPL clients, where the biggest part
represented repayments by a large client, contributed to
the RWA decrease, while in contrast, the RWA for high-risk
exposures is higher mainly due to new project finance loans.
The RWA for market risk decreased by EUR 32.6 million
compared to 31 December 2020 due to the lower fixed
income position in the trading book. And yet, RWA for FX risk
increased by EUR 35.3 million compared to 31 December 2020,
and RWA for CVA increased by EUR 10.7 million – of which
EUR 10.6 million as a result of new regulatory requirements
which became effective from June 2021 onward (calculation
of original exposure method (OEM) with residual maturity).
The increase in the RWA for operating risks (EUR 296.7 million
compared to 31 December 2020) derives from the higher
three-year average of relevant income, as defined in Article
316 of CRR, which represents the basis for the calculation.
The main reason for increased relevant income was the
acquisition of Komercijalna banka Beograd in 2020.
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The most important goal of internal capital adequacy assessment
into the overall risk management system in order to assure
Group. Within these capital constraints, NLB Group defines its
process (ICAAP) in NLB Group, set up in accordance with ECB
proactive support for informed decision-making.
management buffers in the Risk appetite above the regulatory
Guidelines, is ensuring adequate capital and sustainability on
and supervisory requirement and internal capital needs that
an ongoing basis. The purpose of this process is to have in place
From an economic perspective, NLB Group manages its
allow it to sustainably follow its business strategy. A normative
sound, effective, and comprehensive strategies and processes
capital adequacy by ensuring that all its risks are adequately
perspective includes several stress scenarios which are
to assess and maintain capital on an ongoing basis, as well the
covered by internal capital. A normative perspective is a
integrated into NLB Group’s annual business plan review and
adequate distribution of internal capital for covering the nature
multiyear forward-looking assessment of NLB Group which
budgeting process.
and level of the risks to which NLB Group is or might be exposed.
shows its ability to fulfil all of its capital-related regulatory
In addition, NLB Group gives strong emphasis on its integration
and supervisory requirements and risk appetite of NLB
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5.23. Off-balance sheet liabilities
a) Contractual amounts of off-balance sheet financial instruments
Short-term guarantees
- financial
- non-financial
Long-term guarantees
- financial
- non-financial
Loan commitments
Letters of credit
Other
Provisions (note 5.16.b)
Total
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
258,975
139,732
119,243
977,759
393,901
583,858
1,878,988
35,615
13,167
222,440
119,309
103,131
904,002
359,787
544,215
1,816,441
21,794
10,293
3,164,504
2,974,970
(33,441)
3,131,063
(42,174)
2,932,796
112,758
63,188
49,570
614,343
226,747
387,596
1,259,489
1,950
1,037
1,989,577
(20,560)
1,969,017
122,136
61,322
60,814
567,532
196,681
370,851
1,306,791
2,256
5,865
2,004,580
(28,543)
1,976,037
Fee income from issued non-financial guarantees amounted to
EUR 7,578 thousand (2020: EUR 4,910 thousand) in NLB Group,
in accordance with the Capital Requirements Regulation
(credit and other lines which can be irrevocably cancelled by
and to EUR 4,547 thousand (2020: EUR 4,397 thousand) in NLB.
a bank). As at 31 December 2021 these items at the NLB Group
In addition to the instruments presented in the table above,
EUR 307,093 thousand), and at the NLB level EUR 302,063
NLB Group and NLB have also some low-risk off-balance
thousand (31 December 2020: EUR 236,542 thousand).
sheet items, for which 0% credit conversion factor is applied
level amount to EUR 372,403 thousand (31 December 2020:
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273
b) Analysis of derivative financial instruments by notional amounts
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Short-term
Long-term
Short-term
Long-term
Short-term
Long-term
Short-term
Long-term
in EUR thousands
Swaps
- currency swaps
- interest rate swaps
Options
- interest rate options
- securities options
Forward contracts
- currency forward
99,349
99,349
-
9,880
-
9,880
38,825
38,825
1,284,832
16,844
1,267,988
30,945
30,945
-
26,921
26,921
99,420
99,420
-
12,811
-
12,811
91,309
91,309
1,425,765
6,068
1,419,697
27,000
27,000
-
41,423
41,423
109,137
109,137
-
9,880
-
9,880
37,511
37,511
1,284,832
16,844
1,267,988
30,945
30,945
-
26,921
26,921
Total
148,054
1,342,698
203,540
1,494,188
156,528
1,342,698
78,413
78,413
-
12,811
-
12,811
93,846
93,846
185,070
1,425,765
6,068
1,419,697
27,000
27,000
-
41,423
41,423
1,494,188
1,490,752
1,697,728
1,499,226
1,679,258
The notional amounts of derivative financial instruments that
The fair values of derivative financial instruments are
qualify for hedge accounting at NLB Group and NLB amount
disclosed in notes 5.2. and 5.5.
to EUR 572,455 thousand (31 December 2020: EUR 573,753
thousand) (note 5.5.b). Derivatives that qualify for hedge
accounting are used to hedge interest rate risk.
c) Capital commitments
Capital commitments for purchase of:
- property and equipment
- intangible assets
Total
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
1,696
4,243
5,939
2,433
9,566
11,999
1,623
4,094
5,717
2,429
9,403
11,832
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5.24. Funds managed on behalf of third parties
Funds managed on behalf of third parties are accounted
respective fund, and no liability falls on NLB Group in
connection with these transactions. NLB Group charges fees
separately from NLB Group’s funds. Income and expenses
for its services.
arising with respect to these funds are charged to the
Funds managed on behalf of third parties
Fiduciary activities
Settlement and other services
Total
Fiduciary activities
Assets
Clearing or transaction account claims for client assets
- from financial instruments
- receipt, processing, and execution of orders
- management of financial instruments portfolio
- custody services
- to Central Securities Clearing Corporation or bank
settlement account for sold financial instrument
- to other settlement systems and institutions for
bought financial instrument (debtors)
Clients' money
- at settlement account for client assets
- at bank transaction accounts
Liabilities
Clearing or transaction liabilities for client assets
- to client from cash and financial instruments
- receipt, processing, and execution of orders
- management of financial instruments portfolio
- custody services
- to Central Securities Clearing Corporation or bank
settlement account for bought financial instrument
- to other settlement systems and institutions for
bought financial instrument (creditors)
- to bank or settlement bank account for fees and costs, etc.
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
26,165,580
25,713,799
24,806,894
24,466,910
1,079,500
971,600
977,197
907,132
27,245,080
26,685,399
25,784,091
25,374,042
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
26,071,589
26,024,700
10,085,409
588,761
25,633,706
25,630,244
9,194,539
528,206
24,741,052
24,694,275
9,346,002
-
24,396,203
24,392,773
8,502,331
-
15,350,530
15,907,499
15,348,273
15,890,442
180
46,709
94,934
75,151
19,783
49
3,413
80,094
42,029
38,065
68
46,709
65,842
46,059
19,783
17
3,413
70,707
32,642
38,065
26,165,580
26,129,503
10,110,124
591,772
25,713,799
25,707,581
9,230,406
537,283
24,806,894
24,797,057
9,371,707
-
24,466,910
24,461,033
8,538,198
-
15,427,607
15,939,892
15,425,350
15,922,835
3,865
31,825
387
72
5,755
391
134
9,316
387
72
5,414
391
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Fee income for funds managed on behalf of third parties
in EUR thousands
category in NLB Group, concentrates on taking moderate
risks – a diversified credit portfolio, adequate credit portfolio
quality, the sustainable costs of risk, and ensuring an optimal
return considering the risks assumed. As regards liquidity risk,
NLB Group
NLB
the tolerance is low, while the activities are geared towards
Fiduciary activities (note 4.3.b)
Settlement and other services
Total
2021
11,385
1,567
12,952
2020
9,812
925
10,737
2021
8,911
1,552
10,463
2020
8,494
864
9,358
6. Risk management
Risk management in NLB Group is implemented in accordance
with the set strategic guidelines, established internal policies,
and procedures which take into account European banking
regulations, the regulations adopted by the Bank of Slovenia,
the current EBA guidelines, and relevant good banking
practices. In addition, the Group is constantly enhancing and
complementing the existing approaches, methodologies, and
processes in all risk management segments with the aim to
proactively support decision-making.
Managing risks and capital efficiently is crucial for NLB
Group sustained long-term profitable operations. Robust Risk
Management framework is comprehensively integrated into
decision-making, steering, and mitigation processes within the
Group. NLB Group gives high importance to the risk culture and
awareness of all relevant risks within the entire Group.
NLB Group’s Risk management framework supports
business decision-making on strategic and operating levels,
comprehensive steering, proactive risk management, and
mitigation by incorporating:
• risk appetite statement and risk strategy orientations;
• yearly review of strategic business goals, budgeting, and
capital planning process;
• internal capital adequacy assessment process (ICAAP) and
internal liquidity adequacy assessment process (ILAAP);
• recovery plan activities;
Risk management function acts as a second line of defence.
Set governance and different risk management tools enable
adequate oversight of the Group’s risk profile. Moreover,
they support business operations and enable efficient risk
management by incorporating escalation procedures and
different mitigation measures when necessary.
a) Risk management strategies and processes
The key goal of NLB Group’s Risk Management is to
proactively manage, assess, and monitor risks within the
Group. Sound and holistic understanding of risk management
is embedded into the entire organisation, focusing on risk
identification at a very early stage, efficient risk management,
and mitigation of them with the aim of ensuring the prudent
use of its capital and adequate liquidity structure to support
the financial resilience of the Group.
Key strategic risk management principles of NLB Group are
defined by its Risk Appetite and Risk Strategy, designed in
accordance with the Group’s business model, integrating
forward-looking perspective. The Strategy of NLB Group,
the Risk Appetite, Risk Strategy, and the key internal policies
of NLB Group – which are approved by the Management
and Supervisory Boards – specify the strategic goals, risk
appetite guidelines, approaches, and methodologies for
monitoring, measuring, and managing all types of risk
in order to meet internal strategic objectives and fulfil all
external requirements. The main strategic risk guidelines are
comprehensively integrated into decision-making, including
• other internal stress-testing capabilities, early warning
the business plan review and budgeting process.
systems, and regular risk analysis;
• regulatory and internal management reporting.
NLB Group uses the ‘three lines of defence framework’ as an
important element of its internal governance, whereby the
NLB Group plans a prudent risk profile and optimal capital
usage, representing an important element of its business
strategy and related mid-term financial targets. The
management of credit risk, which is the most important risk
ensuring an adequate liquidity position on an ongoing basis.
The Group limited exposure to credit spread risk, arising
from the valuation risk of debt securities portfolio servicing
as liquidity reserves, to moderate level. The fundamental
orientation in the management of interest rate risk is to
limit unexpected negative effects on revenues and capital,
therefore, a moderate tolerance for this risk is stated. When
assuming operational risk, the Group pursues the orientation
that such a risk must not significantly impact its operations.
On this basis, changes of control activities, processes, and/
or organisation are performed. Besides the Group also
focuses on proactive mitigation, prevention, and minimisation
of potential damage. The conclusion of transactions with
derivative financial instruments at NLB is primarily limited to
servicing customers and hedging Bank’s own positions. In
the area of currency risk, NLB Group pursues the goals of low
to moderate exposure. The tolerance for other risk types is
low and focuses on minimising their possible impacts on NLB
Group’s entire operations.
Environmental, social, and governance (ESG) risks do not
represent a new risk category, but rather an aggravating
factor for the types of risks, not least credit and operational
risk. The Group integrates and manages them within the
established risk management framework. The management
of ESG risks follows ECB and EBA guidelines with the
tendency to comprehensively integrate them into all relevant
processes. The availability of ESG data in the region where
NLB Group operates is still lacking. Nevertheless, the Group
strives to obtain relevant clients’ data as prerequisite for
adequate decision-making and the corresponding proactive
management of ESG risks.
Risk management focuses on managing and mitigating risks
in line with the Group’s Risk Appetite and Risk Strategy. Within
these frameworks, the Group monitors a range of risk metrics,
including internal capital allocation, in order to assure Group’s
risk profile is in line with its risk appetite. The usage of risk
limits and potential deviations from limits and target values
are regularly reported to the respective committees and/or
the Management Board of the Bank. The banking subsidiaries
within NLB Group adapted a corresponding approach to
monitor and manage their target risk profiles.
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NLB Group established a comprehensive stress-testing framework
NLB Group established three lines of a defence framework
their decision, following which the Credit Committee of NLB
and other early warning systems in different risk areas with the
with the aim of managing risks effectively. The three lines of
gives their opinion. The resolution of the Credit Committee
intention to strengthen the existing internal controls and timely
defence concept provides a clear division of activities and
of NLB is made on the basis of all available documentation,
response when necessary. Robust and uniform stress-testing
defines roles and responsibilities for risk management at
including a non-binding rating opinion prepared by the
programme includes all material types of risk and relevant stress
different levels within the Group. Risk management in the
underwriting department of NLB. This same principle and
scenario analysis, according to the vulnerability of the Group’s
Group acts as a second line of defence, accountable for
process is set also for the issuing of credit exposures for the
business model. In 2021, the Group established own ESG stress
appropriate managing, assessing, monitoring, and reporting
materially important clients of NLB Group.
testing concept to identify most relevant financial vulnerabilities
of risks in the Bank as the main entity in Slovenia, and as the
stemming from climate risk. Stress-testing is integrated into the risk
competence centre in charge of seven banking members and
Risk monitoring in NLB Group members is operating within
appetite, ICAAP, ILAAP, Recovery Plan, and budgeting process to
other non-core subsidiaries which are in a controlled wind-
an independent and/or separate organisational unit. This
support proactive management of the Group’s risk profile, namely
out.
the capital and liquidity positions in a forward-looking perspective.
way, monitoring of risks is established based on standardised
and systemic risk management approaches. This monitoring
In addition, the Group also performs reverse stress tests with
Overall, the organisation and delineation of competencies
enables a comprehensive overview of the Group’s and of each
the aim to test its maximum recovery capacity. Other partial risk
in NLB Group’s risk management structure is designed
member’s statement of financial position. In compliance with
assessments are covered by other risk analysis, based on relevant
to prevent conflicts of interest and ensure a transparent
the risk appetite, risk management strategy and policies of
risk parameters, and integrated into the process of setting a risk
and documented decision-making process, subject to an
NLB Group, risk monitoring in each NLB Group member is
management limit system.
appropriate upward and downward flow of information.
separated from its management and/or business function to
Risk management in NLB Group is managed within the
maintain the objectivity required when assessing business
For the purpose of an efficient risk mitigation process,
Risk management competence line, which is a specialised
decisions. The organisational unit for managing risks directly
NLB Group applies a single set of standards to retail and
competence line encompassing several professional areas
reports to the Management Board and its committees (Credit
corporate loan collateral, representing a secondary source
for which the Global Risk Department, the Credit Risk –
Committee, ALCO and the Operational Risk Committee), which
of repayment with the aim of efficient credit risk management
Corporate Department, the Credit Risk – Retail Department
report to the Supervisory Board (the Risk Committee of the
and optimal capital consumption. The Group has a system
and the Evaluation and Control Department are responsible
Supervisory Board or Board of Directors).
for monitoring and reporting collateral at fair (market) value
within NLB, and which reports to the Assets and Liabilities
in accordance with the International Valuation Standards
Committee (ALCO) of the Management Board and the Risk
(IVS). The eligibility of collateral, by types and ratios referring
Committee of the Supervisory Board. The risk management
c) Risk measurement and reporting systems
As a systemic banking group, NLB Group is subject to the
to prudent lending criteria, is set within internal lending
competence line is in charge of formulating and controlling
Single Supervisory Mechanism (SSM), which is supervised
guidelines. Credit risk mitigation principles and rules in NLB
the risk management policies of NLB Group, setting limits,
by the Joint Supervisory Team (JST) of the ECB and the
Group are described in more relevant details in the section
establishing methodologies, overseeing the harmonisation of
Bank of Slovenia. The Group member complies with the ECB
‘Credit risk management.’ When hedging market risks, namely
risk management policies within the NLB Group, monitoring
regulation, while NLB Group subsidiaries operating outside
interest rate risk and foreign exchange risk, in line with the set
NLB Group’s risk exposures, and preparing external and
Slovenia are also compliant with the rules set by the local
risk appetite, NLB Group follows the principle of natural hedge
internal reports.
or using derivatives in line with hedge accounting principles.
regulators. A third-party equivalent was approved in Serbia,
Bosnia and Herzegovina, and North Macedonia, resulting in
b) Risk management structure and organisation
NLB Group’s corporate governance framework is based
statements of NLB Group, report their exposure to risks to the
capital adequacy, based on the provisions of the Directive
competent organisational units within the Risk management
(CRD), Decision (CRR), NLB Group applies a standardised
on the principles of sound and responsible governance, in
competence line. These organisational units then report
approach to credit and market risk, and the basic approach
accordance with the applicable legislation of the Republic
all relevant risk information to the Assets and Liabilities
(a simplified approach with less data granularity) to
of Slovenia, particularly the provisions of the Companies Act
Committee (ALCO) of the Management Board and the Risk
operational risks, with the exception of NLB which applies the
All members of NLB Group that are included in the financial
alignment of local regulation with CRR rules. With regards to
(ZGD-1) and the Banking Act (ZBan-3), Regulation on Internal
Committee of the Supervisory Board, which is where the
standardised approach.
Governance Arrangements, the Management Body, and the
Management Board and the Supervisory Board, adopt
Internal Capital Adequacy Assessment Process for Banks and
appropriate measures.
Savings Banks, the EBA Guidelines on internal governance,
Across the Group, risks are assessed, monitored, managed,
or mitigated in a uniform manner, as defined in the Group’s
the EBA Guidelines on the assessment of the suitability of
The credit ratings of clients that are materially important
Risk management standards, considering also the specifics
members of the management body, and key function holders,
to NLB Group and the issuing of credit risk opinions are
of the markets in which individual NLB Group members
as well as the EBA Guidelines on remuneration practices.
centralised via the Credit Committee of NLB. The process
operate. For the purposes of measuring exposure to credit
Several layers of management provide cohesive risk
follows the co-decision principle, in which the credit
risk, liquidity risk, interest rate, and credit spread risk in
management governance in NLB Group.
committee of the respective Group member first approves
the banking book, operational risk, market risk, and non-
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financial risks, in addition to the prescribed regulations, NLB
The NLB Group gives special focus on the inclusion of risk
liabilities to NLB Group. For that reason, it proactively and
Group uses internal methodologies and approaches that
analysis into the decision-making process on strategic and
comprehensively monitors and assesses the aforementioned
enable more detailed monitoring and management of risks.
operating levels, diversification in order to avoid a large
risk. In that process, NLB Group follows the International
These internal methodologies are aligned with ECB, EBA,
concentration, optimal usage of internal capital, appropriate
Financial Reporting Standards, regulations issued by the
and Basel guidelines, as well as best practices in banking
risk-adjusted pricing, regular education/trainings at all levels
European Central Bank or Bank of Slovenia, and the EBA
methodologies.
of management, and the assurance of overall compliance with
guidelines. This area is governed in greater detail by the
internal policies/rules and relevant regulations.
internal methodologies and procedures set out in internal
As for risk reporting, NLB Group’s internal guidelines reflect,
acts.
in addition to internal requirements, the substance and
COVID-19 did not have a meaningful impact on the quality of
frequency of reporting required by the Bank of Slovenia
the credit portfolio. NLB Group is compliant with EBA guidelines
Through regular reviews of the business practices and the
and the ECB. In addition, each member of NLB Group also
on payment moratoria and is very prudent in identifying any
credit portfolios of NLB entities, NLB ensures that the credit
complies with the requirements of its local regulations.
increase in credit risk. The vast schemes introduced by the
risk management of those entities function in accordance
Risk reporting is carried out in the form of standardised
governments in the Group countries providing moratoriums
with NLB Group’s risk management standards to enable
reports, pursuant to risk management policies based on
to eligible clients as part of the COVID-19 pandemic measures
meaningfully uniform procedures at the consolidated level.
common methodologies for measuring exposure to risks,
had been phasing out during the 2021. Though COVID-19
uniform database structure within Data Warehouse (DWH),
coupled with its implications on the business environment the
NLB Group manages credit risk at two levels:
comprehensive data quality assurance, and automated
Group faced growing excess liquidity and managed to stay well
• At the level of the individual customer/group of customers
report preparation, which ensures the quality of reports and
capitalised. Besides, the Group has taken necessary measures
appropriate procedures are followed in various phases of
reduces the possibility of errors.
to protect its customers and employees by ensuring the relevant
the relationship with a customer prior to, during, and after
d) Data and IT system
Risk data are calculated and stored in NLB Group DWH,
safety conditions and making sure that the services offered by
the conclusion of an agreement. Prior to concluding an
the Group are provided without any disruption.
agreement, a customer’s performance, financial position,
and past cooperation with NLB are assessed. To objectively
collected from NLB and other Group member’s DWH. The
NLB Group is engaged in contributing to sustainable finance
assess a client’s operation, internal scoring models for
established process provides an integrated information
by incorporating environmental, social, and governance
particular client segments or product types have been
in common reference structure where business users can
(ESG) risks into its business strategies, risk management
developed. It is also important to secure high-quality
access in a consistent and subject-oriented format. Data are
framework, and internal governance arrangements. With the
collateral even though it does not affect a customer’s credit
regularly checked and validated. Data used for internal risk
adoption of the NLB Group Sustainability programme, NLB
rating. This is followed by various forms of monitoring
assessment, management, and reporting are the same as
Group implemented sustainability elements into its business
a customer, in particular an assessment of its ability to
data which NLB Group uses for regulatory reporting.
model. Thus, sustainable finance integrates ESG criteria into
generate sufficient cash flows for the regular settlement of
e) Main emphasis of risk management in 2021
Efficient managing of risks and capital remains crucial
the Group’s business and investment decisions for the lasting
its liabilities and contractual obligations. In this part of the
benefit of the Group’s clients and society. The NLB Group
credit process, regular monitoring of clients within the Early
Sustainability Committee oversees the integration of the ESG
Warning System (EWS) is important. In the case of client
for NLB Group to sustain long-term profitable operations.
factors to the NLB Group business model. The management
default, restructuring or work-out is initiated depending on
The Group further enhanced the robustness of its risk
of ESG risks addresses the NLB Group’s overall credit
the severity of the client’s position.
management system in all respective risk categories in
approval process and related credit portfolio management.
order to manage them proactively, comprehensively,
It follows ECB and EBA guidelines with a tendency of their
• The quality and trends in the credit portfolio, including
and prudently. Risk identification in a very early stage,
comprehensive integration into all relevant processes. The
on-balance and off-balance sheet exposures, are actively
its efficient managing, and the corresponding mitigation
availability of ESG data in the region where NLB Group
monitored and analysed at the level of the overall portfolio
processes represent essential steps in such a system. The
operates is still lacking, nevertheless, the NLB Group strives
of NLB Group and single banking entities.
business and operating environment relevant for NLB Group
to obtain relevant clients’ data as prerequisite for adequate
operations is changing with trends, such as: changing
decision-making. In addition, the NLB Group carefully
Comprehensive analyses are regularly performed to assure
customer behaviours, emerging new technologies and
considers potential reputation and liability risks which could
monitoring of the portfolio quality through time and to
competitors, sustainable financing, actively contributing to
arise from sustainable financing of its clients.
identify any breach of limits or targets. Great emphasis is
a more balanced and inclusive economic and social system,
and increasing new regulatory requirements. Respectfully,
the risk management framework is regularly adapted
with the aim of detecting and managing new potential
6.1. Credit risk management
a) Introduction
In its operations, NLB Group is exposed to credit risk, or
placed on the evolution of portfolio structure in terms of client
segmentation, credit rating structure, structure by stages
(based on IFRS 9), and NPL ratios. Furthermore, the coverage
of NPL is an important indicator of potential future losses that
emerging risks.
the risk of losses due to the failure of a debtor to settle its
is closely monitored.
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Apart from analysing the portfolio as a whole, vintage
of default (PD) and loss given default (LGD), which are
range of advanced approaches supported by mathematical
analysis is used to monitor the quality of new loans production
calculated using historic data and statistical modelling, as
and statistical models in credit risk assessment in line with
and test the conservativity of the lending standards, which
well as predicted macroeconomic parameters for different
best banking practises, while at the same time enabling faster
should ensure the portfolio quality is maintained within the
scenarios. For off-balance financial assets, the probability of
responsiveness towards clients.
Group Risk Appetite.
the redemption of guarantees is considered when creating
collective provisions. The models used to estimate future risk
Lending growth in the corporate segment remained relatively
Apart from default risk, the portfolio management is
parameters are validated and back-tested on a regular basis
moderate, while the SME and retail segment experienced a
also focused on monitoring single name and industry
to make loss estimations as realistic as possible.
considerable growth in 2021 after a temporary slowdown in
concentration, migration, and FX lending risk. Increasing
2020 due to COVID-19 circumstances. After the acquisition
emphasis is also placed on stress tests that forecast the
The management of ESG risks addresses the Group’s
of Komercijalna banka as at 30 December 2020, the Bank
effects of negative macroeconomic movements on the
overall credit approval process and related credit portfolio
worked actively on harmonisation of risk management
portfolio, on the level of impairments and provisions, and on
management. Sustainable financing is implemented through
methodologies with the NLB Group. Credit portfolio remains
capital adequacy. Capital requirements for credit risk at NLB
amended documentary framework:
well-diversified, there is no large concentration in any specific
Group level within the first pillar are calculated according to
• Lending Policy for Non-Financial Companies in NLB d.d. and
industry or client segment. The share of retail portfolio in the
the Standardised approach, while within the second pillar an
NLB Group where in special Chapter Environmental and
whole credit portfolio is quite substantial with still prevailing
internal IRB approach is used to estimate the RWA for default,
Social Framework three categories are defined (prohibited,
segment of mortgage loans.
migration, and FX lending risk. In addition, a single name
restricted, normal activities)
concentration add-on is based on the Granularity adjustment
• Policy Environmental and Social Transaction Framework in
COVID-19 did not have a meaningful impact on the quality
methodology and an industry concentration add-on is
NLB d.d. and NLB Group applies to certain transactions with
of the credit portfolio. The vast schemes introduced by the
estimated based on the HHI concentration indexes.
greatest potential for significant E&S impact (exclusion list,
governments in the Group countries providing moratoriums
regulatory compliance check, category A list).
to eligible clients as part of the COVID-19 pandemic measures
NLB and other NLB Group members assess the level of credit
• Methodology Environmental and Social Transaction
had been phasing out during the 2021.
risk losses on an individual basis for material claims, and at
Categorisation Methodology Framework in NLB d.d. and
the collective level for the rest of the portfolio.
NLB Group that provides a guide to the typical level of
In addition to moratoria, the governments in Serbia and
inherent environmental and social risk according to NACE
Slovenia provided public guarantee schemes for new
An individual review is performed for material Stage 3
codes.
financial assets which have been rated as non-performing
financing of clients whose business has been materially
impacted due to the COVID-19 pandemic; none of the
based on the information regarding significant financial
Beside addressing ESG risks in all relevant stages of the
guarantees have been exercised.
problems encountered by a customer, regarding actual
credit-granting process relevant ESG criteria were considered
breaches of contractual obligations such as arrears in
also in the collateral evaluation process. On portfolio level the
In 2021, the Group’s credit portfolio quality remained solid
the settlement of liabilities, whether financial assets will
Group does not face any large concentration towards specific
with a stable rating structure and diversified portfolio. Great
be restructured for economic or legal reasons, and the
NACE industrial sectors exposed to climate risk, whereby the
emphasis was placed on intensive and proactive handling
likelihood that a customer will enter bankruptcy or a financial
role of transitional risk is more prevailing. The availability
of problematic customers and early warning system for
reorganisation. Expected future cash flows (from ordinary
of ESG data in the region where NLB Group operates is still
detecting increased credit risk at a very early stage. The
operations and possible redemption of collateral) are
lacking, nevertheless the Group strives to obtain relevant
stock of NPE volume decreased, as a result of active workout
assessed following an individual review. If their discounted
clients’ data as prerequisite for adequate decision-making.
management. As at 31 December 2021, the share of non-
value differs from the book value of the financial asset in
question, impairment must be recognised.
b) Main emphasis in 2021
In the process of constantly complementing and enhancing
1.7% (2.8% at the end of 2020). Moreover, the coverage ratio
remains high at 57.9%, which is well above the EU average
performing exposure by EBA methodology in NLB Group was
Collective ECL allowances are made for the remainder of
credit risk management, NLB Group focuses on taking
published by the EBA (45.1% in 3Q 2021).
the portfolio, which is not assessed on an individual basis.
moderate risks, and at the same time ensuring an optimal
Based on IFRS 9 requirements, financial assets measured at
return considering the risks assumed. Preserving high credit
amortised cost or at fair value through other comprehensive
portfolio quality represents the most important key aim,
income are attributed to the appropriate stage based on the
with a focus on the quality of new placements leading to
estimated increase of credit risk of a single exposure since
a diversified portfolio of customers. The Group is actively
initial recognition. The stage of financial assets determines
present on the market in the region, financing existing and
whether a 12-month or lifetime ECL must be considered. The
new creditworthy clients. To further enhance existing risk
ECL calculation is based on the forward-looking probability
management tools, the Group is constantly developing a wide
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c) Maximum exposure to credit risk
Cash. cash balances at central banks.
and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily
at fair value through profit or loss
Financial assets at fair value through
other comprehensive income
Financial assets at amortised cost
Debt securities
Loans to governments
Loans to banks
Loans to financial organisations
Loans to individuals
Loans to other customers
Other financial assets
Derivatives - hedge accounting
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
5,005,052
3,961,812
3,250,437
2,261,533
7,678
4,261
84,855
27,233
7,682
7,888
18,831
30.935
3,395,261
3,446,491
1,541,042
1,671,204
1,717,626
281,010
140,683
141,709
5,519,290
4,645,112
122,229
568
1,503,087
1,436,424
1,277,880
368,400
197,005
158,871
4,933,093
4,159,496
113,138
-
143,864
199,287
226,144
2,656,935
2,118,210
92,404
568
170,742
158,320
177,198
2,377,770
1,838,468
54,503
-
Total net financial assets
20,980,479
18,953,481
11,680,885
10,037,384
Guarantees
Financial guarantees
Non-financial guarantees
Loan commitments
Other potential liabilities
1,236,734
533,633
703,101
1,878,988
48,782
1,126,442
479,096
647,346
1,816,441
32,087
727,101
289,935
437,166
1,259,489
2,987
689,668
258,003
431,665
1,306,791
8,121
Total contingent liabilities
3,164,504
2,974,970
1,989,577
2,004,580
Total maximum exposure to credit risk
24,144,983
21,928,451
13,670,462
12,041,964
Maximum exposure to credit risk is a presentation of NLB
their net book value as reported in the statement of financial
Group’s exposure to credit risk separately by individual types
position, and for off-balance sheet items in the amount of their
of financial assets and contingent liabilities. Exposures stated
nominal value.
in the above table are shown for the balance sheet items in
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d) Collateral from financial assets that are credit-impaired
31 Dec 2021
NLB Group
in EUR thousands
Financial assets at amortised cost
Loans to individuals
Loans to other customers
Other financial assets
Total
Fully/over collateralised financial assets
Financial assets not or not fully covered
with collateral
Net value of
financial assets
Fair value of
collateral
Net value of
financial assets
Fair value of
collateral
32,372
79,120
127
111,619
122,205
446,308
6,661
575,174
18,718
23,364
2,098
44,180
7,645
23,694
32
31,371
31 Dec 2020
NLB Group
in EUR thousands
Financial assets at amortised cost
Loans to individuals
Loans to other customers
Other financial assets
Total
Fully/over collateralised financial assets
Financial assets not or not fully covered
with collateral
Net value of
financial assets
Fair value of
collateral
Net value of
financial assets
Fair value of
collateral
33,375
78,426
149
111,950
132,532
532,990
2,338
667,860
20,822
45,161
1,478
67,461
5,922
55,545
89
61,556
31 Dec 2021
NLB
in EUR thousands
Financial assets at amortised cost
Loans to individuals
Loans to other customers
Other financial assets
Total
Fully/over collateralised financial assets
Financial assets not or not fully covered
with collateral
Net value of
financial assets
Fair value of
collateral
Net value of
financial assets
Fair value of
collateral
17,785
21,490
6
39,281
49,518
117,862
408
167,788
8,114
4,037
22
12,173
3,924
4,478
5
8,407
31 Dec 2020
NLB
in EUR thousands
Financial assets at amortised cost
Loans to individuals
Loans to other customers
Other financial assets
Total
Fully/over collateralised financial assets
Net value of
financial assets
Fair value of collateral
Financial assets not or not fully covered
with collateral
Net value of
financial assets
Fair value of collateral
17,359
30,058
7
47,424
45,756
116,073
448
162,277
11,431
6,081
70
17,582
2,672
20,757
44
23,473
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e) Collateral from loans mandatorily at fair value through profit or loss
in EUR thousands
NLB Group
Fully/over collateralised loans
31 Dec 2021
31 Dec 2020
Net value of
loans
Fair value of
collateral
Net value of
loans
Fair value of
collateral
Loans mandatorily at fair value through profit or loss
-
-
25,076
47,725
f) Credit protection policy
NLB Group applies a single set of standards to retail and
corporate loan collateral, as developed by NLB Group
members in accordance with regulatory requirements. The
master document regulating loan collateral in the NLB Group
is the Loan Collateral Policy in NLB d.d. and NLB Group. The
Policy has been adopted by the Management Board of NLB
Group. The Policy represents the basic principles that NLB
Group’s employees must take into account when signing,
evaluating, monitoring, and reporting collateral, with the aim
of reducing credit risk.
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NLB
repay the contractual obligations.
In line with the policy, the primary source of loan repayment
is the debtor’s solvency, and the accepted collateral is a
in EUR thousands
secondary source of repayment in case the debtor ceases to
Loans mandatorily at fair value through profit or loss
4,198
4,500
3,690
2,050
Fully/over collateralised loans
Loans not or not fully covered with
collateral
Net value of
loans
Fair value of
collateral
Net value of
loans
Fair value of
collateral
NLB Group primarily accepts collateral complying with
the Basel II requirements with the aim of improving credit
risk management and consuming capital economically. In
accordance with Basel II, collateral may consist of pledged
deposits, government guarantees, bank guarantees, debt
securities issued by central governments and central banks,
bank debt securities, and real-estate mortgages (the real
in EUR thousands
estate must be, beside other criteria, located in the European
31 Dec 2020
NLB
Loans mandatorily at fair value through profit or loss
22,989
43,620
7,946
1,787
Fully/over collateralised loans
Loans not or not fully covered with
collateral
Net value of
loans
Fair value of
collateral
Net value of
loans
Fair value of
collateral
Economic Area or in country recognised in EBA’s third party
equivalent list for the effect on capital to be recognised).
Loans made to companies and sole proprietors may be
secured by other forms of collateral, as well (e.g., a lien on
movable property, a pledge of an equity stake, investment
coupons, collateral by pledged/assigned receivables, etc.) if it
is assessed that the collateral could generate a cash flow if it
were needed as a secondary source of payment. If there is of
a lower probability that this type of collateral would generate
a cash flow, NLB Group takes a conservative approach and
accepts the collateral while reporting its value as zero.
g) The processes for valuing collateral
In compliance with relevant regulations, NLB Group has
established a system for monitoring and reporting collateral
at fair (market) value.
The market value of real estate used as collateral is obtained
from valuation reports of licensed appraisers. The market
value of movable property is obtained from valuation reports
of licensed appraisers or from sales agreements. Both,
valuation reports and sales agreements must not be older
than one year. In NLB and members of NLB Group, most
Contents
282
reports of external real estate appraisers are controlled.
exposures, real-estate evaluations must also be reviewed by
a storeyed property intended for living in or performing
Controls are performed by internal appraisers. The subject of
an internal licensed appraiser with knowledge of the local
a business activity, such as land in the area foreseen for
control is the content, value, scope, and format of the report,
real-estate market. If the appraisal does not correspond to the
construction, apartments, residential buildings, garages
its compliance with international valuation standards, and
international valuation standards or if the value adjustment is
and holiday homes, business premises, industrial buildings,
the estimated value. If they notice deviations, they estimate
greater than certain limit, the appraisal is rejected as inadequate.
offices, shops, hotels, branches and warehouses, forests,
needed correction of the value of the external valuation (in
parking spaces, etc. Objects can be completed or under
%) and correct the value of the external valuation. The value
When assuring collateral, NLB Group follows the internal
construction. Priority is given to property where the pledge
adjustment can only be negative and can be applied only in
regulations which define the minimum security or pledge
right of the Bank is entered in the first place and real estate
a limited range. For the purposes of business decisions and
ratios. NLB Group strives to obtain collateral with a higher
is already owned by the debtor and/or the pledger. For real
the calculation of the necessary impairments and provisions,
value than the underlying exposure (depending on the
estate, there must be a market, and it must be redeemable
additional deductions (haircuts) are applied to the eventual
borrower’s rating, loan maturity, etc.) with the aim of reducing
within a reasonable time;
adjusted market value, depending on the type of collateral.
negative consequences resulting from any major swings
• Collateral in the form of movable property: priority is given
These haircuts for purpose of liquidation value are for real
in market prices of the assets used as collateral. If real
to the types of movable property, that are highly likely to be
estate in the range of 30 to 70%, depending on the type of real
estate, movable property, and financial instruments serve
sold in the event of execution, and the funds received are
estate and location, and for movables they range between 50
as collateral, NLB Group’s lien on such assets should be top
used to repay the collateralised claims (their market value
and 100%, depending on the type of movable.
ranking. Exceptionally, where the value of the mortgaged real
must be estimated with considerable reliability). Among the
estate is large enough, the lien can have a different priority
appropriate types of movable property, the Bank includes
The market value of financial instruments held by NLB Group
order.
is obtained from the organised market – such as the stock
motor vehicles, agricultural machinery, construction
machinery, production lines and series-produced machines,
exchange, for listed financial instruments or determined
NLB Group monitors the value of collateral during the loan
and some custom-made production machines;
in accordance with the internal methodology for unlisted
repayment period in accordance with the mandatory periods
• Collateral by a pledge of financial assets (Bank deposits or
financial instruments (such collateral is used exceptionally
and internal instructions. For example, the value of collateral
cash-like instruments, debt securities of different issuers,
and on a small scale in loans granted to companies and sole
using mortgaged real estate is monitored annually by either
investment fund units, equity securities, or convertible
proprietors).
preparing individual assessments or using the internal
bonds):
methodology for preparing an own value appraisal of real
NLB has compiled a reference list of licensed real estate
estate (which applies to Republic of Slovenia, and partly, for
• Cash receivable collateral: bank deposits and savings with
appraisers for real estate. All appraisals must be made for
the housing segment to Serbia, Montenegro, and Bosnia and
Bank are appropriate in domestic and foreign currency;
the purpose of secured lending and in accordance with
Herzegovina) based on public records and indexes of real-
• Debt securities: shares and bonds which, according to the
the international valuation standards (IVS, EVS, and RICS).
estate value published by the relevant government authorities
Bank’s assessment, are suitable for securing investments
Appraisals related to retail loans are generally ordered only
(the Surveying and Mapping Authority in the Republic
and are traded on a regulated market (marketable
from appraisers with whom the NLB has a contract for real-
of Slovenia). The value of pledged movable property is
securities of higher-quality Slovenian and foreign issuers);
estate valuations. For corporate loans, appraisals are usually
monitored once a year (in NLB automated, with a straight-line
• The pledge of investment coupons of mutual funds
submitted by clients. If a client submits an appraisal that is
depreciation over the period of the remaining useful life).
managed by management companies (a priority company
not made by an appraiser included on the NLB’s reference
list, the NLB’s expert department which employs certified real
estate appraisers in construction with licences granted by the
h) The main types of collateral taken by the NLB Group
NLB Group accepts different forms of material and personal
NLB Skladi) and are, according to the Bank’s assessment,
suitable for insurance of investments.
Slovenian Ministry of Justice, and certified real-estate value
security as loan collateral.
• A pledge of an equity stake: non-marketable capital shares
appraisers with licences granted by the Slovenian Institute of
with a credit rating of at least B are adequate;
Auditors, will verify the appraisal. The expert department is
Material loan collateral gives the right in the case of a debtor
• A pledge or assignment of receivables as collateral: cash
also responsible for reviewing valuations of real estate serving
(borrower) defaulting on their contractual obligations to sell
receivables must have longer maturities than the maturity of
as collateral for large loans.
a specific property to recover claims, keep specific non-cash
the investment and they must not be due and not be paid;
Other NLB Group members obtain valuations from in-house
against the counterparty’s debt to the Bank.
policies pledged to NLB): The Bank accepts products of
appraisers and outsourced appraisers, all possessing the
Vita, life insurance company d.d. Ljubljana – a pledge of an
necessary licences. NLB Group has compiled a reference list
NLB Group accepts the following material types of loan
investment life insurance policy and a life insurance policy
of appraisers for valuations of real estate located outside the
collateral:
with a guaranteed return that includes saving, in addition to
property or cash, or reduce or offset the amount of exposure
• Other material forms of loan collateral (e.g., life insurance
Republic of Slovenia. Appraisals must be made in accordance
• Collateral in the form of business and residential real
insurance.
with the international valuation standards, and for larger
estate: land, buildings, and individual parts of buildings in
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Personal loan collateral is a method for reducing credit risk
collateral. However, collateral is an important comfort element
includes the amount of the guarantees received in the
whereby a third party undertakes to pay the debt in case of
in the approval process and, depending on the credit rating
exposure of the guarantor, and guarantees are only taken into
the primary debtor (borrower) defaulting.
of the client, a prerequisite. NLB Group has prescribed the
account as collateral if the guarantor has sufficient overall
NLB Group accepts the following types of personal loan
amount, depending on the type of collateral, loan maturity
collateral:
and the client rating. The ratios are based on experience and
The Business Rules – Collateral for Retail and Corporate
• Joint and several guarantees by retail and corporate
regulatory guidelines.
clients: for the collateralisation of private individuals’ loans,
Loans regulate which forms of collateral are acceptable, and
which preconditions a type of collateral needs to fulfil to be
employees, or pensioners are adequate guarantors. They
NLB Group pays particular attention to closely monitoring
able to be considered.
minimum ratios between the value of collateral and the loan
creditworthiness.
must not be in the process of personal bankruptcy. They are
the fair value of collateral, and to receiving regular and
responsible for fulfilling the debtor’s obligations for loans
independent revaluations by applying the International
with a repayment period not exceeding 60 months. For the
Valuation Standards. Through a detailed examination of all
collateralisation of legal entities investments, legal entities,
collateral received, NLB has ensured that only collateral from
individuals, or private individuals are adequate guarantors.
which payment can be realistically expected if it is liquidated,
• Bank guarantees;
is considered.
• Government guarantees (e.g., of the Republic of Slovenia);
• Guarantees by national and regional development agencies
NLB Group has the largest concentration of collaterals arising
with which the Bank has a contract on the acceptance of
from mortgages on real estate, which is a relatively reliable
guarantees (e.g. Slovene Enterprise Fund);
and quality type of collateral. Due to the possible decrease
• Other types of personal loan collateral.
of real estate market prices, the Bank closely monitors the
real-estate collateral values and, where required, establishes
Loans are very often secured by a combination of collateral
higher amounts of impairments and provisions for non-
types. The general recommendations on loan collateral are
performing loans secured by real estate, based on estimated
specified in the internal instructions and include the elements
discounts of the real-estate value, which are expected to be
specified below. The decision on the type of collateral and
achieved in a sale (expected payment from collateral). Priority
the coverage of loan by collateral depends on the client’s
is given to property where the pledge right of the Bank is
creditworthiness (credit rating), loan maturity, and varies
entered in the first place and the real estate is already owned
depending on whether the loan is granted to retail or a
by the debtor and/or the pledger. For real estate, there must
corporate client.
be a market, and it must be redeemable within a reasonable
NLB has also created, in the area of real-estate loan collateral,
time.
an ‘online’ connection with the Surveying and Mapping
Collateral consisting of securities entails market risk,
Authority in the Republic of Slovenia, which allows direct and
specifically the risk of changes in the prices of securities on
immediate verification of the existence of property.
capital markets. To limit such risks and restrict the possibility
of the value of instruments received as collateral falling below
NLB Group strives to ensure the best possible collateral for
approved limits, the Rules determine minimum pledge ratios
long-term loans, in particular mortgages where possible. As a
for securing loans based on pledged securities and equity
result, the mortgaging of real estate is the most frequent form
shares in NLB. Deviations from the Rules are subject to the
of loan collateral of corporate and retail clients. In corporate
prior approval of the respective decision bodies of the Bank.
exposures, the next most frequent forms of collateral are
The ratio between the loan amount and the securities’ value
government and corporate guarantees, while in retail loans, it
is determined regarding the securities’ liquidity, maturity,
is guarantors.
i) Risks, deriving from valuation of received collateral
Client/counterparty credit risk is the key decision parameter
correlation with changes in market indexes, i.e., by considering
the key features reflecting the level of volatility of market
prices, and the ability to sell the securities at the market price.
when approving exposures. Collateral is a secondary source
Collateral consisting of the sureties of corporate clients,
of repayment, and therefore decisions on approvals of
sureties of private individuals, and bank guarantees entail
exposures should not primarily be based on the provided
the credit risk of the provider of the collateral. NLB Group
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j) Credit quality analysis for financial assets and contingent liabilities
NLB Group
NLB
in EUR thousands
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
Lifetime ECL
credit-
impaired
Purchased
credit-impaired
financial assets
31 Dec 2021
Debt securities at amortised cost
A
B
C
Loss allowance
Carrying amount
Loans and advances to banks at amortised cost
A
B
Loss allowance
Carrying amount
Loans and advances to individuals
at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Loans and advances to other
customers at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Other financial assets at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Debt instruments at fair value through
other comprehensive income
A
B
C
D and E
Loss allowance
Contingent liabilities
A
B
C
D and E
Loss allowance
Carrying amount
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
Lifetime ECL
credit-
impaired
Purchased
credit-impaired
financial assets
1,218,597
495,114
-
(3,253)
1,710,458
89,499
51,382
(198)
140,683
5,305,833
60,891
5,827
-
(18,336)
5,354,215
1,172,770
3,333,087
124,628
-
(50,961)
4,579,524
92,430
26,908
319
-
(476)
119,181
1,587,032
1,809,069
-
-
(11,148)
1,405,533
1,574,401
48,037
-
(12,912)
3,015,059
-
-
7,220
(52)
7,168
-
-
-
-
46,972
23,933
49,330
-
(7,398)
112,837
59
198,824
213,301
-
(26,624)
385,560
37
128
694
-
(36)
823
-
-
184
-
(70)
6,451
67,514
23,571
-
(1,640)
95,896
-
-
-
-
-
-
-
-
-
-
-
-
125,297
(76,204)
49,093
-
-
-
209,229
(135,994)
73,235
-
-
-
6,703
(6,322)
381
-
-
-
798
(798)
-
-
-
24,565
(14,545)
10,020
-
-
-
-
-
-
-
-
-
249
16
293
2,430
157
3,145
3
26
17
30,079
(613)
29,512
-
-
-
1,236
608
1,844
-
-
-
-
-
38
11
18
14,366
(4,344)
10,089
Total
1,218,597
495,114
7,220
(3,305)
1,717,626
89,499
51,382
(198)
140,683
1,183,578
254,672
-
(1,826)
1,436,424
199,390
79
(182)
199,287
5,353,054
2,554,006
84,840
55,450
127,727
(101,781)
5,519,290
1,172,832
3,531,937
337,946
239,308
(214,192)
5,067,831
92,467
27,036
1,013
7,939
(6,226)
122,229
1,587,032
1,809,069
184
798
16,919
-
-
(3,503)
2,567,422
875,912
1,421,398
53,965
-
(10,101)
2,341,174
83,943
5,223
3,224
-
(62)
92,328
1,308,690
218,282
-
-
(12,016)
(2,203)
1,412,022
1,641,926
71,626
38,931
(33,441)
3,131,064
1,041,295
844,526
27,751
-
(3,909)
1,909,663
-
-
-
-
-
-
-
-
-
26,634
15,108
24,293
-
(2,421)
63,614
26
85,402
37,876
-
(1,787)
121,517
1
19
29
-
(1)
48
-
-
-
-
-
5,657
34,180
9,265
-
(141)
48,961
-
-
-
-
-
-
-
-
-
-
-
-
57,396
(31,497)
25,899
-
-
-
68,782
(46,272)
22,510
-
-
-
1,107
(1,084)
23
-
-
-
798
(798)
-
-
-
19,252
(12,469)
6,783
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,855
(838)
3,017
-
-
-
11
(6)
5
-
-
-
-
-
-
-
-
7,651
(4,041)
3,610
Total
1,183,578
254,672
-
(1,826)
1,436,424
199,390
79
(182)
199,287
2,580,640
32,027
24,293
57,396
(37,421)
2,656,935
875,938
1,506,800
91,841
72,637
(58,998)
2,488,218
83,944
5,242
3,253
1,118
(1,153)
92,404
1,308,690
218,282
-
798
(3,001)
1,046,952
878,706
37,016
26,903
(20,560)
1,969,017
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31 Dec 2020
Debt securities at amortised cost
A
B
Loss allowance
Carrying amount
Loans and advances to banks
at amortised cost
A
B
C
Loss allowance
Carrying amount
Loans and advances to individuals
at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Loans and advances to other
customers at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Other financial assets at amortised cost
A
B
C
D and E
Loss allowance
Carrying amount
Debt instruments at fair value through
other comprehensive income
A
B
D and E
Loss allowance
Contingent liabilities
A
B
C
D and E
Loss allowance
Carrying amount
in EUR thousands
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
Lifetime ECL
credit-
impaired
Purchased
credit-impaired
financial assets
Total
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
Lifetime ECL
credit-
impaired
Purchased
credit-impaired
financial assets
NLB Group
NLB
1,118,700
388,072
(3,685)
1,503,087
67,862
128,784
500
(141)
197,005
4,739,470
34,415
3,528
-
(25,044)
4,752,369
1,070,367
2,930,393
219,102
-
(49,475)
4,170,387
64,691
46,382
223
-
(276)
111,020
1,568,201
1,839,167
-
(8,656)
1,285,492
1,490,929
48,329
-
(15,796)
2,808,954
-
-
-
-
-
-
-
-
-
76,080
9,471
47,436
-
(8,151)
124,836
373
188,641
238,152
-
(32,682)
394,484
28
55
438
-
(30)
491
-
229
-
(28)
843
53,326
49,781
-
(2,767)
101,183
-
-
-
-
-
-
-
-
-
-
-
-
111,118
(61,305)
49,813
-
-
-
279,803
(194,298)
85,505
-
-
-
5,655
(5,243)
412
-
-
798
(798)
-
-
-
31,474
(18,554)
12,920
-
-
-
-
-
-
-
-
-
-
-
-
6,075
-
6,075
-
-
-
37,716
(1,325)
36,391
-
-
-
1,219
(4)
1,215
-
-
-
-
-
-
-
14,796
(5,057)
9,739
1,118,700
388,072
(3,685)
1,503,087
67,862
128,784
500
(141)
197,005
1,118,700
161,021
(1,841)
1,277,880
158,475
-
-
(155)
158,320
4,815,550
2,290,498
43,886
50,964
117,193
(94,500)
4,933,093
1,070,740
3,119,034
457,254
317,519
(277,780)
4,686,767
64,719
46,437
661
6,874
(5,553)
113,138
1,568,201
1,839,396
798
(9,482)
1,286,335
1,544,255
98,110
46,270
(42,174)
2,932,796
5,132
-
-
(8,973)
2,286,657
820,241
1,127,454
34,338
-
(16,664)
1,965,369
48,994
5,386
56
-
(73)
54,363
1,422,777
217,138
-
(2,343)
984,496
889,669
22,253
-
(7,510)
1,888,908
-
-
-
-
-
-
-
-
-
42,642
460
21,573
-
(2,351)
62,324
120
111,223
82,492
-
(8,936)
184,899
1
28
36
-
(2)
63
-
-
-
-
238
41,654
31,363
-
(732)
72,523
-
-
-
-
-
-
-
-
-
-
-
-
51,644
(22,855)
28,789
-
-
-
117,392
(82,274)
35,118
-
-
-
1,324
(1,251)
73
-
-
798
(798)
-
-
-
27,855
(16,493)
11,362
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,341
(1,319)
1,022
-
-
-
8
(4)
4
-
-
-
-
-
-
-
7,052
(3,808)
3,244
Total
1,118,700
161,021
(1,841)
1,277,880
158,475
-
-
(155)
158,320
2,333,140
5,592
21,573
51,644
(34,179)
2,377,770
820,361
1,238,677
116,830
119,733
(109,193)
2,186,408
48,995
5,414
92
1,332
(1,330)
54,503
1,422,777
217,138
798
(3,141)
984,734
931,323
53,616
34,907
(28,543)
1,976,037
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The NLB Group’s client credit rating classification is based
The Rating Group B classification is an investment grade for
is determined in absolute and relative terms (EUR 100 for
on an internally developed methodology, drawing from
BBB, and an ‘invest with care’ for BB and B.
retail and EUR 500 for non-retail segment and 1% of the total
internal statistical analyses, good banking practices, as well
on-balance exposure on the client level). At the same time, the
as Bank of Slovenia regulations, and ECB and EBA guidelines
Rating Group C (CCC to C rating classes) includes clients who
assessment of rating for private individuals was improved by
and requirements. The aligned rating methodology is used
are exposed to a higher and above-average level of credit
establishing a common rating on the client level.
across the entire NLB Group. It includes a uniform credit
risk. CCC rated clients are financed by the Bank only in the
grade scale of 12 rating classes, out of which nine represent
case when such support brings more positive effects for the
A standard corporate rating methodology, with the prescribed
performing clients and three non-performing clients.
Bank; however, the Rating Group C is overall considered as a
set of parameters (qualitative and quantitative) applies to all
substantial risk. The Bank reasonably restricts cooperation
the NLB Group bank entities. Groups of connected clients are
Rating Group A (AAA to A rating classes) includes the best
with such clients and decreases its exposure to them.
treated as materially important for the NLB Group whenever
clients with a low degree of default probability, characterised
exposure exceeds EUR 7 million or EUR 15 million for NLB Group
by high coverage of financial liabilities with free cash flow.
Rating Groups D (D and DF rating classes) and E represent
members with total assets greater than EUR 1 billion. Materially
The Rating Group A is considered as investment grade
non-performing clients that are treated as defaulted. D, DF,
important clients are submitted to the NLB Credit Committee.
classification.
and E rating classified clients are ordinarily transferred to the
specialised units for restructuring (which performs business
NLB regularly reviews the business practices and credit
Rating Group B (BBB to B rating classes) includes clients
and financial restructuring with a goal of minimising losses and
portfolios of NLB Group entities to make sure they are operating
with a low credit risk, starting one notch lower than ‘A’
restoring the client to a performing status) or workout and legal
in accordance with the minimum risk management standards
rating group clients. These clients show stable performance,
support (with the goal of minimising losses due to default).
of NLB Group. This ensures appropriate standard processes for
acceptable financial ratios, and qualitative elements, and
managing and reporting credit risks at the consolidated level.
have sufficient cash flow to settle their obligations, but may
In 2020, NLB Group applied a new default definition based on
be more sensitive to changes in the industry or the economy.
the EBA guidelines, where the materiality threshold for delays
k) Forborne loans
31 Dec 2021
NLB Group
All forborne exposures
Non - performing
Impairment, provisions and value
adjustments
Gross carrying
amount
Performing
Impaired
Defaulted
Performing
forborne exposures
Non-performing
forborne exposures
in EUR thousands
Collateral and
financial
guarantees
received on
forborne
exposures
Loans and advances (including at amortised cost and fair value)
239,208
57,058
182,094
182,150
(4,602)
(100,963)
109,177
Governments
Other financial organisations
Non-financial organisations
Households
Debt instruments other than held for trading
Loan commitments given
Total exposures with forbearance measures
1,093
2,744
180,754
54,617
239,208
718
239,926
828
213
35,422
20,595
57,058
96
57,154
265
2,531
145,276
34,022
182,094
622
182,716
265
2,531
145,332
34,022
182,150
622
182,772
(11)
(8)
(3,268)
(1,315)
(4,602)
-
(4,602)
(265)
(2,531)
(83,243)
(14,924)
(100,963)
(374)
(101,337)
-
12
79,260
29,905
109,177
294
109,471
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31 Dec 2020
NLB Group
All forborne exposures
Non - performing
Impairment, provisions and value
adjustments
Gross carrying
amount
Performing
Impaired
Defaulted
Performing
forborne exposures
Non-performing
forborne exposures
in EUR thousands
Collateral and
financial
guarantees
received on
forborne
exposures
Loans and advances (including at amortised cost and fair value)
303,802
Governments
Other financial organisations
Non-financial organisations
Households
Debt instruments other than held for trading
Loan commitments given
Total exposures with forbearance measures
31 Dec 2021
Loans and advances (including at amortised cost and fair value)
Other financial organisations
Non-financial organisations
Households
Debt instruments other than held for trading
Loan commitments given
Total exposures with forbearance measures
1,342
2,425
254,947
45,088
303,802
1,586
305,388
55,354
1,050
50
33,882
20,372
55,354
942
56,296
223,376
248,448
(5,761)
(141,372)
142,714
292
2,375
195,993
24,716
223,376
644
224,020
292
2,375
221,065
24,716
248,448
644
249,092
(5)
-
(4,739)
(1,017)
(5,761)
(4)
(5,765)
(292)
(2,375)
(129,550)
(9,155)
(141,372)
(37)
-
50
114,395
28,269
142,714
1,332
(141,409)
144,046
NLB
All forborne exposures
Non - performing
Impairment, provisions and value
adjustments
Gross carrying
amount
Performing
Impaired
Defaulted
Performing
forborne exposures
Non-performing
forborne exposures
109,674
2,744
69,299
37,631
109,674
688
110,362
25,485
213
13,100
12,172
25,485
96
25,581
84,133
2,531
56,143
25,459
84,133
592
84,725
84,189
2,531
56,199
25,459
84,189
592
84,781
(1,130)
(8)
(291)
(831)
(1,130)
-
(1,130)
(48,898)
(2,531)
(35,930)
(10,437)
(48,898)
(344)
(49,242)
in EUR thousands
Collateral and
financial
guarantees
received on
forborne
exposures
51,837
12
31,564
20,261
51,837
294
52,131
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31 Dec 2020
Loans and advances (including at amortised cost and fair value)
Other financial organisations
Non-financial organisations
Households
Debt instruments other than held for trading
Loan commitments given
Total exposures with forbearance measures
NLB
All forborne exposures
Non - performing
Impairment, provisions and value
adjustments
Gross carrying
amount
Performing
Impaired
Defaulted
Performing
forborne exposures
Non-performing
forborne exposures
148,251
2,397
117,671
28,183
148,251
1,560
149,811
21,976
22
9,522
12,432
21,976
920
22,896
103,287
2,375
85,161
15,751
103,287
640
103,927
126,275
2,375
108,149
15,751
126,275
640
126,915
(1,522)
-
(742)
(780)
(1,522)
(2)
(1,524)
(73,298)
(2,375)
(66,055)
(4,868)
(73,298)
(35)
(73,333)
in EUR thousands
Collateral and
financial
guarantees
received on
forborne
exposures
76,210
22
58,447
17,741
76,210
1,332
77,542
Forborne exposures of debt instruments by periods of forbearance
31 Dec 2021
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
31 Dec 2020
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
31 Dec 2021
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
31 Dec 2020
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
The main forbearance measurements used by NLB Group
and NLB are: deferral of payment, reduction of interest rates,
acquisition of collateral for partial repayment of claims, and
others, either as a single forbearance measurement or as a
combination of those.
Up to 3 months
3 to 6 months
6 to 12 months
Over 12 months
NLB Group
in EUR thousands
7,411
26,835
34,246
13,455
32,950
46,405
5,055
4,856
9,911
9,963
1,786
11,749
9,860
18,540
28,400
1,858
7,140
8,998
30,130
30,956
61,086
24,317
65,200
89,517
Up to 3 months
3 to 6 months
6 to 12 months
Over 12 months
NLB
in EUR thousands
2,819
7,467
10,286
8,304
3,969
12,273
3,898
2,410
6,308
931
942
1,873
7,008
13,863
20,871
1,398
5,513
6,911
10,630
11,551
22,181
9,821
42,553
52,374
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l) Repossessed assets
NLB Group and NLB received the following assets by taking possession of collateral held as security and held them at the reporting date:
NLB Group
in EUR thousands
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Net value
Net value
36,009
13,559
-
74,717
733
699
125,717
36,130
13,268
-
75,151
866
699
126,114
4,176
7
2,333
4,827
-
-
4,079
7
2,412
4,926
-
-
11,343
11,424
Nature of assets
Investment property (note 5.9.)
Property and equipment (note 5.8.)
Investments in subsidiaries and associates
Real estates (note 5.13.)
Other assets (note 5.13.)
Non-current assets held for sale (note 5.7.)
Total
m) Analysis of loans and advances by industry sectors
NLB Group
Industry sector
Banks
Finance
Electricity, gas, and water
Construction industry
Heavy industry
Education
Agriculture, forestry, and fishing
Public sector
Individuals
Mining
Entrepreneurs
Services
Transport and communications
Trade industry
Health care and social security
Other financial assets
Total
31 Dec 2021
31 Dec 2020
in EUR thousands
Gross loans
Impairment
provisions
140,881
90,538
361,520
420,173
1,059,774
12,888
91,735
231,488
5,621,071
49,936
341,670
778,569
798,822
1,008,369
36,541
128,455
(198)
(2,851)
(5,392)
(29,459)
(30,352)
(1,358)
(3,530)
(5,269)
(101,781)
(1,604)
(7,554)
(34,587)
(25,902)
(64,364)
(1,970)
(6,226)
Net loans
140,683
87,687
356,128
390,714
1,029,422
11,530
88,205
226,219
(%)
1.30
0.81
3.28
3.60
9.49
0.11
0.81
2.08
5,519,290
50.87
48,332
334,116
743,982
772,920
944,005
34,571
122,229
0.45
3.08
6.86
7.12
8.70
0.32
1.13
Gross loans
Impairment
provisions
197,146
116,593
298,612
361,494
952,671
13,883
91,780
301,205
5,027,648
79,662
314,276
725,020
811,517
874,235
48,620
118,691
(141)
(3,126)
(6,971)
(27,548)
(44,446)
(1,111)
(7,023)
(5,737)
(94,555)
(1,230)
(7,268)
(71,133)
(25,029)
(75,309)
(1,794)
(5,553)
Net loans
197,005
113,467
291,641
333,946
908,225
12,772
84,757
295,468
4,933,093
78,432
307,008
653,887
786,488
798,926
46,826
113,138
(%)
1.98
1.14
2.93
3.35
9.12
0.13
0.85
2.97
49.55
0.79
3.08
6.57
7.90
8.03
0.47
1.14
11,172,430
(322,397)
10,850,033
100.00
10,333,053
(377,974)
9,955,079
100.00
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NLB
Industry sector
Banks
Finance
Electricity, gas, and water
Construction industry
Heavy industry
Education
Agriculture, forestry, and fishing
Public sector
Individuals
Mining
Entrepreneurs
Services
Transport and communications
Trade industry
Health care and social security
Other financial assets
Total
31 Dec 2021
31 Dec 2020
Gross loans
Impairment
provisions
Net loans
Gross loans
Impairment
provisions
Net loans
199,469
169,679
228,423
71,989
583,658
4,045
13,073
94,176
2,694,356
22,316
54,600
482,176
556,786
248,823
25,360
93,557
(182)
(3,109)
(724)
(9,870)
(6,747)
(27)
(100)
(974)
(37,421)
(514)
(1,942)
(11,421)
(5,459)
(16,492)
(1,619)
(1,153)
199,287
166,570
227,699
62,119
576,911
4,018
12,973
93,202
2,656,935
21,802
52,658
470,755
551,327
232,331
23,741
92,404
(%)
3.66
3.06
4.18
1.14
10.60
0.07
0.24
1.71
48.80
0.40
0.97
8.65
10.13
4.27
0.44
1.70
158,475
135,040
157,515
63,025
519,880
5,197
15,099
95,930
2,411,949
8,580
52,216
454,154
589,269
204,343
26,288
55,833
(155)
(4,405)
(2,892)
(8,463)
(14,445)
(38)
(865)
(1,793)
(34,179)
(74)
(3,014)
(44,827)
(4,965)
(22,190)
(1,222)
(1,330)
2,377,770
49.46
8,506
49,202
409,327
584,304
182,153
25,066
54,503
0.18
1.02
8.51
12.15
3.79
0.52
1.13
MB Statement
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Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
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Financial Report
in EUR thousands
(%)
3.29
2.72
3.22
1.13
10.51
0.11
0.30
1.96
158,320
130,635
154,623
54,562
505,435
5,159
14,234
94,137
5,542,486
(97,754)
5,444,732
100.00
4,952,793
(144,857)
4,807,936
100.00
n) Analysis of net loans and advances by geographical sectors
Country
Slovenia
Other European Union members
Serbia
Other countries
Total
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
4,861,968
4,360,051
4,856,305
4,354,155
249,772
2,320,491
3,417,802
157,557
2,146,793
3,290,678
156,425
136,696
295,306
73,252
134,303
246,226
10,850,033
9,955,079
5,444,732
4,807,936
As at 31 December 2021, Other countries include direct
exposure to Ukraine amount to EUR 4 thousand at NLB Group
exposure to Russia in the amount of EUR 94 thousand at
level and EUR 2 thousand at NLB level.
NLB Group level and EUR 84 thousand at NLB level. Direct
Contents
291
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
o) Analysis of debt securities and derivative financial instruments by geographical sectors
Financial assets
measured at
amortised cost
Financial assets
held for trading
Financial assets
measured at fair
value through OCI
NLB Group
NLB
in EUR thousands
Derivative
financial
instruments
Financial assets
measured at
amortised cost
Financial assets
held for trading
Financial assets
measured at fair
value through OCI
Derivative
financial
instruments
31 Dec 2021
Country
Slovenia
Other members of European Union
- Austria
- Belgium
- Bulgaria
- Czech Republic
- Cyprus
- Denmark
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Spain
- Sweden
- Other
United States of America
Other countries
- Bosnia and Herzegovina
- Kosovo
- Montenegro
- North Macedonia
- Serbia
- Albania
- Canada
- Great Britain
- Iceland
- Israel
- Kazakhstan
- Norway
- Russia
- Other
Total
324,705
1,076,225
76,628
126,828
43,374
-
12,447
-
45,899
170,425
105,368
-
21,719
51,906
26,190
24,929
15,321
78,097
67,678
17,829
47,842
23,365
21,603
70,347
15,128
13,302
5,061
311,635
4,048
-
37,349
221,697
7,167
-
14,026
-
5,768
-
-
14,606
-
6,974
1,717,626
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-trading financial
assets mandatorily
at FV through profit
or loss
-
2,428
-
-
-
-
-
-
-
-
-
-
-
107
-
-
-
2,321
-
-
-
-
-
-
-
1,833
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
331,155
1,180,521
81,063
93,404
3,173
12,795
1,755
20,234
107,633
193,668
115,180
14,805
6,547
100,689
10,910
-
27,226
30,087
143,546
18,989
18,704
5,484
34,627
64,377
75,625
-
75,498
1,808,087
145,522
76,533
23,578
152,886
1,196,724
29,823
27,247
81,218
8,857
10,468
14,254
16,210
20,105
4,662
6,835
1,388
-
642
-
-
-
-
-
528
167
-
-
-
-
-
-
-
51
-
-
-
-
-
-
-
-
23
-
1
-
6
-
-
-
16
-
-
-
-
-
-
324,705
1,041,207
76,628
126,828
43,374
-
12,447
-
45,899
160,423
95,361
-
21,719
51,906
26,190
24,929
15,321
78,097
57,670
17,829
47,842
23,365
21,603
65,346
15,128
13,302
5,061
65,451
4,048
-
6,799
13,230
-
-
14,026
-
5,768
-
-
14,606
-
6,974
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280,174
970,192
56,551
59,830
3,173
12,795
1,755
20,234
99,578
162,625
92,622
14,805
6,547
32,639
10,910
-
27,226
30,087
135,529
18,989
18,704
5,484
34,627
49,857
75,625
-
8,667
282,009
3,204
-
3,073
57,867
5,021
29,823
27,247
81,218
8,857
10,468
14,254
16,210
20,105
4,662
6,835
1,388
-
642
-
-
-
-
-
528
167
-
-
-
-
-
-
-
51
-
-
-
-
-
-
-
-
27
-
1
-
-
10
-
-
16
-
-
-
-
-
-
Other members of the European Union included in the line
Other members of the ‘Other countries’ in the line item ‘Other’
item ‘Other’ are Malta and Estonia.
are Egypt, Uzbekistan, and Oman.
3,395,261
4,261
8,246
1,436,424
1,541,042
8,250
Contents
292
31 Dec 2020
Country
Slovenia
Other members of European Union
- Austria
- Belgium
- Bulgaria
- Czech Republic
- Cyprus
- Denmark
- Finland
- France
- Germany
- Greece
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Netherlands
- Poland
- Portugal
- Romania
- Slovakia
- Spain
- Sweden
- Other
United States of America
Other countries
- Bosnia and Herzegovina
- Kosovo
- Montenegro
- North Macedonia
- Serbia
- Albania
- Canada
- Great Britain
- Iceland
- Israel
- Kazakhstan
- Norway
- Russia
Financial assets
measured at
amortised cost
Financial assets
held for trading
Financial assets
measured at fair
value through OCI
Non-trading financial
assets mandatorily
at FV through profit
or loss
Derivative
financial
instruments
Financial assets
measured at
amortised cost
Financial assets
held for trading
Financial assets
measured at fair
value through OCI
Derivative
financial
instruments
NLB Group
NLB
in EUR thousands
305,697
930,258
78,720
121,657
36,910
1,025
12,662
-
38,515
151,981
63,155
-
20,907
45,576
7,088
22,112
11,626
71,821
50,409
26,432
45,937
23,600
21,662
66,622
8,072
3,769
9,786
257,346
-
-
20,386
204,455
7,182
-
14,037
-
4,993
-
-
6,293
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,450
66,356
-
-
-
-
66,356
-
-
-
-
-
-
-
-
484,875
978,504
73,959
78,858
3,255
16,420
1,826
15,976
81,905
155,580
104,967
7,001
9,924
36,464
11,048
749
18,385
37,853
133,360
17,023
19,377
5,599
36,350
53,201
59,424
-
79,543
1,903,569
167,131
75,223
18,649
143,059
1,267,258
30,548
27,514
104,493
8,988
9,511
12,261
20,526
18,408
-
111
-
-
-
-
-
-
-
-
-
-
-
-
111
-
-
-
-
-
-
-
-
-
-
-
2,046
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,498
672
305,697
930,258
-
-
-
-
-
-
-
80
120
-
-
-
-
-
-
-
90
-
-
-
-
-
-
382
-
879
-
786
-
7
30
-
-
56
-
-
-
-
-
78,720
121,657
36,910
1,025
12,662
-
38,515
151,981
63,155
-
20,907
45,576
7,088
22,112
11,626
71,821
50,409
26,432
45,937
23,600
21,662
66,622
8,072
3,769
9,786
32,139
-
-
6,816
-
-
-
14,037
-
4,993
-
-
6,293
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,450
-
-
-
-
-
-
-
-
-
-
-
-
-
-
389,932
932,714
59,163
57,167
3,255
16,420
1,826
15,976
80,827
149,673
104,967
7,001
9,924
34,146
11,048
749
18,385
37,853
133,360
17,023
19,377
5,599
36,350
53,201
59,424
-
56,742
291,816
-
-
3,134
56,433
-
30,548
27,514
104,493
8,988
9,511
12,261
20,526
18,408
14,498
672
-
-
-
-
-
-
-
80
120
-
-
-
-
-
-
-
90
-
-
-
-
-
-
382
-
1,211
4
786
-
-
365
-
-
56
-
-
-
-
-
Total
1,503,087
68,806
3,446,491
2,157
16,049
1,277,880
2,450
1,671,204
16,381
Other members of the European Union included in the line
item ‘Other’ are Malta and Croatia.
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
293
p) Internal rating of derivatives counterparties
A
B
C
D and E
Total
in %
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
74.08
25.69
0.03
0.19
73.56
15.35
10.90
0.19
74.25
25.53
0.03
0.19
73.75
15.24
10.82
0.19
100.00
100.00
100.00
100.00
All derivatives in the banking book are entered into with
rating, but all such transactions are covered through back-
counterparties with an external investment-grade rating.
to-back transactions involving third parties with an external
investment-grade rating.
When derivatives are entered into on behalf of NLB Group’s
customers, such customers usually do not have an external
r) Debt securities in NLB Group’s and NLB’s portfolio that represent subordinated liabilities for the issuer
31 Dec 2021
Internal rating
Financial assets measured at fair value through
other comprehensive income
Financial assets measured at amortised cost
- loans and advances to banks
- loans and advances to customers
Total
31 Dec 2020
Internal rating
Financial assets measured at fair value through
other comprehensive income
Financial assets measured at amortised cost
- loans and advances to banks
- loans and advances to customers
Total
A
48,099
-
-
48,099
A
-
-
-
-
B
-
-
-
-
B
14,796
-
-
14,796
NLB Group
C
-
-
-
-
NLB Group
C
-
-
-
-
D
-
-
-
-
D
-
-
-
-
Total
A
48,099
33,107
-
-
84,399
-
48,099
117,506
Total
14,796
A
-
-
-
67,128
-
14,796
67,128
NLB
C
-
-
6,522
6,522
NLB
C
-
-
5,858
5,858
B
-
-
-
-
B
-
-
-
-
in EUR thousands
D
-
-
-
-
Total
33,107
84,399
6,522
124,028
in EUR thousands
D
-
-
-
-
Total
-
67,128
5,858
72,986
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
294
s) Presentation of net financial instruments by measurement category
Financial assets
held for trading
Non-trading financial
assets mandatorily at FV
through P&L
Financial assets
measured at
FV through OCI
NLB Group
Financial assets
measured at
amortised cost
Financial leases
Derivatives for
hedge accounting
-
5,005,052
-
-
-
-
-
-
-
7,678
-
-
-
-
-
-
-
-
21,161
4,261
4,472
-
-
12,428
-
-
-
-
-
-
-
-
3,461,860
3,251,826
66,599
37,569
105,866
-
-
-
-
-
-
-
-
-
1,717,626
1,707,960
-
-
9,666
-
-
10,619,525
280,961
140,683
141,698
5,473,278
4,582,906
122,229
17,464,432
7,678
21,161
3,461,860
in EUR thousands
Total
5,005,052
5,200,647
4,964,047
71,071
37,569
115,532
12,428
8,246
10,727,804
281,010
140,683
141,709
5,519,290
4,645,112
122,229
21,063,978
-
-
-
-
-
-
-
-
108,279
49
-
11
46,012
62,206
-
108,279
-
-
-
-
-
-
-
568
-
-
-
-
-
-
-
568
Financial assets
held for trading
Non-trading financial
assets mandatorily at
FV through P&L
NLB Group
Financial assets
measured at
FV through OCI
Financial assets
measured at
amortised cost
in EUR thousands
Financial leases
Total
-
68,806
68,806
-
-
-
-
16,049
-
-
-
-
-
-
-
84,855
-
17,317
2,157
4,171
-
-
10,989
-
25,076
-
-
-
-
25,076
-
42,393
-
3,514,290
3,260,940
67,799
50,449
135,102
-
-
-
-
-
-
-
-
-
3,961,812
1,503,087
1,480,478
-
-
22,609
-
-
9,768,232
365,339
197,005
158,845
4,913,793
4,133,250
113,138
3,514,290
15,346,269
-
-
-
-
-
-
-
-
48,633
3,061
-
26
19,300
26,246
-
48,633
3,961,812
5,103,500
4,812,381
71,970
50,449
157,711
10,989
16,049
9,841,941
368,400
197,005
158,871
4,933,093
4,184,572
113,138
19,036,440
31 Dec 2021
Cash and obligatory reserves
with central banks, and other
demand deposits at banks
Securities
- Bonds
- Shares
- Commercial bills
- Treasury bills
- Investment funds
Derivatives
Loans and receivables
- Loans to governments
- Loans to banks
- Loans to financial organisations
- Loans to individuals
- Loans to other customers
Other financial assets
Total financial assets
31 Dec 2020
Cash and obligatory reserves
with central banks, and other
demand deposits at banks
Securities
- Bonds
- Shares
- Commercial bills
- Treasury bills
- Investment funds
Derivatives
Loans and receivables
- Loans to governments
- Loans to banks
- Loans to financial organisations
- Loans to individuals
- Loans to other customers
Other financial assets
Total financial assets
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
295
31 Dec 2021
Cash and obligatory reserves
with central banks, and other
demand deposits at banks
Securities
- Bonds
- Shares
- Treasury bills
Derivatives
Loans and receivables
- Loans to governments
- Loans to banks
- Loans to financial organisations
- Loans to individuals
- Loans to other customers
Other financial assets
Total financial assets
31 Dec 2020
Cash and obligatory reserves
with central banks, and other
demand deposits at banks
Securities
- Bonds
- Shares
- Treasury bills
Derivatives
Loans and receivables
- Loans to governments
- Loans to banks
- Loans to financial organisations
- Loans to individuals
- Loans to other customers
Other financial assets
Total financial assets
Financial assets
held for trading
Non-trading financial
assets mandatorily at
FV through P&L
NLB
Financial assets
measured at
FV through OCI
Financial assets
measured at
amortised cost
Derivatives for
hedge accounting
-
-
-
-
-
7,682
-
-
-
-
-
-
-
7,682
-
4,472
-
4,472
-
-
7,888
-
-
-
-
7,888
-
12,360
-
1,585,751
1,526,237
44,709
14,805
-
-
-
-
-
1,585,751
3,250,437
1,436,424
1,436,424
-
-
-
5,344,440
143,864
199,287
226,144
2,656,935
2,118,210
92,404
10,123,705
-
-
-
-
-
568
-
-
-
-
-
-
-
568
Financial assets
held for trading
Non-trading financial
assets mandatorily at
FV through P&L
NLB
Financial assets
measured at
FV through OCI
Financial assets
measured at
amortised cost
-
2,450
2,450
-
-
16,381
-
-
-
-
-
-
-
18,831
-
4,171
-
4,171
-
-
30,935
-
-
-
-
30,935
-
35,106
-
1,716,351
1,598,760
45,147
72,444
-
-
-
-
-
-
-
-
1,716,351
2,261,533
1,277,880
1,277,880
-
-
-
4,722,498
170,742
158,320
177,198
2,377,770
1,838,468
54,503
8,316,414
in EUR thousands
Total
3,250,437
3,026,647
2,962,661
49,181
14,805
8,250
5,352,328
143,864
199,287
226,144
2,656,935
2,126,098
92,404
11,730,066
in EUR thousands
Total
2,261,533
3,000,852
2,879,090
49,318
72,444
16,381
4,753,433
170,742
158,320
177,198
2,377,770
1,869,403
54,503
10,086,702
As at 31 December 2021 and 31 December 2020, all of NLB
liabilities measured at fair value through profit or loss, were
Group’s financial liabilities, except for derivatives designated
carried at amortised cost.
as hedging instruments, trading liabilities, and financial
MB Statement
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Sustainability
Performance Overview
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296
6.2. Market risk
NLB defines market risk as the risk of potential financial losses
due to changes in rates and/or market prices (exchange
rates, credit spreads, and equity prices), or in parameters
that affect prices (volatilities and correlations). Losses may
impact profit or loss directly, for example in the case of trading
book positions. However, for the banking book positions they
are reflected in the revaluation reserve. The exposure to the
market risk is to a certain degree integrated into the banking
industry and offers an opportunity to create financial results
and value.
The Global Risk Department of NLB is independent from
the trading activities and reports to the Bank’s Assets and
Liabilities Committee (ALCO). Global Risk also monitors and
manages exposure to market risks separately for the banking
and trading books. Exposures and limits are monitored daily
and reported to the ALCO committee on a regular basis.
The Bank uses a wide selection of quantitative and qualitative
tools for measuring, managing, and reporting market risks
such as value-at-risk (VaR), sensitivity analysis, stress-
testing, back-testing, scenarios, other market risk mitigants
(concentration of exposures, gap limits, stop-loss limits, etc.),
net interest income sensitivity, economic value of equity, and
economic capital. Stress-testing provides an indication of the
of an individual NLB Group entity is regularly monitored and
Regarding structural FX positions on a consolidation level,
reported to the Assets and Liabilities Committee of NLB Group
assets, and liabilities held in foreign operations are translated
(NLB Group ALCO).
6.2.1. Currency risk (FX)
Foreign currency risk (FX) is a risk of the potential losses
into euro currency at the closing FX rate on the reporting
date. Foreign exchange differences of non-euro assets and
liabilities against euro are recognised in OCI, and therefore
affect shareholder’s equity and CET1 capital. NLB Group ALM
from the open FX positions due to the changes of the foreign
employs strategies to manage this foreign currency exposure,
currency rates. The exposures of NLB to the movement of the
including matched funding of assets and liabilities.
FX rates have impact on the financial position and cash flows
of the Bank. The Bank measures and manages the FX risk with
Exposure to currency risks is discussed at daily liquidity
a usage of combination of sensitivity analysis, VaR, scenarios,
meetings and monthly meetings of the ALCO committee of the
and stress-testing.
NLB Group, and quarterly on the consolidated level.
MB Statement
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Key Highlights
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Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
In the trading book, similar to the other market risks, risk is
managed on the basis of VaR limits which are approved by
the Management Board of the Bank and in accordance to the
adopted policy of managing market risk in the trading book of
NLB. Trading FX risk is managed on an integrated basis at a
portfolio level.
NLB monitors and manages FX risk in the banking book
according to the policy of managing FX risk in NLB. The
policy is primarily composed to protect Common Equity
Tier 1 against the negative effects of the volatility of the FX
rates, whilst limiting the volatility in the income statement. FX
exposures in banking book result from core banking business
potential losses that could occur in severe market conditions.
activities.
In the area of currency risk, NLB Group pursues the goal of low
to medium exposure. NLB monitors the open position of NLB
Group on an ongoing basis. The orientation of NLB Group in
interest rate risk management is to prevent negative effects on
the net revenues arising from changed market interest rates. The
conclusion of transactions involving derivatives at NLB is limited
to the servicing of the clients’ and hedging of the Group’s own
open positions. In accordance with the provisions of the Strategy
on trading with financial instruments in NLB Group, the trading
activities in other NLB Group members are very restricted.
For monitoring and managing NLB Group’s exposure to
market risks uniform guidelines and exposure limits for each
type of risk are set for individual NLB Group entities. The
Each member is responsible for its own currency risk policy,
which also includes a limit system and is in line with the parent
Bank’s guidelines and standards, as well as local regulatory
requirements. Policies are confirmed by either the local
Management Board or Supervisory Board. NLB monitors and
manages NLB Group currency risk exposure on a monthly
basis for each member and on the consolidated level.
NLB Group banks follow the guidelines for managing FX
lending in NLB Group. The guidelines’ goal is to address
risks stemming from the potential excessive growth of FX
lending, to identify hidden risks, and tail-event risks related
to FX lending, to mitigate the respective risk, to internalise the
respective costs, and to hold adequate capital with respect to
methodologies are in line with regulatory requirements on
FX lending.
individual and consolidated levels, while reporting to the
regulator on the consolidated level is carried out using the
standardised approach. Pursuant to the relevant policies,
NLB Group entities must monitor and manage exposure to
market risks and report to NLB accordingly. The exposure
The positions of all currencies in the statement of financial
position of NLB, for which a daily limit is set, are monitored
daily. FX positions are managed on the currency level so that
they are always within the limits.
Contents
297
a) Analysis of financial instruments by currency exposure
31 Dec 2021
Financial assets
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Derivatives - hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
EUR
RSD
NLB Group
USD
CHF
Other
Total
in EUR thousands
4,035,603
7,678
11,000
2,349,722
1,489,279
79,530
8,582,987
61,713
568
7,082
294,459
-
5,689
802,321
7,168
145
763,856
12,463
-
-
58,367
-
4,472
206,583
19,172
37,070
19,478
20,813
-
-
112,880
503,743
5,005,052
-
-
-
-
7,678
21,161
14,992
88,242
3,461,860
-
17,293
68,284
48
-
-
202,007
6,645
1,152,516
27,192
-
-
1,717,626
140,683
10,587,121
122,229
568
7,082
Total financial assets
16,625,162
1,886,101
365,955
213,497
1,980,345
21,071,060
Financial liabilities
Financial liabilities held for trading
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Total financial liabilities
7,585
35,377
49,351
845,649
14,295,198
73,645
288,519
133,555
15,728,879
-
-
1,456
-
1,244,161
-
-
24,471
1,270,088
-
-
6,370
12,882
358,851
406
-
26,131
404,640
-
-
2,114
-
179,934
-
-
2,641
184,689
-
-
12,537
-
7,585
35,377
71,828
858,531
1,562,665
17,640,809
-
-
20,080
1,595,282
74,051
288,519
206,878
19,183,578
Net on-balance sheet financial position
896,283
616,013
(38,685)
28,808
385,063
1,887,482
Derivative financial instruments
(27,149)
2,002
44,115
(24,124)
(13,568)
(18,724)
Net financial position
31 Dec 2020
Total financial assets
Total financial liabilities
869,134
618,015
5,430
4,684
371,495
1,868,758
14,728,767
13,962,729
1,921,270
1,254,761
376,572
371,229
176,890
175,275
1,846,785
1,502,653
19,050,284
17,266,647
Net on-balance sheet financial position
766,038
666,509
5,343
1,615
344,132
1,783,637
Derivative financial instruments
30,748
-
651
(2,303)
(43,314)
(14,218)
Net financial position
796,786
666,509
5,994
(688)
300,818
1,769,419
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31 Dec 2021
Financial assets
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Derivatives - hedge accounting
Fair value changes of the hedged items in portfolio hedge of interest rate risk
EUR
3,165,604
7,682
7,888
1,477,670
1,407,226
199,287
5,060,091
50,515
568
7,082
RSD
1,212
-
-
-
-
-
-
7
-
-
NLB
USD
24,185
-
4,472
82,038
19,172
-
13,932
20,755
-
-
in EUR thousands
CHF
Other
Total
13,648
45,788
-
-
-
-
-
69,808
1
-
-
-
-
26,043
10,026
-
1,322
21,126
-
-
3,250,437
7,682
12,360
1,585,751
1,436,424
199,287
5,145,153
92,404
568
7,082
Total financial assets
11,383,613
1,219
164,554
83,457
104,305
11,737,148
Financial liabilities
Financial liabilities held for trading
Financial liabilities measured at fair value through profit or loss
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Total financial liabilities
7,602
352
35,377
75,149
860,597
9,412,452
-
288,519
79,050
10,759,098
-
-
-
13
-
5
-
-
-
18
-
-
-
10,878
12,882
148,364
406
-
22,174
194,704
-
-
-
2,416
-
55,391
-
-
153
57,960
-
-
-
20,873
-
43,393
-
-
1,150
65,416
7,602
352
35,377
109,329
873,479
9,659,605
406
288,519
102,527
11,077,196
Net on-balance sheetfinancial position
624,515
1,201
(30,150)
25,497
38,889
659,952
Derivative financial instruments
(15,358)
-
35,825
(25,132)
(14,076)
(18,741)
Net financial position
31 Dec 2020
Total financial assets
Total financial liabilities
Net on-balance sheet financial position
609,157
1,201
5,675
365
24,813
641,211
9,780,372
9,199,763
580,609
2,289
13
2,276
177,771
171,281
63,153
60,015
76,961
58,746
10,100,546
9,489,818
6,490
3,138
18,215
610,728
Derivative financial instruments
4,136
-
(2,491)
(3,299)
(12,169)
(13,823)
Net financial position
584,745
2,276
3,999
(161)
6,046
596,905
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b) FX sensitivity analysis
Scenarios
USD
CHF
CZK
RSD
MKD
JPY
AUD
HUF
HRK
BAM
31 Dec 2021
Appreciation of
USD
CHF
CZK
RSD
MKD
Other
Effects on comprehensive income
Depreciation of
USD
CHF
CZK
RSD
MKD
Other
Effects on comprehensive income
NLB Group and NLB
31 Dec 2021
31 Dec 2020
+/-5.74%
+/-4.23%
+/-4.55%
+/-0.35%
+/-1.34%
+/-5.66%
+/-6.77%
+/-6.53%
+/-1.38%
+/-0%
+/-7.89%
+/-4.02%
+/-8.57%
+/-0.97%
+/-3.46%
+/-8.56%
+/-10.70%
+/-9.63%
+/-2.02%
+/-0%
NLB Group
NLB
Effects on income
statement
Effects on other
comprehensive income
Effects on income
statement
Effects on other
comprehensive income
in EUR thousands
454
(358)
11
2
2
23
134
(405)
329
(10)
(2)
(2)
(21)
(111)
-
566
-
2,501
3,570
70
6,707
-
(520)
-
(2,484)
(3,476)
(69)
(6,549)
(132)
6
11
4
285
(17)
157
117
(5)
(10)
(4)
(277)
15
(164)
42
-
-
-
-
-
42
(38)
-
-
-
-
-
(38)
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NLB Group
NLB
in EUR thousands
In the trading book, interest rate risk is measured on the basis of
the VaR method and BPV method, in accordance with the adopted
policy for managing market risk in the trading book of NLB.
31 Dec 2020
Appreciation of
USD
CHF
CZK
RSD
MKD
Other
Effects on comprehensive income
Depreciation of
USD
CHF
CZK
RSD
MKD
Other
Effects on comprehensive income
Effects on income
statement
Effects on other
comprehensive income
Effects on income
statement
Effects on other
comprehensive income
(345)
(293)
(4)
9
4
85
(544)
295
270
3
(9)
(4)
(68)
487
-
231
-
7,096
7,663
91
15,081
-
(213)
-
(6,959)
(7,151)
(89)
(14,412)
(97)
(32)
(4)
22
19
89
(3)
83
29
3
(22)
(18)
(70)
5
(11)
-
-
-
-
-
(11)
10
-
-
-
-
-
10
The effect on the other comprehensive income statement of
calculation of the VAR value is adjusted to Basel standards
NLB Group has decreased by half due to the lower translation
(99% confidence interval, a monitored period of 250 business
positions in MKD and RSD currencies and due to the lower
days, a 10-day holding position period).
volatility growths’ scenarios for MKD and RSD currencies.
6.2.2. Managing market risks in the trading book
Market risk exposure in the trading book arises mostly as a
6.2.3. Interest rate risk
Interest rate risk is the risk to NLB Group’s capital and profit
or loss arising from changes in market interest rates. Interest
result of the changes in interest rates, credit spreads, FX rates,
rate risk management of NLB Group includes all interest rate-
and equity prices.
sensitive on and off-balance sheet assets and liabilities which
are divided into the trading and banking book according
The Management Board determines low total risk appetite
to regulatory standards. It takes into account the positions
and limits by the risk type. The limits are monitored daily by
in each currency. Interest rate risk management in NLB
the Global Risk Department.
Group is adopted in accordance with the risk appetite and
risk strategy, based on general Basel standards on interest
NLB uses an internal VaR model based on the variance-
rate management in the banking book (IRRBB; hereinafter:
covariance method for other market risks. The daily
‘Standards’) and European Banking Authority guidelines.
The interest rate risk in the banking book is measured
and monitored within a framework of interest rate
risk management policy that establishes consistent
methodologies, models, and limit systems. NLB Group
manages interest rate risk exposure through application of
two main measures:
• Economic value sensitivity – using BPV method (Basis Point
Value), which measures the extent to which the economic
value of the banking book would change if interest rates
change according to the scenario.
• Sensitivity of net interest income – using EaR method
(Earnings at Risk), which measures the impact of the interest
rate change on future net interest income over a one-year
period, assuming constant balance sheet volume and
structure.
NLB Group regularly measures interest rate risk exposure in
the banking book under various standardised and additional
scenarios of changes in the level and shape of interest rate
yield curve, including all significant sources of risk, taking
into account behavioural and modelling assumptions. Part of
non-maturing deposits, which is considered as a core part is
allocated long-term by using replicating portfolio. Optionality
risk is mainly derived from behavioural options, reflected in
prepayments and withdrawals, and embedded options such
as caps and floors. Moreover, considering expected cash flows,
non-performing exposures, as well as off-balance sheet items
are considered when measuring interest rate risk exposure.
The interest rate risk is closely measured, monitored, and
managed within approved risk limits and controls. The Group
manages interest rate positions and stabilises its interest rate
margin primarily with the pricing policy and a fund transfer
pricing policy. An important part of the interest rate risk
management is presented by the banking book securities
portfolio, whose primary purpose is to maintain adequate
liquidity reserves, while it also contributes to the stability of
the interest rate margin, which is why valuation risk has been
included in the Group’s interest rate risk management model.
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NLB Group also manages interest rates risk by using plain
Each member of NLB Group is responsible for its own interest
Interest rate risk in the banking book is measured, monitored,
vanilla derivative financial instruments (interest rate swaps,
rate risk policy, which includes the limit system and is in line
and reported by the Global Risk Department (weekly in the
overnight index swaps, cross currency swaps, and forward
with the parent Bank’s guidelines and standards, as well
case of NLB and monthly on Group level), while positions are
rate agreements), most of which are treated according to
as with the local regulatory requirements. NLB regularly
managed by Financial Markets. Exposure to interest rate risk
hedge accounting rules. Interest rate risk exposure arises
monitors the interest rate risk exposure of each individual
is discussed on ALCO monthly on NLB’s individual level and
mainly from banking book positions; particularly in a current
member of NLB Group in accordance with the Standards
quarterly on the consolidated level.
low interest rate environment, where NLB Group recorded an
for Risk Management in NLB Group. The aforementioned
increased volume of fixed interest rate loans and long-term
document comprises guidelines for uniform and effective
banking book securities on the assets side and transformation
interest rate risk management within individual NLB Group
of deposits from term to sight.
members.
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a) Analysis of financial instruments according to the
Financial instruments without maturity such as sight deposits
exposure to interest rate risk
The following table presents open net interest rate risk
positions by the most important currencies of NLB Group.
are presented in the first gap irrespective of their behavioural
characteristics and the NLB Group’s expectations.
31 Dec 2021
Currency
EUR
RSD
MKD
Other
31 Dec 2020
Currency
EUR
RSD
MKD
Other
31 Dec 2021
Currency
EUR
Other
31 Dec 2020
Currency
EUR
Other
1 - 3 years
(2,404,620)
203,340
141,261
(32,296)
1 - 3 years
(1,856,327)
216,751
74,788
(134,917)
1 - 3 years
(1,803,603)
1,626
1 - 3 years
(1,479,227)
(9,471)
NLB Group
3 - 5 years
1,211,248
341,214
21,960
124,132
NLB Group
3 - 5 years
816,980
175,362
43,725
49,451
NLB
3 - 5 years
815,356
32,325
NLB
5 - 10 years
1,573,325
62,458
13,835
66,726
5 - 10 years
1,397,446
167,139
5,224
16,095
in EUR thousands
Over 10 Years
446,585
1,912
9,378
3,234
in EUR thousands
Over 10 Years
279,265
-
11,032
(2,886)
in EUR thousands
5 - 10 years
1,203,636
1,242
Over 10 Years
389,570
6,627
in EUR thousands
3 - 5 years
5 - 10 years
Over 10 Years
451,008
9,171
1,071,925
5,628
227,828
(7)
Contents
302
b) Net interest income sensitivity analysis and an economic
The assessment of the impact of a change in interest rates of
view of interest rate risk in the banking book
The analysis of interest income sensitivity for the horizon of the
next 12 months assumes a sudden parallel interest rate shock
down by 50 basis points or 100 basis points. The analysis
assumes that the positions used remain unchanged.
50/100 basis points on the amount of net interest income of
the banking book position:
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
Net interest income sensitivity
Net interest income sensitivity - as % of Equity
18,520
0.94%
13,852
0.78%
6,668
0.49%
7,493
0.55%
The values in the table are calculated on short-term interest
comprehensive view of the possible long-term effects of
rate gaps, where the applied parallel interest rate shock down
changing interest rates at least under the six prescribed
by 50/100 basis points represents a realistic and practical
standardised interest rate shock scenarios or more if
scenario. The calculations of the sensitivity of net interest
necessary, according to the situation on financial markets.
income are implemented in technological support.
Calculations are considering behavioural and automatic
options, as well as the allocation of non-maturing deposits.
The ‘EVE’ (Economic Value of Equity) method is a measure
of the sensitivity of changes in market interest rates on the
The assessment of the impact of a change in interest rates of
economic value of financial instruments. The EVE represents
200 basis points on the economic value of the banking book
the present value of net future cash flows and provides a
position:
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
Interest risk in banking book - EVE
Interest risk in banking book - EVE as % of Equity
126,651
6.42%
128,370
7.27%
84,130
6.14%
82,116
5.98%
The applied sudden parallel interest rate shock up is by 200
loans with fixed interest rate, as well as from transformation of
basis points, which represents a “worst case” scenario for NLB
term to sight deposits due to a low interest rate environment.
Group. The calculation takes into the account allocation of the
Long-term interest positions of other members in NLB Group,
core part of non-maturing deposits and other behavioural
which present a majority of their exposure to interest-rate risk
assumptions.
(an economic point of view), mainly arise from a portfolio of
mortgage loans with a fixed interest rate.
Exposure to the interest rate risk of the banking book mainly
arises from investments in long-term debt securities and
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6.3. Liquidity risk
Liquidity risk is the risk of the NLB Group being unable
to fulfil current or future expected and unexpected cash
requirements, across all time horizons. The risk may stem from
the reduction in funding sources or a reduction in the liquidity
of certain assets.
Liquidity risk is related to funding liquidity risk (the NLB
Group’s liquidity on the liabilities-side) and market liquidity
risk (counterbalancing capacity on the assets-side). On
the liabilities-side, liquidity risk can result in a loss if the
Bank is unable to settle all its liabilities or when the Bank,
because of its incapacity to provide sufficient funds to settle
its obligations, is forced to raise the necessary funds at a
cost which significantly exceeds the normal cost. On the
assets-side, the liquidity risk is related to the market value of
The Management Board approves the Liquidity Risk
NLB Group performs stress tests on a regular basis for a
Management Policy, which outlines the key principles for
variety of bank-specific and market-wide stress scenarios
the Bank’s liquidity management. ALCO receives a regular
(individually and in combination) to identify sources of
report on the liquidity position and the performance against
potential liquidity strain and to ensure that current exposures
approved limits and targets. ALCO oversees the development
remain in accordance with the NLB Group’s established
of the Bank’s funding and liquidity position and decides on
liquidity risk tolerance. Stress test outcomes are used to
liquidity risk-related issues in NLB Group.
adjust its liquidity risk management strategies, policies, and
Risk tolerance for liquidity risk is low, therefore NLB Group
capacity, and to develop effective contingency plans.
must be able to provide sufficient funds for settling its liabilities
at all times, even if a specific stress scenario is realised. NLB
The NLB Group has a formal liquidity contingency plan (LCP)
Group measures and manages its liquidity in two stages:
that clearly sets out the procedures for addressing liquidity
positions, define minimum amount of counterbalancing
• Static view (current exposure),
• Forward-looking and stress-testing.
shortfalls in stressed situations. The plan outlines procedures
to manage a range of stress environments, establish clear
lines of responsibility, include clear invocation and escalation
The objectives of monitoring and managing liquidity risk in
procedures, and is regularly tested and updated to ensure
counterbalancing capacity and arises in case of significant
NLB Group are as follows:
that it is operationally robust.
reduction of market value of an individual financial instrument
• ensuring a sufficient amount of liquidity for the settlement of
and may result in insufficient value of counterbalancing
capacity to cover the NLB Group’s liquidity needs.
Intraday liquidity risk is the capacity required during
the business day to enable financial institutions to make
payments and settle obligations.
In the risk identification process, first the reasons for the
realisation of each identified material risk are analysed and
grouped together in short risk descriptions. Material risks
are then classified into three groups based on what part of
liquidity is affected by the realisation of the material risks:
liabilities side, assets side, intraday liquidity risk. Based on the
identified material risks, key liquidity risk drivers are defined.
Key risk drivers of the liquidity position are factors that are
expected to trigger a substantial deterioration of the Group’s
liquidity position. This deterioration may take place in the form
of an increase in outflows, a decrease in inflows or a decrease
in the liquidity value of the counterbalancing capacity.
Liquidity risk is defined as an important risk type for NLB Group,
and one which must be managed carefully. NLB Group has
a liquidity risk management framework in place that enables
maintaining a low risk tolerance for liquidity risk. NLB Group
formulated a set of liquidity risk metrics and limits to manage
liquidity position within the requirements set by the regulator.
By maintaining a smooth long-term maturity profile, limiting
dependence on wholesale funding, and holding a solid liquidity
buffer, the NLB Group maintains a sound and robust liquidity
position, even under severely adverse conditions.
all NLB Group’s liabilities;
NLB Group maintains a sufficient amount of liquidity
• minimising the costs of maintaining liquidity;
reserves in the form of high credit quality debt securities
• determining an adequate amount of counterbalancing
that are eligible for refinancing via the ECB/central bank
capacity and optimal liquidity management;
or on the market. In the current situation, NLB Group also
• ensuring adequate control environment;
strives to follow as closely as possible the long-term trend
• ensuring an appropriate level of liquidity for different
of diversification on both the liability and asset sides of
situations and stress scenarios;
the balance sheet. NLB Group regularly performs stress
• anticipating emergencies or crisis conditions, and
tests with the aim of testing the liquidity stability and the
implementing contingency plans in the event of
availability of liquidity reserves in various stress situations.
extraordinary circumstances;
In addition, special attention is given to the fulfilment of
• ensuring regular projections of future cash flows and stress-
the liquidity regulation (CRR/CRD), with monitoring and
testing of liquidity risk;
reporting of the liquidity coverage ratio (LCR) according to
• preparing proposals for establishing additional financial
the Delegated Act and net stable funding ratio (NSFR). This
assets as collateral for sources of funding.
also includes monitoring and reporting of Additional Liquidity
Overall assessment of the liquidity position of NLB Group
In accordance with the Commission Implementing Regulation
is assessed in the Internal Liquidity Adequacy Assessment
(EU), NLB Group regularly monitors and issues quarterly
Monitoring Metrics (ALMM) on solo and consolidated levels.
Process (ILAAP) at least once per year for NLB Group, and
reports on asset encumbrance.
it includes a clear formal statement on liquidity adequacy,
supported by an analysis of ILAAP outcomes. The ILAAP
The Group manages its liquidity position (liquidity within one
process is integral to risk management frameworks and is
day) daily, for a period of several days or weeks in advance,
aligned with the NLB Group’s risk appetite which is consistent
based on the planning and monitoring of cash flows. Each
with the business model and approved by the management
NLB Group member is responsible for its own liquidity position
board. Based on the Risk Appetite, the NLB Group prepares
and carries out the following activities:
a business plan and financial forecasts which are crucial for
• managing intraday liquidity;
defining internal capital needs (ICAAP process) and internal
• planning and monitoring cash flows;
liquidity assessment (ILAAP process). Both processes are
• monitoring and complying with the liquidity regulations of
conducted from the normative and economic perspectives
the central bank;
and supplemented by the stress-testing programme.
• adopting business decisions;
• forming and managing liquidity reserves; and
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• performing liquidity stress test to define the liquidity buffer
funding and their appropriate diversification and maturity,
liquidity reserves decreased by the required balances for
for smooth functioning of the payment system in stressed
and by managing liquidity reserves and fulfilling the
the continuous performance of payment transactions,
circumstances.
requirements of regulations governing liquidity. The exposure
encumbered securities, and/or credit claims for different
of an individual NLB Group member towards liquidity risk is
purposes (secured funding).
NLB Group members actively manage liquidity over the
regularly monitored and reported to ALCO, and to local Assets
course of a day, taking into account the characteristics
and Liabilities Committees.
of payment settlements to ensure the timely settlement of
liabilities in normal and stressed circumstances.
a) Managing NLB Group’s liquidity reserves
NLB Group has liquidity reserves available to cover liabilities
tests. The amount represents a sum of liquidity reserves that
would enable the survival of a severe stress over a period of
The minimum amount of liquidity reserves is determined on
the basis of the methodology pertaining to liquidity risk stress
Liquidity risk management in NLB Group is under strict
that fall or may become due. Liquidity reserves must become
one month in a combined stress scenario and comprises high
monitoring by NLB as a parent bank. Reporting to NLB by
available on short notice. Liquidity reserves are comprised
quality liquid assets according to LCR methodology, specified
all Group members is performed daily. Global Risk gives
of cash, the settlement account at the central bank above
in Commission Delegated Regulation (EU) 2015/61 and the
guidelines and defines minimal standards for Group members
reserve requirement, debt securities, and loans eligible as
later amendments.
regarding liquidity risk management in NLB Group Risk
collateral for the Eurosystem’s liquidity providing operations,
Management Standards. Each Group member is responsible
on the basis of which the Bank may generate the requisite
for ensuring adequate liquidity via the necessary sources of
liquidity at any time. The available liquidity reserves are
The structure of liquidity reserves is shown in the following table.
Liquidity reserves
Cash, cash balances at central banks*
Trading book securities
Banking book securities
ECB eligible loans
Total available liquidity reserves
Encumbered liquidity reserves
*above reserve requirement
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
3,567,873
-
4,615,374
80,043
8,263,290
874,827
2,683,851
68,809
4,946,632
582,986
8,282,278
52,336
3,068,123
-
2,479,952
80,043
5,628,118
874,827
2,106,517
2,450
2,896,747
582,986
5,588,700
52,336
As at 31 December 2021, 79.8% (31 December 2020: 81.8%)
of debt securities in the banking book of NLB Group were
with respect to the portfolio’s structure in terms of issuers’
ratings and asset class. The framework for managing the
loans are specified in the general terms about execution of
monetary policy framework (Part 4) adopted by the Bank of
government securities (including government guaranteed
banking book securities is the Policy for managing debt
Slovenia. NLB is the only member of NLB Group that complies
bonds – GGB), and 10.0% (31 December 2020: 8.4%) were
securities in the Financial Markets’ banking book and the
with the conditions set by the Eurosystem to classify as an
senior unsecured bonds.
Policy for Managing Domestic (Slovenian) Corporate Debt
eligible counterparty. As such, these ECB credit claims are
The purpose of banking book securities is to provide liquidity,
objectives and characteristics of the associated portfolio.
along with stabilisation of the interest margin and the interest
Members of NLB Group manage their liquid assets on a
rate risk management, simultaneously. When managing the
The ECB-eligible credit claims comprise loans which fulfil the
decentralised basis in compliance with the local liquidity
portfolio, NLB Group uses conservative principles, particularly
high eligibility criteria set by the ECB itself and for domestic
regulation and valid policies of NLB Group.
Securities in Large Corporates, which clearly define the
included among liquidity reserves.
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b) Encumbered/unencumbered assets
31 Dec 2021
Loans on demand
Equity instruments
Debt securities
Loans and advances other
than loans on demand
Other assets
Total
NLB Group
NLB
Carrying amount
of encumbered
assets
Fair value of
encumbered
securities
Carrying amount
of unencumbered
assets
Fair value of
unencumbered
securities
Carrying amount
of encumbered
assets
Fair value of
encumbered
securities
Carrying amount
of unencumbered
assets
Fair value of
unencumbered
securities
1,083,713
780
454,939
471,556
-
2,010,988
-
780
455,631
-
-
3,411,743
82,719
4,662,209
10,378,477
1,031,360
19,566,508
-
82,719
4,689,116
-
-
101,854
-
497,515
464,027
-
1,063,396
-
-
500,328
-
-
2,970,538
49,181
2,479,951
4,980,705
1,155,761
11,636,136
-
49,181
2,501,899
-
-
in EUR thousands
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31 Dec 2020
Loans on demand
Equity instruments
Debt securities
Loans and advances other
than loans on demand
Other assets
Total
NLB Group
NLB
Carrying amount
of encumbered
assets
Fair value of
encumbered
securities
Carrying amount
of unencumbered
assets
Fair value of
unencumbered
securities
Carrying amount
of encumbered
assets
Fair value of
encumbered
securities
Carrying amount
of unencumbered
assets
Fair value of
unencumbered
securities
991,649
708
52,336
80,204
-
1,124,897
-
708
2,462,193
82,251
55,519
4,968,205
-
-
9,874,875
1,053,435
18,440,959
-
80,949
5,017,867
-
-
102,458
-
52,336
72,943
-
227,737
-
-
55,519
-
-
1,966,670
49,318
2,899,197
4,734,993
1,148,687
10,798,865
-
49,318
2,951,975
-
-
in EUR thousands
Contents
306
c) Collateral received – unencumbered
The nominal amount of collateral received, or own debt
securities issued not available for encumbrance are shown in
the table below:
Equity instruments
Debt securities
Loans and advances other than loans on demand
Other assets
Total
d) Source of encumbrance
in EUR thousands
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
242,682
-
140,751
268,249
10,438
146,750
203,620
-
20,245
198,874
-
20,165
9,839,848
10,679,630
4,120,940
3,809,244
10,223,281
11,105,067
4,344,805
4,028,283
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
42,292
746,021
3,698
792,011
53,744
835,066
1,122,179
76,187
5,978
3,875
2,010,989
86,040
91,250
12,055
1,021,592
1,124,897
42,292
790,505
-
53,744
877,641
132,010
832,797
1,063,395
76,187
5,978
-
82,165
91,250
12,055
124,433
227,738
in EUR thousands
Derivatives
Deposits
Other sources of encumbrance
Total
As at 31 December 2021, NLB Group and NLB had a large share
of unencumbered assets. Other sources of encumbrance
mostly relate to the obligatory reserve. On the NLB Group
level, the amount of encumbered assets equalled EUR 2,011
million (31 December 2020: EUR 1,125 million), relating to the
deposit guarantee scheme and to targeted longer-term
refinancing operations (TLTRO).
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e) Non-derivative cash flows
The tables below illustrate the cash flows from non-derivative
financial instruments by residual maturities at the end of the
year. The amounts disclosed in the table are the undiscounted
contractual cash flows determined on the basis of spot rates
at the end of the reporting period.
31 Dec 2021
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
NLB Group
in EUR thousands
Financial liabilities and credit-related commitments
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
Total
Total financial assets
56,073
954
15,772,513
614
-
120,694
578,233
30,426
16,559,507
6,179,369
173
480
270,238
1,929
4,427
11,678
166,473
72,983
528,381
820,022
684
748,496
859,204
6,824
6,803
17,866
838,890
195,917
2,674,684
2,704,322
15,448
99,842
743,774
29,554
41,400
55,321
470,308
342,426
1,798,073
8,110,038
-
6,048
22,543
40,862
318,201
1,319
407,499
61,349
857,821
5,031,994
72,378
855,820
17,668,272
79,783
370,831
206,878
2,461,403
703,101
22,418,466
22,845,745
31 Dec 2020
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
NLB Group
in EUR thousands
Financial liabilities and credit-related commitments
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
Total
Total financial assets
52,434
666
14,111,895
1,041
-
112,258
563,821
25,177
14,867,292
5,228,895
19,813
727
379,127
2,899
4,426
8,762
226,551
67,127
709,432
651,541
558
18,146
1,080,487
9,719
6,803
14,402
703,691
154,766
1,988,572
2,434,589
491
130,821
848,237
43,382
41,400
42,917
408,880
334,078
1,850,206
7,867,386
-
10,273
19,059
39,743
328,352
3,756
424,681
66,198
892,062
4,621,083
73,296
160,633
16,438,805
96,784
380,981
182,095
2,327,624
647,346
20,307,564
20,803,494
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NLB
in EUR thousands
31 Dec 2021
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Financial liabilities and credit-related commitments
Financial liabilities measured at fair
value through profit or loss
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
Total
Total financial assets
-
94,326
44,569
9,303,784
-
-
71,942
503,492
16,714
10,034,827
3,678,758
-
-
-
65,745
-
4,427
4,041
96,524
45,786
216,523
308,197
352
15,197
82,882
158,637
406
41,400
25,501
280,201
240,761
845,337
-
-
-
8,706
-
318,201
427
220,580
33,803
581,717
4,150,714
3,280,846
-
-
742,584
125,834
-
6,803
616
451,614
100,102
1,427,553
1,061,588
NLB
Total
352
109,523
870,035
9,662,706
406
370,831
102,527
1,552,411
437,166
13,105,957
12,480,103
in EUR thousands
31 Dec 2020
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
Financial liabilities and credit-related commitments
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
Total
Total financial assets
41,635
85
8,412,546
-
-
57,913
478,872
18,203
9,009,254
2,800,273
-
704
108,942
-
4,426
6,134
143,562
41,599
305,367
217,309
-
13,547
184,159
13
6,803
582
418,866
90,299
714,269
-
121,751
143,115
-
41,400
23,813
261,282
245,158
836,519
-
9,561
4,775
-
328,352
527
270,333
36,406
649,954
1,008,108
3,878,926
2,904,506
41,635
145,648
8,853,537
13
380,981
88,969
1,572,915
431,665
11,515,363
10,809,122
When determining the gap between the financial liabilities
calculation of the liquidity position. To ensure NLB Group’s
Liabilities and credit-related commitments are included in
and financial assets in the maturity bucket of up to one month,
and NLB’s liquidity, and based on its approach to risk, in
maturity buckets based on their residual contractual maturity,
it is necessary to be aware of the fact that financial liabilities
previous years NLB Group compiled a substantial amount of
with the exception of the TLTRO loan, which is included based
include total demand deposits, and that NLB may apply a
high-quality liquid investments, mostly government securities
on expected early repayment in June 2022 (note 5.15.b).
stability weight of 60% to demand deposits when ensuring
compliance with the central bank’s regulations concerning
and selected loans, which are accepted as adequate financial
assets by the ECB.
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f) An analysis of the statement of financial position by residual contractual maturity
NLB Group
in EUR thousands
31 Dec 2021
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Derivatives - hedge accounting
Fair value changes of hedged items in portfolio hedge of interest rate risk
Non-current assets held for sale
Property and equipment
Investment property
Intangible assets
Investments in associates and joint ventures
Current income tax assets
Deferred income tax assets
Other assets
Total assets
Financial liabilities held for trading
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
- lease liabilities
Provisions
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Total liabilities
Credit risk related commitments
Non-financial guarantees
5,005,052
7,678
6,739
401,080
38,317
119,930
466,930
92,505
568
-
-
-
-
-
-
-
-
23,983
6,162,782
7,585
35,377
56,053
889
15,771,461
535
-
120,182
512
7,314
2,722
-
36,495
16,039,125
578,233
30,426
-
-
-
-
-
921
163,233
400,588
124,948
2,374
1,912,038
773
-
-
7,051
-
-
-
-
3,948
620
19,859
-
-
3,340
1,888,222
783,028
1,552
4,519,726
25,538
-
1,330
-
89,813
43,693
29,259
-
-
31,934
37,563
-
-
10,161
608,737
752,226
-
3,141,189
104
-
5,752
-
157,201
3,931
29,817
11,525
-
6,423
161
Total
5,005,052
7,678
21,161
3,461,860
1,717,626
140,683
10,587,121
122,229
568
7,082
7,051
247,014
47,624
59,076
11,525
3,948
38,977
91,221
2,473,120
7,454,998
4,727,227
21,577,496
-
-
521
751,773
852,576
6,186
1,759
13,817
4,049
39,914
-
-
5,749
1,676,344
838,890
195,917
-
-
15,254
99,418
727,308
27,074
-
37,643
17,678
69,863
-
3,045
4,867
1,002,150
470,308
342,426
-
-
-
6,009
20,980
38,486
283,071
257
1,062
1,130
-
-
1,609
352,604
407,499
61,349
7,585
35,377
71,828
858,531
17,640,809
74,051
288,519
182,554
24,324
119,404
5,878
3,045
49,468
19,361,373
2,461,403
703,101
19,107
16,827
547,238
3,309
-
-
-
-
-
-
-
-
-
9,655
759,369
-
-
-
442
268,484
1,770
3,689
10,655
1,023
1,183
3,156
-
748
291,150
166,473
72,983
Total liabilities and credit-related commitments
16,647,784
530,606
2,711,151
1,814,884
821,452
22,525,877
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Performance Overview
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Events After 2021
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310
31 Dec 2020
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
NLB Group
in EUR thousands
Cash, cash balances at central banks, and other demand deposits at banks
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Fair value changes of hedged items in portfolio hedge of interest rate risk
Non-current assets held for sale
Property and equipment
Investment property
Intangible assets
Investments in associates and joint ventures
Current income tax assets
Deferred income tax assets
Other assets
Total assets
Financial liabilities held for trading
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
- lease liabilities
Provisions
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Total liabilities
Credit risk related commitments
Non-financial guarantees
3,961,812
16,046
6,067
352,474
74,540
154,686
538,078
80,692
-
-
-
-
-
-
1,656
327
24,548
5,210,926
15,485
61,161
52,434
658
14,109,959
977
-
111,166
1,092
8,507
644
763
31,914
-
15,173
120
57,055
47,087
36,706
421,665
8,319
-
-
-
-
-
-
22
-
9,109
595,256
-
-
19,813
717
375,751
2,731
3,690
7,703
1,059
1,183
358
-
412
14,394,760
413,417
563,821
25,177
226,551
67,127
-
1
24,954
337,298
76,672
4,375
1,733,251
3,380
-
8,658
-
-
-
-
2,691
-
54,992
2,246,272
-
-
163
17,468
1,069,785
9,120
1,759
9,552
4,850
32,785
-
-
4,505
1,149,987
703,691
154,766
-
47,223
1,171
1,960,192
695,030
1,238
4,252,968
20,597
885
-
78,847
41,501
32,274
-
-
28,759
8,337
7,169,022
-
-
223
129,215
825,076
41,072
-
25,970
16,947
79,159
-
3,301
2,464
1,123,427
408,880
334,078
-
6,412
10,081
807,271
609,758
-
2,673,898
150
12,959
-
170,270
13,341
29,394
7,988
-
2,703
154
Total
3,961,812
84,855
42,393
3,514,290
1,503,087
197,005
9,619,860
113,138
13,844
8,658
249,117
54,842
61,668
7,988
4,369
31,789
97,140
4,344,379
19,565,855
-
-
-
10,167
16,596
37,660
282,872
1,345
2,411
3,425
-
411
6,337
361,224
424,681
66,198
15,485
61,161
72,633
158,225
16,397,167
91,560
288,321
155,736
26,359
125,059
1,002
4,475
45,632
17,442,815
2,327,624
647,346
Total liabilities and credit-related commitments
14,983,758
707,095
2,008,444
1,866,385
852,103
20,417,785
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
311
31 Dec 2021
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
NLB
in EUR thousands
Cash, cash balances at central banks, and other demand deposits at banks
3,250,437
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Derivatives - hedge accounting
Fair value changes of hedged items in portfolio hedge of interest rate risk
Non-current assets held for sale
Property and equipment
Investment property
Intangible assets
Investments in subsidiaries, associates and joint ventures
Current income tax assets
Deferred income tax assets
Other assets
Total assets
Financial liabilities held for trading
Financial liabilities measured at fair value through profit or loss
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
- lease liabilities
Provisions
Other liabilities
Total liabilities
Credit risk related commitments
Non-financial guarantees
7,682
614
24,773
2,825
916
317,315
66,454
568
-
-
-
-
-
-
-
-
6,984
3,678,568
7,602
-
35,377
94,326
44,569
9,303,755
-
-
71,866
76
544
14,216
9,572,331
503,492
16,714
-
-
29
57,473
18,182
40,463
171,605
658
-
-
-
-
-
-
-
-
-
-
288,410
-
-
-
-
-
65,612
-
3,689
3,895
146
672
166
74,180
96,524
45,786
-
-
306
141,428
90,276
50,129
676,938
3,100
-
-
4,089
-
-
-
24,282
3,761
-
4,869
999,178
-
-
-
-
746,028
125,287
-
1,759
2
614
18,501
1,442
893,633
451,614
100,102
-
-
6,939
918,421
608,223
32,066
2,183,239
22,192
-
1,330
-
19,304
9,181
14,255
37,984
-
31,902
-
-
-
4,472
443,656
716,918
75,713
1,796,056
-
-
5,752
-
66,818
-
15,198
723,757
-
-
-
Total
3,250,437
7,682
12,360
1,585,751
1,436,424
199,287
5,145,153
92,404
568
7,082
4,089
86,122
9,181
29,453
786,023
3,761
31,902
11,853
3,885,036
3,848,340
12,699,532
-
352
-
15,003
82,882
156,322
406
-
23,495
2,006
29,646
3,683
313,795
280,201
240,761
-
-
-
-
-
8,629
-
283,071
13
414
-
1,532
293,659
220,580
33,803
7,602
352
35,377
109,329
873,479
9,659,605
406
288,519
99,271
3,256
49,363
21,039
11,147,598
1,552,411
437,166
Total liabilities and credit-related commitments
10,092,537
216,490
1,445,349
834,757
548,042
13,137,175
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31 Dec 2020
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Cash, cash balances at central banks, and other demand deposits at banks
2,261,533
NLB
in EUR thousands
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Fair value changes of hedged items in portfolio hedge of interest rate risk
Non-current assets held for sale
Property and equipment
Investment property
Intangible assets
Investments in subsidiaries, associates and joint ventures
Current income tax assets
Deferred income tax assets
Other assets
Total assets
Financial liabilities held for trading
Derivatives - hedge accounting
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
- lease liabilities
Provisions
Other liabilities
Total liabilities
Credit risk related commitments
Non-financial guarantees
16,381
526
91,312
66,893
392
322,669
33,661
-
-
-
-
-
-
-
-
6,558
2,799,925
15,500
61,161
41,635
85
8,412,510
-
-
57,840
73
495
14,610
-
-
158
19,936
13,792
22,824
141,946
218
-
-
-
-
-
-
-
-
-
-
1
26,084
185,583
41,502
50,274
609,404
40
-
4,454
-
-
-
1,719
1,923
-
5,106
-
2,449
3,885
867,674
556,444
28,990
2,029,791
20,584
885
-
22,173
8,300
13,058
65,140
-
29,214
-
-
-
4,453
551,846
599,249
55,840
1,460,368
-
12,959
-
69,502
-
15,047
683,863
-
-
-
Total
2,261,533
18,831
35,106
1,716,351
1,277,880
158,320
4,564,178
54,503
13,844
4,454
91,675
8,300
28,105
750,722
1,923
29,214
11,664
198,874
926,090
3,648,587
3,453,127
11,026,603
-
-
-
704
108,772
-
3,690
6,006
128
669
94
-
-
-
12,948
183,709
13
1,759
-
582
19,463
2,236
220,710
418,866
90,299
-
-
-
120,260
141,077
-
-
21,899
1,914
41,533
2,430
329,113
261,282
245,158
-
-
-
9,467
4,687
-
282,870
12
515
1,630
2,631
15,500
61,161
41,635
143,464
8,850,755
13
288,319
85,757
3,212
63,790
22,001
301,812
9,575,607
270,333
36,406
1,572,915
431,665
8,603,909
120,063
478,872
18,203
143,562
41,599
Total liabilities and credit-related commitments
9,100,984
305,224
729,875
835,553
608,551
11,580,187
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g) Derivative cash flows
The table below illustrates cash flows from derivatives,
residual maturities. The amounts disclosed in the table are the
contractual undiscounted cash flows prepared on the basis of
broken down into the relevant maturity buckets based on
spot rates on the reporting date.
31 Dec 2021
Foreign exchange derivatives
- Forwards
- Outflow
- Inflow
- Swaps
- Outflow
- Inflow
Interest rate derivatives
- Interest rate swaps and cross-currency swaps
- Outflow
- Inflow
- Caps and floors
- Outflow
- Inflow
Total outflow
Total inflow
31 Dec 2020
Foreign exchange derivatives
- Forwards
- Outflow
- Inflow
- Swaps
- Outflow
- Inflow
Interest rate derivatives
- Interest rate swaps and cross-currency swaps
- Outflow
- Inflow
Total outflow
Total inflow
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
NLB Group
in EUR thousands
(26,202)
26,214
(96,742)
96,483
(1,116)
34
-
-
(124,060)
122,731
(10,460)
10,465
(2,362)
2,364
(2,107)
237
-
-
(14,929)
13,066
(16,853)
16,865
(17,335)
17,346
(10,153)
3,321
(1)
2
(44,342)
37,534
(12,180)
12,199
-
-
(26,901)
7,179
(51)
52
(39,132)
19,430
-
-
-
-
(12,053)
7,287
-
-
(12,053)
7,287
(65,695)
65,743
(116,439)
116,193
(52,330)
18,058
(52)
54
(234,516)
200,048
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
NLB Group
in EUR thousands
(24,456)
24,494
(20,709)
20,297
(692)
73
(45,857)
44,864
(28,334)
28,368
(49,105)
49,112
(2,962)
718
(80,401)
78,198
(65,976)
66,041
(36,055)
36,034
(11,378)
4,394
(113,409)
106,469
(13,817)
13,828
-
-
(42,239)
8,777
(56,056)
22,605
-
-
-
-
(18,643)
2,348
(18,643)
2,348
(132,583)
132,731
(105,869)
105,443
(75,914)
16,310
(314,366)
254,484
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31 Dec 2021
Foreign exchange derivatives
- Forwards
- Outflow
- Inflow
- Swaps
- Outflow
- Inflow
Interest rate derivatives
- Interest rate swaps and cross-currency swaps
- Outflow
- Inflow
- Caps and floors
- Outflow
- Inflow
Total outflow
Total inflow
31 Dec 2020
Foreign exchange derivatives
- Forwards
- Outflow
- Inflow
- Swaps
- Outflow
- Inflow
Interest rate derivatives
- Interest rate swaps and cross-currency swaps
- Outflow
- Inflow
Total outflow
Total inflow
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
NLB
in EUR thousands
(24,891)
24,902
(102,036)
101,772
(1,116)
34
-
-
(128,043)
126,708
(10,460)
10,465
(6,875)
6,864
(2,107)
237
-
-
(19,442)
17,566
(12,180)
12,199
-
-
(26,901)
7,179
(51)
52
(39,132)
19,430
(16,853)
16,865
(17,335)
17,346
(10,153)
3,321
(1)
2
(44,342)
37,534
NLB
-
-
-
-
(12,053)
7,287
-
-
(12,053)
7,287
(64,384)
64,431
(126,246)
125,982
(52,330)
18,058
(52)
54
(243,012)
208,525
in EUR thousands
Up to 1 Month
1 Month to 3 Months
3 Months to 1 Year
1 Year to 5 Years
Over 5 Years
Total
(23,685)
23,715
(24,874)
24,821
(692)
73
(49,251)
48,609
(31,650)
31,685
(53,580)
53,592
(2,962)
718
(88,192)
85,995
(65,976)
66,041
(6,063)
6,068
(11,378)
4,394
(83,417)
76,503
(13,817)
13,828
-
-
(42,239)
8,777
(56,056)
22,605
-
-
-
-
(18,643)
2,348
(18,643)
2,348
(135,128)
135,269
(84,517)
84,481
(75,914)
16,310
(295,559)
236,060
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6.4. Management of non-financial risks
a) Operational risk
When assuming operational risks, NLB Group follows the
mostly due to inclusion of the net losses arising from acquired
The concept of the action plan that is prepared each year
Komercijalna banka Group. Nevertheless, the reported
is such that the activities contribute to the upgrading or
incurred net loss remained within the set tolerance limits for
improvement of the Business Continuity Management System.
guideline that such risks may not materially impact its
operational risk.
operations and, therefore, the risk appetite for operational
In 2021, Business Continuity Management was upgraded
System according to external influence – we added scenarios
risks is low to moderate. The risk is also gradually decreasing
In general, considerable attention is paid to reporting loss
for most likely events which could affect the bank (earthquake,
due to the reduced complexity of operations in NLB Group,
events, their mitigation measures, and defining operational
fire, floods, sleet, epidemic, terrorism, IT disaster, cyber-
with disinvestment process of non-core activities and
risks in all segments. To treat major loss events appropriately
attack).
optimisation of internal processes. NLB Group has set up a
and as soon as possible, the Bank introduced an escalation
system of collecting loss events, identification, assessment,
scale for reporting bigger or more important loss events to
The basis for modernising the business continuity plans is the
and management of operational risks, all with the aim of
the top levels of decision-making at NLB and the Supervisory
regular annual Business Impact Analysis (BIA). On its basis,
ensuring quality management of operational risks. This is
Board of NLB. Additional attention is paid to the reporting of
the adequacy of the plans for office buildings, HR plans and
particularly valid in strategic banking members.
potential loss events in order to improve the internal controls,
IT plans is checked. The best indicator of the adequacy of the
All NLB Group banking members monitor risk appetite limits
the methodology to monitor, analyse, and report key risk
and an IT test were carried out at NLB (no evacuation and
for operational risk. The upper tolerance limit is defined as the
indicators is established, servicing as an early warning
manual procedures test because of the COVID-19 pandemic).
limit amount of net loss that an individual member still allows
system. The aim is to improve business and supporting
No major deviations were identified.
and thus minimise those and similar events. Furthermore,
business continuity plans is testing. In 2021, only external tests
in its operations. If the sum of net loss exceeds the tolerance
processes, as well enabling prompt response.
limit, a special treatment of major loss events is required and,
In NLB Group, know-how and methodologies are transferred
if necessary, takes additional measures for the prevention or
Through comprehensive identification of operational
to the members (except non-core members which are in
mitigation of the same or similar loss events are taken. The
risks, possible future losses are identified, estimated, and
the process of liquidation). The members have adopted
warning and critical limit of loss events are also defined, which in
appropriately managed. Each year, special emphasis is
appropriate documents which are in line with the standards
case of exceeding require escalation procedures an acceptance
placed on current risks as a result of risk identification
of NLB and revised in accordance with the development of
of possible additional risk management measures. In addition,
process, including ESG risks. Additional KRIs have been
business continuity management. The activity of the members
the Bank does not allow certain risks in its business – for them
addressed for ESG risks, servicing as an early warning
is monitored throughout the year, and expert assistance is
a so-called ‘zero tolerance’ was defined. For monitoring some
system. The major operational risks are actively managed
provided if necessary.
specific more important key risk indicators, that could show a
with the measures taken to reduce them. An operational
possible increase of an operational risk, the Bank developed a
risk profile is prepared once a year on the basis of the
For more efficient functioning of the business continuity
specific methodology as an early warning system. Such risks
operational risk identification. Special emphasis is put on
management system in NLB Group, training courses and visits
are periodically monitored in different business areas, and the
the most topical risks, among which in particular are those
to individual banking members are also provided. In 2021,
results are discussed at the Operational Risk Committee. The
with a low probability of occurrence and very high potential
visits of NLB Group banking subsidiaries were suspended
latter was named as the highest decision-making authority in the
financial influence. For this purpose, the Bank has developed
due to COVID-19 situation, nevertheless all preventive and
area of operational risk management. Relevant operational risk
the methodology of stress-testing for operational risk. The
response measures with regard to business continuity were
committees were also appointed at other NLB Group banks. The
methodology is a combination of modelling loss event data
sent to the members with the purpose to help and act in the
Management Board serves in this role at other subsidiaries. The
and scenario analysis for exceptional, but plausible events.
uniform way. Besides, workshops were performed to present
main task of the aforementioned bodies is to discuss the most
Scenario analyses are made based on experience and
development of Business Continuity Management System
significant operational risks and loss events, and to monitor and
knowledge of experts from various critical areas.
to all the NLB Group members to be more resilient in the
support the effective management of operational risks including
epidemic/pandemic circumstances.
their mitigation within an individual entity. All NLB Group entities,
The capital requirement for operational risk is calculated
which are included in the consolidation, have adopted relevant
using the basic indicator approach at the NLB Group level and
With regards to IT failures, the Bank successfully used the IT
documents that are in line with NLB standards. In banking
using the standardised approach at the NLB level.
plans and instructions for manual procedures, and thus also
members, these documents are in line with the development
of operational risk management and regularly updated. The
whole NLB Group uses uniform software support, which is also
b) Business Continuity Management (BCM)
In NLB Group, business continuity management is carried out
During COVID-19 pandemic in Slovenia and SEE, NLB Group
ensured business operations in emergency situations.
regularly upgraded.
to protect lives, goods, and reputation. Business continuity
has taken measures to protect its customers and employees,
In NLB Group, the reported incurred net loss arising from
loss events in 2021 was higher than in the previous year,
disasters, IT disasters, epidemic/pandemic, and the undesired
conditions and making sure that the services offered by the
effects of the environment to mitigate their consequences.
Group are provided without any disruption. The NLB Group
plans are prepared to be used in the event of natural
such as (but not limited to) ensuring the relevant safety
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continuously offered necessary services to clients, especially
between market participants at the measurement date. NLB
• Level 3 – A valuation technique where inputs are not based
through digital channels (mobile banking, video calls and
Group uses various valuation techniques to determine fair
on observable market data. Unobservable inputs are
telebanking), which the NLB Group continues to develop at an
value. IFRS 13 specifies a fair value hierarchy with respect to
used to the extent that relevant observable inputs are not
accelerated pace. A Crisis Management Team was activated
the inputs and assumptions used to measure financial and
available. Unobservable inputs must reflect the assumptions
in the Bank and other banking members with full engagement
non-financial assets and liabilities at fair value. Observable
that market participants would use when pricing an asset or
of the Management Board members. Special attention was
inputs reflect market data obtained from independent
liability. This level includes non-tradable shares and bonds,
paid to continuous provision of services to clients, their
sources, while unobservable inputs reflect the assumptions
and derivatives associated with these investments and
monitoring, health protection measures, and prevention of
of NLB Group. This hierarchy gives the highest priority to
other assets and liabilities for which fair value cannot be
cyber fraud.
observable market data when available, and the lowest
determined with observable market inputs.
priority to unobservable market data. NLB Group considers
c) Management of other types of non-financial risks
relevant and observable market prices in its valuations, where
Wherever possible, fair value is determined as an observable
– capital risk, strategic risks, reputation risk, and
possible. The fair value hierarchy comprises the following
market price in an active market for an identical asset or
profitability risk
Risks not included in the regulatory capital requirements
levels:
liability. An active market is a market in which transactions for
• Level 1 – Quoted prices (unadjusted) on active markets. This
an asset or liability are executed with sufficient frequency and
(standardised approach) but have or might have an important
level includes listed equities, debt instruments, derivatives,
volume to provide pricing information on an ongoing basis.
influence on the risk profile of NLB Group, are regularly
units of investment funds, and other unadjusted market
Assets and liabilities measured at fair value in active markets
assessed, monitored, and managed. In addition, they are
prices of assets and liabilities. When an asset or liability
are determined as the market price of a unit (e.g., share) at the
integrated into internal capital adequacy assessment process
may be exchanged in multiple active markets, the principal
measurement date, multiplied by the quantity of units owned
(ICAAP). NLB Group established internal methodologies for
market for the asset or liability must be determined. In the
by NLB Group. The fair value of assets and liabilities whose
identifying and assessing specific types of risk, referring to
absence of a principal market, the most advantageous
market is not active is determined using valuation techniques.
the Group’s business model or arising from other external
market for the asset or liability must be determined.
These techniques bear a different intensity level of estimates
circumstances. If a certain risk is assessed as a materially
and assumptions, depending on the availability of observable
important risk, relevant disposable preventive and mitigation
• Level 2 – A valuation technique where inputs are
market inputs associated with the asset or liability that is the
measures are applied, including regular monitoring of their
observable, either directly (i.e., prices) or indirectly (i.e.,
subject of the valuation. Unobservable inputs shall reflect the
effectiveness. On this basis, internal capital is considered and
derived from prices). Level 2 includes prices quoted for
estimates and assumptions that other market participants
its consumption regularly monitored.
similar assets or liabilities in active markets and prices
would use when pricing the asset or liability.
6.5. Fair value hierarchy of financial and
non-financial assets and liabilities
Fair value is the price that would be received when selling an
asset or paid to transfer a liability in an orderly transaction
markets that are not active. The sources of input parameters
For non-financial assets measured at fair value and not
for financial instruments, such as yield curves, credit
classified at Level 1, fair value is determined based on valuation
spreads, foreign exchange rates, and the volatility of interest
reports provided by certified valuators. Valuations are prepared
rates and foreign exchange rates, is Bloomberg.
in accordance with the International Valuation Standards (IVS).
quoted for identical or similar assets, and liabilities in
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a) Financial and non-financial assets and liabilities measured at fair value in the financial statements
NLB Group
NLB
Level 1
Level 2
Level 3 Total fair value
Level 1
Level 2
Level 3 Total fair value
in EUR thousands
31 Dec 2021
Financial assets
Financial instruments held for trading
Derivatives
Derivatives - hedge accounting
Financial assets measured at fair value through other comprehensive income
2,010,485
1,449,888
Debt instruments
Equity instruments
Non-trading financial assets mandatorily at fair value through profit and loss
Debt instruments
Equity instruments
Loans
Financial liabilities
Financial instruments held for trading
Derivatives
Derivatives - hedge accounting
Financial liabilities measured at fair value through profit or loss
Non-financial assets
Investment properties
Non-current assets held for sale
Non-financial assets impaired during the year
Recoverable amount of property and equipment
Recoverable amount of intangible assets
Recoverable amount of investments in subsidiaries, associates and joint ventures
2,009,699
1,385,211
786
16,689
4,261
12,428
-
-
-
-
-
-
-
-
-
-
64,677
-
-
-
-
7,585
7,585
35,377
-
19,982
7,051
-
-
-
-
-
-
7,677
7,677
568
7,678
7,678
568
-
-
-
3,461,860
1,533,797
3,395,261
1,533,797
1
1
-
1,487
351
1,136
4,472
-
4,472
-
-
-
-
-
27,642
-
66,599
21,161
4,261
16,900
-
7,585
7,585
35,377
-
47,624
7,051
2,990
2,990
872
-
872
-
7,681
7,681
568
51,735
7,245
44,490
7,888
-
-
7,888
7,602
7,602
35,377
352
9,181
4,089
-
-
201
1
1
-
219
-
219
4,472
-
4,472
-
-
-
-
-
-
-
-
-
7,682
7,682
568
1,585,751
1,541,042
44,709
12,360
-
4,472
7,888
7,602
7,602
35,377
352
9,181
4,089
-
-
2,618
2,819
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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NLB Group
NLB
Level 1
Level 2
Level 3 Total fair value
Level 1
Level 2
Level 3 Total fair value
in EUR thousands
31 Dec 2020
Financial assets
Financial instruments held for trading
Debt instruments
Derivatives
2,450
2,450
-
81,619
66,356
15,263
Financial assets measured at fair value through other comprehensive income
2,068,317
1,444,146
Debt instruments
Equity instruments
Non-trading financial assets mandatorily at fair value through profit and loss
Debt instruments
Equity instruments
Loans
Financial liabilities
Financial instruments held for trading
Derivatives
Derivatives - hedge accounting
Non-financial assets
Investment properties
Non-current assets held for sale
Non-financial assets impaired during the year
Recoverable amount of property and equipment
Recoverable amount of investments in subsidiaries, associates and joint ventures
2,060,346
1,385,245
7,971
13,146
2,157
10,989
-
-
-
-
-
-
-
-
58,901
-
-
-
-
15,485
15,485
61,161
22,632
8,658
-
-
786
-
786
1,827
900
927
29,247
-
4,171
25,076
-
-
-
32,210
-
3,897
-
84,855
68,806
16,049
2,450
2,450
-
3,514,290
1,663,619
3,446,491
1,663,619
67,799
42,393
2,157
15,160
25,076
15,485
15,485
61,161
54,842
8,658
3,897
-
-
-
-
-
-
-
-
-
-
-
-
-
15,595
-
15,595
52,458
7,585
44,873
7,947
-
-
786
-
786
274
-
274
27,159
-
4,171
18,831
2,450
16,381
1,716,351
1,671,204
45,147
35,106
-
4,171
7,947
22,988
30,935
15,500
15,500
61,161
8,300
4,454
-
280
-
-
-
-
-
-
4,670
15,500
15,500
61,161
8,300
4,454
-
4,950
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b) Significant transfers of financial instruments between levels of valuation
NLB Group’s policy of transfers of financial instruments between levels of valuation is illustrated in the table below.
Fair value hierarchy
Equities
Equity stake
Funds
Debt securities
Loans
Equities
Currency
Interest
Derivatives
1
2
3
Transfers
market value from
exchange market
regular valuation by
fund management
company
market value from
exchange market
valuation model
valuation model
valuation model
valuation model
valuation model
valuation model
valuation model
valuation model
(underlying in level 1)
valuation model
(underlying instrument
in level 3)
valuation model
valuation model
from level 1 to 3
from level 1 to 3
from level 1 to 2
from level 2 to 3
from level 2 to 3
equity excluded from
exchange market
fund management
company stops
publishing regular
valuation
debt securities excluded
from exchange market
counterparty
reclassified from
performing to NPL
underlying instrument
excluded from
exchange market
from level 1 to 3
from level 3 to 1
from level 1 to 2
from level 3 to 2
from level 3 to 2
companies in
insolvency proceedings
from level 1 to 3
equity not liquid (not
trading for 2 months)
from level 3 to 1
equity included in
exchange market
For 2021 and 2020, neither NLB Group nor NLB had any
significant transfers between levels of valuation of financial
instruments measured at fair value in financial statements.
fund management
company starts
publishing regular
valuation
debt securities not
liquid (not trading
for 6 months)
counterparty
reclassified from
NPL to performing
underlying instrument
included in
exchange market
from level 1 to 3
and from 2 to 3
companies in
insolvency proceedings
from level 2 to 1
and from 3 to 1
start trading with
debt securities on
exchange market
from level 3 to 2
until valuation
parameters are
confirmed on ALCO (at
least on quarterly basis)
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c) Financial and non-financial assets and liabilities at Level 2
yield, risk premium, and the risk premium to account for
NLB Group selects valuation model and values of
regarding the fair value hierarchy
Financial instruments on Level 2 of the fair value hierarchy at
capital preservation are used. Rents at similar locations are
unobservable input data within a reasonable possible range,
generated from various sources, like data from lessors and
but uses model and input data that other market participants
NLB Group and NLB include:
lessees, web databases, and own databases. NLB Group has
would use.
• debt securities: mostly bonds not quoted on active markets
observable data for all investment property at its disposal.
and valuated by a valuation model;
If observable data for similar locations are not available,
At least one of the three valuation methods are used for the
• derivatives: derivatives except forward derivatives and
NLB Group uses data from wider locations and adjusts it
valuation of investment property. The majority of investment
options on equity instruments that are not quoted on active
appropriately.
markets;
property is valued using the income approach where the
present value of future expected returns is assessed. When
• performing loans measured at fair value, which according
d) Financial and non-financial assets and liabilities at Level 3
valuing an investment property, average rents at similar
to IFRS 9 do not pass SPPI test. Fair value is calculated on
the basis of the discounted expected future cash flows with
of the fair value hierarchy
Financial instruments on Level 3 of the fair value hierarchy in
locations and capitalisation ratios such as: the risk-free
yield, risk premium and the risk premium to account for
the required rate of return; and
• the National Resolution Fund.
NLB Group and NLB include:
capital preservation are used. Rents at similar locations are
• equities: mainly financial equities that are not quoted on
generated from various sources, like data from lessors and
active markets;
lessees, web databases, and own databases. NLB Group has
Non-financial assets on Level 2 of the fair value hierarchy at
• derivative financial instruments: forward derivatives and
observable data for all investment property at its disposal.
NLB Group and NLB include investment properties.
options on equity instruments that are not quoted on an
If observable data for similar locations are not available,
active organised market. Fair values for forward derivatives
NLB Group uses data from wider locations and adjusts it
When valuing bonds classified on Level 2, NLB Group primarily
are determined using the discounted cash flow model. Fair
appropriately.
uses the income approach based on an estimation of future
values for equity options are determined using valuation
cash flows discounted to the present value.
models for options (the Garman and Kohlhagen model,
binomial model, and Black-Scholes model). Unobservable
The input parameters used in the income approach are the
inputs include the fair values of underlying instruments
risk-free yield curve and the spread over the yield curve
determined using valuation models. The source of observable
(credit, liquidity, country).
market inputs is the Bloomberg information system; and
• non-performing loans measured at fair value, which
Fair values for derivatives are determined using a discounted
according to IFRS 9 do not pass SPPI test. Fair value is
cash flow model based on the risk-free yield curve. Fair values
calculated on the basis of the discounted expected future
for options are determined using valuation models for options
cash flows with the required rate of return. In defining the
(the Garman and Kohlhagen model, binomial model, and
expected cash flows for non-performing loans, the value of
Black-Scholes model).
collateral and other pay off estimates can be used.
At least one of the three valuation methods are used for the
Non-financial assets on Level 3 of the fair value hierarchy at
valuation of investment property. The majority of investment
NLB Group include investment properties.
property is valued using the income approach where the
present value of future expected returns is assessed. When
NLB Group uses three valuation methods for the valuation of
valuing an investment property, average rents at similar
equity financial assets mentioned in first bullet: the income,
locations and capitalisation ratios such as: the risk-free
market, and cost approaches.
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Movements of financial assets and liabilities at Level 3
NLB Group
Derivatives
Debt instruments
Equity instruments
Equity instruments
Loans and other
financial assets
Financial instruments
held for trading
Financial assets measured
at fair value through OCI
Non-trading financial assets mandatorily
at fair value through profit or loss
Total financial assets
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
Balance as at 1 January 2020
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiaries
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Balance as at 31 December 2020
Effects of translation of foreign
operations to presentation currency
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Balance as at 31 December 2021
807
-
-
(21)
-
-
-
-
786
-
(785)
-
-
-
1
-
-
900
-
-
-
-
-
900
-
-
-
63
(612)
351
4,109
53
85
-
21
-
-
(3,341)
927
(2)
-
266
-
(55)
1,136
2,716
-
-
1,642
-
(187)
-
-
4,171
-
(56)
-
357
-
-
4,472
14,961
-
-
(2,720)
-
(48)
20,399
(7,516)
25,076
-
15,747
-
9
3,017
(43,849)
-
22,593
53
985
(1,099)
21
(235)
20,399
(10,857)
31,860
(2)
14,906
266
366
3,080
(44,516)
5,960
7,998
-
(8,006)
-
8
-
-
-
-
-
-
-
-
-
-
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NLB
Derivatives
Equity instruments
Equity instruments
Loans and other
financial assets
Financial instruments held
for trading
Financial assets measured
at fair value through OCI
Non-trading financial assets mandatorily
at fair value through profit or loss
Total financial assets
Balance as at 1 January 2020
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Balance as at 31 December 2020
Valuation:
- through profit or loss
Foreign exchange differences
Increases
Decreases
Balance as at 31 December 2021
807
(21)
-
-
-
-
786
(785)
-
-
-
1
259
-
15
-
-
-
274
-
-
-
(55)
219
2,716
1,642
-
(187)
-
-
4,171
(56)
357
-
-
4,472
13,055
(2,831)
-
(48)
19,833
(7,021)
22,988
13,749
9
3,005
(39,751)
-
16,837
(1,210)
15
(235)
19,833
(7,021)
28,219
12,908
366
3,005
(39,806)
4,692
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
7,746
(7,754)
-
8
-
-
-
-
-
-
-
-
NLB Group and NLB recognise the effects from valuation of
from non-trading financial assets mandatorily at fair value
trading instruments in income statement line item ‘Gains less
through profit or loss,’ and effects from valuation of financial
losses from financial assets and liabilities held for trading,’
assets measured at fair value through other comprehensive
effects from valuation of non-trading equity instruments
income in the accumulated other comprehensive income line
and loans mandatorily measured at fair value through
item ‘Financial assets measured at fair value through other
profit or loss in income statement line item ‘Gains less losses
comprehensive income.’
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In 2021 and in 2020, NLB Group and NLB recognised the following unrealised gains or losses for financial instruments that were at Level 3 as at 31 December:
NLB Group
2021
Items of Income statement
Gains less losses from non-trading assets
mandatorily at fair value through profit or loss
Foreign exchange translation gains less losses
Item of Other comprehensive income
Financial assets measured at fair value
through other comprehensive income
NLB Group
2020
Items of Income statement
Gains less losses from financial assets
and liabilities held for trading
Gains less losses from non-trading assets
mandatorily at fair value through profit or loss
Foreign exchange translation gains less losses
Item of Other comprehensive income
Financial assets measured at fair value
through other comprehensive income
Financial assets
held for trading
Financial assets measured at
fair value through OCI
Non-trading financial assets mandatorily
at fair value through profit or loss
Derivatives
Equity instruments
Equity instruments
Loans and other
financial assets
-
-
-
-
-
266
(56)
357
-
-
-
-
Financial assets
held for trading
Financial assets measured at
fair value through OCI
Non-trading financial assets mandatorily
at fair value through profit or loss
Derivatives
Equity instruments
Equity instruments
Loans and other
financial assets
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
-
-
-
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
(21)
-
-
-
-
-
-
21
-
1,642
(187)
-
-
(2,720)
(48)
-
8,006
(8)
-
-
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NLB
2021
Items of Income statement
Gains less losses from non-trading assets
mandatorily at fair value through profit or loss
Foreign exchange translation gains less losses
NLB
2020
Items of Income statement
Gains less losses from financial assets
and liabilities held for trading
Gains less losses from non-trading assets
mandatorily at fair value through profit or loss
Foreign exchange translation gains less losses
Item of Other comprehensive income
Financial assets measured at fair value
through other comprehensive income
Movements of non-financial assets at Level 3
Investment property
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5.12.c)
Additions
Disposals
Transfer from/(to) property and equipment
Transfer from/(to) non-current assets held for sale
Transfer from/(to) other assets
Net valuation to fair value
Disposal of subsidiary (note 5.12.b)
Balance as at 31 December
Financial assets
held for trading
Financial assets measured at
fair value through OCI
Non-trading financial assets mandatorily at
fair value through profit or loss
Derivatives
Equity instruments
Equity instruments
-
-
-
-
(56)
357
Loans and other
financial assets
-
-
Financial assets
held for trading
Financial assets measured at
fair value through OCI
Non-trading financial assets mandatorily at
fair value through profit or loss
Derivatives
Equity instruments
Equity instruments
Loans and other
financial assets
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
-
-
in EUR thousands
Financial liabilities
measured at fair value
through profit or loss
Loans and other
financial liabilities
-
1,642
(187)
-
-
(2,831)
(48)
-
7,754
(8)
-
-
(21)
-
-
-
-
-
-
15
2021
32,210
19
-
-
(502)
(7,568)
22
1,260
3,416
(1,215)
27,642
in EUR thousands
NLB Group
2020
28,933
(24)
19,643
609
(189)
(62)
17
(16,790)
73
-
32,210
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e) Fair value of financial instruments not measured at fair
disclosure purposes only and do not impact NLB Group
value in financial statements
statement of financial position or income statement.
Financial instruments not measured at fair value in financial
The table below shows estimated fair values of financial
statements are not managed on a fair value basis. For
instruments not measured at fair value in the statement of
respective instruments fair values are calculated for
financial position.
NLB Group
NLB
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
in EUR thousands
Financial assets measured at amortised cost
- debt securities
- loans and advances to banks
1,717,626
140,683
1,745,225
140,843
1,503,087
197,005
- loans and advances to customers
10,587,121
10,751,051
9,619,860
- other financial assets
122,229
122,229
113,138
1,563,103
197,220
9,873,137
113,138
1,436,424
199,287
5,145,153
92,404
1,461,185
204,743
1,277,880
158,320
1,333,840
165,966
5,235,839
4,564,178
4,674,069
92,404
54,503
54,503
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
71,828
858,531
69,720
849,834
72,633
158,225
72,648
155,673
109,329
873,479
109,522
863,970
41,635
143,464
41,635
140,702
- due to customers
17,640,809
17,658,686
16,397,167
16,414,382
9,659,605
9,664,607
8,850,755
8,860,267
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
74,051
288,519
206,878
73,744
292,130
206,878
91,560
288,321
182,095
93,020
281,001
182,095
406
288,519
102,527
406
292,130
102,527
13
288,321
88,969
13
281,001
88,969
Loans and advances to banks
Deposits and borrowings
Other financial assets and liabilities
The estimated fair value of deposits is based on discounted
The fair value of sight deposits and overnight deposits equals
The carrying amount of other financial assets and liabilities is
cash flows using prevailing market interest rates for
their carrying value. However, their actual value for NLB
a reasonable approximation of their fair value as they mainly
instruments with similar credit risk and residual maturities.
Group depends on the timing and amounts of cash flows,
relate to short-term receivables and payables.
The fair value of overnight deposits equals their carrying
current market rates, and the credit risk of the depository
value.
institution itself. A portion of sight deposits is stable, similar to
term deposits. Therefore, their economic value for NLB Group
Loans and advances to customers
differs from the carrying amount.
The estimated fair value of loans and advances represents the
discounted amount of estimated future cash flows expected
The estimated fair value of other deposits and borrowings
to be received. Expected cash flows are discounted at current
from customers is based on discounted cash flows using
market rates for debts with similar credit risk and residual
interest rates for new deposits with similar residual maturities.
maturities to determine their fair value.
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Fair value hierarchy of financial instruments not measured at fair value in financial statements
31 Dec 2021
NLB Group
NLB
Level 1
Level 2
Level 3
Total fair value
Level 1
Level 2
Level 3
Total fair value
in EUR thousands
Financial assets measured at amortised cost
- debt securities
1,434,411
- loans and advances to banks
- loans and advances to customers
- other financial assets
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
-
-
-
-
-
-
-
245,700
-
303,647
140,843
10,751,051
122,229
69,720
849,834
17,658,686
73,744
46,430
206,878
7,167
-
-
-
-
-
-
-
-
-
1,745,225
140,843
10,751,051
122,229
69,720
849,834
17,658,686
73,744
292,130
206,878
1,358,293
-
-
-
-
-
-
-
245,700
-
102,892
204,743
5,235,839
92,404
109,522
863,970
9,664,607
406
46,430
102,527
-
-
-
-
-
-
-
-
-
-
1,461,185
204,743
5,235,839
92,404
109,522
863,970
9,664,607
406
292,130
102,527
in EUR thousands
31 Dec 2020
NLB Group
NLB
Level 1
Level 2
Level 3
Total fair value
Level 1
Level 2
Level 3
Total fair value
Financial assets measured at amortised cost
- debt securities
1,267,437
- loans and advances to banks
- loans and advances to customers
- other financial assets
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- borrowings from other customers
- subordinated liabilities
- other financial liabilities
-
-
-
-
-
-
-
234,629
-
288,484
197,220
9,873,137
113,138
72,648
155,673
16,414,382
93,020
46,372
182,095
7,182
-
-
-
-
-
-
-
-
-
1,563,103
197,220
9,873,137
113,138
72,648
155,673
16,414,382
93,020
281,001
182,095
1,254,337
-
-
-
-
-
-
-
234,629
-
79,503
165,966
4,674,069
54,503
41,635
140,702
8,860,267
13
46,372
88,969
-
-
-
-
-
-
-
-
-
-
1,333,840
165,966
4,674,069
54,503
41,635
140,702
8,860,267
13
281,001
88,969
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6.6. Offsetting financial assets
and financial liabilities
NLB Group has entered into bilateral foreign exchange netting
arrangements with certain banks and corporates. Cash
flows from such transactions that are due on the same day
in the same currency, are settled on a net basis, i.e., a single
cash flow for each currency. The settlement of all interest
rates derivatives is also carried out by netting of both legs
of transaction. Assets and liabilities related to these netting
mitigation and collateralisation of exposures, as well as the
arrangements are not presented in a net amount in the
daily settlement of cash flows for each currency.
statement of financial position because netting rules apply to
cash flows and not to the entire financial instrument.
All derivatives are conducted under the conditions of signed
In 2013, NLB Group also novated certain standardised
in place along with CSA annex and for corporates domestic
derivatives (some interest rate swaps) to a clearing house or
MA is in place, which enable daily evaluation and exchange of
central counterparty. A system of daily margins assures the
margining.
Master Agreements (MA), with international banks ISDA MA is
31 Dec 2021
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2020
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2021
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2020
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
Gross amounts of recognised
financial assets/liabilities
8,239
42,961
Gross amounts of recognised
financial assets/liabilities
15,820
76,646
Gross amounts of recognised
financial assets/liabilities
8,249
42,978
NLB Group
Amounts not set off in the statement of financial position
in EUR thousands
Impact of master netting agreements
Financial instruments collateral
Net amount
998
998
NLB Group
445
41,121
6,796
842
in EUR thousands
Amounts not set off in the statement of financial position
Impact of master netting agreements
Financial instruments collateral
Net amount
608
608
NLB
594
74,861
14,618
1,177
in EUR thousands
Amounts not set off in the statement of financial position
Impact of master netting agreements
Financial instruments collateral
Net amount
1,008
1,008
NLB
445
41,121
6,796
849
in EUR thousands
Gross amounts of recognised
financial assets/liabilities
16,189
76,661
Amounts not set off in the statement of financial position
Impact of master netting agreements
Financial instruments collateral
Net amount
623
623
594
74,861
14,972
1,177
NLB Group and NLB have no financial assets/liabilities set off
in the statement of financial position.
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7. Analysis by segment for NLB Group
a) Segments
Retail
Banking
in Slovenia
Corporate and
Investment
Banking
in Slovenia
Strategic
Foreign
Markets
Financial
Markets
in Slovenia
Non-Core
Members
NLB Group
in EUR thousands
Other activities
Unallocated
Total
2021
Total net income
Net income from external customers
Intersegment net income
Net interest income
Net interest income from external customers
Intersegment net interest income
171,046
188,629
(17,583)
79,535
98,898
(19,363)
101,505
110,588
(9,083)
35,714
44,481
(8,767)
361,945
363,452
(1,507)
266,804
270,839
(4,035)
Administrative expenses
(104,844)
(40,829)
(198,589)
Depreciation and amortisation
Reportable segment profit/(loss) before
impairment and provision charge
Other net gains/(losses) from equity investments
in subsidiaries, associates and joint ventures
Impairment and provisions charge
Profit/(loss) before income tax
Owners of the parent
Non-controlling interests
Income tax
Profit for the year
(11,659)
54,543
1,108
(6,684)
48,967
48,967
-
-
(4,278)
56,398
-
30,450
86,848
86,848
-
-
(29,329)
134,027
-
(20,779)
113,248
101,784
11,464
-
24,107
(8,855)
32,962
26,377
(6,188)
32,565
(7,963)
(677)
15,467
-
329
15,796
15,796
-
-
7,223
7,014
209
1,331
1,751
(420)
6,127
6,091
36
(401)
(421)
20
(10,534)
(10,259)
(833)
(4,144)
-
5,403
1,259
1,259
-
-
(619)
(4,751)
-
39
(4,712)
(4,712)
-
-
Reportable segment assets
2,811,209
2,333,769
9,797,839
6,190,193
95,905
337,056
Investments in associates and joint ventures
11,525
-
Reportable segment liabilities
7,720,693
1,966,530
Additions to non-current assets
9,972
4,218
-
8,315,316
26,608
-
1,231,669
-
7,749
264
(10,036)
-
119,416
2,039
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(13,538)
-
-
-
-
671,953
666,919
5,034
409,360
409,360
-
(373,018)
(47,395)
251,540
1,108
8,758
261,406
249,942
11,464
(13,538)
236,404
21,565,971
11,525
19,361,373
33,065
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Retail
Banking
in Slovenia
Corporate and
Investment
Banking
in Slovenia
Strategic
Foreign
Markets
Financial
Markets
in Slovenia
Non-Core
Members
NLB Group
in EUR thousands
Other activities
Unallocated
Total
2020
Total net income
Net income from external customers
Intersegment net income
Net interest income
Net interest income from external customers
Intersegment net interest income
Administrative expenses
Depreciation and amortisation
Reportable segment profit/(loss) before
impairment and provision charge
Other net gains/(losses) from equity investments
in subsidiaries, associates and joint ventures
Negative goodwill
Impairment and provisions charge
Profit/(loss) before income tax
Owners of the parent
Non-controlling interests
Income tax
Profit for the year
170,358
184,758
(14,400)
81,395
96,357
(14,962)
(102,089)
(12,043)
56,226
874
-
(15,069)
42,031
42,031
-
-
75,185
81,124
(5,939)
34,007
40,873
(6,866)
(37,878)
(3,911)
33,396
-
-
8,982
42,378
42,378
-
-
209,091
213,881
(4,790)
159,261
163,255
(3,994)
(94,862)
(14,162)
100,067
-
137,858
(59,084)
178,841
175,792
3,049
-
39,633
12,713
26,921
23,471
(3,126)
26,598
(6,972)
(619)
32,042
-
-
(1,267)
30,775
30,775
-
-
5,445
4,537
908
1,199
2,012
(813)
(11,848)
(1,011)
(7,414)
-
-
2,854
(4,560)
(4,560)
-
-
7,958
7,472
486
240
203
37
(11,047)
(685)
(3,774)
-
-
(7,770)
(11,544)
(11,544)
-
-
Reportable segment assets
2,545,714
2,043,324
9,346,255
5,218,038
131,204
273,332
Investments in associates and joint ventures
7,988
-
-
-
Reportable segment liabilities
7,367,145
1,519,067
7,879,089
557,402
Additions to non-current assets
15,679
6,047
13,517
418
-
4,571
695
-
115,540
2,941
Segment reporting is presented in accordance with the
Group members are, based on their business activity, included
new subsidiary NLB Lease&Go that includes operations with
strategy on the basis of the organisational structure used in
in only one segment except NLB Lease&Go which is according
retail clients, as well as the contribution to the result of the
management reporting of NLB Group’s results. NLB Group’s
to its business activities divided into two segments.
associated company Bankart.
segments are business units that focus on different customers
and markets. They are managed separately because each
The segments of NLB Group are divided into core and non-
• Corporate and Investment Banking in Slovenia, which
business unit requires different strategies and service levels.
core segments.
The business activities of NLB are divided into several
The core segments are the following:
includes banking with Key Corporate Clients, SMEs, Cross-
border corporate financing, Investment Banking and
Custody, Restructuring and Workout, and part of the new
segments. Interest income and expenses are allocated between
• Retail Banking in Slovenia, which includes banking with
subsidiary NLB Lease&Go that includes operations with
segments on the basis of fund transfer prices (FTP). Other NLB
individuals and asset management (NLB Skladi), and part of
corporate clients.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,165)
-
-
-
-
507,670
504,484
3,186
299,573
299,573
-
(264,696)
(32,431)
210,543
874
137,858
(71,354)
277,921
274,872
3,049
(5,165)
269,707
19,557,867
7,988
17,442,815
39,298
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• Strategic Foreign Markets, which consist of the operations
• Financial Markets in Slovenia include treasury activities and
NLB Group is primarily a financial group, and net interest
of strategic Group banks in the strategic markets (North
trading in financial instruments, while they also present the
income represents the majority of its net revenues. NLB
Macedonia, Bosnia and Herzegovina, Kosovo, Montenegro,
results of asset and liabilities management (ALM).
Group’s main indicator of a segment’s efficiency is net profit
and Serbia). As a result of the acquisition of Komercijalna
before tax.
banka Beograd at the end of the year 2020, NLB Group
• Other accounts for the Bank’s categories whose operating
acquired three banks: Komercijalna banka Beograd,
results cannot be allocated to specific segments as well as
No revenues were generated from transactions with a single
Komercijalna banka Podgorica, and Komercijalna banka
subsidiary NLB Cultural Heritage Management Institute.
external customer that would amount to 10% or more of
Banja Luka, as well as an investment fund company
Group’s revenues.
KomBank Invest Beograd. In November 2021, the merger of
Non-Core Members include the operations of non-core Group
NLB Banka Podgorica and Komercijalna banka Podgorica
members, namely REAM and leasing entities (except NLB
was finalized. Komercijalna banka Banja Luka was sold
Lease&Go), NLB Srbija, and NLB Crna Gora. NLB Leasing
b) Geographical information
Geographical analysis includes a breakdown of items with
outside the NLB Group on 9 December 2021, so it is included
Ljubljana was sold to the strategic company Lease&Go within
respect to the country in which individual NLB Group entities
in the result of the segment for 2021 with its operations until
the NLB Group in 2021. Despite the change in ownership, its
are located.
the specified date.
operations continue to be monitored within the segment of
non-core members.
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NLB Group
Slovenia
South East Europe
North Macedonia
Serbia
Montenegro
Croatia
Bosnia and Herzegovina
Kosovo
Western Europe
Germany
Switzerland
Total
Revenues
Net income
Profit/(loss) before income tax
Income tax
in EUR thousands
2021
352,053
458,571
87,936
192,048
43,983
5
83,087
51,512
17
1
16
2020
322,128
265,600
81,710
35,240
31,291
42
69,616
47,701
3
2
1
2021
301,021
365,649
70,157
165,199
34,756
207
52,735
42,595
249
499
(250)
2020
290,376
214,486
64,466
28,046
25,033
454
57,079
39,408
(378)
80
(458)
2021
137,857
121,301
43,277
29,405
6,508
(181)
15,236
27,056
2,248
488
1,760
2020
93,362
184,266
21,008
130,912
2,741
(1,019)
15,776
14,848
293
(433)
726
2021
(5,043)
(8,462)
(4,054)
2,077
(1,484)
(1)
(2,213)
(2,787)
(33)
-
(33)
2020
(1,154)
(3,963)
(1,566)
1,323
(426)
(12)
(1,572)
(1,710)
(48)
-
(48)
810,641
587,731
666,919
504,484
261,406
277,921
(13,538)
(5,165)
The column ‘Revenues’ includes interest and similar income,
effect of financial instruments, foreign exchange translation,
dividend income, and fee and commission income.
the effect on the derecognition of assets, net operating
income, and gain less losses from non-current assets held
The column ‘Net Income’ includes net interest income,
for sale.
dividend income, net fee and commission income, the net
Contents
331
NLB Group
Slovenia
South East Europe
North Macedonia
Serbia
Montenegro
Croatia
Bosnia and Herzegovina
Kosovo
Western Europe
Germany
Switzerland
Total
Non-current assets
Total assets
Number of employees
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
31 Dec 2021
31 Dec 2020
in EUR thousands
150,829
214,380
37,384
108,515
18,328
383
34,782
14,988
30
30
-
153,671
219,886
37,181
109,167
17,934
381
39,576
15,647
58
58
-
11,716,270
9,845,128
1,758,269
4,780,843
775,238
4,025
1,596,370
930,383
16,098
971
15,127
10,142,675
9,411,671
1,576,941
4,587,600
709,797
4,390
1,654,026
878,917
11,509
1,648
9,861
2,619
5,563
877
2,901
374
6
942
463
3
1
2
2,691
6,098
877
3,198
467
7
1,086
463
3
1
2
365,239
373,615
21,577,496
19,565,855
8,185
8,792
The table below presents data on NLB Group members before intercompany eliminations and consolidation journals.
NLB Group
Slovenia
South East Europe
North Macedonia
Serbia
Montenegro
Croatia
Bosnia and Herzegovina
Kosovo
Western Europe
Germany
Switzerland
Total
Revenues
Net income
Profit/(loss) before
income tax
in EUR thousands
Income tax
2021
448,559
459,405
87,864
192,776
43,978
3
83,275
51,509
19
1
18
2020
341,092
265,889
81,673
35,318
31,376
145
69,678
47,699
335
2
333
2021
387,692
374,776
68,429
161,017
35,417
274
67,806
41,833
86
493
(407)
2020
328,302
211,337
62,658
28,386
24,356
468
56,791
38,678
(144)
81
(225)
2021
225,706
146,496
43,054
37,536
7,969
(181)
30,895
27,223
2,247
489
1,758
2020
120,806
44,271
20,788
(6,761)
187
(1,019)
16,032
15,044
588
(432)
1,020
2021
(5,252)
(8,940)
(4,054)
1,599
(1,484)
(1)
(2,213)
(2,787)
(33)
-
(33)
2020
(1,221)
(3,949)
(1,566)
1,337
(426)
(12)
(1,572)
(1,710)
(34)
-
(34)
907,983
607,316
762,554
539,495
374,449
165,665
(14,225)
(5,204)
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8. Related-party transactions
A related party is a person or entity that is related to
NLB Group in such a manner that it has control or joint
control, has a significant influence, or is a member of
the key management personnel of the reporting entity.
Related parties of NLB Group and NLB include: key
management personnel (Management Board, other key
management personnel and their family members); the
Supervisory Board; companies in which members of
Related-party transactions with Management Board and
the Management Board, key management personnel,
other key management personnel, their family members
or their family members have control, joint control, or a
and companies these related parties have control, joint
significant influence; a major shareholder of NLB with
significant influence, subsidiaries, associates and joint
control, or significant influence
A number of banking transactions are entered into with
ventures.
NLB Group and NLB
Management Board and other
Key management personnel
Family members of the
Management Board and other
key management personnel
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Deposits received
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest expenses
Other financial assets
Other financial liabilities
Guarantees issued and
loan commitments
Fee income
Other income
Other expenses
2021
2,284
1,041
(1,228)
2,097
39
1,610
2,048
(1,488)
2,170
(4)
-
2,268
215
12
13
-
2020
2,119
1,476
(1,311)
2,284
40
1,579
1,392
(1,361)
1,610
(4)
2
2,759
242
15
16
(11)
2021
444
228
(257)
415
7
956
595
(833)
718
-
-
1
72
6
-
-
2020
520
184
(260)
444
8
871
826
(741)
956
-
-
-
78
7
-
-
related parties within regular course of business. The volume
of related-party transactions and the outstanding balances
are as follows:
Companies in which members
of the Management Board,
key management personnel
or their family members have
control, joint control or a
significant influence
in EUR thousands
Supervisory Board
2021
-
891
(359)
532
6
136
1,625
(1,171)
590
-
-
14
194
83
-
(78)
2020
130
90
(220)
-
1
193
207
(264)
136
-
-
8
6
101
-
(76)
2021
305
55
(300)
60
4
323
321
(139)
505
(1)
-
-
23
2
-
-
2020
248
109
(52)
305
7
198
277
(152)
323
-
-
-
33
1
-
-
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Key management compensation
The remuneration for the members of the Supervisory
change, repeal, or replace any of its resolutions in relation to
Bank during the period to which the variable part of the
the remuneration of the Supervisory Board members at any
performance benefit relates.
Board of NLB d.d. and the Management Board of NLB d.d.
time, or adopt a new resolution in relation to the remuneration
is regulated in Remuneration Policy for the Members of
of the Supervisory Board members.
the Supervisory Board of NLB d.d. and the Members of the
The non-deferred part of variable remuneration is paid no
later than three months after the adoption of the Annual
Management Board of NLB d.d. The remuneration for the
The performance of key management is defined by financial
Report of NLB Group for the business year to which the
identified employees and other employees is regulated in
and non-financial criteria. In addition to the salary determined
variable remuneration relates. Variable remuneration part
Remuneration Policy for employees of NLB d.d. and NLB
in their employment contract, they are entitled to the annual
of payment of an identified employee is awarded and paid
Group.
variable part of the salary based on their achievement of
in cash, provided that the amount does not exceed EUR 50
the financial and non-financial performance criteria, which
thousand or/and is higher than one-third of his/her total
In 2021, NLB d.d. in accordance with the Companies Act (ZGD-
encompass the goals of NLB Group or NLB, the goals of the
remuneration for each financial year, and if this is permissible
1) and the Banking Act (ZBan-3), adopted a new Remuneration
organisational unit, and the personal goals of the employee
in accordance with the relevant regulation.
Policy for members of the Supervisory Board of NLB d.d.
performing special work.
and members of the Management Board of NLB d.d., which
If the variable remuneration part of payment of an identified
was adopted by the Supervisory Board of NLB d.d. and then
The objectives and criteria of each member of the Management
employee exceeds EUR 50 thousand or/and is higher than
submitted to the General Meeting of Shareholders of NLB d.d.,
Board shall be determined each year by the Supervisory Board
one-third of his/her total remuneration for each financial
where it was voted in December 2021. Pursuant to Article 294.a
NLB d.d. at the time of adoption of the Bank’s annual business
year and if this is permissible in accordance with the relevant
of the Companies Act (ZGD-1), the Bank must in case of every
plan. The objectives and criteria for the identified employees
regulation, then at least 50% of the variable remuneration must
significant change submit the Remuneration Policy to the
are determined by the Management Board.
consist of instruments. The part of the variable remuneration
General Meeting of Shareholders for voting, and in any case at
of an identified employee consisting of instruments shall be
least every four years.
The variable portion of receipts for a given financial year
awarded and paid, under the terms and conditions in the valid
may not exceed eight salaries for the period including 5 July
Remuneration Policy, in instruments whose value is based on
In the Remuneration Policy and based thereon, the Bank
2021, while for the period as of 6 July 2021 onwards it shall
the value of the share of NLB d.d. (with these instruments not
designates identified employees. In designating identified
be seven salaries of a member of the Management Board in
giving any dividends or other yields).
employees, the internal organisation and the nature, scope
the financial year. Other identified employees are entitled to
and complexity of the Bank’s activities are taken into account.
a variable part of remuneration according to the category
The deferred part of the variable part of the salary must be
The criteria fully take into account the risks that the Bank or
of employee in the maximum amount of three to six salaries.
deferred for a period of at least five years of the day on which
the NLB Group is or could be exposed to its given risk profile
Key management shall be entitled to a variable part of the
the non-deferred part of such variable remuneration is paid
and risk appetite. The Remuneration Policy includes members
performance benefit only in proportional part to the actual
and it is paid in proportional shares, according to the relevant
of the Supervisory Board, members of the Management
period of employment (duration of the term of office) of the
legislation.
Board, senior management and other identified employees
who are included in the Policy on the basis of the Bank’s self-
assessment.
The table below shows payments in presented periods.
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Members of the Supervisory Board may, in relation to their
function of a member of the Supervisory Board, only receive
remuneration that is compliant with the relevant resolutions of
NLB Group and NLB
the Bank’s General Meeting.
The Supervisory Board members are entitled to a
remuneration for performing their function and/or attendance
fees for their membership in the Supervisory Board of the
Bank and the committees of the Supervisory Board of the
Bank, which are determined in accordance with respective
applicable resolution by the General Meeting of the Bank,
and to reimbursement of travel expenses, daily allowances,
and accommodation costs up to the amount provided by the
regulations governing reimbursement of costs related to work
and other income not included in the tax base.
The Bank’s General Meeting may determine and change
the remuneration of the members of the Supervisory Board
independently from the Remuneration Policy, and may
Short-term benefits
Cost refunds
Long-term bonuses:
- severance pay
- other benefits
- variable part of payments
Total
Management
Board
Other key management
personnel
in EUR thousands
Supervisory
Board
2021
1,589
4
385
5
394
2,377
2020
1,401
4
259
4
-
1,668
2021
5,480
83
5
70
2,898
8,536
2020
5,501
95
108
49
-
5,753
2021
705
26
-
-
-
731
2020
649
34
-
-
-
683
Short-term benefits include:
The reimbursement of cost comprises food
• monetary benefits (gross salaries, supplementary
allowances, travel expenses, and use of own
insurance, holiday allowances and other bonuses);
resources.
• non-monetary benefits (company cars, health care,
residential facilities, etc.).
Contents
334
Payments to individual members of the Management Board
Member
Blaž Brodnjak
01.12.2012
Short-term benefits:
- gross salary and holiday allowance
- benefits and other short-term bonuses
Costs refunds
Long-term bonuses:
- other benefits
- variable part of payments
Total
Andreas Burkhardt
Short-term benefits:
18.09.2013
- gross salary and holiday allowance
- benefits and other short-term bonuses
Costs refunds
Long-term bonuses:
- other benefits
- variable part of payments
Total
Archibald Kremser
Short-term benefits:
31.07.2013
- gross salary and holiday allowance
- benefits and other short-term bonuses
Costs refunds
Long-term bonuses:
- other benefits
- variable part of payments
Total
Petr Brunclík
Short-term benefits:
18.05.2020 - 30.06.2021
- gross salary and holiday allowance
- benefits and other short-term bonuses
Costs refunds
Long-term bonuses:
- severance payments
- other benefits
- variable part of payments
Total
László Pelle
Short-term benefits:
26.10.2016 - 31.01.2020
- gross salary and holiday allowance
- benefits and other short-term bonuses
Costs refunds
Long-term bonuses:
- severance payments
- other benefits
- variable part of payments
Total
2021
441,770
2,310
1,302
1,410
130,211
577,003
405,092
32,672
1,290
1,410
122,919
563,383
420,809
34,117
1,249
1,410
126,044
583,629
221,963
30,092
476
385,000
705
14,633
652,869
-
-
-
-
-
-
-
in EUR
2020
384,734
2,250
1,304
940
-
389,228
352,796
17,861
1,212
940
-
372,809
366,484
24,331
1,248
940
-
393,003
170,517
20,647
710
-
705
-
192,579
57,624
4,343
129
258,750
117
-
320,963
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335
Payments to individual members of the Supervisory Board
Member
Andreas Klingen
Session fees
22.06.2015
Primož Karpe
11.02.2016
Annual compensation
Other bonuese - benefit
Costs refunds
Session fees
Annual compensation
Other bonuese - benefit
Costs refunds
David Eric Simon
Session fees
04.08.2016
Annual compensation
Other bonuese - benefit
Costs refunds
Gregor Rok Kastelic
Session fees
10.06.2019
Annual compensation
Other bonuese - benefit
Costs refunds
Shrenik Dhirajlal Davda
Session fees
10.06.2019
Annual compensation
Other bonuese - benefit
Costs refunds
Mark William Lane Richards
Session fees
10.06.2019
Annual compensation
Other bonuese - benefit
Costs refunds
Verica Trstenjak
Session fees
15.06.2020
Sergeja Kočar
17.06.2020
Annual compensation
Other bonuese - benefit
Costs refunds
Session fees
Annual compensation
Other bonuese - benefit
Costs refunds
2021
-
90,000
447
4,947
-
96,000
447
4,629
-
81,000
447
5,251
-
81,000
447
758
-
72,000
447
2,367
-
81,000
447
2,643
-
65,790
447
-
-
11,856
447
-
in EUR
2020
-
84,000
388
2,690
-
89,583
388
8,235
-
75,000
388
6,455
-
70,625
388
4,239
Member
Bojana Šteblaj
17.06.2020
Session fees
Annual compensation
Other bonuese - benefit
Costs refunds
Janja Žabjek Dolinšek
Session fees
20.11.2020
Annual compensation
Other bonuese - benefit
Costs refunds
Islam Osama Bahgat Zekry
Session fees
14.06.2021
Annual compensation
Other bonuese - benefit
Costs refunds
Tadeja Žbontar Rems
Session fees
22.01.2021
Annual compensation
Other bonuese - benefit
Costs refunds
-
Peter Groznik
Session fees
2021
-
15,655
447
-
-
6,839
447
-
-
38,608
447
5,705
-
26,656
447
-
-
66,000
388
3,917
-
75,000
388
3,617
-
33,933
388
-
-
5,662
500
153
08.09.2017 - 14.06.2021
Annual compensation
32,800
Other bonuese - benefit
Costs refunds
Petra Kakovič Bizjak
Session fees
17.06.2020 - 10.09.2020
Annual compensation
Other bonuese - benefit
Costs refunds
László Zoltan Urbán
Session fees
11.02.2016 - 15.06.2020
Annual compensation
Other bonuese - benefit
Costs refunds
Alexander Bayr
Session fees
04.08.2016 - 15.06.2020
Annual compensation
Other bonuese - benefit
Costs refunds
-
-
-
-
-
-
-
-
-
-
-
in EUR
2020
-
5,255
500
457
-
169
-
-
-
-
-
-
-
-
-
-
-
66,000
388
429
-
7,302
112
178
-
31,875
-
1,456
-
36,000
-
2,799
MB Statement
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Related-party transactions with subsidiaries, associates and joint ventures
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Impairment
Deposits received
Balance at 1 January
Effects of translation of foreign operations
to presentation currency
Increase
Decrease
Balance at 31 December
Interest expenses
Other financial assets
Other financial liabilities
Guarantees issued and loan commitments
Fee income
Fee expenses
Other income
Other expenses
in EUR thousands
NLB Group
Associates
Joint ventures
2020
2021
2020
2021
1,106
89
(184)
1,011
38
26
3,973
-
7,610
(3,616)
7,967
-
20
1,148
2,032
38
1,066
165
(125)
1,106
32
27
842
-
4,461
(1,330)
3,973
-
19
596
38
15
(13,583)
(13,977)
162
(726)
177
(699)
851
7
(657)
201
4
69
3,434
3
7,706
(7,651)
3,492
(59)
-
1
-
1
-
2
-
1,205
11
(365)
851
11
(23)
8,455
(3)
90,966
(95,984)
3,434
(62)
1
-
21
983
(952)
144
(37)
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Subsidiaries
NLB
Associates
in EUR thousands
Joint ventures
2021
2020
2021
2020
2021
2020
169,176
170,308
(89,181)
250,303
4,906
1,075
69,386
433,380
(418,818)
83,948
3
2
-
44,484
44,484
1
160,634
98,221
(89,679)
169,176
5,007
(1,835)
70,469
658,253
(659,336)
69,386
21
4
-
-
-
-
19,415
80,806
7,558,162
7,934,453
(7,509,205)
(7,995,844)
68,372
(2)
(7)
9,789
25,491
(8)
1,860
31,003
584
14,541
9,720
(21)
1,078
(2,133)
(298)
19,415
(21)
354
12,424
948
-
800
55,068
(53)
6,692
6,857
(25)
780
(1,065)
1,208
(558)
436
1,106
89
(184)
1,011
38
26
-
-
-
-
-
-
-
-
-
-
3,973
7,610
(3,616)
7,967
-
-
-
20
-
1,001
2,032
-
-
38
(10,782)
162
(708)
-
-
1,066
165
(125)
1,106
32
27
-
-
-
-
-
-
-
-
-
-
842
4,461
(1,330)
3,973
-
-
-
19
-
480
38
-
-
15
(11,140)
177
(664)
-
-
851
7
(657)
201
4
69
-
-
-
-
-
-
-
-
-
-
1,174
10
(333)
851
10
(23)
-
-
-
-
-
-
-
-
-
-
284
213
(470)
27
5,418
86,850
(91,984)
284
-
-
-
-
-
-
-
-
-
1
-
2
-
-
-
-
-
-
1
-
-
21
-
-
925
(332)
144
(37)
-
-
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Impairment
Deposits
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Impairment
Loans received
Balance at 1 January
Increase
Balance at 31 December
Interest income
Deposits received
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest expenses
Derivatives
Fair value
Contractual amount
Other financial assets
Impairment
Other financial liabilities
Guarantees issued and loan commitments
Income/(expenses) provisions for
guaranties and commitments
Received loan commitments
and financial guarantees
Fee income
Fee expenses
Other income
Other expenses
Gains less losses from financial assets
and liabilities held for trading
Gains less losses from non-trading
financial assets mandatorily at fair
value through profit or loss
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Related-party transactions with major shareholder with significant influence
The volumes of related party transactions with major shareholder are as follows:
NLB Group
Shareholder
in EUR thousands
NLB
Shareholder
2021
2020
2021
2020
23,219
13,199
(15,884)
20,534
713
691,868
1,247,211
28,206
1,607
(6,594)
23,219
720
850,965
866,414
23,219
13,199
(15,884)
20,534
713
597,123
947,581
(1,392,356)
(1,026,883)
(1,049,482)
(12,201)
534,522
6,021
(652)
659
4
1,184
309
(27)
212
(5)
-
(158)
1,372
691,868
9,024
(805)
807
6
1,241
194
(30)
206
(6)
14,660
43
(11,566)
483,656
6,389
(652)
659
4
1,184
309
(27)
212
(5)
-
(158)
28,206
1,607
(6,594)
23,219
720
778,088
758,140
(940,974)
1,869
597,123
9,486
(805)
807
6
1,241
194
(30)
206
(6)
14,660
43
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Investments in securities
Balance at 1 January
Increase
Decrease
Valuation
Balance at 31 December
Interest income
Interest expenses
Other financial assets
Other financial liabilities
Guarantees issued and loan commitments
Fee income
Fee expenses
Other income
Other expenses
Gains less losses from financial assets
and liabilities not measured at fair
value through profit or loss
Gains less losses from financial assets
and liabilities held for trading
NLB Group and NLB disclose all transactions with the major
shareholder with significant influence. For transactions with
other government-related entities, NLB Group discloses
individually significant transactions.
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NLB Group and NLB
Guarantees issued and loan commitments
Amount of significant
transactions concluded
during the year
2021
70,000
2020
112,500
NLB Group and NLB
Loans
Debt securities measured at amortised cost
Borrowings, deposits and business accounts
Guarantees issued and loan commitments
Year-end balance of all
significant transactions
2021
507,159
72,633
184,267
152,500
2020
516,058
76,396
70,006
152,500
NLB Group and NLB
Interest income from loans
Fees and commissions income
Interest income from debt securities measured at amortised cost and
net valuation effects from hedge accounting
Interest expenses from borrowings, deposits, and business accounts
in EUR thousands
Number of significant
transactions concluded
during the year
2021
1
2020
1
in EUR thousands
Number of significant
transactions at year-end
2021
2020
7
1
3
2
6
1
1
2
in EUR thousands
Effects in income statement
during the year
2021
3,141
241
(990)
(213)
2020
3,706
27
1,166
(290)
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9. Events after the reporting date
The Swiss Francs Law
On 2 February 2022, the Slovenian Parliament passed the ‘Law
on limitation and distribution of foreign exchange risk between
creditors and borrowers concerning loan agreements in Swiss
francs’ (here and after the CHF Law). The CHF Law affects all loan
agreements denominated in Swiss francs (regardless of whether the
agreements are still in force) concluded between banks operating
in Slovenia (including NLB) as lenders and individuals as borrowers
in the period from 28 June 2004 to 31 December 2010, and provides
for a cap on the exchange rate between Swiss francs and the Euro
to be set at 10% volatility (the ‘FX cap’) and shall be applied from
the conclusion of any of the affected loan agreements. During the
validity of the FX cap, the value of instalments and other payments
Acquisition of Sberbank banka d.d., Ljubljana
On the level of the European Central Bank and the Single
Dependence on Russia and Ukraine within the country trade
balance in the NLB Group region is moderate; the highest volume
Resolution Board, a decision was made on 28 February 2022 to
of trade is done with the EU.
suspend the business operations of the banking group Sberbank
Europe AG, which also had a subsidiary bank in Slovenia. At the
same time, a transitional period or short-term moratorium was
adopted, during which a solution for the Slovenian subsidiary,
Sberbank banka d.d., was found with the aim to ensure the
continuity of the business operations for all of its clients. On
1 March 2022, in order to maintain financial stability in Slovenia, the
Single Resolution Board, in cooperation with the Bank of Slovenia,
adopted a scheme and resolution plan for Sberbank banka d.d.,
Ljubljana. Based on this resolution, the Bank of Slovenia issued
a decision using the instrument of sale of operation in a way that
all shares are transferred from the shareholders to the transferee.
Country
Bosnia and
Herzegovina
Montenegro
North Macedonia
Kosovo
Serbia
Slovenia
Export to Russia
Import from Russia
1.10%
0.00%
0.91%
2.10%
0.00%
1.70%
no data available
no data available
3.90%
2.60%
5.30%
1.20%
under such loans shall equal the amount at which the FX cap has
In the process of finding a new owner of Sberbank banka d.d.,
Direct and indirect exposures of NLB toward Russia and Ukraine is
been triggered and the lender would be required to repay any
Ljubljana, a sale agreement was concluded with NLB d.d., which
moderate, but on the other hand Russia's invasion of Ukraine has
overpayment to the relevant borrower. Further, any overpayment
became an owner of 100% of the bank's shares as at 1 March 2022.
increased risks globally. Effects on the global economy will occur
on such loans by the relevant borrowers shall be subject to default
interest to be paid by the lender.
The purchase price for the bank was EUR 5,109 thousand and
through three major channels:
• commodity price shocks,
Since the CHF Law affects civil law contractual relationships
arrangements. Initial accounting for the business combination has
market risk aversion), and
retroactively, the constitutionality of the Law has been extensively
not yet been completed, therefore assets, liabilities, and gain on a
• security challenges associated with military conflict or through
was fully paid in cash. There are no contingent consideration
• financial repercussions (new sanctions against Russia and
debated during the legislative process with a number of national
bargain purchase (negative goodwill) recognised as a result of the
cyberattacks.
and European authorities considering the Law to violate the
acquisition are not disclosed.
Slovenian Constitution. The shareholders of affected Slovenian
banks (including NLB) submitted a joint letter to several Slovenian
and European authorities expressing great concern regarding
Russian-Ukrainian conflict
In February 2022, Russia began a military invasion of Ukraine. The
In particular, commodity prices will have effects on the whole
corporate output leading to an increased inflation rate in NLB
Group markets.
the Law. On 28 February 2022, the banks filed an initiative with
Russian-Ukrainian conflict has led to quite considerable volatility in
the Constitutional Court of the Republic of Slovenia to initiate
the financial markets, in particular shifts in credit spreads, interest
With regards to the credit portfolio, the NLB Group carefully
proceedings to assess the constitutionality of the CHF Law and a
rates and foreign exchange rates. Special attention is given to the
monitors its clients being present or having direct and indirect
proposal for its temporary suspension of enforcement.
markets in the Balkans, neighbouring countries to Ukraine and
connection with Russia, Ukraine, Belarus or its neighbouring
Russia and international banks with operations in Russia. The NLB
countries. These clients are closely monitored with the intention
The Constitutional Court of the Republic of Slovenia adopted
Group is closely monitoring its major bond portfolio positions,
of identifying any significant increase in credit risk at a very early
a decision on 10 March 2022 to suspend in whole the
mostly sovereigns, with a stronger connection to the Russian crisis.
stage. Corporate clients are still assessing the possible impacts of
implementation of the CHF Law. The decision has been adopted
Besides, the Group holds EUR 20 million of Russian government
this conflict on their business model and financial performance,
unanimously. The implementation of the law has been suspended
bonds maturing in April 2022 and in September 2023. The fair
however at this stage these effects are not very excessive.
until the final decision of the Constitutional Court on the conformity
value of these securities has decreased by approximately 30% by
Moreover, the length and intensity of the Russian-Ukrainian
of the CHF Law with the Constitution. During this time the
31 March 2022. The manner and timing of their settlement in the
conflict might cause additional spill-over effects in the mid-
deadlines set for individual liabilities of banks do not apply. Until
given circumstances is not determined yet. Since the beginning
term period, such as raising the price of energy sources or their
the final decision of the Constitutional Court on the constitutionality
of the crisis, the Bank has observed credit spreads widening from
availability, which may at a later period have some impact also on
of the CHF Law is made, the NLB will act in accordance with the
50 to 200 bps for selected positions (with the exception of Russia
other segments of the credit portfolio.
applicable legislation and courts’ decisions, and will, at the same
where the escalation is more severe), which is currently impacting
time, exercise all legal remedies at its disposal.
the Bank’s FVOCI positions. Compared to 31 December 2021, the
Sberbank d.d. Slovenia with its entire portfolio become a member
fair value revaluation reserve has decreased by more than EUR 50
of the NLB Group in March 2022. The Bank strategy was focused
Based on the assessment of the CHF Law, NLB estimated that
million at the NLB Group level and EUR 40 million at the NLB level
on the Slovenian SME segment, so the NLB Group does not expect
negative pre-tax effect on the operations of NLB and NLB Group
(analysis of debt securities by geographical sectors as at year-
major direct exposures toward Russia or Ukraine. All identified
should not exceed EUR 70 – 75 million. Impact on NLB and NLB
end is disclosed in note 6.1.o). Regarding the Group’s major FX
risks will be appropriately considered when assessing fair values
Group is material but manageable given the historically limited
positions, no material movements were observed so far. Current
of assets, liabilities and contingent liabilities and final calculation of
extent to which NLB engaged in Swiss francs lending. NLB
developments, market observations and potential mitigations are
gain on a bargain purchase (negative goodwill).
considers this as a non-adjusting event after the reporting period.
discussed at daily monitoring meetings.
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NLB Group Directory
Nova Ljubljanska banka d.d., Ljubljana
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 39 00, +386 1 477 20 00
E-mail: info@nlb.si
www.nlb.si
Blaž Brodnjak, CEO & CMO
Archibald Kremser, CFO
Andreas Burkhardt, CRO
Petr Brunclík, COO 22
Slovenian network
Ljubljana Area Branch
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 23 30
Northwest and Central Slovenia Area Branch
Ljubljanska cesta 62
1230 Domžale, Slovenia
Tel: +386 1 724 55 01
Northeast Slovenia Area Branch
Titova cesta 2
2000 Maribor, Slovenia
Tel: +386 2 234 45 04
Southeast Slovenia Area Branch
Seidlova cesta 3
8000 Novo mesto, Slovenia
Tel: +386 7 339 14 56
Southwest Slovenia Area Branch
Cesta Zore Perello - Godina 7
6000 Koper, Slovenia
Tel: +386 5 610 30 10
22 Until 30 June 2021.
Private Banking
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 23 66
Micro Enterprises
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 50 01
Mobile banking
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 44 39
Small and Mid-corporates
Small Enterprises I23
Trg republike 2
1000 Ljubljana, Slovenia
Tel.: +386 1 476 49 52
Small Enterprises II 24
Titova cesta 2
2000 Maribor, Slovenia
Tel.: +386 2 234 45 09
Central region
Trg republike 2
1000 Ljubljana, Slovenia
Tel.: +386 1 476 26 11
Northwest region
Ljubljanska cesta 62
1230 Domžale, Slovenia
Tel.: +386 1 724 54 75
Southwest region
Cesta Zore Perello - Godina 7
6000 Koper, Slovenia
Tel.: +386 5 610 30 29
23 Until 31 December 2021.
24 Until 31 December 2021.
Podravsko-Pomurska region
Titova cesta 2
2000 Maribor, Slovenia
Tel.: +386 2 234 45 00
Savinjsko-Koroška region
Kocenova 1
3000 Celje, Slovenia
Tel.: +386 3 424 01 11
CSA & Cross-border Financing
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 26 18
Large corporates
Institutional Investors
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 24 92
Large Corporates
Trg republike 2
1000 Ljubljana, Slovenia
Tel: +386 1 476 26 92
Members of NLB Group
Komercijalna Banka a.d. Beograd
Svetog Save 14, 11000 Belgrade, Serbia
Tel: +381 11 20 18 600
Email:kontaktni.centar@kombank.com
www.kombank.com
Vlastimir Vuković, President of the Management Board
Dejan Janjatović, Deputy of the president
of the Management Board
Dragiša Stanojević, Member of the Management Board
Dubravka Djedović Negre Member of the Management Board
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NLB Banka a.d., Beograd
Bulevar Mihajla Pupina 165 v
11070 Belgrade, Serbia
Tel: +381 11 71 51 522
E-mail: info@nlb.rs
www.nlb.rs
NLB Banka sh.a., Prishtina
Rr. Ukshin Hoti nr. 124
10000 Prishtina, Kosovo
Tel: +383 38 744 000
E-mail: info@nlb-kos.com
https://nlb-kos.com/
Jelena Živković, President of the Management Board
Albert Lumezi, President of the Management Board
Vladimir Čaprić, Member of the Management Board
Gem Maloku, Member of the Management Board
Lavdim Koshutova, Member of the Management Board
NLB Banka AD Skopje
Majka Tereza 1
1000 Skopje, North Macedonia
Tel: +389 2 15 600
E-mail: info@nlb.mk
www.nlb.mk
Antonio Argir, President of the Management Board 25
Günter Friedl, Member of the Management Board
Peter Zelen, Member of the Management Board
Igor Davčevski, Member of the Management Board
NLB Banka a.d. Banja Luka
Milana Tepića 4
78000 Banja Luka, Republic of Srpska,
Bosnia and Herzegovina
Tel: +387 51 248 588
E-mail: helpdesk@nlbbl.com
www.nlb-rs.ba
NLB Banka a.d., Podgorica
Bulevar Stanka Dragojevića 46
81000 Podgorica, Montenegro
Tel: +382 20 402 000
E-mail: info@nlb.me
www.nlb.me
Martin Leberle, CEO 26
Marko Popovič, Executive Officer 27
Dino Redžepagić, Executive Officer 28
Lana Đurasović, Executive Officer 29
KomBank Invest a.d. Beograd
Kralja Petra 19, 11000 Belgrade, Serbia
Tel.: +381 11 330 8310
E-mail: vladimir.garic@kombankinvest.com
www.kombankinvest.com
Vladimir Garić, Director
Goran Babić, President of the Management Board
Marjana Usenik, Member of the Management Board
Dragan Injac, Member of the Management Board
NLB Lease&Go, leasing, d.o.o., Ljubljana
Šlandrova ulica 2, 1231 Ljubljana - Črnuče, Slovenia
NLB Banka d.d., Sarajevo
Ul. Koševo br. 3, 71000 Sarajevo - Centar
71000 Sarajevo, Bosnia and Herzegovina
Tel: +387 33 720 300
E-mail: info@nlb.ba
www.nlb.ba
Tel: +386 1 586 29 10
E-mail: info@nlbleasego.si
www.nlbleasego.si
Andrej Pucer, Director
Anže Pogačnik, Director
Claus-Peter Martin Mueller, Director
Lidija Žigić, President of the Management Board
Denis Hasanić, Member of the Management Board
NLB Leasing d.o.o., Ljubljana – v likvidaciji
Šlandrova ulica 2
Jure Peljhan, Member of the Management Board
1231 Ljubljana - Črnuče, Slovenia
Tel: +386 1 586 29 10
E-mail: info@nlbleasing.si
Anže Pogačnik, Liquidator
26 Martin Leberle is a President of the Management Board from 1 January 2022.
27 Dražen Vujošević is a Member of the Management Board from 1 January
2022.
28 Dino Redžepagić is a Member of the Management Board from 1 January
NLB Leasing d.o.o. Beograd – u likvidaciji
Bulevar Mihajla Pupina 165 v
11070 Belgrade, Serbia
Tel: +381 11 222 01 01
E-mail: info@nlbleasing.rs
Veljko Tanić, Liquidator
Optima Leasing d.o.o. u likvidaciji, Zagreb
Miramarska 24
10000 Zagreb, Croatia
Tel: +385 1 61 77 225
E-mail: info@optima-leasing.hr
Vjekoslav Budimir, Liquidator
Prvi faktor d.o.o., v likvidaciji, Ljubljana 30
Slovenska cesta 17
1000 Ljubljana, Slovenia
E-mail: france.zupan@prvifaktor.si
iztok.zupanc@prvifaktor.si
France Zupan, Liquidator
Iztok Zupanc, Liquidator
Prvi faktor – faktoring d.o.o., Beograd – u likvidaciji
Bulevar Mihajla Pupina 165 v
11070 Beograd, Serbia
Tel: +381 11 222 54 00
E-mail: zeljko.atanaskovic@prvifaktor.rs
Željko Atanasković, Liquidator
Prvi faktor d.o.o. u likvidaciji, Zagreb 31
Miramarska cesta 24
10000 Zagreb, Croatia
Tel: +385 1 6165 000
E-mail: info@prvifaktor.hr
Vjekoslav Budimir, Liquidator
25 Branko Greganović, President of the Management Board from 1 January
2022.
2022
29 Till 31 December 2021.
30 France Zupan and Iztok Zupanc are liquidators from 1 March 2021.
31 Vjekoslav Budimir is liquidator from 1 March 2021.
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
343
NLB InterFinanz AG in Liquidation, Zürich
Beethovenstrasse 48
8002 Zürich, Switzerland
Tel: +41 44 283 17 15
E-mail: info@nlbinterfinanz.ch
Jean-David Barnezet Llort, Liquidator
Polona Žižmund, Liquidator
NLB InterFinanz d.o.o., Beograd – u likvidaciji
Bulevar Mihajla Pupina 165 v
11070 Belgrade, Serbia
Tel: +381 11 22 25 351
Liljana Zoraja, Liquidator
REAM d.o.o., Podgorica
Bul. Džordža Vašingtona br. 102, I. sprat/20,
81000 Podgorica, Montenegro
Tel: +382 20 674 900
E-mail: gligor.bojic@nlb.me
Gligor Bojić, Director
Marko Furlan, Authorised Representative
REAM d.o.o., Zagreb
Miramarska 24/6
10000 Zagreb, Croatia
Tel: +385 1 56 25 914
E-mail: josip.zurga@ream-cro.com
E-mail: julijana.milic@nlb.si
NLB Skladi, upravljanje premoženja, d.o.o., Ljubljana
Tivolska cesta 48
Josip Žurga, Director
Julijana Milić, Director
1000 Ljubljana, Slovenia
Tel: +386 1 476 52 70
E-mail: info@nlbskladi.si
www.nlbskladi.si
Kruno Abramovič, President of the
Management Board
Blaž Bračič, Member of the
Management Board
Bankart d.o.o., Ljubljana
Celovška cesta 150
1000 Ljubljana, Slovenia
Tel: +386 1 583 42 02
E-mail: info@bankart.si
www.bankart.si
Aleksander Kurtevski, Director
Jure Kvaternik, Director
OL Nekretnine d.o.o. u likvidaciji, Zagreb
Miramarska 24
10000 Zagreb, Croatia
Tel: +385 1 56 25 914
E-mail: vjekoslav.budimir@ream-cro.com
E-mail: ivan.strek@ream-cro.com
Vjekoslav Budimir, Liquidator
Ivan Štrek, Liquidator
REAM d.o.o., Beograd – Novi Beograd
Bulevar Mihaila Pupina 165 v
11070 Belgrade, Serbia
Tel: +381 11 22 25 374
E-mail: vladimir.vasilijevic@ream-srb.com
Vladimir Vasilijević, Director
Veljko Tanić, Director
LHB Aktiengesellschaft, Frankfurt am Main
Große Bockenheimer Str. 33-35
SPV2 d.o.o., Beograd – Novi Beograd
Bulevar Mihaila Pupina 165 v
60313 Frankfurt, Germany
Tel: +49 69 21 65 78 20
E-mail: info@lhb.de
Matjaž Jevnišek, President of the Management Board
11070 Belgrade, Serbia
Tel: +381 11 22 25 374
E-mail: office@ream-srb.com
Vladimir Vasilijević, Director
PRO-REM d.o.o., Ljubljana - v likvidaciji
Čopova 3
Tara Hotel d.o.o., Budva
Bulevar Džordža Vašingtona 102, Podgorica
1000 Ljubljana, Slovenia
Tel: +386 1 586 29 16
E-mail: info@prorem.si
www.nlbrealestate.com
Jovica Jakovac, Liquidator
Nataša Batagelj, Liquidator
81000 Podgorica, Montenegro
Tel: +:382 20 674 900
E-mail: gligor.bojic@nlb.me
Gligor Bojić, Director
NLB Srbija d.o.o., Beograd
Bulevar Mihajla Pupina 165 v
11070 Belgrade, Serbia
Tel: +381 11 22 25 366
E-mail: office@nlbsrbija.co.rs
www.nlbsrbija.co.rs
Veljko Tanić, Director
NLB Crna Gora d.o.o., Podgorica
Bulevar Džordža Vašingtona 102, I sprat/20
81000 Podgorica, Montenegro
Tel: +382 68 886 441
E-mail: goran.lalicevic@nlb.me
Goran Laličević, Executive Director
Barbara Šink, Authorised Representative
Marko Čelebić, Authorised Representative
S-REAM d.o.o., Ljubljana
Čopova 3
1000 Ljubljana, Slovenia
Tel: +386 (0)41 307 759
E-mail: info@s-ream.com
www.nlbrealestate.com
Jovica Jakovac, Director
Lamija Hadžiosmanović, Director
Branches and representative offices
of NLB Group members outside their
country of residence
NLB InterFinanz AG in liquidation
Ljubljana Branch in liquidation
Puharjeva ulica 3
1000 Ljubljana, Slovenia
Marko Čelebić, Director
Komercijalna banka, branch Kosovska Mitrovica
Čika Jovina 11, 38 220 Kosovska Mitrovica
Goran Dželajlija, Director
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
344
Definitions and Glossary of Selected Terms
AC
ALCO
ALM
ALMM
AML/CTF
BARS
BCM
BIA
BiH
BIS
BMR
BoS
bps
BPV
CAGR
CB
CBR
CCF
CEE
CEO
CET1
CFO
CGU
CIR
CIRS
CISO
CMO
COO
CoR
COSO
CRD
CRM
CRO
CRR
CSA
CSD
CSI
CSR
CVA
DGS
DPS
DWH
EAD
EaR
EBA
EBRD
ECB
ECL
ECRA
EEA
EIB
EMIR
EPS
ESEF
ESG
ESMS
Amortised Costs
Asset and Liability Committee
Asset and Liability Management
Additional Liquidity Monitoring Metrics
Anti-Money Laundering and Counter-
Terrorism Financing
The Banking Agency of Republic of Srpska
Business Continuity Management
Business Impact Analysis
Bosnia and Herzegovina
Bank for International Settlements
Benchmarks Regulation
Bank of Slovenia
Basis Points
Basis Point Value
Compound Annual Growth Rate
Central Bank
Combined Buffer Requirement
Credit Conversion Factor
Central Eastern Europe
Chief Executive Officer
Common Equity Tier 1
Chief Financial Officer
Cash-Generating Units
Cost-to-Income Ratio
Currency Interest Rate Swaps
Chief Information Security Officer
Chief Marketing Officer
Chief Operating Officer
Cost of Risk
Committee of Sponsoring Organizations
of the Treadway Commission
Capital Requirements Directive
Customer Relationship Management
Chief Risk Officer
Capital Requirements Regulation
Credit Support Annex
Central Security Depository
Customer Satisfaction Index
Corporate Social Responsibility
Credit Value Adjustments
Deposit Guarantee Scheme
Dividend per Share
Data Warehouse
Exposure at Default
Earnings at Risk
European Banking Authority
European Bank for Reconstruction and Development
European Central Bank
Expected Credit Losses
Enterprise Compliance Risk Assessment
European Economic Area
European Investment Bank
European Market Infrastructure Regulation
Earnings Per Share
European Single Electronic Format
Environmental, Social and Governance
Environmental and Social Management System
EU
EVE
EVS
EWS
FATF
FTP
FURS
FVOCI
FVTPL
FX
GDP
GDPR
GDR
GGB
GRI GS
HHI
HR
IAS
IASB
ICAAP
IFRIC
IFRS
ILAAP
IRRBB
IRS
ISDA
IVS
JST
JV
KB
KDD
KPI
KRI
LCP
LCR
LECL
LGD
LPD
LRE
LTD
M&A
MA
MAR
MiFID II
MiFIR
MIGA
MREL
NACE
NLB or the Bank
NPE
NPL
NPS
NPV
NSFR
European Union
Economic Value of Equity
European Valuation Standards
Early Warning System
Financial Action Task Force
Fund Transfer Pricing
Financial Administration of the Republic of Slovenia
Fair Value Through Other Comprehensive Income
Fair Value Through Profit or Loss
Foreign Exchange
Gross Domestic Product
General Data Protection Regulation
Global Depositary Receipts
Government Guaranteed Bonds
Global Reporting Initiative - Global Standards
Herfindahl-Hirschman Index
Human Resources
International Accounting Standard
International Accounting Standards Board
Internal Capital Adequacy Assessment Process
International Financial Reporting
Interpretations Committee
International Financial Reporting Standard
Internal Liquidity Adequacy Assessment Process
Interest Rate Risks for Banking Book
Interest Rate Swaps
International Swaps and Derivatives Association
International Valuation Standards
Joint Supervisory Team
Joint Venture
Komercijalna Banka
Central Securities Clearing Corporation
Key Performance Indicator
Key Risk Indicators
Liquidity Contingency Plan
Liquidity Coverage Ratio
Lifetime Expected Credit Losses
Loss Given Default
Lifetime Probability of a Default
Leverage Ratio Exposure
Loan-to-Deposit Ratio
Mergers and Acquisitions
Master Agreements
Market Abuse Regulation
Markets in Financial Instruments Directive
Markets in Financial Instruments Regulation Rules
Multilateral Investment Guarantee Agency
(part of the World Bank Group)
Minimum Requirement of Own
Funds and Eligible Liabilities
Statistical Classification of Economic
Activities in the European Community
NLB d.d.
Non-Performing Exposures
Non-Performing Loans
Net Promoter Score
Net Present Value
Net stable funding ratio
OBM
OCR
OEM
O-SII
OU
p.p.
P1R
P2eM
P2G
P2M
P2P
P2R
PD
PEPP
POCI
POS
PSD2
REAM
RFR
RICS
ROA
ROE
RoS
RPA
RSD
RWA
SDG
SEE
SICR
SLA
SME
SPPI
SRB
SRD II
SREP
SRF
SSM
TCR
The Group
TLTRO
TREA
TSCR
UN
UN SDG
UNEP FI PRB
VaR
VAT
ZBan-3
ZGD-1
ZPIZ
ZTFI-1
ZVKNNLB
ZVOP-2
Operational Business Margin
Overall Capital Requirement
Original Exposure Method
Other Systemically Important Institutions
Organisational Units
Percentage Point(s)
Pillar 1 Requirement
Person to e-Merchant
Pillar 2 Guidance
Person to Merchant
Person to Person
Pillar 2 Requirements
Probability of Default
Pandemic Emergency Purchase Programme
Purchased or Originated Credit-Impaired
Point of Sale
Payments Services Directive
Real Estate Asset Management
Risk-Free Rates
Royal Institution of Chartered Surveyors
Return on Assets
Return on Equity
Republic of Slovenia
Robotic Process Automation
Serbian Dinar
Risk Weighted Assets
Sustainable Development Goals
South Eastern Europe
Significant Increase of Credit Risk
Service Level Agreements
Small and Medium-sized Enterprises
Solely Payment of Principal and Interest
Single Resolution Board
Shareholders Rights Directive
Supervisory Review and Evaluation Process
Single Resolution Fund
Single Supervisory Mechanism
Total Capital Ratio
NLB Group
Targeted Longer-Term Refinancing Operations
Total Risk Exposure Amount
Total SREP Capital Requirement
United Nations
United Nations Sustainable Development Goals
United Nations Environment Programme Finance
Initiative's Principles for Responsible Banking
Value-at-Risk
Value Added Tax
Slovenian Banking Act
Companies Act
Slovenian Pension and Disability Insurance Act
Financial Instruments Market Act
Slovenian Act for Value Protection of Republic
of Slovenia’s Capital Investment in Nova
Ljubljanska banka d.d., Ljubljana
Slovenian Personal Data Protection Act
MB Statement
SB Statement
Key Highlights
Strategy
Risk Factors & Outlook
Sustainability
Performance Overview
Risk Management
Events After 2021
Financial Report
Contents
345
NLB d.d., Ljubljana
nlb.si
NLB d.d.
Production: Saatchi & Saatchi Ljubljana
Photographs: Archive NLB, Urša Premik, iStock
Copyright: NLB d.d., Ljubljana
Ljubljana, April 2022