Building on
advantages of
our home court
NLB Group Annual Report 2023
Contents
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . 3
NLB Group at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BUSINESS REPORT . . . . . . . . . . . . . . . 29
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
FINANCIAL REPORT . . . . . . . . . . . . . 183
NLB Group Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368
Statement by the Management Board of NLB . . . . . . . . . 6
Funding Strategy, Capital, and MREL Compliance . . 32
Definitions and Glossary of Selected Terms . . . . . . . . . 371
Statement by the Chairman of the
Supervisory Board of NLB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Risk Factors and Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Key Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. 11
Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Shareholder Structure and Market Performance
of NLB’s Shares and GDRs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Macroeconomic Environment . . . . . . . . . . . . . . . . . . . . . . . . 20
Regulatory Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Overview of Financial Performance . . . . . . . . . . . . . . . . . . 46
Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
IT and Cyber Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Compliance and Integrity . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Internal Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Corporate Governance Statements . . . . . . . . . . . . . . . . 128
Disclosure on Shares and Shareholders of NLB . . . . . 156
Events After the End of the 2023 Financial Year . . . . . 158
Reconciliation of Financial Statements
in Business and Financial Part of the Report . . . . . . . 159
Alternative Performance Indicators . . . . . . . . . . . . . . . . 162
NLB Group Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Organisational Structure of NLB . . . . . . . . . . . . . . . . . . . . 182
2
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Report format
The Annual Report in PDF format represents its unofficial version . The Annual Report
Forward-looking statements
The expectations, forecasts and statements regarding future developments that are
in European Single Electronic Format (ESEF) is pursuant to Commission Delegated
contained in this report are based on assumptions and are contingent on a number of
Regulation (EU) 2019/815 and paragraph one of Article 134 of the Market in Financial
factors that will come into play in the future . Consequently, the actual situation may turn
Instruments Act (ZTFI-1) and represents its official version published on SEOnet .
out to be different .
Contents
OVERVIEW
3
3
NLB Group
NLB Group
Annual Report
Annual Report
2023
2023
Overview
Overview
MB Statement
MB Statement
SB Statement
SB Statement
Key Highlights
Key Highlights
Business
Business
Report
Report
Strategy
Strategy
Risk Factors &
Risk Factors &
Outlook
Outlook
Sustainability
Sustainability
Performance
Performance
Overview
Overview
Segment Analysis
Segment Analysis
Risk Management
Risk Management
Financial
Financial
Report
Report
Financial Report
Financial Report
Contents
Contents
NLB Group at a Glance
Total assets
Total capital
Total operating income
Number of active clients
Employees
7 banks
EUR
25,942
million
EUR
3,109
million
EUR
1,093
million
more than
2 .8
million
7,982
with
418
branches
Vision
Our strategic focus
Ratings
The Group will take care
of the financial needs of
its clients and improve
the quality of life in its home
region – South-Eastern Europe.
Sustainable banking
• NLB has been a member of the UNEP FI Net-Zero
Banking Alliance since May 2022 and published
its first NLB Group Net-Zero Disclosure Report in
December 2023.
• Sustainalytics ESG Rating: 16.0 (improvement by 1.7
points vs. 2022, top 13% of all banks assessed)
• Reduction of operational carbon footprint 2023 vs.
2022: -7.6%
Be a
REGIONAL
CHAMPION
Put
CLIENTS
FIRST
GROW
our market position
Monetise
OPPORTUNITIES
AND SYNERGIES
BBB
2023
BBB
2022
Stable investment grade rating
from the S&P Global Ratings . Moody’s (unsolicited)
long-term Credit rating at A3 with stable outlook .
4
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Antonio Argir
Member
Peter Andreas Burkhardt
Member
Blaž Brodnjak
Chief executive officer
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Statement by the Management Board of NLB
Esteemed Stakeholders,
The most inspiring success stories are never only
acquire and seamlessly consolidate and integrate
carbon sustainable economy that will use resources
written by great results, unique measures, or continuous
winning streaks . They also consist of stumbles which
are overcome by effort, perseverance, and resilience .
Of many defeats, born in a dignified way . Of joy and
businesses . Another very significant milestone for the
Group was signing the sale and purchase agreement
for Summit Leasing Slovenia in November . Subject to
regulatory clearances, this transaction will boost NLB
more efficiently . We are committed to making a positive
contribution to this both through our operations and our
business, thereby creating better footprints .
satisfaction, when achieving the almost impossible .
Group’s ambitions in the strategically important leasing
We believe, however, that a positive contribution to
And they are, above all, made up of indescribable
segment, will build on the ambition of the Group to add
society is also achieved with direct and decisive actions
feelings of belonging, homecoming, and warmth when
value for the shareholders, and provide the clients with
whenever and wherever needed, which we have proven
experiencing this on one’s home court . In NLB Group, we
do business from our hearts and souls with and for our
home region – and we live it every day .
With this in mind, we made sure that 2023 was truly
another year to remember – one in which NLB Group
delivered an impressive set of results, yet at the same
time continued to take responsible actions and with
its strategic focus and business decisions laid the
foundations for stable, profitable operations for years
to come . All of this was accomplished in addition to our
additional services and solutions . The latter of these
by further generous support to key pillars of the regional
ambitions will also be supplemented in the future by
expanding the offer of asset management services of
the Group, following a successfully concluded sale and
purchase agreement of NLB Skladi to acquire a 100%
society in the form of numerous sponsorships and
donations that address the most pressing challenges
of our societies, and in 2023 cumulatively amount to
more than EUR 17 million . In June, the Group contributed
shareholding in Generali Investments AD Skopje .
over EUR 1 .35 million across its operational markets in
In 2023, the Group continued to focus on enhancing our
customers’ user experience, as well as recognising and
addressing the needs of the economies in the region .
In addition to others, NLB in Slovenia launched the
the home region to support more than 30 associations,
with selected recipients covering a variety of societal
challenges such as childcare, assistance for socially
vulnerable families, support for the elderly, and aid for
employees facing constraints due to illness or accidents .
donations and sponsorships to humanitarian, health,
new mobile and web application, "NLB Klik," upgraded
Moreover, the Group’s quick and effective response was
cultural, sport, and other pillars of society to continue
the Group’s mobile wallet "NLB Pay" with Google Pay,
especially evident during the August floods in Slovenia:
to create better footprints, and by that improving the
launched the NLB Smart POS solution for micro and
to eliminate the consequences of which the Bank
quality of life in South-eastern Europe .
small business segments, and continued digging
donated a total of EUR 9 .5 million . A total EUR 4 million
In a continuously uncertain operating environment
regional infrastructure projects such as, the Krivača and
sustainable reconstruction and investments; a solidarity
with escalating geopolitical tensions, volatile financial
Selac wind power-plants, the Sava Congress Centre in
fund of EUR 0 .5 million was established for dozens of
deeper into AI-driven data science . It supported large
was allocated to the 20 most-affected municipalities for
conditions, as well as ever-tightening regulatory
Belgrade, and others .
NLB’s impacted employees; and EUR 5 million was
transferred to the budget of the Republic of Slovenia .
controlled cost evolution, and benign asset quality
reflected the strong credit and performance of NLB
additional tax exceeding EUR 30 million annually for the
requirements, the Group’s business model resilience
remained one of the key distinguishing factors among
the market participants . It provided for recurring solid
performance that is characterised by robust revenues,
trends, which when combined enabled NLB Group to
reach EUR 550 .7 million of net income after tax, further
strengthening market shares across geographies, client
segments, and product lines .
Among our key achievements in 2023, we should
highlight the legal and operational merger of N Banka .
This process was successfully completed in September,
The Bank also successfully issued its first ever, green
senior preferred notes, amounting to EUR 500 million .
The four times oversubscribed transaction not only
Furthermore, under the recently adopted reconstruction
law, which also imposes a tax on banks’ total assets
starting on 1 January 2024, NLB will be obliged to pay an
Group, but also demonstrated that NLB has wide
next five years . Combining donations and the respective
access to capital markets, and confirmed our focus
balance sheet tax, NLB will contribute over EUR 170
on sustainable development . This commitment was
additionally reinforced by the publication of NLB
Group’s first Net-Zero portfolio targets that outline
our efforts and progress in aligning emissions with the
Net-Zero pathways by 2050 or sooner, focusing on
key sectors such as power generation, iron and steel,
million for the recovery alone .
The Group’s strong business results in 2023 translated
into significant added value for our shareholders .
NLB has delivered on its commitment, performing
substantial dividend payments of EUR 110 million in
two tranches in 2023, which was well on the path of
fulfilling the ambition of achieving a total capital return
within the envisaged timeframe and budget, as yet
residential mortgages, and commercial real estate . In
another indication of the Group’s proven capacity to
NLB Group, we firmly support the transition to a low-
6
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
through robust cash dividends in a cumulative amount
Yet ever stronger confidence of investors, analysts, and
than EUR 1,000,000 at the beginning of 2024, confirming
of EUR 500 million between 2022 and the end of 2025 .
What is more, the business results of 2023 enabled us to
significantly increase our future dividend payments by
committing to at least 40% pay-out ratio of the previous
markets in the NLB Group has already been reflected
in the improved ratings . Moody’s first upgraded NLB’s
long-term deposits rating from Baa1 to A3 with a stable
appreciation of global investor base for the NLB’s equity
story and consistent strong performance .
outlook, and later upgraded NLB’s baseline credit
All of these accomplishments fuel our motivation to
years’ profit after tax . In 2024, this translates to EUR
assessment (BCA) and adjusted BCA from ba1 to baa3 .
even more enthusiastically address key opportunities
220 million in dividends, representing a 100% uptick
Furthermore, the Group received a new ESG Risk Rating
that lie ahead . We are fully aware that we can succeed
from 2023, while at the same time maintaining capacity
of 16 .0 by Sustainalytics, thus improving the previous
at that only by continuously investing in talent – not the
for organic and/or M&A driven growth . NLB Group
rating by 1 .7 points . The improved rating ranks in the
constantly monitors market conditions and analyses
top 13 per cent among all banks rated by the firm . All
potential opportunities for meaningful and value
of this was especially noticeable in a year of the fifth
accretive acquisitions to further strengthen our position
anniversary of the NLB shares listing on the Ljubljana
least because of this we have in 2023, for the eighth year
in a row, been awarded the renowned Top Employer
certificate for the best employers, underscoring our
focus on their learning and development . We are taking
in target markets .
Stock Exchange, and of global share certificates at
lessons from sports and a sports mindset, as we believe
To compliment a strengthened dividend pay-out in
December 2023, the Group kicked-off the new mid-term
business strategy defining process, thereby laying the
foundations for successful operations and added value
for all its stakeholders in the future . The details of future
the London Stock Exchange, as well as the NLB stock
that this spirit is the main ingredient our economies and
reaching record valuations . Since the IPO, the share
businesses need to succeed on the global stage . We are
price increased from EUR 51 .5 to EUR 85 .0 at the end
finding inspiration in the effort, dedication, successes,
of 2023, bringing investors 65% price return and more
and triumphs of athletes and in the dignity with which
than 128% total return (including dividends), bringing
annual return in excess of 17% . At the beginning of the
they recover from setbacks . And we feel a deep sense
of pride when we see that our efforts contribute to a
strategic priorities and ambitions of the Group will be
year 2024, share price exceeded EUR 100 and thus
better quality of life in our home region . We are, last
disclosed at the upcoming Investor Day on 9 May 2024,
brought investors in the IPO more than 100% price
but not least, building our success on our home court
in Ljubljana .
return . Trading with shares and GDRs has in the past
advantage . And we are confident that the best for our
year materially improved, from combined average daily
NLB Group is yet to come .
liquidity around EUR 500,000 in 2020 and 2021 to more
Yours truly,
Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
7
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement by the Chairman of the
Supervisory Board of NLB
Primož Karpe
Chairman of NLB Supervisory Board
Dear shareholders, esteemed clients, valued employees
and other interested stakeholders,
You will probably agree with the statement that the year
balance sheet, transactions, and distribution . This brings
Out of the top five revenue pools for the banking sector,
2023 has been transformational from a typical bank
us to the main question: where is our NLB Group on this
carefully underwritten retail and corporate lending
shareholder mindset perspective . Banks, in general,
transition path?
have generated record profits following the steepest
remain at the core of our activities . However, the two
other "growing revenue pools" are also particularly
and fastest rate hike in the eurozone history . Taken
At the Supervisory Board, our mindset strongly supports
interesting for the Group going forward: wealth & asset
as a whole, both 2022 and 2023 have been the years
the Bank’s future strategy in a way that unlocks
management and payments (of NLB Group members)
of banks’ profitability evolution bonanza, but (and
shareholder value . Namely, the banking valuation gap
with all their sub-segments . Unlike balance sheet
it’s worth emphasising that "but") with considerable
highlights a need for our business model to evolve
conditioned growth in lending and deposit-taking
variation between banks, riding the tailwind . The time
alongside the three key pillars mentioned above . If the
(the balance sheet factor), where our commitment to
has come to talk about value creation that a sustainable
capital markets, on average, expect long-term average
organic and inorganic growth remains intact, wealth
banking business model can generate going forward
ROE of banks will level down or be slightly above
and asset management and payments/transactions are
and to consider it with a different mindset .
(or even below) the cost of equity, where then is this
off-balance sheet-driven . The two segments also stand
As the McKinsey annual review of the sector1 points out,
regardless of what happens next, including cycle change
"unlocking factor" that can persuade investors there
out as the largest value creation and total shareholder
is indeed a way to a long-term sustainable and highly
return generating sub-sectors across the financial
profitable growth of NLB Group, with less dependency
institutions’ universe over the last decade .
8
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
and rate spread "normalisation", the banking transition
on cycle steering?
is very real, large, and tangible . And I couldn’t agree
more; it has been affecting three key banking pillars: the
1 McKinsey & Co: The Global Banking Annual Review 2023; The Great Banking Transition; October 2023.
It is easy to notice that the growth of off-balance sheet
funds (retail AUM, pension funds money, private debt
Contents
and equity, insurance assets under management) have
depends on the market characteristics of the retail bank
mobility being a good example) are consolidating their
been surpassing on-balance sheet growth over the last
clientele . We have already created an omnichannel
value propositions, and we want to be part of it . While
decade as the source of funding for investments in the
experience where branch and contact centre
embedded finance’s long-term prospects may look
real economy . Even our core SEE region is not immune
professionals have the tools to support customers at
appealing, some already market-proven best practices
to this . And I think NLB Group can hop on this trajectory
any stage of the sales journey . But, there is a dire need
offer attractive scaling options, for example in insurance
of growth . Our growth (both geographic and organic) in
to invest more into the most advanced technology and
and point-of-sale lending . And we are looking to be
the asset & wealth management market share proves
apply it to segments like credit-risk decisioning in real
there as well . While we still cling to multiple distribution
that, and our adopted payments strategy focus ads
time, back-end processes that drive clients through
channels, removing this silos logic over the mid-term into
further rationale to the above .
self-servicing, and well-designed digital workflows,
a more streamlined approach offers us new opportunities
all backed by logically designed data warehouse
for performance improvements .
Transaction volumes have, over a more extended period,
architecture . Nevertheless, as we all know, the deeper we
also been moving to non-traditional players and are
dive into the digital world, the stronger our cyber security
Hence, if the transition of the banking model is an
no longer solely in the domain of banks . Banks have
defences need to be, addressing the plethora of cyber
undisputed fact of the present and the future, your NLB
been selling and spinning off operations or acquiring
risks all banks are exposed to . Therefore, our cyber
Group is committed to making it happen . Deploying its
them, in line with their strategies, to either gain scale
security investment focus must always stay at the top of
capital prudently and strictly in line with our RORAC-
or rationalize . This includes payment processing
our minds . Since the distribution channels of NLB Group
driven profitability signalling system .
companies, wealth and asset managers, etc . Again,
allow for further development, there is ample room and
NLB Group, with its payment and transaction-focused
ambition (coupled with its co-ownership of payment
opportunity for improvements in their utilisation, allowing
for an even more embedded finance approach .
Still, only by relentlessly pursuing excellence will we
be able to approach it, enabling ourselves to continue
processing) and regional wealth and asset management
giving back to all our key constituencies to whom we
ambition, can ride this trend .
The demand for embedded finance (embedding financial
owe all this: to our shareholders, to our employees,
products into non-financial platforms or vice versa) is
to our wider society (in the widest ESG sense) and of
Finally, the distribution is moving increasingly from
also growing . "Traditional" embedded finance ecosystems
course, to our clients .
omnichannel to mobile-only channels, although that
such as retail and B2C marketplaces (car leasing/
Yours truly,
Supervisory Board of NLB
Primož Karpe
Chairman
9
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
We are building our success on the
home court advantage .
NLB Banka, Banja Luka
Market share
by total assets
Result
after tax
10
Total assets
Active clients
NLB, Ljubljana
Market share
by total assets
Result
after tax
Total assets
Active clients
30 .2%
514
(in EUR millions)
16,015
(in EUR millions)
719,708
NLB Lease&Go, Ljubljana
Market share
by total assets(ii)
Result
after tax
Total assets
Net loans to
customers
10 .1%
2
(in EUR milliions)
283
(in EUR millions)
257
(in EUR milliions)
NLB Skladi, Ljubljana
Market share
Result
by total assets (i)
after tax
Assets under
management
39 .6%
9
(in EUR milliions)
2,360
(in EUR milliions)
NLB Banka, Sarajevo
Result
Market share
after tax
by total assets
Total assets
Active clients
6 .2%
13
(in EUR milliions)
917
(in EUR millions)
133,567
(i) Market share of assets under
management (AuM) in mutual funds.
(ii) Market share of leasing portfolio.
NLB Banka, Podgorica
Result
Market share
after tax
by total assets
Total assets
Active clients
For further information on NLB Group subsidiaries, please refer to the chapter Segment Analysis .
14 .4%
27
(in EUR milliions)
971
(in EUR millions)
93,873
20 .4%
24
(in EUR milliions)
1,041
(in EUR millions)
210,985
NLB Komercijalna Banka, Beograd
Market share
by total assets
Result
after tax
Total assets
Active clients
9 .9%
132
(in EUR milliions)
5,019
(in EUR millions)
1,060,357
NLB Lease&Go Leasing, Beograd
Market share
by total assets
Result
after tax
Total assets
Net loans to
customers
5 .1%
-1
(in EUR milliions)
71
(in EUR millions)
69
(in EUR milliions)
NLB Banka, Prishtina
Result
Market share
after tax
by total assets
Total assets
Active clients
16 .9%
36
(in EUR milliions)
1,230
(in EUR millions)
230,418
NLB Banka, Skopje
Market share
by total assets
Result
after tax
Total assets
Active clients
15 .6%
45
(in EUR milliions)
1,902
(in EUR millions)
407,635
NLB Lease&Go, Skopje
Market share
by total assets
Result
after tax
Total assets
Net loans to
customers
n .a .
-1
(in EUR milliions)
10
(in EUR millions)
9
(in EUR milliions)
Key Highlights
Built on foundations for strong
performance
Profit a .t .
(in EUR millions)
204
194
270
138
NGW(i)
KB
236
551
447
173
NGW(i)
N Banka
2018
2019
2020
2021
2022
2023
(i) NGW = negative goodwill = gains from bargain purchase
Net interest income
Gross loans to customers
Non-performing loans (NPLs)
833
7,627
7,938
10,033
1,877
KB
14,064
622
13,397
954
N
Banka
10,903
475
375
367
328
301
313
318
300
505
409
11
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
2018
2019
2020
2021
2022
2023
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
31 Dec
2023
31 Dec
2018
31 Dec
2019
31 Dec
2020
31 Dec
2021
31 Dec
2022
31 Dec
2023
Contents
Empowering growth through strong capital,
delivering significantly higher shareholder returns,
underpinned by solid asset quality trends
Capital
MREL
TCR
MREL ratio
20 .3% 40 .2%
vs. 15.5%
vs. 34.99%
Asset
quality
cost of risk
-7 bps
requirement (incl. P2G)
requirement
Dividend pay-out in 2024
EUR
MREL funding (stock)
EUR
NPL ratio
220million
1,556
million
which represents a 40% pay-out ratio of the
2023 profit
MREL funding in 2023:
EUR 540 million
1 .5%
(internal definition)
12
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Key Performance Indicators
Table 1: Key financial indicators for NLB Group and NLB
NLB Group
NLB
Income statement data (in EUR millions)
Net interest income
Net non-interest income
Net non-interest income (BoS)
Total costs
Operating costs (BoS)
Result before impairments and provisions(i)
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 millions)
Total assets
Gross loans to customers
Impairments and valuations of loans to customer
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
CET1 ratio
Total RWA (in EUR millions)
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)(ii)
NPL coverage ratio (EBA definition) (BoS)(iii)
NPL volume (in EUR millions)
NPL ratio (internal def .; NPL/ Total loans)
Net NPL ratio (internal def .; net
NPL / Total net loans)
NPL ratio (EBA definition)(ii)
NPL ratio (EBA definition) (BoS)(iii)
NPE ratio (EBA definition)
NPE ratio (EBA definition) (BoS)(iv)
2023
833
260
300
-502
-541
591
-14
1
578
13
551
25,942
14,064
-329
13,735
4,804
20,733
2,883
65
6,301
20 .3%
16 .9%
16 .4%
15,337
59 .1%
110 .0%
64 .6%
65 .6%
65 .6%
301
1 .5%
0 .5%
2 .1%
1 .5%
1 .1%
1 .1%
2022
505
294
503
-460
-496
338
-29
1
483
11
447
24,160
13,397
-324
13,073
4,877
20,028
2,366
57
5,449
19 .2%
15 .7%
15 .1%
14,653
60 .6%
98 .9%
57 .1%
58 .1%
58 .1%
328
1 .8%
0 .8%
2 .4%
1 .8%
1 .3%
1 .3%
2021
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%
2023
373
266
277
-238
-249
401
78
-
479
-
514
16,015
7,277
-121
7,156
3,016
11,882
2,249
-
5,291
25 .2%
19 .7%
18 .8%
9,207
57 .5%
87 .9%
61 .2%
61 .4%
61 .4%
138
1 .2%
0 .5%
1 .9%
1 .2%
0 .9%
0 .9%
2022
177
189
199
-208
-218
158
6
-
164
-
160
13,939
6,157
-95
6,062
2,961
10,984
1,603
-
4,046
25 .6%
19 .1%
18 .1%
7,833
56 .2%
86 .1%
58 .1%
58 .2%
58 .2%
111
1 .1%
0 .5%
1 .7%
1 .1%
0 .9%
0 .9%
2021
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%
13
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Received collaterals / NPL
NPL Collateral received / NPL (EBA definition)
Credit impairments and provisions / RWA
c) Profitability
Net interest margin (BoS)(v)
Financial intermediation margin (BoS)
Operational business margin(vi)
ROE b .t .
ROA b .t .
ROE a .t .
ROA a .t .
d) Business costs
Operating costs / Average total assets (BoS)
CIR
Total costs / RWA
Total costs / Total assets
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
Key indicators per share
Shareholders(vii)
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(viii)
NLB Group
NLB
2023
58 .1%
45 .6%
-0 .1%
3 .4%
4 .6%
4 .8%
21 .6%
2 .3%
21 .0%
2 .2%
2 .2%
45 .9%
3 .3%
1 .9%
51 .9%
41 .0%
245 .7%
187 .3%
9 .6%
-
66 .2%
7 .1%
-
-
-
139 .9
418
7,982
2022
61 .0%
54 .7%
0 .1%
2 .2%
4 .4%
3 .6%
20 .6%
2 .1%
19 .9%
1 .9%
2 .2%
57 .6%
3 .1%
1 .9%
48 .5%
40 .7%
220 .3%
183 .0%
9 .1%
-
65 .3%
5 .4%
-
-
-
114 .1
440
8,228
2021
61 .7%
58 .8%
-0 .3%
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
8,185
2023
58 .7%
67 .1%
0 .0%
2 .5%
4 .4%
3 .7%
26 .0%
3 .3%
27 .9%
3 .5%
1 .7%
37 .3%
2 .6%
1 .5%
66 .5%
51 .5%
299 .7%
175 .0%
10 .9%
30 .2%
60 .2%
6 .9%
3,457
2022
58 .4%
75 .6%
0 .2%
1 .3%
2 .9%
2 .5%
10 .5%
1 .2%
10 .2%
1 .2%
1 .7%
56 .8%
2 .7%
1 .5%
61 .8%
49 .8%
276 .5%
177 .6%
10 .3%
27 .6%
55 .2%
4 .7%
3,025
2021
60 .0%
63 .1%
-0 .4%
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
20,000,000
20,000,000
10
108 .3
68
2,554
10
75 .9
71
10
77 .6
75
2,418
2,510
NLB Rating 2023
NLB Rating 2022
NLB Rating 2021
NLB Outlook 2023
NLB Outlook 2022
NLB Outlook 2021
BBB
-
A3
BBB
-
Baa1
BBB-
-
Baa1
Stable
-
Stable
Stable
-
Stable
Stable
-
Stable
Further details on the definition of certain indicators in this table are available in the chapter Alternative Performance Indicators.
(i) The result before impairments and provisions of NLB Group for the year 2022 does not include negative goodwill.
(ii) Loans and advances without loans and advances classified as held for sale, cash balances at central banks, and other demand deposits.
(iii) Loans and advances including cash balances at CBs and other demand deposits.
(iv) The carrying amount of debt instruments measured at fair value through other comprehensive income (FVOCI) is increased by value adjustments due to impairments.
(v) Calculated on the basis of average total assets.
(vi) Calculated as Net income from operational business (NII - Tier 2 expenses + Net fee and commission income + Recurring net income from financial operations)/Average total assets.
(vii) As per share register of Central Securities Clearing Corporation (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 a single
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.
(viii) Unsolicited rating.
14
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Key Events
April
Agreement on
acquisition of
N Banka
submitted to the
court registry
June
Issue of Green
Senior Preferred
Notes
Dividend payment
November
Acquisition of
Summit Leasing
& Generali
Investment Skopje
Improved
ESG Risk rating
September
N Banka legal
& operational
merger
January
"Top Employer"
certificate
February
Moody’s
rating
upgrade
May
Announcement of
MREL requirement
August
Donations for
those affected by
floods in Slovenia
March
Slovenia’s Best
Private Bank for
High Net Worth
Individuals
October
First Bankarium
commemorative
banknote
December
Prime Market
Share of the Year
Dividend payment
Additional flood
relief donations
15
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
January
· "Top Employer" certificate: The Top Employers Institute
awarded the Bank the prestigious "Top Employer"
certificate for the 8th consecutive year .
· Best Indoor Experience 2023: Bankarium was awarded
the Best Indoor Experience 2023 award in the In Your
Pocket Ljubljana competition .
February
· Rating upgrade: Credit rating agency Moody’s upgraded
NLB’s long-term deposit rating to A3 from Baa1 .
March
· USA regional banks & Credit Suisse turmoil: The
collapse of two regional banks in the USA, Silicon
· New members of the Supervisory Board: The General
Meeting appointed four members, two of whom were
members before – Shrenik Dhirajlal Davda and Mark
November
· Acquisition of Summit Leasing: The Bank signed SPA
for 100% shareholding in Summit Leasing Slovenija
William Lane Richards, and two new members – Cvetka
and its subsidiaries .
Selšek and André-Marc Prudent-Toccanier, all for four-
year terms .
· Green Senior Preferred Notes: The Bank debuted in
issuing green senior preferred notes amounting to EUR
500 million with a maturity of 4NC3, counting towards
· Acquisition of Generali Investment AD Skopje:
NLB Skladi signed SPA for acquiring a majority
shareholding in Generali Investments AD Skopje .
· ESG Risk Rating: The NLB Group significantly improved
Sustainalytics ESG Risk Rating to 16 .0 .
meeting the MREL requirement .
· Donations to various associations, humanitarian
organisations and groups: The Bank donated EUR 1 .35
million to more than 30 recipients from the SEE region
December
· Dividend payment: The Bank paid the dividends (the
second tranche) of EUR 55 million or EUR 2 .75 gross per
in the area of childcare, socially vulnerable families,
care for the elderly and employees who might be in
Valley Bank and Signature Bank, impacted Europe
need due to illness or accident .
as it put European banks under much stress . Swiss
financial regulators engineered an emergency rescue
plan for Credit Suisse with the UBS Group AG buying
Credit Suisse . As of 31 March 2023, the Group has only a
small exposure to Credit Suisse, derived mainly from a
limited bond investment . From a liquidity point of view,
no material deviations from the normal intra-monthly
August
· ECB’s licence for N Banka merger: On 3 August 2023,
NLB received the authorisation of the ECB for the
merger of N Banka .
· Measures taken regarding the floods in Slovenia: To
help alleviate the effects of the floods that affected a
deposit dynamics were identified at the Group level as
part of Slovenia, the Bank introduced systemic steps,
share .
· Prime Market Share of the Year: Ljubljana Stock
Exchange awarded NLB Bank for Prime Market Share
of the Year .
· the! Award: NLB received three awards from the
Croatian Public Relations Association: gold for the NLB
Investor Day, silver for the NLB Frame of Help and
bronze for the communication support of the N Banka
acquisition .
· New SREP requirement: A new SREP decision for NLB
Group under which Pillar 2 Requirement has been
a result of the turmoil .
including a donation of EUR 4 million for sustainable
reduced from 2 .40% to 2 .12% while Pillar 2 guidance
· Slovenia’s Best Private Bank for High Net Worth
Individuals: Euromoney awarded NLB as part of the
global private banking awards in 2023 .
April
· Acquisition: The agreement concluded on 16 November
2022 between the acquiring company NLB and the
reconstruction to the most afflicted municipalities .
remains at 1 .00% . The new SREP decision shall apply
The Bank also provided solidarity aid to its affected
employees . In addition, NLB Banka, Skopje donated
EUR 60,000 to the Slovenian Red Cross and other
as of 1 January 2024 .
· MREL requirement: NLB received the decision of the
Bank of Slovenia on the MREL requirement . Starting
organisations to support flood relief efforts . As a part
1 January 2024, NLB must comply with 30 .66% TREA
of risk management, the Bank has been enhancing
(excluding CBR) and 10 .69% LRE at the NLB Resolution
its existing flood risk assessment model based on
acquired company N Banka was submitted to the
flood risk zones to minimise future negative impacts of
District Court of Ljubljana court registry .
similar events .
May
· New MREL requirement: From 1 January 2024, the
MREL requirement to be met by the Bank on a
September
· N Banka legal and operational merger: On
1 September, the legal and operational merger
Group level .
· Employer Brand Awards Adria 2023: NLB received two
awards at Best Employer Brand Awards Adria 2023:
Best Employer Brand – Banking Sector and Integration
of Corporate and Employer Brand .
· Additional donations for flood relief: NLB donated an
additional EUR 5 million to the Budget of the Republic
consolidated basis at the resolution group level shall be
between N Banka and NLB was successfully completed
of Slovenia to a particular budget line to raise funds to
30 .99% of the Total Risk Exposure Amount, excluding
18 months after having been acquired by NLB within
applicable CBR and 10 .39% of the Leverage Ratio
the envisaged budget and timeframe .
Exposure .
June
· Dividend payment: The Bank paid the dividends
October
· First Bankarium commemorative banknote: The
Bankarium commemorative banknote was presented to
recover the consequences of the August floods .
· First NLB Group Net-Zero disclosure report: The Bank
released the first comprehensive overview of efforts
and progress to achieve net-zero emissions by 2050 or
sooner .
(the first tranche) of EUR 55 million, or EUR 2 .75 gross
the public .
per share .
16
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Shareholder Structure
and Market Performance
of NLB’s Shares and GDRs
21 .97%
Other shareholders
25%
+ 1 share
Republic of Slovenia
53 .03%
Shares in GDR format(i)
(i) Bank of New York Mellon
on behalf of the GDR holders
GDR holders with shares >5% and <10%:
- EBRD
- Schroders plc
Shareholder
Structure of NLB
The Bank’s shares are listed on the Prime Market
sub-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 of the London Stock Exchange (ISIN:
US66980N2036 and US66980N1046, London Stock
Exchange GDR trading symbol: NLB and 55VX) . Five
GDRs represent one NLB share .
Table 2: NLB’s main shareholders as at 31 December 2023(i)
Shareholder
Bank of New York Mellon on
behalf of the GDR holders(ii)
of which EBRD(iii)
of which Schroders plc(iii)(iv)
Republic of Slovenia (RoS)
Other shareholders
Total
Number of
shares
Percentage
of shares
10,605,146
53 .03
/
/
>5 and <10
>5 and <10
5,000,001
4,394,853
25 .00
21 .97
20,000,000
100.00
17
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
(i) This information is sourced from the NLB’s shareholders’ book that is 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 self-declarations by individual holders pursuant to the applicable provisions of Slovenian legislation, which require 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 on this obligation vested with the
holders of major holdings, the Bank postulates that no other entities nor any natural person hold directly and/or indirectly ten 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 shareholders’ meeting or 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 the chapter Events After the End of the 2023 Financial Year.
Contents
Market Performance
of NLB’s Shares and
GDRs
Rebased to January 2023, the European banking stocks
index gained 11% . It started the year positively, only to
fall to the lowest in March as investors were probably
spooked by the still elevated inflation and increasingly
faltering demand (for loans), as the CB hiked rates
(10 times) in a historic campaign . The price fluctuated
mildly but with a growing trend up until November .
Not surprisingly, the index closed the remainder of the
year with a strong performance, reaching its highest
price at the close of the year after Q3 results indicated
a solid and lucrative year for the banks that had net
interest income registering high growth . The effect was
further enhanced by the fact that the liability side of
the balance sheet reacted with a notable lag in scope .
Hence, the index gained 11% in 2023, outperforming the
European stock index, which was short of achieving 8%
in 2023 . It similarly fell in value in March and rebounded
to a volatile period, ending with the lowest price in
November to finish the year strong . It also reached the
Ljubljana Stock
Exchange awarded
NLB as Prime Market
Share of the Year
Expanded Analyst
Coverage of NLB by
HSBC and PKO BP,
and first credit rating
by Bank of America
highest price at the close of the year (bringing forth
notable effects of disinflation) .
The SBI index’s lowest price was seen at the start of the
year . From there it grew to reach the highest price of the
year at the end of July only to experience a fall in August .
It finished the year with a growing trend, reaching
growth north of 18% in the year 2023 .
The price of the Bank’s stock grew rather steadily until
August, from where the price stagnated until mid-
November, to finish the year strongly (the price was the
highest in mid-December), due to a similar mix of factors
as described two paragraphs above . In 2023, the price
of the bank’s stock grew by 36%, outperforming the SBI
index and European STOXX 600 for banks .
Figure 1: NLB share price movements on the Ljubljana Stock Exchange and NLB GDR price movement
on the London Stock Exchange (in EUR)
GDR
18.00
17.00
16.00
15.00
14.00
13.00
12.00
11.00
10.00
9.00
8.00
Ja n 2 0 23
Fe b 2 0 23
M ar 2 0 23
A pr 2 0 23
M ay 2 0 23
Ju n 2 0 23
Jul 2 0 23
A u g 2 0 23
Se p 2 0 23
O ct 2 0 23
N ov 2 0 23
D ec 2 0 23
Shares
90.00
85.00
80.00
75.00
70.00
65.00
60.00
18
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Shares (NLBR)
GDR (NLB)
Source: Ljubljana Stock Exchange, Bloomberg.
Contents
EUR
600,000
in combined average
regular trading volume per
day (excluding block trades)
In addition, in December 2023, the Ljubljana Stock
Exchange awarded Bank shares (ticker "NLBR") the
"Prime Market Share of the Year" accolade .
IR presentations, financial reports, and important
information are available on the Bank’s website in line
with IR’s Financial Calendar .
NLB Shares and GDRs
Table 3: NLB share information
Share information
Total number of shares issued
Highest closing price (in 2023)
Lowest closing price (in 2023)
Closing price as at 29 December 2023(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 30 and 31 December 2023.
31 Dec 2023
20,000,000
EUR 86 .0
EUR 62 .0
EUR 85 .0
EUR 139 .9
EUR 27 .5
0 .61
EUR 5 .5
EUR 1,700,000,000
Indices
The Bank’s shares are included in several indices: the
SBITOP index, SBITOP TR index, and ADRIA prime index
The Investor
Relations Function
of the Ljubljana Stock Exchange, FTSE Frontier Index,
The Bank participated in various forms of engagement,
MSCI Frontier, and MSCI Slovenia, S&P Eastern Europe
such as investor meetings, calls, conferences, and
BMI, S&P Emerging Frontier Super Composite BMI, S&P
roadshows to meet the requirements of the Bank’s
Extended Frontier 150, S&P Frontier BMI, S&P Frontier
ownership . Transparent communication with investors
Ex-GCC BMI, S&P Slovenia BMI, as well as the STOXX
and analysts allowed for a dialogue on strategic
All Europe Total Market, STOXX Balkan Total Market,
developments, as well as on the financial performance
STOXX Balkan Total Market ex-Greece & Turkey, STOXX
of the Group . The Bank promoted greater awareness
EU Enlarged Total Market, STOXX Eastern Europe 300,
and understanding of operating businesses,
STOXX Eastern Europe 300 Banks, STOXX Eastern
developments, and events, which influence the
Europe Large 100, STOXX Eastern Europe Total Market,
performance of the Bank's share price . The performance
STOXX Eastern Europe Total Market Small, STOXX
of the Bank is covered by analysts from EFG Hermes,
Global Total Market, and STOXX Slovenia Total Market,
JP Morgan, Deutsche Bank, Wood & Company, Citi,
among others .
InterCapital, Raiffeisen Bank International, HSBC, PKO
BP, and Ilirika BPH .
Throughout 2023, the Bank participated in more than
10 conferences, organised earnings calls, conducted
six non-deal roadshows for equity and for fixed-
income investors, and met 160+ investors on 200+
investor interactions . Those meetings covered various
topics, including governance (including remuneration),
sustainability, digitalisation, strategy, and finance .
In 2023, the Bank received its first credit rating from Bank
of America, expanding analysts’ coverage beyond equity
research and helping the Bank with capital markets
activities . Additionally, the analysts from HSBC and PKO
BP initiated coverage on the NLB in 2023, leading to 10
covering equity analysts .
Share price growth
in 2023 above
36%
19
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Macroeconomic Environment
In 2023, the growth in the Euro area was weak, as the economic environment was affected by tighter financial
conditions, lower aggregate demand, and an insufficient credit supply . Weak foreign demand and receding fiscal
support hampered activity . Conflicts in Palestine and the Middle East added to the rise of uncertainty .
The global and
European economy
The 2020s are turning into an inactive decade for the
global economy as stagnation, loss of purchasing
power, depleted savings, and high interest rates plague
the growth outlook . The unresolved conflict in Ukraine
and additional Israel-Palestinian hostilities since
October 2023 have contributed to uncertainty . Freight
rates, initially declining since the Suez Canal obstruction
in 2021, were under pressure again as alternative routes
had to be employed as Houthi attacks blocked the
Red Sea trade route . While the global economy is in
a better place concerning the recession risk than last
year, developing countries still feel the strain of slow
growth, deteriorating global trade, expensive borrowing,
and very tight financial conditions that are further
aggravated by elevated food prices .
The global economy expanded slowly in 2023,
predominantly driven by a solid year for the US economy
and emerging markets, which were led by China . Private
consumption supported by tight labour markets proved
to be the growth driver for the world economy . This has
been a pleasant surprise despite the CBs’ substantial
tightening of the monetary policy . US economic growth
in 2023 was relatively resilient . Still, the tighter monetary
policy has already shown signs of hampered spending,
and the unemployment rate rose by 0 .4 p .p . within a
year, which is a considerable jump in a short amount of
time . Credit card debt has already been growing, and
retail sales data suggests consumers slowed purchasing
in Q4 2023 . The personal saving rate has been declining
since May and has been low historically . In China,
economic activity stabilised after the reopening, despite
weakness in the real estate sector towards the year’s
end, as it represents a noticeable portion of Chinese
GDP and could affect the rest of world economies . A
trend akin to the Western economies, which is becoming
increasingly evident, the increasing debt levels are
directly muting China’s growth .
In the Euro area, a recession was avoided, but YoY GDP
growth was on a clear downward path throughout
the year, with marginal growth in Q1 and Q2, and
stagnation in Q3 and Q4 . The export of goods started
the year strong in Q1, but soon soured after that,
remaining in contraction for the remainder of the year
in YoY terms due to weak external demand . Imports
grew initially, but contracted from March to September
when they bottomed up, pointing towards a pent-up
1 .6%economic growth
in Slovenia in 2023
demand (for foreign goods) and shrinking inventories .
Moreover, recent ECB data on year-end wage
HICP inflation started the year in the double-digit
negotiations suggests persistent future high wage
territory, nearing the mandated goal by year-end
pressures with no indication of a peak . Though subdued
which was driven by the disinflationary momentum .
for most of the year, consumer confidence slightly
Core inflation, though slower to decrease, followed a
improved in the closing quarter . However, ESI and its
similar downward trend . Services prices rose noticeably
sub-indicators showed signs of bottoming out in the last
until August, then started declining due to retreating
two months of 2023 . The unemployment rate changed
demand . Food maintained significant pressure on price
slightly in 2023, staying tight in historical comparison .
levels, resisting the disinflationary trend . Energy had
a noticeable deflationary effect, especially in the last
In 2023, the FED raised its target range from 4 .25%–
quarter, primarily due to the base effect . Industrial
4 .50% to 25 bps to 5 .25%–5 .50% (by four 25 bps hikes)
production lost the previous year’s momentum in
and stayed there from July until the end of the year .
March and contracted until the final quarter as foreign
Despite December minutes suggesting reduced inflation
and domestic demand weakened . The composite
risks, concerns persisted, especially in housing and
PMI contracted after May services PMI outperformed
non-housing services . The year-end data in labour
manufacturing PMI . Retail trade as a proxy for demand
markets, consumer demand, and the housing market,
showed negative momentum (YoY) throughout 2023, and
supported the FED’s cautious approach to easing
was influenced by higher interest rates and consumer
monetary policy . The ECB finished its historic campaign
spending cutbacks . ECB’s private consumption metric
of 10-rate hikes in September 2023, bringing the deposit
stagnated in the first half of 2023, then experienced a
facility rate to 4 .0% . Since then, the ECB has stuck to the
mild uptick in Q3 that was still below the peak in Q3
"higher for longer" narrative to support its intention to
2022 . Negotiated wages and gross disposable income
keep the rates there until inflation declines towards the
rose, improving for most countries of the Euro area
mandated goal . Bond yields dropped in the last quarter,
(in the same comparison), suggesting a consumer
causing a price increase when the ECB was winding
preference for saving over spending, which was
down PEPP . At the end of 2023, the ECB urged banks to
confirmed by the increase in the household saving rate,
prepare for more delinquencies, unpaid loans, and
surpassing the 2022 levels .
elevated liquidity risk . Also, it failed to disclose the
quantity and pace of potential cuts in 2024, most
20
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
probably because of tight labour markets and wage
austerity must be ushered in to manage the elevated
decrease . In Bosnia and Herzegovina, the average rates
in January-November 2023 rose the most in consumer
loans, followed by NFC loans – whereas the real estate
loans finished the year at the same level they opened .
In North Macedonia, during the same period, average
interest rates increased the most for real estate loans,
followed by consumer and NFC loans, while in Slovenia,
interest rates increased the most for NFC loans, followed
by real estate loans, while they have decreased
marginally during the period for consumer loans .
Slow economic growth, elevated prices and interest
rates, and uncertainty about the mid-term developments
impacted global foreign direct investment (FDI) flows in
2023 . Despite that, some countries in the region reached
new FDI records; Serbia, Kosovo, and Bosnia and
Herzegovina reported strong FDI flows in 2023, while
Slovenia, Montenegro, and North Macedonia reported
positive albeit moderated FDI flows . Appetites for
regional investments that would decrease global supply
chains dependency together with investment potential
in the region are supporting FDI factors, where mid-term
outlook uncertainties represent the main factors for their
eventual transitory moderation .
growth pressures instilling uncertainty about the "second
debt levels .
round effects ."
The 2023 was a year
of stagnation, slow
growth, weak demand
and tight labour
markets
The risk of the recession has receded compared to
a year ago, and inflation has gradually declined in
most regions due to lower energy and food prices .
Global growth, however, will continue to reflect the
impact of monetary policy tightening and elevated
rates across advanced economies in 2024, leading to
sluggish investment . After contracting noticeably in
2023, global trade growth is expected to pick up, but
regional tensions could influence commodity prices .
Borrowing costs for countries with poor credit ratings
will remain very high . The Euro area GDP should grow at
an underwhelming pace in 2024, supported by expected
recoveries in industrial sectors, increased consumer
spending, wage growth, and lower inflation .
Exports should pick up again as global trade improves .
However, slowdowns in the Mediterranean economies
and the lagged effects of interest rate hikes will cap
the overall upturn . Potential turbulence in the banking
and financial sectors and sizeable public debt levels
pose risks . Governments should continue to roll back
the related support measures to reduce elevated public
debts and avoid additional inflationary pressures . The
Euro area households, especially those with lower
incomes and floating-rate loans, feel the strain of
higher interest rates . Although tight labour markets,
government support measures, and accumulated
savings managed to mitigate household vulnerabilities,
low-income earners continue to face pressure on real
incomes, consumption, and debt servicing ability .
Further challenges may arise if energy prices soar
or interest rates continue to remain elevated . Fiscal
The economy in the
Group’s region
In 2023, growth appeared slow, but still slightly less
stagnant than the Euro area and began picking up in
Q3 . As the year started, the export sector grew; however,
as economic growth started receding in the Euro area,
the foreign demand subsided quickly, hurting the
exporting industry . Double-digit inflation in the first
half of the year caused domestic demand for foreign
goods to retreat even faster, causing imports to contract .
Private consumption remained the main growth driver,
picking up in Q3 and maintaining momentum towards
the year’s end . Inflation started in double-digit territory,
but disinflationary trends grabbed hold as the CBs
lifted policy rates . Only the Serbian economy persisted
with double-digit inflation by June, and growth rates
subsided steadily . Food and non-alcoholic beverages
drove annual inflation in the first half of 2023 . Still, by
Q3 of 2023, the item was already experiencing notable
disinflationary trends and was surpassed by housing
and related costs and leisure and accommodation
prices . Industrial production had a solid performance
in Q1, but soured afterwards due to a lack of foreign
demand, with Montenegro being an outlier with
solid Q1 and Q3 prints . Retail sales mostly posted
negative growth in annual terms, apart from Bosnia
and Herzegovina and Montenegro, which exceeded
expectations . An economic sentiment indicator began
improving slowly across the region until August, when it
experienced a setback but finished the year on a more
positive note . Tight labour markets (in historical terms)
enabled and supported the growth of economies, with
unemployment rates subsiding in 2023, except for the Q3
upticks in Bosnia and Herzegovina, and Slovenia .
In 2023, the average interest rates in Serbia’s NFC sector
increased as consumer and housing loan rates began
subsiding in October . In Montenegro, consumer loans
saw the most significant rate increase as NFC and
real estate rates were similar or lower in November
(compared with January) . Likewise, in Kosovo, consumer
loans saw rates increase marginally from January to
November, as NFC and real estate loans saw rates
21
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
A macroeconomic
snapshot of NLB Group’s
region
Growth in Slovenia was slow in the first half of 2023
and decreased further in Q3, as it experienced a flood-
induced slowdown . The annual decline in goods and
services exports (starting after Q1) outpaced Q2’s
contraction as the floods hit the key auto industry .
2 .2%economic growth
in the Group’s region
in 2023
Montenegro’s YoY GDP growth cooled slightly in Q3,
coming from Q2’s expansion . A softer, albeit still-strong
increase in exports and a faster expansion in imports
weighed on the external sector . Moreover, household
spending growth decelerated amid a surprisingly strong
disinflationary trend at the end of Q2 . That said, both
fixed investment and government consumption gained
steam . Available data for Q4 2023 is relatively upbeat, as
industrial production rose notably annually . Moreover,
YoY growth in tourist arrivals outpaced Q3’s average
Moreover, private consumption shifted into contraction,
growth was stable . Inflation persisted in double digits
increase . That said, merchandise exports plunged YoY in
and both public spending and fixed investment
expanded less than in Q2 . The savings rate declined
until May and started subsiding after (apart from the
October, while economic sentiment was less optimistic
hiccup in August) . During the last quarter, the economy
than in Q3 .
notably in Q3, as in previous years . However, a
gathered some steam . Industrial output rebounded
significant part of the workforce takes annual leave .
annually from Q2’s fall, and retail sales declined at a
That said, the external sector made a net contribution
gentler pace in the same period .
to GDP as imports declined sharply in comparison to
exports . Turning to Q4, the available data suggested
growth would pick up as the impact of the floods fades
In Bosnia and Herzegovina, the YoY economic growth
accelerated in Q3 to the same slow pace of growth
amid disaster relief from the EU . In October, industrial
already seen in Q1 . The improvement was driven by
output posted the best reading in over a year (which
pickups in both public and private spending growth,
was still rather shabby), while retail trade contracted at
supported by the disinflationary trend in the period .
a softer YoY pace amid lower inflation, was a good sign
Investment growth slowed, while exports continued
for private spending .
their sharp contraction since Q3 2020 . The economy
lost momentum towards the year’s end as industrial
GDP growth in Serbia picked up throughout the year . It
sped up in Q3 thanks to more robust domestic demand,
output contracted markedly in annual terms in the last
quarter, while retail sales expanded slower than in Q3 .
as household consumption, public spending, and fixed
Meanwhile, merchandise exports continued to shrink,
investment grew rapidly . On the flip side, exports shrank,
albeit at a softer rate than in Q3 . In mid-December,
reflecting the stagnation of major growth partners .
the EU decided not to open accession negotiations
The end of the year should show strong performance
with the country due to a lack of compliance with the
driven by domestic demand, as retail sales gathered
membership criteria .
steam in Q4, while economic sentiment strengthened in
the same period, especially in the services sector . On 17
December, the ruling Serbian Progressive Party (SNS)
obtained an absolute majority in snap parliamentary
Kosovo’s YoY economic growth accelerated in Q3
of 2023, but was still short of the Q1 growth . The
improvement was driven by more vigorous private
elections . That said, opposition parties and international
spending thanks to robust remittance inflows and a
observers denounced the misuse of public resources
marked pickup in government expenditures due to rising
during the campaign, and made accusations about
public wages . In contrast, investment growth slowed,
voter intimidation .
North Macedonia’s annual economic growth increased
slightly in Q3 from Q2 in a year of slow growth . Despite
while exports contracted – the available data for Q4
2023 painted a mixed picture . Tourist arrivals lost steam
in October . However, merchandise exports fell at a
softer rate relative to Q3 . In other news, on 1 January, the
the positive change, the expenditure breakdown
country joined Europe’s open-border Schengen zone,
indicates that the economy weakened in general, as
which is also likely to spur outflows of workers to other
a sharper decline in imports drove the improvement .
European countries .
Public spending, total investment, and exports all
contracted at sharper rates, while private consumption
22
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The banking system in the Group’s region
In general, 2023 was a year to remember for the banks
Due to rising interest rates, the National Bank of Serbia
where NFC loans contracted in YoY terms . The global
as the higher interest rates saw margins increase,
imposed temporary measures on housing loans, limiting
and Euro area’s demand receded, further adding to the
bringing profitability to levels not seen in a long time .
interest for borrowers’ first variable-rate housing loan
effect of higher interest rates . Production companies
Loan demand remained strong despite higher borrowing
up to EUR 200,000, secured by a mortgage for the next
seemingly decided to deleverage and thus turn to their
rates and tighter monetary policy, whereas banks
15 months, starting with the October instalment . Despite
possible internal sources, such as retained earnings
experienced increased funding costs . At the close of the
this, household loan appetite remained very robust
and cash buffers, since corporate lending performed
year, the hiking cycle had already entered its final stage,
throughout the region, with Kosovo notably exceeding
much worse than last year, as it contracted in Slovenia
but market participants already anticipated lower rates
YoY growth compared to other countries . Corporate
and Serbia – which were hit by supply (tighter credit
in the upcoming period; therefore, interest rates on new
loans grew at a slower YoY pace (compared with the
standards) and demand (higher rates) impediments .
loans in the Euro area declined at the close of the year,
previous year), with only Serbia witnessing similar
resulting in an increased amount of renegotiated loans .
dynamics to the ones in the Euro area and Slovenia,
Table 4: Movement of key banking systems indicators in the NLB Group region in 2023
Corporate loans
Household loans
Corporate deposits
Household deposits
Net interest margin
NPL
CAR
in EUR
millions
Δ % YoY
in EUR
millions
Δ % YoY
in EUR
millions
Δ % YoY
in EUR
millions
Δ % YoY
2022, in % 2023, in %
in %
Δ pp YoY
in %
Δ pp YoY
Slovenia
Serbia
N . Macedonia
BiH
Kosovo
Montenegro
9,968
14,791
3,460
5,854
2,954
1,460
-4 .9
-1 .7
3 .3
8 .1
9 .8
3 .3
12,556
12,576
3,730
5,998
1,914
1,734
3 .4
1 .0
6 .7
7 .8
17 .3
9 .2
10,784
15,696
2,625
7,601
1,321
2,202
11 .1
16 .2
13 .2
2 .9
12 .4
-5 .2
26,514
18,692
5,671
8,417
4,061
2,730
2 .8
10 .0
7 .9
13 .6
11 .3
11 .1
1 .6
2 .9
3 .1
2 .5
3 .9
4 .0
3 .0
4 .0
4 .0(i)
3 .3
3 .2
4 .7
1 .4
3 .2
2 .8
3 .8
2 .0
5 .0(i)
-0 .1
0 .2
-0 .1
-1 .1
0 .0
-0 .9
19 .3(i)
21 .4
18 .1
19 .3(i)
15 .8
20 .7(i)
0 .8
1 .2
0 .4
0 .1
1 .0
2 .3
Source: Statistical offices, CBs, NLB.
Note: Net interest margin calculated on interest-bearing assets. Residential loans and deposits for Montenegro.
(i) Data for Q3 2023.
23
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In other countries, the growth was in the lower
Figure 2: ROE ratio in the Euro area and NLB Group region
4.6%
7.2%
single-digit range, except in Kosovo, where it was just
shy of double-digit (YoY) growth . Corporate deposit
growth was in double digits in Serbia, while North
Macedonia and Slovenia trailed, with the rest of the
countries experiencing growth below the mid-single
digit range . The growth of household deposits was
least pronounced in Slovenia, and was more notable
Euro area
Slovenia
in Kosovo and North Macedonia, and in double-digit
Serbia
territory in Serbia and Montenegro . The NPLs indicator
exhibits some upticks in the region (North Macedonia
and Serbia), as well as some marginal movements
downwards (Montenegro and Slovenia) with no
significant changes occurring despite the notable rise in
interest rates, except for Bosnia and Herzegovina where
a notable contraction occurred . The net interest income
improved throughout the Group’s region, reflecting
the interest rate hikes by respective central banks,
the growth of lending, and price effects . The capital
adequacy ratio improved in all Group region countries,
mostly Montenegro and Serbia . In contrast, in other
N. Macedonia
BiH
Kosovo
Montenegro
2022
2023
10.8%
20.6%
13.8%
18.2%
12.2%
12.0%
16.1%
15.0%
14.4%
20.6%
19.7%
19.3%
countries, it improved to more or less half of that extent,
insinuating that the banks in the Group remain solid and
Source: ECB, National CBs.
Note: Return on average equity (ROAE) used for Bosnia and Herzegovina. Data for the Euro area, Bosnia and Herzegovina and North Macedonia are
from Q3 2023 and for Serbia is from 30 November 2023.
well-capitalised .
Figure 3: Loans to non-financial corporations and household loans (% GDP) in the Euro area and NLB Group region in 2023
Euro area
Slovenia
Serbia
N. Macedonia
BiH
Kosovo
35.7%
47.7%
17.3%
20.5%
17.7%
15.7%
18.1%
21.3%
19.4%
19.4%
25.8%
27.9%
30.9%
Montenegro
24.5%
Loans to non/financial corporations, % GDP
Household loans, % GDP
Source: National CBs, National Statistical Offices.
Note: Data for Q3 of 2023, except for the Euro area, Slovenia, and Serbia (year-end). Residential loans for Montenegro.
24
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The LTD ratio decreased in Slovenia, North Macedonia,
Figure 4: LTD ratio in the Euro area and NLB Group region
and Serbia, but improved in Bosnia and Herzegovina,
Montenegro, and Kosovo . The banks’ profitability in the
Group’s region has continued to improve in 2023 due
to rising interest rates . Still, maintaining the earnings
Euro area
momentum next year will certainly not be impossible .
Slovenia
The net interest income increased further in 2023
compared to last year and reached levels not seen in
approximately 15 years, as the profitability in the region
was astounding, with ROE in double digits territory in all
Serbia
countries of the Group (almost doubled in Slovenia) .
N. Macedonia
BiH
Kosovo
Montenegro
2022
2023
Source: ECB, National CBs, NLB.
Note: LTD for Serbia is from 30 November 2023, the rest are from 31 December 2023.
67.1%
63.6%
79.3%
74.3%
85.5%
81.6%
71.3%
71.7%
78.3%
80.2%
60.2%
62.2%
94.6%
94.3%
25
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Sport excites us and
brings us together .
Slovenian men's
national handball team
Adaptability
and quick
thinking
ensure court
advantage .
Regulatory Environment
During 2023, 119 changes with material effects on the Bank and the Group were adopted in the EU and Slovenian
regulatory environments . The Group strives to be fully compliant with the existing and new requirements . Disclosure
of the most relevant changes in legislation and regulation that influence the Group are presented herein .
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 and are
designed to maintain the safety and soundness of
banks to limit their risk exposure . The CRD V was
further transposed into the Banking Act (ZBan-3) . In
October 2021, the European Commission adopted a
further package of a review of the CRR and CRD with
the final elements for implementing Basel III in the EU .
These final elements were agreed in December 2023,
endorsed by the Council and Parliament, and will be
implemented in EU law .
As a financial institution offering benchmark-based
products, the Bank meets its obligations under
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 about the interests of its
customers, especially the protection of their data, the
legislation in the field of personal data protection is
also essential to the Bank . The Bank strictly adheres to
its obligations imposed on it by GDPR in Slovenia and
the Group . The new Slovenian Personal Data Protection
Act (ZVOP-2) was adopted in December 2022 and is
implemented in the Bank’s operations .
In the financial markets, there were no significant
changes in the regulatory environment in 2023 .
The Bank complies with MiFIR/MiFID II and EMIR
provisions regarding financial market transactions,
enhanced investor protection, transparency, and
reporting obligations .
The Group also considers and complies with the
Both documents demonstrate a straightforward
regulations concerning prevention of money laundering
top-down and bottom-up process for sustainability
and terrorist financing (AML/CTF), with the Prevention
governance, including climate change aspects, that
of Money Laundering and Terrorist Financing Act
extend from individual business units and countries
(ZPPDFT-2), effective in April 2022, replacing the previous
to the management bodies . The Bank also updated
law and integrating the provisions of Directive (EU)
other sustainability-related internal documents in
2019/1153, Directive (EU) 2019/2177, and Regulation
various business areas in line with regulatory and other
(EU) 2018/1672 into Slovenia’s legislation . In addition,
developments . These developments are monitored
an Amendment and supplements to the Act on
regularly by the Sustainability Unit, Compliance and
Prevention of Money Laundering and Terrorist Financing
(ZPPDFT-2A) were published in the Slovenian Official
Gazette in November 2022 . The Group regularly monitors
and manages all newly introduced financial sanctions
from all relevant regimes .
The regulatory environment underwent significant
changes in the payment and settlement systems field
Integrity, and within specific business areas, and are
promptly implemented in the internal governance
framework .
In December 2022, the Digital Operational Resilience
Act (DORA) Regulation was published in the EU’s Official
Journal alongside the revised directive on the security
of network and information systems (NIS2) . The new
in 2023 . The European Commission proposed a third
framework introduces a comprehensive set of rules
Payment Services Directive (PSD3) and a new Payment
concerning financial sector firms’ information and
Services Regulation (PSR) to enhance user protection,
communications technologies (ICT) and risk management
open banking, enforcement, and unification in the
to strengthen their digital operational resilience and
European payments market . The Bank is preparing
prevent and mitigate cyber threats . In 2023, the Bank
to meet its obligations under the new legislative
carried out activities to implement the new regulatory
framework, which is expected to enter into force by the
requirements, which will apply from 17 January 2025 .
end of 2026 . The Bank meets its obligations under PSD2,
the respective regulatory technical standards and the
Payment Services, Services for Issuing Electronic Money
and Payment Systems Act (ZPlaSSIED) . The Bank is
committed to providing the best user experience while
ensuring compliance with the regulatory requirements in
the payment and settlement systems .
In the EU’s policy context under the European
Regulatory
Environment in the
Group’s region
The regulatory environment in the rest of the region
where the Group operates was dominated by actions
Green Deal, "sustainable finance" is understood as
to ensure the stable functioning of financial systems .
finance to support economic growth while reducing
During 2023, 132 changes with material effects on the
environmental pressures and considering social and
Group were adopted in the regulatory environments
governance aspects . In 2023, the Bank updated its
in the Group’s region . It is worth noting that this figure
governance of the ESG area by adopting two new
excludes any changes affecting solely NLB d .d .
internal documents: the Sustainability Policy and
Standard – Rulebook on sustainability management .
27
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In Serbia, the most significant regulatory changes
introduced by the National Bank of Serbia throughout
to the expectations of the regulator in the ESG area
of the ECB on business operations of banks in Bosnia
(Guidelines for Managing Risks Related to Climate
and Herzegovina . Lastly, the National Assembly has
2023 were related to the facilitation of financing of the
Change and Environmental Risks) . Implementing the
adopted the new Family Law, which affects the Bank’s
citizens, dinarisation of the financial system, including
Guidelines is to guide the banking sector in terms of
product called Children’s Deposit . Parents or guardians
a set of measures and activities aiming to enhance the
determining, measuring, managing, and controlling
cannot make payments from the child’s deposit without
use of the dinar in Serbia’s financial system, further
climate and environmental risks, publishing data and
reasonable cause and literal approval from a competent
leading to the stabilisation of the prices on the market
information related to these risks, and segment integration
Guardianship Authority .
and related to preserving and strengthening the
of environmental sustainability in the Bank’s business
financial system stability . In that sense, to facilitate the
activities . In June 2023, the Federal Banking Agency
financing of the citizens, the National Bank of Serbia
adopted the Decision on the conditions and method of
In Kosovo, in 2023, several regulations were adopted by
the Central Bank of Kosovo . The Bank’s main activities
adopted the Decision on Temporary Measures for Banks
submitting customer complaints and the actions of entities
concerned the implementation of the requirements from
Relating to Natural Persons’ Housing Loans, introducing
of the banking system, which prescribes new terms for
the Regulation on access to payment accounts with basic
a temporary freeze on the variable nominal interest
provider and user of services (banks and others), as well
services, which determines the conditions for customers’
rate . Further, to prescribe measures related to the
as definitions of complaints . Changes were made to the
access to payment accounts with basic services as a
dinarisation of the financial system and preserving and
local procedure of the client’s complaint, and an internal
necessary tool to encourage their participation in the
strengthening its stability, the National Bank of Serbia
act was aligned with the decision .
adopted the Decision on Amendment to the Decision on
financial market . It is also related to Regulations on bank
liquidity risk management, Regulations on reporting of
Capital Adequacy of Banks to increase the exposure in
dinars and the Decision on Amendments to the Decision
Although the Law on Prevention of Money Laundering
and Financing of Terrorist Activities has not yet been
banks, Regulations on the interbank payment system,
etc . Furthermore, there have been legal changes and
on Banks’ Required Reserves with the National Bank
adopted, the Ministry of Security of Bosnia and
guidelines to follow regarding cyber security, the Law on
of Serbia, introducing changed ratios for calculation of
Herzegovina made Amendments to the Rulebook on
prevention and protection from violence against women
required reserves of the dinars and foreign currency
the Implementation of the Law on Prevention of Money
and gender-based updates on rules provided by the
base . In addition, several laws and by-laws regarding
Laundering and Financing of Terrorist Activities . The
Kosovo Deposit Security Fund, instructions regarding the
tax and accounting, outsourcing of activities and labour
Rulebook prescribes additional indicators of suspicious
Logs of Personal Data Processing Activities, etc .
law have been adopted .
transactions and clients, including indicators of
suspicious transactions of bank employees .
In North Macedonia, the process of harmonisation with
the Law on Payment Services and Payment Systems
and related by-laws continued during the 2023 year,
In the Republic of Srpska, the local regulator, the
Banking Agency of the Republic of Srpska, published
In Montenegro, the main activities 2023 were dedicated
to implementing the Law on Interbank Fees and Special
Business Rules Concerning Payment Cards, which apply
from 9 January 2024 . This Law regulates interbank
and several new by-laws from various areas related to
numerous decisions that influenced the Bank’s internal
fees charged when executing payment transactions
this Law were also adopted and are in the process of
acts and processes . The most important one is the
in Montenegro based on payment cards issued to
implementation in the Bank or already implemented .
Decision on minimum standards of recording of banks’
consumers and special business rules related to issuing
The National Bank of the Republic of North Macedonia
lending activities, which provides rules of the minimum
or executing payment transactions based on payment
adopted several significant acts, such as the Decision on
standards of documenting during the negotiation phase,
cards . Amendments to the Law on Payment Transactions
the credit risk management methodology, the Circular for
loan approval, credit exposure, etc ., for the entire time
(PSD2) apply from 8 April 2024 . The PSD2 regulation in
the protection of consumers who use financial services
of the establishment and duration of the contract with
Montenegro relies on and complements the existing EU
in the banking sector, the Decisions on the amount of
the client . Next to this decision, the Agency published
rules, and it refers to payment services in the internal
the rate of the countercyclical protective layer of the
Guidelines for the management of climate-related
market . PSD2 expands the scope of payment services
capital for exposures in the Republic of North Macedonia
risks, representing the first Act in the area of climate
and their providers, more clearly defines exceptions,
and exposures to other countries, the Decision on the
regulation . The Guidelines are not obligatory; however,
improves cooperation and the exchange of information
method of implementation of measures to prevent
certain expectations of banks are to be accomplished
among participants in the payment traffic, and introduces
money laundering and terrorist financing, the Decision
and reported to the Agency by 30 June 2024 . Next, the
stricter security requirements for electronic payments . In
on foreign exchange office activities, etc . In addition, the
Central Bank of Bosnia and Herzegovina adopted the
bancassurance, novelties in the by-laws refer to clients’
Bank continuously undertakes the necessary activities
Decision to amend the Decision on establishing and
pre-contractual information, procedures regarding the
according to the set deadlines .
maintaining mandatory reserves and determining
protection of their rights, and reporting to the regulator .
In the Federation of Bosnia and Herzegovina, the most
important decision of the regulator in 2023 is related
compensation for the amount of reserves, intending
The Bank continued to consistently apply the decisions on
to harmonise with the policy of the ECB and mitigate
introducing international restrictive measures determined
the impact of the increase in the reference interest rate
by the EU Council’s decisions .
28
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
BUSINESS REPORT
29
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Strategy
The Group has continued to execute its medium-term
strategy, focusing on strengthening its market position
in its home region, actively participating in the growth
and consolidation of the market, and promoting
the ESG agenda . Digitalisation, client centricity, and
cost efficiency remain key strategic orientations to
deliver the Group’s vision . The Group is currently in
the process of defining its new Strategy 2030, which is
expected to outline the key decisions regarding capital
allocation in the future .
Be a regional
champion
The Group aims to further strengthen its role as a
systemically important financial institution in the SEE
region . To achieve this, it strives to become a leader in
all its target markets and to have a prominent role in
the region’s development . The Group believes there is
significant value to be unlocked by facilitating further
development of the region and increasing its standard
of living .
As one of the most important players in the region’s
financial system, the Group is carrying its share of
responsibility for building a stable banking system .
The 2022 acquisition of N Banka is an example of the
Group’s resolve to commit capital in turbulent times for
the benefit of all stakeholders . In 2023, the merger of
N Banka was successfully closed with the transfer of all
customers and their operations .
Put clients first
The Group is driving its customer-centric agenda by
starting with the financial needs of its customers and
The Group is promoting ambitious environmental,
looking for ways to improve and streamline its products
sustainability, and corporate governance agendas .
and services to fulfil them to the utmost extent . One
It joined leading peers from the banking industry in
way the Group does this is by digitising its distribution
collective efforts to reach net-zero emissions by 2050 .
channels, allowing clients to access its products and
In 2023, the Group published its first net zero portfolio
services from anywhere at any time .
targets within the NLB Group Net Zero disclosure report .
For more information on Net Zero, please refer to the
The Group is committed to adding innovative financial
chapter Sustainability .
solutions to address its clients’ unmet and new needs .
Accelerating the development of the SEE region
Promoting the ESG agenda
Supporting stability of the banking sector
Be
a regional
champion
Put
clients
first
Digitalizing distribution channels
Adding new financial solutions as per clients' needs
Offering strong customer support
Growing client market share
Creating value for shareholders
Offering a great place to work
Grow our
market
position
Monetise
opportunities
and synergies
Finding inorganic expansion opportunlties
Establishing horizontally diversified businesses
Continuing strategic transformation
30
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
By staying on top of the latest trends, needs, and
An employee engagement metric is measured and
asset management services, concluded an agreement
technologies, it will stay competitive and deliver the
analysed in relation to its employees .
best possible banking experience . Ensuring strong
to purchase the majority ownership of Generali
Investments AD Skopje, further expanding asset
customer support remains one of the Group’s key
The Group regularly engages with its stakeholders in
management activities within the Group .
focuses . It requires that its customer service team is
defining what is material to them and the Group . Some
knowledgeable, friendly, and always ready to assist
of the most important channels for communications
The Group is moving closer to the fintech ecosystem to
clients with their questions or concerns, wherever they
with the stakeholders (in addition to the regular publicly
find new and better ways of solving customers’ financial
may be .
available periodic reports, presentations, and webcasts
needs . It established a corporate venture team, eNLaB,
Digitalisation
The Group continues implementing substantial efforts
and resources toward digital distribution channels and
operating models . The customers’ preference for an
increased share of digital business interactions has
remained even after normalisation since the COVID-19
pandemic . Effective and safe digital distribution
channels require novel operating models and
automated processes to minimise response times and
costs . One of the results of digitalisation and process
optimisation is a reduced amount of printed paper .
The Group will continue to invest in IT infrastructure
and its digital capabilities and roles . The focus will be
on improving the speed of IT delivery by adopting agile
methodology principles, providing and implementing
the best online experience for customers in the SEE, and
enhancing capabilities for processing data, modelling,
and delivering relevant services to clients . One such
example is the launch of the new omnichannel solution
"NLB Klik", which allows checking and managing
personal finances and offers a unified user experience
on mobile phones and PCs .
Grow our market
position
The Group is working to strengthen its market position
as a systemic player in its home region . To do this, the
Group is monitoring how well it is creating value for three
types of its main stakeholders: shareholders, customers,
and employees . Concerning its shareholders, the Group
views its decisions through a lens of maximising its
return on equity . Concerning its customers, market
shares and Net Promoter Scores (NPS) are tracked .
on the Group performance) are, for example, the NLB
to build business cooperation with ambitious fintech
Group Sustainability Report and the corporate website,
players to accelerate the Group’s efforts in bringing
along with social media channels .
novel use cases and business solutions to the market .
Continuing
transformation
The Group follows a comprehensive plan to deliver its
mission and financial targets to facilitate continuous
transformation in an ever-changing environment . It has
identified a series of projects and initiatives and has
dedicated resources for implementation . All significant
running change efforts are channelled into one overall
strategic transformation programme .
The backbone of the strategy is strengthening customer-
centricity by establishing customer-based market
management, improving the understanding of clients,
reimagining digital client journeys, and accelerating
innovation to provide lifestyle and value chain services
to strengthen relationships .
The transformation programme also focuses on
increased operational efficiency, cost management,
and the improved utilisation of the Group’s capital .
Simultaneously, overall operational capabilities are
enhanced by improving human capital, optimising
IT infrastructure, digitalising internal processes, and
leveraging information capital .
The Group’s employees represent its key resource
and are one of its main drivers for creating value .
Through the focus on recruitment, management, and
continual development of employees, they are given the
opportunity to thrive by making the most of their talent
and experiences .
Monetise
opportunities and
synergies
Significant strategic business efforts have been made to
achieve business synergies across the Group regarding
costs and operational efficiency . The Group believes
that these can help offset the adverse economic effects
of the rising inflation on the Group’s clients . In Slovenia,
the Bank has achieved further synergies with the full
integration of N Banka in 2023 .
The Group monitors market conditions and analyses
potential M&A opportunities that could add value to
the Bank’s shareholders . The Group is fully engaged in
re-establishing some key financial services across all
its markets, thus diversifying its services horizontally .
In the Group Strategy, leasing is one of the strategic
activities representing an important part of the Group’s
business portfolio . Leasing operations in Slovenia (NLB
Lease&Go, Ljubljana) are gaining momentum, while
new leasing companies were established within the
Group in North Macedonia and Serbia in 2022 . The
Group has further materially enhanced its strategically
important position in 2023, announcing the acquisition
of Summit Leasing, Slovenia’s leading auto finance
provider . In addition, NLB Skladi, which offers clients
31
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Funding Strategy, Capital,
and MREL Compliance
Deposit strategy
Deposits from customers represent the primary funding
source for the Group, and each bank within the Group
has established processes that enable prudent strategic
deposit management that is aligned with business targets
Fostering strong client relationships is vital for maintaining a stable and growing deposit base . At the same time,
and regulatory requirements . Regularly monitoring
wholesale funding focuses on meeting MREL requirements and optimising capital, which leads to increased average
deposits and their structure enables timely reactions
funding costs . Nonetheless, overall funding cost remains low thanks to a reliable deposit base and the stability of
whenever necessary due to business or regulatory-
sight deposit pricing, which remains unaffected by market fluctuations .
Figure 5: Average cost of funding (quarterly data)
4.87%
4.73%
0.51%
0.24%
Q1 2023
0.58%
0.28%
Q2 2023
Total average cost of funding
Average interest rate for deposits from customers
Average cost of wholesale funding
5.66%
0.80%
0.38%
Q3 2023
related reasons . The LTD ratio evolution in recent years,
including the disruptive COVID pandemic in 2020,
political turbulence in 2022, and high inflation in 2023, was
still confined to a healthy liquidity zone below 70%, which
proved that the deposit base of the Group is robust, and
the liquidity position strong .
A leading Group market position and a responsive client
relationship are essential for a stable deposit base . Besides
5.78%
that, proper deposit pricing is pivotal in risk management
and business decision-making . The Group’s fund pricing
is aligned with international standards . The year 2023
further underlined the importance of responsive deposit
pricing and active client relationships in highly competitive
markets; all Group entities reacted systematically and
defended their market positions in line with strategic
targets . The deposit beta, which measures the Group’s
response in deposit pricing from the start of the ECB hiking
cycle, was low at 8% in 2023, and is a sign of a stable
deposit base .
Group retail deposits represent a majority in the structure
and are the most stable funding source, with around 80%
insured by the Deposit Guarantee Scheme . Despite the
challenging business environment, Group retail deposits
recorded an increase in 2023 . Sight deposits represent
84% of Group retail deposits, and despite a modest
structural decrease related to increased interest rates
and expected transformation to term deposits, sight
0.88%
0.46%
deposits represent a stable funding source . This supports
Q4 2023
the stable business of the Group in the region, even
during volatile times in the wholesale funding markets .
Although corporate sector deposits represent a smaller
share of the deposit structure of the Group, they are still
an important source of liquidity as well . Despite increased
price levels, combined with uncertainties related to the
economic outlook, the corporate deposit base of the
Group became stronger and remains structurally stable .
32
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Capital and capital adequacy
Capital requirements
Figure 6: NLB Group capital requirements as at 31 December 2023
2.40%
1.35%
0.45%
0.60%
8.00%
CET1
4.50%
AT1
1.50%
T2
2.00%
Pillar 1
Pillar 2
10.40%
5.85%
1.95%
2.60%
TSCR
OCR
14.51%
4.11%
1.00%
1.00%
OCR+P2G
15.51%
10.96%
1.95%
2.60%
Combined Buffer
P2G
OCR+P2G
As at the end of 2023, the Bank’s Overall Capital
In addition to the above requirements, the Pillar 2
Slovenia will increase from 0 .5% to 1 .0% . At the same
Requirement (OCR) on a consolidated basis was 14 .51% .
Guidance (P2G) is 1 .0% of Common Equity Tier 1 (CET1) .
time, the sectoral systemic risk buffer for retail exposures
This requirement has two components:
· The Total SREP Capital Requirement (TSCR) is 10 .40%,
which includes 8 .00% Pillar 1 and 2 .40% Pillar 2
Effective from 1 January 2024, NLB has lower capital
decrease from 1 .0% to 0 .5% .
requirements . On 1 December 2023, NLB received a
to natural persons secured by residential real estate will
Requirements . As at 1 January 2023, the Pillar 2
new SREP decision on a consolidated basis for 2024 .
Requirement decreased by 0 .2 p .p . to 2 .40% due to a
As per the decision, the Pillar 2 Requirement decreased
better overall SREP assessment .
· The second component is the Combined Buffer
Requirement (CBR), which is 4 .11%, and includes a
by 0 .28 p .p . to 2 .12%, since the overall SREP assessment
improved .
2 .50% Capital Conservation Buffer, a 1 .25% O-SII Buffer,
a 0 .26% Countercyclical Buffer2 and a 0 .10% Systemic
risk buffer3 .
Effective as at 1 January 2025, there will be some
changes in the capital buffer rates for Slovenia . The
countercyclical capital buffer rate for exposures in
33
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
2 The Bank of Slovenia has increased the countercyclical capital buffer for exposures in Slovenia from 0% to 0.5%. The Bank had to meet the required buffer from 31 December 2023 onwards.
3 Starting from 1 January 2023, the Bank of Slovenia has mandated that banks maintain systemic risk buffer rates for sectoral exposures. The required rates are 1.0% for all retail exposures to natural
persons secured by residential real estate and 0.5% for all other exposures to natural persons.
Contents
above requirements . The higher total capital adequacy
Common Equity Tier 1 capital
Capital adequacy
As at 31 December 2023, the TCR for the Group stood
at 20 .3% (or 1 .1 p .p . increase YoY), and the CET1 ratio
stood at 16 .4% (1 .3 p .p . increase YoY), – which is well
derives from higher c apital (EUR 302 .8 million YoY),
which compensated for the increase of the RWA (EUR
684 .1 million YoY) . The Group increased its capital with
a partial inclusion of 2023 profit (EUR 327 .4 million) .
Temporary treatment of FVOCI for sovereign securities
ceased to apply as at 1 January 2023, which decreased
capital by EUR 61 .6 million . This effect was compensated
with EUR 84 .5 million in revaluation adjustments . In
December 2023, a deduction item related to deferred
taxes appeared in EUR 47 .0 million .
Table 5: Capital realisation YoY and surplus of NLB Group
Tier 1 capital
Total capital
Total risk exposure amount (RWA)
Common Equity Tier 1 Ratio
Tier 1 Ratio
Total Capital Ratio
31 Dec 2023
31 Dec 2022
Change YoY Surplus 31 Dec 2023
in EUR millions
2,509 .9
2,597 .8
3,109 .2
15,337 .2
16 .4%
16 .9%
20 .3%
2,208 .2
2,295 .7
2,806 .4
14,653 .1
15 .1%
15 .7%
19 .2%
301 .7
302 .1
302 .8
684 .1
1 .3 p .p .
1 .3 p .p .
1 .1 p .p .
829 .0
617 .8
730 .2
5 .4 p .p .
4 .0 p .p .
4 .8 p .p .
Figure 7: NLB Group capital (in EUR millions), realised total
capital ratios and regulatory thresholds
Figure 8: NLB Group CET1 (in EUR millions), realised CET1 ratio
and regulatory requirement
17.78%
15.25%
2,253
287
19.15%
15.10%
2,806
511
1,966
2,296
20.27%
15.51%
3,109
511
2,598
15.23%
15.47%
15.07%
16.36%
10.55%
10.46%
10.96%
10.80%
1,960
2,208
2,510
31 Dec 2021
31 Dec 2022
31 Dec 2023
1 Jan 2024
31 Dec 2021
31 Dec 2022
31 Dec 2023
1 Jan 2024
Tier 1
Tier 2
TCR realised
OCR+P2G requirement
CET1
CET1 ratio realised
CET1 (OCR+P2G) requirement
Figure 9: Capital and capital ratios of NLB Group – evolution YoY (in EUR millions)
Capital /
changes
in Capital
2,806
327
2.1%
23
-47
n.a.
3,109
0.2%
-0.3%
-0.9%
19.2%
TCR
31 Dec 2022
Result
OCI
DTA
RWA impact
20.3%
TCR
31 Dec 2023
34
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Dividend payout
The dividend payout in 2023 was split into two tranches .
The first instalment of EUR 55 .0 million was paid in June
2023, while the second was paid in the same amount of
EUR 55 .0 million in December 2023, contributing to the
2023 cumulative payout of EUR 110 .0 million .
Total risk exposure
dynamic
In 2023 (YoY), the RWA of the Group for credit risk
increased by EUR 370 .3 million, mainly as the
consequence of ramping up lending activity in all Group
banks, the most in the Bank, NLB Komercijalna Banka,
Beograd and NLB Banka Prishtina . Higher RWA for
exposures associated with particularly high risk due to
new project financing loans given, mainly in the Bank
and NLB Komercijalna banka, Beograd, was partially
offset by repayments or by withdrawing the high-risk
flag after fulfilling the relevant conditions . In contrast, a
RWA decrease was observed for liquidity assets, mainly
in Komercijalna Banka, Beograd, due to the maturity
Table 6: Total risk exposure for NLB Group
Total risk exposure amount (RWA)
RWA for credit risk
Central governments or central banks
Regional governments or local authorities
Public sector entities
Institutions
Corporates
Retail
of some Serbian bonds and higher MIGA guarantee
Secured by mortgages on immovable property
for assets at central banks in foreign currency (EUR) .
Exposures in default
The higher MIGA guarantee also reduced the RWA for
Items associated with particularly high risk
exposures dominated in EUR at the central bank in
Skopje . Furthermore, RWA also decreased due to the
maturity of Macedonian bonds and Bosnian bonds of
Republika Srpska . The RWA decline for liquidity assets
was partly mitigated by the RWA increase at institutions,
mainly in the Bank, due to the purchase of bank bonds,
a larger volume of deposits at commercial banks and
higher risk weights for institutions from countries outside
the EEA that are not on the third-party equivalent
list (e .g ., the United Kingdom) . Repayments, higher
Covered bonds
Claims in the form of CU
Equity exposures
Other items
RWA for market risk + CVA
RWA for operational risk
31 Dec 2023
31 Dec 2022
Change YoY
in EUR millions
RWA
15,337.2
12,168.1
RWA
Density
RWA
14,653.1
45.3%
11,797.9
9 .4%
37 .2%
19 .3%
33 .6%
92 .0%
71 .0%
37 .5%
113 .3%
150 .0%
12 .8%
20 .4%
121 .9%
48 .0%
899 .8
96 .9
19 .1
369 .8
3,740 .4
4,606 .0
1,067 .5
117 .4
671 .8
27 .8
12 .9
104 .4
434 .4
1,461.9
1,707.1
1,109 .2
101 .2
57 .9
292 .0
3,520 .3
4,371 .0
987 .7
156 .4
642 .4
31 .5
17 .9
90 .1
420 .1
1,445.1
1,410.1
RWA
Density
46.7%
12 .7%
42 .9%
37 .5%
28 .9%
90 .1%
70 .7%
37 .5%
113 .6%
150 .0%
11 .4%
26 .2%
124 .1%
46 .3%
684.1
370.3
4.7%
3.1%
-209 .5
-18 .9%
-4 .3
-38 .8
77 .8
220 .1
235 .0
79 .7
-39 .0
29 .3
-3 .6
-5 .0
14 .3
14 .3
16.8
-4 .2%
-66 .9%
26 .6%
6 .3%
5 .4%
8 .1%
-24 .9%
4 .6%
-11 .6%
-28 .1%
15 .8%
3 .4%
1.2%
297.0
21.1%
derivative transactions subject to CRR risk based on
Further information on capital and capital adequacy
impairments and provisions, upgrades, and improved
OEM method), and higher RWA for TDI risk of EUR 1 .2
is available in the Note 5 .23 . of the financial part of the
data of real estate collaterals for CRR eligibility resulted
million (mostly IRS derivatives) .
report and in Pillar 3 Disclosures .
in the RWA reduction for non-performing exposures .
The increase in RWAs for market risks and Credit Value
million YoY) derives from the higher net interests, mainly
Adjustments (CVA) in the amount of EUR 16 .8 million
from the Bank and Komercijalna banka, Beograd,
YoY was the result of higher RWA for FX risk of EUR 86 .6
resulting in a higher three-year average of relevant
million (mainly the result of more opened positions in
income . There were no significant deviations from
domestic currencies of non-euro subsidiary banks –
previous years in the other components used in the
The increase in the RWA for operational risks (EUR 297 .0
mostly RSD), lower RWA for CVA risk of EUR 71 .4 million
calculations .
(due to a change of calculating exposure value for
35
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Wholesale funding
and MREL
Wholesale funding activities in the Group are conducted
Figure 10: Resolution groups within NLB Group
SLO
NLB d .d .
&
NLB Lease&Go, NLB Skladi, Other
MNE
NLB Banka,
Podgorica
RKS
NLB Banka,
Prishtina
BIH
NLB Banka,
Banja Luka
MKD
NLB Banka,
Skopje
SRB
NLB
Komercijalna Banka,
Beograd
Resolution group
MREL legislation not implemented yet
BIH
NLB Banka,
Sarajevo
with the aim of achieving diversification, improving
structural liquidity and capital position, and fulfilling
regulatory requirements, especially compliance with the
MREL requirements .
The Preferred Resolution Strategy (PRS) for NLB Group
is based on the Multiple Point of Entry (MPE) strategy .
Bail-in at the level of NLB is the primary resolution tool
to be applied during the stabilisation phase .
Within NLB Group, seven resolution groups are
designated . The resolution group in the Banking Union is
headed by NLB and the remaining six resolution groups
are headed by the banking subsidiaries located in
non-EU countries (Bosnia and Herzegovina, Montenegro,
and Serbia, while Kosovo and North Macedonia have not
yet implemented MREL legislation) .
The NLB Resolution Group consists of NLB as the only
banking member and other non-banking members, the
latter representing less than 5% in TREA . The entities and
their contribution to TREA of the NLB Resolution Group
are presented in the table below .
Table 7: Contribution to NLB Resolution Group’s TREA
Entity
NLB d .d .
NLB Lease&Go, Ljubljana
NLB Skladi, Ljubljana
Other
TREA total
in EUR millions
31 Dec 2023
7,861
213
56
124
8,256
NLB has to ensure a linear build-up of own funds
and eligible liabilities towards the MREL requirement
applicable as of 1 January 2024, which amounts to:
· 30 .66% of TREA + applicable CBR (4 .33% on
31 December 2023),
· 10 .69% of LRE .
On 31 December 2023, the MREL ratio amounted to
40 .24% TREA and 19 .94% LRE, which was well above the
required level .
36
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The composition of the own funds and eligible liabilities
Figure 11: Evolution of MREL eligible funding (in EUR millions), MREL requirement and realised MREL ratio
items by which the Bank met the MREL requirement was
as presented in the table below .
Table 8: Composition of the own funds and eligible liabilities of
NLB Resolution Group
Own funds and eligible liabilities items
31 Dec 2023
in EUR millions
CET1
Additional Tier 1 instruments
Tier 2 instruments
Unsecured and unsubordinated claims
arising from debt instruments
Total
1,768
82
508
964
3,322
In June 2023, the Bank issued green senior preferred
notes of EUR 500 million to strengthen the MREL buffer,
and thus ensured that the Bank could comfortably
meet the higher MREL requirement from 1 January 2024
onwards . In addition, the Bank obtained other MREL
eligible instruments in a total amount of EUR 40 million .
36.31%
28.69%
489
2,041
39.17%
31.45%
979
40.24%
31.91%
964
2,209
2,358
34.99%
31 Dec 2022
30 Sep 2023
31 Dec 2023
1 Jan 2024
Realised MREL ratio
MREL requirement (including CBR)
CET1+T1+T2
MREL deposits and senior funding
SEE banking members in Bosnia and Herzegovina,
In 2024, certain MREL regulation changes are expected
Serbia, and Montenegro are subject to local MREL
in the Group countries of operations, and the subsidiary
requirements . As of 31 December 2023, all banking
banks are exploring all options to ensure a linear build-
subsidiaries have secured the necessary eligible
up of own funds and eligible liabilities to fulfil the local
funding to meet the SalMREL requirements, set as per
MREL requirements .
Total Liabilities and Own Funds (TLOF) target level .
37
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Risk Factors and Outlook
Risk factors
Risk factors affecting the business outlook are (among
others):
· The economy’s sensitivity to a potential slowdown in
the Euro area or globally
· Potential liquidity outflows
· Widening credit spreads
· Worsened interest rate outlook / Persistence of high
inflation
· Energy and commodity price volatility
· Increasing unemployment
· Geopolitical uncertainties
· Potential cyber-attacks
· Litigation risks
· Regulatory, other legislative, and tax measures
impacting the banks
The sharp rebound from the COVID recession has
turned in the prospective stagflation in 2023 . As a result
of rising inflation, high-interest rates, weaker external
demand, and increased macroeconomic uncertainty,
subdued economic growth or its gradual slowdown
was experienced . The growth in the Group’s region
was moderate, though relatively high inflationary
pressures and other uncertainties could suggest a
further slowdown, namely in private consumption and
investment growth .
Credit risk usually increases considerably in times of
an economic slowdown . The Group has thoroughly
analysed and adjusted the potential impact on the
credit portfolio in light of anticipated inflationary
pressures and expected decreases in economic growth .
Lending growth in the corporate and retail segments
remained relatively moderate, especially in such
circumstances . Regarding the credit portfolio quality, the
Group carefully monitors the potentially most affected
segments to detect any significant increase in credit risk
at a very early stage . In August 2023, certain areas in
Slovenia were damaged by floods . Their impact on the
Bank’s credit portfolio quality in the corporate and retail
segments was estimated as negligible, and only minor
client credit quality deterioration or received collaterals
e .g . litigation cases related to loan processing fee and
occurred . The aforementioned adverse developments
loan insurance premium in Serbia and CHF litigations in
could affect the cost of risk and NPLs . Notwithstanding
Slovenia . In the latter case, we have noticed an increase
the established procedures in the Group’s credit risk
in the number of proceedings against the Bank, which
management, there can be no certainty that they will be
was expected . The current litigations against the Bank
sufficient to ensure the Group’s credit portfolio quality or
referring to CHF are less material, but the Bank is closely
the corresponding impairments remain adequate .
monitoring developments .
The investment strategy of the Group, referring to the
The Group is subject to various regulations and laws
Group’s bond portfolio kept for liquidity purposes,
relating to banking, insurance, and financial services .
adapts to the expected market trends in accordance
Respectively, it faces the risk of significant interventions
with the set risk appetite . Geopolitical uncertainties
by several regulatory and enforcement authorities
have increased volatility in the financial markets,
in each jurisdiction in which it operates, including
particularly shifts in credit spreads, rising interest rates,
and foreign exchange rate fluctuations . The Group
changes of tax treatment of banking business (e .g .
application of VAT on card payments services in Bosnia
closely monitors its prominent bond portfolio positions,
and Herzegovina) and changes in interpretation
mostly sovereigns, and carefully manages them by
of legislation (e .g . introduction of reimbursement
incorporating adequate early warning systems to limit
of a proportional part of loan costs in case of early
the potential sensitivity of regulatory capital .
repayment of consumer loans in Slovenia) .
So far, no material movements regarding the Group’s
The SEE region is the Group’s most significant
significant FX positions have been observed . Current
geographic area of operations outside the RoS, and the
developments, market observations, and potential
economic conditions in this region are, therefore, crucial
mitigations are closely monitored and discussed . While
to the Group’s operations and financial condition results .
the Group monitors its liquidity, interest rate, credit
The Group’s financial condition could be adversely
spread, FX position, and corresponding trends, their
affected by any instability or economic deterioration in
impacts on the Group positions, and any significant and
this region .
unanticipated movements on the markets or a variety
of factors, such as competitive pressures, consumer
confidence, or other certain factors outside the Group’s
control, could adversely affect the Group’s operations,
capital, and financial condition .
Special attention is paid to the continuous provision of
services to clients, their monitoring, and the prevention
of cyber-attacks and potential fraud events . The Group
has established internal controls and other measures
to facilitate adequate management . However, these
measures may only sometimes entirely prevent possible
adverse effects .
With regards to litigation risk, in recent years, and even
more so in recent periods, the Bank has seen a shift in
case law that is generally more favourable to consumers,
38
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In this regard, the Group closely follows the
The alternative scenarios are based on plausible drivers
might affect the Group’s capital adequacy or liquidity
macroeconomic indicators relevant to its operations:
· GDP trends and forecasts,
· Economic sentiment,
· Unemployment rate,
· Consumer confidence,
· Construction sentiment,
· Deposit stability and growth of loans in the banking
sector,
· Credit spreads and related future forecasts,
· Interest rate development and related future forecasts,
· FX rates,
· Energy and commodity prices,
· Other relevant market indicators .
of economic development for the next three years . The
position . The stress-testing framework and recovery
optimistic scenario is supply- and demand-driven, with
plan indicators support proactive management of
a mild winter and sufficient energy supplies easing price
the Group’s overall risk profile in these circumstances,
pressures in the Euro area . China’s decision to abandon
including capital and liquidity positions from a forward-
strict COVID restrictions supports the Euro area exports,
looking perspective .
which stimulates demand . Lower inflation leads to
an optimistic financial market outlook, and the first
Risk Management actions that the Group might use
year shows positive growth expectations, followed by
are determined by various internal policies and
additional ECB support and moderated growth potential
applied when necessary . Moreover, the selection and
in the following two years .
application of mitigation measures follow a three-layer
approach, considering the feasibility analysis of the
The severe, supply- and demand-driven scenario
measure, its impact on the Group’s business model, and
depicts sluggish economic growth due to lower
the strength of the available measure .
consumer purchasing power, geopolitical disruption,
During 2023, the Group reviewed the IFRS 9 provisioning
and elevated inflation . The Group home countries
by testing the relevant macroeconomic scenarios to
experience near-zero real economic growth, leading
reflect the current circumstances and their future impacts
accurately . The Group established multiple scenarios
to substantial upward shocks in financial markets .
Political tensions persist, causing supply disruptions,
(i .e ., baseline, optimistic, and severe) for the Expected
and inflation remains higher than expected, resulting
Credit Losses (ECL) calculation, aiming to create a unified
in increased long-term inflation expectations . GDP
projection of macroeconomic and financial variables
growth remains low as the ECB implements a restrictive
for the Group, aligned with the Bank’s consolidated
monetary policy . Despite a slow increase in the
view of the future of economic development in the SEE .
unemployment rate, many industries still face a tight
The Group formed three probable scenarios with an
labour market . The financial system stabilises, allowing
associated probability of occurrence for forward-looking
the ECB to focus on taming inflation . The Bank considers
assessment of risk provisioning in the context of the IFRS
these scenarios in calculating expected credit losses in
9 . These IFRS 9 macroeconomic scenarios incorporate
the context of the IFRS 9 .
the forward-looking and probability-weighted aspects
of the ECL impairment calculation . Both features
On this basis, the Group revised scenario weights in
may change when material changes in the future
H1 2023 and assigned weights of 20%–60%–20%
development of the economy are recognised and not
(alternative scenarios receiving 20% each, and the
embedded in previous forecasts .
baseline scenario 60%), with minor changes in some
entities to reflect the likelihood of relevant future
The baseline scenario presents an expected forecast
economic conditions in their environment . Regular
macroeconomic view for all the countries of the
yearly revision of IFRS 9 provisioning will be conducted
Group . This scenario is based on recent official and
In H1 2024 .
professional forecasts, with specific adjustments for
individual countries of the Group . Key characteristics
The Group established a comprehensive internal
include no additional supply shocks, decreasing
stress-testing framework and early warning systems
inflation due to increased ECB key rate and quantitative
in various risk areas with built-in risk factors relevant
tightening, a slightly less tight labour market, GDP
to the Group’s business model . The stress-testing
growth supported by declining interest rates and
framework is integrated into the Risk Appetite, Internal
positive expectations, regional containment of political
Capital Adequacy Assessment Process (ICAAP), Internal
tensions, and limited spillover effects of financial system
Liquidity Adequacy Assessment Process (ILAAP), and the
issues on the real economy .
Recovery Plan to determine how severe and unexpected
changes in the business and macro environment
39
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Outlook
The indicated outlook constitutes forward-looking
The position of the Group is strong, and the performance
quality expected in all segments and geographies, the
statements which are subject to several risk factors and
throughout all of year 2023 in many of the item lines
cost of risk is expected to be between 20 and 40 bps .
are not a guarantee of future financial performance .
exceeded the plans and previous guidance . The Group
The NLB Group is pursuing various strategic activities
is herewith presenting the guidance for the full year 2024
In January 2024, Tier 2 notes in the amount of EUR 300
to enhance its business performance . The interest rate
and 2025 . The outlook for 2024 does not include effects
million and 10NC5 tenor were issued and have already
outlook is uncertain, given the adaptive monetary
from the announced acquisition of Summit Leasing,
been included in the capital following the ECB approval .
policy of the ECB and local central banks to the general
which is expected to close before the end of 2024 and
In parallel, the Bank conducted a liability management
economic sentiment .
thus without material effects for 2024 . The Group is
exercise (LME), repurchasing EUR 219 .6 million of its two
preparing a new business strategy and vision for 2030
outstanding Tier 2 notes to optimise its capital structure .
In Slovenia, the economic growth is forecasted to
that will, among others, also outline shareholders’
Moreover, in 2024, the Bank is considering issuing senior
accelerate in 2024 compared to 2023 thanks to
returns going forward in line with the improved earnings
preferred notes in benchmark size, subject to market
reconstruction efforts, relief funds, cooling inflation, and
outlook . The announcement of the key strategic
conditions . Both issuances will enable the Bank to meet
strengthening export demand from the wider Euro area .
directions for the Group is planned for the Investor Day
MREL requirements comfortably .
Downside risks are a slower-than-expected recovery
on 9 May in Ljubljana .
among key trading partners and potential energy price
The operating environment, coupled with an appropriate
spikes . Economic growth is seen accelerating in the region
The outlook for 2024 incorporates a reasonable
tactical and strategic positioning of the Group, have led
(apart from Montenegro), mainly due to better prospects
amount of prudence, most notable on the still prevailing
the Group to achieve strong running results . Previously
of the major trading partners, disinflation, falling
market view that interest rates by the end of 2024 will
indicated guidance on nominal dividend payment has
interest rates, and stronger household consumption .
be lowered by some 150 bps . Despite this assumption,
materialised in increasing dividend payments and, at the
The performance of the Euro area, ethno-nationalistic
the Group is expected to achieve more than EUR 1,100
same time, meaningful build-up of the capital buffers,
tensions and the wars in Ukraine and Gaza are key
million in regular income since a comfortable level of net
allowing for a potential M&A . With this outlook, the Bank
factors to watch . The Group’s region is expected to grow
interest income and fee income is still expected due to
is communicating its intention to pay EUR 220 million in
by 2 .2% in 2023 and 2 .5% in 2024 . While banks have so
the growing loan book and fee business stemming from
dividends in 2024, translating to a 40% pay-out ratio out
far largely benefited from higher interest rates in 2023,
more robust household consumption . The cost to income
of 2023 profit after tax . This represents a 100% increase
the uncertain macro-financial conditions may continue to
ratio is expected to stay below 50%, indicating that
from dividend payments made in 2023 or more than 75%
weigh on volume growth going forward in the short term .
cost inflation should be reasonably contained . With the
of the so far’s guidance for the cumulative payment until
Loan potential in 2024 should improve, however .
mid-single digit loan growth and still solid trends in asset
the end of 2025 . Such capital return will not impede the
Table 9: Movement of key macroeconomic indicators in the Euro area and NLB Group region
Euro area
Slovenia
Serbia
N . Macedonia
BiH
Kosovo
Montenegro
GDP
(real growth in %)
Average inflation
(in %)
Unemployment rate
(in %)
2022
2023
2024
2025
2026
3 .4
2 .5
2 .5
2 .2
4 .2
4 .3
6 .4
0 .4
1 .6
2 .5
1 .8
1 .6
3 .3
5 .1
0 .6
1 .9
2 .9
2 .6
2 .5
3 .7
3 .3
1 .5
2 .5
3 .4
3 .2
3 .0
4 .0
3 .2
1 .6
3 .0
3 .4
3 .2
3 .0
4 .0
3 .3
2022
8 .4
9 .3
12 .0
14 .1
14 .0
11 .6
13 .0
2023
5 .4
7 .2
12 .1
9 .4
6 .1
4 .9
8 .6
2024
2025
2026
2022
2023
2024
2025
2026
2 .5
3 .1
5 .8
4 .0
2 .9
2 .8
3 .8
2 .2
2 .5
3 .7
2 .6
2 .4
2 .7
2 .8
2 .0
2 .2
3 .0
1 .8
1 .9
2 .5
2 .4
6 .8
4 .0
9 .6
14 .4
15 .4
12 .6
14 .7
6 .5
3 .8
9 .5
13 .1
13 .3
11 .0
13 .2
6 .7
4 .2
9 .0
12 .7
12 .5
10 .5
13 .0
6 .7
4 .2
8 .8
12 .4
12 .0
10 .0
12 .7
6 .5
4 .0
8 .6
12 .2
11 .5
9 .5
12 .5
Note: NLB Forecasts are highlighted in grey.
Source: Statistical offices, Focus Economics.
40
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Bank’s capacity to grow, either organically or through
to a one percentage point increase of ROE a .t . (from
M&A, while, at the same time, avoiding the capital to
around 14% to 15%), and ROE normalised expected to
build excessively .
exceed 20% (previously around 20%) . The intended
pay-out ratio for 2025 from the 2024 results exceeds
The outlook for 2025 (i .e ., the outlook for the mid-term
40%, still retaining up to EUR 4 billion in M&A capacity .
targets within the final year of the current strategy) will
be subject to revision at the upcoming Investor Day in
With this guidance on dividends, the Bank will pay
May . On the "as-is" presumption, the guidance for 2025
cumulative dividends between 2022 and 2024 in the total
indicates the continuation of the current trends with
amount of EUR 430 million, well on the path to delivering
stable and growing results for the NLB Group . Increased
EUR 500 million of dividends in the
regular income by EUR 100 million, to around EUR 1,200
2022–2025 period .
million and higher dividend distribution also translates
Table 10: Market performance and outlook for the period 2023-2025
Regular income
CIR
Cost of risk
Loan growth
Dividends
ROE a .t .
ROE a .t . normalised(ii)
M&A potential
Last Outlook
for 2023
> EUR 1,000 million
~ 46%
~ 0 bps
Mid single-digit
Actual 2023
Performance
EUR 1,108 million
46%
-7 bps
5%
EUR 110 million
EUR 110 million
>15%
>20%
21%
29%
Outlook
for 2024
Last Outlook
for 2025
> EUR 1,100 million
~ EUR 1,100 million
< 50%
20-40 bps
Mid single-digit
EUR 220 million
(40% of 2023 profit)
~ 15%
> 20%
< 50%
30-50 bps
High single-digit
EUR 500 million
(2022-2025)(i)
~ 14%
~ 20%
Tactical M&A
capacity of
> EUR 4 billion RWA
Revised Outlook
for 2025
~ EUR 1,200 million
< 50%
30-50 bps
High single-digit
More than 40%
of 2024 profit(i)
~ 15%
> 20%
M&A capacity of
up to EUR 4 billion RWA
(i) Future capital returns will be revised during the new 2030 strategy process.
(ii) ROE a.t. normalised = result a.t. divided by the average risk-adjusted capital. An average risk-adjusted capital is calculated as a Tier 1 requirement of average RWA reduced by minority shareholder capital contribution.
41
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In the efforts, sacrifices,
successes, and triumphs
of athletes …
Slovenian
ski jumping team
It's not
just about
the jump
you make,
but the
courage to
take that
leap in
the first
place .
Sustainability
As a systemically important regional financial institution, NLB Group aims to actively contribute to the sustainable
transformation of the economy and society to a more green, just and inclusive future for the present and future
generations . Therefore, the Group has placed sustainability matters and ESG factors at the core of its business
strategy and business model .
The Group regularly monitors and strengthens the
overview of our efforts and progress towards
business . Total outstanding volume of corporate
existing mechanisms, control functions, and activities for
transitioning the operational and attributable GHG
responsible governance and oversight in sustainability
emissions from lending and investment portfolios to
and ESG . A vital governance milestone was the adoption
align with pathways consistent with achieving net zero
of a comprehensive Sustainability Policy in December
by 2050 or sooner .
2023, together with the rulebook for harmonised
sustainability management across the Group . The policy
NLB Group is committed to the highest standards of
demonstrates the commitment to our sustainability
mission, which is leading by example, improving quality
corporate governance, compliance, and integrity .
The Group’s fundamental commitment to responsible
sustainable financing stood at EUR 331 million .
· Based on the Net-Zero Strategy and assessed market
potential in the region, the Group set a new commitment
in December 2023 to allocate EUR 1 .9 billion by 2030 to
clients in sustainable transition .
· In June 2023, NLB issued its inaugural senior
green bonds in a benchmark nominal value size of
EUR 500 million . The proceeds shall be used in line
of life, and contributing to a sustainable economy and
business conduct is set out in the NLB Group Code
with NLB Green Bond Framework which is aligned with
society across the Group’s three sustainability pillars:
of Conduct . At the same time, specific principles are
ICMA principles . The first annual allocation and impact
Sustainable
Operations
Sustainable
Finance
Contribution
to Society
stipulated in several domain-specific internal documents
in accordance with developments in the sustainability
area . In 2023, the Group put particular emphasis on
report is expected to be published in June .
· Throughout 2023, the Group successfully followed its
strategic orientations and annual plans in risk
implementing the Policy on Respect for Human Rights in
management . Among other improvements, ESG risk
its business conduct by setting standards for respect for
management was upgraded and further integrated
These pillars define and deliver forward-looking
human rights in its operations and expecting the same
into NLB Group’s overall credit-approval process,
strategic principles, objectives, key targets and KPIs,
standard to be ensured by its clients and suppliers .
Environmental and Social Risk Management System
initiatives, and action plans across the NLB Group .
NLB, as a parent bank in the Group, is a signatory
to the UN Environment Programme Finance Initiative
(UNEP FI) Principles for Responsible Banking and
Net Zero Banking Alliance . Thereby, The Group members
officially endorse the UN Sustainable Development
Goals and take decisive actions to address climate-
related risks and opportunities and thus contribute to
achieving the 2015 Paris Climate Agreement objective to
limit global warming to 1 .5°C by mid-century compared
to the pre-industrial era .
In December 2023, the first NLB Group Net Zero
disclosure report was published, reaffirming our
commitment to achieving Net-Zero by setting targets for
reducing its financed emissions and maintaining a coal
exclusion policy . The report provides a comprehensive
Overview of sustainability
pillars – key achievements
Sustainable Finance
· NLB Group’s portfolio decarbonisation strategy
focuses on four key sectors: power generation, iron
and steel, residential real estate, and commercial real
estate, where the Group has significant emissions and
exposure and has set NZBA-aligned targets .
· The Group finances its corporate and retail clients
in their sustainable transition and actively engages
with them to encourage the development of their own
net-zero strategies .
· At the end of 2023, the Group’s total new production
volume of sustainable financing4 stood at
EUR 287 million, of which EUR 198 million was
corporate, and EUR 89 million was retail and micro
(ESMS), collateral evaluation process and related credit
portfolio management . Methodologies in credit rating
classification and ESG due diligence were improved,
within NLB Group’s commitment to the strict limitation
of new financing of certain activities, the Lending Policy
was amended with a new exclusion list .
16 .0Sustainalytics'
ESG Risk Rating
43
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
4 Green lending classification refers to the internal methodology of NLB Group, which refers to EBRD, MIGA, Green bond and EU taxonomy frameworks (and NZBA in case of retail green lending). If a
loan is mapped to either of these frameworks, it is considered as a green loan.
Contents
end of 2022 . The calculation of operational carbon
our corporate social responsibility activities with an
footprint (Scope 1, Scope 2, Scope 3, limited and without
overarching focus on education in the communities
Sustainable Operations
· At the Group, sustainable operations mean
managing our non-financial operations by being an
environmentally responsible institution and ensuring
sustainable relations with our stakeholders .
· At the end of 2023, the Group’s operational carbon
footprint decreased by 7 .6% in comparison with the
category 15) has been in place since 2019, follows the
GHG Protocol, and is annually verified by an external
independent institution . In line with the Group’s climate-
neutral commitment, we started the initiative to reach
operational net-zero by 2050 or sooner .
· In 2023, the Group made advancements in implementing
ESG factors in the procurement process, such as
implementing bidders and suppliers due diligence .
· The Group stayed committed to high standards in
all aspects of sustainable client relations, including
identifying clients’ needs and issues, responsible
product development and offering, responsible
marketing communications, providing the
awareness-building Sustainability Festival was
European Sustainability Reporting standards ESRS by
executed in October, which actively engaged more
conducting the new double materiality analysis and
than 1,000 employees in several sustainability activities .
further improving and automating the data collecting
44
Contribution to Society
· The Group actively contributes towards more
comprehensive socio-economic development through
where it operates .
· In 2023, NLB Group continued to manage CSR activities
in such way that each of them contributes to at least
one UN SDG5 .
· Among several other initiatives in 2023, the Group also
focused on increasing financial and digital literacy and
financial inclusion, especially among young people and
the elderly . More information is available in the chapter
process . In addition, we will keep integrating other
relevant reporting frameworks, such as IFRS S1/S2
(where TCFD was transposed at the end of 2023) and
keep following the implications of the Taskforce on
Nature-related Financial Disclosures (TNFD) proposal .
· Identifying and mitigating ESG risks and pursuing
opportunities stemming from lending or investment
portfolios and business relations with key stakeholders,
while following ECB and EBA guidelines . .
· Further commitment to building sustainability-related
awareness, culture, and capacity in all NLB Group
members .
· Exploring possibilities to influence and further
strengthen the Group’s value chain in terms of
Corporate Social Responsibility .
sustainable practices .
Outlook
The Group recognises sustainability, particularly
confidentiality and privacy of client data, as well as
climate change, as one of modern society’s most
cyber- and physical security .
· At the Group, sustainable practices and human
resource management are strongly interconnected . In
significant challenges . The call to drastically change
how companies, governments, and individuals –
consumers – address sustainability is expected to be
addition to adhering to labour-related regulation, the
intensified in 2024 and onwards . To further improve
Group invested in employee development, provided
its environmental and social impacts and maintain
a diverse and inclusive workplace environment,
high corporate governance standards, the Group will
motivational and remuneration mechanisms, increased
continue to implement initiatives and activities across all
the number of trainings per employee, promoted
three sustainability pillars in accordance with the annual
health, safety, and well-being, improved employee
engagement, and received the award Top Employer for
the 8th consecutive year .
· Sustainability training for employees in all hierarchical
levels was provided to enhance and further develop
their capacity and skills . In total, employees did
action plans . The main priorities in 2024 are as follows:
· Fortify the implementation of the UN Principles for
responsible banking in our business model and
upgrade targets in our priority impact areas .
· Further developing and implementing a
comprehensive NLB Group climate strategy, including
7,572 total hours of sustainability-related training, in
pathways to decarbonise the Group’s portfolio and
NLB Group's overall
ESG Risk score
improved by 1.7 points.
This represents low risk
and ranks the Group
among the
top 13 percent of
all banks assessed
with Sustainalytics
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
particular to enhance awareness of ESG risks and their
appropriate treatment, as well as to strengthen the
employees’ client engagement capacity and practices
operations by 2050 .
· Financing the green transition of the Group corporate
and retail clients in line with our net-zero commitment
Despite its clear ambition and action to mitigate
sustainability risks, the finance sector’s role, including
the Group, has its limitations . Climate action, as well as
to support the Net-Zero Strategy .
· Two major initiatives were completed further to
enhance the sustainable culture among employees
in 2023 . The renewed e-training on sustainability
was launched across the Group in September
and completed by all employees . The Group-wide
by providing them with sustainable banking, leasing
positive changes in business and society, necessitate
and asset management products .
· Implementing the newly introduced sustainability-
related governance framework across the NLB Group .
· Providing CSRD readiness and aligning sustainability
disclosures with the forthcoming new directive and
collective efforts . It is imperative for the clients to also take
action, while governments should provide the necessary
guidance and direction, regulatory environment through
dedicated policies to achieve net-zero goals by 2050 .
Therefore, the NLB Group will continue to engage
5 For a full list of the 17 Goals of the United Nations Sustainable Development, see the UN website.
Contents
stakeholders, build partnerships, and contribute to
discussions on further improving sustainability-related
Culture and protection of cultural heritage
The Bank is a great patron of developing Slovenian art
managers and women entrepreneurs with the aim of
networking and sharing experiences . Through inspiring
regulations and supportive environment .
and culture . As a responsible owner of an extensive
stories, the goal was to empower each other and point
This section summarises the NLB Group’s results and
works internationally . The Group launched a new
key initiatives in each sustainability pillar For more
NLB Group Art Programme for visual arts, aiming to
NLB Komercijalna Banka organised a traditional
information, please refer to the NLB Group Sustainability
support contemporary art in SEE, including investing in
Organic contest to encourage organic agriculture in
collection of 20th-century art heritage, the Bank exhibits
out the positive sides of female togetherness .
Report 2023 .
Corporate Social
Responsibility
The Group remains determined to create more
sustainable footprints in its home region . The main
pillars stay the same, with some awe-inspiring projects .
More information is also available in NLB Group
Sustainability Report 2023 .
Education, financial literacy, and mentoring
In 2023, Bankarium, the pioneering Slovenian Banking
Museum founded by NLB in 2021, welcomed 3,854
visitors . Beyond its role as a museum, Bankarium stands
as a financial literacy centre, guiding visitors through six
stages of personal finance management with interactive
digital games, quizzes, and educational resources . It is
widely accepted and enjoyed by school groups, through
which the Group significantly contributes to knowledge
transfer for future generations .
NLB Banka, Podgorica extended its outreach in
Montenegro, hosting financial literacy programs in
seven schools and facilitating dialogues with youths
in four cities . Young people discussed various aspects,
from banking to social entrepreneurial initiatives to
financial management .
acquisitions and commissions of works of art and art
projects and design a new art collection called "SEE ART ."
Responsibility to the environment
To be responsible for the environment is to care for
nature . In response to the degradation of a section
of the southern Trnovski gozd, a forest located near
Nova Gorica, Slovenia, due to recent natural disasters,
the Bank’s employees planted 2,500 seedlings across
approximately one hectare to aid regeneration efforts .
Serbia . This year, 50 innovative projects have applied
to the 12th NLB Organic, and the best four have been
rewarded with RSD 2 .5 million . In addition to the
award for the best project in organic agriculture, new
categories were women, youths under 40, and the
service industry that offers at least one organic product
from Serbia .
Supporting youth, female, and disabled sports
NLB takes great pride in its long-standing NLB Youth
Similarly, NLB Banka Banja Luka organised a tree-
planting initiative with colleagues from the Bijeljina
Sports project in Slovenia . In 2023, the project reached
its ninth year, supporting a remarkable 66 sports
branch and local partners to prevent soil erosion in
clubs and 10,000 children . NLB Group's commitment
flood-prone areas .
extends beyond Slovenia, as the Bank actively supports
youth sports in other markets, with over 2,000 children
By supporting Slovenian beekeeping, which is among
participating across the Group's region .
the best in the world, NLB endorses the preservation
of a rich cultural heritage and the protection of the
environment . On the 150th anniversary of the Slovenian
Beekeeping Association, NLB enabled the organisation
Furthermore, NLB Group demonstrates its dedication to
inclusivity through the NLB Wheel project, donating two
sports wheelchairs specifically for disabled basketball
of the 2023 International Young Beekeepers
players and giving ongoing support to KHF Istog, one of
Competition, which took place in Slovenia in the
Kosovo's most successful women's handball clubs .
summer . The first competition of this kind in Slovenia
was attended by over 150 participants from 30 countries
across the globe, marking a significant milestone for
Slovenian beekeeping .
Sustainable entrepreneurship
The goal of several "Women in Adria" events that were
Philanthropy
NLB Group made a substantial donation totalling EUR
1 .35 million across all markets of operations in the home
region . Employees proposed and selected recipients
for the donation . In response to devastating floods in
Slovenia, the Bank donated EUR 9 .5 million to help the
organised by NLB Banka, Banja Luka throughout
most affected citizens and municipalities .
Bosnia and Herzegovina was to bring together women
45
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Overview of
Financial Performance
The Group posted a profit after tax of EUR 550 .7 million, surpassing the previous year by a remarkable EUR 103 .8
million, representing a 23% YoY increase . It is important to highlight that the 2023 result was positively impacted
by the booking of deferred tax assets (EUR 61 .9 million), and the 2022 result by the negative goodwill from the
acquisition of N Banka (EUR 172 .8 million) .
The following key drivers influenced the Group’s
performance:
· Despite the challenging rising interest rate
environment, the Group experienced a YoY increase of
· A significant 65% YoY increase in net interest income
was driven by healthy loan demand and the effects
of higher interest rates on loans and central bank
balances . The deposit beta (the cumulative change
EUR 666 .2 million in gross loans to customers, of which
of the average customer deposit interest rate
EUR 491 .9 million went to individuals .
· More attractive pricing, especially for term deposits,
caused a EUR 705 .0 million increase in the deposit
base YoY, of which EUR 511 .6 million from individuals
and EUR 293 .7 million from corporates . A total EUR
100 .2 million decrease in the state deposit reflected the
compared with the cumulative change of the average
ECB deposit facility rate) in the respective period was
8% on the Group level . Consequently, the annual net
interest margin improved by 1 .21 p .p . YoY to 3 .50% .
· Net fee and commission income benefitted from the
favourable impact of economic activity and an upswing
high price elasticity of the deposits of the certain large
in consumer spending across all banking members .
clients in Slovenia .
Additionally, increased activity in investment funds,
bancassurance, and guarantee business contributed
Figure 12: Profit after tax of NLB Group – evolution YoY (in EUR millions)
4.6
-38.3
-41.6
14.8
0.3
-172.9
328.4
446.9
EUR
1,093 .3
million
of total net
operating income
10.1
-1.7
550.7
46
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
2022
Net interest
income
Net fee and
commission
income
Other net non-
interest income
Total costs
Impairments
and provisions
Share of profit
from investments
in associates and
joint ventures
Negative goodwill
Income tax
Results of non-
controlling
interests
2023
Contents
EUR 550 .7
million
of net profit
positively to fees . The effects of cancelling the high
balance deposit fee in the Bank and implementing
temporary measures, particularly in Serbia, were
therefore effectively mitigated and resulted in a
moderate 2% increase of net fee and commission
income YoY .
· NLB donated a total amount of EUR 11 .5 million,
of which EUR 9 .0 million was a direct voluntary
contribution to the budget and municipalities for flood
recovery in Slovenia, the rest being discretionary
support payments .
· Total costs witnessed an uptick of EUR 41 .6 million
or 9% YoY owing to several factors, namely, general
inflationary trends within the region, investments
into technology enhancements across the Group,
rate) . The unrecognised deferred tax assets amount to
Recurring profit before impairments and provisions of
EUR 127 .7 million . Additionally, the deferred tax liability
the Group, totalling EUR 606 .3 million, was exceptional
for withholding tax on dividends, which are projected
in 2023, with EUR 287 .6 million or 90% higher YoY . In
to be paid in the foreseeable future in the amount of
Q1 2023, the result before impairments and provisions
EUR 9 .6 million, was recorded on NLB Group .
· Enhanced financial performance resulted in ROE a .t . at
21 .0%, which was 8 .8 p .p . higher YoY (compared to 12 .2%
in 2022 without the inclusion of negative goodwill) .
· A sound financial position was confirmed by a robust
Total Capital Ratio (TCR) of 20 .3%, which improved
was affected by the accrual of a one-time yearly
payment of regulatory costs in Slovenian banks
(EUR 2 .9 million Single Resolution Fund (SRF)
and EUR 8 .6 million Deposit Guarantee Scheme
(DGS)), in Q3 by EUR 4 .0 million in donations to 20
municipalities affected by the floods in Slovenia, in
by 1 p .p . YoY primarily due to the partial inclusion of
Q4 by EUR 5 .0 million in additional donations for the
2023 result .
· The multi-year declining trend of the non-performing
credit portfolio stock continued, mostly due to
post-flood reconstruction effort, and a EUR 15 .3 million
modification loss due to interest rate regulation on
housing loans in NLB Komercijalna Banka, Beograd .
repayments, cured clients, and collection . The
combination of successful resolution of NPL and
credit growth of a high-quality portfolio resulted in the
decrease of gross NPL ratio (EBA def .) from 2 .4% to 2 .1%
YoY, and the NPE ratio (EBA def .) by 0 .2 p .p . YoY to 1 .1% .
· Unencumbered liquidity reserves portfolio amounted to
EUR 10,207 .1 million (39 .6% of total assets) .
the expansion of the leasing and asset management
Figure 13: Result before impairments and provisions of NLB Group (in EUR millions)
activities, the intensive integration process in Slovenia
(EUR 9 .2 million of integration costs in 2023), and costs
related to the new acquisition .
· The Group net released EUR 11 .8 million in impairments
and provisions for credit risk, attributed to material
repayments of previously written-off receivables and
changes in the model, despite new establishments
from portfolio development in loans to individuals .
Consequently, the cost of risk was negative at -7 bps .
· Other impairments and provisions were net
established in the amount of EUR 25 .9 million, mainly
due to pending fee repayments in the Slovenian
banks, HR restructuring provisions in the Bank, and
legal provisions .
· Based on substantially increased profit projections for
the upcoming five years (2024 onwards) and the higher
corporate income tax rate (nominal rates increased
from 19% to 22%), the Bank increased the recognised
part of the deferred tax assets by EUR 61 .9 million
+75%
591.4
645.4
338.3
354.9
19.5
-36.1
-14.9
-39.1
124.8
136.2
146.1
155.2
168.2
180.5
152.3
173.5
6.8
-18.2
-1.3
-7.8
-5.9
-6.4
-14.5
-6.7
2022
2023
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Result before impairments and provisions w/o non-recurring income and regulatory costs
Non-recurring net non-interest income
(EUR 48 .4 million recognised income due to profit
Regulatory costs
projections and EUR 13 .5 million due to increase of tax
47
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
All banks recorded a profit on a standalone basis
and positively contributed to the Group’s result . The
largest contribution of EUR 269 .6 million came from
NLB, followed by NLB Komercijalna Banka, Beograd,
with EUR 131 .7 million . The YoY contribution of NLB was
notably higher due to elevated net interest income
and net released impairment and provisions . The
SEE banks contributed 44% to the Group result with
growth achieved in all banks . For more information on
banks’ operations, see the chapters NLB, Ljubljana and
Strategic Foreign Markets .
Figure 14: Contribution to Profit after tax by bank member (in EUR millions)
+224%
269.6
83.3
-93%
184.1
NGW
172.8
+99%
131.7
66.2
48.9% NLB
Other 1.1%
NLB Banka, Podgorica 4.4%
NLB Banka, Prishtina 5.4%
NLB Banka, Sarajevo 2.3%
NLB Banka, Banja Luka 4.4%
EUR 550.7 million
NLB Banka, Skopje 7.2%
2.3% N Banka(i)
23.9% NLB Komercijalna Banka, Beograd
+20%
39.7
33.1
+26%
24.3
19.4
+12%
11.1
12.5
+11%
26.6 29.5
+48%
24.5
16.6
12.7
NLB(i)
N Banka(i)
NLB KB,
Beograd(ii)
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
2022
2023
(i) Merger of NLB and N Banka on 1 Sept ember 2023.
(ii) Merger of NLB Komercijalna Banka, Beograd and NLB Banka, Beograd on 30 April 2022. The profit of NLB Komercijalna Banka, Beograd in 2022 also includes the profit of
NLB Banka, Beograd (EUR 2.2 million).
48
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Income statement
Table 11: Income statement of NLB Group
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
Share of profit from investments in
associates and joint ventures
Negative goodwill
Result before tax
Income tax
Result of non-controlling interests
Result after tax
2023
833 .3
278 .0
0 .2
17 .3
-35 .4
260 .0
1,093.3
-282 .2
-170 .5
-49 .2
-501 .9
591.4
11 .8
-25 .9
-14 .1
1 .1
0 .0
578.4
-15 .1
12 .6
550.7
2022
504 .9
273 .4
0 .2
36 .6
-16 .6
293 .6
798.5
-257 .7
-155 .2
-47 .4
-460 .3
338.3
-17 .5
-11 .4
-28 .9
0 .8
172 .9
483.1
-25 .2
11 .0
446.9
Change YoY
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Change QoQ
in EUR millions
328 .4
4 .6
-0 .1
-19 .3
-18 .9
-33 .7
294.7
-24 .5
-15 .2
-1 .8
-41 .6
253.2
29 .3
-14 .5
14 .8
0 .3
-172 .9
95.3
10 .1
1 .7
103.8
65%
2%
-30%
-53%
-114%
-11%
37%
-10%
-10%
-4%
-9%
75%
-
-128%
51%
37%
-
20%
40%
15%
23%
231 .9
72 .4
0 .0
-2 .3
-9 .5
60 .6
292.5
-74 .7
-51 .8
-13 .7
-140 .2
152.3
-15 .0
-13 .0
-28 .0
-0 .2
0 .0
124.0
42 .8
3 .0
163.8
221 .5
70 .9
0 .1
4 .7
-8 .0
67 .7
289.2
-70 .0
-38 .8
-12 .0
-120 .9
168.2
-3 .1
-0 .7
-3 .8
0 .7
0 .0
165.1
-18 .0
2 .8
144.2
201 .0
68 .5
0 .0
6 .0
-5 .8
68 .7
269.7
-70 .6
-41 .1
-11 .8
-123 .6
146.1
11 .5
-6 .2
5 .4
0 .3
0 .0
151.8
-25 .9
3 .3
122.6
179 .0
66 .1
0 .0
8 .9
-12 .1
63 .0
241.9
-66 .8
-38 .7
-11 .7
-117 .1
124.8
18 .4
-6 .0
12 .4
0 .3
0 .0
137.5
-13 .9
3 .4
120.1
10 .4
1 .4
0 .0
-7 .0
-1 .5
-7 .1
3.3
-4 .7
-12 .9
-1 .7
-19 .3
-15.9
-11 .8
-12 .4
-24 .2
-1 .0
0 .0
5%
2%
-68%
-
-18%
-10%
1%
-7%
-33%
-14%
-16%
-9%
-
-
-
-
-
-41.1
-25%
60 .8
0 .2
19.5
-
7%
14%
49
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Net interest income
The Group’s net interest income constituted 76% of the
Group’s total net revenues (2022: 63%) and reached
EUR 833 .3 million .
A significant increase in the net interest income was
recorded in all Group banking members, supported
by loan volume growth from healthy demand for
loans coupled with prevailing higher interest rates .
The growth mainly came from loans to customers,
with EUR 253 .7 million (EUR 98 .3 million allocated to
individuals and EUR 155 .4 million to corporate and
state), and balances at banks and central banks
amounting to EUR 127 .7 million . At the same time,
interest expenses increased due to higher expenses
incurred from wholesale funding raised for the minimum
requirement for own funds and eligible liabilities (MREL)
and capital requirement, as well as higher expenses for
customer deposits .
Profitability protection is one of the NLB Group’s
priorities . Net interest income sensitivity, simulated
by 100 bps immediate parallel downward shift in
interest rates, yields a net interest income sensitivity
of EUR -101 million, mostly driven by the cash and
Euribor rate positions . Focus on stabilising net interest
income includes on-going increased fixed interest rate
loan production, active management of funding mix,
liabilities hedging activities, and increasing duration of
BB securities portfolio .
Funding cost grew at much lower pace than interest
rates on assets and consequently, the Group’s annual
net interest margin was improved by 1 .21 p .p . to 3 .50%
in 2023 . The annual operational business margin was
4 .75%, 1 .19 p .p . higher YoY, mainly due to the net interest
income growth .
Figure 15: Net interest income of NLB Group (in EUR millions)
+65%
833.3
504.9
569.8
-64.9
2022
993.4
-160.1
2023
179.0
207.0
201.0
233.2
221.5
267.7
231.9
285.4
-28.0
-32.2
-46.2
-53.5
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Interest income
Interest expenses
Figure 16: Net interest margin and operational business margin of NLB Group(i) (quarterly data)
4.39%
3.14%
4.73%
3.46%
4.89%
3.64%
4.99%
3.74%
50
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Net interest margin
Operational business margin
(i) Calculated based on average interest-bearing assets.
Contents
Figure 17: Net non-interest income of NLB Group (in EUR millions)
4 .0 million in donations were paid to 20 municipalities
293.6
-11%
19.5
0.7
260.0
Net non-interest income
The overall YoY decrease in the net non-interest income
derives from the negative impact from non-recurring
income . In Q1, the gain of EUR 4 .2 million was realised
from the sale of real estate in Serbia, and in Q3, EUR
affected by the floods in Slovenia . In Q4, there were EUR
5 .0 million additional donations paid for the post-flood
reconstruction effort, and a EUR 15 .3 million modification
loss was recorded for interest rate regulation on housing
loans in NLB Komercijalna Banka, Beograd . Additionally,
regulatory charges were also higher by EUR 2 .9 million
YoY due to higher deposit base, mostly occurring in Q1
due to accrual of one-off expenses in Slovenia .
Despite a decline in the net non-interest income, the
net fee and commission income – a significant part of
it – recorded modest growth . The negative effects of
the cancellation of the high balance deposit fee in the
Bank and temporary measures for consumer protection,
particularly in Serbia, were effectively mitigated with
the positive impact of increased economic activity and
consumption, leading to higher fees across all banking
members . Additional positive influence on fees came
from the increased performance of investment funds,
bancassurance, and guarantee business .
273.4
278.0
6.8
63.0
66.1
1.5
68.7
68.5
67.7
70.9
2.6
60.6
2.8
72.4
2022
-14.9
2023
-3.1
-10.0
-1.3
-5.9
-14.5
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Net fee and commission income
Recurring other net non-interest income
Non-recurring other net non-interest income
51
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Total costs
Total costs amounted to EUR 501 .9 million and were
9% higher than the previous year . The increase was
observed in all banks of the NLB Group, and was
primarily driven by a EUR 24 .5 million rise in employee
costs and a EUR 15 .2 million increase in other general
and administrative expenses . The escalation in
depreciation and amortisation resulted from higher
investment activity in the last quarter .
The growth of the other general and administrative
expenses can be attributed to the general inflationary
trends within the region, investments into technology
enhancements across the Group, growth of the leasing
and asset management activities, the intensive
integration process in Slovenia (EUR 9 .2 million
integration costs in 2023), and costs related to new
Figure 18: Total costs of NLB Group (in EUR millions)
+9%
501.9
49.2
170.5
460.3
47.4
155.2
257.7
282.2
117.1
66.8
11.7
38.7
123.6
70.6
11.8
41.1
120.9
70.0
12.0
38.8
140.2
74.7
13.7
51.8
2022
2023
Q1 2023
Q2 2023
Q3 2023
Q4 2023
acquisition . The Group is undertaking several initiatives
Employee costs
Other general and administrative expenses
Depreciation and amortisation
(some of them are channel strategy, digitalisation,
going paperless, instituting a lean process, and branch
network optimisation) to keep costs low . In Q3, some cost
optimisation and HR synergies related to the merger of
NLB and N Banka were observed . However, owing to
prevailing circumstances and current economic situation,
characterised by significant inflationary pressures across
all cost categories, many of the successful efficiency
measures across the Group were nullified .
The costs were increasing throughout the year, with a
higher share occurring in the last quarter (28% of total
costs, the same as in the previous year) due to year-
end employee payments and higher IT and marketing
costs (sponsorships) .
CIR stood at 45 .9%, representing a significant 11 .7 p .p .
improvement YoY, driven by strong net operating income
growth that outpaced the increase in total costs .
52
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Impairments and
provisions
The Group released net impairments and provisions
for credit risk in the amount of EUR 11 .8 million . The
established impairments derived from portfolio
development, from new financing and minor portfolio
deterioration . In contrast, material repayments
of written-off receivables and changes in models
contributed to lower total impact and negative cost of
risk in the financial year .
Other impairments and provisions were net established
in the amount of EUR 25 .9 million, mainly due to
pending fee repayments in the Slovenian banks and HR
restructuring provisions in the Bank .
Figure 19: Impairments and provisions of NLB Group (in EUR millions)
CoR
(bps)
14
-7
11.8
-25.9
-14.1
2023
-17.5
-11.4
-28.9
2022
12.4
18.4
-6.0
5.4
11.5
-6.2
-3.1
-0.7
-3.8
-15.0
-13.0
-28.0
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Impairments and provisions for credit risk
Other impairments and provisions
53
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Corporate income tax
and deferred taxes
of NLB, Ljubljana
The effective tax rate in 2023 was significantly influenced
The effective tax rate of NLB, excluding deferred tax
effect, the overall contribution rate will be substantially
by several non-recurring items, with the most material
assets revaluation, non-taxable dividends, and non-
higher and is expected to be slightly less than 20% on
impact coming from the increase of deferred tax
taxable reversal of equity investments, amounts to 11%
NLB Group level until 2028 . When both changes expire,
assets . Based on a highly successful year in 2023 and
at NLB d .d ., on group level 12% (excluding also non-
and when NLB’s tax loss carry forward will be utilised,
increased profit projections for the upcoming five
taxable interest from state bonds, according to the
we expect a regular effective tax/contribution rate of
years (from 2024 onwards), NLB increased recognised
local tax legislations) . Including voluntary contributions
around 15% .
deferred tax assets of EUR 56 .7 million in 2023 (EUR
paid in Slovenia to Republic of Slovenia and Slovene
48 .4 million recognised in income statement and EUR
municipalities the equivalent rate amounts to 14% .
The Minimum Tax Act was adopted in Slovenia in
8 .3 million in other comprehensive income) . Deferred
December 2023 based on OECD Pillar 2 Model Rules
taxes were additionally increased for EUR 14 .9 million
Based on the Reconstruction, Development and
and related EU Directive . It is expected that the parent
due to a higher corporate income tax rate in the next
Provision of Financial Resources Act, the tax on balance
company NLB will be liable to pay the top-up tax
five years (2024 to 2028), namely EUR 13 .5 million income
sheet was introduced for the years 2024-2028 (yearly
concerning subsidiaries in non-EU jurisdictions that
recognised in income statement and EUR 1 .4 million in
tax liability is estimated to amount to more than EUR 30
have a statutory tax rate below 15% . Based on the first
other comprehensive income .
million), and the tax rate for corporate income tax was
estimates for the year 2024, we expect that the tax
The other factor influencing the effective tax rate of
From 2024 on, when these two changes will come into
increased from 19% to 22% for the years 2024 to 2028 .
liability shall not be material .
NLB was the non-taxable income, consisting mostly of
received dividends and the release of impairments of
equity investments in subsidiary banks . In addition,
Table 12: Effective tax and contribution rates
tax losses carry-forward decreased 50% of the
taxable base .
Profit before tax
Non-taxable income
Non-taxable dividends received
Non-taxable reversal of equity investments
Non-taxable interest from state bonds
Taxable income
Adjustments
Utilization of tax loss carry forward
Other adjustments(i)
Tax base
Corporate income tax (at 19%)
Withholding tax (mainly dividends) & other
Recognition and increase of DTAs
Non-recognised deferred tax assets on current loss and other
Total tax
Regular tax payable (corporate income tax and withholding tax)
Effective tax rate for regular tax
Donations to state and municipalities
Contribution (regular tax and donations)
Overall contribution rate
(i) Effect of different tax rates in other countries is included in other adjustments.
NLB
479
-236
-138
-98
0
243
-145
-115
-30
98
18
8
-62
0
-36
26
11%
9
35
14%
in EUR millions
NLB Group
578
0
0
0
-40
538
-232
-117
-115
306
58
8
-62
11
15
66
12%
9
75
14%
54
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of financial position
Table 13: Statement of financial position of NLB Group
ASSETS
Cash, cash balances at central banks, and
other demand deposits at banks
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
Deposits from customers
- Corporate
- Individuals
- State
Deposits from banks and central banks
Borrowings
Subordinated debt securities
Other debt securities in issue
Other liabilities
Equity
Non-controlling interests
TOTAL LIABILITIES AND EQUITY
31 Dec 2023
31 Dec 2022
Change YoY
31 Dec 2023
30 Sep 2023
30 Jun 2023
31 Mar 2023
in EUR millions
6,103 .6
5,271 .4
547 .6
13,734 .6
14,063 .6
6,437 .8
7,235 .3
390 .4
-329 .0
4,803 .7
15 .8
4,787 .9
12 .5
278 .0
31 .1
62 .1
368 .7
223 .0
13,073 .0
13,397 .3
6,345 .7
6,743 .4
308 .2
-324 .4
4,877 .4
21 .6
4,855 .8
11 .7
251 .3
35 .6
58 .2
358 .6
832 .2
324 .7
661 .6
666 .2
92 .1
491 .9
82 .3
-4 .6
-73 .8
-5 .8
-68 .0
0 .8
26 .7
-4 .5
3 .9
10 .1
25,942.0
24,160.2
1,781.7
20,732 .7
5,859 .2
14,460 .3
413 .2
95 .3
240 .1
509 .4
828 .8
587 .6
2,882 .9
65 .1
20,027 .7
5,565 .6
13,948 .7
513 .4
106 .4
281 .1
508 .8
307 .2
506 .7
2,365 .6
56 .7
705 .0
293 .7
511 .6
-100 .2
-11 .1
-41 .0
0 .6
521 .6
80 .9
517 .3
8 .4
25,942.0
24,160.2
1,781.7
16%
146%
5%
5%
1%
7%
27%
-1%
-2%
-27%
-1%
7%
11%
-13%
7%
3%
7%
4%
5%
4%
-20%
-10%
-15%
0%
170%
16%
22%
15%
7%
6,103 .6
5,815 .7
5,760 .4
5,304 .3
547 .6
13,734 .6
14,063 .6
6,437 .8
7,235 .3
390 .4
-329 .0
4,803 .7
15 .8
4,787 .9
12 .5
278 .0
31 .1
62 .1
368 .7
518 .6
13,666 .1
13,990 .2
6,526 .0
7,107 .2
357 .1
-324 .2
4,653 .1
25 .0
4,628 .1
13 .0
257 .1
33 .1
55 .4
266 .0
304 .7
13,431 .8
13,747 .3
6,454 .4
6,945 .8
347 .1
-315 .5
4,553 .7
21 .1
4,532 .6
12 .3
254 .3
34 .5
56 .1
293 .6
329 .1
13,137 .7
13,455 .0
6,269 .3
6,850 .7
335 .0
-317 .3
4,582 .5
19 .3
4,563 .3
12 .0
252 .1
35 .3
56 .9
301 .9
25,942.0
25,278.0
24,701.5
24,011.8
20,732 .7
5,859 .2
14,460 .3
413 .2
95 .3
240 .1
509 .4
828 .8
587 .6
2,882 .9
65 .1
20,289 .1
5,676 .8
14,156 .7
455 .7
127 .2
221 .0
529 .0
810 .0
504 .9
2,734 .9
61 .9
19,924 .9
5,363 .7
14,168 .6
392 .5
107 .4
220 .0
520 .0
814 .5
469 .3
2,586 .1
59 .2
25,942.0
25,278.0
24,701.5
19,732 .0
5,331 .8
13,951 .7
448 .5
107 .4
279 .9
513 .2
311 .7
499 .6
2,507 .6
60 .3
24,011.8
55
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The balance sheet volume of the Group totalled EUR
Figure 20: Balance sheet structure of NLB Group on 31 December 2023 (in EUR millions)
25,942 .0 million at the end of the year and increased
by EUR 1,781 .7 million YoY . Growth in the customer’s
loan book was fully financed with growth in customer
deposits, while additional MREL funding increased the
Other assets
753
liquidity reserves .
25,942
25,942
Financial assets
4,804
Other liabilities
588
Other debt
securities in issue
829
Cash equivalents
& placements
with banks
6,651
Total equity
2,948
Deposits from
customers
20,733
Subordinated
debt securities
509
Deposits from banks
and central banks &
Borrowings
335
Deposits
from state
2.0%
Deposits
from
individuals
69.7%
Deposits from
corporate
28.3%
20,733
13,735
Net loans
to customers
13,735
Loans to
corporate
45.6%
Loans to
individuals
51.6%
Loans to state
2.8%
The LTD ratio (net) was 66 .2% at the Group level;
a 1 .0 p .p . YoY increase resulted from higher relative
increase of gross loans compared to deposits .
Assets
Liabilities
Figure 21: NLB Group’s LTD ratio movement
65.3%
20,027.7
66.2%
20,732.7
13,073.0
13,734.6
31 Dec 2022
31 Dec 2023
LTD
Net loans (in EUR millions)
Deposits (in EUR millions)
56
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Assets
Figure 22: Total assets of NLB Group – structure (in EUR millions)
+7%
24,160.2
715.5
25,942.0
752.5
4,877.4
13,073.0
5,494.3
31 Dec 2022
4,803.7
13,734.6
6,651.2
31 Dec 2023
The distribution of total assets between countries was
Figure 23: Total assets of NLB Group by country (in %)(i)
Cash equivalents, placements with banks and loans to banks
Financial Assets Net loans to customers Other Assets
similar to the previous year, with 57 .2% of the total
assets related to the Group members located in Slovenia
and 19 .6% in Serbia .
2023
57 .2%
Slovenia
19 .6%
Serbia
7 .3%
N. Macedonia
7 .5%
BiH
4 .7%
Kosovo
3 .6%
Montenegro
2022
57 .7%
Slovenia
19 .3%
Serbia
7 .6%
N. Macedonia
7 .4%
BiH
4 .5%
Kosovo
3 .4%
Montenegro
57
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
0 .1%
Other
( i) The geographical analysis includes a breakdown of items with respect to the country in which individual NLB Group members are located.
0 .1%
Other
Contents
The lending activity continued with stable growth in
Slovenia (NLB and N Banka), with stable new loan
Gross loans to corporate and state in Slovenia increased
2023 . The highest increase of 9% was recorded in
production of housing loans in the contractual amount
by EUR 3 .3 million YoY where in the beginning of 2023,
loans to individuals in the SEE banks, with each Group
of EUR 393 .1 million in 2023 (EUR 749 .5 million in 2022) .
the volume decreased by EUR 120 million due to the
member bank recording high YoY growth from 5% to
Conversely, the new production of consumer loans
repayment of extraordinary liquidity lines for energy
18% in outstanding loan balances . The new production
improved, with EUR 394 .1 million new deals approved in
companies provided in December 2022 . New production
of loans was high, with over EUR 900 million of new
2023 (EUR 268 .3 million in 2022) .
was high, with almost EUR 1 .3 billion in new loans
consumer loans approved (10% more than in the
previous year) .
Most SEE banks also recorded growth in corporate and
state loans, with the highest 11% growth achieved in NLB
approved in 2023 .
Despite higher interest rates, the solid growth in the
Komercijalna Banka, Beograd .
volume of loans to individuals was also recorded in
Figure 24: NLB Group gross loans to customers dynamics (in EUR millions)
Gross loans
to individuals
NLB Group
+7%
6,743.4
7,235.3
4.74%
5.71%
NLB(i)(ii)
SEE Banks(i)
+5%
+9%
3,448.0
3.84%
3,608.8
4.72%
3,220.9
5.66%
3,523.1
6.63%
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
Gross loans
to corporate
& state
+3%
6,653.9
6,828.2
3.04%
5.09%
+0%
3,667.8
4.61%
3,664.5
2.19%
+6%
3,245.4
5.50%
3,050.3
3.84%
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
Gross loans
Interest rates
(i) On a standalone basis.
(ii) Merger of NLB and N Banka on 1 September 2023. Volumes for 2022 for N Banka and NLB, interest rates only for NLB.
58
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Despite significant portfolio growth in all NLB Group
the volume of housing loans are still prevailing . Most of
of the loan portfolio was linked to a fixed interest rate,
banks in 2023, the loan portfolio remained well-
the loan portfolio refers to the euro currency, while the
and the rest mainly to the Euribor reference rate .
59
diversified, and there was no large concentration in any
rest originates from the local currencies of the Group
specific industry or client segment . In the retail portfolio
banking members . From interest rate type, almost 66%
Figure 25: Loan portfolio(i) by segment, geography, currency, and interest rate type (in EUR millions)
by segment(iv)
Institutions
451
2%
SME
3,764
19%
State(ii)
5,928
29%
EUR 20 .2 billion
Corporates
2,865
14%
Retail consumer
3,131
15%
Retail housing
4,105
20%
by geography
Other(iii)
670
3%
Serbia
4,084
20%
Kosovo
1,016
5%
Montenegro
723
4%
N. Macedonia
1,493
7%
EUR 20 .2 billion
Slovenia
10,811
53%
BiH
1,447
7%
by currency
by interest rate
Floating
34%
EUR 20 .2 billion
EUR
82%
EUR 20 .2 billion
Fixed
66%
Other
1%
BAM
4%
MKD
5%
RSD
8%
(i) The loan portfolio also includes account balances, required reserves at CBs, and demand deposits at banks.
(ii) State includes exposures to CBs.
(iii) The largest part represents EU members.
(iv) Segmentation following the company size defined in the Companies Act of an individual country in the region.
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The banking book debt securities portfolio slightly
Two business models are implemented, dividing the
and related deferred taxes) . New FVOCI investments
decreased YoY to EUR 4,687 million (book value),
portfolio into securities valued at fair value through
are typically placed at a short duration . In contrast,
constituting 18 .1% of the Group’s total assets compared
other comprehensive income (FVOCI) and securities
the AC portfolio at year-end increased to 53 .8% of the
to 19 .7% in 2022 . The portfolio’s average duration
valued at amortised cost (AC) . The FVOCI portfolio at
total Group debt securities portfolio, with an average
at year-end was 2 .8 years (2022: 2 .7 years), and the
year-end represented 46 .2% of the total Group debt
duration of 3 .7 years . Unrealised losses of AC Group’s
average yield was 0 .55 p .p . higher in 2023, reaching
securities portfolio, 13 .5 p .p . lower YoY, with an average
debt securities portfolio during 2023 amounted to EUR
1 .67% .
duration of 1 .9 years . The negative valuation of FVOCI
81 million . The ESG portfolio represented 6 .5% of the
Group’s debt securities portfolio during 2023 amounted
whole portfolio . Additional information is available in
to EUR 89 million (the net of hedge accounting effects
the NLB Group Sustainability Report 2023 .
Figure 26: Banking book debt securities portfolio by geography, asset class, currency, and maturity profile as at 31 December 2023 (in EUR millions)
by geography
by asset class
by currency
Finland
158
Austria
191
BiH
191
the Netherlands
230
Belgium
258
N. Macedonia
270
Other
1,316
EUR 4,687
million
Government
bonds
3,584
Serbia
720
EUR 4,687
million
Germany
275
France
376
Slovenia
703
Bank senior
unsecured
bonds
556
EUR
3,681
Covered bond
218
GGB
140
Multilateral bank bonds
136
Subordinated debt
38
Corporate bonds
15
EUR 4,687
million
RSD
507
USD
210
MKD
152
BAM
117
Other
20
% of total
portfolio
26%
1,235
771
357
107
maturity profile
32%
1,518
647
636
235
21%
20%
993
647
241
105
941
607
78
256
2024
2025-2026
2027-2028
2029+
Slovenia
SEE
International
60
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Liquidity position
The Group’s liquidity remains strong, with a high level of
unencumbered liquidity reserves in total assets (39 .6%)
reflected in the LCR ratio of 245 .7%, compared to 220 .3%
at the end of 2022 . The Group holds a comfortable
liquidity position, with liquidity ratios well above the
220.3%
risk appetite limit at the Group and individual banking
member levels .
Figure 27: LCR quarterly dynamic of NLB Group (in EUR millions)
231.3%
244.8%
238.9%
245.7%
6,028
6,132
6,505
6,688
7,012
2,737
2,651
2,657
2,800
2,854
31 Dec 2022
31 Mar 2023
30 Jun 2023
30 Sep 2023
31 Dec 2023
Stock of HQLA
Net liquidity outflow
LCR
In 2023, the Group’s unencumbered liquidity reserves
Figure 28: Evolution of NLB Group unencumbered liquidity reserves (in EUR millions)
increased by 11% YoY, comprising of cash, balances
with CB without minimum reserve requirement, the
debt securities portfolio, and credit claims eligible for
CB-secured funding operations . Among others, these
liquidity reserves provided the basis for future strategic
growth . The growth of unencumbered liquidity reserves
9,187.5
9,113.6
in 2023 can largely be attributed to the increase in CB
49.4%
47.0%
9,406.8
44.9%
9,675.0
45.0%
10,207.1
44.8%
reserves, while values of other categories stayed at
similar levels throughout 2023 . Encumbered liquidity
reserves, used for operational and regulatory purposes,
decreased by 66% YoY to EUR 41 .5 million (excluding
obligatory reserves) and were excluded from the
liquidity reserves portfolio .
0.0%
0.0%
0.0%
0.0%
0.0%
45.9%
49.0%
48.6%
48.6%
7.0%
6.1%
6.3%
6.6%
43.8%
6.8%
31 Dec 2022
31 Mar 2023
30 Jun 2023
30 Sep 2023
31 Dec 2023
ECB eligible credit claims
Trading book debt securities (market value)
Cash & CB reserves
Banking book debt securities (market value)
61
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Liabilities
The total liabilities of the Group increased and
amounted to EUR 22,994 .0 million, with additional EUR
2,948 .0 of total equity . The Group’s funding base was
dominated by customer deposits, accounting for 80% .
Sight deposits prevailed; however, due to increased
interest rates and attractive offers on term deposits,
the share of term deposits increased by 3 p .p . in 2023
and accounted for 16% (13% at the end of 2022) . Most
customer deposits were from individuals (70%, the same
as at the end of 2022) .
Figure 29: Total liabilities of NLB Group – structure (in EUR millions)
+6%
21,737.9
506.7
307.2
508.8
281.1
20,027.7
106.4
22,994.0
587.6
828.8
509.4
240.1
20,732.7
95.3
31 Dec 2022
31 Dec 2023
Deposit from customers
Subordinated liabilities
Deposit from banks and central banks
Other debt securities in issue
Other liabilities
Borrowings
62
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Deposits from customers increased by 4% YoY . The
Deposits from individuals recorded growth in all bank
largest increase of 15% was recorded in the corporate
members, 3% in the Bank and 5% in SEE banks . The
and state deposits in the SEE banks due to the improved
Bank’s share of term and savings accounts increased
economic situation in the region . In the Bank, the
by 5 p .p . YoY to 48%, with term deposit volume in 2023
corporate and state deposit base decreased due to the
increasing by more than EUR 350 million, mainly in
high price elasticity of the certain large corporate and
the last four months due to an attractive offer on term
state clients .
deposits . For more information on the average cost of
funding, please refer to the chapter Funding Strategy,
Capital, and MREL Compliance .
Figure 30: NLB Group deposits from customers dynamics (in EUR millions)
Deposits from
individuals
NLB Group
+4%
13,948.7
1,665.3
12,283.4
0.10%
14,640.3
2,282.6
12,177.7
0.33%
SEE Banks(i)
NLB(i)(ii)
+3%
8,325.8
402.0
8,543.8
702.3
7,923.8
0.05%
7,841.6
0.35%
+5%
5,623.0
1,263.3
4,359.6
0.17%
5,916.5
1,580.4
4,336.1
0.32%
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
Deposits from
corporate &
state
+3%
6,079.0
976.4
5,102.6
0.11%
6,272.4
995.6
5,276.9
0.37%
-6%
3,337.7
504.7
2,833.0
0.25%
3,557.4
670.7
2,886.8
0.05%
+15%
2,588.5
306.2
2,282.2
0.18%
2,983.3
509.1
2,474.2
0.51%
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
31 Dec 2023
Sight deposits Term deposits Interest rates
(i) On a standalone basis.
(ii) Merger of NLB and N Banka on 1 September 2023. Volumes for 2022 for N Banka and NLB, interest rates only for NLB.
63
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
On the assets side, the securities portfolio has a duration
Figure 31: Duration overview (balance sheet items in EUR millions)(i)
of 2 .9 years and a loan portfolio of 2 .4 years . A large
weight in the duration of total assets also has assets
with the central bank, which lowers the duration of total
assets to 1 .9 years . On the liabilities side, the issued
securities portfolio has a duration of 1 .9 years and a
term deposits portfolio of 0 .9 year . The largest weight
in the duration of total liabilities has a portfolio of sight
deposits, which lowers the duration of total liabilities
to 0 .5 years . Total duration GAP of banking book
derivatives is -2 .3 years .
26,680
O/N
Central bank
5,905
0.6 Y
Interbank 654
2.9 Y
Debt securities
4,414
2.4 Y
Loans and advances
14,624
1.4 Y
Derivates 1,084
Assets
(i) Included are cash flows and not carring amount.
26,680
Interbank 778
Debt securities issued
1.6 Y
1.9 Y
1,310
0.9 Y
Term deposits 3,735
O/N
Sight deposits 17,100
3.7 Y
Derivates 1,084
Equity 2,883
Liabilities
64
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Off-balance sheet items
Off-balance sheet items of the Group amounted to
EUR 6,300 .8 million and were primarily comprised
of guarantees (26%), loan commitments (39%), and
derivatives (34%) .
Loan commitments were primarily divided between
loans (60%), overdrafts (15% retail and 11% corporate),
and cards (16%) . Most of the Group’s derivatives were
concluded by the Bank either for hedging the banking
book or trading with customers .
The substantial augmentation in derivatives trading
volume primarily came from several key factors . Firstly,
a significant portion of this increase, totalling EUR
450 million, can be attributed to hedging the senior
preferred bond issued in June 2023 . Secondly, newly
participation from NLB Group members was notable,
as they engaged in hedging activities concerning their
respective positions in the banking book . Lastly, the
consolidation efforts following the merger of N Banka
with NLB led to a notable surge, particularly through the
novation of existing derivatives contracts .
Figure 32: Off-balance sheet items of NLB Group (in EUR millions)
+16%
35.0
5,449.5
1,511.3
2,407.1
1,496.0
41.0
6,300.8
1,631.6
2,487.5
2,140.8
31 Dec 2022
31 Dec 2023
Guarantees
Letters of credit
Loan commitments
Derivatives
65
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Segment Analysis6
Core Segments
Retail Banking in Slovenia includes banking with
individuals and micro companies (NLB and N Banka),
Strategic Foreign Markets consist of the operations of
strategic Group banks in the strategic markets (Serbia,
Non-Core Segment
Non-Core Members include the operations of non-core
NLB Group members, namely REAM and leasing entities
asset management (NLB Skladi), and part of subsidiary
North Macedonia, Bosnia and Herzegovina, Kosovo, and
in liquidation, NLB Srbija, and NLB Crna Gora .
NLB Lease&Go, Ljubljana that includes operations with
Montenegro), as well as investment company KomBank
retail clients, as well as the contribution to the result of
Invest, Beograd, NLB DigIT, Beograd, NLB Lease&Go,
the associated company Bankart .
Skopje and NLB Lease&Go Leasing, Beograd .
Corporate and Investment Banking in Slovenia includes
banking with Key Corporate Clients, SMEs, Cross-Border
Other activities include categories in NLB and N Banka
whose operating results cannot be allocated to specific
Corporate Financing, Investment Banking and Custody,
segments, including negative goodwill from acquisition
Restructuring and Workout in NLB and N Banka, and
of N Banka and NLB Lease&Go Leasing, Beograd in
part of the subsidiary NLB Lease&Go, Ljubljana that
2022 as well as subsidiaries NLB Cultural Heritage
includes operations with corporate clients .
Management Institute and Privatinvest .
Financial Markets in Slovenia include treasury activities
and trading with financial instruments, while they also
present the results of asset and liabilities management
(ALM) in both, NLB and N Banka .
Table 14: Segments of NLB Group
NLB Group
Core Segments
Non-Core Segment
Retail Banking in
Slovenia
Corporate and
Investment Banking in
Slovenia
Financial Markets in
Slovenia
Strategic Foreign
Markets
Other
Non-Core Members
Profit b .t . (in EUR millions)
Contribution to Group’s profit b .t .
Total assets (in EUR millions)
% of total assets
CIR
Cost of risk (bps)
578
100%
25,942
100%
45 .9%
-7
182
31%
3,791
15%
41 .9%
56
87
15%
3,376
13%
47 .1%
-36
35
6%
7,232
28%
24 .5%
/
292
50%
11,059
43%
46 .4%
-13
-7
-1%
436
2%
240 .0%
/
-10
-2%
47
0%
/
/
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 the Group's revenues .
66
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
6 N Banka is included in the segment analysis for the years 2023 and 2022 as an independent legal entity; in the segment analysis
for the year 2023, it is included with the result for the period 1 January – 31 August 2023.
Contents
Financial and Business Performance
Table 15: Key performance indicators of NLB(i)
NLB, Ljubljana
NLB, as Slovenia’s largest and systematically
important bank, has demonstrated remarkable
business resilience in the dynamic economic landscape
this year . Bolstered by the successful merger with
N Banka in September, the Bank has expanded
its footprint, securing a substantial market share,
including in both retail and corporate lending . In
2023, NLB achieved a milestone with a record-high
profit . The interest rate environment contributed to a
considerable increase in net interest income .
Moreover, income from dividends (EUR 145 .3 million),
the release of impairments of equity investments
(EUR 97 .8 million), and deferred tax assets
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
(EUR 61 .9 million) materially added to the overall result .
Equity
Demonstrating responsibility as a key player in the
market, NLB proactively addressed the aftermath of
August’s floods in Slovenia . The Bank donated
EUR 4 .0 million to the 20 affected municipalities and
made a one-time payment of EUR 5 .0 million to the
Reconstruction Fund, showcasing its commitment
to corporate social responsibility and
community welfare .
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
2023
2022
Change YoY
in EUR thousands
372,566
265,946
-237,864
78,098
478,746
514,287
177,027
189,153
-207,866
5,756
164,070
159,602
16,014,776
13,939,333
7,156,068
7,276,656
6,062,305
6,157,442
11,881,563
10,984,411
2,249,451
1,602,870
25 .2%
2 .8%
27 .9%
3 .5%
37 .3%
25 .6%
1 .5%
10 .2%
1 .2%
56 .8%
138,004
111,170
1 .2%
30 .2%
60 .2%
1 .1%
27 .6%
55 .2%
110%
41%
-14%
-
192%
-
15%
18%
18%
8%
40%
-0 .3 p .p .
1 .3 p .p .
17 .7 p .p .
2 .3 p .p .
-19 .5 p .p .
24%
0 .0 p .p .
2 .6 p .p .
5 .0 p .p .
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements. Merger of NLB and N Banka on 1 September 2023.
EUR 514
million
result a.t.
49%
contribution to
NLB Group’s
result a.t.
30 .2%
market share
by
total assets
Largest
bank
in the country
(by total assets)
67
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 16: Key performance indicators of N Banka(i)
2023
2022
Change YoY
in EUR thousands
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
CIR
NPL volume
NPL ratio (internal def .: NPL/Total loans)
Market share by total assets
LTD
27,822
5,225
-16,811
511
16,747
13,389
25,270
10,453
-22,976
925
13,672
11,085
1,293,280
939,238
955,035
898,768
186,423
21 .4%
2 .0%
64 .3%
23,633
1 .9%
2 .6%
10%
-50%
27%
-45%
22%
21%
-
-
-
-
-
-21 .4 p .p .
-2 .0 p .p .
-64 .3 p .p .
-
-1 .9 p .p .
-2 .6 p .p .
104 .5%
-104 .5 p .p .
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements. N banka's internal calculation of net interest margin and
total capital ratio. Data for 2022 are for the period March-December. Data for 2023 are for the period January-August, merger of NLB and N Banka on
1 September 2023.
Table 17: Capital realisation YoY and surplus of NLB
Common Equity Tier 1 capital (CET1)
Tier 1 capital
Total capital
Total risk exposure amount (RWA)
Common Equity Tier 1 Ratio
Tier 1 Ratio
Total Capital Ratio
31 Dec 2023
31 Dec 2022
Change YoY
1,734 .6
1,816 .6
2,324 .1
9,207 .5
18 .8%
19 .7%
25 .2%
1,414 .7
1,496 .7
2,004 .2
7,832 .7
18 .1%
19 .1%
25 .6%
319 .9
319 .9
319 .9
1,374 .8
0 .8 p .p .
0 .6 p .p .
-0 .3 p .p .
in EUR millions
Surplus
31 Dec 2023
1,045 .9
989 .8
1,313 .1
11 .4 p .p .
2 .9 p .p .
4 .2 p .p .
68
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
… as well as the dignified
handling of defeats, we
find inspiration .
Cedevita Olimpija
basketball team
The pursuit
of excellence
knows no
boundaries .
Retail Banking
in Slovenia
The Bank has prioritised customers’ needs and experience and recently integrated N Banka, thereby strengthening
its position as the market leader in retail banking . The Bank offers tailored product and service options to cater to
different customer segments, and it is accessible through various channels such as traditional branch offices, a mobile
branch on wheels, and an extensive ATM network, ensuring that customers can conveniently reach the Bank anytime,
anywhere . The Bank proudly offers clients 24/7 access to its services via the Contact Centre and digital banking
and remains committed to delivering the highest standards of excellence in everything it does . The Bank’s primary
objective is to strive to be the best and most innovative bank, particularly in providing digital services to its customers,
leveraging its strategic assets and transforming the sales process to enhance the user experience .
Figure 33: Contribution to NLB Group
Financial and Business Performance
Table 18: Performance of the Retail Banking in Slovenia segment
Result b.t.31%
32%
Net interest income
39%
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 commission income
Total net operating income
Total costs
Result before impairments and provisions
Impairments and provisions
Share of profit from investments in
associates and joint ventures
Result before tax
Net loans to customers
Gross loans to customers
Housing loans
Interest rate on housing loans(ii)
Consumer loans
Interest rate on consumer loans(ii)
NLB Lease&Go, Ljubljana
Other
Deposits from customers
Interest rate on deposits(ii)
Non-performing loans (gross)
Cost of risk (in bps)
CIR
Net interest margin(ii)
31 Dec 2023
31 Dec 2022
Change YoY
2023
264 .7
87 .2
177 .5
102 .3
114 .1
367.0
-153 .8
213.2
-32 .6
1 .1
181.7
2022
104 .8
95 .8
9 .1
106 .7
113 .2
211.5
-144 .0
67.4
-21 .4
0 .8
46.8
3,586 .5
3,641 .0
2,430 .8
2.35%
722 .1
7.11%
69 .0
419 .2
9,085 .8
0.05%
67 .7
3,694 .2
3,760 .8
2,483 .5
3.07%
818 .5
8.14%
98 .2
360 .6
9,357 .8
0.32%
77 .3
2023
56
41 .9%
4 .17%
in EUR millions consolidated
Change YoY
159 .9
-8 .5
168 .4
-4 .4
0 .9
155.5
-9 .8
145.7
-11 .2
0 .3
134.9
107 .7
119 .8
52 .7
0.72 p.p.
96 .5
1.03 p.p.
29 .2
-58 .6
272 .0
0.27 p.p.
153%
-9%
-
-4%
1%
74%
-7%
-
-52%
37%
-
3%
3%
2%
13%
42%
-14%
3%
9 .6
14%
2022
Change YoY
58
68 .1%
1 .70%
-3
-26 .2 p .p .
2 .48 p .p .
(i) Net interest income from assets and liabilities using Fund Transfer Pricing (FTP).
(ii) Net interest margin and interest rates before the merger of NLB and N Banka only for NLB. The segment’s net interest margin is calculated as the ratio
between annualised net interest income (i) and the sum of average interest-bearing assets and liabilities divided by 2.
70
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Net interest income experienced a substantial YoY
increase, primarily driven by higher volumes and the
positive impact of the key ECB interest rate hike on the
segment’s income from clients’ deposits . The average
interest rate on deposits increased by 27 bps YoY by
providing more attractive offerings on interest rates for
term deposits and savings accounts for individuals –
which clients perceived positively . Consequently, the
deposit base increased by 3% YoY, with a shift towards
long-term deposits . The term deposit volume in 2023
increased by over EUR 350 million, particularly in the
last four months of 2023 . Solid growth in the volume of
30.2% and 29.8%
market share in
housing loans and
consumer loans
The segment’s total costs increased YoY due to general
inflationary trends within the region, investments into
loans to individuals was also recorded, with stable new
technology enhancements, and the integration process
loan production of housing loans and higher new
of NLB and N Banka .
production of consumer loans, especially in the second
half of the year (EUR 394 .1 million new deals were
approved in 2023 vs . EUR 268 .3 million in 2022) . This
increase is related to the adjustments of
macroprudential restrictions on consumer lending,
Impairments and provisions for credit risk were
net established due to the portfolio development,
repayments of written-off receivables and changes
in models . Other provisions were related to potential
which changed the minimum creditworthiness amount
liability concerning the pending fee repayments .
for consumers .
Net fee and commission income remained stable YoY .
The positive impact of increased economic activity
The operational merger of N Banka was successfully
completed at the beginning of September . With the
merger, the Bank again confirmed its systemically
and consumption, with an additional positive influence
important position in the market . The market share in
on fees from the increase of investment in funds and
retail lending and deposit-taking stayed at the same
bancassurance business, was entirely offset by the
level at 29 .5% and 33 .5%, respectively . The retail part of
cancellation of the high balance deposit fee – which in
NLB Lease&Go, Ljubljana, continued growing steadily
2022 amounted to EUR 1 .8 million .
and recorded a 42 .3% portfolio increase YoY .
Customer experience
is our focus
The Bank’s product and service development is
primarily driven by the requirements and expectations
of its clients . In addition, the Bank tailors its offer to suit
specific segments and devises processes to support its
clients’ life situations . The sales approach and the offer
are uniquely tailored to each segment, serving as the
foundation for the Bank’s initiatives and business
models . To enhance user experience, the Bank is
broadening its spectrum of services to cater to an array
of diverse segments .
Successful migration
and integration of
N Banka clients
In Valicon’s Client Satisfaction Survey (CSS), the
Customer Satisfaction Index indicator measures
long-term relationship with clients . The Net Promoter
Score (NPS) indicates transactional satisfaction after
a completed service . The Bank’s client satisfaction
remained stable and better than the competition in
2023 . Furthermore, clients expressed a higher level of
satisfaction with the Bank’s advisors . Kindness and
competence are valued the most and are the main
reasons for high client satisfaction (80 vs . 73 for the
competition) . The NPS for 2023 shows a stable level of
satisfaction with a value of 61 (the benchmark for the
financial sector in 2023 is 52 based on SurveyMonkey
global benchmark), influenced mostly by the high
satisfaction with advisory service .
Figure 34: Market share of net loans to individuals and market share of deposits from individuals
26.9%
24.4%
30.5%
29.6%
30.2%
29.8%
33.9%
15.2%
7.3%
36.1%
21.5%
9.8%
36.9%
25.1%
31 Dec 2021
31 Dec 2022
31 Dec 2023
31 Dec 2021
31 Dec 2022
31 Dec 2023
experience .
Housing loans
Consumer loans
Sight deposits
Short-term deposits
Long-term deposits
In the integration process, clients of N Banka have
switched to NLB services and solutions . In addition, the
Bank introduced some of its established good practices
5.8%
and services, such as a revolving card offer and a
partnership model, focusing on providing a positive user
71
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Added value for our clients
Private banking is a leading banking provider for
this segment in the market and an integral part of the
In cooperation with NLB Lease&Go, Ljubljana, the
Bank extended its range of financial services to private
Bank’s offering, showing a substantial 24% YoY growth
individuals . Clients can now visit the branch offices
in assets under management . Also, the client base has
for expert advice and high-quality financial services
expanded notably by 17% YoY to 2,347 clients . Products
to choose the best leasing solution that is tailored to
and services are carefully selected and tailored to meet
their needs . The NLB Quick Leasing model covers the
the unique needs of these clients . The Bank provides
digital aspect, enabling simple and quick car financing
comprehensive wealth manage-ment, combining
approval through an E2E digital process .
banking and financial products, along with a full
spectrum of advisory services . Dedication to providing
exceptional service has been recognised by Euromoney,
The Bank is the largest provider of bancassurance
on the market, with the insurance companies Vita,
which awarded the Bank’s Private Banking segment
življenska zavarovalnica, Generali Zavarovalnica, and
as Slovenia’s Best Private Bank for High Net Worth
Individuals in 2023 .
Figure 35: Assets under management and the number of
private banking clients
1,800
1,243
2,000
1,377
1,580
1,075
2,347
1,711
Zavarovalnica Triglav being its long-term partners .
Moreover, Vita’s model of exclusive distribution of life
and health insurance products again resulted in record
business volume for these insurance types . Vita also
introduced new health insurance, NLB Vita Diseases,
which provides coverage in the event of one or more
severe illnesses and further improved its digital footprint
within Bank’s digital solutions .
Figure 36: Active clients’ penetration(i) of ancillary business
16.8%
17.1%
17.4%
17.1%
9.4%
10.3%
10.6%
10.9%
2.2%
2.5%
2.6%
2.2%
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2023
NLB Skladi
Vita
Generali
(i) Drop in bancassurance product due to migrated N Banka’s clients
Strong and stable
market position in
lending, deposits, and
asset management
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2023
AuM (in EUR millions)
# of Clients
NLB Skladi, Slovenia’s largest asset management
company, maintains a high market share of 39 .6% .
Net inflows in 2023 amounted to EUR 171 .3 million,
accounting for 50 .5% of all net inflows in the market .
The total assets under management grew by 20% YtD
to reach EUR 2,360 .3 million, of which EUR 1,896 .3 million
is from mutual funds and EUR 464 .0 million is from the
discretionary portfolio .
72
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Top Retail banking
institution in Slovenia
Launch of new digital
bank NLB Klik
Approaching clients
Customers’ digital activity continues rising, driven
entirely by mobile, impacted by customer base
demographics . To grow mobile usage even more, the
Bank will continue to add a broader range of servicing
functionalities to the new omnichannel solution NLB
Klik . A more comprehensive range of services will boost
higher digital adoption and engagement . With the new
solution, the Bank witnessed another boost in active
digital users by 14% YoY and active digital penetration
by 5 .5 p .p . YoY .
Figure 37: Digital penetration(i)
also upgraded ATMs to be more friendly to blind and
visually impaired customers .
The Bank is proactively promoting the digitisation of
payments through various activities . The Group’s mobile
wallet NLB Pay was significantly improved to become
the digital wallet of choice, with Google Pay being an
option for paying, Flik P2P (person-to-person), and
e-commerce payments gained significant traction and
boosted use and improved various customer journeys .
The Bank has also offered the most flexible credit
card 3-in-1 feature, offering to customers all relevant
financing options on credit cards: charge, revolving, or
instalment options .
The implementation of the new Group’s mobile
POS terminal solution, the NLB Smart POS, was
well-received by micro-segment, small businesses,
and other merchants, enabling them to provide simple,
61%
fast, and safe services .
56%
Figure 38: NLB Pay volume of transactions (in EUR thousands)
49%
43%
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2023
(i) Share of active digital users in # of clients with an active transactional
account.
When introducing changes, the Contact Centre (CC), the
only 24/7 available banking contact point in Slovenia,
12,577
122,952
+108.7%
58,924
36,218
plays a crucial role for the Bank’s clients who need
assistance or have inquiries regarding the Bank’s
products or channels . It is also well-accepted as a
virtual bank for contracting new products, as 11% of
consumer loans and overdraft sales were completed
via the CC in 2023 .
The Bank is promoting the advisory role of its
branch offices, focusing on shifting transactional
business to digital and card-based services . The goal
of this redirection is to decrease cash-based
transactions . With an increasing number of clients using
digital banking and 24/7 accessible channels such as CC
and ATMs, the Bank is closer to achieving its goal . With
one of the largest ATM networks in the country, the Bank
2020
2021
2022
2023
The Bank has introduced the possibility of returning
part of the value of purchases to customers called
NLB Cashback for card payments . The service, also
implemented across the Group, is a novelty in the
Slovenian market . The City of Ljubljana has become
the first open loop transit city in the region, as the
Bank introduced a transit-ready solution for cards
acceptance for transit payments .
73
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Corporate and Investment
Banking in Slovenia
The Bank reaffirmed its position as a leading and systemic player in its home region . It continues to support
corporate clients with daily banking and tailor-made comprehensive solutions, including trade finance, corporate
finance, and cross-border financing . The Bank also strongly emphasises sustainability in all its operations .
25 .7%
market share in loans
to customers
Figure 39: Contribution to NLB Group
Financial and Business Performance
Table 19: Performance of the Corporate and Investment Banking in Slovenia segment
Result b.t.15%
13%
Net interest income
16%
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 commission income
Total net operating income
Total costs
Result before impairments and provisions
Impairments 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(ii)
Investment banking
Restructuring and Workout
NLB Lease&Go, Ljubljana
State
Interest rate on State loans(ii)
Deposits from customers
Interest rate on deposits(ii)
Non-performing loans (gross)
Cost of risk (in bps)
CIR
Net interest margin(ii)
in EUR millions consolidated
Change YoY
2023
106 .5
62 .2
44 .3
42 .7
40 .2
149.2
-70 .2
79.0
7 .9
86.9
2022
52 .9
53 .7
-0 .8
52 .3
43 .6
105.2
-65 .1
40.1
12 .2
52.3
53 .5
8 .5
45 .1
-9 .5
-3 .3
44.0
-5 .1
38.9
-4 .2
34.6
31 Dec 2023
31 Dec 2022
Change YoY
3,360 .2
3,413 .2
3,306 .7
3,049 .5
4.54%
0 .1
97 .7
159 .4
105 .6
5.95%
2,471 .8
0.28%
61 .8
2023
-36
47 .1%
3 .55%
3,370 .1
3,424 .6
3,311 .5
3,129 .9
1.95%
0 .1
60 .8
120 .7
112 .9
2.59%
2,731 .0
0.07%
67 .6
2022
-42
61 .9%
1 .80%
-9 .9
-11 .3
-4 .8
-80 .4
2.59 p.p.
0 .0
36 .9
38 .7
-7 .3
3.36 p.p.
-259 .1
0.21 p.p.
-5 .8
Change YoY
6
-14 .8 p .p .
1 .74 p .p .
101%
16%
-
-18%
-8%
42%
-8%
97%
-35%
66%
0%
0%
0%
-3%
8%
61%
32%
-6%
-9%
-9%
74
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
(i) Net interest income from assets and liabilities using FTP.
(ii) Net interest margin and interest rates before the merger of NLB and N Banka only for NLB. The segment’s net interest margin is calculated as the ratio
between annualised net interest income (i) and the sum of average interest-bearing assets and liabilities divided by 2.
Contents
In Corporate and Investment Banking, the Bank
continues its long tradition and commitment to
Net fee and commission income decreased YoY due to
the cancellation of the high balance deposit fee, which
Following the August floods, the Bank has taken
immediate measures to support the economy to recover
sustainable and long-term business relationships .
amounted to EUR 5 .7 million in 2022, partially offset
from the consequences of the floods, including a more
Cooperating with almost 11,000 corporate clients, the
by higher fees from guarantees (EUR 1 .3 million) and
favourable loan line of EUR 100 million, and a moratorium
business’s principal revolves around customer centricity
payment transactions (EUR 0 .6 million) .
on the repayment of loan obligations, if required .
and addressing clients’ actual needs . The Bank provides
extensive and customised financial solutions to support
the broader economy .
NLB is the first choice
for corporate clients
in Slovenia
In 2023, the Bank successfully organised nine regional
events for its corporate clients, with topical themes on
ESG: Thinking Entrepreneurially, Acting Sustainably
(Taxonomy) and AI: Artificial and Human Intelligence
Partnering for Business Success .
The segment faced 8% YoY higher costs as operating
costs increased, stemming from the general inflationary
trends within the region, investments into technology
enhancements, and the integration process of NLB and
N Banka .
Impairments and provisions were net released in
the amount of EUR 7 .9 million due to the portfolio
development and successful workout resolution .
The volume of gross loans decreased by EUR 11 .3 million
YoY, primarily due to EUR 120 million repaid extraordinary
liquidity credit lines from the energy sector, which was
approved in December 2022, and less predictable
business environment influencing corporate clients to
In September, the Bank successfully migrated and
be more cautious when taking business decisions and
integrated N Banka’s clients .
investing in development projects . However, the Bank has
been steadily increasing its market share in loans to the
Figure 40: Market share in Corporate Banking in Slovenia
current 25 .7% .
39.0%
38.6%
25.3%
23.8%
25.7%
23.4%
31.5%
20.0%
18.3%
31 Dec 2021
31 Dec 2022
31 Dec 2023
Market share in loans to customers
Market share in deposits from customers(i)
Market share in guarantees and letters of credit
(i) Change in methodology, received loans are excluded from the
calculation.
Similar to the retail segment, the notable YoY rise in
net interest income was primarily driven by the loan
volume and deposit margin . Deposit interest rates, being
less sensitive to market rate volatility, earned a higher
segment income in a rising market rate environment,
considering the short maturity of the deposit base . In
contrast, the loan market has become increasingly
competitive, and client rates have not increased fully to
reflect recent market rate movements, resulting in slight
decrease in interest margins on the loan portfolio .
The volume of deposits decreased by 9% YoY, due to
the high price elasticity of certain large corporate clients
and slight decline in market share . Nevertheless, the
Bank kept a solid deposit base, with most clients having
house-bank relationships .
Comprehensive solution
offering
Sustainable Finance
Corporate Banking continued with successful financing
of the green transformation project throughout the
region, encompassing the renovations of electricity
distribution networks in Slovenia, the construction of
a wind farm in the region, energy renovation of larger
buildings, and the establishment of electric battery
production in Slovenia . The Bank is increasing its share
of financing the green transformation of Slovenian
companies and beyond .
Trade finance solutions
In the trade finance, the Bank maintains its leading
position in the region, with a 38 .6% market shares . The
guarantee portfolio increased by 29 .5% compared to
the previous year .
The Bank’s guarantees support all major infrastructure
projects in Slovenia and the region . Through all types
of letters of credit, which are also structured to enable
financing, the Bank reduces payment and performance
risks for exporters and importers .
A strong focus has been given to purchasing the
receivables business, including introducing a reverse
factoring product developed in Q4 2022 .
Cross-Border Financing
Cross-Border activities have seen substantial
development in 2023 . Key highlights include EUR 175
million of signed loan facilities in 2023, combined
with EUR 435 million in outstanding portfolio, and
additionally EUR 100 million in still undisbursed loans by
the end of 2023 . Most of these financings were intended
to support green and sustainable projects (newly signed
loans at approx . EUR 50 million) in the home region
while supporting other key industries like infrastructure,
energy, and real estate .
Outside the home region, activities were concentrated
on granting Schuldschein loans to major international
investment-grade-rated companies from the Nordics
and Western Europe . Additionally, there has been a
38 .6%
market share in guarantees
and letters of credit
75
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
acceptance for transit payments on city buses in the
Slovenian capital .
Figure 41: Transaction volume in acquiring (in EUR millions)
76
in 2023 increased by 15% and reached EUR 191 .3 million
e-commerce
strong emphasis on forming strategic partnerships
with key stakeholders (developers, equity/quasi-equity
providers, investors, and commercial and development
The Bank remains among the top Slovenian players
in custodian services for Slovenian and international
clients . The total value of assets under custody on
banks), especially in the sustainable finance universe,
domestic and foreign markets has increased throughout
both regionally and globally .
the year, amounting to EUR 18 .6 billion at the end of the
year (31 December 2022: EUR 16 .4 billion) .
Successful migration
and integration of
N Banka clients
Investment banking & Custody
The Bank executed clients’ buy and sell orders in the
amount of EUR 942 .6 million within brokerage services
in 2023 . In dealing with financial instruments, the Bank
conducted foreign exchange spot deals amounting
to EUR 1,094 .8 million, and transactions involving
derivatives reached EUR 173 .4 million in 2023 .
The NLB trading platform has been thriving, offering
clients the best possible interaction with the Bank for
executing financial instrument deals . The services for
buying and selling physical gold, introduced last year,
have also shown considerable growth and high interest
on the clients’ side in 2023 .
Leasing financing
Intermediary business for NLB Lease&Go, Ljubljana, has
also been the focus of the Bank’s commercial activities,
providing clients with the best possible financing
solutions for financing vehicles and equipment . In NLB
Lease&Go, Ljubljana, the total volume of new business
(including short-term financing), which had the effect
on increased balance of leasing portfolio at year end of
2023 by EUR 38 .7 million or 32% compared to 2022 .
End-to-end leasing applications have gained further
validity and usefulness . They have started to be used on
the market, mainly through intermediaries – vehicle
broker-dealers (partners), which enables a fast and
smooth leasing process from start to finish .
Digital payments
In the area of digital payments, the Bank improved its
solutions to corporate clients by revamping NLB Pay and
incorporating Google Pay, transforming it into a virtual
The Bank has been actively involved in the financial
or smart wallet that enables payments . A new payment
advisory business . In addition to the M&A and advisory
method for E-commerce merchants, Flik P2eM, was
business, it was engaged in the organisation of
launched . As the first among Slovenian banks, the Bank
syndicated loans (as a sole mandated lead arranger)
launched the Group’s new mobile POS terminal solution,
in the amount of EUR 304 million (NLB participating in
NLB Smart POS, primarily for the micro-segment and
financing with EUR 162 million), and organising the bond
issuing (as a lead arranger or joint lead arranger) in the
small businesses . With the new app, merchants can
transform their smartphones or tablets into mobile
nominal amount of EUR 523 million .
32%annual growth in NLB
Lease&Go, Ljubljana
corporate portfolio
POS terminals, offering their clients simple, fast, safe,
and contactless payments . In partnership with LPP,
the public transportation company in Ljubljana, the
Bank has introduced a transit-ready solution for card
Strong focus on
green eligible projects
with 11% in total
new business
+48%
113
76
47
55
2020
2021
2022
2023
+13%
3,244
2,865
2,348
2,535
2020
2021
2022
2023
POS
The Bank was the leading bank in the introduction of
instant payments on the Slovenian market and is the
only bank enabling users of m-bank to automatically
send out transactions as instant payments - every day of
the year in Slovenia and the SEPA area .
Flik P2P enables money transfer among all Slovenian
banks’ clients, while Flik P2M payments enable
purchases on NLB POS terminals and on POS terminals
of some other Slovenian banks which have upgraded
their POS .
As the first banking group in the SEE, the Group enables
services arising from the SWIFT Global Payment
Initiative, an international payments service enabling
banks to transfer money faster and more safely
worldwide . At the same time, it enables full tracking of
payment orders and monitoring of related costs .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial Markets in Slovenia
The segment is focused on the Group’s activities in international financial markets, including treasury operations .
This continuous focus was on prudent liquidity reserves management in the changed interest rate environment .
In 2023, the Bank issued its first senior preferred green notes of EUR 500 million .
3 .7 years
average duration of
the banking book debt
securities portfolio
Figure 42: Contribution to NLB Group
Financial and Business7 Performance
Table 20: Performance of the Financial Markets in Slovenia segment
Result b.t.6%
Net interest income5%
Net interest income
Net interest income w/o ALM(i)
o/w ALM
Net non-interest income
Total net operating income
Total costs
Result before impairments and provisions
Impairments and provisions
Result before tax
Balances with Central banks
Banking book securities
Interest rate(ii)
Borrowings
Interest rate(ii)
Subordinated liabilities (Tier 2)
Interest rate(ii)
Other debt securities in issue
Interest rate(ii)
(i) Net interest income from assets and liabilities using FTP.
(ii) Interest rates only for NLB.
in EUR millions consolidated
Change YoY
2023
37 .8
23 .1
14 .6
2 .7
40.4
-9 .9
30.5
4 .8
35.3
2022
47 .3
16 .2
31 .1
-0 .7
46.6
-9 .4
37.2
-3 .4
33.8
-9 .6
6 .9
-16 .5
3 .4
-6.2
-0 .5
-6.6
8 .1
1.5
31 Dec 2023
31 Dec 2022
Change YoY
4,153 .2
2,981 .1
1.17%
82 .8
1.66%
509 .4
6.89%
828 .8
6.56%
3,373 .7
2,993 .3
0.74%
160 .5
-0.72%
508 .8
4.16%
307 .2
6.00%
779 .5
-12 .3
0.43 p.p.
-77 .7
2.38 p.p.
0 .6
2.73 p.p.
521 .6
0.56 p.p.
-20%
43%
-53%
-
-13%
-5%
-18%
-
4%
23%
0%
-48%
0%
170%
77
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
The net interest income was EUR 9 .6 million lower YoY
due to the new bond issuance and further transfer of
There was an increase in balances with the central bank
(EUR 779 .5 million YoY) . The excess liquidity deriving from
ALM results to Retail Banking in Slovenia and Corporate
issued debt securities was placed at the central bank .
and Investment Banking in Slovenia segments, while
Borrowings decreased by EUR 77 .7 million YoY because
interest income from banking book improved .
of the prepayment of TLTRO in the amount of EUR 63
million in H1 .
7 This business overview includes the operations of the Group’s ALM, due to more comprehensive presentation of the operations
on the group level.
Contents
liquidity for different situations, including emergencies
and crisis conditions .
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 treated as inflows
according to LCR calculation . Liquid assets are managed
by each Group member on its own .
Capital, liquidity, and
interest rate risks
management with
an active presence
on capital markets
The Group’s ALM
The Group’s ALM process strategically manages
the Group’s balance sheet concerning the interest
rate, currency, and liquidity risk considering the
macroeconomic environment and financial markets
developments . Monitoring and managing the Group’s
exposure to market risk is decentralised, with uniform
guidelines and limits for each type of risk for individual
Group members .
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, mainly in the form of term deposits . The
Group manages its positions and stabilises its interest
margin through pricing policy adjustments, whereas to
manage interest rate risk exposure, the Group actively
adjusts the average duration of liquidity reserves and
keeps outstanding "plain vanilla" derivatives . Active
profitability management has been supported by a
highly disciplined deposit pricing policy, enabling the
response to a highly competitive loan market all over the
Group’s strategic markets .
63%government securities in
the banking book debt
securities portfolio
Liquidity management
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 .
The Group has developed a comprehensive liquidity
contingency plan (LCP) to ensure an appropriate level of
78
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Wholesale funding
Wholesale funding activities in the Group aim to achieve
diversification, improve structural liquidity and capital
position, and fulfil regulatory requirements, especially
ensuring compliance with the MREL requirements .
The Bank was active in capital markets, issuing its first
green EUR 500 million senior preferred notes with 4NC3
tenor in June for MREL purposes .
NLB Group members were also active in the wholesale
market . More specifically, they obtained funding from
international financial institutions . NLB Banka, Sarajevo
will use its EUR 5 million credit line to meet its MREL
requirement .
First issuance of
senior preferred notes
in green format
on international
capital markets
Table 21: Overview of outstanding NLB notes as at 31 December 2023(i)
in EUR millions
79
Type of bond
ISIN code
Issue Date
Maturity
First call date
Interest Rate
Nominal Value
Senior Preferred
XS2498964209
19 Jul 2022
Senior Preferred
XS2641055012
27 Jun 2023
19 Jul 2025
27 Jun 2027
19 Jul 2024
27 Jun 2026
Tier 2(i)
Tier 2(i)
Tier 2(i)
Tier 2
SI0022103855
6 May 2019
6 May 2029
XS2080776607
19 Nov 2019
19 Nov 2029
XS2113139195
5 Feb 2020
5 Feb 2030
6 May 2024
19 Nov 2024
5 Feb 2025
XS2413677464
28 Nov 2022
28 Nov 2032
28 Nov 2027
10 .750% p .a .
Additional Tier 1
SI0022104275
23 Sep 2022
Perpetual(i)
between
23 Sep 2027 and
23 Mar 2028
Total Tier 2:
9 .721% p .a .
6 .000% p .a .
7 .125% p .a .
Total SP:
4 .200% p .a .
3 .650% p .a .
3 .400% p .a .
300
500
800
45
120
120
225
510
82
(i) Further information is available in the chapter Events After the End of the 2023 Financial Year.
Figure 43: Volume of outstanding NLB notes (in EUR millions)
Total AT1:
Total outstanding:
82
1,392(i)
1,392.0
82.0
510.0
800.0
1,117.5
82.0
535.5
1,107.0
82.0
525.0
500.0
500.0
607.0
82.0
525.0
31 Dec 2023
31 Dec 2024
31 Dec 2025
31 Dec 2026
SP
Tier 2
AT1
Note: Including issued Tier 2 notes of EUR 300 million and repurchase of EUR 219.6 million of two existing Tier 2 notes (both in January 2024). Maturity envisaged
on call date.
Figure 44: Refinancing needs from matured NLB notes (in EUR millions)
54.9
300.0
500.0
10.5
31 Dec 2024
31 Dec 2025
31 Dec 2026
SP
Tier 2
Note: Maturity envisaged on call date.
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB’s banking book debt securities portfolio
Figure 45: Banking book securities portfolio of NLB by asset class and geography as at 31 December 2023 (in EUR millions)
by asset class
by geography
Government
bonds
1,856
EUR 2,928
million
Bank senior
unsecured bonds
552
Covered
bonds
218
GGB
140
Multilateral bank bonds
117
Subordinated debt
38
Corporate bonds
8
Other
895
EUR 2,928
million
Slovenia
636
Ireland
82
Sweden
90
Spain
108
Finland
117
Austria
152
the Netherlands
162
Belgium
191
Germany
191
France
304
The purpose of banking book securities is to provide
liquidity, stabilise the interest margin, and manage
interest rate risk . In 2023, an ongoing goal was to further
Figure 46: Maturity profile of NLB banking book securities as at
31 December 2023
2023 had been sold at the beginning of February 2023,
contributing to the impairment release of EUR 4 .2 million .
diversify the Bank’s banking book securities portfolio,
% of total portfolio
which at the end of 2023 amounted to EUR 2,928 million,
constituting 18 .3% of the Bank’s total assets . At the year-
end, debt securities measured at FVOCI represented
32 .9% of the Bank debt securities portfolio, having a
duration of 2 .7 years, while the duration of the portfolio
measured at AC was 4 .2 years . The negative valuation
of the FVOCI portfolio at year-end amounted to EUR
48 million (net of hedge accounting effects and related
deferred taxes), and unrealised losses from securities
measured at AC amounted to EUR 77 million .
The average duration of the Bank’s banking book debt
securities was approximately 3 .7 years at year-end,
and the average yield on the Bank’s banking book debt
securities portfolio increased by 0 .43 p .p . YoY to 1 .17% .
13%
388
344
32%
935
637
67
45
230
26%
757
635
105
29%
847
592
17
256
2024
2025-2026
2027-2028
2029+
Slovenia
SEE
International
As of year-end, the Bank is no longer exposed to the
Russian Federation . The USD 8 million nominal exposure
that would have otherwise matured in September
As the Group actively works on incorporating ESG in
its business profile, the portfolio reflects the growing
market of ESG bonds . The Bank’s debt securities
portfolio includes EUR 287 million (or 9 .8%) of the ESG
debt securities issued by governments, multilateral
organisations or financial institutions, of which EUR 132
million were bought in 2023 . Additional information is
available in the NLB Group Sustainability Report 2023 .
80
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Inspiration that can
often be transferred to
the business environment
as well .
Slovenian biathlon and
cross-country teams
There's
always room
for faster
times .
Strategic Foreign Markets
The market shares
(by total assets) of
subsidiary banks
reaching or exceeding
10% in five out of
six markets
Figure 47: Contribution to NLB Group
Result b.t.50%
Net interest income51%
46%
Net non-interest
income
The core financial part of the Group in the Strategic Foreign Markets segment consists of six banks, one asset
management company, a captive IT services company, and two leasing companies . The Group banking subsidiaries
are locally firmly entrenched as important financial institutions and market leaders across various business segments
and provide a comprehensive range of financial services to retail and corporate clients . All Group subsidiary banks
have a stable market position and enjoy a robust reputation . The market share of the banking subsidiaries, measured
by total assets, reached or surpassed 10% in five out of six markets .
In 2023, in a rising interest rates environment, the Group banks marked remarkable double-digit growth of gross
loans to customers, above the local market average, especially in the retail segment, thereby contributing to the
overall economic development of local countries’ households and supporting green financing .
In line with the self-funding strategy, the Group banks attracted new depositors (9% YoY growth), adapting to
prevailing market conditions, thus ensuring organic growth and keeping optimal balance sheet structure .
The Group banks’ ESG and CSR activities were continuously upgraded by supporting the financial literacy of clients,
organising the #FrameOfHelp project for small entrepreneurs, tree planting activities, and many more events, as
stated in the Group Sustainability report .
In 2023, the Group banks accelerated their digital transformation by automating processes and offering various
digital solutions to clients, thus bringing, first in some markets, various solutions further boosting digital penetration
by almost doubling the number of digital users .
For their efforts in digital solutions and green financing, several Group banks received notable awards for their
contribution to the local countries of operation .
Leasing operations continued with solid growth, especially in Serbia, by achieving a market share in new
production of 11 .5% .
Six subsidiary banks,
two leasing companies,
one IT services
company, and one
investment fund
company
Profit before tax
EUR 291 .5
million
56% higher
compared to last year
82
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial and Business Performance
Table 22: Results of the Strategic Foreign Markets segment
in EUR millions consolidated
Change YoY
NLB Lease&Go Leasing, Beograd realised a
remarkable growth in new financial leasing financing of
Net interest income
Interest income
Interest expense
Net non-interest income
o/w Net fee and c ommission income
Total net operating income
Total costs
Result before impairments and provisions
Impairments and provisions
Result before tax
o/w Result of minority shareholders
Net loans to customers
Gross loans to customers
Individuals
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)
CIR
Net interest margin
2023
423 .2
472 .5
-49 .3
118 .4
124 .1
541.6
-251 .2
290.4
1 .1
291.5
12 .6
2022
298 .0
322 .8
-24 .8
129 .5
118 .7
427.6
-228 .1
199.4
-12 .3
187.1
11 .0
125 .2
149 .7
-24 .5
-11 .1
5 .4
114.0
-23 .1
91.0
13 .4
104.4
1 .7
31 Dec 2023
31 Dec 2022
Change YoY
6,648 .1
6,839 .8
3,525 .6
6.63%
3,042 .9
5.37%
271 .4
7.13%
8,878 .3
0.38%
134 .0
2023
-13
46 .4%
4 .19%
6,077 .5
6,271 .4
3,221 .0
5.66%
2,869 .0
3.84%
181 .4
3.65%
8,171 .2
0.17%
160 .6
2022
7
53 .4%
3 .14%
570 .6
568 .5
304 .6
0.97 p.p.
173 .9
1.53 p.p.
90 .0
3.48 p.p.
707 .1
0.21 p.p.
-26 .7
Change YoY
-20
-7 .0 p .p .
1 .05 p .p .
Amid an increasing interest rate environment,
persisting pricing pressures, and regulatory changes
The volume of the loans increased 9% YoY . The most
significant increase in gross loans to customers was
and interventions, and despite signs of an economic
achieved by NLB Banka, Prishtina (12% YoY), NLB Banka,
slowdown, the banking members from the Group
Sarajevo (10% YoY), NLB Banka, Podgorica (9% YoY)
continued to grow, which resulted in remarkable 2023
and NLB Komercijalna Banka, Beograd (9% YoY) . High
results . Serving various business segments of clients, the
performance in new business production continued in the
banks exhibit solid liquidity and capital .
corporate and retail segments as several products and
services were upgraded, which included streamlining and
modernising their distribution network and improving
their digital offering .
42%
46%
-99%
-9%
5%
27%
-10%
46%
-
56%
15%
9%
9%
9%
6%
50%
9%
EUR 85 .3 million YoY by increasing the financial leasing
market share in the country’s new leasing production to
approximately 11 .5% .
The higher interest rate environment and economic
contraction affected customers’ behaviour . The overall
confidence remained strong, and the total customer
deposit base increased by 9% YoY . The net interest
income increased by EUR 125 .2 million YoY due to higher
volumes and interest rate hikes . All banking members
recorded a double-digit increase YoY, with the highest
impact in an interest rate increase in NLB Komercijalna
Banka, Beograd, of EUR 77 .9 million YoY, due to a high
portion of the portfolio at the variable interest rates .
The net fee and commission income increased by
EUR 5 .4 million due to higher volumes of card business
and payments, repricing activities and increased sale
of bancassurance products . Nevertheless, the total
net non-interest income of the segment decreased by
EUR 11 .1 million YoY due to a EUR 15 .3 million modification
loss related to interest rate regulation on housing loans
-17%
in NLB Komercijalna Banka, Beograd .
Total costs increased by EUR 23 .1 million YoY due to
higher operating costs resulting from inflationary
pressures and increase in leasing activities . However,
the CIR of the segment improved to 46 .4% .
Impairments and provisions were net released in
EUR 1 .1 million due to successful NPL resolution .
The banking members
as leading financial
institutions in the
SEE markets, leasing
financing is growing
83
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Figure 48: Result after tax of strategic NLB Group banks (in EUR millions)
+100%
132.3
66.0
+18%
44.5
37.9
+26%
24.3
19.3
+12%
11.4 12.8
+11%
36.0
32.4
+60%
26.7
16.6
NLB Komercialna
Banka, Beograd(i)
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
2022
2023
(i) Merger of NLB Komercijalna Banka, Beograd and NLB Banka, Beograd on 30 April 2022. The profit of NLB Komercijalna Banka, Beograd in 2022 does
not include the profit of NLB Banka, Beograd (EUR 2.2 million).
The rising interest rates on the market supported SEE
production was still high, significantly outperforming the
banking members’ results, thus showing a net interest
local markets, especially in consumer loans . The highest
margin between 3 .03% (NLB Banka, Sarajevo) and
increase in loans to individuals was achieved by NLB
4 .75% (NLB Banka, Podgorica) .
Retail Banking
Despite the loan squeeze due to increasing interest
rates, the banking members realised robust new
retail loan production of 9% YoY . The loan portfolio to
individuals increased in all banking members . New loan
Banka, Prishtina, and both Bosnian banks with double-
digit growth, followed by other banks in the region with
the single-digit growth of the loan portfolio .
Moreover, all the banks in the Group increased
their market share in consumer lending from
0 .1 p .p . to 1 .8 p .p . YoY . NLB Banka, Banja Luka achieved
an impressive growth of 1 .8 p .p . market share YtD,
following NLB Komercijalna Banka, Beograd (0 .6 p .p .),
NLB Banka, Skopje (0 .8 p .p .), NLB Banka, Prishtina
(0 .6 p .p .), and NLB Banka, Sarajevo (0 .1 p .p .) . In terms
of housing loans, NLB Banka, Banja Luka marked
a remarkable boost of 1 .3 p .p ., followed by NLB
Komercijalna Banka, Beograd (0 .6 p .p .), NLB Banka,
Podgorica (0 .3 p .p .) and NLB Banka, Skopje (0 .3 p .p .) .
New production in ESG loans accelerated in 2023
with the offering of various NLB Green Loans through
partners – Eco mortgage loans through business
partners, Eco home appliance loans, electric and hybrid
vehicles, and so forth .
Turbulences in the banking sector at the beginning of
the year increased client concerns over their deposits .
The Group banks retained customer confidence as the
total segment deposits from individuals increased by 5%
YoY .
Corporate Banking
The banking members maintained a positive trend in
approving new financing and attracting new corporate
clients . The portfolio to corporate clients recorded a
6% YoY growth, with the highest growth levels achieved
in NLB Komercijalna Banka, Beograd, NLB Banka,
Sarajevo and NLB Banka, Prishtina with low-double or
high-single digit growth .
The banks continued with sustainable financing by
supporting green investments, particularly in solar
power plants and energy efficiency .
The SEE banks attracted corporate deposits by boosting
corporate balances of the segment by 17% YoY .
84
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Despite a considerable drop in housing loan demand
Financial position statement indicators
in 2023, the bank marked growth over the market . The
Total assets
NLB Komercijalna
Banka, Beograd
In 2023, the bank achieved remarkable profitability
with growth of its net profit by 100% . The bank
managed to increase lending activities in all segments
significantly and, throughout the year, achieved
higher growth than the market while improving
the quality of the loan portfolio by embedding it as
a leading banking institution in the local market .
increased interest rates also served as a important
factor of profit growth .
NLB Komercijalna Banka, Beograd started the
complete transformation of the business model
by introducing an agile, simple, and fast working
model, digitalising products and services, and putting
a sustainability concept at the centre of business
decisions . In 2023, the bank was awarded a digital
award for the first time for "Welcome to the Bank
of Real Opportunities" for two socially responsible
campaigns – "NLB Organic" and "NLB Frame of Help"
as well, and the bank became the first certified
family-friendly bank in Serbia .
EUR 132
million
result a.t.
24%
contribution to
NLB Group’s
result a.t.
9 .9%
market share
by
total assets
5th
largest bank
in the country
Financial and Business Performance
Table 23: Key performance indicators of NLB Komercijalna Banka, Beograd(i)
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
Result before tax
Result after tax
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
2023
2022
Change YoY
in EUR thousands
211,296
49,686
-113,634
1,933
149,281
132,313
5,019,429
2,811,599
2,848,543
4,004,112
827,575
27 .1%
4 .7%
16 .9%
2 .8%
43 .5%
22,490
0 .6%
9 .9%
70 .2%
124,269
58,805
-102,137
-11,801
69,136
66,014
4,670,405
2,589,222
2,624,735
3,692,213
737,972
24 .6%
3 .0%
9 .6%
1 .5%
56 .6%
32,519
1 .0%
10 .0%
70 .1%
70%
-16%
-11%
-
116%
100%
7%
9%
9%
8%
12%
2 .5 p .p .
1 .7 p .p .
7 .3 p .p .
1 .3 p .p .
-13 .1 p .p .
-31%
-0 .4 p .p .
-0 .1 p .p .
0 .1 p .p .
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements. In April 2022, NLB Banka, Beograd merged with Komercijalna
Banka, Beograd. Key financial indicators (ROE a.t., ROA a.t., CIR and net interest margin) for 2022 calculated for the merged bank.
Retail banking
Despite operating in a challenging environment,
Corporate banking
The corporate segment in 2023 observed a 6%
the retail segment recorded 5% YoY growth in gross
growth in gross loans . The bank aimed to build a
loans over the average market growth, driven mainly
strong value proposition for all products and services
by increased volume of consumer loans . The bank
continued to gain the growth of the market share of
in the cross and upselling program, which also brought
added-value to customers .
retail loans to 12% .
Significant double-digit growth in consumer loans was
confirming its commitment to the green agenda and
marked (10% YoY) by increasing the market share to
ESG targets by supporting the increase of renewable
10 .4% . Despite a decline in demand in the housing
energy in Serbia . The bank also approved several project
segment, growth above the market peers was achieved
financings for important real estate developments and
The bank participated in green project financing, thus
at 4% YoY, thus boosting the share in the housing
segment by 40 bps to 12 .7% .
The deposit base increased by 5% YoY . The interest
margin in the retail segment was still high, but under
intense pressure from competition .
sovereign funding for road infrastructure development .
85
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial and Business Performance
Table 24: Key performance indicators of NLB Banka, Skopje(i)
2023
2022
Change YoY
in EUR thousands
NLB Banka, Skopje
The bank is a leading banking institution in the local
market and is identified as a systemically important
bank . In 2023, its success was once again confirmed
and recognised by receiving several prestigious
awards in the fields of banking, outstanding growth
Key performance indicators
Net interest income
Net non-interest income
in cashless payment systems of the country, and
Total costs
demonstrated humanity and solidarity .
Impairments and provisions
The bank continues to support the country’s
population and economy . The focus remains on
digitalisation, improving digital channels to increase
customer digital penetration, improve customer
experience, and expand the portfolio of products and
services with a particular focus on "green" products, as
well as socially responsible projects for caring for their
employees and the community in its entirety .
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
65,406
21,198
-36,416
-761
49,427
44,517
1,902,260
1,216,188
1,276,133
1,499,509
279,987
18 .9%
3 .7%
16 .5%
2 .4%
42 .0%
48,791
3 .1%
15 .6%
81 .1%
53,932
21,948
-31,778
-2,434
41,668
37,874
1,847,521
1,170,692
1,234,343
1,462,015
265,844
18 .2%
3 .1%
15 .0%
2 .1%
41 .9%
54,549
3 .6%
16 .3%
80 .1%
21%
-3%
-15%
69%
19%
18%
3%
4%
3%
3%
5%
0 .7 p .p .
0 .5 p .p .
1 .5 p .p .
0 .3 p .p .
0 .2 p .p .
-11%
-0 .5 p .p .
-0 .7 p .p .
1 .0 p .p .
EUR 45
million
result a.t.
7%
contribution to
NLB Group’s
result a.t.
15 .6%
market share
by
total assets
3rd
largest bank
in the country
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements.
Retail banking
The gross loans experienced significant YoY growth of
10% with the increase in housing (12%) and consumer
loans (11%), surpassing the 2023 market growth . The
highest amounts of disbursed loans so far in the retail
segment led to an increase in the market share to 22 .7% .
The deposit base increased by 1 .4% YoY . The interest
margin in the retail segment was still high, but under
intense pressure from competition . The key drivers of
income growth were the portfolio increase, foreign
payment operations, account management, and
bancassurance .
Corporate banking
As of 31 December 2023, the bank had a market share of
12 .4% in corporate gross loans . Considering the strategic
orientation, NLB Banka, Skopje maintained its interest in
credit support for investments in renewable sources and
projects to increase energy efficiency, modernisation, and
automation of the corporate segment .
The bank increased the portfolio in the segment of long-
term financing of highly creditworthy clients, securing
a stable portfolio and revenue generation . The bank
had a total outstanding balance of EUR 41 million in
project financing and almost EUR 30 million outstanding
balance of loans approved for investments in renewable
sources and energy-efficient investments .
NLB Banka Skopje also supported many export-oriented
companies by offering them services and products
appropriate for their operation to adapt to emerging
market conditions . In response to macroeconomic
developments, corporate interest rates were aligned with
market conditions throughout the year .
86
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Banka,
Banja Luka
Financial and Business Performance
Table 25: Key performance indicators of NLB Banka, Banja Luka(i)
In 2023, the bank remained the second most important
bank in the Republic of Srpska market, reaffirming its
status as a leading bank in retail with an increased
market share of 21 .7% (increased by 1 .6 p .p .) . The
predominant strength of the bank was its market
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
position in the corporate and retail segments and a
solid deposit base . As evidence of a highly successful
Result before tax
Result after tax
year, the bank also received several "Golden BAM"
Financial position statement indicators
awards for the highest ROE, the best CIR, and, for the
Total assets
first time, the award for being the most innovative
bank in the market of Bosnia and Herzegovina .
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
2023
2022
Change YoY
in EUR thousands
32,475
14,399
-19,433
-763
26,678
24,269
1,040,630
556,960
575,960
840,115
107,270
15 .9%
3 .4%
24 .2%
2 .4%
41 .5%
5,543
0 .7%
20 .4%
66 .3%
23,594
14,941
-17,293
-280
20,962
19,281
995,308
523,238
540,533
796,668
96,237
16 .0%
2 .6%
20 .2%
2 .0%
44 .9%
8,272
1 .1%
20 .1%
65 .7%
38%
-4%
-12%
-173%
27%
26%
5%
6%
7%
5%
11%
-0 .1 p .p .
0 .8 p .p .
4 .0 p .p .
0 .4 p .p .
-3 .4 p .p .
-33%
-0 .4 p .p .
0 .3 p .p .
0 .6 p .p .
(i)Data on a stand-alone basis as included in the Group’s consolidated financial statements.
EUR 24
million
result a.t.
4%
contribution to
NLB Group’s
result a.t.
Retail banking
Retail banking recorded excellent double-digit YoY
Corporate banking
Corporate banking recorded YoY growth in gross loans
growth in gross loans (13%), while deposits grew by 6%
(2%) by supporting local companies in short- and
YoY . Consumer loans increased by 19% and housing
long-term projects .
loans by 7% YoY . The market share in retail loans rose by
1 .9 p .p . YoY and reached 22 .0%, while the market share
in retail deposits was 25 .7% . The key drivers of income
Corporate deposits recorded YoY growth of 12%, which
supported the bank’s organic growth .
20 .4%
market share
by
total assets
2nd
largest bank
in the country
growth were interest income and income from accounts
and payments processing .
The focus remains on further growth of the retail
portfolio, with particular emphasis on introducing
additional customer services, especially in digitalisation
and bancassurance services .
87
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial and Business Performance
Table 26: Key performance indicators of NLB Banka, Sarajevo(i)
NLB Banka, Sarajevo
In 2023, the bank showed solid performance and
remarkable loan growth of 10% by boosting the
bank’s market share . The predominant strength of the
bank was in consumer lending and the development of
innovative retail products, largely contributing to the
Key performance indicators
Net interest income
Net non-interest income
high share of net non-interest income (31% of net fee
Total costs
and commission income in total net operating income) .
Impairments and provisions
The bank achieved an impressive 31% YoY growth in
net interest income, driven by a substantial surge in
Result before tax
Result after tax
loan volume and vigilant monitoring of market and
Financial position statement indicators
interest rate trends .
In 2023, the bank launched new digital products and
actively contributed to the country's green financing
initiatives . As a result, it received several awards in
the local market, namely the Golden BAM award for
the "Total ESG Effect" category; awards for the best
digital socially responsible campaign, "The Healing
Horse" and "Go Green Star"; as well the Visa Awards
for "Google Pay Launch" and for First-to-Market with
"Tap-to-Phone" .
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
2023
2022
Change YoY
in EUR thousands
25,490
11,203
-19,877
-2,939
13,877
12,819
917,233
575,560
597,715
749,708
95,980
17 .8%
3 .0%
13 .6%
1 .5%
54 .2%
15,732
2 .0%
6 .2%
76 .8%
19,524
12,152
-18,304
-982
12,390
11,436
838,117
521,326
542,001
673,402
90,608
16 .5%
2 .6%
12 .5%
1 .5%
57 .8%
16,986
2 .3%
6 .0%
77 .4%
31%
-8%
-9%
-199%
12%
12%
9%
10%
10%
11%
6%
1 .3 p .p .
0 .4 p .p .
1 .1 p .p .
0 .0 p .p .
-3 .6 p .p .
-7%
-0 .3 p .p .
0 .2 p .p .
-0 .6 p .p .
(i) Data on a standalone basis as included in the consolidated financial statements of the Group.
EUR 13
million
result a.t.
2%
contribution to
NLB Group’s
result a.t.
6 .2%
market share
by
total assets
6th
largest bank
in the Federation
of BiH
Retail banking
Retail banking recorded YoY growth in gross loans,
Corporate banking
The corporate banking segment achieved YoY growth
reaching 10%, propelled by the expansion of housing
in gross loans, reaching 10% . The focus was increasing
and consumer loans . Housing loans experienced a YoY
the client loan portfolio by acquiring new creditworthy
increase by 7%, while the consumer loans portfolio grew
clients . Also, a positive trend was observed in the volume
by 12% YoY, attributed to heightened demand, various
campaigns, and increased employee engagement .
of the guarantees portfolio . A strong focus is placed on
green loans and the implementation of ESG standards
Additionally, the average interest rate in the retail
segment rose to 5 .63% in 2023 compared to 5 .37%
Corporate deposits reached YoY growth of 21%,
as well .
in 2022 .
accompanied by a shift in the maturity structure, with an
increasing share of corporate term deposits by
8% YoY .
88
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial and Business Performance
Table 27: Key performance indicators of NLB Banka, Prishtina(i)
NLB Banka, Prishtina
In 2023, the bank kept its leading position in profitability
by increasing its net profit by 11% . It ranked the second
biggest bank in Kosovo by increasing its total assets by
13% YoY . The bank’s predominant strength has been
providing a full spectrum of financial services to retail
Key performance indicators
Net interest income
Net non-interest income
and corporate clients, and being a market leader in
Total costs
innovations in the local banking sector . Net interest
Impairments and provisions
income grew by 18% YoY, mainly due to boosting
lending activities and optimising investments in
Result before tax
Result after tax
securities and the balance sheet .
Financial position statement indicators
The bank received the EBRD "Most Active Local Bank in
Using TFP Line" award for several consecutive years .
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
2023
2022
Change YoY
in EUR thousands
47,165
8,017
-15,995
776
39,963
35,968
1,229,757
831,333
866,730
1,008,261
149,669
15 .8%
4 .2%
27 .3%
3 .2%
29 .0%
16,234
1 .6%
16 .9%
82 .5%
39,844
8,547
-14,348
2,052
36,095
32,402
1,083,638
740,775
777,202
894,242
113,844
15 .7%
4 .1%
29 .2%
3 .3%
29 .7%
15,705
1 .7%
16 .7%
82 .8%
18%
-6%
-11%
-62%
11%
11%
13%
12%
12%
13%
31%
0 .1 p .p .
0 .1 p .p .
-1 .9 p .p .
-0 .1 p .p .
-0 .7 p .p .
3%
-0 .1 p .p .
0 .2 p .p .
-0 .4 p .p .
(i) Data on a stand-alone basis as included in the Group’s consolidated financial statements.
EUR 36
million
result a.t.
5%
contribution to
NLB Group’s
result a.t.
16 .9%
market share
by
total assets
2nd
largest bank
in the country
Retail banking
In 2023, the bank achieved YoY growth in gross loans
Corporate banking
Corporate banking recorded YoY growth in gross loans
(18%) and deposits (8%) . The growth in retail was
of 7%, mainly driven by the disruption of the normal
predominately fuelled by heightened loan demand and
supply chain (external factors) and the cross-selling of
a further rise in the general consumption pattern . This,
products through existing corporate clients, particularly
in turn, has resulted in an inflation-driven increase in
real estate prices . The growth in housing loans reached
targeting new retail and SME clients . Optimisation of the
bank’s liquidity structure was highlighted by an 18 .5%
16%, and consumer loans showed a substantial 24% YoY
YoY deposits increase . The key drivers of income growth
increase .
were working capital loans, credit lines, and overdrafts .
Cooperation on the Group level resulted in financing the
In addition, the bank has signed several partnership
construction of a major locally recognised project that
agreements with construction and trade companies
contributed largely to clean energy production from
to finance their products and boost the performance
renewable sources .
committed by the sales department .
89
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial and Business Performance
Table 28: Key performance indicators of NLB Banka, Podgorica(i)
NLB Banka,
Podgorica
In 2023, the bank maintained the second position
within 11 banks in the market and is identified as
a systemically important bank . The predominant
strength of the bank is seen in housing and consumer
loans, where the bank is an important player in the
local market .
Key performance indicators
Net interest income
Net non-interest income
Total costs
Impairments and provisions
Result before tax
Result after tax
The Bank received th e recognition »The Best Bank in
Financial position statement indicators
Montenegro« for the second year in a row, awarded
Total assets
by the world’s most influential financial magazine,
Euromoney . It also presented the bank with two more
valuable awards, declaring it the best ESG and socially
responsible bank in Montenegro .
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
2023
2022
Change YoY
in EUR thousands
40,335
8,955
-20,418
3,238
32,110
26,658
971,149
584,526
603,349
798,018
120,390
19 .2%
4 .8%
22 .9%
2 .9%
41 .4%
24,140
3 .2%
14 .4%
73 .2%
29,607
7,720
-20,252
1,165
18,240
16,613
851,630
532,254
552,470
692,872
106,937
18 .4%
4 .0%
16 .7%
2 .1%
54 .3%
32,610
4 .6%
13 .3%
76 .8%
36%
16%
-1%
178%
76%
60%
14%
10%
9%
15%
13%
0 .8 p .p .
0 .7 p .p .
6 .2 p .p .
0 .8 p .p .
-12 .8 p .p .
-26%
-1 .4 p .p .
1 .1 p .p .
-3 .6 p .p .
EUR 27
million
result a.t.
4%
contribution to
NLB Group’s
result a.t.
14 .4%
market share
by
total assets
2nd
largest bank
in the country
(i) Data on a standalone basis as included in the consolidated financial statements of the Group.
Retail banking
Retail banking recorded YoY growth in gross loans (10%)
Corporate banking
The corporate banking segment recorded YoY growth in
and deposits (8%) . Consumer loans present 52% of
gross loans (3%) and deposits (26%) . The loan portfolio
the retail portfolio, while housing loans occupied 48% .
predominantly consisted of large corporates, which
Growth in gross loans was recorded by the increase in
increased by 6% YoY . New production of
consumer loans volume by 12% YoY and housing loans
by 7% YoY . Consumer loan growth was affected by timely
EUR 81 .5 million was recorded in all segments — large
corporate, state, and SME — by improving the existing
organised and well-executed consumer loan campaigns
portfolio quality .
following increased salaries within state institutions .
The focus remains on further growth of the retail
in the country, such as a wind power plant
portfolio, with particular emphasis on introducing
in the amount of EUR 25 million, an electric
additional services for customers, especially
transmission infrastructure, and a high-end business
in digitalisation .
centre in Montenegro .
The Group financed several strategic corporate projects
90
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
The Bank and EBRD signed a contract worth EUR 2
million to lend to the population for energy-efficient
residential building investments and reduce costs and
CO2 emissions .
Contents
NLB DigIT, Beograd
The company is the IT hub, supporting the Group
members and spearheading digital transformation
projects . The company was built on the resource pool of
the Group Competence Centre of NLB Banka, Beograd
(merged into NLB Komercijalana Banka, Beograd in
2022), and additional external staff onboarding .
NLB DigIT’s primary focus is to deliver services with a
high level of quality to Group entities in domains where
IT resources and expertise are scarce throughout the
region . NLB DigIT provides services mainly in key areas
such as IT security setup for all the banks, IT delivery,
and others .
Leasing and Asset
Management
operations expansion
in SEE
The Group is consolidating its strategically important
position in its home SEE region, announcing new
acquisitions within leasing and asset management
activities . Leasing is one of the strategic activities of the
NLB Group . It complements the Bank’s lending services
and enables retail and corporate clients to choose the
option that best addresses their needs, situations,
and preferences .
After entering the Slovenian market with NLB Lease&Go,
Ljubljana in the spring of 2020, leasing activities gained
momentum . New leasing companies were established
within the Group in 2022 in North Macedonia and
Serbia . With remarkable growth, especially in Serbia,
NLB Lease&Go Leasing, Beograd and NLB Lease&Go,
Skopje ended the year 2023 with EUR 69 .4 million and
EUR 9 .3 million of net loans to customers, respectively .
In November 2023, the Bank entered into a sale and
purchase agreement to acquire a 100% shareholding
in SLS HOLDCO, holdinška družba, d .o .o ., the parent
company of Summit Leasing Slovenija d .o .o ., and its
subsidiaries, from funds managed by affiliates of Apollo
Global Management Inc . and the EBRD .
Meanwhile, the Group and its member company NLB
Skladi, which offers clients asset management services,
are also writing a new regional story . NLB Skladi, asset
management, d .o .o . has recently concluded a purchase
agreement with Generali Investments to purchase
the majority ownership of the company Generali
Investments AD Skopje .
91
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Non-Core Members
The Non-Core Members segment includes the operations of non-core Group members . The main objective in the
efficient divestment manner of the remaining non-
non-core segment remains a rigorous wind-down of all non-core portfolios and the consequent reduction of
performing portfolio or the repossession of the collateral
costs . The implementation of the wind-down has been pursued with a variety of measures, including the sales
real estate .
of portfolios (either packages that include portfolios in a single market or entity, as well as packages combining
portfolios in different markets and/or entities), sales or liquidation of non-core entities, sales of individual assets,
The main task is to ensure value-preserving strategies
the collection or restructuring of individual assets, and active management of real estate assets .
Financial and Business 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
Impairments and provisions
Result before tax
2023
1 .5
-1 .7
-0.1
-13 .7
-13.9
3 .7
-10.1
2022
0 .3
4 .4
4.7
-12 .6
-7.9
-0 .8
-8.7
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)
31 Dec 2023
31 Dec 2022
Change YoY
47.1
10 .9
28 .6
20 .1
16 .0
27 .4
61.5
13 .8
35 .4
39 .6
8 .1
32 .3
-14.5
-2 .9
-6 .9
-19 .5
7 .9
-4 .8
in EUR millions consolidated
Change YoY
1 .3
-6 .1
-4.8
-1 .1
-6.0
4 .6
-1.4
-
-
-
-9%
-75%
-
-16%
-24%
-21%
-19%
-49%
97%
-15%
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 2023, real-estate transactions with a total
sales value of EUR 290 .3 million were executed or
supported and directly or indirectly contributed to a
EUR 656 .4 million NPL reduction, of which EUR 9 .9 million
in 2023 alone .
In order to achieve efficient, sustainable,
environmentally and socially responsible NLB Group
operations, as per NLB Group Real Estate strategy, as of
2024, the NLB Real Estate Management companies will
be part of the non-financial core Group members .
92
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
The wind-down has remained the main objective of
New business has been suspended for all non-core
the non-core segment in all the non-core portfolios .
Group members who are in the process of being
In line with the divestment strategy, several non-core
wound down . The decrease of the cumulative non-core
Group members were liquidated or disinvested, thus the
subsidiaries’ portfolio remains ongoing through regular
segment’s total assets decreased by EUR 14 .5 million YoY .
repayments and different collection measures .
EUR 6 .9 million
reduction of gross loans
to customers in 2023
Divestment of non-core
Group members
A liquidation process is ongoing in all non-core leasing
and trade finance subsidiaries and some real estate
Active management of
real estate assets
The divestment process of the remaining NPL exposures
at the Bank or the non-core subsidiaries’ level is
subsidiaries . The divestment process has been running
facilitated through a specialised team for repossessing,
with thoughtful cost management and well-established
managing, and divesting collateral real estate . Real
collection procedures .
estate expertise and services are offered to the Group
members, assisting them in implementing the most
EUR 48 .2 million
the total sales value of
real-estate transactions executed or
supported by the real-estate team
in 2023
Contents
It is the sporting mentality
that our economy and
entrepreneurship also
need on the global stage .
Slovenian men's national
volleyball team
Elevate
your game
and leave
your heart
on the court .
Risk Management
The self-funded model, strong liquidity, and a solid capital position continued in 2023, 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 the Group’s decision-making,
steering, and mitigation processes, which aims to support its business operations proactively . The Group contributes
to sustainable finance by incorporating environmental, social, and governance risks into its business strategies, risk
management framework, and internal governance arrangements .
The Group has a well-diversified business model . Under
Based on the Group’s business strategy, credit risk is the
its strategic orientations, it intends to be sustainably
dominant risk category, followed by credit spread and
profitable, predominantly working with clients on its core
interest rate risk in the banking book, and operational
markets, providing innovative, but simple customer-
risk . Credit risk management focuses on moderate risk-
oriented solutions, and actively contributing to a
taking, striving to assure a diversified credit portfolio,
sustainable, more balanced, and inclusive economic
adequate credit portfolio quality, the sustainable
and social system . Efficient management of risks and
cost of risk, and optimal returns considering the risks
capital is crucial for the Group to sustain long-term
assumed . The Group has limited exposure to the other
operations . Risk Management in the Group manages,
aforementioned risks, while market and other non-
assesses, and monitors risks within the Bank as the main
financial risks are less important from a materiality
entity in Slovenia and the competence centre for six
perspective . The Group integrates and manages ESG
banking subsidiaries .
risks within the existing types of risks, such as credit,
Figure 49: Risk profile of NLB Group as at 31 December 2023
2.4% 1.4%
9.5%
7.5%
10.0%
3.7%
Credit risk
Concentration risk
Credit spread risk
Interest rate risk in banking book
Operational risk
Market risk
65.5%
Business and Strategic risk
1 .1%low level of NPE
(EBA def.)
liquidity, market, and operational risk, as part of its risk
management framework . These risks are estimated as
low, except for transition risk in the area of credit, which
is assessed as low to medium . Liquidity risk tolerance is
low . The Group must maintain an appropriate level of
liquidity at all times, and also pursue a proper structure
of the sources of financing .
Table 30: NLB Group’s Key Risk Appetite indicators (KRIs)
KRIs
Total capital ratio
CET1 ratio
LCR
NSFR
Cost of risk
NPL ratio (EBA definition)
NPE (EBA definition)
Interest rate risk (EVE)
31 Dec 2023
20 .3%
16 .4%
245 .7%
187 .3%
-7 bps
2 .1%
1 .1%
-4 .2%
During 2023, the Group’s credit portfolio quality
remained high-quality and well-diversified, with a
stable rating structure and lower NPLs level . The Group
recorded a slower credit portfolio growth in all segments
94
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
after strong new corporate and retail loan origination
the ECB, namely, setting Pillar 2 Guidance, which
across all markets in 2022 due to inflationary pressures,
remained at a relatively low level of 100 bps .
higher interest rates and low GDP growth . The impacts of
the floods in Slovenia were estimated as negligible, and
only minor client credit quality deterioration or received
collaterals occurred . Besides, the Group monitored the
macroeconomic and geopolitical circumstances closely,
remaining very prudent in identifying any increase in
credit risk at a very early stage, and proactive in NPL
management . The cost of risk remained low, at -7 bps,
mainly due to the successful collection of previously
written-off receivables, revised risk parameters, and
-7 bps
cost of risk on Group level
· formulating and controlling the Group’s Risk
Management policies,
· setting limits,
· overseeing the harmonisation,
· regular monitoring risk exposures and limits based on
centralised reporting at the Group level .
The Group greatly emphasises 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
stable portfolio development in the SEE region .
Besides, the Group is also included in two ECB Stress test
by the Group’s Risk Appetite and Risk Strategy, which
The Group stayed well capitalised and well above the
analysis and the 2024 ECB Cyber Resilience Stress Test
The Group performs the risk identification process
risk appetite at both the Group and banking member
Exercise, which started in Q3 2023 and will be concluded
regularly as part of the ICAAP and ILAAP frameworks .
exercises – the 2024 EBA Fit-for-55 climate risk scenario
are designed in accordance with its business strategy .
levels . The Group’s liquidity position also remained
in H1 2024 .
solid, with liquidity indicators high above the regulatory
requirements, indicating its low tolerance for liquidity
risk . Significant attention was put into the structure and
concentration of liquidity reserves by incorporating early
warning systems, while at the same time considering
the potential adverse negative market movements .
Investment activity continued with a balanced approach
to finding attractive market opportunities while pursuing
well-managed credit spread and interest rate risk, as
well as capital consumption . Raising the interest rate
environment and corresponding increased market
demand for fixed interest rate products led to moderate
interest rate risk exposure, which stayed well within the
risk appetite tolerance .
As a systemically important institution, the Group was
included in the ECB Stress Test exercise performed in H1
2023 . On 30 July, the results of stress tests carried out for
important banks by the ECB to assess the resilience of
the financial institutions were disclosed . Under the
adverse scenario, the CET1 ratio (fully loaded) would fall
As a systemic bank, the Bank is involved in the
Single Supervisory Mechanism (SSM).
Supervision is under the jurisdiction
of the Joint Supervisory Team (JST)
of:
ECB
BoS
ECB regulations are followed by the Group, where the
Group subsidiaries operating outside Slovenia are
compliant with the rules set by the local regulators.
Third-party equivalents are approved in Serbia,
Bosnia and Herzegovina, and North Macedonia,
aligning local regulations with CRR rules.
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.
All topical risks in this process, including ESG-related
ones, are comprehensively assessed, monitored, and
mitigated where necessary . Particular focus is placed
on including risk analysis in the decision-making
process at strategic and operating levels, diversification
to avoid large concentrations, optimal capital usage
and allocation, appropriate risk-adjusted pricing, and
overall compliance with internal rules and regulations .
Risk Management focuses on managing and mitigating
risks in line with the Group’s Risk Appetite and Risk
Strategy, representing the foundation of the Group’s Risk
Management framework . Within these frameworks, the
Group monitors a range of risk metrics to ensure the
Group’s risk profile is in line with its Risk Appetite . In
addition, the Group is constantly enhancing its Risk
Management system, where consistent incorporation of
ICAAP, ILAAP, the Recovery plan, and other internal
stress-testing capabilities into the Risk Management
system is essential . Moreover, the Group emphasises
their integration into the overall Risk Management
system to assure proactive support for informed
in the 300–599 bps range after three years without
Risk Management and control are performed through
decision-making .
mitigation measures . The Group’s results of adverse
a clear organisational structure with defined roles
depletion were lower than the peer group and average
and responsibilities . The organisation and delineation
SSM sample banks results . Moreover, the Group’s data
of competencies are designed to prevent conflicts of
quality and accuracy were assessed as above average .
interest and ensure a transparent and documented
The final results of the bottom-up stress test showed that
decision-making process subject to an appropriate
even in a very unfavourable market condition as defined
upward and downward flow of information .
the EBA and ECB, the Group holds sufficient resilience in
terms of capitalisation . The qualitative outcomes were
Competence line Risk Management in NLB is, by
included in the determination of capital requirements by
encompassing several professional areas, in charge of:
Proactive
Risk Management
in 2023
95
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The uniform stress-testing programme, which includes
Figure 50: NLB Group’s Risk Management framework
internally developed models, stress scenarios,
and sensitivity analysis, is regularly revised and
complemented . The Group established an internal
ESG stress-testing concept to identify the most relevant
financial vulnerabilities stemming from climate risk,
which is constantly further enhanced by considering
available ESG-related data . Such a comprehensive
stress-testing framework is the subject of a regular
internal validation cycle and related procedures where
the Group established a comprehensive validation
framework . The Group supports a robust validation
governance process and controls over applied and
selected risk approaches and internal models .
The business and operating environment relevant for
the Group operations is changing, with trends such
as sustainability, social responsibility, governance,
changing customer behaviour, emerging new
technologies, and competitors actively contributing to
a more sustainable, balanced, and inclusive economic
and social system – as well increasing new regulatory
requirements . It should be noted that Risk Management
is continuously adapting to detect and manage new
potential emerging risks .
ICAAP
&
ILAAP
inputs
Business strategy
Risk identification
Risk Appetite (Limit system)
Capital and Financial planning
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)
96
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Proactive Risk Management in 2023
A 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 levels in accordance with the Risk
Appetite . It also incorporates normative and economic
perspectives as part of the established ICAAP process .
As at 31 December 2023, the Group had a very solid
capital position and TCR of 20 .3% (1 .1 p .p . YoY increase) .
The CET1 ratio, representing capital of the highest
quality, stood at 16 .4% (1 .3 p .p . YoY decrease) .
Capital is higher mainly due to the partial inclusion of
2023 profit (EUR 327 .4 million) . Temporary treatment
of FVOCI for sovereign securities ceased to apply,
resulting in a decrease of capital by EUR 61 .6 million .
This effect was compensated with EUR 84 .5 million of
revaluation adjustments . In addition, a deduction item
related to deferred taxes decreased the capital by
EUR 47 .0 million .
An increase of RWA in NLB Group for credit risk mostly
relates to the contribution of acquired N Banka and
ramping up lending activity in all NLB Group banks .
RWA growth was partially mitigated by CRR-eligible real
estate collaterals . A slight increase in RWAs for market
risks and CVA is mainly the result of higher RWA for
FX risk . The main effect of an increase in the RWA for
operational risks derives from the higher net interests,
resulting in a higher three-year average of relevant
income .
As at 31 December 2023, the Group meets all fully loaded
regulatory requirements . Moreover, enhanced overall
corporate governance in recent years led to a lower P2R,
which decreased from 2 .40% applicable in 2023 to 2 .12%
applicable from 1 January 2024, while Pillar 2 Guidance
remains at a low level of 1% .
The MREL requirement forms part of the Group’s risk
appetite, whereby its fulfilment is regularly analysed and
monitored . NLB complies with all interim targets . More
information on MREL is available in the chapter Funding
Strategy, Capital, and MREL Compliance .
Figure 51: NLB Group’s Pillar 2 Requirement evolution
3.50%
3.25%
2.75%
2.75%
2.60%
2.40%
2.12%
2018
2019
2020
2021
2022
2023
2024
97
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 remained stable and strong at the
Group and individual subsidiary bank levels . Group
LCR slightly increased to 245 .7% (by 25 .4 p .p . YoY),
Group would survive at least three months under such
remaining well above the risk appetite limit . The
stress conditions . The core funding base of the Group
level of the unencumbered eligible liquid reserves
predominately represents retail customer deposits
remained at a high level, representing 39 .6% of total
with a very stable and constantly growing base . LTD
assets . The Group has sufficient liquidity reserves
increased to 66 .2% from 65 .3% at the end of 2022,
in the form of placements with the ECB, prime debt
though it remains at a very comfortable level .
securities, and money market placements . Even in the
event of the combined adverse stress scenario, the
Figure 52: NLB Group’s LCR
300%
280%
260%
240%
220%
200%
180%
160%
140%
120%
100%
31 D ec 2 0 22
31 Ja n 2 0 23
28 Fe b 2 0 23
31 M ar 2 0 23
3 0 A pr 2 0 23
31 M ay 2 0 23
3 0 Ju n 2 0 23
31 Jul 2 0 23
31 A u g 2 0 23
3 0 Se p 2 0 23
31 O ct 2 0 23
3 0 N ov 2 0 23
31 D ec 2 0 23
LCR NLB Group
98
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Maintaining adequate
credit portfolio quality
Maintaining adequate credit portfolio quality is the most
important goal, focusing on cautious risk-taking and the
quality of new loans, leading to a diversified portfolio
of customers . The Group is constantly developing a
wide range of advanced approaches in the credit risk
assessment segment in line with best banking practices
to enhance the existing risk management tools further
while enabling greater customer responsiveness . The
sized companies, and small enterprise segments,
restructuring approach in the Group is focused on
whereas in the corporate segment, the Bank established
the early detection of clients with potential financial
cooperation with selected corporate clients (through
difficulties and their proactive treatment .
different types of lending or investment instruments) .
All other banking members in the SEE region where the
The Group actively supports SEE markets by financing
Group is present are universal banks, mainly focused
existing and new creditworthy clients . The Group’s
on the retail, medium-sized companies, and small
lending strategy focuses on its core markets of retail,
enterprise segments . Their primary goal is to provide
SME, and selected corporate business activities within
comprehensive services to clients by applying prudent
the region and EU . In the Slovenian market, the focus is
risk management principles .
on providing appropriate solutions for retail, medium-
Figure 53: NLB Group structure of the credit portfolio(i) (gross loans) by segment (in EUR millions) and rating(ii)
Institutions
451
SME
3,764
State(iii)
5,928
63%
62%
63%
EUR 20 .2 billion
Corporates
2,865
32%
33%
33%
NPLs
3%
3%
3%
1%
1%
1%
1%
1%
1%
Retail consumer
3,131
Retail housing
4,105
Highest quality
31 Dec 2021
31 Dec 2022
31 Dec 2023
A
B
C
D
E
Default
(i) Loan portfolio also includes reserves at CBs and demand deposits at banks, which are also shown in the rating distribution.
(ii) Ratings 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 issues with settlement of liabilities in the future; Ratings D and E are NPLs: Default clients (article 178 of CRR), including clients in delay
>90 days and other clients considered "unlikely to pay" with delays below 90 days. The numbers may add up to less than 100% due to rounding.
(iii) State includes exposures to CBs.
99
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Lending growth was observed in the corporate, as well
to finance some of the region’s top corporate clients
credit portfolio remains well diversified, and no large
as in the retail segments in 2023 . In the circumstances
while focusing on SMEs as its key segment . The current
concentration exists in any specific industry or client
of the growing EURIBOR, there was a certain transfer
structure of the credit portfolio (gross loans) consists of
segment . The share of the retail portfolio in the whole
to fixed interest rates; at the same time, the new loan
35 .7% retail clients, 14 .2% large corporate clients, and
credit portfolio is quite substantial, with mortgage loans
production slowed down compared to the previous year .
18 .6% SMEs and micro companies, while the remainder
as the still prevailing segment .
In the corporate segment, the Bank seized opportunities
of the portfolio consists of other liquid assets . The
Table 31: Overview of NLB Group loan portfolio by industry as at 31 December 2023
Corporate sector
Retail sector
Corporate sector by industry
NLB Group
Accommodation and food service activities
Act . of extraterritorial org . and bodies
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
198 .8
0 .0
111 .3
344 .7
20 .0
556 .9
15 .0
543 .3
144 .4
37 .4
291 .6
%
3 .0%
0 .0%
1 .7%
5 .2%
0 .3%
8 .4%
0 .2%
8 .2%
2 .2%
0 .6%
4 .4%
Retail consumer
43%
EUR 7 .2 billion
Retail housing
57%
in EUR millions
∆ 2023
-17 .9
0 .0
31 .5
18 .4
-3 .6
-12 .8
1 .1
-7 .2
-80 .3
-9 .5
-23 .3
66 .0
-8 .1
47 .7
10 .8
64 .6
-2 .8
-10 .5
5 .8
12 .3
1 .5
83.7
1,524 .9
23 .0%
46 .1
234 .9
199 .5
377 .4
13 .9
619 .0
57 .1
1,290 .2
2 .8
0 .7%
3 .5%
3 .0%
5 .7%
0 .2%
9 .3%
0 .9%
19 .5%
0 .0%
6,629.3
100.0%
Companies’ financing also includes financing of real
In the development phase, the Bank requires a minimum
estate activities (projects), which represent a smaller
of 25% of equity and a pre-lease/pre-sale of 30% for
part of the portfolio . Projects are carefully monitored
offices, 60% for shopping malls and 20% for residential
throughout each phase of construction . For
real estate before first disbursement . The Bank finances
income-producing CRE companies in the operating
projects sponsored by investors with proven track
phase, the DSCR is between 1 .2 and 1 .4, and the LTV is,
records . In the CRE portfolio, occupancy rates and rent
on average, lower than 60%; a sufficient reserve and
repayment to the Bank is not threatened . For most
approved loans, an amortization repayment structure
was backed against the background of concluded
long-term rental contracts (offices and shopping
malls segment) .
deterioration have not been observed .
100
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Approximately 53% of the NLB Group corporate and
segment . In the retail segment, close to 70% of the loan
contractual interest rates for existing loans at the
retail loan portfolio is linked to a fixed interest rate, and
portfolio is linked to a fixed interest rate, which results
client’s request .
101
the rest to a floating rate (mainly the Euribor reference
from considerable growth predominately of housing
rate) . Floating interest rates dominate the corporate
loans in 2023 and activities of changing the type of
Figure 54: NLB Group corporate and retail loan portfolio by
interest rates as at 31 December 2023
Figure 55: NLB Group loan portfolio by stages as at 31 December 2023
Corporate
(incl . SME)
Consumer
Housing
37%
63%
34%
30%
66%
70%
Fix
Float
Stage 3
2%
Stage 2
3%
FVTPL
0%
Institutions
2%
State
31%
Corporate
31%
Table 32: NLB Group loan portfolio by stages as at 31 December 2023
Stage 1
95%
Retail
36%
Stage 1
Credit portfolio
Stage 2
Stage 3 & FVTPL
Stage 1
Stage 2
Stage 3 & FVTPL
Provisions and FV changes for credit portfolio
in EUR millions
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
o/w Corporate
o/w Retail
o/w State
19,239.2
6,005 .6
6,854 .7
95.0%
90 .6%
94 .7%
1,781.6
85 .6
431 .7
5,928 .1
100 .0%
1,182 .5
o/w Institutions
450 .8
99 .9%
81 .8
704.1
454 .3
249 .6
-
0 .3
3.5%
6 .9%
3 .4%
-
0 .1%
85.9
28 .6
57 .0
-
0 .3
300.5
169 .4
131 .0
0 .0
0 .1
1.5%
2 .6%
1 .8%
0 .0%
0 .0%
-27.5
-30 .4
3 .0
-0 .1
0 .0
92.3
50 .0
39 .7
2 .4
0 .2
0.5%
0 .8%
0 .6%
0 .0%
0 .0%
44.1
19 .7
24 .4
-
-
6.3%
4 .3%
9 .8%
-
-
Provisions
& FV
changes
Coverage
with
provisions
and FV
changes
194.2
109 .7
84 .4
0 .0
0 .1
64.6%
64 .7%
64 .4%
98 .4%
75 .9%
The majority of the Group’s loan portfolio is classified as
Figure 56: NLB Group Corporate and Retail loan portfolio (valued at amortised cost) by stages
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Stage 1 (95 .0%), the remaining portfolio as Stage 2 (3 .5%),
Stage 3, and FVTPL (1 .5%) . The portfolio quality remains
very stable, with increasing Stage 1 exposures and a
relatively low percentage of NPLs . The percentage of the
Stage 1 loan portfolio remains almost at the same level
as at the end of 2022, i .e ., at 94 .7% in the retail segment,
while in the corporate segment, despite the adverse
economic conditions, improved to the level of 90 .6%,
which is a result of cautious lending policy and successful
4,526
closure of NPL . The Stage 2 allocation slightly increased
in the corporate and retail segment due to the changed
macroeconomic conditions and improved Early Warning
System (EWS) . Nevertheless, the increase remains
negligible compared to the entire portfolio volume .
Stage 1 by segment
(in EUR millions)
Stage 2 by segment
(in EUR millions)
Stage 3 by segment
(in EUR millions)
+1% YoY
5,920
6,006
5,371
+7% YoY
6,855
6,423
+7% YoY
412
426
454
+30% YoY
250
242
193
120
-15% YoY
200
169
+2% YoY
130
128
131
Corporate
Retail
Corporate
Retail
Corporate
Retail
31 Dec 2021
31 Dec 2022
31 Dec 2023
Contents
New NPLs formation and
NPL management
In 2023, NPL formation amounted to EUR 118 million or
0 .6% of the total loan portfolio . Nevertheless, the total
amount of NPL decreased during 2023 and remained
quite low .
Figure 57: NLB Group gross NPL formation (in EUR millions)
Formation /
gross loans
(stock)
0.9%
143
80
58
0.7%
0.6%
127
70
51
5
7
118
76
43
2021
2022
2023
Corporate
SME
Retail
In 2023, the Bank released impairments and provisions
Figure 58: Cumulative net new impairments and provisions for credit risk in NLB Group (in EUR millions)
for a credit risk of EUR 11 .8 million . The established
impairments derive from portfolio development, new
financing and any portfolio deterioration . In contrast,
material repayments of written-off receivables and
changes in models contributed to a lower total impact
and negative cost of risk of -7 bps in the financial year .
Macroeconomic conditions in the region could continue
to be affected by high inflation and relatively low GDP
growth, which could have a negative impact on the
level of the cost of risk in the following periods, but their
impact should not be substantial .
10.4
11.8
-22.9
24.2
Changes in models /
risk parameters
Portfolio
development
Repayments of
written-off receivables
Net impairments
and provisions for
credit risk 1-12 2023
release
establishment
102
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Figure 59: NLB Group NPL, NPL ratio and Coverage ratio 1(i) (in EUR millions)
103
Precisely set targets 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 the use of other active NPL management tools,
such as the foreclosure of collateral, the sale of claims,
and pledged assets . In 2023, the multi-year declining
trend of the non-performing credit portfolio stock
continued, primarily due to repayments, cured clients,
and the collection . The non-performing credit portfolio
stock in the Group decreased to EUR 300 .5 million at
the end of 2023 compared to EUR 328 .3 million at the
end of 2022 . The combined result of contraction in the
non-performing credit portfolio stock and credit growth
of a higher quality portfolio led to 1 .5% of NPLs . At the
same time, the internationally more comparable NPE
ratio, based on the EBA methodology, stood at 1 .1% . The
Group’s indicator gross NPL ratio, defined by the EBA,
equals 2 .1% .
110.0%
98.9%
89.2%
81.8%
86.1%
475
375
367
328
301
3.8%
3.5%
2.4%
1.8%
1.5%
31 Dec 2019
31 Dec 2020
31 Dec 2021
31 Dec 2022
31 Dec 2023
Coverage ratio 1
NLP ratio
NLPs
(i) By internal definition.
Due to extensive experience gained in the last few
years in dealing with clients with financial difficulties
An important Group strength is the NPL coverage ratio 1
(coverage of gross NPLs with impairments for all loans),
The Group strives to ensure the best possible collateral
for long-term loans, namely mortgages in most cases .
resulting primarily from legacy portfolios, the Group
which remains high at 110 .0% . Furthermore, the Group’s
Thus, the real-estate mortgage is the most frequent
has developed an extensive knowledge base both
NPL coverage ratio 2 (coverage of gross NPLs with
form of loan collateral for corporate and retail clients . In
in the prevention of financial difficulties for clients
impairments for NPL) stands at 64 .6%, well above the
corporate loans, government and corporate guarantees
to restructure viable clients in case of need, and to
EU average published by the EBA (42 .6% for Q3 2023) .
are also common types of collateral . In retail loans, the
efficiently work out exposures with no realistic recovery
As such, it enables a further reduction in NPLs without
other most frequent types of loan collateral are loan
prospects . This extensive knowledge base is available
significantly influencing the cost of risk in the coming
insurances by insurance companies and guarantors .
throughout the Group . Risk units, as well as restructuring
years .
and workout teams, are properly staffed and have the
capacity to deal, if needed, with considerably increased
volumes in a professional and efficient manner .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 .
The Group carries its main business activities in euros,
and the subsidiary banks, in addition to their domestic
currencies, also operate in euros, the Group’s reporting
currency . The Group’s net open FX position from
transactional risk is low, at 1 .4% 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 exposure to interest rate risk is moderate and
The exposure to interest rate risk remains modest, within
derives mainly from the banking book positions . The
the risk appetite limits . The Group applies different
Group has a strategy of maintaining a low Economic
scenarios when assessing the EVE sensitivity . In 2023,
Value of Equity (EVE) indicator while simultaneously
the Group upgraded the measuring of interest rate risk
monitoring the effects on Earnings At Risk (EAR) . Bonds
according to new EBA Guidelines, which impacted EVE
and loans with a fixed interest rate contribute the
result . From the EVE perspective, the estimated capital
most to the interest rate risk exposure in terms of the
sensitivity of the worst regulatory scenario (parallel up
Economic Value of Equity (EVE) indicator . In contrast,
+200 bps) is 4 .2% of the Group’s T1 capital .
exposure is managed with core deposits, which present
the most important and material element of interest rate
risk management . To a lesser extent, the Group also uses
plain vanilla derivatives to hedge risk .
Figure 60: NLB Group’s EVE evolution
-5.1%
-3.7%
-3.0%
-2.7%
-4.2%
31 Dec 2022
31 Mar 2023
30 Jun 2023
30 Sep 2023
31 Dec 2023
104
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Robust operational risk
management
In operational risk management, where the Group
has established a robust operational risk culture, the
main qualitative activities refer to reporting loss events
and identifying, assessing, and managing operational
risks . Constant improvements of control activities,
processes, and/or organisation are performed on this
basis . Besides that, the Group also focuses on proactive
mitigation, prevention, and minimisation of potential
damage . Special attention is dedicated to the stress-
testing system, based on a scenario analysis referring
to the potentially high severity, low-frequency events
and modelling data on loss events . The Bank uses the
gamma distribution technique for modelling, which
proved to be the most suitable . From an economic
perspective, the aim is to ensure the necessary capital
for materially important risks that could happen
extremely rarely . Consequently, data on realised loss
events are used with a confidence interval of 99 .9% .
Moreover, some add-ons are added for specific current
and significant risks . In a normative view, a 90%
confidence level is used for more plausible, but still
severe events which would be absorbed through P&L .
In NLB Group, the reported incurred net loss arising
from loss events in 2023 was higher than in the previous
year but remained within the set tolerance limits for
operational risk . Certain litigation costs occurred due
to systemic issues such as changes in the interpretation
of legislation (e .g . introduction of reimbursement
of a proportional part of loan costs in case of early
repayment of consumer loans in Slovenia), litigation risk
(e .g . litigation cases related to loan processing fee and
loan insurance premium in Serbia) and changes of tax
treatment of banking business (e .g . application of VAT
on card payments services in Bosnia and Herzegovina) .
Apart from losses already included in the loss event
database, the Bank could also experience one-off and
unpredictable extreme events . The list of such potential
events is updated yearly, based on current risks in the
Bank’s environment or past realised events in the banking
industry . For those possible and topical events, scenario
analyses are prepared . In 2023, several such scenarios
were defined . The cyber-attack scenario as an umbrella
scenario was further divided into five more detailed
areas of credit, liquidity, market, and operational
scenarios for different types of such attacks . The results
risk . The management of ESG risks follows ECB
show that the most significant loss could derive from the
and EBA guidelines, following the tendency of their
following potential events: possible difficulties operating
comprehensive integration into all relevant processes .
electronic banking channels, anti-money laundering,
cyber-attacks, other external fraud events, and legal risk .
The availability of ESG data in the region where the Group
For these scenarios, existent controls were additionally
operates is still lacking . Nevertheless, the Group made
revised, while for identifying potential deficiencies,
significant progress in obtaining relevant ESG-related
mitigation measures were defined .
data from its clients, being the prerequisite for adequate
Furthermore, key risk indicators serve as an early
management of ESG risks . For the purpose of calculating
warning system for the broader field of operational
credit portfolio GHG emissions, several important
risks (such as HR, processes, systems, and external
activities started in 2022 . For larger corporate clients, the
conditions) . They are regularly monitored, analysed, and
Group initiated direct Scope 1, 2, and 3 data-gathering
reported to improve the existing internal controls and
processes, whereas for the SME and micro-segments, it
decision-making and the corresponding proactive
enable on-time reactions .
developed its own proxies in cooperation with an external
expert . In residential mortgages, the most essential input
The Group supports proactive discussion of operational
risks on all hierarchical levels . Every employee can
for GHG calculation is the buildings’ energy performance
certificates . In H1 2023, NLB Group disclosed financed
report loss events . The biggest/most important
GHG emissions arising from its credit portfolio in Pillar 3
operational risks are escalated in a short period and
Disclosures . Besides the emissions, the Group collected,
discussed at the Operational Risk Committee sessions,
analysed, and used relevant historical data for physical
while implementation of the mitigation measures is
risk and publicly available climate change pertinent
closely monitored .
studies to its region .
In addition, the Group was also diligently managing
The Group conducts a materiality assessment as part
other non-financial risks, referring to the Group’s
of its overall risk identification process to determine
business model or arising from other external
the level of transitional and physical risk to which the
circumstances within the established ICAAP process .
Group is exposed . In this process, the identification
Incorporating ESG risks
The Group contributes to sustainable finance by
of environmental risk factors, relevant transmission
channels, and their materiality and impact on the
Group’s financial performance in short-, mid-, and
long-term periods are assessed . From the perspective
incorporating ESG risks into its business strategies,
of physical risk, the most relevant natural disasters
its risk management framework, and internal
are floods, landslides and drought, while hail and
governance arrangements . By adopting the NLB Group
windstorms are also frequent but less material . Despite
Sustainability programme, the Group implemented the
this, the Group can expect its impact to increase in the
main sustainability elements into its business model .
long run if no adequate changes are implemented
The NLB Group Sustainability Committee oversees the
are implemented by governments and society in a
integration of ESG factors into the NLB Group business
timely manner . Chronic risk is not determined as a
model . Thus, sustainable finance integrates ESG criteria
material risk . Transition risks already arise in the short
into the Group’s business and investment decisions for
term due to the determination of the EU to reduce
the lasting benefit of the Group’s clients and society .
carbon emissions, according to its ambitious net zero
strategy by 2050 . With the NZBA commitment and
ESG risks do not represent a new risk category, but
implementation of NLB Group’s Net Zero Strategy in
rather one of the risk drivers of the existing type of
2023, its impacts are expected to diminish gradually in
risks . The Group integrates and manages them within
the long run . Nevertheless, the Group assessed them
the established risk management framework in the
more materially than physical risk .
105
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In recent years, the Bank signed Framework
the Bank has substantial emissions and/or exposure
were prepared to deal with financial and economic
Agreements with the EBRD, such as the Contract of
and available data . These include residential mortgages
shocks stemming from climate risk .
106
Guarantees with MIGA, and committed to the UN
and commercial real estate . These targets will be
Principles of Responsible Banking . Consequently, the
integrated into NLB Group’s Risk appetite as well .
In 2023, NLB’s ESG Risk Rating was revised and improved .
Group established a mechanism for environmental
The assigned rating reflects a low risk of experiencing
and social screening of current or potential financing
Besides, the Group analyses and monitors its credit
material financial impacts from ESG factors .
applications against the MIGA and EBRD Exclusion
portfolio using heat maps . For heat maps, the Group
List and applicable environmental and social laws .
aggregates single risks by using predefined weights to
Further information on risk management is available in
The management of ESG risks is incorporated into
determine a final risk score . Such an approach enables
Note 6 of the financial part of the report,
the Group’s overall credit approval process and the
different views over the Group’s corporate portfolio from
Pillar 3 Disclosures, and the NLB Group Sustainability
related credit portfolio management . Sustainable
physical and transition risk perspectives . Concerning
Report 2023 .
financing is implemented in accordance with the Group’s
physical risk, some adverse events in the region in the
Environmental and Social Management System (ESMS) .
past years were observed in the public infrastructure
In addition to addressing ESG risks in all relevant stages
and agriculture . However, they were reimbursed
of the credit-granting process, relevant ESG criteria were
to a large extent by the government or insurance .
also considered in the collateral evaluation process .
Consequently, there were no material impacts on the
Group’s portfolio quality or liquidity .
In the process of the transaction approval, collecting
ESG data at the KYC stage was established . A regulatory
The Group carefully considers potential reputation
compliance check represents the next important step
and liability risks that could arise from the sustainable
and includes verification that a client is adhering to
financing of its clients . Special attention is given to
the applicable laws, regulations, and standards . If the
approving new products and monitoring the fulfilment
transaction is classified with a high E&S risk, a strict
of relevant criteria by the clients . Additional key risk
deviation management process is in place that ensures
indicators have been addressed, serving as an early
further enhanced risk assessment . During a project’s
warning system in the area of ESG risks . Besides,
lifetime, ESG risk monitoring is established to assess
physical risks, as part of ESG risks in the area of
the impact of each risk and create a strategy for its
operational risk, are addressed in the Group’s business
mitigation . With that, the Group ensures that the risks are
continuity management (BCM) . As such, BCM is carried
adequately addressed and that any changes or newly
out to protect lives, goods, and reputation . Business
emerged risks are identified and addressed .
continuity plans included relevant ESG risks . They are
On the portfolio level, the Group does not face any large
disasters, and the undesired effects of the environment
concentration towards specific NACE industrial sectors
to mitigate their consequences .
prepared to be used in the event of natural disasters, IT
exposed to climate risk, with the role of transitional
risk being more prevalent . Based on the industry
An internal ESG stress-testing concept to identify the
segmentation of the portfolio and corresponding
most relevant financial vulnerabilities stemming from
emissions, the Group has a relatively low exposure
transitional and physical climate risks was established,
to emission-intensive sectors in its corporate clients’
which was further revised and enhanced by considering
businesses . The Group does not finance companies that
disposable ESG-related data . The results of the climate
extract fossil fuels or operate coal-fired power plants as
stress tests showed no material impacts on the Group’s
part of its strategy . Moreover, in December 2023, NLB, as
capital and liquidity positions .
a member of the UN Net-Zero Banking Alliance, publicly
disclosed its Net-Zero commitment . With this step,
As a systemically important institution, the Group was
the Bank pledged to align its lending and investment
included in the ECB Stress test exercise – 2024 EBA Fit-
portfolio with net-zero emissions by 2050 . In its initial
for-55 climate risk scenario analysis . The exercise started
round of NZBA targets, NLB Group has focused on fossil
in December 2023 and will be concluded in March 2024 .
fuel-based and highly energy-intensive sectors (power
By performing this exercise, the ECB assessed how banks
generation and iron and steel) and other sectors where
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
From it we can truly learn
how important it is to
work in sync …
Slovenian
alpine skiing team
Advantage
is built
in every
slide and
everyturn .
IT and Cyber
Security
The Group remains committed to providing its clients
with sustainable and efficient services that are
supported by highly reliable and secure technology
platforms . The Bank is also advancing its technology
transformation programme and consolidating core
banking systems . IT Security, IT Infrastructure, and
IT Governance have made significant progress in the
consolidation process at the Group level . Additionally,
the Bank rolled out further group-wide business
solutions like a contact centre and new product
origination platform, and successfully launched a
new digital banking platform in Slovenia . The Bank
also successfully carried out a technical merger with
N Banka . The Bank has prioritised and invested in
extra resources and products to enhance overall
cyber security resilience in response to the increase in
general cyber security risks .
IT Strategy 2020–2024
At the end of 2020, an upgraded IT Strategy
incorporating the Group dimension was adopted . Since
the existing one is coming to an end, the strategy for
the next period is being prepared to pursue further
digital transformation . The current IT Strategy covers the
following:
Vision
Build the best digital banking IT team in the SEE region .
· Introduce a new way of agile development and DevOps
transformation, leading to shorter release cycles,
automated testing, and fewer manual tasks .
· Ensure the necessary development capacity .
· Introduce modern collaboration tools and digitise
internal processes .
· Ensure quality, security, and availability of IT systems
and applications .
· Have a highly motivated, effective, and satisfied IT
team working closely with the business side .
99 .95%
availability in NLB
IT Infrastructure: Ensuring
reliability and resilience
Confirmed high performance with numbers
IT performance is monitored through a set of relevant
indicators that are linked to the Balanced Scorecard
(BSC) system . The indicators reflect high performance
of IT operations and successful risk management in
this segment . With 99 .95% IT system availability and a
very low 0 .05% of unplanned interruptions, the Bank
continues to prioritise stability . In 2023, the number of
days without system/service interruptions was 79%
(2022: 81 .1%) . Harmonised Service Level Agreements
(SLA) are in place with users of the information
system, which the Bank has managed to fulfil to a very
high degree . The Group members recorded high IT
operational performance (between 99 .87% and 99 .99%) .
Mission
Enable the best client and employee experiences
Main IT initiatives
through reliable, effective, secure, accessible, and
Transformation with expanding group-wide
scalable IT solutions .
capabilities
The primary focus is to transform IT, cover the
Main principles
· Increase client satisfaction in all segments with a new
digital omnichannel platform, digitise client journeys
organisation, group perspective, processes, people,
and technology . The IT has supported a more agile
way of delivery to make a better partner to businesses,
and interactions (CRM), and achieve operational
resulting in higher efficiency . Specifically, a Group IT
excellence .
· Have an effective IT architecture using cloud solutions
and open-source software where possible .
domain concept was introduced that promotes shared
teams and IT solutions across the Group .
Strengthening the
team and extra
investments in cyber
security
Group-wide capabilities are still expanding, and the
Group Competence Centre in Belgrade, Serbia, which
was transferred from the Bank to a separate IT service
company called NLB DigIt, significantly supports
development on the Group level .
Change of delivery approach
The team has made significant achievements in the key
strategic directions regarding solution delivery . They
developed a new call centre solution in Slovenia, executed
new deployments in the Group, and fully enrolled a
new Digital Banking platform in Slovenia . Additionally,
the team made progress in reducing reliance on the
mainframe and migrated the next set of applications from
the mainframe to distributed systems . After acquiring N
Banka, the Bank onboarded N Banka IT into the Group
and developed an integration plan and strategy in 2022 .
The technical merger was completed in 2023 .
Core systems consolidation
IT followed the core banking system strategy, and the
consolidation of core banking systems is in progress .
Due to the N Banka integration in Slovenia, the
programme course was adjusted, and the first scope
was migrated into the new target core system .
Enterprise and application architecture
The focus of enterprise and application architecture is
on two key areas . The first focuses on the Group solution,
with most new solutions adhering to a Group standard
and associated Group roadmaps . New Group solutions
have been chosen for a digital web portal and Customer
Relationship Management .
The second area involves establishing a standardised
enterprise architecture management system for which
a market standard tool was procured to enable simpler
application portfolio management, mitigate software
obsolescence and IT risks and provide support in
defining transformation paths .
108
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Data management
The Bank continues implementing a comprehensive
data management platform across the Group,
encompassing an enterprise data warehouse, advanced
analytics, risk management analytics, profitability,
data governance, and consolidated Group regulatory
reporting . The Group continues to address data
throughout the entire life cycle by implementing data
governance policies and tools .
Outlook
In the upcoming years, the Bank remains dedicated
to investing in newly adopted technologies crucial
for supporting the business strategy, especially in
digital, data, the cloud, and customer relationship
management . The aim is to consolidate the Group’s
infrastructure, simplify core systems, and elevate
the client experience regarding quality, innovation,
reliability, and security .
More than
1 .7 million
digital users in the Group
Digital penetration
The Group is working towards digitalisation, which
involves utilising the available and ever-changing
information technology tools to enhance its efficiency
and provide clients with more innovative, personalised,
accurate, and prompt service . With an increasing
number of smartphone users, the Group aims to move
more customers to alternative distribution channels .
The Group is committed to developing a wide range of
24/7 digital solutions to bring clients closer and offer
them anchor products and accessible and personalised
digital services . The primary objective is to encourage
digital banking adoption among active customers .
Figure 61: Digital penetration of the Group banks as at 31 December 2023
109
61% 60%
67%
55%
33% 34%
33%
27%
29% 32%
30%
25%
24%
19%
NLB,
Ljubljana
NLB KB,
Beograd
NLB Banka,
Skopje
NLB Banka,
Sarajevo
NLB Banka,
Banja Luka
NLB Banka,
Prishtina
NLB Banka,
Podgorica
Penetration (all)
Penetration (active)
Cyber security
Strengthening team and implementing new solutions
The Group focuses on cyber security, assuring
confidentiality, integrity, and availability of data,
information, and IT systems supporting banking
services and products for clients . Cyber security in the
Group is constantly tested and upgraded by security
assessments, independent reviews, and penetration
testing, and also regularly discussed at the Bank’s
Information Security Steering Committee, Operational
Risk Committee, and Management Board meetings .
During 2023, the Group stepped up its cyber security
capabilities regarding human resources by hiring
specialists for different domains . Currently there are 35
FTEs hired in IT security as the first line of defence and
21 FTEs in the CISO corner, working as a second line
of defence . Additionally, improvements were made in
vulnerability management, with all Group members now
utilising a unified solution and configuration .
The team can conduct on-demand scans and stay
abreast of global trends and most recently published
vulnerabilities, which provides a more proactive
approach to the whole vulnerability remediation process
in the Group .
Several different new cyber security solutions were
introduced within the Group, and the implementation
process was initiated in all banks, leading to EUR 1 .9
million CAPEX and EUR 2 .0 million OPEX annually spent
at the Group level . The goal is to have Group unified
cyber security solutions in place, guaranteeing equal
levels of protection throughout all Group members .
The most significant achievement of the Group Cyber
security team is that almost all bank members in
2023 had individual on-demand requests for different
penetration testing services . More information about
cyber security is available in the chapter Compliance
and Integrity .
Continuous employee education and information
exchange
All employees in the Group are continuously educated
about the importance of information/cyber security,
as well as social engineering techniques . The banks
in the Group provide employees and customers with
security notifications, especially regarding threats
in the (global) environment with potential impact on
the banks’ IT systems, services, products, and clients .
The Bank also tests the awareness of its employees
with social engineering attack simulations . Threat
intelligence data is shared by the Group team with all
Group members, providing information on the latest
threats and recommendations on mitigation measures .
In conjunction with routine phishing simulations, the
Group Cyber Security team has deployed its proprietary
phishing platform and effectively executed simulated
internal employee phishing tests across all Group
members .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Human
Resources
As a frontrunner in the market, NLB Group
realises that investing in employees is crucial, and
understands that engaged employees are pivotal in
achieving our business goals and driving successful
outcomes . That is why the Group continued with
its long-lasting tradition of investing in employee
development, searching for new approaches, and
introducing new practices to improve organisational
culture, leadership, and employee experience .
Simultaneously, it firmly tries to uphold its "Top
Employer" status in the workforce market .
Employee Headcount
The Group continues with the optimisation of processes
and right-sizing its staffing level . Due to the acquisition
of N Banka, the number of employees rose to some
degree, but has downsized throughout the year to reach
7,982 by the end of 2023 .
Table 33: NLB Group headcount by countries
Country
Slovenia
Serbia
N . Macedonia
BiH
Kosovo
Montenegro
Germany
Switzerland
Croatia
Group Total
31 Dec 2023
31 Dec 2022 Changes YoY
2,689
2,480
2,833
2,614
-144
-134
962
990
468
390
0
2
1
954
971
467
380
1
2
6
8
19
1
10
-1
0
-5
best-in-class HR practices . In 2023, the Bank was
is actively enhancing the leadership competencies
once again recognised as a "Top Employer" by the
Dutch Top Employer Institute for the 8th consecutive
year, demonstrating a high level of expertise and
contribution in the areas of people strategy, leadership,
of its senior management to align with the changing
organisational culture . In line with this, the Group
undertook two major activities this year:
· Employees at the B and B-1 levels in the Group
digitalisation, talent acquisition and development,
received individual development and follow-up
performance management, sustainability, and a lot
coaching sessions on their development needs and
more . The Bank will continue to ensure an even more
action plans based on the M/I and L/I 360 feedback
stimulating work environment .
on culture impact .
"Top Employer" in
2023 for the 8th
consecutive year
Investing in
Employees:
A Longstanding
Tradition Continued
Organisational culture
Recognising the importance of organisational culture
in driving company development and success, the
Group has proactively embraced a comprehensive
approach to its enhancement . Following a thorough
assessment of the current organisational culture,
targeted activities have been initiated to foster more
constructive behavioural styles aligning with NLB’s
goals and target corporate culture . With the input of
employees, various improvement initiatives were defined
and implemented . The Bank introduced leadership
development programmes to improve psychological
· After an in-depth leadership assessment, the Group
development plans were aligned with strategy and
culture improvement .
Moreover, to ensure the leadership succession pipeline,
the Bank identifies potential successors in all Group
members .
Talent cultivation and innovation
The Group has identified talented employees in
leadership, professionalism, and youth potential .
They received additional opportunities, knowledge,
personalised development plans, essential skills to
manage and lead in future challenges .
The Bank has delivered two major internal Hackathon
initiatives to foster internal capabilities and an
innovative and entrepreneurial mindset . The Talents-on
Hackathon in the parent bank focused on developing
agile cooperation and introducing innovation . In
addition, the Data Science Hackathon was carried
out on the Group level to support the broadening and
exchanging of skills throughout the Group .
On average
employee spent
7 .2 days
on training activities
7,982
8,228
-246
safety and enhance organisational culture, focusing
Aspiring to maintain
"Top Employer" status
The Group continues strengthening its Human
Resources (HR) practices based on feedback from
reputable institutions and benchmarks with
on implementing and promoting corporate values and
work efficiency through meetings . Multiple initiatives
coupled with existing practices have proven to be an
effective way to support the desired development of
organisational culture .
Strategic leadership development
Working environments significantly impact employee
satisfaction, and leaders at all levels play an important
role in creating a productive atmosphere . The Group
110
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Developing NLB Employer Brand
The Group focuses on developing and actively
cultivating its Employer Brand to attract top-tier
talent across the region . The Group has implemented
various internal and external activities to show who the
Bank is as an employer . As a caring mentor, the Bank
cooperates with multiple universities throughout the
region, offering scholarships and career opportunities
to young talents . Also, it invites internal ambassadors
to promote and provide recommendations for
employment, offers various benefits to employees, and
introduces continuous improvements to its processes . As
a confirmation of the efforts, the Bank received two Best
Employer Brand Awards in the categories of banking
and the integration of corporate and employer brands .
Retention and Mobility
Based on the aligned Retention Policy in all subsidiaries,
the Bank strategically managed across the Group to
plan, respond, and accept some challenges based on
the workforce market by attracting, developing, and
retaining employees .
The Mobility Policy within NLB Group is well established
throughout the Group . The most commonly used type of
mobility is virtual teams, established in all entities and
across borders . In addition, some reassignments and job
rotations were carried out .
Engagement of employees
A crucial part of success is the motivation and
Ready to Face
Tomorrow’s
Challenges
Various training activities to embrace changes
The Group upholds rigorous standards characteristic
of a contemporary learning institution . In response
to the swiftly evolving business landscape, the Bank
has broadened its array of training programmes
to encompass emerging and pertinent subjects .
These include Generative AI, Change Management,
Data Analytics, Digital Literacy, ESG, Mergers and
Acquisitions, among others, reflecting the shifts in our
business and surroundings .
To that end, in addition to regular off-the-shelf
programmes, we organised a highly technical series of
internal ESG workshops for every NLB Group Member
focusing on green investments, ESG risk scorecards,
and EU taxonomy . We also organised many digital
literacy programmes covering subjects from Generative
AI tools to MS 365 and other productivity tools to boost
the understanding and effectiveness of our employees
and better prepare them for the continuously more
digital business environment . The main goal remains
to enhance the accessibility and availability of training
or programmes by offering a diverse range of online
content and simultaneously delivering high-quality
in-class training and workshops, whether conducted
engagement of employees . In 2023, 81 .5% of employees
internally or externally .
participated in the survey .
Figure 62: NLB Group Employee Engagement 2023
50%
37%
Engaged
Not engaged
Actively disengaged
13%
The majority of training hours in the Group are provided
through internal training (45%) and internal e-learning
programmes (24%), while external training (21%) and
Udemy for Business (10%) are also utilised .
In 2023, Udemy for Business was utilised across the
Group to a substantial number of employees, enabling
them access to 7,000+ quality training courses . The
objective is to empower employees to take control of
their professional development, providing them with
opportunities to upskill or reskill anytime, anywhere .
This approach aims to equip them with the necessary
capabilities to tackle upcoming challenges effectively .
A total of 3,200 employees across the Group benefited
from Udemy access, collectively engaging in 5,449 days
of video content, averaging 1 .7 days per employee with
a license .
111
Well-being & Health
The Group consistently prioritises imparting knowledge
about healthy habits and advocates for activities
contributing to employees’ well-being and satisfaction .
It fosters a healthy work environment conducive
to meaningful interpersonal connections and a
balanced work-life dynamic . The Bank proudly holds a
family-friendly certificate as a testament to these efforts .
In 2023, the Bank conducted training sessions on health
issues, addressing stress management and cultivating
healthy habits, mental well-being, mindfulness, personal
energy, and effective communication . An internal
sustainable mobility challenge ran from May through
November, promoting exercise – walking, running,
and biking – to reduce work commute-related carbon
footprint . Also, in 2023, the Bank organised a Group-
wide program called "Sustainability Festival", celebrating
environmental awareness and eco-friendly practices,
featuring engaging activities, insightful workshops, and
showcases of sustainable initiatives .
The Group continuously enables employees whose
presence on the Group’s premises is not essential to the
business process to work from home (remotely) . With it,
the Group is enabling employees, if they so choose, an
option to balance their work-life balance better .
7,982
employees in
the Group family
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The Role of
Remuneration
System in Fostering
Employee
Engagement and
Commitment
Table 34: Composed salary for an employee working in the
companies within NLB Group
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 the
salary for each member of the Management Board is
awarded and paid in cash if the variable part does not
exceed EUR 50,000 and is not higher than one-third of
their total remuneration for the respective business year .
The variable part of the salary for each member of the
Management Board is awarded and paid in cash and
instruments if the amount of the variable part exceeds
EUR 50,000 and is higher than one-third of their total
remuneration for the respective business year .
Fixed part Fixed pay is determined according to the
complexity of the job position for which the
employee has concluded a contract of employment .
Variable
part
It depends on the employee’s
working performance .
At least 50% of the variable part of the salary of the
Management Board member awarded for an individual
business year shall be deferred for a period of at least
five years, starting on the day of payment of the non-
deferred part of the variable part of the salary .
Employees are assessed and awarded:
- quarterly or half-yearly, and
- annual rewards related to the business
performance of the bank where they work .
A 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 they must be specific,
measurable, achievable, relevant, and time-bound .
In 2023, NLB initiated the transformation process
regarding the performance management and
reward system for employees on collective
agreement . The process of setting "SMART" goals
and cascading goals top-down by hierarchy
remains the same; changes are more related
to ensuring a more transparent and long-
term incentive scheme by implementing target
bonuses and yearly (for the business part of
the bank remains half-yearly) assessments .
All these changes will be implemented in
the Group in the upcoming period .
The Remuneration Policy for members of the
Supervisory and Management Boards of NLB
Members of the Supervisory Board may receive
In 2023, the Bank amended the Remuneration Policy,
which the Supervisory Board adopted in its session
on 26 October 2023 . It was then submitted to the
General Assembly of NLB for voting, which was held on
11 December 2023 . The Policy was not confirmed at the
General Assembly, but since the voting is of consultative
nature it has entered into force and is applicable as of
1 January 2024 . The Remuneration Policy will be further
improved and presented to the shareholders at the
next General Meeting .
The Remuneration policy for employees in NLB and in
the Group
The Remuneration Policy for Employees in the NLB and
the Group presents the basic framework of principles
for rewarding all employees in the Group . It defines
fixed and variable remuneration, the goal-setting
system and performance criteria (Key Performance
Indicators) and sets out the conditions for the awarding
and payment of the variable part of remuneration . The
Remuneration Policy includes provisions of deferral,
malus, retention, and clawback of the variable part of
remuneration compliant with the relevant resolutions of
the remuneration for identified employees, severance
the Bank’s General Meeting .
payments, and compensation for the non-competition
period for identified employees and pension benefits for
Members of the Management Board receive
all employees .
remuneration compliant with the relevant Remuneration
Policy of members of the Supervisory and Management
Boards of NLB .
Diversity Policy
Framework
The Policy on the Provision of Diversity of the
Management Body and Senior Management was
amended in 2022 and was adopted by the shareholders’
General Meeting in June 2022 .
The Diversity Policy sets the framework for the
Bank’s commitments to diversity . It focuses on the
representation in the Management Body and senior
management on certain aspects where specific goals
and implementation of these goals related to gender
structure, age structure, professional competencies,
skills and experience, continuity of composition of
the management body and senior management,
international experience, personal integrity, and
geographical provenance are defined .
The policy is annually reviewed by the Nomination
Committee of the Supervisory Board . The Bank
implements the principles of the Diversity policy through
other policies and procedures, namely the 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 Nomination
Committee of the Supervisory Board .
Objectives and process
Considering the size of the Bank, the Group members,
and their regional presence and business strategy, the
following aspects are essential to ensure diversity:
· gender representation
· age structure, which should reflect the age structure in
the Bank to the largest extent possible
· professional competencies, skills and experience;
· continuity of composition of the management body
and senior management;
· international experience;
· personal integrity;
· geographical provenance .
Goals related to the above-defined aspects of diversity
are defined in the relevant diversity policy and are
disclosed in NLB Group Sustainability Report 2023 .
112
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Corporate Governance
Corporate governance of the Bank is based on legislation of the RoS, particularly (but not exclusively) the provisions
of the Companies Act (ZGD-1) and the Banking Act (ZBan-3), the Decision of the BoS on Internal Governance,
Management Body, Adequate Internal Capital Assessment Procedure for Banks and Savings Banks, relevant
EBA Guidelines on internal governance, EBA Guidelines on the assessment of the suitability of members of the
management body and key function holders, EBA Guidelines on prudent remuneration, and relevant EU regulations
regarding sustainability issues and other applicable RoS and EU regulations .
Apart from a binding legal framework, the Bank
complies with the Slovenian Corporate Governance
Code for Listed Companies . The Code stipulates
governance, management, and leadership principles
based on the "comply or explain" principle of
companies listed on the Ljubljana Stock Exchange .
Deviations from the recommendations of the said
Code are published in the NLB Group Annual Report in
the section Corporate Governance Statement of NLB .
This statement is prepared in accordance with Article
70 (Paragraph 5) of the Companies Act (ZGD-1) . The
before-mentioned statement is also published on the
Bank’s website, as well as on the website of Ljubljana
Stock Exchange – SEOnet .
Rules and Procedures
The Bank’s Corporate Governance includes processes
through which Bank objectives are set and pursued
(directed and controlled) . Lately, it has become an
efficient way to channel investor-driven initiatives
related to sustainability . Corporate governance
principles identify the distribution of rights and
responsibilities among different stakeholders in
the Bank (Management and Supervisory Board,
shareholders, investors, creditors, auditor, regulators,
and other stakeholders), and include the rules and
Articles of Association of NLB d .d .
NLB operates under a two-tier governance system,
NLB Group Code of Conduct
In the NLB Group Code of Conduct, the values, mission,
defined by the Banking Act (ZBan-3) and Companies Act
and core principles of conduct are defined together with
(ZGD-1) . The Management Board manages the Bank’s
a set of guidelines to which the Group is committed . The
operations, and the Supervisory Board provides for
Code describes the values and basic principles of ethical
control and supervision of the Management Board’s
business conduct that the Group respects, promotes,
work . Shareholders exercise their rights at General
and expects to be followed by the whole Group .
Meetings of Shareholders . For more information, refer to
Operating with integrity and responsibility is key to the
the Bank’s website Corporate Governance .
Group’s corporate culture . The Code demands that
every employee, regardless of their job or location of
work, and every other stakeholder of the Group comply
with the highest standards of integrity .
Corporate Governance Policy
of the NLB and NLB Group
Governance Policy
The corporate governance framework of the Bank, the
Corporate Governance Policy of NLB (February 2023), is
drawn up jointly by the Management and the Supervisory
Boards of the Bank . In this policy, the Management and
Supervisory Boards publicly disclose commitments to
shareholders, clients, creditors, employees, and other
stakeholders as a whole and explain how the Bank is
managed and supervised, as well as adopt decisions
on which corporate governance code the Bank follows
(https://ww .nlb .si/corporate-governance) . The Corporate
Governance Policy of NLB should be read together with
the NLB Group Governance Policy (December 2023),
in which the corporate governance principles and
procedures for decision-making in corporate affairs . The
mechanisms of the Group members (NLB excluded) are
most important rules and procedures are:
defined and governed .
113
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Bank’s Governing Bodies
The Bank’s corporate governance is based on a two-
tier system in which the Management Board manages
the Bank’s daily operations, and the Supervisory Board
controls and supervises Management Board's work .
General Meeting of Shareholders
Supervisory Board
Management Board
The General Meeting of
Shareholders
The shareholders exercise their rights related to
the Bank’s operations at General Meetings . The
out the first tranche of distributable profit as dividends,
Both pay-outs in a total amount of EUR 110 million from
totalling EUR 55 million, which is equivalent to EUR 2 .75
the profit generated in 2022 are not included in the
gross per share .
capital base, meaning they do not affect the Group’s
capital ratios . With these pay-outs, the Bank remains
The General Meeting also adopted decisions on the
firmly on a path to fulfilling its ambition – a total capital
election of the Supervisory Board members . As the term
return through solid cash dividends in a cumulative
of office of four members of the Supervisory Board,
amount of EUR 500 million between 2022 and the end
Bank’s General Meeting passes decisions that follow
namely Deputy Chairman Andreas Klingen, Shrenik
of 2025 .
legislation and the Bank’s Articles of Association .
Decisions adopted by the General Meeting include,
among others, adopting and amending the Articles
of Association, use of distributable profit, granting
a discharge from liability to the Management and
Supervisory Boards, changes to the Bank’s share
capital, appointing and discharging members of
the Supervisory Board (representatives of capital),
remuneration of members of the Supervisory and
Dhirajlal Davda, Gregor Rok Kastelic, and Mark William
Lane Richards, expired, the General Meeting also
At the General Meeting, shareholders got acquainted with
appointed four members, of whom two were existing
the revised Remuneration Policy, which was not confirmed
and two were new . The shareholders
in the consultative vote . The Remuneration Policy enters
re-appointed Shrenik Dhirajlal Davda and Mark William
into force, irrespective of the outcome of the vote, and
Lane Richards . They also appointed two new members,
applies as of 1 January 2024 to the remuneration of the
namely Cvetka Selšek, a former CEO and Chairwoman
members of the Supervisory Board and the members of
of the Societe Generale SKB Bank (Slovenia), and
the Management Board, which refers to the period as of
André-Marc Prudent-Toccanier, a seasoned banker who
1 January 2024 . The Remuneration Policy will be further
Management Boards, and authorisation regarding the
has held various managerial positions in his 40-year
improved and presented to the shareholders by the next
characteristics of the issue of securities .
career at Societe Generale . All four were appointed
General Meeting .
There were two General Meetings of Shareholders in
2023 . At the 40th General Meeting of the Shareholders
dated 19 June 2023, the shareholders took note of the
adopted NLB Group Annual Report 2022 . They adopted
members began on the day of their appointment, while
More information on the work of the General Meeting
Cvetka Selšek and André-Marc Prudent-Toccanier
of the Shareholders activities is available in the chapter
assumed the position of members of the Supervisory
Board on 15 August 2023, after the ECB agreed to their
Corporate Governance Statement of NLB, and on the
Bank’s website .
the Report of the Supervisory Board of NLB on the results
appointment to their position .
for a four-year term of office, which for the existing
of the examination of the NLB Group Annual Report 2022
and the Report on remuneration in the business year
2022 with the Additional information to the Report on
remuneration in the business year 2022 based on SSH’s
Baselines, and the Internal Audit Report for 2022, with the
Opinion of the Supervisory Board of NLB .
The General Meeting adopted decisions on allocating
distributable profit from the previous year and granted
a discharge from liability to the Management Board and
Supervisory Boards . The shareholders decided to pay
The General Meeting also decided on payments to the
members of the Supervisory Board and its committees .
In the 41st General Meeting of the Shareholders held
on 11 December, shareholders confirmed the payment
of additional dividends at EUR 2 .75 gross per share
(the second tranche) or EUR 55 million, making a total
dividend pay-out in 2023 EUR 110 million . EUR 55 million
was already paid-out to shareholders on 27 June 2023 .
114
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The Supervisory
Board
In accordance with the Articles of Association, the
As at 31 December 2023, the Supervisory Board had the following members:
Supervisory Board consists of 10 members, eight of
whom represent the interests of shareholders and two
of whom represent the interests of employees . The
Members of the Supervisory Board of the Bank
representing the shareholders’ interests are elected
and recalled at the Bank’s General Meeting from
Representatives of Capital
Primož Karpe, M .Sc .
Chairman
Term of office: 2016–2020,
renewed term 2020–2024
Shrenik Dhirajlal Davda, MBA, LLB
Deputy Chairman
Term of office: 2019–2023,
renewed term 2023–2027
David Eric Simon
Member
Term of office: 2016–2020,
renewed term 2020–2024)
persons proposed by shareholders or the Supervisory
Board of the Bank . Members of the Supervisory Board
Link to CV
Link to CV
Link to CV
of the Bank representing employees’ interests are
elected and recalled by the Workers’ Council of the
Bank . All Supervisory Board members must be
independent experts .
Membership in
NLB Supervisory Board committees:
• Nomination Committee (Chairman)
• Audit Committee (Member)
• Operations and IT
Committee (Member)
Membership in
NLB Supervisory Board committees::
• Remuneration Committee
(Chairman)
• Risk Committee (Member)
• Audit Committee (Member)
Membership in
NLB Supervisory Board committees::
• Audit Committee (Chairman)
• Risk Committee (Member)
As at 31 December 2023:
Number of members:
Diversity:
Membership in management bodies
of related or unrelated companies:
• Angler d.o.o. – Director
• Aroma Global 3 Ltd. – Chairman
of the Supervisory Board
Membership in management bodies
of related or unrelated companies:
• Charity Commission of England and
Wales – Commissioner and Board
Member (since 27 March 2023)
• IPSO, UK – Lay Member of the
Board (since 8 March 2022)
• New Europe Capital Partners Ltd.
London, UK – Managing Director
Membership in management bodies
of related or unrelated companies:
• Jihlavan a.s. – Chairman of
the Supervisory Board
• Jihlavan Real Estate a.s. – Chairman
of the Supervisory Board
• Czech Aerospace industries sro –
Legal representative
10 48 are
out of 10
members were
female (40%)
representatives
of capital,
while 2 are
representatives
of workers
There was only one change in the composition of the
Supervisory Board in 2023 . At the General Meeting of
the Shareholders held on 19 June 2023, four members
were elected, two existing and two new, as mentioned
above . At the end of the year, the composition of the
Supervisory Board was as follows: Primož Karpe
(Chairman), Shrenik Dhirajlal Davda (Deputy Chairman),
David Eric Simon, Verica Trstenjak, Islam Osama Zekry,
Shrenik Dhirajlal Davda, Mark William Lane Richards,
Cvetka Selšek, Andre-Marc Prudent-Toccanier (all
of them shareholders' representatives), and Sergeja
Kočar and Tadeja Žbontar Rems (as employees'
representatives) .
Islam Osama Zekry, Ph .D .
Member
Term of office: 2021–2025
André-Marc Prudent-Toccanier
Member
Term of office: 2023–2027
Mark William Lane Richards, M .Sc .
Member
Term of office: 2019–2023,
renewed term 2023-2027
Link to CV
Link to CV
Link to CV
Membership in
NLB Supervisory Board committees:
• Operations and IT Committee
(Deputy Chairman)
• Nomination Committee (Member)
• Risk Committee (Member)
Membership in
NLB Supervisory Board committees:
• Risk Committee (Chairman)
• Operations and IT
Committee (Member)
• Audit 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
Membership in management bodies
of related or unrelated companies:
• None
Membership in
NLB Supervisory Board committees:
• Operations and IT
Committee (Chairman)
• Remuneration Committee
(Deputy Chairman)
• Nomination Committee
(Deputy Chairman)
Membership in management bodies
of related or unrelated companies:
• Vencap International pic
Ukraine (UK) – Chairman
• Berry Palmer & Lyle Ltd. (BPL
Global) (Lloyds of London insurance
Broker) – Non-Executive Director
• Sheffield Haworth Ltd –
Non-Executive Director
115
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Representatives of Capital
Cvetka Selšek
Member
Term of office: 2023–2027
Verica Trstenjak, Ph .D .
Member
Term of office: 2020–2024
Link to CV
Link to CV
Membership in
NLB Supervisory Board committees:
• Audit Committee (Deputy
Chairwoman)
• Risk Committee (Deputy
Chairwoman)
Membership in management bodies
of related or unrelated companies:
• Directors’ Association of
Slovenia – Deputy President
• Managers Association of Slovenia –
Member of the Honorable Tribunal
Membership in
NLB Supervisory Board committees:
• Nomination Committee (Member)
• Remuneration Committee (Member)
Membership in management bodies
of related or unrelated companies:
• None
Representative of Employees
Tadeja Žbontar Rems, M .Sc .
Member
Term of office: 2021–2025
Sergeja Kočar, M .Sc .
Member
Term of office: 2020–2024
Link to CV
Link to CV
Membership in
NLB Supervisory Board committees::
• Operations and IT
Committee (Member)
• Remuneration Committee (Member)
Membership in
NLB Supervisory Board committees:
• Nomination Committee (Member)
• Remuneration 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 Supervisory
Board is available in the chapter Corporate Governance Statement of NLB .
116
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Committees of the
Supervisory Board
The Supervisory Board appoints committees that
prepare proposals for resolutions passed by the
Supervisory Board, ensure their implementation, and
perform other expert tasks . The Bank’s Supervisory
Board has five collective decision-making and
advisory committees .
Selection and independence of an audit firm
The selection of and audit firm is carried according
to the internal act . A proposal for the criteria for the
appointment of the audit company and the minimum
conditions for cooperation are prepared, which also
include the mandatory disclosure of all possible (non-)
audit services . Based on the recommendation of the
Audit Committee, the Supervisory Board proposes the
appointment of an audit company, which is approved by
the Shareholders' Meeting .
The statutory auditor must assess and document
compliance with independence requirements before
accepting or continuing a statutory audit engagement .
The Audit Committee annually requires written
declarations of independence from the statutory
auditors, which must apply to both the audit firm and
the audit partners and senior personnel involved in the
audit engagement .
Audit Committee
Risk Committee
Nomination
Committee
Remuneration
Operations and
Committee
Information
Technology (IT)
Committee
David Eric Simon,
Chairman
Andreas Klingen,
Chairman
(until 19 June 2023)
Primož Karpe,
Chairman
Gregor Rok Kastelic,
Chairman
(until 19 June 2023)
Mark William Lane
Richards,
Chairman
Cvetka Selšek,
Deputy Chairwoman
(from 18 September
2023)
André-Marc
Prudent-Toccanier,
Chairman
(from 18 September
2023)
Andreas Klingen,
Deputy Chairman
(until 19 June 2023)
Shrenik Dhirajlal
Davda,
Chairman
(from 18 September
2023)
Islam Osama Zekry,
Deputy Chairman
Primož Karpe,
Member
Cvetka Selšek,
Deputy Chairwoman
(from 18 September
2023)
Mark William Lane
Richards,
Deputy Chairman
(from 18 September
2023)
Mark William Lane
Richards,
Deputy Chairman
Andreas Klingen,
Member
(until 19 June 2023)
Shrenik Dhirajlal
Davda,
Member
Shrenik Dhirajlal
Davda,
Member
Verica Trstenjak,
Member
Verica Trstenjak,
Member
Primož Karpe,
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 .
André-Marc
Prudent-Toccanier,
Member
(from 18 September
2023)
Islam Osama Zekry,
Member
Sergeja Kočar,
Member
Sergeja Kočar,
Member
Tadeja Žbontar
Rems,
Member
Gregor Rok Kastelic,
Member
(until 19 June 2023)
David Eric Simon,
Member
Islam Osama Zekry,
Member
Tadeja Žbontar
Rems,
Member
André-Marc
Prudent-Toccanier,
Member
(from 18 September
2023)
Gregor Rok Kastelic,
Member
(until 19 June 2023)
117
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
As at 31 December 2023, the composition of the Management Board was as follows:
118
The Management Board
The Management Board represents the Bank and
manages its daily operations, independently and at its
discretion, as provided by the applicable laws and the
Articles of Association of NLB . In accordance with the
mentioned Articles of Association, the Management
Board has three to seven members (the president and
up to six members) appointed and dismissed by the
Supervisory Board . The president and members of the
Management Board are assigned to a five-year term
of office . They may be reappointed or dismissed early
in accordance with the law and Articles of Association .
As at 31 December 2023:
Number of members:
Mandate:
6 5members
-year term
of office
In 2023, the composition of the Management Board
remained unchanged . The Management Board of the
Bank consists of Blaž Brodnjak as President & CEO,
Archibald Kremser as Chief Financial Officer (CFO),
Peter Andreas Burkhardt as Chief Risk Officer (CRO),
Hedvika Usenik as Chief Marketing Officer (CMO),
responsible for Retail Banking and Private Banking,
Blaž Brodnjak
CEO (since 2016)
Term of office: 2012–2016, 2016–2021,
renewed term 2021–2026
Peter Andreas Burkhardt
CRO
Term of office:
2013–2016, 2016–2021,
renewed term 2021–2026
Archibald Kremser
CFO
Term of office:
2013–2016, 2016–2021,
renewed term 2021–2026
Deputy CEO (since 2023)
Link to CV
Link to CV
Link to CV
Other important functions
and achievements:
• 22 years of experience in banking,
especially in Central Europe.
Other important functions
and achievements:
• More than 23 years of experience
in the financial services industry in
Austria, CEE, and SEE, focusing on
finance and asset management,
strategy and corporate
development, and performance
improvement assignments.
Other important functions
and achievements:
• More than 23 years of experience in
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,
a leading asset management
company in Slovenia and a
multinational production group.
Direct responsibility:
• Strategy and Business Development
• Legal and Secretariat
• Brand and Communication
• Human Resources and
Organisation Development
• Internal Audit
• Compliance and Integrity
Direct responsibility:
• Global Risk
• Credit Risk – Corporate
• Credit Risk – Retail
• Workout and Legal Support
• Restructuring
• Evaluation and Control
• Financial Instruments Processing
• Corporate Customer Delivery
• Retail Banking Processing
Direct responsibility:
• Financial Accounting
and Administration
• Controlling
• Financial Markets
• Group Real Estate Management
• IT Delivery
• IT Infrastructure
• Data Management
• IT Governance
• IT Security
• Procurement
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Supervisory Board:
NLB Banka, Podgorica
• Chairman of the Board of Directors:
NLB Komercijalna Banka, Beograd
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Supervisory Board:
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairman of the Supervisory Board:
Andrej Lasič as CMO, responsible for Corporate and
NLB Banka, Skopje
Investment Banking, and Antonio Argir, responsible for
Group governance, payments, and innovations .
• Chairman of the Board of Directors:
NLB Banka, Prishtina
• Member of the Board of Directors:
NLB Komercijalna Banka, Beograd
• President of the Association
of Banks in Slovenia
• President of the Board of
Governors: AmCham Slovenia
• Member of the Executive
Committee of the Handball
Federation of Slovenia
• Member of the Board of Directors:
• Cedevita Olimpija
NLB Banka, Banja Luka
NLB Banka, Sarajevo
NLB Lease&Go, Ljubljana
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Antonio Argir
Responsible for Group governance,
payments, and innovations
Term of office: 2022–2027
Andrej Lasič
CMO (responsible for Corporate
and Investment Banking)
Term of office: 2022–2027
Hedvika Usenik
CMO (responsible for Retail
Banking and Private Banking)
Term of office: 2022–2027
Link to CV
Link to CV
Link to CV
Other important functions
and achievements:
• Over 26 years of experience in
corporate and investment banking
in international banking groups.
Other important functions
and achievements:
• Over 21 years of experience in
international banking groups,
thereof more than 17 years of
managerial experience.
Other important functions
and achievements:
• Under the management of Antonio
Argir, NLB Banka, Skopje marked
exceptional growth in all segments
of its operations and was perceived
as the most innovative bank on the
market, with a significant increase
in the bank’s profitability, and
share price increased fivefold.
• Vice President of the
Economic Chamber of North
Macedonia (2018–2023)
Direct responsibility:
• Group Steering
• Cash Processing
• Payments Processing
• Payments and Cards Services
and Business Development
Direct responsibility:
• Capital Structure Advisory and
Cross-Border Financing
• Large Corporates
• Small and Mid Corporates
• Trade Finance Services
• Investment Banking and Custody
• NLB Group Corporate and
Investment Banking Management
Membership in management or
supervisory bodies of related
or unrelated companies:
• Member of the Supervisory Board:
NLB Lease&Go, Ljubljana
Membership in management or
supervisory bodies of related
or unrelated companies:
• Member of the Supervisory Board:
NLB Banka, Sarajevo
Direct responsibility:
• Private Banking
• Call Centre 24/7
• Distribution Network
• Customer, Product Management
and Digital Services
Membership in management or
supervisory bodies of related
or unrelated companies:
• Chairwoman of the Supervisory
Board:
NLB Skladi
• Member of the Supervisory Board:
NLB Banka, Banja Luka
• Member of Management Board:
Institute for Economic Research
• Member of Management
Board: British–Slovenian
Chamber of Commerce
Further information about the work and composition of the Management Board is available in the chapter Corporate
Governance Statement of NLB .
119
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Collective Decision-Making Bodies
The Management Board appoints different committees, commissions, boards, and
working bodies to execute relevant tasks within the powers of the Management Board .
Corporate Credit Committee
Assets and Liabilities Management
Committee of the NLB Group
NLB Operational Risk Committee
Change the Bank Committee
Chairman: CRO
Chairman: CFO
Chairman: CRO
Chairman: CEO
Number of members: 8
The Committee determines credit ratings,
makes decisions on the reclassification
of clients, and approves commercial
banking investment transactions and limits
beyond the directors’ competencies . The
Committee adopts decisions on investment
transactions in commercial banking
within the statutory powers in 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 . It analyses
the balance sheet, changes to and trends in
the assets and liabilities of the Bank and the
Group companies, and 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 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 to transform the
Bank and decisions associated with
adopting the development guidelines .
As a rule, the Committee meetings
are convened once a month .
Risk Committee
Group Real Estate
Management Committee
Chairman: CRO
Chairman: CFO
Sales Committee
Private Individual Credit Committee
Chairman: CMO (responsible for
Corporate and Investment Banking)
Chairman: Director of Credit Risk – Retail
Number of members: 12
Number of members: 3
Number of members: 13
Number of members: 5
The Risk Committee monitors and
periodically reviews matters related to
risk and commercial risk and prepares
materials for the Management Board
to make decisions . As a rule, committee
meetings are convened quarterly .
The Committee gives opinions on the
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 Sales Committee adopts decisions
on managing the range of products
and services and the relations with the
clients in 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 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
120
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Advisory bodies of the
Bank’s Management Board
Watch List Committee
Chairman: CRO
Number of members: 7
NLB Group Non-Performing Assets Divestment Committee
NLB d.d. Sustainability Committee
Chairman: Director of Workout and Legal Support
Chairman: CEO
Number of members: 7
Number of members: 20
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 NLB Group Non-Performing Assets
Divestment Committee monitors the operations of
Non-Core Group Members and issues opinions,
recommendations, and initiatives . As a rule,
committee meetings are convened quarterly .
The Committee oversees the integration of the ESG factors to
the NLB d .d . and the NLB Group members’ business model
in a focused and coordinated way across the company,
issues opinions, recommendations, and initiatives, and
takes relevant decisions when needed . The Committee shall
discuss, develop and approve sustainability strategies,
policies, initiatives, methodologies, KPIs and other relevant
procedures . It shall influence sustainability-related strategic
objectives and shall monitor its development and realisation .
As a rule, committee meetings are convened quarterly .
NLB Group’s Governance
As the parent bank, NLB implements the corporate
Model of Governance of NLB Group consists of three
(Internal Audit, Risk Management and Compliance,
and business governance of the Group members in
pillars:
compliance with EU and BoS legislation, the local
including AML, Information Security, Fraud
Prevention, and Physical Security) .
legislation, and regulatory requirements applicable
1 . Corporate Governance, which is carried out following
to respective Group members while also considering
fundamental corporate rules and governance
internal rules, ECB Guidelines, and other
applicable regulations .
The Group operating model is comprehensively defined
in the NLB Group Governance Policy through corporate
and business governance rules, principles, criteria, and
mechanisms which define the roles, authorisations,
and responsibilities of relevant stakeholders to ensure
that they act orchestrated and achieve the set business
goals . In the Bank, the Group Steering Department is the
principal partner of the Bank’s Management Board in
the corporate and partially also business governance
principles comprised of:
· shareholder voting at the General Meeting of NLB
Group members,
· proposing candidates for supervisory bodies of NLB
Group members,
· offering professional support to supervisory bodies of
NLB Group members,
· offering professional support in the selection of
candidates for management of NLB Group members,
· proposing candidates for various committees of NLB
Group members .
2 . Business Governance which is carried out through
of strategic and non-strategic Group companies .
mechanisms that ensure efficient business guidance
In line with strategic aspirations, the two key senior
and oversight:
functions were fully introduced in recent years: country
· setting up a formal business governance framework
managers who support and steer the Group members
by Group Steering,
and facilitate best practice-sharing on different levels,
· standardisation and harmonisation of operations
and stream coordinators who address the facilitation
across NLB Group by Competence Lines .
of more in-depth knowledge of competence lines and
greater integration between streams and the Group
3 . The Internal Control Functions serve as the
members, the increasing transmission of current
second and third lines of defence . In addition
information, needs, and other requirements from the
to standardisation and harmonisation in
Group members .
their respective areas, they also oversee the
implementation of group rules and requirements
121
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Figure 63: NLB Group Governance Model
General Assembly of NLB
Supervisory Board of NLB
Management Board of NLB
NLB Group Steering
Corporate Governance
Business Governance
Internal Control Functions
General Assembly
of NLB Group members
Supervisory Bodies
of NLB Group members
Management Boards
of NLB Group members
Competence Lines
Internal Audit
Group functions
Risk management
Competence Centers
Centers of Excellence
Group domains
Sustainability Management
Compliance(i)
(i) Including also AML, CISO, Fraud Prevention and
Physical Securtiy
The NLB Group consists of NLB and Group members
d .o .o ., Ljubljana), two companies were sold (Tara Hotel
NLB Group Governance Policy also provides the
who represent:
d .o .o . and Optima Leasing d .o .o . in liquidation), the
formal framework for the operation of other business
· financial core members: banks, leasing companies,
liquidation process of NLB Leasing d .o .o . Beograd–in
governance levels (i .e ., Group functions and Group
and asset management companies;
liquidation was completed, and the company was
virtual teams) and sub-groups (granddaughters), sets
· non-financial core members: real estate
management companies (from 1 January 2024) and
deleted from the court register .
the overarching formal framework and defines the roles
of key stakeholders in sustainability management, and
other non-financial companies;
In the last year, an in-depth revision and renewal of the
establishes clear communication and escalation rules .
· non-core members: companies in wind-down
existing NLB Group operating model was performed
The policy was adopted in December 2023 and will be
process or companies considered non-strategic for
due to recent changes in the Group structure and
subject to the Supervisory Board’s acknowledgement in
NLB Group .
business governance . As a result, the new NLB Group
February 2024 .
Governance Policy enhanced the role of Competence
At the end of 2023, the Group comprised 30 members,
Lines, which is the main business governance
The legal and organisational structure of the banking
six fewer than the previous year . In the core part of the
Group, the merger of N Banka to NLB was successfully
counterpart of the Group members, responsible for
harmonisation and standardisation of the Group
group, including a description of the internal governance
arrangements, the arrangements about close links
closed in September . Most of the changes relate to the
operations and, therefore, represents the highest level
and the arrangements regarding the governance of
reduction of the non-core part of the Group, namely two
of business governance hierarchy with professional,
subsidiaries, are available on the Bank’s website .
companies merged (SPV 2 d .o .o ., Beograd with REAM
competent, and qualified teams that are entirely or
d .o .o ., Beograd and REAM d .o .o . Zagreb, with S-REAM
at least primarily dedicated to the Group . The revised
122
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB
NLB Group
123
As such, all employees are included in yearly training
the ethical culture and values of the organisation
Compliance
and Integrity
The Group addresses the challenges of stringent
regulation and strict regulatory requirements with
a systematic approach to mitigating compliance
risks . It is essential to ensure that employees and
decision-makers know and understand the purpose
and objectives of the regulations . The Group is
continuously strengthening its compliance function
and due diligence of its operations .
A culture of compliance is integrated into day-to-day
business of the Group to support its operations,
contribute to its robust internal control environment, and
ensure that compliance risks are mitigated .
employees are committed to the culture of responsibility
to the customer, implementation of the planned business
results, care for the environment, and promotion of
a healthy lifestyle . The Bank acts in accordance with
the legislation and the rules of the profession, ethical
principles and good business practices, as well as
the values of the NLB Group . The confidence it enjoys
among the customers, fellow employees, shareholders,
and society gives it great responsibility . The Bank
justifies this trust by working with the stakeholders
for a positive change, mutual benefits, and growth .
and awareness-raising activities in general ethics,
anti-corruption, anti-money laundering, information
security, etc . The Group’s Code of Conduct was updated
in 2023 . It provides guidance and principles of expected
behaviour regarding ethical conduct and requires
adequate conduct from all the employees at any level of
the organisation, including its contractors .
Group-wide ethics and
integrity standards
Compliance and Integrity addresses the following areas:
Prevention
As part of the Bank’s commitment to ethics and integrity,
it has implemented various prevention activities to
protect the Bank and its stakeholders from the risk to
· Prevention and investigation of frauds, abuses and
reputation, money laundering, terrorist financing, fraud,
other types of misconduct (Fraud);
corruption, and other forms of financial crime .
· Prevention of money laundering and terrorist
financing (MLTFP) and restrictive measures;
· Personal data protection (DPO);
· Information protection (CISO);
· Regulatory compliance;
The Bank conducts regular assessments of compliance
risks, the so-called "Enterprise Compliance Risk
Assessment" (ECRA); the management of the Bank,
particularly Compliance and Integrity, can plan its
· Prevention of corruption and bribery (ABC) and
activities to reduce or mitigate compliance and integrity
management of conflicts of interest;
risks . As part of the compliance programme, Compliance
· Prevention of abuse on the financial instruments
and Integrity is also involved, among other things, in risk
market;
assessments regarding new and changed products, fit
· Cooperation in the procedure of assessment of
and proper assessments for key function holders, and
suitability of key function holders;
members of management bodies, outsourcing, and
· Efficient, consistent and proportional actions in the
other material changes affecting the Bank’s business .
event of identified deviations from compliance and
integrity;
Several workshops and mandatory e-training on ethics,
· Cooperation in the system of internal controls;
preventing corruption, conflicts of interest, protecting
· General professional ethics;
· Physical/technical security .
personal data, AML/CFT, Information Security, Physical
Security, and other relevant topics related to everyday
work were prepared as a standard compliance function .
Within the framework of the programme of ensuring
For all employees, yearly e-trainings are mandatory on
business compliance, the Group also deals with the
subjects such as prevention of insider trading and market
ethics and integrity of the organisation . The Group
manipulation, ethics, anti-corruption, mitigation of
2,363
4,179
The number of employees who completed
training on the Code of Conduct in 2023
The number of employees engaged and satisfied with
2,389
NLB
350
NLB Group
751
The number of suppliers and business partners who
signed or agreed to comply with the Code of Conduct,
anti-corruption policies, and conflict of interest policies
conflict of interests, personal data protection, information
security, and similar topics . The Group focuses on
promoting a corporate culture that facilitates compliance
and ethics . For this purpose, the Group regularly raises
awareness through various means, such as monthly
compliance newsletters, highlighting essential regulatory
changes and providing current information and case
studies relating to compliance and ethics .
The Bank is constantly improving the compliance
risk management system and regularly monitors
and implements activities, and also renews relevant
internal acts to manage compliance risks also in
individual areas, such as ensuring the compliance of the
management body, operations of the market of financial
instruments and custody, data protection, prevention
tax evasion, and obligations arising from the automatic
exchange of information on financial accounts and the
management of the system of internal controls and risks
brought by the new legislation .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The regime on inside
information (MAR)
In line with the Market Abuse Regulation (MAR) and
other relevant regulations, the Bank has established a
system at the level of the Bank and the entire Group for
managing and publicly disclosing inside information
on NLB in a manner that enables it to comply with the
obligations related to inside information identification
and disclosure according to the applicable rules and
regulations applicable at any time . Also, the Bank has
a system to implement the market abuse prevention
regime following the MAR guidelines to prevent insider
trading, market manipulation, and illegal disclosure of
inside information .
Prevention of Money
Laundering and Terrorism
Financing, and Financial
Sanctions Compliance
The Bank complies with national regulations on Anti-
Money Laundering and Countering the Financing
of Terrorism (AML/CFT), including the EBA, BoS, and
other competent authorities’ guidelines and standards .
The RoS is a member of the EU and thus subject
to the European AML/CFT Directives, which is how
the EU transposes the Financial Action Task Force
recommendations throughout the EU . For the Bank, it
is paramount to effectively mitigate the risk of money
laundering, financing of terrorism, and breaches
of financial sanctions . For these reasons, the rules,
procedures, and technology in the AML/CFT area are
subject to strict and unified policies and standards . The
same principles also apply to the Bank’s framework
on financial sanctions . The Bank regularly updates
and enhances its governance in line with directions
set by the BoS . Through the system of performing risk
assessment, regular reporting, and constant on-site and
off-site control, the headquarters effectively monitor
implementation and execution of standards throughout
the Group .
The Bank regularly performs customer due diligence
following the risk-based approach, and in the case of
increased risk performs additional measures, both in
the segment of "Know your customer" and ongoing
monitoring of transactional activities . In the case of
detected deviations, also considering the AML/CFT
indicators, the AML function of the Bank ensures the
review and, if AML/CFT legislation requires, reports
the customers and transactions to the competent
Financial Intelligence Unit . In its Acceptance Policy, the
Bank has also adopted additional measures to prevent
onboarding customers who do not correspond to its risk
appetite . The Bank also ensures a high awareness of the
AML/CFT and financial sanctions with regular training of
all Bank employees .
Information security and
personal data protection
The information security area, inter alia, is focused
on implementing measures to increase the level of
information/cyber security and the Bank’s overall
digital resilience by improving cyber threat intelligence
situational awareness and testing the cyber security
resilience of information systems (pen-tests) .
Furthermore, in 2023, the Bank also assessed the
information security status of 38 of the Bank’s
outsourcing providers according to EBA guidelines .
Special obligatory e-trainings in information security
and social engineering were prepared for all employees
– with one specially dedicated training for the Bank’s
Management Board members carried out as part of the
prevention measures in this area .
In response to a notable surge in cyber fraud attempts
targeting its customers, the Bank has implemented a
robust Brand Intelligence/Brand Protection service . This
enhancement enables NLB to swiftly and proactively
detect fraudulent NLB-like phishing portals, empowering
it to take decisive and independent actions to mitigate
threats posed by phishing campaigns targeting its clients .
New information security approaches were introduced
and implemented across the Group, improving the
visibility and autonomy of each local Chief Information
Security Officer (CISO) office in core subsidiaries .
The focus was on increasing awareness of the local
responsibility for information security management
following the subsidiaries' executive management risk
appetite, the organisation's ability to build defence,
124
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
and local regulatory compliance . The Bank continues
a robust brand protection tool, a testament to its
its membership in the only global cyber intelligence-
commitment to preserving the trust and confidence
sharing community focused on financial services
that customers place in the Bank . The Bank also
exclusively . All local CISO offices have access to
implemented a range of additional controls in web &
intelligence exchange platforms and cyber resilience
mobile e-banking channels .
resources to anticipate, mitigate, and respond to
cyber threats and NLB Group cyber threat intelligence
We are committed to ensuring the security of our
service was founded . To manage cyber risks, the Group
customers and employees, and as such, we have
is working on critical intelligence access, strategies
strengthened our approaches to managing risks
to address crisis events, and building a trusted
related to cyber security and preventing unauthorized
network of relationships . In 2023, the Group continued
payment transactions . We have been actively
the cyber-attack incident response exercise and
participating in The Bank Association (ZBS) initiatives,
participated in the 2023 FS-ISAC CAPS (cyber-attack
playing a pivotal role in educating the public about
against payment systems) exercise, which challenged
cyber and payment fraud prevention .
incident response teams to overcome a simulated attack
against systems and processes, locking part of the bank
We devote significant attention to employee training,
data through forced cooperation of a bank employee
informing about identified patterns of various
and receiving a demand for a payment of ransom .
The Bank runs its operations in line with GDPR
types of fraud, and providing recommendations for
process improvement .
requirements, including the retention and processing
Fraud prevention in loan origination processes is
of personal data, a dedicated Data Privacy Officer,
intricately linked to operational risk and requires a
education, and training of employees . A new Slovenian
comprehensive approach . We have implemented
Personal Data Protection Act (ZVOP-2) was adopted in
rigorous verification processes for new loan
2022 and is implemented in the Bank’s operations .
applications, including identity verification checks,
thorough credit history analysis, and cross-referencing
information from multiple sources to identify any
inconsistencies or fraudulent indicators .
Our involvement in these activities underscores our
dedication to fostering a secure and transparent
business environment . We remain steadfast in our
mission to uphold the highest standards of business
ethics, ensuring that our customers can engage with our
brand with absolute confidence .
Fraud prevention and
investigation
The Group has implemented a unified system and
standards for preventing and investigating suspected
misconduct . This framework enables anyone, both
internal and external stakeholders, to unhinderedly
report potential suspected misconduct through several
different communication channels, also anonymous .
The Bank uses various measures to ensure complete
and total protection of the informant from any potential
retaliation they could endure due to well-intended
reporting of a suspicion of harmful conduct and adheres
to commitments outlined also in the Whistleblower
Protection Act . A specialised team centrally handles
all reports received, following the detailed internal
procedures . Furthermore, the Bank has implemented
effective and appropriate reporting mechanisms for
management bodies .
In the past year, the Bank has made significant strides
in safeguarding its brand’s integrity . It has implemented
125
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
assurance regarding the management of key risks,
management of the Bank, and functioning of internal
controls; thereby strengthening and protecting the
value of the Bank .
Internal Audit is an 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
management of the Group operations on an ongoing
basis . Internal Audit provides impartial assurance
to the Management and Supervisory Boards on the
management of risks in key areas, i .e ., the internal
governance of risk data collection and risk reporting, the
ICAAP process, cyber security transformation processes,
digital banking platform, the Single Resolution Board –
SRB, ESG, anti-money laundry, outsourcing process, card
fraud management, remuneration, lending processes,
large exposure, RWA for credit and operational risk,
cash management in branches, and others .
Performed audits
Internal Audit performs its tasks and responsibilities
at its discretion and in compliance with the annual
audit plan approved by the Management and the
Supervisory Board . Based on its internal methodology
and comprehensive risk analysis for 2023, Internal Audit
planned 91 audits, of which 62 were completed and
covered various areas of operations in the Bank and the
Group . Moreover, 23 of these assignments were branch
inspections, four were conducted as group audits, five
were joint audits with a local auditor, three were quality
reviews in banking subsidiaries, and one new audit
was initiated . In addition, Internal Audit was involved in
several strategic projects as an advisor . Five planned
audits were postponed for objective reasons . Most of
the recommendations given in 2023 were implemented
within the agreed-upon deadlines .
Implementation
of uniform rules
Internal Audit continuously 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 . Internal Audit also introduces uniform
rules of operation of the internal audit function and
regularly monitors compliance with these rules within
the Group .
Following the highest
standards
In 2022, an external quality review of the internal audit
function was performed and confirmed that Internal
Audit and other internal audit services in the Group
operate in accordance with the following:
International
Standards
for the
Professional
Practice of
Internal
Auditing
Code of
Internal
Auditing
Principles
Banking Act
(ZBan-3) or other
relevant laws
regulating the
operations of a
Group member
Code of
Ethics of
an Internal
Auditor
91planned and
extraordinary audits
conducted in the Bank
36Internal Audit
experts
126
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
… as one team, towards a
common goal .
Slovenian
national soccer team
The
collective
dream
comes
true when
all hearts
beat
as one .
Corporate Governance Statements
128
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The Statement of Management’s Responsibility
In accordance with the provisions of Article 134
(2nd paragraph) of the Market and Financial Instruments
Act8, the Management Board hereby confirms the
statements made in the business report, which are in
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 material types of
accordance with the attached financial statements as
risks the Bank and the NLB Group companies included in
of 31 December 2023, and represent the actual and fair
the consolidation that are exposed as a whole .
financial standing of the Bank and the NLB Group as
well as their operating results in the year that ended
31 December 2023 .
Ljubljana, 10 April 2024
Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
129
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
8 ZTFI-1, Official Gazzete of the RoS, No. 77/18, 17/19 – corr., 66/19 in 123/21.
Contents
Authorisation to Perform Banking Services
NLB has an authorisation to perform banking services
pursuant to Article 5 of the Banking Act (Official Gazette
of the RS, No . 92/2021, with Amendments; hereinafter:
the ZBan-3) . Banking services are the acceptance of
5 . Issuance and management of other payment
13 . Credit rating services: collecting, analyzing
instruments (i .e . travellers’ cheques and banker’s
and disseminating information regarding
drafts) in the part in which this service is not
creditworthiness
included in service of point 4 of this Article
14 . Leasing of safe deposit boxes
deposits and other repayable funds from the public and
6 . Issuing of guarantees and other commitments
15 . Investment services and transactions, and ancillary
the granting of credits for its own account .
7 . Trading for own account or for the account of
investment services in accordance with the ZTFI
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:
1 . Receiving deposits
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
clients:
· in money-market instruments,
· in foreign exchange, including currency
exchange transactions,
· financial futures and options,
· exchange and interest-rate instruments,
· in transferable securities
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 and administrative services according
to the law governing investment funds and
8 . Participation in securities issues and the provision
management companies
of associated services
5 . credit brokerage for consumer and other types of
9 . Corporate consultancy with regard to capital
loans
structure, operational strategy and related matters,
6 . other services or transactions:
and consultancy and services in connection with
6 .1 . intermediation in financial leasing
corporate mergers and acquisitions
6 .2 . sale and purchase of investments in gold
10 . Monetary intermediation on interbank markets
non-current non-past-due receivables at a
11 . Advice on portfolio management
Authorisation to perform banking services is published
discount and without recourse, secured by
12 . Safekeeping of securities and other related
on the official website of the BoS .
financial instruments (forfeiting)
services
4 . Payment services and electronic money issuing
services
130
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Corporate Governance Statement of NLB
Pursuant to Article 70, paragraph 5 of the Companies
Act (ZGD-1)9 NLB hereby gives the following Corporate
Governance Statement of NLB d .d . as part of the
Business Report of the NLB Group Annual Report 2023 .
The main function of this statement is the prompt
informing of investors on the coherence of the Bank’s
corporate governance system .
1 . COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
1 .1 . References to the Code on
Corporate Governance
The recommended best corporate governance practices
contribute to a transparent and understandable
corporate governance system, which promotes both
domestic and foreign investor confidence, as well
as the confidence of employees, other stakeholders
(shareholders, regulators, suppliers, etc .), and the public .
A decision on which code the Bank will follow was made
jointly by the Management and Supervisory Boards
of the Bank by adopting the Corporate Governance
Policy of NLB .10 Last year, the Corporate Governance
Statement of NLB was made according to the renewed
version of the Slovenian Corporate Governance Code for
Listed Companies .
Compliance with the Slovenian Corporate Governance
Code for Listed Companies is explained in this statement
on a "comply or explain basis," in which the Bank
provides an explanation regarding deviations, reasoning
for non-compliance with a certain recommendation, or
alternative practices performed mostly due to stricter
banking regulation . The statement refers to the Bank’s
system of corporate governance from the beginning
to the end of financial year, which also corresponds to
the beginning and the end of the calendar year (from
1 January until 31 December) .
The Corporate Governance Statement of NLB is included
The Corporate Governance system of the Bank and
in the Business Report of the NLB Group Annual Report,
all relevant information on Bank’s management that
and is also published as a separate report on the Bank’s
exceeds the requirements of article 70 of the Companies
website in the chapter Corporate Governance .
Act (ZGD-1) are published in the chapter of Risk
Management of this annual report, where ESG Risk
NLB strives to increase the level of its business
Management for the year 2023 is described, as well as
transparency and informs the shareholders and
in the Sustainability chapter of this annual report, and
other expert community in line with the Guidelines
the NLB Group Sustainability Report 2023 . Some other
on the Disclosure for Listed Companies (Ljubljana
aspects about the functioning of the Bank’s managing
Stock Exchange, 18 December 2020) on an electronic
bodies are described in the chapter on Corporate
communications system of the Ljubljana Stock Exchange,
Governance of this annual report, as well as in the
and in line with Rules and Regulation of the Luxembourg
Corporate Governance Policy of NLB published on
Stock Exchange, as well as in line with the Rules of the
NLB’s website . Information on the Diversity Policy and
London Stock Exchange through Regulatory News
Remuneration Policy and ESG risks is also described in
Services (RNS) of the London Stock Exchange .
the Pillar 3 Disclosures, according to Basel standards .
NLB also upholds its own code of conduct . The NLB
Group Code of Conduct, which was revised in May 2023,
is a standardised document for all members of the
Group that defines values, lays down the standards of
ethical business conduct, and serves as the guideline
for all our relationships regardless of whether it involves
clients, competitors, business partners, state authorities,
regulators, shareholders, or internal relationships
between employees . At the same time, it is the basis of
the Group values and basic principles of conduct which
provide specific conduct guidelines to its employees .
The aim of this approach is to ensure compliance with
all applicable laws, regulations, and standards, and is
published on the Bank’s website .
131
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
9 The Companies Act (ZGD-1; Official Gazette of the RoS, No. 65/09 and consecutive changes).
10 February 2023.
Contents
2 . COMPLIANCE WITH THE SLOVENIAN CORPORATE
GOVERNANCE CODE FOR LISTED COMPANIES
The Bank does not follow, or partially implement,
and the NLB Group (December 2023), and in the Policy
or adhere to different, in most cases stricter,
on Conflict-of-Interest Management and Corruption
Recommendation 14.4: In 2023, the NLB Workers’ Council
did not report to the Supervisory Board despite being
banking regulations with regard to the following
Prevention of NLB d .d . and the NLB Group (April 2023) .
prompted . The NLB Workers’ Council will inform the
recommendations:
Recommendation 5.6: NLB does not provide an external
assessment of the adequacy of the Corporate Governance
Recommendation 12.1: In assessing a candidate’s
eligibility to be a Supervisory Board member, statutory
criteria are applied, however, according to the Policy to
Statement of NLB at least every three years since NLB is a
Assess the Suitability of the Management and Supervisory
professional services of NLB if it will have the intention to
report to the Supervisory Board in the future .
Recommendation 14.6: Access to the archives after
expiration of the term of office of the members of
systemically important bank with demanding regulation
Board Members in NLB (June 2022), it is not necessary
the Supervisory Board is determined by the Rules of
that takes into account high standards of corporate
for candidates to have a certificate evidencing their
Procedure of the Supervisory Board of NLB . Members of
governance . The Bank is highly regulated by a regulator
specialised professional competence for membership on
the Supervisory Board do not sign a special Agreement
and examined by the external auditor .
a Supervisory Board, such as the Certificate of Slovenian
on the access to the archives upon taking up the
Directors’ Association, or any other relevant certificate .
position . See also Recommendation 14 .2 above .
Recommendation 7: The Bank has publicly disclosed
its strategic document which serves as the overarching
However, all strict conditions must be fulfilled according
to banking legislature, including the wide range of
framework for sustainability management, replacing
knowledge, skills, and experience .
Recommendation 17.6: Decisions discussed at the
meeting are always available to members of the
Supervisory Board in the bank’s information system .
the previous NLB Sustainability Framework . The Bank
has also started activities to develop the comprehensive
NLB Group Net-Zero Strategy in line with the Bank’s
Recommendation 14.2: Currently, valid Rules of
Procedure of the Supervisory Board of NLB (2023) are
As soon as it is possible, but no later than two working
days after the meeting of the Supervisory Board, the
commitment to a climate-positive future and its net-
prepared according to strict rules governing banks . They
Secretariat prepares copies of the decisions adopted
zero ambition, following UNEP FI – NZBA guidance and
do not include provisions on the Agreement on access
at the meetings of the Supervisory Board and forwards
methodology . In December 2023, NLB Group published
to the archives after expiration of the term of office of
them to the proposer and all recipients listed in each
the first NLB Group Net-Zero Disclosure Report which
the members of the Supervisory Board, as the access
decision . An employee of the Secretariat, who is present
provides a comprehensive overview of the Bank’s efforts
to the archives after expiration of the term of office is
at the meeting, approves the amendments to the
and progress towards transitioning the operational and
determined by the provisions of the Rules of Procedure
resolutions and thereby confirms the consistency of the
attributable GHG emissions from lending and investment
of the Supervisory Board of NLB and not in a
content of the resolutions adopted at the meeting .
portfolios to align with pathways that are consistent with
special agreement .
achieving net-zero by 2050 or sooner .
Recommendation 7.2: The Sustainability Policy in NLB
d .d . and NLB Group was adopted by the Management
Recommendation 14.3: The Rules of Procedure of
the Supervisory Board of NLB do not include the
scope of topics and timeframe to be respected by the
Recommendation 19.1: In 2023, the Supervisory Board
members (representatives of capital and representatives
of workers) did not receive attendance fees, but received
payments for performing their function based on the
Board and the Supervisory Board of the Bank .
Management Board in its periodic reporting of the
decisions of the General Meeting of shareholders dated
Recommendation 7.4: The Sustainability Policy of
NLB d .d . and NLB Group contains basic due diligence
Supervisory Board . However, the scope of topics and
21 October 2019, 15 June 2020, and 11 December 2023 .
time frames of periodic reporting to the Supervisory
Remuneration of the members of the Supervisory Board
Board are included in annual Action Plan of the
is regulated by the Articles of Association and the
guidelines and measures for identifying risks and
Supervisory Board . Competent organisational units of
Remuneration Policy for the Members of the Supervisory
prevention of serious harm in relation to areas
the Bank take care that timely information is provided to
covered . Additionally, due diligence guidelines and
the Supervisory Board .
measures for identifying risk are further elaborated
in the Policy on the Respect for Human Rights in NLB
Board of NLB d .d ., and the Members of the Management
Board of NLB d .d .11 Recommendation 20: Minutes of
the Supervisory Board are taken by a professional
employee of the bank who was specified by the
132
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
11 The second version was adopted by the Supervisory Board on 19 October 2022 and approved by the General Meeting of shareholders on 12 December 2022. The third version was adopted by the
Supervisory Board on 26 October 2023 but was not approved by the General Meeting of shareholders on 11 December 2023. Since the voting is of consultative nature it has entered into force and is
applicable as of 1 January 2024.
Contents
Management Board to the Supervisory Board to assist in
the implementation of the Supervisory Board’s tasks .
Recommendation 23.5: In accordance with regulations
and the Remuneration Policy of the Members of the
Supervisory Board of NLB d .d . and the Members of
the Management Board of the NLB d .d, in 2023, NLB
awarded to the members of its Management Board
50% of their variable remuneration in share-linked
instruments: 50% of such instruments were handed over
to the members of the Management Board without any
deferral, and the remaining 50% of such instruments
will be handed over to the members of the Management
Board during a 5-year deferral period .
Recommendation 26.6: The Bank maintains a list of
transactions with related persons according to the
Banking Act (ZBan-3) . A list of transactions with related
persons is submitted to the Supervisory Board by
special demand .
Recommendation 30.4: NLB draws up its Financial
Calendar which is published on the Banks’ website,
and includes the date of the Annual General Meeting .
However, it doesn’t provide information on the dividend
payment date . Date is announced in the publication of
the Agenda and Proposed Resolutions to be passed at
the Annual General Meeting. The dividend payment date
is determined based on KDD’s Operations Rules (Central
Securities Clearing Corporation) .
Recommendation 32.7: NLB does not publish the rules
of procedure of its bodies (Management Board and
Supervisory Board and its committees) on its website .
However, each year the Bank discloses the composition,
competences, and work of its managing bodies in the
Corporate Governance Statement of NLB and publishes
it in the NLB Group Annual Report, on the Bank’s
website, as well as on the web page of the Ljubljana
Stock Exchange .
133
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
3 . MAIN FEATURES OF INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN
RELATION TO FINANCIAL REPORTING
NLB is governed by the provisions of the Capital
3 . The third level of controls is performed by the
assurances based on risk assessment, with a consultancy
Requirements Regulation (CRR), with amendments,
internal audit function, which assesses and regularly
and deep understanding of the Bank’s operations . In
together with all applicable delegated acts, the Banking
checks the completeness, functionality, and
addition, the Internal Audit carries out regular control
Act (ZBan-3) and the Regulation on Internal Governance
adequacy of the internal control system . An internal
of the quality of operation of the other internal audit
Arrangements, the Management Body and the Internal
audit is completely independent of both the first line
departments in the Group and takes care of constant
Capital Adequacy Assessment Process for Banks and
and the second-level control functions .
development of the internal auditing function .
Savings Banks regulating, and relevant EBA Guidelines,
among other, the Bank’s obligation to set up, maintain
In the event of deficiencies, irregularities, or breaches
The Supervisory Board of NLB must issue its approval
appropriate internal control, and risk management
identified in the process of implementation of internal
of the appointment, remuneration, and dismissal to
systems . Due to the above, the NLB has developed
controls the breaches are discussed at the Operational
the Head of the Internal Audit, which ensures their
a steady and reliable internal governance system
Risk Committee (which is the collective decision-making
independence and so, the independence of the work of
encompassing the following:
body appointed by the Management Board of the
the Internal Audit .
3 .1 . Internal control mechanisms
Suitability of the internal control mechanisms are
determined by the independence, quality, and validity of:
· the rules for and controls of the implementation of the
Bank’s organisational, business, and work procedures
(internal controls), and
· the internal control functions and departments (internal
control functions) .
3.1.1. Internal Controls
The policy entitled "Internal Control System" defines a
system of internal controls as set of rules, procedures,
and organisational structures . The system of internal
controls in NLB is designed to ensure that for each
Bank that is established for execution of individual
tasks within powers of the Management Board of the
Bank) . The mentioned committee adopts decisions so
b) The Risk Management Function
The Risk Management Function is organised according
that appropriate actions are taken, and informs the
to the Charter of the Risk Management Function of NLB
Management Board of the Bank about deficiencies and
adopted by the Management Board, in agreement with
actions taken on that behalf .
the Supervisory Board of NLB .
As NLB advances its commitment to sustainable and
The risk management function represents an important
responsible banking, updates to the Internal Control
part of overall management and governance system in
System policy, implemented in November 2023,
the Group . This function in NLB is organised within the
reflect our dedication to ensuring a comprehensive
Risk stream, covered by the member of the Management
approach to ESG governance, addressing ESG risks, and
Board in charge of risk (Chief risk officer - CRO) .
promoting responsible business practices .
3.1.2. Internal Control Functions
The internal control functions are part of the system of
The risk management function is performed by
the Global Risk function . In accordance with the
competences, authorisations, and responsibilities Global
key risk there is a process or other measure to reduce
the internal governance in the Bank . Internal control
Risk is represented by its General Manager . Global
or manage that risk and that process or measure is
effective for that purpose .
functions include:
Risk is in functional and organisational terms separate
from other functions where business decisions are
Mentioned policy introduces a new description of the
a) The Internal Audit Function
The Internal Audit function is organised according to
adopted and where potential conflict of interest may
arise with the risk management function . The head
three lines of defence, namely:
the Charter on the Internal Audit of NLB adopted by the
of the risk management function has direct access to
1 . First-level (or line) controls are implemented into
Management Board, to which the Supervisory Board of
the Management Board of the NLB, and at the same
business and non-business organisational units
NLB gave its approval .
(OU) .
2 . Second-level controls are divided between Risk
Management and Compliance control functions
The Management Board has set up an independent
internal audit function which gives assurances and
time has unhindered and independent access to the
Supervisory Board of NLB and the Risk Committee of the
Supervisory Board of the NLB .
(including AML/CTF and Information security
advice about risk management, internal controls
Risk management and control is performed through
management) that carry out independent controls
system, and management of the NLB . The mission and
a clear organisational structure with defined roles
and supervision over the operation of the first line of
the principal task of the Internal Audit is to consolidate
and responsibilities . The organisation and delineation
defence .
and secure the value of the Bank by issuing objective
of competencies is designed to prevent conflicts of
134
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
interest, to ensure a transparent and documented
Compliance and Integrity is an organisational unit of
decision-making process, and is subject to an
the Bank, placed directly under the Bank’s Management
appropriate upward and downward flow of information .
Board in the organisational structure . The Bank adopted
The competence line, Risk Management in NLB,
the Integrity and Compliance Policy of the NLB and the
encompasses several professional areas, and is in
NLB Group, which was revised in December 2023 . This
charge of formulating and controlling the Group’s risk
Policy regulates the method and scope of the activities
management policies, setting limits, overseeing the
of the compliance function in the Bank . Supervision
harmonisation, regular monitoring of risk exposures, and
over compliance of operations is within the competence
limits based on centralised reporting at the Group level .
of the Compliance and Integrity . This enables the
Compliance and Integrity to operate independently from
In members of the Group, the risk management
other Bank’s departments .
function is organised according to the local legislation,
considering the bases for setup, organisation, and
The Director of Compliance and Integrity does not
activities in risk management in the members, as
perform any other function at the Bank that could
defined in the document "Risk Management Standards
possibly lead to conflict of interests . To ensure his
in the NLB Group ."
c) The Compliance Function, Information Security
Function, and AML/CTF Function
Compliance and Integrity in the Group in its role as
independence, the Director reports directly to the
Management and Supervisory Boards . Additionally,
the Director provides regular updates to a designated
member of the Bank’s Management Board responsible
for overseeing compliance area (including information
internal control function performs control activities with
security, personal data protection, and AML/CTF
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) .
functions) . This arrangement provides additional
assurance for the independence of the Compliance and
Integrity operations .
As information security, AML/CTF, and Group AML
functions are organised within Compliance and Integrity,
CISO for NLB (Chief Information Security Officer), Group
CISO, DPO (Data Protection Officer), the head of the
AML/CTF area for NLB, and head of Group AML are
ensured full independence through equal reporting lines
as the Director of Compliance and Integrity . Following
NLB’s model, the compliance function was established
in the core members of the Group, as well based on the
Group standards for the compliance and integrity area .
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 source applications, and archiving pursuant to the
laws and internal regulations . Furthermore, the policy
precisely defines primary accounting controls, performed
in the scope of analytical bookkeeping, and secondary
accounting controls, i .e ., checking the efficiency of
implementation of primary accounting controls . With an
efficient mechanism of controls in accounting reporting,
NLB ensures:
· A reliable decision-making and operation support
system;
· Accurate, complete, and timely accounting data, the
resulting accounting, and other reports of the Bank;
· Compliance with legal and other requirements .
Financial statements of NLB and consolidated financial
statements of the NLB Group are audited by the
auditing company KPMG Slovenia d .o .o ., Ljubljana .
The mentioned auditing company was appointed
as the auditor of NLB by the 38th General Meeting of
shareholders of the Bank dated 20 June 2022 for the
financial years 2023 to 2026 .
135
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
share of 25% of the Bank’s voting shares . Approval for
The Management Board
ownership of the company’s securities in the sense of
the transfer of shares is issued by the Supervisory Board .
Articles of Association define that the Management
achieving a qualified stake as determined by the act
Board of the Bank is comprised of three to seven
regulating acquisitions
The Bank rejects the request for approval of transfer
members, one of whom is appointed President of
(Point 3 of the sixth paragraph of Article 70 of the ZGD-1)
shares if the acquirer, together with the shares held by
the Management Board of the Bank . The number
the acquirer before the acquisition and the shares held
of Management Board members is determined by
Significant direct and indirect ownership of the
by third parties for the account of the acquirer, exceeded
a resolution of the Bank’s Supervisory Board . The
company’s securities in terms of achieving a qualifying
the 25% share of the Bank with voting rights, increased
President and other members of the Management
holding as defined in the Takeovers Act (as at
by one share .
Board are appointed and recalled by the Supervisory
Board of the Bank; the President of the Management
31 December 2023) .
Shareholder
RoS
EBRD(i)
Schroders plc(i)
(i) In the form of GDRs.
Number of
shares
Percentage
of shares
Nature of
ownership
5,000,001
25 .00
shares
/ >5 and <10
/ >5 and <10
GDRs
GDRs
More information on the Bank’s Share Capital is
available on the NLB website .
Notwithstanding the provision mentioned in the first
Board may propose to the Chair of the Supervisory
paragraph, approval for the transfer of shares is not
Board of the Bank to appoint or recall an individual
required if the acquirer of the shares has acquired them
member or the remaining members of the Management
for the account of third parties, so that it is not entitled
Board of the Bank .
to exercise voting rights from these shares at its sole
discretion, while at the same time committing to the
The President and members of the Management Board
Bank, it will not exercise voting rights on the basis of the
shall be appointed for a period of five years and may be
instructions of an individual third party for whose account
re-appointed for another term of office . The President
it has acquired the shares if, together with the instructions
and members of the Management Board may be recalled
for voting, it does not receive a written guarantee from
prior to the expiry of their term of office in accordance
Explanation regarding the holders of securities that
that person that this person has shares for his own
with applicable laws and Articles of Association . Each
carry special control rights
account, and that this person is not, directly or indirectly,
member of the Management Board of the Bank may
(Point 4 of the sixth paragraph of Article 70 of the ZGD-1)
a holder of more than 25% of the Bank’s voting rights .
prematurely resign her/his term of office with a period of
notice of three months . Written notice shall be delivered to
The Bank did not issue any securities carrying special
The acquirer who exceeds the share of 25% of the
the Chair of the Supervisory Board of the Bank . The notice
controlling rights .
Explanation regarding the 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
Bank’s shares with voting rights and does not require the
term may be shorter than three months if requested by
issuance of approval for the transfer of shares, or does
the resigning member of the Management Board of the
not receive the approval of the Bank, may exercise the
Bank in his/her notice and is subject to the approval of
voting right from 25% of the shares with the voting rights .
the Supervisory Board of the Bank .
There are no restrictions other than those mentioned
A member of the Bank’s Management Board may only
and those that are regulatory .
be a person who fulfils the legally prescribed conditions
for a management board member under the law on
Explanation on the (i) company’s rules on appointment
banking and who obtained a licence from the BoS or
(Point 6 of the sixth paragraph of Article 70 of the ZGD-1)
or replacement of members of the management or
the ECB, if executing the competences and tasks from
supervisory bodies, and (ii) changes to company’s
Item (e) of paragraph 1 of Article 4 of Regulation (EU)
The shares of the Bank are freely transferable, subject to
Articles of Association
no . 1024/2013 for the performance of the function of
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
(Point 8 of the sixth paragraph of Article 70 of the ZGD-1)
a bank’s management board member under the law
regulating banking . The Bank assesses every candidate
The appointment or replacement of members of the
following the Bank’s Policy governing the Fit & Proper
the acquirer, together with the shares held by the holder
management or supervisory bodies
assessment prior to the appointment .
before such an acquisition and the shares held by third
parties for the account of the acquirer, exceeds the
136
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The Supervisory Board
for the performance of the function of a bank’s
The Supervisory Board of the Bank consists of a total
supervisory board member under the law regulating
of 10 members, of which eight members represent the
banking . The Bank assesses every candidate following
interests of shareholders and two members represent
the Bank’s Policy governing Fit & Proper assessment
the interests of employees . Members representing the
prior to the appointment .
interests of shareholders shall be elected and recalled
by the Bank’s General Meeting from persons proposed
by shareholders or the Supervisory Board of the Bank,
Amendments to Articles of Association
A qualified majority of at least 75% (seventy-five per
and members representing the interests of employees
cent) of the votes cast by shareholders at the general
shall be elected and recalled by the Workers’ Council
meeting of the Bank’s shareholders is required for
of the Bank . Members of the Supervisory Board
the adoption of any amendments of the Articles of
representing the interests of shareholders are elected by
Association .
an ordinary majority of votes cast by the shareholders .
Explanation regarding the authorisation of
The term of office of the Supervisory Board members
the members of the management, particularly
commences on the day their appointment enters into
authorisations to issue or purchase own shares
force (at the start of the term of office) and lasts up
(Point 9 of the sixth paragraph of Article 70 of the ZGD-1)
until the end of the Bank’s Annual General Meeting of
shareholders which decides on the use of accumulated
No authorisation exists which would authorise the
profit for the fourth business year since the start of their
members of the management to issue or purchase own
term of office, unless otherwise stipulated at the time
shares of the Bank .
of appointment of individual members . In this context,
the first year is deemed the business year in which the
members of the Supervisory Board of the Bank started
their term of office .
The General Meeting of the Bank may dismiss an
individual or all members of the Supervisory Board
(representatives of shareholders) even before the
expiration of their term of office . A resolution on a
dismissal shall be valid if adopted with at least a three-
quarter majority of all votes cast .
The Supervisory Board of the Bank shall at its first
meeting 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 banking act
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
137
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
The General Meeting is a body of the Bank through
share capital increase, the right to profit participation
Shrenik Dhirajlal Davda and Mark William Lane
which shareholders exercise their rights, which include
(dividends), and the right to a share in surplus in the
Richards, and also appointed two new members, namely
among others: decisions on corporate changes
event of liquidation or bankruptcy of the Bank and the
Cvetka Selšek, and André-Marc Prudent-Toccanier .
(amendments of the Articles of Association, increase
right to be informed .
or decrease of share capital) and legal restructuring
All four were appointed for a four-year term of office,
which for the existing members began on the day of
(mergers, acquisitions), adopting decisions on all
According to Article 296 of the Companies Act, NLB
their appointment, while Cvetka Selšek and André-Marc
statutory issues with respect to appointing and
informs shareholders on their rights as shareholders
Prudent-Toccanier assumed the position of members of
discharging members of the Supervisory Board
in an Information on the Rights of Shareholders that
the Supervisory Board on 15 August 2023, after the ECB
(representatives of shareholders), and appointment
is published among the documents for convocation
agreed to their appointment to their position .
of an auditor, distribution decisions (appropriation of
of each General Meeting (i .e ., on the expansion of the
distributable profit), and the granting of discharge from
liability to the Management and Supervisory Boards .
agenda, proposals by shareholders, voting proposals by
shareholders, and the shareholders right to be informed) .
The General Meeting of NLB also took note on Internal
Audit Report for 2022 and Opinion of the Supervisory
The General Meeting is convened by the Management
Board . The General Meeting may be convened by the
Supervisory Board in cases where the Management
There were two General Meetings of shareholders in
2023 . Shareholders gathered at the 39th General Meeting
on 19 June 2023 . At the General Meeting, shareholders
Board of NLB and adopted decision on Determination of
payments to members of the Supervisory Board of NLB
and its committees .
Board fails to convene the General Meeting or where
acknowledged the adopted NLB Group 2022 Annual
a convocation is necessary to ensure unhindered
Report, the Report of the Supervisory Board of NLB on
The 41st General Meeting of NLB Shareholders held on
19 December 2023 confirmed payment of additional
operations of the Bank . The Supervisory Board may
the results of the examination of the NLB Group Annual
dividends of EUR 55 million EUR (2 .75 gross per
amend the agenda of the General Meeting convened in
Report 2022, the Report on renumerations for the
share), making a total dividend pay-out in 2023 of
line with the bylaws .
business year 2022, and the Additional information to
EUR 110 million . With these pay-outs, NLB remains firmly
As a rule, the General Meeting of the Bank shall be
based on SSH’s Baselines .
convened at the registered office of the Bank, yet it
through solid cash dividends in a cumulative amount of
EUR 500 million between 2022 and by the end of 2025 .
the Report on remuneration for the business year 2022
on the path to fulfil its ambition – a total capital return
may also be convened at another venue specified by
The shareholders also decided on the allocation of
the convenor . The Management Board may stipulate
distributable profit for 2022 and granted a discharge
At the General Meeting, the shareholders became
that shareholders may attend or vote before or at the
from liability to the Management Board and Supervisory
acquainted with the revised Remuneration Policy, which
General Meeting by electronic means without physical
Board of NLB for the year 2022 . The distributable profit
was updated so that it ensures that the members of the
presence . The General Meeting of shareholders shall
adopt resolutions by simple majority of the votes
of the Bank as at 31 December 2022 amounted to EUR
515,463,762 .89 . Part of that profit, in the amount of EUR
management board are rewarded in accordance with
the long-term strategic goals of the NLB Group and
cast, unless the applicable laws or the Bank’s Articles
55,000,000 .00, was paid out as dividends (EUR 2 .75
with the interests and directions of the shareholders, the
of Association stipulate a larger majority or other
gross per share) .
conditions (adoption and amendments of the Articles of
relevant legislation, guidelines, and best practices with
the aim of with the aim of rewarding board members not
Association, issue of convertible bonds or other equity
The General Meeting of NLB adopted a decision on
only for their contribution to immediate financial success,
securities of the Bank, exclusion of pre-emptive right
election of members of the Supervisory Board of NLB .
but also to the overall sustainable development of the
of existing shareholders, decrease in share capital, the
As the term of office of four members of the Supervisory
NLB Group, growth and creation of long-term value
status restructuring of the Bank, liquidation of the Bank
Board of NLB, namely Deputy Chairman Andreas
for shareholders . The policy was not confirmed in the
and discharge of Supervisory Board members) .
Klingen, Shrenik Dhirajlal Davda, Gregor Rok Kastelic,
consultative vote, but nevertheless comes into force . Until
The shareholders have the right to participate at
General Meeting also appointed four members, of whom
Remuneration Policy and present it to the shareholders .
the general meeting of the Bank, the voting right,
two were already performing a function of a member of
The outcome of the vote is available to all interested
pre-emptive right to subscribe for new shares in case of
the Supervisory Board . The shareholders re-appointed
stakeholders on NLB’s website .
and Mark William Lane Richards had expired, the
the next General Meeting NLB will further improve its
138
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6 . INFORMATION ABOUT THE COMPOSITION AND WORK OF THE MANAGEMENT AND
SUPERVISORY BODY AND ITS COMMITTEES
6 .1 . Composition of the
Management Board
In 2023, the Management Board of the Bank consisted
of consists of six members, namely: Blaž Brodnjak as
President & CEO, Archibald Kremser as Chief Financial
Officer (CFO), Andreas Burkhardt as Chief Risk Officer
(CRO), as well as Hedvika Usenik as Chief Marketing
Officer (CMO) – responsible for Retail Banking and
Private Banking, Antonio Argir – responsible for
Group governance, payments, and innovations, and
Andrej Lasič as CMO – responsible for Corporate and
Investment Banking .
Work of the Management Board
Despite the uncertainties caused by decelerated
economic growth, and high inflation, NLB Group once
more demonstrated its resilience and delivered strong
results . The successful performance of NLB Group can
be attributed to the vigorous emphasis on prudent risk
management and unwavering focus on maintaining high
asset quality, a strong capital base, and robust liquidity
position, while remaining committed to ever-improving
excellent customer services and embracing opportunities
for further growth . In 2023, the Management Board
continued to work on the implementation of the NLB
Group Strategy and the inclusion of ESG factors into the
NLB Group business model .
The Management Board stayed focused on growth of
core business and was aware of all the risks possible
and eventual distress, while the bank helped customers
that faced difficulties due to strengthened market
conditions . In 2023, NLB Group delivered remarkable
business results . They enabled the Bank to pay out a
distributable profit for 2022 in the form of dividends in a
total amount of EUR 110 million, and thereby reaffirmed
NLB Group’s stable and successful business operations
and strong capital position . Dividends were paid in two
instalments, namely in the amount of EUR 55 million
in June 2023, and in the amount of EUR 55 million in
December 2023 .
There are many topics that the Management Board was
equal opportunities, as well as independent and
working on to remain the leading group in the region . We
professional corporate governance . To that extent the
stayed committed to further improvement and enhancing
Management Board was extremely proud of receiving
of the satisfaction and user experience of customers, and
an improved second ESG rating (December 2023)
to increase digital payment penetration and innovation
assessed by Sustainalytics (previous ESG risk rating was
in the payments area . As part of the digital agenda, we
improved by of 1 .7 points) .
launched our new "Klik," as our online bank "NLB Klik"
and mobile bank, "Klikin" merged into one modern digital
A detailed information on composition of the
bank "NLB Klik," which make it easier for our customers
Management Board can be found in Appendix C .1 of
to manage their finances . In the business network,
this statement .
we focused on enhanced advice to our customers . In
order to do that, we had to keep investing in advance
technologies and peoples’ strengths .
The Management Board successfully completed
the merger of N Banka (former Sberbanka that NLB
acquired in March 2022) into NLB that was formally
completed on 1 September 2023, and continued activities
on the business aspects of integration to make sure
that former clients of the bank will benefit from best of
both worlds . In 2023, the Management Board signed
an agreement for the acquisition of the largest leasing
company in Slovenia, which also has operations in
Croatia, and an agreement for the acquisition of the
third largest asset management company in North
Macedonia . Obtaining permits for the acquisition of
the Summit Leasing, Slovenia Group together with the
Croatian branch and Generali Investments Macedonia is
in progress .
The Management Board is deeply aware of the banks’
vital role in fighting climate change by supporting the
global transition of the real economy towards net-zero,
which is why we not only strive to reinforce, accelerate,
and support the implementation of decarbonisation,
but also want to lead by example . To that extent in
December 2023, our first NLB Group Net-Zero Disclosure
Report was published, which reaffirms our commitment
to achieving Net-Zero by setting targets for reducing its
financed emissions and maintaining a coal exclusion
policy by 2050 or sooner . Besides environmental
issues, the Management Board is equally active about
addressing social and governance topics, we advocate
6 .2 . Composition of the
Supervisory Board
At the beginning of 2023, the Supervisory Board of
NLB consisted of 10 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, David Eric Simon, Gregor
Rok Kastelic, Verica Trstenjak, and Osama Zekry,
while Sergeja Kočar, and Tadeja Žbontar Rems, were
representatives of the workers .
As already mentioned in this chapter, the term of office
of four members of the Supervisory Board expired .
The General Meeting on its session dated 19 June 2023
appointed four members, of whom two were existing,
while two members were new . On 31 December 2023,
the Supervisory Board of NLB consisted of Primož
Karpe (the Chairman), Shrenik Dhirajlal Davda (Deputy
Chairman), David Eric Simon, Mark William Lane
Richards, Verica Trstenjak, Islam Osama Zekry, Cvetka
Selšek, and André-Marc Prudent-Toccanier, and with
Sergeja Kočar and Tadeja Žbontar Rems serving as
representatives of the employees .
Statement of Independence of the Members of the
Supervisory Board
In accordance with Article 16 of the Articles of
Association of NLB, all Supervisory Board members
must be independent experts . Persons representing the
interests of employees in the Supervisory Board of the
139
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Bank are considered independent despite the existence
types of risk to steer the Group’s fulfilment of internal
During the year, the Supervisory Board adopted
of an employment relationship with the Bank upon
strategic objectives and fulfil all external requirements .
periodic reports of the Internal Audit, Compliance, and
fulfilling certain terms and conditions .
Consequently, the following items were discussed
issued approval to the transactions with persons in
and adopted – the NLB Group Risk appetite, the NLB
special relationship with the Bank, and to the conclusion
A statement of independence, in which they declare
Group Risk strategy, ICAAP and ILAAP of NLB Group,
of legal transactions in accordance with Article 170 of the
themselves on their meeting of the criteria of conflict of
the Recovery Plan of NLB Group, regular Risk reports
Banking Act .
interest, is provided by a candidate for a function of a
for NLB and NLB Group, other relevant risk reports and
member of the Supervisory Board, upon each change
information on Pillar III Disclosures .
that would mean change of his/her independence status
According to the recommendation of the Slovenian
Corporate Governance Code for Listed Companies,
and once a year (with the new statements published as
Through the year, the Supervisory Board
the Supervisory Board adopted a decision to engage
of January 2024) . It is published on the Bank’s website .
acknowledged regular reports on documents received
an external advisor for the evaluation of efficiency
from the regulator(s), namely, the Bank of Slovenia
and self-assessment of the Supervisory Board of NLB
Work of the Supervisory Board
In 2023, the Supervisory Board held seven regular
and ECB, and the implementation of the requirements
and the Audit Committee of NLB . It also adopted the
of regulators . As a systemically important institution,
Internal Audit’s Annual Report for 2023, the Internal
and nine correspondence sessions . In its work, the
the Group was included in the ECB Stress Test exercise
Audit Plan (2024 & the long-term plan), the Action Plan
Supervisory Board of NLB received professional
aiming to assess the resilience of the financial
for Compliance & Integrity for 2024, the regular periodic
assistance from five operational committees, namely:
institution, performed in H1 2023 . The Supervisory
reports on the Internal Audit, Compliance, and Security .
The Audit Committee, the Risk Committee, the
Nomination Committee, the Remuneration Committee,
Board was acquainted with the exercise, where the
results showed that even in a very unfavourable market
With the aim of ensuring sustainable development, NLB
and the Operations and Information Technology
condition defined by the EBA and ECB, the Group holds
Group strives to actively contribute to a more balanced
Committee . Mentioned committees function as
sufficient resilience in terms of capitalisation .
and inclusive economic and social system through three
consulting bodies of the Supervisory Board as they
lines of actions: sustainable operations, sustainable
discuss the materials and proposals of the Management
The Supervisory Board adopted decisions with regards
finance, and Corporate Social Responsibility . The
Board related to a particular area . Based on their
to the convocation of the two General Meetings of
Supervisory Board regularly adopts decisions related to
findings, the Supervisory Board passed the appropriate
shareholders . At the General Meeting of shareholders
sustainability and ESG issues .
resolutions . Each of the five committees is composed of
dated 11 June 2023, the General Meeting acknowledged
at least three members of the Supervisory Board .
itself with the Annual Report 2022, the Report of the
Throughout the year, the Supervisory Board has
Supervisory Board and the Additional information
maintained a well-balanced professional relationship
Through the year, the Supervisory Board monitored
to the Report on remuneration . The General Meeting
with the Management Board and enjoyed timely,
the implementation and effectiveness of the NLB
adopted a decision on the allocation of distributable
comprehensive, and data-supported inputs from the
Group’s Strategy and adopted the regular NLB Group
profit for 2022, and granted a discharge from liability to
latter, enabling the Supervisory Board to adopt all its
Sustainability Implementation Update and NLB Group
the Management and Supervisory Boards . The General
decisions in line with the professional interests of the
Payments Progress update . The Supervisory Board
Meeting of Shareholders acknowledged the adopted
Bank, whilst always adhering to banking regulations
issued approvals to the Management Board related
Internal Audit Report for 2022, and the positive opinion of
and its statutory powers .
to the Bank’s Business Policy and the NLB Group 2024
the Supervisory Board of NLB granted with the resolution
Budget and Financial Projections 2025 – 2028, adopted
of the Supervisory Board adopted on 23 February 2023 .
To ensure transparent decision-making at sessions of
the NLB Group Annual Report for 2022, and NLB Group
The General Meeting adopted decisions on the four
the Supervisory Board and at sessions of committees
Sustainability Report 2022, the Annual Internal Audit
proposed candidates for the Supervisory Board and
on which they sit, members of the Supervisory Board in
Plan, the Plan of Compliance & Integrity, and adopted
determined payments to members of the Supervisory
particular take into account all necessary precautionary
the Comprehensive Opinion of the Internal Audit .
Board of NLB and its committees .
measures to avoid conflicts of interest .
In order to implement effective corporate governance
The General Meeting, dated 11 December 2023, adopted
Pursuant to Article 282 of the Companies Act
arrangements, the Supervisory Board acted within
a decision on the allocation of second tranche of
(ZGD-1) and the above report, the Supervisory Board
its powers to ensure that the bank’s business goals,
the distributable profit for 2022, and approved the
of NLB established and ensured that it regularly
strategies, and policies were properly coordinated with
Remuneration Policy for the Members of the Supervisory
and thoroughly monitored the Bank’s and the NLB
the strategies and policies for assuming and managing
Board of NLB d .d . and the Members of the Management
Group’s operations in 2023 within its powers and
risks . The Supervisory Board was regularly informed
Board of NLB d .d ., whereby the vote on this resolution
efficiently supervised the Bank’s and the NLB Group’s
on the risk profile of the Group, and the corresponding
was of a consultative nature .
management and operations .
140
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Composition of the Supervisory Board members is
There were six regular, one extraordinary, and three
Board, the committee also regularly meets with
described in the Appendix C .2 of this statement .
correspondence sessions of the Audit Committee in 2023 .
representatives of professional services for individual
141
6 .3 . The Supervisory
Board Committees
All five Committees for the Supervisory Board function
as consulting bodies of the Supervisory Board of NLB
and discuss the material and proposals of Management
Board of NLB for the Supervisory Board meetings
related to a particular area . The Supervisory Board has
the following committees:
· The Audit Committee
· The Risk Committee
· The Nomination Committee
· The Remuneration Committee
· The Operations and IT Committee .
Committees are composed of at least three members
of the Supervisory Board . The Worker’s Council
can nominate one Supervisory Board member – a
representative of the workers into each committee . The
member of the Committee may only be appointed from
among the members of the Supervisory Board . The
term of office of Chair, the Deputy Chair, and members
of the Committee should not exceed their term of office
as Supervisory Board members . The responsibilities of
committees are defined in the Rules of Procedure of the
Committees of the Supervisory Board of NLB .
6 .3 .1 . The Audit Committee of the Supervisory Board
of NLB
The Audit Committee monitors and prepares draft
resolutions for the Supervisory Board on accounting
reporting, internal control and risk management,
internal audit, the compliance of operations, and
external audit, and as well monitors the implementation
of regulatory measures .
At the end of 2023, the composition of the committee was
as follows: David Eric Simon (Chairman), Cvetka Selšek
(Deputy Chairwoman), Primož Karpe, Shrenik Dhirajlal
Davda and André-Marc Prudent-Toccanier (members) .
Changes in membership of the committee that occurred
during the year, as well as academic degrees of the
Audit Committee members, are reflected in the chart on
the Supervisory Board Committees (Appendix C .2 below) .
The following is a summary of key topics considered by
areas covered by the committee . The president of the
the Audit Committee:
· The NLB Group 2022 Annual Report, Key Performance
Indicators; Comprehensive Opinion of Internal Audit for
committee also meets regularly with representatives of
the external auditor and regulators .
2022; Internal Audit Annual Report for 2022;Corporate
In 2023, the Audit Committee carried out a self-
Governance Statement of NLB; Statement on
assessment of its work with the help of an external
Management of Risk of the NLB, the NLB Group
independent evaluator, the Directors' Association of
Sustainability Report for 2022; the Report of the of the
Slovenia . Based on the findings, an action plan was
Audit Committee of the Supervisory Board of NLB to
prepared, which will be discussed and approved at the
the Supervisory Board of NLB about the statutory audit
Supervisory Board meeting in March 2024 .
for financial year 2022; Changes to fees for statutory
audit on NLB Group level; Annual Report for the 2022
6 .3 .2 . The Risk Committee of the Supervisory Board
ECRA – general risk assessment regarding integrity and
compliance operations at NLB and NLB Group; Audit
planning for 2023 financial statements;
· Regular interim reports on the operations of the
NLB Group and Business Performance Indicatory
of NLB
The Risk Committee monitors and drafts resolutions
for the Supervisory Board in all risk areas relevant to
the Bank’s operations . It is consulted on the Group’s
current and future risk appetite, the corresponding
for NLB and NLB Group, Quarterly Internal Audit
risk profile and risk management strategy, and helps
Reports, Compliance and Integrity Reports, Reports on
carry out control over senior management concerning
Information security assurance in NLB; Assessment of
implementation of the risk management strategy .
the NLB Group identified employees in control functions
for 2022; Approval of the payment of deferred variable
At the end of 2023, the composition of the committee was
part for Directors in control functions;
· NLB Group Internal Audit Plan (2024 & long-term),
Action Plan for Compliance and Integrity Centre
as follows: André-Marc Prudent-Toccanier (Chairman),
Cvetka Selšek (Deputy Chairwoman), Shrenik Davda,
Islam Osama Zekry, and David Eric Simon (members) .
for 2024;
· Regular reports on overdue material recommendations
of the Internal Audit; Reports on the documents
Changes in the membership of the committee that
occurred during the year are reflected in the chart on
Supervisory Board Committees (Appendix C .2 below) .
received from the BoS and ECB and on the
implementation of the requirements of the BoS and
There were five regular sessions of the Risk Committee
ECB; the Policy of the Internal Controls System; the
in 2023 . The following is a summary of key topics
Report on the court proceedings exceeding EUR 0 .5
million; reports on Restructuring of TOP 20 clients;
· Information about the costs of the Management
Board and Supervisory Board;
· Revision of Rules on the Prevention of Market Abuse
and Supervision over the Implementation of Personal
Transactions in the Provision of Investment Services
and Transactions in NLB d .d .; Revision of the Policy
Internal control system;
· Self-assessment of the Audit Committee for 2022 .
The Audit Committee performs its tasks both at the
meetings themselves and outside of the meetings .
considered by the Risk Committee:
· Risk Management Strategy of the NLB Group; Risk
Appetite of the NLB Group; Risk dashboard of NLB and
NLB Group; IT Security Architecture and Protection of
NLB Group; Report on status information security in
NLB and NLB Group;
· Internal liquidity adequacy process (ILAAP); The
Internal Capital Adequacy Assessment Process (ICAAP)
in NLB Group; the NLB Group Recovery Plan for 2022;
the Statement of Management of Risk of the NLB; the
ECB stress test findings related topics
· Regular quarterly risk reports of NLB and the NLB
Group; Pillar III Disclosures of the NLB Group for
In addition to considering materials at the meetings
2022 and Acknowledgement of quarterly Pillar III
themselves and preparing proposals for the Supervisory
Disclosures; Information on the status of information
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
security in NLB and NLB Group;
· Confirmation of the goals of identified employees;
· Report on the Top 50 groups of clients by exposure in
the NLB Group; Report on Top 20 largest restructuring
cases; Report on the material court proceedings for
NLB and NLB Group members;
· Information of the assessment of the NLB Group and
NLB results and identified employees in control function
for the year 2022; Approval of the payment of the
deferred variable part of the salary for the Director of
the Global Risk;
· Changes to Risk Appetite of the NLB Group; NLB Group
Non-Performing Exposure and Foreclosed Assets
There were five regular sessions of the Nomination
Committee in 2023 . The following is a summary of key
topics considered by the Nomination Committee:
· Determination and the appointment of the Deputy
President of the Management Board of the Bank;
· Fit and proper assessment – Candidates for members
of the Supervisory Board of NLB;
· The reassessment of suitability of the Supervisory
Board member;
· Compliance and integrity – prolongation of the
mandate;
· Annual review of the Diversity Policy .
· Salary increase of the Director of a controlled function;
Awarding of variable pay to the Management
Board members for financial years 2019 and 2020 in
instruments;
· Remuneration Policy for Employees of NLB d .d .
and the NLB Group – annual review; Report on the
implementation of the NLB remuneration policy to the
NLB Group members .
6 .3 .5 . The Operations and IT Committee of the
Supervisory Board of NLB
The Committee monitors and prepares draft resolutions
for the Supervisory Board, whereby the main tasks
Strategy for the period 2023 – 2025; Proposals for the
6 .3 .4 . The Remuneration Committee of the Supervisory
that it performs are the following: monitors the
issuance of prior consent of the Supervisory Board
of NLB for legal transactions based on Banking Act
Board of NLB
The Remuneration Committee carries out expert and
implementation of the IT Strategy, Information Security
Strategy, and Operations Strategy; monitors key
(ZBan-3) for large exposures; transactions with NLB
independent assessments of the remuneration policies
operations and IT KPI’s and service quality indicators;
Group members; and, prior consent to conclude legal
deal with MIGA .
and practices and formulates initiatives for measures
related to improving the management of the Bank’s
monitors key operations and IT projects and initiatives;
monitors operating risks in the area of Operations,
risks, capital, and liquidity; prepares proposals for
IT, and Security; monitors the recommendations for
6 .3 .3 . The Nomination Committee of the Supervisory
remuneration-related decisions of the Supervisory
ensuring and increasing the level of information/
Board of NLB
The Nomination Committee drafts proposed
Board; and supervises the remuneration of senior
cyber security issued by CISO; addresses the report on
management performing the risk management and
potential violations, events, and incidents in the area of
resolutions for the Supervisory Board concerning the
compliance functions .
appointment and dismissal of the Management Board
IT security; and monitors the Target Operating Model
implementation in the areas of IT, the Security Operating
members; recommends candidates for Supervisory
At the end of 2023, the composition of the committee
System, Competence Centre, and Operations .
Board members; recommends to the Supervisory
was as follows: Shrenik Davda (Chairman), Mark William
Board the dismissal of members of the Management
Lane Richards (Deputy Chairman), Verica Trstenjak,
At the end of 2023, the composition of the committee
and Supervisory Boards (representatives of capital);
Tadeja Žbontar Rems, and Sergeja Kočar (members) .
was as follows: Mark William Lane Richards (Chairman),
prepares the content of executive employment contracts
Changes in the membership of the committee that
Islam Osama Zekry (Deputy Chairman), Primož Karpe,
for the President and members of the Management
occurred during the year are reflected in the chart on
Tadeja Žbontar Rems, and André-Marc Prudent-
Board; evaluates the performance of the Management
Supervisory Board Committees (Appendix C .2 below) .
Toccanier . Membership of Janja Žabjek Dolinšek was
and Supervisory Boards; and assesses the knowledge,
terminated on 8 July 2022 . Changes in membership
skills, and experience of individual members of the
There were five regular and two correspondence
of the committee that occurred during the year are
Management and Supervisory Boards and the bodies
sessions of the Remuneration Committee in 2023 . The
reflected in the chart on Supervisory Board Committees
as a whole .
following is a summary of key topics considered by the
(Appendix C .2 below) .
At the end of 20223, the composition of the committee
was as follows: Primož Karpe (Chairman), Mark Richards
Remuneration Committee:
· The proposed goals of the NLB Group for 2023;
Assessment of goals for the members of the
(Deputy Chairman), Verica Trstenjak, Sergeja Kočar
Management Board of the NLB for 2022; Proposal for
and Islam Zekry (members) . Membership of the Bojana
Šteblaj was terminated on 12 September 2022 . Changes
in the membership of the committee that occurred
annual self-assessment of identified employees;
· Confirmation of financial goals of the NLB Group;
financial goals of NLB and goals for each member of
during the year are reflected in the chart on Supervisory
the Management Board of NLB for 2022; Confirmation
Board Committees (Appendix C .2 below) .
of the assessment of the NLB Group and NLB results
and identified employees in control function for
the year 2021; Confirmation of goals of identified
employees in controlled and supervisory functions;
There were five sessions of the Operations and IT
Committee 2023 . The Operations and IT Committee
acknowledged itself with:
· IT Strategy update; Procurement Strategy;
· Review of IT KPIs and Business Priorities; Data/BI
remediation progress update; Report on process
metrics;
· Information on the achievement of goals for 2022 in the
area of Information Technology in the Group;
· Performance Metrics; Data/BI remediation progress
update;
142
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
· Customer relationship management – Project update;
· Payment IT strategy update; Payment transactions –
analysis of process of optimisation;
· Information on Afina – N Banka integration; Digital
Banking Platform status; Artificial Intelligence and
advance analytics activities and plans in NLB Group;
BIT project rollout; OMNI project; Web project readiness
assessment .
143
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
7 . DESCRIPTION POLICY ON THE PROVISION OF DIVERSITY OF THE MANAGEMENT BODY
144
AND SENIOR MANAGEMENT
7 .1 . Description of the policy
NLB adopted amendments to the Policy on the Provision
of Diversity of the Management Body and Senior
Management of NLB d .d . (hereinafter: Diversity Policy)
in 2022 to align it with the stipulations of the changed
legislation and to address the concerns of stakeholders .
The amended Diversity Policy was adopted at the Annual
General Meeting on 20 June 2022 .
The Diversity Policy outlines specific goals for achieving
diverse representation on the Supervisory Board,
Management Board, and senior management . The
policy establishes various diversity goals, ensuring that
the composition of the management body encompasses
a collective proficiency in knowledge, skills, and
experience . This comprehensive approach aims to
foster a deep understanding of the Bank’s strategy,
challenges, and the associated risks .
This policy concurrently establishes a framework to
promote diversity across dimensions such as gender,
age, a spectrum of knowledge, skills, and experience,
international exposure, and geographical origin .
The Diversity Policy sets out the targets to be pursued
in terms of representation on the Supervisory Board,
Management Board, and senior management,
according to different diversity goals in order the
management body is composed in such a way that,
as a whole has the knowledge, skills, and experience
necessary for an in-depth understanding of the Bank’s
strategy and challenges, and the risks to which it
is exposed . The policy is annually reviewed by the
Nomination Committee of the Supervisory Board . The
Report on Diversity is adopted on the Supervisory Board
on a yearly basis .
The Bank implements the principles of the Diversity
Policy through other policies and procedures, namely
the 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
Nomination Committee of the Supervisory Board .
To achieve the objectives of this diversity policy, one of
the measure the influence the selection process is also:
if two candidates for the position of a member of the
Management Board or a member of the Supervisory
Board meet all the required tender criteria and at
the same time the target gender representation is
not achieved in a certain body, a candidate of the
underrepresented sex shall be selected .
7 .2 . Objectives of the policy
Considering the size of the Bank and the NLB Group, our
regional presence and business strategy, the following
goals are important to ensure diversity:
· Gender diversity – The Bank pursues this objective
by ensuring that all stakeholders involved in the HR
process strive to construct a well-balanced pool
of candidates during the recruitment process . This
involves considering the equitable representation of
the less-represented gender and achieving a suitable
balance between both genders in alignment with the
objectives outlined in the Policy . The establishment
and implementation of a comprehensive policy for
candidate selection create incentives for diversity
within the management body .
· Age diversity – The Bank pursues the achievement
of age diversity that accurately reflects the Bank’s
age demographics . To fulfil this objective, the Bank
employs recruitment channels designed to attract a
broad spectrum of candidates across different age
groups, ensuring representation from all demographic
segments in both the management body and senior
management . When appointing new candidates, the
Bank carefully considers the appropriate balance
between younger and older members within the
management body or the age distribution within
senior management .
· Professional competencies, skills, and experience – The
collective expertise of the management body must
encompass a diverse spectrum of knowledge, skills,
and professional capabilities . The composition shall
adhere to specific criteria, encompassing factors such
as experience, reputation, effective management
of potential conflicts of interest, independence, time
commitment, and the overall cohesion of the body . The
requests previously mentioned apply mutatis mutandis
to the senior management .
· Continuity of composition of the management body
and senior management – the Bank ensures a suitable
ratio between the existing and the new members
of the management body and senior management
by not changing all members of the management
body or senior management simultaneously when
mandates expire .
· International experience – The Bank should ensure a
suitable share of the management body and senior
management members with international experience
in different areas (e .g ., foreigners and Slovenians doing
business abroad) . To this end, the Bank has established
a timeframe, aligning with relevant policies for selecting
qualified candidates in the selection process .
· Personal integrity – The management body and senior
management members must achieve a high level of
personal integrity whereby integrity represents the
expected action and responsibility of individuals and
organisations in preventing and eliminating risks of
using authority, function, authority, or other decision-
making power contrary to law, legally permissible
goals, and according to the guidelines defined in the
NLB Group Code of Conduct .
· Geographical provenance – The Bank strives for
the management body members to have different
geographical provenances, ensuring that at the
collective level, the management body has suitable
knowledge of the culture, market characteristics, and
legal framework in the areas where the Bank operates .
Targets related to the above-defined aspects of diversity
for the management body and senior management
until the 2025 are defined in the Policy on the provision
of diversity of the management body and senior
management in NLB d .d . adopted by the General
Meeting dated 20 June 2022 (available at www .nlb .
si/general-meetings-in-year-2022 and www .nlb .si/
additional-disclosures-according-to-article-104-of-the-
zban-3) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
7 .3 . The manner the policy is
implemented
To achieve the objectives outlined in this diversity
policy, the following measures are applied:
· Upon the appointment of new members or re-
appointment of the members of the Supervisory Board
and Management Board, due consideration is given
to the 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 . The above applies
mutatis mutandis (with necessary adjustments) to the
appointment and re-appointment of the Bank’s senior
management .
· The pre-definition of conditions for the performance
of each function, including the required profile of
prospective members of the management body, occurs
prior to their appointment .
· Using recruitment pathways that attract a sufficiently
wide range of different candidates .
· Should two candidates for the position of a member
of the Management Board or a member of the
Supervisory Board meet all the required tender criteria
and at the same time the target gender representation
is not achieved in a certain body, a candidate of the
underrepresented sex shall be selected .
· In achieving the target representation of the
Management Board, as well as by a predetermined
replacement plan and by fulfilling another member of
the Management Board, as defined by the Articles of
Association of NLB .
· Considering the objectives of the diversity policy when
assessing the collective suitability of management and
supervisory bodies .
7 .4 . Results achieved
Implementation and the results achieved by the diversity
policy during the reporting period:
The Supervisory Board
It is estimated that the goals for 2023 were almost
achieved . Members of the Supervisory Board as a
whole cover an adequately wide range of knowledge,
skills, and professional experience of its members . The
Supervisory Board is composed with regard to the
following criteria: experience, reputation, management
of potential conflicts of interest, independence, available
time, and collective suitability .
The Senior Management
For 2023, we estimate that the goals were achieved, as
senior management at a high level met the requirements
Also, the Supervisory Board has a suitable ratio between
relating to the range of knowledge, skills, and
the existing and the new members considered when
professional experience . Regarding the requirements
appointing new members in Supervisory Board the ratio
related to international experience in various fields, it is
between existing and new members is not below 70% .
estimated that senior management has largely relevant
The members of the Supervisory Board have a high level
international experience . It is also estimated that 43% of
of personal integrity, a suitable share of members of the
women in senior management is appropriate .
Supervisory Board have international experience, and
have suitable geographical experience as set in the plan
for the year 2023 .
Since the term of office of four members of the
Supervisory Board expired in 2023, and to retain
the proportion of women in Supervisory Board this
criterion was also taken into consideration in the
recruitment process . Therefore, at the General Meeting
dated 19 June 2023 two male representatives were
re-appointed for the position, while among two new
members for the position, one member was female .
With this, we maintained the desired target value of
gender diversity almost at the planned level . The goal
for the members of the Supervisory Board has been
almost achieved with 40% of representation of women
on the Supervisory Board (on 31 December 2023) since
the plan set up for the year 2023 assumed a 42% share
of women .
Regarding the age structure of the Supervisory Board, it
is also considered appropriate, according to the plan set
up for 2023 as members of the Supervisory Board are
represented in the age groups from 40 to 60+ .
The Management Board
We estimate that the goals for 2023 have been achieved
as the members of the Management Board as a
whole meet a high level of requirements related to
the set goals, namely age structure, gender structure,
professional competencies, skills and experience,
and requirements related to relevant international
experience in various fields, personal integrity, and
geographical provenance .
In terms of gender diversity, the target set for 2023 was
accomplished, maintaining a representation of 16 .7%,
the equivalent of at least one woman .
145
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Regarding the age structure, it is also considered
appropriate, as senior management in the age structure
is very dispersed and is thus represented in all age
groups from 30 to 60 years .
Wide range of knowledge, skills and professional experience
Supervisory Board
of NLB
Management Board
of NLB
Senior Management
of NLB
2023
High
Plan for 2023
High
2023
High
Plan for 2023
High
2023
High
Plan for 2023
High
International experience of the members in different areas
Medium High
Medium High
Medium High
Medium High
Medium High
Medium High
Continuity of composition of the management body
Personal integrity
Geographical provenance
Age structure
Additional information on the framework, objectives, and
chart with set goals of the Diversity Policy can be found
in the NLB Group Sustainability Report 2023, as well as in
the chapter Human Resources in this Annual Report .
High
High
High
High
High
High
High
High
Medium High
Medium High
Medium High
Medium High
20-30 = 0
30-40 = 0
40-50 = 1
50-60 = 5
60+ = 4
0
0
2
5
5
20-30 = 0
30-40 = 0
40-50 = 3
50-60 = 3
60+ = 0
0
0
2
4
0
High
High
Low
20-30 = 0
30-40 = 1
40-50 = 23
50-60 = 14
60+ = 2
High
High
Low
0
1
18
16
2
7 .5 . Description of diversity policy
from a gender perspective
As already mentioned in point 7 .2: Gender diversity
7 .6 . Goals that are followed by the
Bank
Goals followed by the bank are published in the Policy
– The Bank pursues this objective by ensuring that
on the provision of diversity of the management body
all stakeholders involved in the HR process strive to
and senior management in NLB d .d . adopted by the
construct a well-balanced pool of candidates during
General Meeting dated 20 June 2022 (available at www .
the recruitment process . This involves considering
nlb .si/general-meetings-in-year-2022 and www .nlb .si/
With the changed composition of the Supervisory
Board in 2023, NLB achieved the first goal, which is a
representation of 40% of women in the Supervisory
Board of NLB (4 out of 10 members are women) . As far
as both goals together are concerned NLB is slightly
below 33% (5 out of 16 members) . Results of the gender
diversity in public companies are checked quarterly by
Deloitte and published on the website of the Slovenian
the equitable representation of the less-represented
additional-disclosures-according-to-article-104-of-the-
Directors’ Association .
gender and achieving a suitable balance between both
zban-3) .
genders in alignment with the objectives outlined in
the Policy . The establishment and implementation of a
Apart from goals in the Policy the Bank also respects
comprehensive policy for candidate selection create
and follows the initiative 40/33/2026 Slovenian Directors’
incentives for diversity within the management body .
Association, by voluntarily committing to achieving the
target of gender diversity by the conclusion of the year
In 2023, two new members of the Supervisory Board
2026 . This initiative entails achieving a representation of
were appointed and in order to retain the proportion
40% for members of supervisory boards and an overall
of women in Supervisory Board in the recruitment
33% representation for members of supervisory boards
process this criterion was also taken into consideration .
and management boards of the underrepresented
The goal for 2023 set for the Management Board was
gender in public joint-stock companies and state-owned
achieved and stayed on 16 .7% or one woman . It is also
enterprises by 2026 .
estimated that 43% of women in senior management is
appropriate (the set goal was slightly higher) .
146
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
7 .7 . Impact on selection procedures
Already explained in Point 7 .3 .
All the above criteria are considered in the selection
process for the members of the Management Board and
the Supervisory Board . In 2023, because of this objective
in the selection process, in order to maintain gender
diversity among the candidates for Supervisory Board of
NLB, one female representative was elected .
Statement on changes that occurred between the
end of accounting period up to the publication of this
statement
In accordance with Guidelines on Disclosure for Listed
Companies, point 6 .3 .2 (Ljubljana Stock Exchange,
18 December 2020) NLB hereby states that the following
changes occurred between the end of accounting
period up to the publication of this statement .
Ljubljana, 21 March 2024
Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
147
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 35: Composition of Management in financial year 2023 (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
Membership in supervisory bodies
in companies not related
to the company
148
Blaž Brodnjak
President
CEO
6 July 2016(i)
6 July 2026
Slovenian
1974
MBA
Banking/Finance
Archibald Kremser
Peter Andreas
Burkhardt
Deputy CEO/
Member
Member
CFO
CRO
31 July 2013
6 July 2026
Austrian
18 September 2013
6 July 2026
German
1971
1971
MBA
Banking/Finance
MBA
Banking/Finance
Banks‘ Association of Slovenia,
AmCham Slovenia,
Handball Federation of Slovenia,
Cedevita Olimpija
Antonio Argir
Member
Andrej Lasič
Member
Hedvika Usenik
Member
Responsible
for Group
governance,
payments and
innovations
CMO (responsible
for Corporate
and Investment
Banking)
CMO (responsible
for Retail Banking
and Private
Banking)
(i) Member of the Management Board since 2012.
28 April 2022
28 April 2027
Macedonian
1975
MBA
Banking/Finance
Economic Chamber of
North Macedonia
28 April 2022
28 April 2027
Slovenian
1970
Bachelor’s
degree
Banking/Finance
28 April 2022
28 April 2027
Slovenian
1972
MBA
Banking/Finance
Institute for
Economic Research
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 36: Composition of Supervisory Board and Committees in financial year 2023 (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
19 June 2023
Shrenik
Dhirajlal
Davda
Deputy
Chairman/
Member
10 June 2019
2027
David Eric
Simon
Member
4 August 2016
2024
Mark
William
Lane
Richards
Gregor Rok
Kastelic
Verica
Trstenjak
Cvetka
Selšek
André-Marc
Prudent-
Toccanier
Sergeja
Kočar
Tadeja
Žbontar
Rems
Islam
Osama
Zekry
Member
10 June 2019
2023
Member
10 June 2019 19 June 2023
Member
15 June 2020
2024
Member
19 June 2023
2027
Member
19 June 2023
2027
Member
17 June 2020
2024
Member
22 January
2021
2025
Member
14 June 2021
2025
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
capital structure
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
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
7/7
male
Slovenian
1970
MSc
Banking/
Finance
YES
YES
3/3
male
German
1964
University
Degree
Banking/
Finance
YES
NO
7/7
male
British
1960
MBA, LLB
Finance
YES
NO
7/7
male
British
1948
Higher
National
Diploma in
Business
Studies
Banking/
Finance
YES
NO
7/7
male
British
1966
MSc
3/3
male
Slovenian
1968
MSc
Banking/
Finance
Banking/
Finance
7/7
female
Slovenian
1962
PhD
Law
YES
NO
YES
YES
NO
NO
3/3
female
Slovenian
1951
University
Degree
Banking/
Finance
YES
NO
Angler d .o .o,
Aroma Global
3 Ltd .
Kyrgyz Investment,
Credit Bank
CISC, Nepi
Rockcastle N .V .
Charity
Commission of
England and
Wales, PSO, UK
Jihlavan a .s .,
Czech Aerospace
industries
sro, Central
Europe Industry
Partners a .s .
BPL Global
(Lloyds of London
insurance Broker),
Sheffield Haworth
Ltd, Vencap
International pic
Ukraine (UK)
Honorable
Tribunal of
Managers
Association of
Slovenia, Directors’
Association
of Slovenia
3/3
male
French
1955
MSc
Banking/
Finance
YES
female
Slovenian
1968
MSc
Management
YES
female
Slovenian
1968
MSc
YES
7/7
7/7
NO
NO
NO
IT
IT
YES
NO
CIB Housing
association,
Egypt, Egyptian AI
Council (Ministry
of Communication
and Information
Technology)
6/7
male
Egyptian
1977
PhD
149
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Shrenik Dhirajlal Davda
Mark William Lane Richards
Verica Trstenjak
Tadeja Žbontar Rems
Sergeja Kočar
Primož Karpe
Mark William Lane Richards
Verica Trstenjak
Sergeja Kočar
Islam Osama Zekry
David Eric Simon
Cvetka Selšek
Primož Karpe
André-Marc Prudent-Toccanier
Shrenik Dhirajlal Davda
André-Marc Prudent-Toccanier
Cvetka Selšek
Shrenik Dhirajlal Davda
David Eric Simon
Islam Osama Zekry
Mark William Lane Richards
Islam Osama Zekry
Primož Karpe
Tadeja Žbontar Rems
Remuneration Committee
Remuneration Committee
Remuneration Committee
Remuneration Committee
Remuneration Committee
Nomination 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
Risk Committee
Operational and IT Committee
Operational and IT Committee
Operational and IT Committee
Operational and IT Committee
28 June 2019
26 June 2020
18 September 2023
18 September 2023
26 June 2020
15 April 2016
18 September 2023
26 June 2020
26 June 2020
18 September 2023
7 April 2016
18 September 2023
15 April 2016
18 September 2023
28 June 2019
18 September 2023
18 September 2023
8 July 2021
7 April 2016
8 July 2021
28 June 2019
8 July 2021
15 April 2016
8 April 2021
André-Marc Prudent-Toccanier
Operational and IT Committee
18 September 2023
(i) There were also extraordinary sessions of the committees that are not reflected in this table.
2027
2027
2024
2025
2024
2024
2027
2024
2024
2025
2024
2027
2024
2027
2027
2027
2027
2027
2024
2025
2027
2025
2024
2025
2027
Chairman
Deputy Chairman
Member
Member
Member
Chairman
Deputy Chairman
Member
Member
Member
Chairman
Deputy Chairwoman
Member
Member
Member
Chairman
Deputy Chairwoman
Member
Member
Member
Chairman
Deputy Chairman
Member
Member
Member
Attendance at sessions of
SB’s Committees in regard
to the total number of SB’s
session (applicable on his/her
mandate)(i)
5/5
5/5
1/2
2/2
5/5
5/5
1/1
5/5
5/5
1/1
6/6
1/1
5/6
1/1
6/6
1/1
1/1
5/5
5/5
3/5
5/5
4/5
5/5
5/5
1/1
External member in committees (audit, nominal, income committee, etc.) - The Banking Act (ZBan-3) 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
150
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of Management of Risk
NLB d .d .’s Management Board and Supervisory Board
management and control system is primarily based on
being a prerequisite for adequate decision-making and
provide herewith a concise statement of the risk
Risk appetite and Risk strategy, which are consistent
the corresponding proactive management of ESG risks .
management according to Article 17 of the Decision on
with the Group’s Business strategy, and focused on
Internal Governance Arrangements, the Management
early risk identification and efficient risk management .
NLB Group plans a prudent risk profile, optimal
Body, and the Internal Capital Adequacy Assessment
Set governance and different risk management
capital usage, and profitable operations in the long
Process for Banks and Savings Banks (Official Gazette
tools enable adequate oversight of the Group’s risk
run, considering the risks assumed . The Business
of the RS, no . 73/15 and 115/2021), Regulation (EU)
profile, proactively support its business operations
strategy, the Risk appetite, the Risk strategy and the
575/2013, article 435 (Risk management objectives and
and its management by incorporating escalation
key internal risk policies of NLB Group, approved by
policies), points (e) and (f), as well as the EBA Guidelines
procedures, and using different mitigation measures
the Management Board and the Supervisory Board of
on Internal Governance (EBA/GL/2021/05) and EBA
when necessary . In this respect, the Group is constantly
NLB d .d ., specify the strategic objectives and guidelines
Guidelines on Disclosure requirements (EBA GL/2016/11) .
enhancing and complementing the existing methods
concerning risk assumption, the approaches and
and processes in all risk management segments .
methodologies of monitoring, measuring, mitigating,
Risk management in NLB Group, representing an
and managing all types of risk at different relevant
important element of the Group’s overall corporate
NLB Group is engaged in contributing to sustainable
levels . Moreover, the main strategic risk guidelines are
governance, is implemented in accordance with the
finance by incorporating environmental, social, and
consistently integrated into regular business strategy
set strategic guidelines, established internal policies,
governance (ESG) risks into its business strategies, risk
review, budgeting process, and other strategic decisions,
and procedures that take into account the European
management framework, and internal governance
whereby informed decision-making is assured . NLB
banking regulations, the regulations adopted by the
arrangements . With the adoption of the NLB Group
Group is regularly monitoring its target risk appetite
Bank of Slovenia, the current EBA guidelines, and the
Sustainability programme, the Group implemented the
profile and internal capital allocation, representing
relevant good banking practices . EU regulations are
main sustainability elements into its business model .
the key component of proactive management . Risk
followed by NLB Group, where the Group subsidiaries
The goal of this strategic, organisation-wide initiative
limits usage and potential deviations from limits or
operating outside Slovenia are also compliant with the
is to ensure sustainable financial performance of the
target values are regularly reported to the respective
rules set by the local regulators . NLB Group gives high
Group by considering ESG risks and opportunities in
committees and/or the Management Board of the Bank,
importance to the risk culture and awareness of all
its operations, and to actively contribute to a more
the Risk Committee of the Supervisory Board, and the
relevant risks within the entire Group . Maintaining risk
balanced and inclusive economic and social system .
Supervisory Board of the Bank .
awareness is engrained in the business and risk strategy
Thus, sustainable finance integrates ESG criteria into
of the Group . The business and operating environment,
the Group’s business and investment decisions for the
Additionally, NLB Group established a comprehensive
relevant for the Group’s operations, is changing with
lasting benefit of Group’s clients and society . Moreover,
stress testing framework and other early warning
trends such as sustainability, social responsibility,
in December 2023, NLB, as a member of the UN Net-
systems in different risk areas, with the intention to
governance, changing customer behaviour, emerging
Zero Banking Alliance, publicly disclosed its Net-Zero
contribute to setting and pursuing the Group’s business
new technologies and competitors, as well as increasing
commitment . With this step, the Bank pledged to align its
strategy, to support decision-making on an ongoing
new regulatory requirements . Respectively, risk
lending and investment portfolio with net-zero emissions
basis, to strengthen the existing internal controls, and
management is continuously adapting with the aim to
detect and manage new potential emerging risks .
by 2050 .
to enable timely response when necessary . The stress
testing framework includes all material types of risk,
The NLB Group Sustainability Committee oversees
as well those related to ESG, and various relevant
NLB Group uses the "three lines of defence framework"
the integration of the ESG factors into the NLB Group
stress scenarios or sensitivity analysis, according to
as an important element of its internal governance,
business model . The management of ESG risks
the vulnerability of the Group’s business model . Stress
whereby the Risk management function acts as a
addresses the Group’s overall risk management
testing has an important role when assessing the
second line of defence . The Group has enhanced
framework, namely the credit approval process,
Group’s resilience to stressed circumstances, namely
overall corporate governance, which is reflected in a
collateral evaluation process, and related credit
from profitability, capital adequacy, and in a liquidity
lower SREP requirement in recent years . The robust
and comprehensive Risk Management framework is
portfolio management . It follows ECB and EBA
guidelines with tendency of their comprehensive
forward-looking perspective . As such, it is embedded
into the Group’s Risk management system, namely
defined and organised with regards to the Group’s
integration into all relevant processes . The availability of
Risk appetite, ICAAP, ILAAP, and the Recovery plan, as
business and risk profile, based on a forward-looking
ESG data in the region where NLB Group operates is still
an important component of sound risk management .
perspective to meet internally set strategic objectives,
lacking . Nevertheless, the Group has set up the process
Besides internal stress testing, NLB Group as a
and all external requirements . The Proactive Risk
of obtaining relevant ESG-related data from its clients,
151
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
systemically important bank also participates in the
is stated . Moreover, in 2023, the Group has indicated
in the beginning of the year 2024 . In its initial round of
regulatory stress test exercises carried out by the ECB .
activities for further comprehensive enhancement of the
NZBA targets, NLB Group has focused on fossil fuel-
152
existing interest rate risk management . When assuming
based and highly energy-intensive sectors, such as
NLB Group is one of the largest Slovenian banking and
operational risk, NLB Group pursues the orientation that
power generation and iron and steel, and other sectors
financial groups with an important presence in the SEE
such risk must not significantly impact its operations . The
where the Bank has substantial emissions and/or
region . In accordance with its strategic orientations,
Risk appetite for operational risks is low to moderate,
exposure and available data . These include residential
it intends to be sustainably profitable, predominantly
with a focus on mitigation actions for important risks and
mortgages and commercial real estate .
working with clients in its core markets, providing
key risk indicators servicing as an early warning system .
innovative but simple customer-oriented solutions,
The conclusion of transactions in derivative financial
Values of the most important risk appetite indicators
and actively contributing to a more balanced and
instruments at NLB d .d . is primarily limited to servicing
of NLB Group as at the end of year 2023, reflecting
inclusive economic and social system . NLB Group has
customers and hedging the Bank’s own positions . In
interconnection between strategic business orientations,
a well-diversified business model . Efficient managing
the area of currency risk, the NLB Group thus pursues
risk strategy, and targeted risk appetite profile, were
of risks and capital is crucial for the Group to sustain
the goals of low to moderate exposure . Based on
long-term profitable operations . Based on the Group’s
environmental and climate risk assessment impact of
business strategy, credit risk is the dominant risk
these risks is estimated as low, except for a transition
category, followed by credit spread risk on the banking
risk in the area of credit risk which is assessed as low to
book portfolio, interest rate risk in the banking book,
medium . The tolerance for all other risk types, including
operational risk, liquidity risk, market risk, and other
non-financial risks . ESG risks do not represent a new
non-financial risks, is low with a focus on minimising
their possible impacts on the Group’s operations .
risk category, but rather one of risk drivers of the
existing types of risks, such as credit, liquidity, market,
The main NLB Group Risk Appetite Statement objectives
and operational risk . The Group integrates and
manages them within the established risk management
framework . Regular risk identification and their
assessment is performed within the ICAAP process with
the aim to assure their overall control and effective risk
management on an ongoing basis .
are following:
· preservation of regulatory and internal capital
adequacy;
· fulfilment of MREL requirement;
· maintenance of low leverage;
· improvement in the quality of the credit portfolio,
sufficient NPL coverage, sustainable credit risk
Managing risks and capital efficiently at all levels is
volatility, sustainable cost of risk across the economic
crucial for NLB Group sustained long-term profitable
cycle, limited Stage 2 exposures, sustainable industry
operations . Management of credit risk, representing
and individual concentration, sustainable exposure to
the Group’s most important risk, focuses on the taking
of moderate risks – a diversified credit portfolio,
adequate credit portfolio quality, a sustainable cost
of risk, and ensuring an optimal return considering
the risks assumed . The liquidity risk tolerance is low .
The NLB Group must maintain an appropriate level of
liquidity at all times to meet its short-term liabilities,
even if a specific stress scenario is realised . Further,
with the aim of minimising this risk, the Group pursues
an appropriate structure of sources of financing . The
Group limited exposure to credit spread risk, arising from
cross border, leverage, M&A and project financing;
· maintenance of a solid liquidity position, maintaining
stable customers’ deposits as the main funding base;
· diversification of risk in exposures to banks and
sovereigns;
· limited exposure to credit spread risk;
· limited exposure to interest rate risk;
· limited exposure to foreign exchange risk;
· sustainable exposure to ESG risks;
· sustainable tolerance to net losses from operational risk .
following:
· Total capital ratio 20 .3%,
· Tier 1 capital ratio 17 .0%,
· Common Equity Tier 1 ratio (CET1) 16 .4%,
· Leverage ratio 9 .6%,
· Cost of risk -7 bps,
· The share of non-performing exposure (NPE%) by
EBA 1 .1%,
· Non-performing loans coverage ratio (NPL CR) 64 .6%,
· Loan-to-deposit ratio (LTD) 66 .2%,
· LCR 245 .7%,
· NSFR 187 .3%,
· EVE sensitivity (of 200 bps) -4 .2% of capital,
· Transactional FX risk 1 .4% of capital,
· No new financing of coal mining and coal-fired
electricity generation (0 EUR),
· Net losses from operational risk 20 .0% of capital
requirement for operational risk .
During 2023, the Group’s credit portfolio quality
remained high-quality and well-diversified, with a
stable rating structure and lower NPLs level . The
Group recorded a slower credit portfolio growth in all
segments after strong new corporate and retail loan
origination across all markets in previous year due to
inflationary pressures, higher interest rates, and low
GDP growth . The impacts of the floods in Slovenia were
estimated as negligible, and only minor client credit
quality deterioration or received collaterals occurred .
Besides, the Group monitored the macroeconomic and
the valuation risk of debt securities portfolio servicing
During the year 2023, sustainable ESG financing
geopolitical circumstances closely, remaining very
as liquidity reserves, to a moderate level . NLB Group’s
in accordance with Environmental and Social
prudent in identifying any increase in credit risk at a
basic orientation in the management of interest rate risk
Management System (ESMS) was integrated in the
very early stage, and proactive in NPL management .
is to limit unexpected negative effects on revenues and
Group’s Risk appetite and overall risk management
The cost of risk remained at a very low level, mainly
capital that would arise from changed market interest
framework . In addition, publicly disclosed its Net-Zero
due to the successful collection of previously
rates, and therefore, a moderate tolerance for this risk
commitment was addressed in the Group’s Risk appetite
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
written-off receivables, revised risk parameters, and
demand for fixed interest rate products led to moderate
Slovenija and its subsidiaries, while NLB Skladi signed
stable portfolio development in the SEE region .
interest rate risk exposure, which stayed well within the
SPA for acquiring a majority shareholding in Generali
153
The Group stayed well capitalised and well above the
risk appetite tolerance .
Investments AD Skopje . Otherwise, during 2023 there
were no other transactions of sufficiently material nature
risk appetite at both the Group and banking member
Consequently, NLB Group concluded the year 2023
to impact on NLB Group’s risk profile or distribution of
levels . The liquidity position of the Group also remained
as self-funded, with strong liquidity and a very solid
the risks on the Group level .
solid, with liquidity indicators high above the regulatory
capital position, demonstrating the Group’s financial
requirements, indicating its low tolerance for this risk .
resilience . Moreover, in 2023, NLB’s ESG Risk Rating
The Condensed Statement of the management of risk
Significant attention was put into the structure and
assigned by Sustainalytics was revised and improved .
is also published on the NLB intranet with the aim
concentration of liquidity reserves by incorporating early
The assigned rating reflects a low risk of experiencing
of strict adherence of the banks’ employees at daily
warning systems, while at the same time considering
material financial impacts from ESG factors . N Banka,
operations of the Bank, as regards the definition and
the potential adverse negative market movements .
which legally and operationally merged at the end of
importance of a consistent tendency of the adopted
Investment activity continued with a balanced approach
September 2023 with NLB d .d ., had a similar business
risks, and ways to take into account when adopting its
to finding attractive market opportunities while pursuing
model to the Bank’s or the Group’s, and so, its impact
daily business decisions .
well-managed credit spread and interest rate risk, as
on the Bank’s and Group’s risk profile at the end of
well as capital consumption . Raising the interest rate
the year 2023 was rather limited . In addition, NLB
environment and corresponding increased market
signed a SPA for 100% shareholding in Summit Leasing
Ljubljana, 21 March 2024
Supervisory Board of NLB
Primož Karpe
Chairman
Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement on Non-Financial Operation
In accordance with Article 56 and in conjunction
with Article 70c of the Companies Act, the Bank has
· The main risks regarding the aforementioned issues
are listed in Sustainability Strategy, Climate (Net-
· the recommendations of the Task force on Climate
Related Financial Disclosures (TCFD) - in line with the
prepared a consolidated Statement on Non-Financial
Zero) Strategy, Sustainable Finance and ESG Risk
requirements and recommendations of the Financial
Operation as a separate report, called the NLB Group
Sustainability Report 2023 .
Management .
· Key non-financial performance indicators which are
important for specific activities are described in 2023
Conduct Authority (FCA); and
· the Global Reporting Initiative (GRI) Sustainability
Reporting Standards .
The consolidated report enables interested parties to
NLB Group Sustainability Report and summarised in
understand the material dimensions of the NLB Group’s
Chapter Sustainability KPIs and Targets .
The NLB Group Sustainability Report 2023 is published
development, performance, and position, and the
on the Bank’s website, on the Ljubljana Stock
impact of its activities, and includes the following non-
In addition to the aforementioned information, the
Exchange’s SEOnet system, on the websites of the
financial information, which is disclosed in NLB Group
report discloses information based on the following
Agency of the Republic of Slovenia for Public Legal
Sustainability Report 2023:
· NLB Group’s business model, which is presented in
Chapters NLB Group at a Glance and Sustainability
Strategy .
· Policy description and results on environmental, social,
and human resources matters are described in Chapter
Sustainability Strategy and related chapters, and
Climate (Net-Zero) Strategy .
· Policy description and results on respect for human
rights are described in Chapter Respecting Human
Rights .
· Policy description and results on anti-corruption and
anti-bribery matters are covered in Chapter Fighting
against corruption and bribery .
Ljubljana, 10 April 2024
Management Board of NLB
legal bases, requirements, recommendations, and
Records and Related Services (AJPES), and on the
reporting frameworks:
· EU Taxonomy: Regulation (EU) 2020/852 establishing
a framework for the promotion of sustainable
London Stock Exchange (LSE), at the same time as the
NLB Group Annual Report 2023 .
investments and the delegated acts adopted under this
The NLB Group’s Consolidated Annual Report 2023 is
Regulation;
· Requirements and recommendations of regulatory
authorities: Bank of Slovenia (BS), Securities Market
Agency (SMA);
· the United Nations Principles for Responsible Banking
(UN-PRB United Nations Principle for Responsible
Banking);
· ECB Guide on Climate and Environmental Risks;
· the European Commission’s Guidelines on
Non-Financial Reporting;
thus in line with the requirements of the Companies Act
(ZGD-1), which requires public interest entities with an
average number of employees exceeding 500 on the
balance sheet cut-off date to include a Statement on
Non-Financial Operation in their business report .
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
154
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
That is why NLB has
been proudly supporting
Slovenian sports for
decades .
Slovenian
table tennis team
It takes
control,
timing, and
unwavering
focus
to win .
Disclosure on Shares and
Shareholders of NLB
1 . Information pursuant to
the Companies Act (ZGD-1),
Article 70, paragraph 6
1 .1 Structure of the Bank’s
share capital
The Bank has issued only ordinary registered no-par
value shares, the holders of which have a voting right
and the right to participate in the General Meeting of the
Bank’s shareholders, the pre-emptive right to subscribe
for new shares in case of a share capital increase,
the right to profit participation (dividends), the right
to a share in the surplus in the event of liquidation or
bankruptcy of the Bank, and the 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 2023) is available in the
subchapter Shareholder Structure of NLB in the chapter
Shareholder Structure and Market Performance of NLB’s
Shares and GDRs .
by third parties for the account of the acquirer, exceed
the 25% share of the Bank with voting rights, increased
by one share .
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 account of third parties so that (s)he is not entitled
to exercise voting rights from these shares at his/her
1 .5 The employee share scheme, if
used by the company, for shares
to which the scheme relates and
about the method of exercising
control over this scheme, if
the controlling rights are not
exercised directly by employees
NLB does not have an employee share scheme . In
sole discretion, while at the same time committing to
accordance with the relevant remuneration policies
the Bank, (s)he will not exercise voting rights on the
basis of the instructions of an individual third party for
(when required by ZBan-3), a part of variable
remuneration of NLB’s Identified Staff shall consist
whose account (s)he has acquired the shares if, together
of NLB shares or NLB share-linked instruments or
with the instructions for voting, (s)he does not receive
equivalent non-cash instruments (the instrument used
a written guarantee from the person that this person
is determined by the Supervisory Board) . So far, NLB
has shares on his/her own account and that this person
has not used its own shares for this purpose . It currently
is not, directly or indirectly, a holder of more than 25%
uses NLB share-linked instruments . More information
of the Bank’s voting rights . The acquirer who exceeds
will be available in the Report on Remunerations for the
the share of 25% of the Bank’s shares with voting rights
Management Body of NLB d .d . in the 2023 Business Year .
and does not require the issuance of approval for the
transfer of shares or does not receive the approval of
the Bank may exercise the voting right from 25% of the
shares with the voting rights .
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
There are no restrictions other than those mentioned
and those that are regulatory .
1 .3 Qualifying holdings
This information is included in the chapter Corporate
the provisions of the Articles of Association of the Bank,
Governance Statement of NLB .
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 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
1 .4 Securities carrying
special controlling rights
This information is included in the chapter Corporate
Governance Statement of NLB .
1 .6 Explanation regarding
restrictions related to voting rights
This information is included in the chapter Corporate
Governance Statement of NLB .
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
The Bank is not aware of such agreements .
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 .
156
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
1 .9 Authorisations given to
management, particularly
authorisations to issue or
purchase own shares
This information is included in the chapter Corporate
Governance Statement of NLB .
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 bid .
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, or
their employment is terminated
In line with the employment contracts of the members
of the Management Board, if 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 the Group after
the termination of the term of office . In the event of
resignation, the member of the Management Board
shall not be entitled to any compensation for early
discontinuation of the term of office unless otherwise
decided by the Supervisory Board ."
2 . Number of shares
held by members of the
Supervisory Board and
Management Board
Table 37: Number of shares held by members of the
Supervisory Board and Management Board
Name of member of
Supervisory Board
Primož Karpe
David Eric Simon(i)
Islam Osama Zekry
Shrenik Dhirajlal Davda
Mark William Lane Richards
Verica Trstenjak
André-Marc Prudent-Toccanier
Cvetka Selšek
Sergeja Kočar
Tadeja Žbontar Rems
Name of member of
Management Board
Blaž Brodnjak
Archibald Kremser
Peter Andreas Burkhardt
Andrej Lasič
Hedvika Usenik
Antonio Argir
Shares held as at
31 Dec 2023
Number
%
1,286
582
0 .006%
0 .003%
—
—
—
—
—
—
190
—
Number
1,700
791
800
325
450
620
—
—
—
—
—
—
0 .001%
—
%
0 .009%
0 .004%
0 .004%
0 .002%
0 .002%
0 .003%
(i) David Eric Simon holds 2,910 GDRs, which is equal to 582 shares (as 1
share represents 5 GDRs).
3 . Stock option agreements
The Bank has no stock option agreements in relation to
its listed shares .
4 . Dividend taxation
Withholding tax
In 2023, 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:
· Individuals: 25%
· Intermediaries: 25%
· Legal entities (other than Intermediaries): 15% .
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% . 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, Financial
Administration of the RoS (FURS) 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 .
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 a 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 (FURS) .
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 .
157
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Events After the End of the 2023 Financial Year
On 24 January 2024, the Bank issued Tier 2 notes in the amount of EUR 300 million and 10NC5 tenor (ISIN:
XS2750306511) . In parallel, the Bank conducted a liability management exercise (LME) where it repurchased EUR 219 .6
million of its two outstanding Tier 2 notes with approaching call dates (ISIN: XS2080776607 and XS2113139195) . The LME
was concluded on 26 January 2024
On 21 March 2024, the shareholding of Schroders plc in the Bank changed from 5 .12% to 4 .98% .
Notice of early redemption of subordinated notes as of 2 April 2024: NLB will, based on the obtained permission of the
European Central Bank, redeem its subordinated notes in the aggregate nominal amount of EUR 45 million, issued
on 6 May 2019 and with maturity on 6 May 2029 (ISIN: SI0022103855), before their maturity . Pursuant to the terms
and condition of the notes the early repayment of principal and accrued and unpaid interest will be made on the fifth
anniversary from the issuance, being 6 May 2024 .
158
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Reconciliation of Financial Statements in Business
and Financial Part of the Report
Table 38: Income Statement of NLB Group for the annual period ended 31 December 2023
in EUR millions Financial Report
in EUR thousands
Notes
Business Report
Net interest income
Net fee and commission income
Dividend income
833 .3
278 .0
Interest and similar income
Interest and similar expenses
Fee and commission income
Fee and commission expenses
0 .2 Dividend income
Net income from financial transactions
17 .3
Net other income
Net non-interest income
Total net operating income
Employee costs
Other general and administrative expenses
(35 .4)
260 .0
1,093.3
(282 .2)
(170 .5)
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
Gains less losses from financial liabilities measured 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
Depreciation and amortisation
(49 .2) 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
(501.9)
591.4
11 .8
(25 .9)
(14 .1)
Provisions for credit losses
Impairment of financial assets
Provisions for other liabilities and charges
Impairment of non-financial assets
1 .1
Share of profit from investments in associates and joint
ventures (accounted for using the equity method)
578.4 Profit before income tax
(15 .1)
Income tax
Result of non-controlling interests
12 .6 Attributable to non-controlling interests
Result after tax
550.7 Attributable to owners of the parent
993,405
(160,071)
398,741
(120,780)
169
(742)
32,187
1,784
(799)
3,899
(2,778)
(16,271)
3,200
(4,692)
(39,093)
5,903
(766)
259,962
1,093,296
(452,623)
(49,232)
(501,855)
591,441
5,055
6,717
(25,925)
53
(14,100)
1,072
578,413
(15,090)
12,623
550,700
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 .
5 .12 .b), c)
4 .9 .
4 .11 .
4 .13 .
4 .14 .
4 .13 .
4 .14 .
5 .12 .g)
4 .15 .
159
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 39: Statement of Financial Position of NLB Group as at 31 December 2023
in EUR millions Financial Report
in EUR thousands
Notes
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
6,103 .6 Cash, cash balances at central banks and other demand deposits at banks
547 .6 Financial assets measured at amortised cost - loans and advances to banks
13,734 .6 Financial assets measured at amortised cost - loans and advances to customers
4,803 .7
15 .7 Financial assets held for trading
- Non-trading book
4,788 .0
Non-trading financial assets mandatorily at fair value
through profit or loss - part (without loans)
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
Property and equipment
Investment property
Intangible assets
12 .5 Investments in associates and joint ventures
278 .0 Property and equipment
31 .1 Investment property
62 .1 Intangible 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
Other assets
TOTAL ASSETS
LIABILITIES
368 .7
Current income tax assets
Deferred income tax assets
Other assets
Non-current assets held for sale
25,942.0 Total assets
Deposits from customers
20,732 .7 Financial liabilities measured at amortised cost - due to customers
Deposits from banks and central banks
95 .3 Financial liabilities measured at amortised cost - deposits from banks and central banks
Borrowings
Subordinated debt securities
Other debt securities in issue
Other liabilities
240 .1
509 .4
828 .8
587 .6
Financial liabilities measured at amortised cost -
borrowings from banks and central banks
Financial liabilities measured at amortised cost - borrowings from other customers
Financial liabilities measured at amortised cost - debt securities issued
Financial liabilities held for trading
Financial liabilities measured at fair value through profit or loss
Financial liabilities measured at amortised cost - other financial liabilities
Derivatives - hedge accounting
Provisions
Current income tax liabilities
Deferred income tax liabilities
Other liabilities
Equity
Non-controlling interests
TOTAL LIABILITIES AND EQUITY
2,882 .9 Equity and reserves attributable to owners of the parent
65 .1 Non-controlling interests
25,942.0 Total liabilities and equity
5 .1 .
5 .6 .b)
5 .6 .c)
5 .2 .a)
5 .3 .a)
5 .4 .
5 .6 .a)
5 .12 .g)
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 .15 .c)
5 .2 .b)
5 .3 .b)
5 .15 .d)
5 .5 .b)
5 .16 .
5 .17 .
5 .19 .
6,103,561
547,640
13,734,601
4,803,678
15,718
14,175
2,251,556
2,522,229
12,519
278,034
31,116
62,117
165,962
47,614
(10,207)
42
111,305
49,154
4,849
25,941,985
20,732,722
95,283
140,419
99,718
1,338,235
13,217
4,482
357,116
3,540
113,305
35,879
1,426
58,653
2,882,850
65,140
25,941,985
160
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
We also believe that if a
single athlete can make
it to the top, everyone is
worth supporting .
NLB Wheel
Willpower
and
determination
transcend
all barriers .
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 statement
and average net loans to customers .
Table 40: NLB Group cost of risk calculation
Numerator
Credit impairments and provisions(i)
Denominator
Average net loans to customers(ii)
Cost of risk (bps)
in EUR millions
NLB Group
2023
-8 .8
2022
17 .6
13,432 .3
12,256 .6
-7
14
(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).
Cost to income ratio (CIR) – Indicator of cost efficiency, calculated as the ratio between the total costs and total net
operating income .
Table 41a: NLB Group and NLB CIR calculation
Numerator
Total costs
Denominator
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
501 .9
460 .3
415 .4
237 .9
207 .9
183 .6
Total net operating income
Cost to income ratio (CIR)
1,093 .3
45.9%
798 .5
57.6%
666 .9
62.3%
638 .5
37.3%
366 .2
56.8%
361 .5
50.8%
162
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 41b: NLB Group’s banking subsidiaries CIR calculation
in EUR millions
163
Numerator
Total cost
Denominator
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
N Banka,
Ljubljana
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2022
113 .6
109 .0
36 .4
31 .8
19 .4
17 .3
19 .9
18 .3
16 .0
14 .3
20 .4
20 .3
23 .0
Table 41:
Total net operating income
Cost to income ratio (CIR)
261 .0
43.5%
192 .4
56.6%
86 .6
75 .9
46 .9
38 .5
36 .7
31 .7
55 .2
48 .4
49 .3
37 .3
35 .7
42.0%
41.9%
41.5%
44.9%
54.2%
57.8%
29.0%
29.7%
41.4%
54.3%
64.3%
Total average cost of funding (quarterly) – Calculated as the ratio between interest expenses annualized and average
interest-bearing liabilities .
Table 42: NLB Group’s average cost of funding (quarterly) calculation
Numerator
Interest expenses(i)
Denominator
Average interest-bearing liabilities(ii)
Total average cost of funding (quarterly)
NLB Group
in EUR millions
Q4 2023
Q3 2023
Q2 2023
Q1 2023
194 .1
173 .8
123 .2
107 .6
22,083 .7
21,828 .0
21,097 .3
21,060 .6
0.88%
0.80%
0.58%
0.51%
(i) Interest expenses (quarterly) are annualized, calculated as the sum of interest expenses in the period divided by the number of days in the quarter and
multiplied by the number of days in the year. Interest expenses on interest bearing liabilities also include interest income from negative interest rate on
financial liabilities.
(ii) NLB internal information. Average interest-bearing liabilities (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).
Average cost of wholesale funding(iii) (quarterly) – Calculated as the ratio between interest expenses on deposits from
customers annualized and average wholesale funding .
Table 43: NLB Group’s average cost of wholesale funding (quarterly) calculation
NLB Group
in EUR millions
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Numerator
Interest expenses from wholesale funding(i)
96 .9
94 .4
62 .9
58 .8
Denominator
Average wholesale funding(ii)
Average cost of wholesale funding (quarterly)
1,674 .7
5.78%
1,665 .8
5.66%
1,329 .1
4.73%
1,205 .7
4.87%
(i) Interest expenses from wholesale funding (quarterly) are annualized, calculated as the sum of interest expenses from wholesale funding 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 wholesale funding (quarterly) for the NLB Group, calculated as the sum of monthly balances (t) for the corresponding
quarters and monthly balance at the end of the previous quarter divided by (t+1).
(iii) Wholesales funding includes deposits from banks and central banks, borrowings, debt instruments, and subordinated liabilities.
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Average interest rate for deposits from customers (quarterly) – Calculated as the ratio between interest expenses on
deposits from customers annualized and average deposits from customers .
Table 44: NLB Group’s average interest rate for deposits from customers (quarterly) calculation
NLB Group
in EUR millions
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Numerator
Interest expenses on deposits from customers(i)
94 .7
77 .2
55 .4
47 .1
Denominator
Average deposits from customers(ii)
20,409 .0
20,162 .2
19,768 .1
19,854 .9
Average interest rate for deposits from customers (quarterly)
0.46%
0.38%
0.28%
0.24%
(i) Interest expenses on deposits from customers (quaterly) are annualized, calculated as the sum of interest expenses on deposits from customers 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 deposits from customers (quarterly) for the NLB Group, calculated as the sum of monthly balances (t) for the
corresponding quarters and monthly balance at the end of the previous quarter divided by (t+1).
Deposit beta – Calculated as the ratio between the change of interest rate on deposits from customers and change of ECB
deposit facility interest rate over the selected period .
Table 45: NLB Group’s Deposit beta calculation
NLB Group
in %, bps
2023
Q2 2022
Q4 2023
∆ (in bps)
Numerator
Interest rate on deposits from customers(i)
0 .09%
0 .46%
Denominator
ECB deposit facility interest rate(ii)
Deposit beta
(i) NLB internal information. Interest rate on deposits from customers (quarterly average).
(ii) Data from the ECB. Deposit facility interest rate (quarterly average).
-0 .5%
4 .0%
37
450
8%
164
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
FVTPL – Financial assets measured mandatorily at fair
value through profit or loss represent the minor part
IFRS 9 requires an expected loss model, where an
lifetime allowances for these financial assets . The
allowance for the expected credit losses (ECL) is formed .
definition of default is harmonised with the EBA
165
(0 .002% December 2023; 0 .002% December 2022) of
Loans measured at amortised costs (AC) are classified
guidelines .
the loan portfolio (before the deduction of fair value
into the following stages (before deduction of loan loss
for credit risk; loans with contractual cash flows that
allowances):
are not solely payments of principal and interest on the
principal amount outstanding) . Classification into stages
is calculated in the internal data source, by which the
NLB Group measures the loan portfolio quality, and
which is also published in the Business Report of Annual
and Interim Reports .
· Stage 1 – A performing portfolio: no significant increase
of credit risk since initial recognition, NLB Group
recognises an allowance based on a 12-month period;
· Stage 2 – An underperforming portfolio: a significant
increase in credit risk since initial recognition, NLB
Group recognises an allowance for a lifetime period;
· Stage 3 – An impaired portfolio: NLB Group recognises
Table 46d: NLB Group Stage 1 in the Corporate segment
calculation
in EUR millions
NLB Group
2023
Numerator
Total (AC) loans in Stage 1 to Corporates
6,005 .6
Denominator
Total gross loans to Corporates
Corporates - IFRS 9 classification into Stage 1
6,629 .3
90.6%
Table 46e: NLB Group Stage 2 in the Corporate segment
calculation
in EUR millions
NLB Group
2023
in EUR millions
NLB Group
2023
19,239 .2
20,243 .9
95.0%
in EUR millions
NLB Group
2023
704 .1
Numerator
Total (AC) loans in Stage 2 to Corporates
454 .3
20,243 .9
3.5%
Denominator
Total gross loans to Corporates
Corporates - IFRS 9 classification into Stage 2
6,629 .3
6.9%
A significant increase in credit risk is assumed: when a
credit rating significantly deteriorates at the reporting
date in comparison to the credit rating at initial
recognition; when a financial asset has material delays
over 30 days (days past due are also included in the
credit rating assessment); if NLB Group expects to grant
the client forbearance or if the client is placed on the
watch list .
Table 46g: NLB Group Stage 1 in the Retail segment calculation
Numerator
Total (AC) loans in Stage 1 to Retail
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 1
in EUR millions
NLB Group
2023
6,854 .7
7,235 .3
94.7%
Table 46h: NLB Group Stage 2 in the Retail segment calculation
Numerator
Total (AC) loans in Stage 2 to Retail
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 2
in EUR millions
NLB Group
2023
249 .6
7,235 .3
3.4%
in EUR millions
NLB Group
2023
300 .2
0 .3
20,243 .9
1.5%
Table 46f: NLB Group Stage 3 in the Corporate segment
calculation
Numerator
Total (AC) loans in Stage 3 to Corporates
Total (FVTPL) non-performing loans
Denominator
Total gross loans to Corporates
Corporates - IFRS 9 classification into Stage 3
in EUR millions
NLB Group
2023
169 .1
0 .3
6,629 .3
2.6%
Table 46i: NLB Group Stage 3 in the Retail segment calculation
Numerator
Total (AC) loans in Stage 3 to Retail
Denominator
Total gross loans to Retail
Retail - IFRS 9 classification into Stage 3
in EUR millions
NLB Group
2023
131 .0
7,235 .3
1.8%
Table 46a: NLB Group Stage 1 calculation
Numerator
Total (AC) loans in Stage 1
Denominator
Total gross loans and advances
IFRS 9 classification into Stage 1
Table 46b: NLB Group Stage 2 calculation
Numerator
Total (AC) loans in Stage 2
Denominator
Total gross loans and advances
IFRS 9 classification into Stage 2
Table 46c: NLB Group Stage 3 calculation
Numerator
Total (AC) loans in Stage 3
Total (FVTPL) non-performing loans
Denominator
Total gross loans and advances
IFRS 9 classification into Stage 3
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 45:
Table 46:
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 47: NLB Group and NLB leverage ratio
Numerator
Tier I
Denominator
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
2,597 .8
2,295 .7
1,965 .6
1,816 .6
1,496 .7
1,362 .7
Total Leverage Ratio exposure measure
26,927 .7
25,240 .5
19,229 .5
16,637 .0
14,553 .0
10,041 .1
Leverage ratio
9.6%
9.1%
10.2%
10.9%
10.3%
13.6%
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 48: NLB Group LCR calculation(i)
31 Dec
2023
30 Nov
2023
31 Oct
2023
30 Sep
2023
31 Aug
2023
31 Jul
2023
30 Jun
2023
31 May
2023
30 Apr
2023
31 Mar
2023
28 Feb
2023
31 Jan
2023
31 Dec
2022
31 Dec
2021
NLB Group
in EUR millions
Numerator
Stock of HQLA
7,011 .7
6,719 .5
6,687 .9
6,687 .7
6,772 .4
6,594 .5
6,505 .1
5,922 .2
5,943 .8
6,131 .6
6,093 .1
6,069 .0
6,028 .3
5,367 .1
Denominator
Net liquidity outflow
2,853 .9
2,736 .9
2,809 .2
2,799 .8
2,691 .4
2,648 .8
2,657 .4
2,541 .8
2,671 .8
2,651 .4
2,663 .4
2,649 .8
2,736 .6
2,125 .0
LCR
245.7% 245.5% 238.1% 238.9% 251.6% 249.0% 244.8% 233.0% 222.5% 231.3% 228.8% 229.0% 220.3% 252.6%
(i) Based on the European Commission’s Delegated Act on LCR.
166
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 49a: NLB Group and NLB LTD calculation
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2021
31 Dec 2023
31 Dec 2022
31 Dec 2021
in EUR millions
Numerator
Net loans to customers
13,734 .6
13,073 .0
10,587 .1
7,156 .1
6,062 .3
5,153 .0
Denominator
Deposits from customers
Net loan to deposit ratio (LTD)
20,732 .7
20,027 .7
17,640 .8
11,881 .6
10,984 .4
66.2%
65.3%
60.0%
60.2%
55.2%
9,659 .6
53.3%
Table 49b: NLB Group’s banking subsidiaries LTD calculation
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
N Banka,
Ljubljana
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2022
in EUR millions
Numerator
Net loans to customers
2,811 .6
2,589 .2
1,216 .2
1,170 .7
557 .0
523 .2
575 .6
521 .3
831 .3
740 .8
584 .5
532 .3
939 .2
Denominator
Deposits from customers
4,004 .1
3,692 .2
1,499 .5
1,462 .0
Net loan to deposit ratio (LTD)
70.2%
70.1%
81.1%
80.1%
840 .1
66.3%
796 .7
65.7%
749 .7
76.8%
673 .4
77.4%
1,008 .3
82.5%
894 .2
82.8%
798 .0
73.2%
692 .9
898 .8
76.8%
104.5%
Table 49:
Table 50: NLB Group’s banking subsidiaries net interest margin on the basis of interest-bearing assets calculation(iii)
Net interest margin on the basis of interest-bearing assets – Calculated as the ratio between net interest income annualized and average interest-bearing assets .
NLB
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
N Banka,
Ljubljana
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2022
in EUR millions
372 .6
177 .0
211 .3
131 .6
65 .4
53 .9
32 .5
23 .6
25 .5
19 .5
47 .2
39 .8
40 .3
29 .6
27 .8
Numerator
Net interest income(i)
Denominator
Average interest bearing-assets(ii)
13,470 .3 11,968 .2
4,517 .8 4,389 .0
1,784 .1 1,714 .0
961 .7
915 .1
841 .2
746 .3
1,124 .1
978 .4
848 .7
737 .2
1,377 .0
Net interest margin on
interest-bearing assets
2.8%
1.5%
4.7%
3.0%
3.7%
3.1%
3.4%
2.6%
3.0%
2.6%
4.2%
4.1%
4.8%
4.0%
2.0%
(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 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). 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). N Banka internal information. Average interest-bearing assets for N Banka are calculated as the sum of daily balances in the period (from 1 January to day d – the last day in reporting period) divided by
number of days d.
(iii) Data for N Banka internal information.
167
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 51: NLB Group’s net interest margin on the basis of interest-bearing assets calculation
Numerator
Net interest income(i)
Denominator
Average interest-bearing assets(ii)
Net interest margin on interest-bearing assets
in EUR millions
NLB Group
2023
833 .3
23,782 .7
3.50%
2022
504 .9
21,988 .4
2.30%
(i) Net interest income is annualized, 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 the Group are calculated as the sum of balance
from the previous year end (31 December) and monthly balances of the last day of each month from January to the
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 52: NLB Group net interest margin on the basis of interest-bearing assets calculation (quarterly)
Numerator
Net interest income(i)
Denominator
NLB Group
in EUR millions
Q4 2023
Q3 2023
Q2 2023
Q1 2023
920 .0
878 .7
806 .2
725 .8
Average interest-bearing assets(ii)
Net interest margin on interest-bearing assets (quarterly)
24,582 .1
3.74%
24,127 .6
3.64%
23,301 .0
3.46%
23,106 .7
3.14%
(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).
Net interest margin on total assets – Calculated as the ratio between net interest income annualized, and average total assets .
Table 53: NLB Group and NLB net interest margin on total assets calculation
Numerator
Net interest income(i)
Denominator
Average total assets(ii)
Net interest margin on total assets
2023
833 .3
NLB Group
2022
504 .9
2021
409 .4
2023
372 .6
NLB
2022
177 .0
in EUR millions
2021
139 .5
24,706 .3
3.4%
22,975 .9
2.2%
20,659 .0
2.0%
14,728 .7
2.5%
13,133 .2
1.3%
11,853 .9
1.2%
(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 day d – the last day in
reporting month) divided by (t+1).
168
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NPE – NPE includes risk exposure to D- and E-rated clients (includes loans and advances, debt securities, and off-
balance exposures, which are included in report Finrep18; before the deduction of allowances for the ECL) . Non-
performing exposures measured by fair value loans through P&L (FVTPL) are considered at fair value increased by the
amount of negative fair changes for credit risk .
NPE per cent. (on-balance and off-balance)/Classified on-balance and off-balance exposures – NPE per cent . in
accordance with EBA methodology: NPE as a percentage of all exposures to clients in the Finrep18 before deduction of
allowances for the ECL; the ratio is in gross terms .
Non-Performing Exposure includes risk exposure to D- and E-rated clients (including loans and advances, debt
securities, and off-balance exposures, which are included in the report Finrep18 before the deduction of allowances
for the ECL) . The share of NPEs is calculated based on an internal data source, with which the NLB Group monitors the
portfolio quality . The calculations presented below are based on internal data sources .
Table 54: NLB Group and NLB 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
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
333 .8
373 .6
415 .5
155 .1
136 .0
159 .5
30,122 .3
28,133 .2
24,328 .0
17,874 .0
15,512 .0
13,869 .9
NPE per cent.
1.1%
1.3%
1.7%
0.9%
0.9%
1.1%
NPE – The NPE indicator, according to the BoS calculation, differs from the EBA methodology in the treatment of
debt instruments measured at FVOCI . Due to impairments, value adjustments increase the carrying amount of debt
instruments measured at FVOCI .
Table 55: NLB Group and NLB 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 Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
333 .8
373 .6
415 .5
155 .1
136 .0
159 .5
30,284 .1
28,134 .7
24,339 .2
17,907 .9
15,506 .3
13,872 .1
NPE per cent.
1.1%
1.3%
1.7%
0.9%
0.9%
1.1%
169
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Non-performing loans include loans to D- and E-rated clients, namely loans at least 90 days past due or loans unlikely
to be repaid without recourse to collateral (before deduction of loan loss allowances) .
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 gross terms . Where non-performing loans are defined as
loans to D- and E-rated clients, namely loans at least 90 days past due or loans unlikely to be repaid without recourse
to collateral (before deduction of loan loss allowances) . The share of non-performing loans is calculated based on an
internal data source, with which the NLB Group monitors the loan portfolio quality .
Table 56a: NLB NPL calculation
Numerator
Total Non-Performing Loans
Denominator
Total gross loans
NPL per cent.
Table 56b: NLB Group NPL calculation
2023
138 .0
11,562 .7
1.2%
NLB
2022
111 .2
9,667 .2
1.1%
Numerator
Total Non-Performing Loans
Denominator
Total gross loans
NPL per cent.
2023
300 .5
2022
328 .3
NLB Group
2021
367 .4
2020
474 .7
20,243 .9
1.5%
18,403 .9
1.8%
15,541 .8
2.4%
13,686 .6
3.5%
in EUR millions
2021
130 .4
8,522 .5
1.5%
in EUR millions
2019
374 .7
9,793 .5
3.8%
Table 56c: NLB Group’s banking subsidiaries NPL calculation
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
NLB Komercijalna Banka,
Beograd
in EUR millions
NLB Group’s
banking
subsidiaries
Numerator
Total Non-Performing Loans
48 .8
54 .5
5 .5
8 .3
15 .7
17 .0
16 .2
15 .7
24 .1
32 .6
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
22 .5
2022
32 .5
2023
270 .9
Denominator
Total gross loans
NPL per cent.
1,558 .5
1,506 .5
3.1%
3.6%
783 .9
0.7%
734 .4
1.1%
772 .2
2.0%
724 .2
2.3%
1,043 .6
1.6%
940 .5
1.7%
756 .1
3.2%
715 .3
4.6%
3,960 .1
0.6%
3,390 .0
19,866 .4
1.0%
1.4%
170
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 based on an internal data source, with which the NLB Group monitors the quality of the
loan portfolio .
Table 57a: NLB NPL coverage ratio 1 calculation
Numerator
Loan loss allowances entire loan portfolio
Denominator
Total Non-Performing Loans
NPL coverage ratio 1 (NPL CR 1)
Table 57b: NLB Group NPL coverage ratio 1 calculation
in EUR millions
NLB
2022
95 .7
2021
97 .9
111 .2
86.1%
130 .4
75.1%
2023
121 .3
138 .0
87.9%
NLB Group
in EUR millions
2023
2022
2021
2020
2019
Numerator
Loan loss allowances entire loan portfolio
330 .5
324 .8
316 .5
388 .4
334 .2
Denominator
Total Non-Performing Loans
NPL coverage ratio 1 (NPL CR 1)
300 .5
110.0%
328 .3
98.9%
367 .4
86.1%
474 .7
81.8%
374 .7
89.2%
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 based on an internal data source, with which the NLB
Group monitors the loan portfolio quality .
Table 58: NLB Group and NLB NPL coverage ratio 2 calculation
Numerator
Loan loss allowances non-
performing loan portfolio
Denominator
Total Non-Performing Loans
NPL coverage ratio 2 (NPL CR 2)
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
194 .2
187 .4
212 .9
84 .4
64 .5
79 .0
300 .5
64.6%
328 .3
57.1%
367 .4
57.9%
138 .0
61.2%
111 .2
58.1%
130 .4
60.6%
Table 56:
Table 57:
171
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 59: NLB Group and NLB Net NPL ratio calculation
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
Numerator
Net volume of non-performing loans
106 .4
140 .9
154 .5
53 .6
46 .6
51 .4
Denominator
Total Net Loans
19,913 .3
18,079 .1
15,225 .4
11,441 .4
9,571 .5
8,424 .7
Net NPL ratio per cent. (% Net NPL)
0.5%
0.8%
1.0%
0.5%
0.5%
0.6%
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 60: NLB Group and NLB Received collaterals for NPLs/NPL calculation
Numerator
Gross volume of Non-Performing
Loans covered by collaterals
Denominator
Total Non-Performing Loans
Received collaterals for NPLs / NPL
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
174 .6
200 .3
226 .6
81 .0
64 .9
78 .2
300 .5
58.1%
328 .3
61.0%
367 .4
61.7%
138 .0
58.7%
111 .2
58.4%
130 .4
60.0%
Non-performing loans and advances (EBA def.) – Non-performing loans include loans and advances in accordance
with EBA Methodology that are classified as 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) .
172
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 this calculation, loans and advances classified as held for sale, cash balances at CBs, and other demand
deposits are excluded from the denominator and the numerator . The calculations presented below are based on
internal data sources .
Table 61: NLB Group and NLB 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 Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
310 .8
337 .2
375 .1
139 .4
111 .7
131 .2
14,780 .1
13,796 .0
11,128 .8
7,520 .3
6,610 .8
5,498 .9
Gross NPL ratio per cent. (% NPL)
2.1%
2.4%
3.4%
1.9%
1.7%
2.4%
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 EU banking
sector indicator is published quarterly by the EBA in the Risk dashboard . The calculations presented below are based
on internal data sources .
Table 62: NLB Group and NLB Gross NPL ratio (EBA def.) (BoS) calculation
Numerator
Gross volume of Non-Performing
Loans and advances
Denominator
Gross volume of Loans and
advances in Finrep18
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
310 .8
337 .2
375 .1
139 .4
111 .7
131 .2
20,421 .9
18,590 .5
15,668 .8
11,664 .9
9,780 .9
8,615 .3
Gross NPL ratio per cent. (% NPL)
1.5%
1.8%
2.4%
1.2%
1.1%
1.5%
173
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 from the denominator and the numerator .
Table 63: NLB Group and NLB NPL coverage ratio (EBA def.) calculation
Numerator
Volume of allowances and value adjustments for credit losses on Non-Performing loans and advances(i)
204 .0
195 .9
219 .1
85 .6
65 .0
79 .8
Denominator
Gross volume of Non-Performing loans and advances(i)
NPL coverage ratio per cent. (% CR)
(i)Without loans and advances classified as held for sale, cash balances at CBs, and other demand deposits.
310 .8
65.6%
337 .2
58.1%
375 .1
58.4%
139 .4
61.4%
111 .7
58.2%
131 .2
60.8%
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
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 64: NLB Group and NLB NPL coverage ratio (EBA def.) (BoS) calculation
Numerator
Volume of allowances and value adjustments for credit losses on Non-Performing loans and advances
204 .0
195 .9
219 .1
85 .6
65 .0
79 .8
Denominator
Gross volume of Non-Performing loans and advances
NPL coverage ratio per cent. (% CR)
310 .8
65.6%
337 .2
58.1%
375 .1
58.4%
139 .4
61.4%
111 .7
58.2%
131 .2
60.8%
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
Collateral received/NPL (EBA def.) – The NPL collateral ratio is the ratio of the collateral received for non-performing
loans and advances to the gross carrying amount of collateralized non-performing loans and advances, in accordance
with the EBA methodology (report Finrep18) . The calculation is provided on a single loan basis . The NPLs where the
amount of collateral received exceeds the net non-performing of each loan exposure are the subject of calculation .
Table 65: NLB Group and NLB NPL collateral coverage ratio (EBA def.) calculation
Numerator
Volume of collateral received up to the carrying amount of each loan or advance
16 .7
30 .7
36 .7
7 .0
Denominator
Gross volume of collateralized Non-Performing loans and advances
NPL Collateral received / NPL (%)
36 .6
45.6%
56 .1
54.7%
62 .5
58.8%
10 .4
67.1%
6 .2
8 .2
75.6%
12 .2
19 .4
63.1%
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
174
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Net stable funding ratio (NSFR) – The net stable funding ratio is a liquidity risk standard requiring financial institutions
to hold enough stable funding to cover the duration of their long-term assets .
NSFR is defined as the amount of available stable funding relative to the amount of required stable funding and is
based on the current Basel Committee guidelines . This ratio should be equal to at least 100% on an ongoing basis .
"Available stable funding" is defined as the portion of capital and liabilities expected to be reliable over the time horizon
considered by the NSFR, which extends to one year . The 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 and
those of its off-balance-sheet (OBS) exposures . The calculations presented below are based on internal data sources .
Table 66: NLB Group and NLB NSFR calculation
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2021
31 Dec 2023
31 Dec 2022
31 Dec 2021
in EUR millions
Numerator
Amount of available stable funding
21,868 .5
20,409 .1
18,446 .7
13,375 .3
11,691 .2
10,815 .8
Denominator
Amount of required stable funding
11,677 .6
11,154 .7
NSFR
187.3%
183.0%
9,960 .8
185.2%
7,577 .5
176.5%
6,582 .3
177.6%
6,309 .5
171.4%
EVE (Economic Value of Equity) method – The EVE method measures the 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 under at least 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 67: NLB Group EVE calculation
31 Dec 2023
30 Sep 2023
30 Jun 2023
31 Mar 2023
31 Dec 2022
NLB Group
in EUR thousands
Numerator
Interest risk in banking book – EVE
-108,489 .1
-69,389 .2
-83,353 .2
-61,615 .8
-110,452 .4
Denominator
Equity (Tier I)
EVE as % of Equity
2,589,612 .0
2,281,260 .0
2,269,153 .0
2,254,020 .0
2,166,333 .0
-4.2%
-3.0%
-3.7%
-2.7%
-5.1%
175
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Operational business margin (OBM) – Calculated as the ratio between operational business net income annualized and
average assets .
Table 68: NLB Group and NLB OBM calculation
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
Numerator
Operational business net income(i)
1,174 .7
820 .0
678 .1
541 .3
326 .8
274 .3
Denominator
Average total assets(ii)
OBM (cumulative)
24,706 .3
22,975 .9
20,659 .0
14,705 .7
13,147 .5
11,876 .0
4.8%
3.6%
3.3%
3.7%
2.5%
2.3%
(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).
Operational business margin (OBM) (quarterly) – Calculated as the ratio between operational business net income
annualized and average assets .
Table 69: NLB Group OBM (quarterly) calculation
Numerator
Operational business net income(i)
Denominator
Average total assets(ii)
OBM (quarterly)
NLB Group
in EUR millions
Q4 2023
Q3 2023
Q2 2023
Q1 2023
1,272 .4
1,223 .6
1,145 .3
1,054 .7
25,494 .3
4.99%
25,037 .1
4.89%
24,211 .9
4.73%
24,049 .9
4.39%
(i) Operational b usiness 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 (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).
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 70: NLB Group and NLB ROE b.t. calculation
Numerator
Result before tax(i)
Denominator
Average total equity(ii)
ROE b.t.
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
578 .4
483 .1
261 .4
478 .7
164 .1
211 .5
2,683 .6
21.6%
2,344 .4
20.6%
2,222 .8
11.8%
1,843 .8
26.0%
1,558 .3
10.5%
1,507 .2
14.0%
(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).
176
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Return on equity after tax (ROE a.t.) – Calculated as the ratio between result after tax annualized and average equity .
Table 71a: NLB Group and NLB ROE a.t. calculation
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
550 .7
446 .9
236 .4
514 .3
159 .6
208 .4
2,623 .0
21.0%
2,248 .7
19.9%
2,069 .9
11.4%
1,843 .8
27.9%
1,558 .3
10.2%
1,507 .2
13.8%
(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 71b: NLB Group (w/o negative goodwill) ROE a.t. calculation
NLB Group (w/o NGW)
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
(i)(ii) Please refer to the notes under Table 71a.
in EUR millions
2022
274 .0
2,248 .7
12.2%
Table 71c: NLB Group’s banking subsidiaries ROE a.t. calculation
Numerator
Result after tax(i)
Denominator
Average equity(ii)
ROE a.t.
(i)(ii) Please refer t o the notes under Table 71a.
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
in EUR millions
NLB Banka,
Podgorica
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
132 .3
68 .2
44 .5
37 .9
24 .3
19 .3
12 .8
11 .4
36 .0
32 .4
26 .7
16 .6
784 .6
16.9%
713 .0
9.6%
270 .4
16.5%
252 .9
15.0%
100 .2
24.2%
95 .3
94 .1
91 .5
20.2%
13.6%
12.5%
131 .8
27.3%
111 .1
29.2%
116 .6
22.9%
99 .5
16.7%
177
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Table 71:
Table 72: NLB Group ROE a.t. normalized calculation
Return on equity after tax (ROE a.t.) normalized(iii)– Calculated as the ratio between result after tax annualized and
average risk adjusted capital .
Numerator
Result after tax(i)
Denominator
Average risk adjusted capital(ii)
ROE a.t.
in EUR millions
NLB Group
2023
550 .7
1,879 .2
29%
(i) Result after tax is annualized, calculated as a 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 risk adjusted capital is calculated as a sum of Risk Weighted Assets (RWA) balance as at the end of the previous year
end (31 December) and monthly Risk Weighted Assets (RWA) balances of the last day of each month from January to month t divided by (t+1), multiplied by
Tier 1 regulatory capital requirement and decreased by minority shareholder capital.
(iii) Result a.t. w/o negative goodwill divided by Average risk adjusted capital. Average risk adjusted capital calculated as Tier 1 requirement of average Risk
Weighted Assets (RWA) reduced for minority shareholder capital contribution.
Return on assets before tax (ROA b.t.) – Calculated as the ratio between result before tax annualized and average
total assets .
Table 73: NLB Group and NLB ROA b.t. calculation
Numerator
Result before tax(i)
Denominator
Average total assets(ii)
ROA b.t.
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
578 .4
483 .1
261 .4
478 .7
164 .1
211 .5
24,706 .3
22,975 .9
20,659 .0
14,705 .7
13,147 .5
11,876 .0
2.3%
2.1%
1.3%
3.3%
1.2%
1.8%
(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 are 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).
178
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Return on assets after tax (ROA a.t.) – Calculated as the ratio between result after tax annualized and average
total assets .
Table 74a: NLB Group and NLB ROA a.t. calculation
Numerator
Result after tax(i)
Denominator
Average total assets(ii)
ROA a.t.
NLB Group
NLB
2023
2022
2021
2023
2022
2021
in EUR millions
550 .7
446 .9
236 .4
514 .3
159 .6
208 .4
24,706 .3
22,975 .9
20,659 .0
14,705 .7
13,147 .5
11,876 .0
2.2%
1.9%
1.1%
3.5%
1.2%
1.8%
(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 are 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 74b: NLB Group’s banking subsidiaries ROA a.t. calculation
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
in EUR millions
NLB Banka,
Podgorica
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
132 .3
68 .2
44 .5
37 .9
24 .3
19 .3
12 .8
11 .4
36 .0
32 .4
26 .7
16 .6
4,760 .5
4,668 .8
1,833 .2
1,771 .1
1,003 .6
2.8%
1.5%
2.4%
2.1%
2.4%
948 .7
2.0%
870 .9
1.5%
777 .6
1.5%
1,135 .9
3.2%
987 .1
3.3%
911 .3
2.9%
795 .2
2.1%
Numerator
Result after tax(i)
Denominator
Average total assets(ii)
ROA a.t.
(i)(ii) Please refer to the notes under Table 74a.
179
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Total capital ratio (TCR) – TCR is the own funds of the institution expressed as a percentage of the total risk
exposure amount .
Table 75a: NLB Group and NLB TCR calculation
NLB Group
31 Dec
2023
31 Dec
2022
31 Dec
2021
31 Dec
2023
in EUR millions
NLB
31 Dec
2022
31 Dec
2021
Numerator
Total capital (Own funds)
3,109 .2
2,806 .4
2,252 .5
2,324 .1
2,004 .2
1,647 .3
Denominator
Total risk exposure Amount (Total RWA)
15,337 .2
14,653 .1
12,667 .4
Total capital ratio
20.3%
19.2%
17.8%
9,207 .5
25.2%
7,832 .7
25.6%
6,708 .5
24.6%
Table 75b: NLB Group’s banking subsidiaries TCR calculation
NLB Komercijalna
Banka, Beograd
NLB Banka,
Skopje
NLB Banka,
Banja Luka
NLB Banka,
Sarajevo
NLB Banka,
Prishtina
NLB Banka,
Podgorica
N Banka,
Ljubljana
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2023
31 Dec
2022
31 Dec
2022
in EUR millions
717 .0
620 .9
268 .7
251 .4
88 .6
81 .4
95 .0
80 .4
135 .5
117 .5
87 .6
77 .0
188 .3
2,647 .4
2,521 .5
1,422 .3
1,384 .8
557 .2
508 .3
534 .0
488 .1
855 .3
746 .0
456 .6
419 .6
877 .9
27.1%
24.6%
18.9%
18.2%
15.9%
16.0%
17.8%
16.5%
15.8%
15.7%
19.2%
18.4%
21.4%
Numerator
Total capital
Denominator
Total risk exposure
Amount (Total RWA)
Total capital ratio
180
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group Chart
Nova Ljubljanska banka d .d ., Ljubljana
Core
Non-Core
Banks
Financial institutions
Companies
Financial institutions
Companies
Slovenia
NLB Skladi,
Ljubljana
Slovenia
Bankart,
Ljubljana(ii)
100%
100%
46 .03%
46 .03%
NLB Lease&Go, leasing,
Ljubljana
100%
100%
NLB Cultural Heritage
Management Institute
100%
100%
Slovenia
NLB Leasing,
Ljubljana – v likvidaciji(iii)
100%
100%
Prvi faktor,
v likvidaciji, Ljubljana
50%
50%
Slovenia
S-REAM,
Ljubljana
100%
100%
PRO-REM,
Ljubljana – v likvidaciji
100%
100%
ARG-Nepremičnine,
Horjul
75%
75%
PRIVATINVEST,
Ljubljana
100%
100%
Foreign countries
Foreign countries
Foreign countries
Foreign countries
Foreign countries
NLB Lease&Go,
Skopje(iv)
51%
100%
NLB Lease&Go Leasing,
Beograd(v)
50 .73%
99 .64%
NLB DigIT,
Beograd
100%
100%
NLB Banka,
Sarajevo
97 .35%
97 .35%
NLB Banka,
Podgorica
99 .87%
99 .87%
NLB Banka,
Prishtina
82 .38%
82 .38%
NLB Banka,
Banja Luka
99 .85%
99 .85%
NLB Banka,
Skopje
86 .97%
86 .97%
NLB Komercijalna Banka,
Beograd
100%
100%
KomBank Invest,
Beograd
100%
100%
REAM,
Beograd
100%
100%
REAM,
Podgorica
100%
100%
NLB Srbija,
Beograd
100%
100%
OL Nekretnine –
u likvidaciji, Zagreb
100%
100%
NLB InterFinanz in
Liquidation, Zürich
100%
100%
NLB InterFinanz,
Beograd – u likvidaciji
100%
100%
LHB AG,
Frankfurt am Main
100%
100%
NLB Crna Gora,
Podgorica
100%
100%
Prvi faktor u likvidaciji,
Zagreb(i.a)
100%
100%
Prvi faktor-faktoring,
Beograd – u likvidaciji(i.b)
90%
95%
% direct share
% direct share
Subsidiary
% indirect share at the group level
Associate
% indirect share at the group level
% direct share
% indirect share at the group level
Joint Venture
Legend: The chart shows voting rights shares. The Group includes entities according to the definition in the Financial Conglomerates Act (Article 2).
(i.a) 100% direct ownership Prvi Faktor, v likvidaciji, Ljubljana.
(i.b) 90% direct ownership Prvi Faktor, v likvidaciji, Ljubljana, 5% NLB, 5% SID banka d.d.
(ii) - 46.03% direct ownership of NLB d.d.
- Abanka merged into Nova KBM, which currently has a 29.22% share in Bankart.
This is over the 25% threshold set in the Founding agreement - no shareholder other than NLB can have more than 25% capital share in Bankart.
(iii) 100% direct ownership NLB Lease&Go, leasing, d.o.o., Ljubljana.
(iv) 51% direct ownership NLB Lease&Go, leasing, d.o.o., Ljubljana, 49% NLB Banka AD Skopje.
(v) 50.73% direct ownership NLB Lease&Go, leasing, d.o.o., Ljubljana, 48.91% NLB Komercijalna Banka, Beograd.
181
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Organisational Structure of NLB
Supervisory Board
Management Board
Internal Audit
Worker´s Council(i)
Compliance and Integrity
Group Steering
Strategy and Business
Development
Legal and Secretariat
Brand and Communication
Human Resources and
Organization Development
Global Risk
Group Real Estate Management
CSA & Cross-border Financing
IT Delivery
Credit Risk - Corporate
Controlling
Large Corporates
Data Management
Credit Risk - Retail
Financial Accounting and
Administration
Evaluation and Control
Financial Markets
Restructuring
Workout and Legal support
IT Governance
IT Security
IT Infrastructure
Procurement
Payments and Cards Services
and Business Development
Payments Processing
Cash Processing
Financial Instruments
Processing
Corporate Customer Delivery
Retail Banking Processing
Small and Mid Corporates
Trade Finance Services
Investment Banking and
Custody
NLB Group Corporate and
Investment Banking Management
Customer, Product Management
and Digital Services
Private Banking
KC 24/7
Distribution Network
Area Branch Ljubljana
Area Branch Northwest and
Central Slovenia
Area Branch Northeast Slovenia
Area Branch East Slovenia
Area Branch Southeast Slovenia
Area Branch Southwest Slovenia
Micro Enterprises
Mobile Banking
Distribution Network Coordination
182
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
CRO
CFO
CMO
COO
Contents
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.
FINANCIAL REPORT
183
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Contents
Independent auditor’s report . . . . . . . . . . . . . . . . . . . . 186
2 .15 . Repossessed assets . . . . . . . . . . . . . . . . . . . . . . . . . . 211
4 .4 . Gains less losses from financial assets
Statement of management’s responsibility . . . . . . . 190
2 .16 . Offsetting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
and liabilities not measured at fair value
through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Income statement for the annual period
ended 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Statement of other comprehensive income
for the annual period ended 31 December . . . . . . . . 192
Statement of financial position
as at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Statement of changes in equity for the
annual period ended 31 December . . . . . . . . . . . . . . . 195
Statement of cash flows for the annual period
ended 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Notes to the financial statements . . . . . . . . . . . . . . . . . 199
2 .17 . Sale and repurchase agreements . . . . . . . . . . . . . 212
2 .18 . Property and equipment . . . . . . . . . . . . . . . . . . . . . . 212
4 .5 . Gains less losses from financial assets
and liabilities held for trading . . . . . . . . . . . . . . . . . . 226
2 .19 . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
4 .6 . Gains less losses from non-trading
2 .20 . Investment properties . . . . . . . . . . . . . . . . . . . . . . . . 212
financial assets mandatorily at fair value
through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
2 .21 . Non-current assets and disposal groups
classified as held for sale . . . . . . . . . . . . . . . . . . . . . 212
4 .7 . Foreign exchange translation gains
less losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
2 .22 . Accounting for leases . . . . . . . . . . . . . . . . . . . . . . . . . 213
4 .8 . Other net operating income . . . . . . . . . . . . . . . . . . . . 228
2 .23 . Cash and cash equivalents . . . . . . . . . . . . . . . . . . . 213
4 .9 . Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . 229
2 .24 . Borrowings, deposits, and issued
4 .10 . Cash contributions to resolution funds
debt securities with characteristics of debt . . . . 213
and deposit guarantee schemes . . . . . . . . . . . . . . 230
1 . General information . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
2 .25 . Other issued financial instruments with
2 . Summary of material accounting policy
characteristics of equity . . . . . . . . . . . . . . . . . . . . . . 214
information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
2 .26 . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
4 .11 . Depreciation and amortisation . . . . . . . . . . . . . . . 231
4 .12 . Gains less losses from modification
of financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
2 .1 . Statement of compliance . . . . . . . . . . . . . . . . . . . . . . . 199
2 .2 . Basis for presenting the financial statements . . . 199
2 .3 . Comparative amounts . . . . . . . . . . . . . . . . . . . . . . . . . 200
2 .4 . Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
2 .5 . Business combinations, goodwill,
and bargain purchases . . . . . . . . . . . . . . . . . . . . . . . . 201
2 .6 . Investments in subsidiaries, associates
2 .27 . Contingent liabilities and commitments . . . . . . . 214
4 .13 . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
2 .28 . Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
4 .14 . Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
2 .29 . Fiduciary activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
4 .15 . Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
2 .30 . Employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
4 .16 . Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
2 .31 . Share-based payment transactions . . . . . . . . . . 216
5 . Notes to the statement of financial position . . . . . 235
2 .32 . Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
5 .1 . Cash, cash balances at central banks,
and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
2 .33 . Segment reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
2 .7 . A combination of entities or businesses
2 .34 . Critical accounting estimates and judgments
and other demand deposits at banks . . . . . . . . . . 235
5 .2 . Financial instruments held for trading . . . . . . . . . 236
under common control . . . . . . . . . . . . . . . . . . . . . . . . . 202
in applying accounting policies . . . . . . . . . . . . . . 216
5 .3 . Non-trading financial instruments measured
2 .8 . Foreign currency translation . . . . . . . . . . . . . . . . . . . 203
2 .35 . Implementation of the new and revised
at fair value through profit or loss . . . . . . . . . . . . . . 237
2 .9 . Interest income and expenses . . . . . . . . . . . . . . . . . . 203
2 .10 . Fee and commission income . . . . . . . . . . . . . . . . . . 203
2 .11 . Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
2 .12 . Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . 204
2 .13 . Allowances for financial assets . . . . . . . . . . . . . . . 207
2 .14 . Forborne loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
International Financial Reporting Standards . . 219
5 .4 . Financial assets measured at fair value
3 . Changes in the composition of the NLB Group . . . 220
4 . Notes to the income statement . . . . . . . . . . . . . . . . . 222
4 .1 . Interest income and expenses . . . . . . . . . . . . . . . . . . 222
4 .2 . Dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
4 .3 . Fee and commission income and expenses . . . . 223
through other comprehensive income . . . . . . . . . . 238
5 .5 . Derivatives for hedging purposes . . . . . . . . . . . . . . 240
5 .6 . Financial assets measured at amortised cost . . . 244
5 .7 . Non-current assets held for sale . . . . . . . . . . . . . . 246
5 .8 . Property and equipment . . . . . . . . . . . . . . . . . . . . . . . 246
184
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .9 . Investment property . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
5 .23 . Capital adequacy ratios . . . . . . . . . . . . . . . . . . . . . . 292
5 .10 . Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
5 .24 . Off-balance sheet liabilities . . . . . . . . . . . . . . . . . . 295
5 .11 . Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
5 .25 . Funds managed on behalf of third parties . . . . 297
5 .12 . Investments in subsidiaries, associates
6 . Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
5 .13 . Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
5 .14 . Movements in allowance for the
impairment of financial assets . . . . . . . . . . . . . . . 264
5 .15 . Financial liabilities, measured at
6 .1 . Credit risk management . . . . . . . . . . . . . . . . . . . . . . . 301
6 .2 . Market risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324
6 .3 . Liquidity risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
6 .4 . Management of non-financial risks . . . . . . . . . . . . 341
amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
6 .5 . Fair value hierarchy of financial and
5 .16 . Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
5 .17 . Deferred income tax . . . . . . . . . . . . . . . . . . . . . . . . . . 285
5 .18 . Income tax relating to components of other
comprehensive income . . . . . . . . . . . . . . . . . . . . . . . 289
non-financial assets and liabilities . . . . . . . . . . . . . 342
6 .6 . Environmental and climate-related risks . . . . . . . 352
6 .7 . Offsetting financial assets
and financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 352
5 .19 . Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
7 . Analysis by segment for NLB Group . . . . . . . . . . . . 354
5 .20 . Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 290
8 . Related-party transactions . . . . . . . . . . . . . . . . . . . . 358
5 .21 . Other equity instruments issued . . . . . . . . . . . . . . 290
9 . Events after the reporting date . . . . . . . . . . . . . . . . . 367
5 .22 . Accumulated other comprehensive income
and reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
185
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Independent auditor’s report
KPMG SLOVENIJA, podjetje za revidiranje, d.o.o.
Železna cesta 8a
SI-1000 Ljubljana
Slovenija
Telefon: +386 (0) 1 420 11 60
Internet: http://www.kpmg.si
Independent Auditors' Report
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audits of the separate and consolidated financial statements of the current period. These matters
were addressed in the context of our audits of the separate and consolidated financial statements as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
To the shareholders of Nova Ljubljanska banka d.d., Ljubljana
We have determined the following key audit matters:
Report on the Audit of the Separate and Consolidated Financial Statements
Opinion
We have audited the separate financial statements of Nova Ljubljanska banka d.d., Ljubljana (the
“Bank”) and the consolidated financial statements of the Bank and its subsidiaries (collectively, the
“Group”), which comprise:
•
the separate and consolidated statements of financial position as at 31 December 2023;
and, for the period from 1 January to 31 December 2023:
•
•
•
•
the separate and consolidated income statements;
the separate and consolidated statements of other comprehensive income;
the separate and consolidated statements of changes in equity;
the separate and consolidated statements of cash flows;
and
• notes, comprising material accounting policies and other explanatory information.
In our opinion, the accompanying separate and consolidated financial statements give a true and fair
view of the unconsolidated and consolidated financial position, respectively, of the Bank and the
Group as at 31 December 2023, and of their respective unconsolidated and consolidated financial
performance and unconsolidated and consolidated cash flows for the year then ended in accordance
with International Financial Reporting Standards as adopted by the European Union (“IFRS EU”).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) and EU
Regulation (EU) No 537/2014 of the European Parliament and of the Council of 16 April 2014 on
specific requirements regarding statutory audit of public-interest entities (OJ L 158, 27.5.2014, p. 77-
112 - EU Regulation EU No 537/2014). Our responsibilities under those standards are further
described in the Auditor’s Responsibilities for the Audit of the Separate and Consolidated Financial
Statements section of our report. We are independent of the Bank and the Group in accordance with
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code) together with the ethical
requirements that are relevant to our audit of the separate and consolidated financial statements in
Slovenia and we have fulfilled our other ethical responsibilities in accordance with these requirements
and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
© 2024 KPMG SLOVENIJA, podjetje za revidiranje, d.o.o., slovenska
družba z omejeno odgovornostjo in članica globalne organizacije
neodvisnih članic, ki so povezane s KPMG International Limited,
zasebno angleško družbo z omejeno odgovornostjo. Vse pravice
pridržane.
vpis v sodni register: Okrožno sodišče v Ljubljani
št. reg. vl.: 061/12062100
osnovni kapital: 54.892,00 EUR
ID za DDV: SI20437145
matična št.: 5648556000
Allowance for impairment of loans and advances to customers
As at 31 December 2023, the carrying amount of loans and advances to customers of the Bank and
the Group, respectively: EUR 7,148 million and EUR 13,735 million; related impairment allowance of
the Bank and the Group, respectively: EUR 120 million and EUR 329 million.
We refer to the separate and consolidated financial statements: Note 2.34. ”Critical accounting
estimates and judgments in applying accounting policies”, Note 2.13. ”Allowances for financial assets”,
Note 5.6. “Financial assets measured at amortised cost”, Note 5.14. “Movements in allowance for the
impairment of financial assets” and Note 6.1. “Credit risk management”.
Key audit matter
Our response
for
impairment
Allowances
represent
management’s best estimate of the expected
credit losses (“ECLs”) within loans and advances
to customers (“loans”, “exposures”) measured at
amortized cost at the reporting date. We focused
on this area as the measurement of allowances for
impairment requires the Management Board to
make complex and subjective assumptions and
judgements.
ECLs for performing exposures (Stage 1 and
Stage 2 in the IFRS 9 Financial instruments
hierarchy) and
for non-performing/defaulted
(Stage 3) exposures not exceeding prescribed
quantitative
thresholds, are determined by
modelling techniques relying on key parameters
such as the probability of default (“PD”), exposure
at default (“EAD”), credit conversion
factor
(“CCF”) and loss given default (“LGD”), taking into
account historical experience, identification of
exposures with a significant increase in credit risk
and
forward-looking
(“SICR”),
management
“collective
judgment
impairment allowance”).
information
(together
ECLs for Stage 3 loans whose amounts exceed
the quantitative thresholds are determined on an
individual basis by means of a discounted cash
flows analysis. The process involves subjectivity
and
reliance on a number of significant
assumptions, including, those in respect of the
expected proceeds from the sale of the related
collaterals and minimum period for collateral
disposal.
Our procedures in the area, performed, where
applicable, with
the assistance of our own
financial risk management (FRM) and information
technology (IT) audit specialists, included, among
other things:
the
level of
— inspecting the Bank’s and Group’s ECL
methodology and assessing its compliance
with the requirements of the relevant financial
reporting standards. As part of the above, we
the Management Board on
challenged
whether
the methodology’s
sophistication is appropriate based on our
assessment of the entity and portfolio level
factors;
— testing
implementation and
operating effectiveness of selected controls in
the process of approval, recording and
monitoring of loans, including, but not limited
to,
rating
to
classification, calculation of days past due,
over inputs of collateral data in the system
and calculation of ECLs;
the design,
the credit
relating
those
— challenging
the
appropriateness
and
consistency of the Bank’s and the Group’s
application of the standard’s definitions of
their classification of
SICR and default,
exposures
into performing and non-
performing and segmentation of loans into
homogenous groups;
— evaluating whether appropriately considered
in loan staging and impairment measurement
were
the current volatile
macroeconomic environment, which included
the effects of
2
186
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In the wake of the above factors, coupled with
the significantly higher estimation uncertainty
stemming from the impact of the current
macroeconomic environment (geopolitical
situation, increasing interest rates, energy prices
and inflation), we considered allowance for
impairment of loans and advances to customers
to be associated with a significant risk of material
misstatement in the separate and consolidated
financial statements.
Therefore, the area required our increased
attention in the audit and as such was
determined to be a key audit matter.
challenging the management overlays used in
measuring ECLs at the Group level.
Other Matter
For collective impairment allowance:
— obtaining
in
the
forward-looking
relevant
information and macroeconomic projections
the Bank’s and Group’s ECL
used
measurement. Independently assessing the
information by means of inquiries of the
Management Board and inspecting publicly
available information;
the Group’s historical
— challenging the collective PD, EAD, CCF and
LGD parameters, by reference to the Bank’s
and
loan default
experience and historical realized losses on
those defaults, also considering any required
adjustments to reflect expected changes in
circumstances;
— for a risk-based sample of loans, critically
assessing, by reference to the underlying loan
files and through discussion with responsible
loan officers and credit risk management
personnel, the existence of any impairment
triggers for classification to Stage 2 or Stage
3 as at 31 December 2023.
For
individually:
impairment
allowances
calculated
— for a risk-based sample of Stage 3 loans,
challenging the Bank’s and Group’s cash flow
projections and key assumptions used in
scenarios, by reference to our knowledge of
the relevant industry and of the borrower. We
also challenged the collateral valuations by
inspecting the underlying valuation reports
obtained by the Bank and Group, and also by
reference to publicly available data.
For loan exposures in totality:
— critically
assessing
overall
reasonableness of
for
impairment, including the loans provision
coverage;
the
the allowances
— examining whether the Bank’s and Group’s
loan
risk-related
impairment and credit
disclosures in the separate and consolidated
financial statements appropriately address
relevant quantitative and qualitative
the
requirements of
financial
reporting framework.
the applicable
The separate and consolidated financial statements of, respectively, the Bank and the Group as at
and for the year ended 31 December 2022 were audited by another auditor who expressed an
unmodified opinion on those financial statements on 12 April 2023.
Other Information
Management is responsible for the other information. The other information comprises the “Overview”
“Business Report”, “NLB Group Directory” and “Definitions and Glossary of Selected Terms” included
in the Annual Report but does not include the separate and consolidated financial statements and our
auditor’s report thereon.
Our opinion on the separate and consolidated financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the separate and consolidated financial statements, our responsibility is
to read the other information identified above and, in doing so, consider whether the other information
is materially inconsistent with the separate and consolidated financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
In addition, with respect to the Business Report, we are required to report on its consistency with the
separate and consolidated financial statements and on whether the Business Report includes the
disclosures required by the Companies Act dated 4 May 2006 (official gazette of Republic of Slovenia
No. 42/2006 with amendments - hereafter referred to as »the applicable legal requirements«). Based
solely on the work required to be undertaken in the course of the audit of the separate and
consolidated financial statements and the procedures above, in our opinion:
•
•
the information given in the Business Report for the financial year for which the separate and
consolidated financial statements are prepared is consistent, in all material respects, with the
separate and consolidated financial statements; and
the Business Report has been prepared in accordance with the applicable legal requirements.
Responsibilities of Management and Those Charged with Governance for the Separate and
Consolidated Financial Statements
Management is responsible for the preparation of separate and consolidated financial statements that
give a true and fair view in accordance with IFRS EU, and for such internal control as management
determines is necessary to enable the preparation of separate and consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, management is responsible for
assessing the Bank’s and the Group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless management
either intends to liquidate the Bank or the Group or to cease operations, or has no realistic alternative
but to do so.
Those charged with governance are responsible for overseeing the Bank’s and the Group’s financial
reporting process.
Auditors' Responsibilities for the Audit of the Separate and Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the separate and consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs and EU Regulation
(EU) No 537/2014 will always detect a material misstatement when it exists. Misstatements can arise
3
4
187
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these
separate and consolidated financial statements.
As part of an audit in accordance with ISAs and EU Regulation (EU) No 537/2014, we exercise
professional judgment and maintain professional scepticism throughout the audit. We also:
•
identify and assess the risks of material misstatement of the separate and consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Bank’s and the Group's internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management;
•
conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Bank’s and the Group’s ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditors’ report to the related disclosures in the separate and consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditors’ report. However, future
events or conditions may cause the Bank or the Group to cease to continue as a going concern;
• evaluate the overall presentation, structure and content of the separate and consolidated financial
statements, including the disclosures, and whether the separate and consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation;
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the separate and consolidated financial statements of the
current period and are therefore the key audit matters. We describe these matters in our auditors’
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the
adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements
We were appointed by the shareholders of the Bank on the shareholders meeting dated 20 June 2022
to audit the Bank’s and the Group’s respective separate and consolidated financial statements for the
year ended 31 December 2023. Our total uninterrupted period of engagement is 1 year.
We confirm that:
• our audit opinion is consistent with the additional report presented to the Audit Committee of the
Bank dated 10 April 2024;
• we have not provided any prohibited non-audit services (NASs) referred in Article 5 of EU
Regulation (EU) No 537/2014. We also remained independent of the Bank and the Group in
conducting the audit.
For the period to which our statutory audit relates, we and other KPMG network firms have not
provided any other services to the Bank and its controlled related entities which are not disclosed in
the Business Report or in the separate and consolidated financial statements.
Independent Auditor's Report on the Compliance of the Electronic Financial Statements with
the Delegated Regulation 2019/815 on a Single Electronic Reporting Format (“ESEF Format”)
We have conducted an engagement to provide reasonable assurance as to whether the audited
separate and consolidated financial statements of the Bank and the Group, respectively, for the
financial year ended 31 December 2023 (respectively, “Audited Separate Financial Statements” and
“Audited Consolidated Financial Statements” and, collectively, “Audited Separate and Consolidated
Financial Statements”) have been prepared in accordance with the requirements of the Commission
Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing the Directive 2004/109/EC
of the European Parliament and the Council with regard to regulatory technical standards for
establishing a single electronic reporting format applicable for the year 2023 (“Delegated Regulation”).
Responsibilities of the Bank’s Management and Those Charged with Governance
The Bank’s Management is responsible for the preparation and presentation of the Audited Separate
and Consolidated Financial Statements in accordance with the Delegated Regulation, and for such
internal control as management determines is necessary to enable the preparation of the Audited
Separate and Consolidated Financial Statements that are free from material misstatement, whether
due to fraud or error.
Those charged with governance are responsible for overseeing the preparation of the Audited
Separate and Consolidated Financial Statements in compliance with requirements of the Delegated
Regulation.
Auditor’s Responsibilities
Our responsibility is to express an opinion on whether the Audited Separate and Consolidated
Financial Statements are prepared in accordance with requirements of the Delegated Regulation. We
conducted our assurance engagement in accordance with the International Standard on Assurance
Engagements (ISAE) 3000 Revised, Assurance Engagements Other Than Audits or Reviews of
Historical Financial Information issued by the International Auditing and Assurance Standards Board.
That standard requires that we plan and perform our procedures to obtain reasonable assurance
about whether the separate and consolidated financial statements in the ESEF Format are properly
prepared and presented in accordance with the requirements of the Delegated Regulation, in all
material respects.
We have acted in accordance with the independence and ethical requirements of the EU Regulation
537/2014 and the IESBA Code. The Code is based on the fundamental principles of integrity,
objectivity, professional competence and due care, confidentiality and professional behaviour.
Our firm applies International Standard on Quality Management (ISQM) 1, Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related
5
6
188
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Services Engagements, issued by the IAASB. This standard requires the firm to design, implement
and operate a system of quality management, including policies or procedures regarding compliance
with ethical requirements, professional standards and applicable legal and regulatory requirements.
Summary of Work Performed
Within the scope of our work, we performed the following audit procedures:
•
•
identified and assessed the risks of material non-compliance of the Audited Separate and
Consolidated Financial Statements with the requirements of the Delegated Regulation, whether
due to error or fraud;
obtained an understanding of internal control relevant to the engagement in order to provide
reasonable assurance for designing procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of such internal control.
Specifically in respect of the Audited Consolidated Financial Statements, we obtained reasonable
assurance that:
•
•
•
the Audited Consolidated Financial Statements are presented in a correct XHTML electronic
format;
the values and disclosures in the Audited Consolidated Financial Statements in XHTML format are
correctly marked and in Inline XBRL (iXBRL) technology and that their machine reading provides
complete and accurate information contained in the Audited Consolidated Financial Statements;
notes to the Audited Consolidated Financial Statements are correctly block-tagged.
Specifically in respect of the Audited Separate Financial Statements, we obtained reasonable
assurance that:
•
the Audited Separated Financial Statements are presented in a correct XHTML electronic format.
We believe that the evidence obtained provides a sufficient and appropriate basis for our opinion.
Opinion
In our opinion, based on the procedures performed and the evidence obtained, the Audited Separate
and Consolidated Financial Statements of the Bank and the Group, respectively, as at and for the
financial year ended 31 December 2023 are prepared, in all material respects, in accordance with the
requirements of the Delegated Regulation.
On behalf of audit firm
KPMG SLOVENIJA,
podjetje za revidiranje, d.o.o.
Domagoj Vuković, FCCA
Certified Auditor
Partner
KPMG Slovenija, d.o.o.
1
Ljubljana, 10 April 2024
7
189
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of management’s responsibility
The Management Board hereby confirms its
Slovenian Companies Act and the Banking Act so as
been prepared on a going-concern basis for NLB Group
responsibility for preparing the consolidated financial
to give a true and fair view of the financial position of
and NLB, and in line with valid legislation and the
statements of NLB Group and the financial statements
NLB Group and NLB as at 31 December 2023, and their
International Financial Reporting Standards as adopted
of NLB for the year ending on 31 December 2023, and for
financial results and cash flows for the year then ended .
by the European Union .
the accompanying accounting policies and notes to the
financial statements .
The Management Board also confirms that the
The Management Board is also responsible for
The Management Board is responsible for the
applied, and that the accounting estimates were
appropriate measures for safeguarding assets, and
preparation and fair presentation of these financial
prepared according to the principles of prudence and
the prevention and identification of fraud and other
statements in accordance with the International
good management . The Management Board further
irregularities or illegal acts .
appropriate accounting policies were consistently
appropriate accounting practices, the adoption of
Financial Reporting Standards as adopted by the
confirms that the financial statements of NLB Group
European Union, and with the requirements of the
and NLB, together with the accompanying notes, have
The Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
190
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Gains less losses from financial liabilities measured at fair value through profit or loss
Fair value adjustments in hedge accounting
Foreign exchange translation gains less losses
Notes
4 .1 .
4 .1 .
4 .2 .
4 .3 .
4 .3 .
4 .4 .
4 .5 .
4 .6 .
5 .5 .a)
4 .7 .
Net gains or losses on derecognition of investments in subsidiaries, associates and joint ventures
5 .12 .b), c)
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
Gain from bargain purchase
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
Earnings per share (in EUR per share)
Diluted earnings per share (in EUR per share)
The notes are an integral part of these financial statements .
4 .8 .
4 .9 .
4 .10 .
4 .11 .
4 .12 .
4 .13 .
4 .13 .
4 .14 .
4 .14 .
5 .12 .e), f)
5 .12 .g)
4 .15 .
4 .16 .
4 .16 .
2023
952,875
40,530
993,405
(148,034)
(12,037)
(160,071)
833,334
169
398,741
(120,780)
277,961
(742)
32,187
1,784
(799)
3,899
(2,778)
(766)
3,200
(4,692)
(452,623)
(39,093)
(49,232)
(16,271)
5,055
(25,925)
6,717
53
-
1,072
5,903
578,413
(15,090)
563,323
550,700
12,623
27 .5
27 .5
2022
558,826
10,950
569,776
(53,086)
(11,768)
(64,854)
504,922
242
381,599
(108,249)
273,350
866
33,451
90
286
1,655
297
-
1,861
16,778
(412,886)
(36,144)
(47,390)
(26)
(3,050)
(5,932)
(14,454)
(5,433)
172,878
781
921
483,063
(25,230)
457,833
446,862
10,971
22 .3
22 .3
2023
477,154
21,184
498,338
(115,779)
(9,993)
(125,772)
372,566
145,258
170,981
(42,432)
128,549
(834)
(408)
2,445
(382)
3,588
3,003
(105)
49
(4,006)
(218,407)
(11,383)
(19,457)
-
3,074
(14,422)
(7,668)
97,114
-
-
172
478,746
35,541
514,287
2022
217,881
4,081
221,962
(34,166)
(10,769)
(44,935)
177,027
56,044
166,440
(37,291)
129,149
(1,050)
11,332
(1,451)
163
1,655
(1,588)
-
33
4,411
(190,865)
(9,713)
(17,001)
-
282
(2,325)
(14,968)
22,767
-
-
168
164,070
(4,468)
159,602
514,287
159,602
-
25 .7
25 .7
-
8 .0
8 .0
191
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of other comprehensive income for the annual period ended 31 December
192
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
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
2023
563,323
84,952
(444)
6,796
45
(973)
1,884
1,884
70,926
77,238
(6,312)
6,718
648,275
635,233
13,042
2022
457,833
(149,677)
4,031
(2,383)
121
17
596
596
(163,055)
(168,593)
5,538
10,996
308,156
297,936
10,220
in EUR thousands
NLB
2023
514,287
48,078
588
2,284
-
(465)
-
-
33,822
38,046
(4,224)
11,849
562,365
562,365
-
2022
159,602
(90,445)
2,048
(1,925)
-
80
-
-
(92,030)
(98,172)
6,142
1,382
69,157
69,157
-
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
- debt securities issued
- 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
Other equity instruments
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 .g)
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 .22 .a)
5 .21 .
5 .22 .b)
5 .22 .a)
NLB Group
in EUR thousands
NLB
31 Dec 2023
6,103,561
15,718
14,175
2,251,556
2,522,229
547,640
13,734,601
165,962
47,614
(10,207)
-
12,519
278,034
31,116
62,117
42
111,305
49,154
4,849
25,941,985
31 Dec 2022
5,271,365
21,588
19,031
2,919,203
1,917,615
222,965
13,072,986
177,823
59,362
(23,767)
-
11,677
251,316
35,639
58,235
1,696
55,527
72,543
15,436
24,160,240
31 Dec 2023
4,318,032
17,957
16,643
1,023,012
1,966,169
149,011
7,148,283
101,596
47,614
(12,514)
975,757
4,823
85,970
7,640
37,379
-
109,449
13,907
4,048
16,014,776
31 Dec 2022
3,339,024
21,692
15,411
1,334,061
1,597,448
350,625
6,054,413
114,399
59,362
(23,767)
904,040
4,571
78,592
6,753
30,425
-
34,888
13,161
4,235
13,939,333
13,217
4,482
21,589
1,796
17,510
3,210
22,150
2,514
95,283
140,419
20,732,722
99,718
1,338,235
357,116
3,540
113,305
35,879
1,426
58,653
22,993,995
200,000
871,378
84,178
(76,118)
13,522
1,789,890
2,882,850
65,140
2,947,990
25,941,985
106,414
198,609
20,027,726
82,482
815,990
294,463
2,124
122,652
12,420
2,569
49,081
21,737,915
200,000
871,378
84,184
(160,588)
13,522
1,357,089
2,365,585
56,740
2,422,325
24,160,240
147,002
82,797
11,881,563
-
1,338,235
198,020
1,420
48,456
14,762
-
32,350
13,765,325
200,000
871,378
84,178
(36,316)
13,522
1,116,689
2,249,451
-
2,249,451
16,014,776
212,656
57,292
10,984,411
216
815,990
164,567
2,124
45,216
3,940
-
25,387
12,336,463
200,000
871,378
84,184
(81,677)
13,522
515,463
1,602,870
-
1,602,870
13,939,333
193
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The Management Board of NLB has authorised
for issue the financial statements and the
accompanying notes .
The Management Board of NLB
Hedvika Usenik
Member
Andrej Lasič
Member
Archibald Kremser
Member
Peter Andreas Burkhardt
Member
Antonio Argir
Member
Blaž Brodnjak
Chief executive officer
Ljubljana, 10 April 2024
194
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of changes in equity for the annual period ended 31 December
in EUR thousands
195
200,000
871,378
84,178
(60,019)
(14,588)
(1,511)
13,522
1,789,890
2,882,850
65,140
2,947,990
NLB Group
Share
capital
Share
premium
Other equity
instruments
Accumulated other
comprehensive income
Fair value
reserve of
financial
assets
measured at
FVOCI
Foreign
currency
translation
reserve
5.20.
5.22.a)
5.21.
5.22.b)
5.22.b)
200,000
871,378
84,184
(142,909)
(16,485)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6)
-
-
82,953
1,897
82,953
1,897
-
-
(63)
-
-
-
-
-
NLB Group
Share
capital
Share
premium
Other equity
instruments
Accumulated other
comprehensive income
Fair value
reserve of
financial
assets
measured at
FVOCI
Foreign
currency
translation
reserve
5.20.
5.22.a)
5.21.
5.22.b)
5.22.b)
200,000
871,378
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82,000
-
-
2,184
11,366
(17,184)
-
(153,255)
(153,255)
-
-
(1,020)
-
-
-
632
632
-
-
67
-
-
Notes
Balance as at 1
January 2023
- Net profit for the year
- Other comprehensive
income
Total comprehensive
income after tax
Dividends
Transactions with
non-controlling
interests (note 3 .)
Transfer of fair
values reserve
Other
Balance as at
31 December 2023
Notes
Balance as at 1
January 2022
- Net profit for the year
- Other comprehensive
income
Total comprehensive
income after tax
Dividends
Other equity
instruments issued
Transactions with
non-controlling
interests (note 3 .)
Transfer of fair
values reserve
Other
Balance as at 31
December 2022
Other
Profit
reserves
Retained
earnings
Equity
attributable
to owners of
the parent
Equity
attributable
to non-
controlling
interests
Total
equity
5.22.b)
(1,194)
-
(317)
(317)
-
-
-
-
5.22.a)
13,522
1,357,089
2,365,585
56,740
2,422,325
-
-
-
-
-
-
-
550,700
550,700
12,623
563,323
-
84,533
419
84,952
550,700
635,233
13,042
648,275
(110,000)
(110,000)
(4,634)
(114,634)
8
63
8
-
(7,970)
(7,976)
(8)
-
-
-
-
(7,976)
in EUR thousands
Other
Profit
reserves
Retained
earnings
Equity
attributable
to owners of
the parent
Equity
attributable
to non-
controlling
interests
Total
equity
5.22.b)
(4,734)
-
3,697
3,697
-
-
(140)
(17)
-
5.22.a)
13,522
1,004,385
2,078,733
137,390
2,216,123
-
-
-
-
-
-
-
-
446,862
446,862
10,971
457,833
-
(148,926)
(751)
(149,677)
446,862
297,936
10,220
308,156
(100,000)
(100,000)
(4,568)
(104,568)
-
82,000
-
82,000
8,230
7,137
(86,358)
(79,221)
17
(2,405)
-
(221)
-
56
-
(165)
200,000
871,378
84,184
(142,909)
(16,485)
(1,194)
13,522
1,357,089
2,365,585
56,740
2,422,325
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Accumulated other
comprehensive income
in EUR thousands
196
Balance as at 31 December 2023
200,000
871,378
NLB
Notes
Balance as at 1 January 2023
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Dividends
Merger of subsidiary
Other
NLB
Notes
Balance as at 1 January 2022
- Net profit for the year
- Other comprehensive income
Total comprehensive income after tax
Dividends
Other equity instruments issued
Other
Share
capital
Share
premium
Other equity
instruments
5.20.
200,000
5.22.a)
871,378
5.21.
84,184
-
-
-
-
-
-
-
-
-
-
-
-
Fair value
reserve of
financial assets
measured at
FVOCI
5.22.b)
(79,743)
-
47,521
47,521
-
(2,889)
-
(35,111)
Other
5.22.b)
(1,934)
-
557
557
-
172
-
Profit
reserves
Retained
earnings
Total
equity
5.22.a)
13,522
-
-
-
-
-
-
5.20.
515,463
514,287
-
514,287
(110,000)
204,904
(7,965)
1,602,870
514,287
48,078
562,365
(110,000)
202,187
(7,971)
(1,205)
13,522
1,116,689
2,249,451
Share
capital
Share
premium
Other equity
instruments
5.20.
200,000
5.22.a)
871,378
-
-
-
-
-
-
-
-
-
-
-
-
Accumulated other
comprehensive income
Fair value
reserve of
financial assets
measured at
FVOCI
5.22.b)
12,464
-
(92,207)
(92,207)
-
-
-
Other
5.22.b)
(3,696)
-
1,762
1,762
-
-
-
in EUR thousands
Profit
reserves
Retained
earnings
Total
equity
5.22.a)
13,522
-
-
-
-
-
-
5.20.
458,266
159,602
-
159,602
(100,000)
-
(2,405)
515,463
1,551,934
159,602
(90,445)
69,157
(100,000)
82,000
(221)
1,602,870
-
-
-
-
-
(6)
84,178
5.21.
-
-
-
-
-
82,000
2,184
84,184
Balance as at 31 December 2022
200,000
871,378
The notes are an integral part of these financial statements .
(79,743)
(1,934)
13,522
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Statement of cash flows for the annual period ended 31 December
in EUR thousands
197
Notes
NLB Group
2023
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
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 bonds
Issuance of senior preferred notes
Issuance of ordinary shares and other equity instruments
Other proceeds related to financing activities
Payments from financing activities
Dividends paid
Purchase of subsidiary‘s treasury shares
Lease payments
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 of merged bank at the date of the merger
Cash and cash equivalents at end of year
The notes are an integral part of these financial statements .
5 .12 .b), c)
3 ., 5 .12 .e), f)
5 .15 .c)
5 .15 .c)
5 .21 .
997,912
(135,715)
417
397,366
(120,892)
94
29,374
(467,937)
16,913
(63,413)
(33,404)
620,715
(74,575)
200
6,416
733,788
(818,626)
3,647
854,231
847,289
6,942
1,400,371
445,345
11,314
12,776
16,786
404,469
(1,083,639)
(42,681)
(19,305)
-
(1,021,653)
(638,294)
497,708
-
497,708
-
-
(122,273)
(114,749)
-
(7,524)
375,435
(595)
1,137,512
5,500,222
-
6,637,139
2022
624,528
(50,824)
965
382,354
(105,086)
3,365
32,799
(428,539)
19,148
(43,260)
(18,336)
417,114
(1,002,409)
(213)
3,357
349,351
(1,357,757)
2,853
476,590
476,083
507
(108,705)
211,536
19,675
-
1,081
190,780
(252,726)
(26,910)
(14,273)
198,241
(409,784)
(41,190)
599,338
217,873
299,029
82,000
436
(131,745)
(104,586)
(19,042)
(8,117)
467,593
6,213
317,698
5,176,311
-
5,500,222
NLB
2023
494,577
(110,439)
138,327
164,611
(41,809)
2
4,287
(216,407)
11,141
(24,090)
(7,750)
412,450
(14,214)
200
648
400,123
(414,239)
(946)
280,488
274,363
6,125
678,724
196,331
224
20,068
944
175,095
(551,632)
(10,152)
(12,587)
-
(528,893)
(355,301)
497,708
-
497,708
-
-
(111,264)
(110,000)
-
(1,264)
386,444
1,039
709,867
3,494,435
118,158
4,323,499
2022
247,675
(30,982)
75,071
162,129
(37,183)
1
12,073
(186,831)
10,159
(11,955)
3,635
243,792
(819,088)
(213)
(3,048)
76,653
(890,003)
(2,477)
621,876
617,277
4,599
46,580
138,980
2,915
21,130
645
114,290
(442,731)
(5,748)
(6,684)
(120,944)
(309,355)
(303,751)
598,902
217,873
299,029
82,000
-
(100,974)
(100,000)
-
(974)
497,928
(1,106)
240,757
3,254,784
-
3,494,435
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Cash and cash equivalents comprise:
Cash, cash balances at central banks, and other demand deposits at banks
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
Notes
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
NLB Group
NLB
in EUR thousands
5 .1 .
6,104,851
506,266
5,272,538
208,404
4,318,499
5,000
3,339,381
155,054
26,022
19,280
-
-
6,637,139
5,500,222
4,323,499
3,494,435
198
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 2023 and as at 31 December 2022, 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 material
accounting policy
information
The material accounting policy information adopted
for the preparation of the separate and consolidated
financial statements are set out below . The policies
have been consistently applied to all the years
presented, except for changes in accounting policies
resulting from the application of new standards or
changes to 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 .
The separate and consolidated financial statements
are comprised of the income statement and statement
of other comprehensive income, the statement of
financial position, the statement of changes in equity,
the statement of cash flows, material accounting policy
information, and the notes .
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 preparation of financial statements in accordance
with the IFRS requires the use of estimates and
assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and
liabilities on the date of the financial statements, and
the reported amounts of revenue and expenses during
the reporting period . Although these estimates are
based on management’s best knowledge of current
events and activities, actual results may ultimately
differ from those estimates . Accounting estimates and
underlying assumptions are reviewed on an ongoing
basis . Revisions of accounting estimates are recognised
in the period in which the estimate is revised . Critical
accounting estimates and judgements in applying
accounting policies are disclosed in note 2 .34 .
This document contains both the separate financial
statements of NLB, and the consolidated financial
statements of NLB Group . The presented accounting
policies apply to both sets of financial statements, with
the exception of policies described in notes 2 .4 . and 2 .5 .,
which only apply to 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 .’
199
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
2 .3 . Comparative amounts
Except when a standard or an interpretation permits
Compared to the presentation of the financial statements
income/expenses’ to section ‘Interest income/expenses
or requires otherwise, all amounts are reported or
for the year ended 31 December 2022, subtotals of line
calculated using the effective interest method,’ and
disclosed with comparative amounts. Where IAS 8 applies,
items ‘Interest income/expenses calculated using the
separately disclosed line item ‘Finance leases,’ which
comparative figures have been adjusted to conform to the
effective interest method’ and ‘Other interest and similar
was in the previous year presentation included in the line
changes in presentation in the current year.
income/expenses’ in the Income statement and note
item ‘Loans and advances to customers at amortised
4.1. were changed due to reclassification of line item
cost.’ Comparative amounts have been adjusted to reflect
‘Negative interest’ from section ‘Other interest and similar
these changes in the presentation.
31 Dec 2022
Income statement
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
Note 4.1. Interest income and expenses
Analysis by type of assets and liabilities
Interest and similar income
Interest income calculated using the effective interest method
Loans and advances to customers at amortised cost
Negative interest
Other interest and similar income
Finance leases
Negative interest
Interest and similar expenses
Interest expenses calculated using the effective interest method
Negative interest
Other interest and similar expenses
Negative interest
NLB Group
NLB
Notes
Old
presentation
New
presentation
Change
Old
presentation
New
presentation
Change
in EUR thousands
4.1.
4.1.
561,467
8,309
569,776
(43.785)
(21,069)
(64,854)
504,922
561,467
489,999
-
8,309
-
3,966
43,785
-
21,069
9,301
558,826
10,950
569,776
(53,086)
(11,768)
(64,854)
504,922
558,826
483,392
3,966
10,950
6,607
-
53,086
9,301
11,768
-
2,641
(2,641)
-
9,301
(9,301)
-
-
2,641
6,607
(3,966)
(2,641)
(6,607)
3,966
(9,301)
(9,301)
9,301
9,301
214,163
7,799
221,962
(27,373)
(17,562)
(44,935)
177,027
214,163
174,543
-
7,799
-
3,718
27,373
-
17,562
6,793
217,881
4,081
221,962
(34,166)
(10,769)
(44,935)
177,027
217,881
174,543
3,718
4,081
-
-
34,166
6,793
10,769
-
(3,718)
3,718
-
6,793
(6,793)
-
-
(3,718)
-
(3,718)
3,718
-
3,718
(6,793)
(6,793)
6,793
6,793
200
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Compared to the presentation of the financial statements
section ‘Cash flows from financing activities,’ which was
operating activities.’ Comparative amounts have been
for the year ended 31 December 2022, some subtotals
in previous years included in the line item ‘Net increase/
adjusted to reflect these changes in the presentation.
201
in the Statement of cash flows were change due to
(decrease) in deposits and borrowings measured at
separately disclosed line item ‘Lease payments’ in
amortised cost’ under the section ‘Cash flows from
31 Dec 2022
Statement of cash flows
CASH FLOWS FROM OPERATING ACTIVITIES
Increases/(decreases) in operating liabilities
Net increase/(decrease) in deposits and borrowings measured at amortised cost
Net cash flows from operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payments from financing activities
Lease payments
Net cash flows from financing activities
NLB Group
NLB
Old
presentation
New
presentation
Change
Old
presentation
New
presentation
Change
in EUR thousands
468,473
467,966
476,590
476,083
(116,822)
(108,705)
(123,628)
(131,745)
-
475,710
(8,117)
467,593
(8,117)
(8,117)
(8,117)
8,117
8,117
8,117
620,902
616,303
45,606
621,876
617,277
46,580
(100,000)
(100,974)
-
(974)
498,902
497,928
(974)
(974)
(974)
974
974
974
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 .
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
2 .5 . Business combinations,
goodwill, and bargain
purchases
on a transaction-by-transaction basis, either at fair
NLB Group accounts for business combinations using
value, or by the non-controlling interest’s proportionate
the acquisition method when the acquired set of
share of net assets of the acquiree .
activities and assets meets the definition of a business,
and control is transferred to the Group . In determining
Inter-company transactions, balances, and unrealised
whether a particular set of activities and assets is a
gains on transactions between NLB Group entities are
business, the Group assesses whether the set of assets
eliminated . Unrealised losses are also eliminated unless
and activities acquired includes, at a minimum, an input
the transaction provides evidence of impairment of the
and substantive process, and whether the acquired set
asset transferred .
NLB Group treats transactions with non-controlling
interests as transactions with equity owners of NLB
has the ability to produce outputs . The acquired process
is considered substantive if it is critical to the ability to
continue producing outputs; and the inputs acquired
include an organised workforce with the necessary
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 .
Group . For purchases of subsidiaries from non-controlling
skills, knowledge, or experience to perform that process
interests, the difference between any consideration paid
or it significantly contributes to the ability to continue
and the relevant share acquired of the carrying value of
producing outputs and is considered unique or scarce
net assets of the subsidiary is deducted from the equity .
or cannot be replaced without significant cost, effort, or
For sales to non-controlling interests, the differences
delay in the ability to continue producing outputs .
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
between any proceeds received and the relevant share
of non-controlling interests are also recorded in the
equity . All effects are presented in the line item ‘Equity
Attributable to Non-controlling Interest .’
The consideration transferred is measured at the
fair value of the assets transferred, equity interest
issued, liabilities incurred or assumed, including
the fair value of assets or liabilities from contingent
consideration arrangements and fair value of any
pre-existing equity interest in the subsidiary . However,
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
this excludes amounts related to the settlement of
Goodwill is tested annually for impairment. For the
NLB Group’s share of its associates and joint ventures
pre-existing relationships which are recognised in profit
purpose of impairment testing, goodwill arising from
post-acquisition profits or losses is recognised in
or loss . Acquisition-related costs such as advisory,
a business combination is, from the acquisition date,
the consolidated income statement, and its share of
legal, valuation, and similar professional services are
allocated to the Group’s cash-generating units (CGUs)
other comprehensive income is recognised in other
recognised in profit or loss as well . Transaction costs
or groups of CGUs that are expected to benefit from the
comprehensive income . The cumulative post-acquisition
incurred for issuing equity instruments are deducted
synergies of the combination. Where goodwill has been
movements are adjusted against the carrying amount of
from the equity, and all other transaction costs
allocated to a cash-generating unit (CGU) and part of
the investment . When NLB Group’s share of losses in an
associated with the acquisition are expensed .
the operation within that unit is disposed of, the goodwill
associate and joint venture equals or exceeds its interest
associated with the disposed operation is included in
in the associate and joint venture, including any other
Identifiable assets acquired and liabilities assumed in
the carrying amount of the operation when determining
unsecured receivables, NLB Group does not recognise
a business combination are, with limited exceptions,
the gain or loss on disposal. Goodwill disposed in these
further losses unless it has incurred obligations or made
measured initially at their fair values at the
circumstances is measured based on the relative values
payments on behalf of the associate and joint venture .
acquisition date .
of the disposed operation and the portion of the cash-
NLB Group resumes recognising its share of those profits
generating unit retained.
only after its share of the profits equals the share of
A contingent consideration classified as equity is not re-
losses not recognised (note 5 .12 .g) .
measured and its subsequent settlement is accounted
The goodwill of associates and joint ventures is included
for within equity . A contingent consideration classified
in the carrying value of investments .
NLB Group’s subsidiaries, associates and joint ventures
as an asset or liability that is a financial instrument
and within the scope of IFRS 9 Financial Instruments
In a business combination achieved in stages, NLB
is measured at fair value at each reporting date, and
Group remeasures its previously held equity interest
changes in fair value are recognised in the statement of
in the acquiree at its acquisition-date fair value, and
profit or loss in accordance with IFRS 9 . Other contingent
recognises the resulting gain or loss, if any, in profit
considerations that are not within the scope of IFRS 9
or loss .
are presented in note 5 .12 .
2 .7 . A combination of entities or
businesses 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 merged entities as reported in the consolidated
2 .6 . Investments in subsidiaries,
associates and joint ventures
In the separate financial statements (NLB), investments
in subsidiaries, associates and joint ventures are
financial statements .
accounted for with the cost method . Dividends from
subsidiaries, joint ventures, or associates are recognised
Mergers of entities within NLB Group do not affect the
in the income statement when NLB’s right to receive the
consolidated financial statements .
dividend has been established .
In the consolidated financial statements, investments in
associates are accounted for using the equity method of
When accounting for a merger in separate financial
statements (the merger of a parent company and its
subsidiary) if a surviving entity is the parent company,
accounting . These are generally undertakings in which
NLB applies an accounting policy to recognise the
NLB Group holds between 20% and 50% of the voting
difference between: (1) the amounts assigned to the
rights, and over which NLB Group exercises significant
assets and liabilities in the parents separate financial
influence, but does not have control .
Joint ventures are entities over whose activities NLB
Group has joint control, established by contractual
statements after the merger; and (2) the carrying
amounts of the investments in the merged subsidiary
before the merger, directly in equity . In such case, the
acquired assets and assumed liabilities are recognised
agreement . In the consolidated financial statements,
at the carrying amounts from the consolidated financial
investments in joint ventures are accounted for using the
statements of merged subsidiary as of the date of the
equity method of accounting .
merger, including any recognised goodwill and fair
value adjustments related to merged subsidiary’s assets
are measured at fair value at each reporting date, and
changes in fair value are recognised in profit or loss .
For each business combination, NLB Group elects
whether to measure the non-controlling interests in
the acquiree at fair value or at the present ownership
instruments’ proportionate share in the recognised
amounts of the acquiree’s identifiable net assets
at the date of acquisition . All other components
of non-controlling interests are measured at
their acquisition-date fair values, unless another
measurement basis is required by IFRSs .
Goodwill is measured as the excess of the aggregate of
the consideration transferred measured at fair value, the
amount of any non-controlling interest in the acquiree,
and the fair value of an interest in the acquiree held
immediately before the acquisition date over the net
amounts of the identifiable assets acquired, as well as
the liabilities assumed. Any negative amount, a gain on
a bargain purchase, is recognised in profit or loss after
management reassesses whether it has identified all
the assets acquired and all the liabilities and contingent
liabilities assumed, and reviews the appropriateness of
their measurement.
202
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
and liabilities . The comparative amounts in separate
financial statements are not restated .
NLB Group entities
The financial statements of all NLB Group entities
the financial instrument, or a shorter period (when
appropriate) to the gross carrying amount of the financial
203
2 .8 . Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of
that have a functional currency different from
asset or to the amortised cost of a financial liability .
the presentation currency are translated into the
Interest income includes coupons earned on fixed-
presentation currency as follows:
yield investments and trading securities, and accrued
• assets and liabilities for each statement of financial
discounts and premiums on securities . The calculation of
position presented are translated at the closing rate at
the effective interest rate includes all fees and points paid
NLB Group’s entities are measured using the currency of
the date of statement of financial position;
or received by parties to the contract and all transaction
the primary economic environment in which the entity
• income and expenses for each income statement are
costs, but excludes future credit risk losses .
operates (i .e ., the functional currency) . The financial
translated at average annual exchange rates; and
statements are presented in euros, which is NLB Group’s
• components of equity are translated at the historical
Interest income is calculated by applying the effective
presentation currency .
rate .
interest rate to the gross carrying amount of financial
assets other than credit-impaired assets .
Transactions and balances
Foreign currency transactions are translated into the
Goodwill and fair value adjustments arising from the
acquisition of a foreign entity are treated as assets
When a financial asset becomes credit-impaired and
functional currency at the exchange rates prevailing
and liabilities of the foreign entity and translated at the
is, therefore, classified in Stage 3, interest income is
at the dates of the transactions . Foreign exchange
closing rate .
gains and losses resulting from the settlement of such
transactions and from the translation of monetary
In the consolidated financial statements, exchange
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
assets and liabilities denominated in foreign currencies
differences arising from the translation of the net
income is again calculated on a gross basis .
are recognised in the income statement, except when
investment in foreign operations are recognised in other
deferred in other comprehensive income as qualifying
comprehensive income . When control over a foreign
In the case of purchased or originated credit-impaired
cash flow hedges .
operation is lost, the previously recognised exchange
financial assets (POCI), the credit-adjusted effective
differences on translations to a different presentation
interest rate is applied to the amortised cost of the
Translation differences resulting from changes in the
currency are reclassified from other comprehensive
financial asset from initial recognition . The credit-
amortised cost of monetary items denominated in
income to profit and loss for the year . On the partial
adjusted effective interest rate is the interest rate that, at
a foreign currency and classified as financial assets
disposal of a subsidiary without loss of control, the
initial recognition, discounts the estimated future cash
measured at fair value through other comprehensive
related portion of accumulated currency translation
flows (including credit losses) to the amortised cost of
income, are recognised in the income statement .
differences is reclassified as a non-controlling interest
the purchased or originated credit-impaired financial
within the equity .
Translation differences on non-monetary items, such as
equity instruments at fair value through profit or loss,
are reported as part of the fair value gain or loss in
the income statement . Translation differences on non-
2 .9 . Interest income and expenses
Interest income and expenses for all financial instruments
monetary items, such as equity instruments classified
measured at amortised cost, and financial assets
as financial assets measured at fair value through
measured at fair value through other comprehensive
asset . At the NLB Group level, most POCI exposures
relate to the initial recognition of non-performing
exposures in the case of a business combination .
2 .10 . Fee and commission income
Fees and commissions mainly include fees received from
other comprehensive income, are included together
income are recognised in the income statement for
credit cards and ATMs, customer transaction accounts,
with valuation reserves in the valuation (losses)/
all interest-bearing instruments on an accrual basis
payment services, investment funds, and commissions
gains taken to other comprehensive income and
using the effective interest method . Interest income
from guarantees . Fee and commission income are
accumulated in the equity .
on all trading assets and financial assets mandatorily
recognised at an amount that reflects the consideration
Gains and losses resulting from foreign currency
or loss is recognised using the contractual interest
exchange for providing the services . The performance
purchases and sales for trading purposes are included
rate . The effective interest method is used to calculate
obligations, as well as the timing of their satisfaction,
in the income statement as gains less losses from
the amortised cost of a financial asset or financial
are identified and determined at the inception of the
financial assets and liabilities held for trading .
liability, and to allocate the interest income or interest
contract . The Group’s revenue contracts do not include
required to be measured at fair value through profit
to which the NLB Group expects to be entitled, in
expenses over the relevant period . The effective interest
multiple performance obligations .
rate is the rate that exactly discounts estimated future
cash payments or receipts over the expected life of
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
When the NLB Group provides a service to its customers,
• Non-trading financial assets, mandatorily at fair value
to profit or loss . In NLB Group, the most material equity
the consideration is invoiced and generally due
through profit or loss (FVTPL) .
instrument irrevocably designated as FVOCI is the
immediately upon satisfaction of a service provided at
investment in the National Resolution Fund (note 5 .4 .a) .
a point in time . When the service is provided over time,
Financial assets are measured at AC if they are held
NLB Group decided to use this presentation alternative
the consideration is invoiced and due in line with the
within a business model for the purpose of collecting
because the fund was established based on the law, and
contractual provisions .
contractual cash flows (‘held to collect’), and if cash
it has a highly regulated investment strategy in order to
flows are solely payments of principal and interest
ensure safety, low risk, and the high liquidity of the fund .
The NLB Group has generally concluded that it is
on the principal amount outstanding . After initial
the principal in its revenue arrangements because it
recognition, they are measured at the amortised cost
All other financial assets are mandatorily measured at
typically controls the services before transferring them
using the effective interest method and are subject
FVTPL, including financial assets within other business
to the customer .
to impairment . Interest income calculated using the
models such as financial assets managed at fair value
Fees and commissions that are integral to the effective
losses, and impairment are recognised in profit or loss .
cash flows that are not solely payments of principal and
interest rate of financial assets and liabilities are
Each of them is presented as a separate line item in the
interest on the principal amount outstanding . Net gains
presented within interest income or expenses .
income statement . Any gain or loss on derecognition is
and losses, including any interest or dividend income,
effective interest method, foreign exchange gains and
or held for trading and financial assets with contractual
recognised in profit or loss in line item ‘Gains less losses
are recognised in profit or loss .
2 .11 . Dividend income
Dividends are recognised in the income statement
from financial assets and liabilities not measured at fair
value through profit or loss .’
IFRS 9 includes an option to designate financial assets
at fair value through profit or loss if doing so eliminates
within the line item ‘Dividend income’ when NLB
Debt financial instruments are measured at FVOCI if
or significantly reduces a measurement or recognition
Group’s right to receive payment has been established
they are held within a business model for the purpose of
inconsistency that would otherwise arise from
and an inflow of economic benefits is probable . In the
both collecting contractual cash flows and selling (‘held
measuring assets or liabilities, or recognising the gains
consolidated financial statements, dividends received
to collect and sell’), and if cash flows are solely payments
or losses on them on different bases .
from associates and joint ventures reduce the carrying
of principal and interest on the principal amount
value of the investment .
outstanding . FVOCI results in the debt instruments being
Financial liabilities
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 instrument .
Subsequent measurement depends on the classification
of the instrument .
recognised at fair value in the statement of financial
Financial liabilities are subsequently measured at the
position and at the AC in the income statement . Interest
amortised cost or at fair value through profit or loss,
income is calculated using the effective interest method,
when they are held for trading, derivative instruments,
foreign exchange gains and losses, and impairments are
or the fair value designation is applied .
recognised separately in the income statement . Other net
gains and losses are recognised in other comprehensive
Upon initial recognition, financial liability may be
income, until the instrument is derecognised . At
irrevocably designated as measured at fair value
derecognition of the debt financial instrument, the
through profit or loss if that eliminates or significantly
cumulative gains and losses previously recognised in
reduces a measurement or recognition inconsistency
other comprehensive income are reclassified to the
that would otherwise arise from measuring assets or
income statement under the line item ‘Gains less losses
liabilities or recognising the gains or losses on them on
from financial assets and liabilities not classified at fair
different bases, or if the liabilities are part of a group
Financial assets
value through profit or loss .’
All debt financial assets need to be assessed based
on a combination of the Group’s business model for
Equity instruments that are not held for trading may be
accordance with a documented risk management or
managing the assets and the instruments’ contractual
irrevocably designated as FVOCI, with no subsequent
investment strategy .
cash flow characteristics . The measurement categories
reclassification of gains or losses to the income
of financial assets are as follows:
• Financial assets, measured at amortised costs (AC);
• Financial assets at fair value through other
comprehensive income (FVOCI);
• Financial assets held for trading (FVTPL); and
statement . Dividends are recognised as income in
Changes in the fair value of financial liabilities
profit or loss unless the dividend clearly represents a
designated as measured at fair value through profit or
recovery of part of the cost of the investment, in which
loss are recognised in profit or loss, with the exception
case, such gains are recorded in other comprehensive
of movement in the fair value due to changes of NLB
income . Other net gains and losses are recognised in
Group’s own credit risk . Such changes are presented
other comprehensive income and are never reclassified
of financial instruments which are managed and
their performance evaluated on a fair value basis in
204
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in other comprehensive income with no subsequent
• debt securities in the second group are held under
is put on new and non-standardised characteristics of
reclassification to the income statement .
a business model ‘held to collect and sale’ with the
loan agreements .
205
intention of collecting the contractual cash flows and
Other financial liabilities are subsequently measured
sale of financial assets, and forms part of the Group’s
at amortised cost using the effective interest method .
liquidity reserves;
Accounting policy for modified financial assets
When contractual cash flows of a financial asset
Interest expenses and foreign exchange gains and
• the third part of debt securities is held within the
are modified, NLB Group assesses if the terms and
losses are recognised in profit or loss . Any gain or loss
business model for holding them with objective to
conditions have been modified to the extent that,
on the derecognition of a financial liability is recognised
collect contractual cash flows .
substantially, it becomes a new financial asset . The
in profit or loss . In the event of derecognition of a
following factors are, amongst others, considered when
financial liability measured at amortised cost, the gains
With regard to debt securities within the ‘held to collect’
making such assessment:
and losses are recognised in the line item ‘Gains less
business model, the sales which are related to the
• reason for modification of cash flows;
losses from financial assets and liabilities not classified
increase of the issuers’ credit risk, sales made close to the
• change in currency of the loan;
at fair value through profit or loss .’ Gains and losses on
final maturity, or sales in order to meet liquidity needs
• introduction of an equity feature;
disposals of financial liabilities designated as measured
in a stress case scenario are permitted . Other sales,
• replacement of initially agreed debtor with a new
at fair value through profit or loss are also presented
which are not due to an increase in credit risk may still
debtor that is not related party to initial debtor; and
separately from those held for trading .
be consistent with a held to collect business model if such
• if the modification changes the result of the SPPI test .
sales are incidental to the overall business model, and:
Assessment of NLB Group’s business model
NLB Group has determined its business model
• are insignificant in value both individually and in
aggregate, even when such sales are frequent;
If the modification results in derecognition of a
financial asset, the new financial asset is initially
separately for each reporting unit within NLB Group, and
• are infrequent even when they are significant in value .
recognised at fair value, with the difference recognised
is based on observable factors for different portfolios
that best reflect how the Group manages groups of
financial assets to achieve its business objective, such as:
• how the performance of the business model and the
A review of instruments’ contractual cash flow
characteristics (the SPPI test – solely payment of
principal and interest on the principal amount
financial assets held within that business model are
outstanding)
as a derecognition gain or loss, to the extent that an
impairment loss has not already been recorded . If
the modification does not result in cash flows that are
substantially different, the modification does not result
in derecognition . In such cases, NLB Group recalculates
evaluated and reported to key management personnel;
The second step in the classification of the financial
the gross carrying amount of the financial asset and
• the risks that affect the performance of the business
assets in portfolios being ‘held to collect’ and ‘held to
recognises modification gain or loss in the income
model and, in particular, the way those risks are
collect and sell’ relates to the assessment of whether
statement . The gross carrying amount is recalculated
managed;
the contractual cash flows are consistent with the SPPI
as the present value of the renegotiated or modified
• how the managers of the business are compensated
test . The principal amount reflects the fair value at
contractual cash flows that are discounted at the
(e .g ., whether the compensation is based on the fair
initial recognition less any subsequent changes, e .g .
financial asset’s original effective interest rate (or
value of the assets or on collection of contractual cash
due to repayment . The interest must represent only the
credit-adjusted effective interest rate for purchased or
flows); and
consideration for the time value of money, credit risk,
originated credit-impaired financial assets) .
• the expected frequency, value, and timing of sales .
other basic lending risks, and a profit margin consistent
The business model assessment is based on reasonably
expected scenarios without taking worst-case and
with 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
b) Reclassification
Financial assets can be reclassified when and only
when NLB Group’s business model for managing those
stress case scenarios into consideration . In general,
asset is mandatorily measured at fair value through
assets changes . The reclassification takes place from
the business model assessment of the Group can be
profit or loss .
summarised as follows:
the start of the reporting period following the change .
Such changes are expected to be very infrequent, and
• Loans and deposits given are included in a business
NLB Group reviews the portfolio within ‘held to collect’
none occurred during the presented periods . Financial
model ‘held to collect’ since the primary objective
and ‘held to collect and sale’ for standardised products
liabilities shall not be reclassified .
of NLB Group for the loan portfolio is to collect the
on a level of a product and for non-standardised
contractual cash flows;
products on a single exposure level . The Group has
• Debt securities are divided into three business models:
established a procedure for SPPI identification as part of
c) Day one gains or losses
The best evidence of fair value at initial recognition
• the first group of debt securities presents ‘held for
regular investment process with defined responsibilities
is the transaction price (i .e ., the fair value of the
trading’ category;
for primary and secondary controls . Special emphasis
consideration given or received), unless the fair value of
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
that instrument is evidenced by a comparison with other
Contents
observable current market transactions in the same
instrument (i .e ., without modification or repackaging), or
f) Fair value measurement principles
The fair value of financial instruments traded on active
requirements in accordance with the policy choice
permitted under IFRS 9 . However, disclosures that are
based on a valuation technique whose variables only
markets is based on the price that would be received
required by the IFRS 9 related amendments to IFRS 7
include data from observable markets .
to sell the assets or transfer liability (exit price) being
‘Financial Instruments: Disclosures’ are implemented .
measured at the reporting date, excluding transaction
If the transaction price on a non-active market is
costs . If there is no active market, the fair value of the
At the inception of the transaction, NLB Group
different than the fair value from other observable
instruments is estimated using discounted cash flow
documents the relationship between hedged items and
current market transactions in the same instrument,
techniques or pricing models .
or is based on a valuation technique whose variables
hedging instruments, as well as its risk management
objective, valuation methodology, and strategy for
only include data from observable markets, the
If discounted cash flow techniques are used, estimated
undertaking various hedge transactions . NLB Group
difference between the transaction price and fair value
future cash flows are based on management’s best
also documents its assessment, both at the hedge
is recognised immediately in the income statement (‘day
estimates; and the discount rate is a market-based
inception and on an ongoing basis, of whether the
one gains or losses’) .
rate at the reporting date for an instrument with similar
derivatives used in hedging transactions are highly
In cases where the data used for valuation are not fully
are based on market-based measurements at the
of hedged items . The actual results of a hedge must
observable in financial markets, day one gains or losses
reporting date .
always fall within a range of 80–125% .
terms and conditions . If pricing models are used, inputs
effective in offsetting changes in fair values or cash flows
are not recognised immediately in the income statement .
The timing of recognition of deferred day one gains or
losses is determined individually . It is either amortised
g) Derivative financial instruments and
Fair value hedge
hedge accounting
Changes in the fair value of derivatives that are
over the life of the transaction, deferred until the
Derivative financial instruments – including forward
designated and qualify as fair value hedges are
instrument’s fair value can be determined using market
and futures contracts, swaps, and options – are initially
recognised in the income statement together with any
observable inputs, or realised through settlement .
recognised in the statement of financial position at fair
changes in the fair value of the hedged asset or liability
value . Derivative financial instruments are subsequently
that are attributable to the hedged risk . Effective changes
d) Derecognition
A financial asset is derecognised when the contractual
re-measured at their fair value . Fair values are
in the fair value of hedging instruments and related
obtained from quoted market prices, discounted cash
hedged items are reflected in ‘Fair Value Adjustments
rights to the cash flows from the financial asset expire,
flow models, or pricing models, as appropriate . All
in Hedge Accounting’ in the income statement .
or when the financial asset is transferred, and the
derivatives are carried at their fair value within assets
Any ineffectiveness from derivatives is recognised
transfer qualifies for derecognition . A financial liability
when the derivative position is favourable to NLB Group,
immediately in the income statement, recorded in the
is derecognised only when it is extinguished, i .e ., when
and within liabilities when the derivative position is
same line as change in fair value of hedging instruments
the obligation specified in the contract is discharged,
unfavourable to NLB Group .
and hedged item if they are different .
cancelled, or expires .
The method of recognising the resulting fair value gain
If a hedge no longer meets the hedge accounting
e) Write-offs
NLB Group writes off financial assets in their entirety
or loss depends on whether the derivative is designated
criteria, the adjustment to the carrying amount of the
as a hedging instrument and, if so, the nature of the item
hedged item for which the effective interest method is
or a portion thereof when it has exhausted all practical
being hedged . NLB Group designates certain derivatives
used is amortised to profit or loss over the remaining
recovery efforts and has no reasonable expectations of
as either:
period to maturity . The adjustment to the carrying
recovery . Criteria indicating that there is no reasonable
• hedges of the fair value of recognised assets or
amount of a hedged equity security is included in the
expectation of recovery include default period, quality
liabilities or firm commitments (fair value hedge);
income statement upon disposal of the equity security .
of collateral, and different stages of enforcement
• hedges of highly probable future cash flows
procedures . NLB Group may write off financial assets
attributable to a recognised asset or liability, or a
Cash flow hedge
that are still subject to enforcement activities, but this
highly probable forecasted transaction (cash flow
The effective portion of changes in the fair value of
does not affect its rights in the enforcement procedures .
hedge); or
derivatives that are designated and qualify as cash flow
NLB Group still seeks to recover all amounts it is legally
• hedges of a net investment in a foreign operation (net
hedges is recognised in other comprehensive income .
entitled to in full . A write-off reduces the gross carrying
investment hedge) .
amount of a financial asset and allowance for the
The gain or loss relating to the ineffective portion is
immediately recognised in the income statement .
impairment . Any subsequent recoveries are credited
Hedge accounting is used when certain criteria are
to credit loss expenses . Write-offs and recoveries are
met . NLB Group and NLB have exercised the option to
Amounts accumulated in equity are recycled as a
disclosed in note 5 .14 .a) and b) .
continue applying the existing IAS 39 hedge accounting
reclassification from other comprehensive income to the
206
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
income statement in the periods when the hedged item
in which case, the allowance is based on the probability
speculative investment rating grade on the short rating
affects the profit or loss .
of default over the life of the financial asset (LECL) . When
scale (with only 3 performing rating groups),
207
determining whether the risk of default has increased
• when a threefold increase of LPD since initial
When a hedging instrument expires or is sold, or when
significantly since initial recognition, the Group considers
recognition is detected (comparing the LPD assessed
a hedge no longer meets hedge accounting criteria, any
reasonable and supportable information that is
using the PD curve calculated at instrument origination
cumulative gain or loss existing in other comprehensive
relevant and available without undue cost or effort . This
and the last available PD curve),
income and previously accumulated in equity at that
includes both quantitative and qualitative information
• when a financial asset has material delays over
time remains in other comprehensive income and in
and analysis, based on the Group’s historical data,
30 days with a healing period of 3 months and the
equity, and is recognised in profit or loss only when the
experience, expert credit assessment, and incorporation
materiality limit aligned with the one used as a
forecasted transaction is ultimately recognised in the
of forward-looking information .
income statement . When a forecasted transaction is no
default trigger (the materiality limit is aligned with the
regulatory limit for default definition, the holding period
longer expected to occur, the cumulative gain or loss
Classification into stages
of 3 months is applied),
that was reported in other comprehensive income is
NLB Group prepared a methodology for ECL defining the
• if NLB Group grants a forbearance to the borrower
immediately transferred to the income statement .
criteria for classification into stages, transition criteria
where the rules of forbearance expiry are aligned with
Hedge of a net investment in a foreign operation
forward-looking scenarios, and the validation of
• if the facility is placed on the watch list or intensive
Hedges of net investments in foreign operations are
models . The Group classifies financial instruments into
care list,
accounted for in consolidated financial statements
similar to cash flow hedges . Any gain or loss on the
Stage 1, Stage 2, and Stage 3, based on the applied ECL
allowance methodology as described below:
• if a retail client is placed on the watch list based on
features which lead to increased credit risk (such as
hedging instrument relating to the effective portion
• Stage 1 – performing portfolio: no significant increase
spending habits, decreased employment security,
between stages, models for risk indicators calculation,
the ECB Guidelines,
of the hedge is recognised directly in equity . The gain
of credit risk since initial recognition, NLB Group
political risk and similar) .
or loss relating to the ineffective portion is recognised
recognises an allowance based on 12-month period;
immediately in the consolidated income statement in
• Stage 2 – underperforming portfolio: significant
The methodology of credit rating for banks and
‘Gains Less Losses on Financial Assets and Liabilities
increase in credit risk (SICR) since initial recognition,
sovereign classification depends on the existence or
Held for Trading .’ Gains and losses accumulated in other
NLB Group recognises an allowance for lifetime period;
non-existence of a rating from international credit rating
comprehensive income are included in the consolidated
and
agencies – Fitch, Moody’s, or the S&P . Ratings are set
income statement when the foreign operation is
• Stage 3 – impaired portfolio: NLB Group recognises
on a basis of the average international credit rating .
disposed of as part of the gain or loss on the disposal .
lifetime allowances for these defaulted financial assets .
If there are no international credit ratings available,
the credit rating classification is based on the internal
2 .13 . Allowances for financial assets
a) Expected credit losses for collective allowances
IFRS 9 applies an expected loss model that provides an
The Bank has aligned its definition of credit impaired
Methodology Rating Classification for Financial
assets under IFRS 9 to the new European Banking
Markets clients' segments in NLB d .d . and NLB Group .
Authority (EBA) definition of non-performing loans
For banks without an international credit rating, we
(NPLs) as at 31 December 2020 . The Bank uses a unified
obtain information from Bureau van Dijk, a Moody's
unbiased and probability-weighted estimate of credit
definition of past due and default exposures; defaulted
Analytics Company, using the modules BankScore and
losses by evaluating a range of possible outcomes that
clients are rated D, DF, or E based on the internal rating
BankFocus . Additionally, information is obtained by an
incorporates forecasts of future economic conditions .
system and contains the clients with material delays
analyst from the annual reports with the assistance of
The expected loss model requires NLB Group to
over 90 days, as well as the clients that were assessed
the central relationship manager .
recognise not only credit losses that have already
as unlikely to pay . All facilities of retail clients obtain a
occurred, but also losses that are expected to occur
unified credit rating .
in the future . An allowance for expected credit losses
The classification into stages is based on the facility
level . Nevertheless, occurring delays on one facility may
(ECL) is required for all loans and other debt financial
A significant increase in credit risk is assumed:
trigger the stage deterioration of other facilities of the
assets not measured at FVTPL, together with loan
• when a credit rating significantly deteriorates at the
same client . When the SICR criteria no longer exist, the
commitments and financial guarantee contracts .
reporting date in comparison to the credit rating
facility may be transferred to a more favourable stage
at initial recognition a significant deterioration is a
subject to the prescribed cure period of three months .
In the general model, the allowance is based on the
3-notch rating decrease taking into consideration the
expected credit losses associated with the probability
NLB Group’s long rating scale (with 9 performing rating
The ECL for Stage 1 financial assets is calculated based
of default in the next 12 months unless there has been a
classes) or deterioration from invest/invest with care to
on 12-month PDs or shorter period PDs, if the remaining
significant increase in credit risk since initial recognition,
maturity of the financial asset is shorter than 1 year .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The 12-month PD already includes the macroeconomic
clients by size, institutions, or central government), or
inflation due to an increased ECB key rate and
impact effect . Allowances in Stage 1 are designed to
by product group (mortgage, consumer loans, and
quantitative tightening, a slightly less tight labour
reflect expected credit losses that had been incurred in
other retail products) . Through the cycle, the PD is
market, GDP growth supported by declining interest
the performing portfolio, but have not been identified .
supplemented with the forward-looking aspect using
rates and positive expectations, regional containment
The ECL for Stage 2 financial assets is calculated based
on lifetime PDs (LPD) because their credit risk has
Risk parameter calculations are based on the data from
three possible scenarios .
of political tensions, and limited spill over effects of
financial system issues on the real economy .
increased significantly since their initial recognition .
each subsidiary, while the calculations and modelling
The alternative scenarios are based on plausible drivers
This calculation is also based on a forward-looking
are performed centrally . In the case where the data
of economic development for the next three years . The
assessment that considers several economic scenarios
samples are not sufficiently large, hurdle rates are
optimistic scenario is supply- and demand-driven, with
in order to recognise the probability of losses associated
applied based on the regulatory or other benchmarks .
a mild winter and sufficient energy supplies easing price
with the predicted macro-economic forecasts .
Expected Life
pressures in the euro area . China’s decision to abandon
strict COVID restrictions supports the euro area exports,
For financial instruments in Stage 3, the same treatment
When measuring ECL, the NLB Group must consider the
and stimulating demand . Lower inflation leads to
is applied as for those considered to be credit impaired .
maximum contractual period over which the NLB Group
an optimistic financial market outlook, and the first
Exposures below the materiality threshold obtain
is exposed to credit risk . For certain revolving credit
year shows positive growth expectations, followed by
collective allowances using a PD of 100% . Financial
facilities that do not have a fixed maturity, the expected
additional ECB support and moderated growth potential
instruments will be transferred out of Stage 3 if they
no longer meet the criteria of being credit-impaired
life is estimated based on the period over which the
NLB Group is exposed to credit risk and where the credit
in the following two years .
after a probation period . Special treatment applies
losses would not be mitigated by management actions .
The severe, supply- and demand-driven scenario
for purchased or originated credit-impaired financial
instruments (POCI), where only the cumulative changes
Forward-looking information
depicts sluggish economic growth due to lower
consumer purchasing power, geopolitical disruption,
in lifetime expected losses since the initial recognition
During 2023, NLB Group reviewed the IFRS 9
and elevated inflation . The NLB Group home countries
are recognised as a loss allowance .
provisioning by testing the relevant macroeconomic
experience near-zero real economic growth, leading
scenarios to accurately reflect the current circumstances
to substantial upward shocks in financial markets .
The calculation of collective allowances is performed
and their future impacts .
by multiplying the EAD (exposure at default) at the
Political tensions persist, causing supply disruptions,
and inflation remains higher than expected, resulting
end of each month with an appropriate PD and LGD
NLB Group established multiple scenarios (i .e ., baseline,
in increased long-term inflation expectations . GDP
(loss-given default) . The obtained result for each
optimistic, and severe) for the ECL calculation, aiming
growth remains low as the ECB implements a restrictive
month is discounted to the present time using the
to create a unified projection of macroeconomic and
monetary policy . Despite a slow increase in the
original effective interest rate of the facility . For Stage
financial variables for the Group, aligned with the Bank’s
unemployment rate, many industries still face a tight
1 exposures, the ECL only takes a 12-month period into
consolidated view of the future of economic development
labour market . The financial system stabilises, allowing
account, while for Stage 2 or 3 all potential losses until
in the SEE . The Group formed three probable scenarios
the ECB to focus on taming inflation . The Bank considers
the maturity date are included . Risk parameters are
with an associated probability of occurrence for forward-
these scenarios in calculating expected credit losses in
calculated separately for each of the three possible
looking assessment of risk provisioning in the context
the context of the IFRS 9 .
scenarios . The final ECL for each facility is calculated as
of the IFRS 9 . These IFRS 9 macroeconomic scenarios
a weighted average ECL for each scenario .
incorporate the forward-looking and probability-
weighted aspects of the ECL impairment calculation .
The EAD represents the anticipated outstanding amount
Both features may change when material changes in the
owed by the obligor, which is determined as the sum of
future development of the economy are recognised and
on-balance exposure and expected future drawings of
not embedded in previous forecasts .
the off-balance exposure . The drawings are assessed by
applying the CCF (credit conversion factor) based on the
The baseline scenario presents an expected forecast
Bank’s historic experience with similar types of facilities .
macroeconomic view for all the countries of the
The PD is the estimation of the likelihood of default
professional forecasts, with specific adjustments for
over a given time horizon . The estimation is performed
individual countries of the Group . Key characteristics
separately for each unique segment (corporate
include no additional supply shocks, decreasing
Group . This scenario is based on recent official and
208
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Macroeconomic scenarios for explanatory variables, developed for each country in the NLB Group used in 2022 (in %):
Slovenia
Real GDP
Unemployment rate
Bosnia and Herzegovina
Real GDP
Unemployment rate
Montenegro
Real GDP
Unemployment rate
North Macedonia
Real GDP
Unemployment rate
Serbia
Real GDP
Unemployment rate
Kosovo
Real GDP
Unemployment rate
Optimistic scenario
Baseline scenario
Severe scenario
2022
2023
2024
2022
2023
2024
2022
2023
2024
4 .7
4 .3
4 .0
15 .4
6 .2
16 .2
4 .1
15 .0
4 .8
9 .9
4 .4
23 .7
5 .5
4 .2
4 .9
15 .4
6 .9
15 .8
6 .0
14 .4
6 .5
9 .2
6 .5
22 .9
4 .0
4 .0
4 .6
14 .8
5 .2
14 .9
5 .2
13 .9
5 .0
8 .8
5 .1
22 .2
3 .5
4 .4
2 .4
15 .3
4 .2
16 .1
2 .9
15 .2
3 .6
10 .0
2 .8
23 .6
3 .1
4 .4
2 .3
15 .1
3 .9
15 .5
3 .6
14 .9
4 .1
9 .4
3 .9
22 .6
2 .8
4 .3
3 .0
14 .4
3 .2
14 .5
4 .0
14 .6
3 .8
9 .1
3 .5
21 .8
1 .5
4 .6
(0 .1)
18 .3
1 .2
16 .2
(0 .1)
15 .5
1 .6
10 .4
0 .3
23 .7
0 .6
5 .6
(0 .7)
18 .9
(0 .1)
16 .2
0 .1
16 .4
1 .6
11 .5
0 .9
23 .3
1 .8
7 .9
1 .8
18 .3
1 .7
16 .5
2 .5
19 .1
2 .8
15 .3
2 .3
23 .8
209
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Macroeconomic scenarios for explanatory variables, developed for each country in the NLB Group used in 2023 (in %):
Slovenia
Real GDP
Unemployment rate
EURIBOR (6 months)
Bosnia and Herzegovina
Real GDP
Unemployment rate
EURIBOR (6 months)
Montenegro
Real GDP
Unemployment rate
EURIBOR (6 months)
North Macedonia
Real GDP
Unemployment rate
EURIBOR (6 months)
Serbia
Real GDP
Unemployment rate
EURIBOR (6 months)
Kosovo
Real GDP
Unemployment rate
EURIBOR (6 months)
Optimistic scenario
Baseline scenario
Severe scenario
2023
2024
2025
2023
2024
2025
2023
2024
2025
2 .4
3 .9
2 .4
2 .3
15 .0
2 .4
6 .0
13 .5
2 .4
3 .6
13 .7
2 .4
3 .3
9 .4
2 .4
4 .1
16 .3
2 .4
3 .4
4 .0
2 .1
2 .9
14 .0
2 .1
5 .5
12 .2
2 .1
4 .3
12 .7
2 .1
4 .2
8 .6
2 .1
4 .6
14 .9
2 .1
2 .5
4 .1
2 .2
2 .4
14 .2
2 .2
3 .4
12 .3
2 .2
3 .3
12 .8
2 .2
3 .6
8 .7
2 .2
3 .8
14 .6
2 .2
0 .6
4 .0
2 .7
1 .0
15 .2
2 .7
2 .6
13 .7
2 .7
1 .6
13 .9
2 .7
1 .8
9 .5
2 .7
2 .4
16 .5
2 .7
2 .2
4 .2
2 .3
2 .0
15 .1
2 .3
3 .2
13 .3
2 .3
3 .0
13 .7
2 .3
3 .1
9 .2
2 .3
3 .5
16 .0
2 .3
2 .5
4 .2
2 .3
2 .3
14 .8
2 .3
3 .2
12 .9
2 .3
3 .3
13 .4
2 .3
3 .4
9 .0
2 .3
3 .8
15 .2
2 .3
(0 .6)
4 .5
4 .6
0 .3
15 .9
4 .6
0 .6
14 .4
4 .6
0 .3
15 .3
4 .6
1 .1
10 .2
4 .6
1 .4
17 .2
4 .6
0 .4
5 .0
4 .5
0 .9
16 .2
4 .5
0 .1
14 .4
4 .5
1 .1
16 .0
4 .5
2 .0
10 .4
4 .5
2 .0
17 .1
4 .5
0 .7
5 .3
4 .6
1 .2
16 .2
4 .6
0 .1
14 .3
4 .6
1 .4
16 .3
4 .6
2 .3
10 .6
4 .6
2 .3
16 .6
4 .6
NLB Group formed three probable scenarios with an
b) Individual assessment of allowances for impaired
expected cash flows from the sale of collateral . The
associated probability of occurrence for forward-
financial assets
expected payment from the collateral is calculated from
looking assessment of risk provisioning in the context of
NLB Group assesses impairments of financial assets
the appraised market value of the collateral, the haircut
IFRS 9 . IFRS 9 macroeconomic scenarios incorporate the
separately for all individually significant assets
is used as defined in the Haircut Methodology, and
forward-looking and probability-weighted aspects of
classified in Stage 3 . The materiality threshold is set at
discounted . Off-balance sheet liabilities are also assessed
ECL impairment calculation . Both features may change
a EUR 0 .5 million exposure for legal entities, and EUR
individually and, where necessary, related allowances
when material changes in the future development of
0 .1 million for private persons on the level of NLB, while
are recognised as liabilities .
the economy are recognised and not embedded in
the Group members apply lower thresholds applicable
previous forecasts . On this basis, for the year 2023, the
to their portfolio size . All other financial assets obtain
The carrying amount of financial assets measured at
Group assigned weights of 20%-60%-20% (alternative
collective allowances .
scenarios receiving 20% each, and the baseline
amortised cost is reduced through an allowance account
and the loss is recognised in the income statement line
scenario 60%), with minor changes in some entities
The amount of loss is measured as the difference
item ‘Impairment of financial assets .’ If the amount of
to reflect the likelihood of relevant future economic
between the asset’s carrying amount and the present
allowances for ECL decreases subsequently due to an
conditions in their environment .
value of estimated future cash flows, which are
event occurring after the impairment was recognised
Effects of changed risk parameters
The effects of the changed risk parameters on the
amount of expected credit losses are disclosed in notes
5 .14 . and 5 .16 .b) .
discounted to the estimation date . The scenario of
(e .g ., repayment in the collection process exceeds the
expected cash flows can be based on the ‘going concern’
assessed expected payment from collateral), the reversal
assumption, where the cash flow from operations is
of the loss is recognised as a reduction in the allowance
considered along with the sale of collateral that is not
account, and the gain is recognised in the same income
crucial for future business . In the case of the ‘gone
statement item . For off-balance exposures, the amount
concern’ principle, the repayments are based on
of ECL is recognised in the statement of financial position
210
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in the line item ‘Provisions’ and in the income statement
as a result of a contractually agreed debt waiver and
In the case of a deferral of payment approved due to the
in the line item ‘Provisions for credit losses .’
ownership restructuring or debt to equity swap, NLB
COVID-19 crisis, the probation period is extended for the
211
Group derecognises the claim in the part relating to
period of deferral .
The ECLs for debt instruments measured at fair value
the write-down or the contractually agreed upon debt
through other comprehensive income do not reduce
waiver . The new estimate of the future cash flows for
the carrying amount of these financial assets in the
the residual claim, not yet written down, is based on an
statement of financial position, which remains at fair
updated estimate of the probability of loss . NLB Group
2 .15 . Repossessed assets
In certain circumstances, assets are repossessed
value . Instead, an amount equal to the allowance that
considers the debtor’s modified position, the economic
following the foreclosure on loans that are in default .
would arise if the assets were measured at amortised
expectations, and the collateral of the forborne loan .
Repossessed assets are initially recognised in the
cost is recognised in other comprehensive income as an
When NLB Group is embarking on the forborne loan by
financial statements at their fair value and classified in
accumulated impairment amount, with a corresponding
taking possession of other assets (i .e ., property, plant
the appropriate category according to their purpose
charge to profit or loss . The accumulated loss recognised
and equipment; securities; and other financial assets),
and are sold as soon as it is feasible in order to reduce
in other comprehensive income is recycled to the profit
including investments in the equity of debtors obtained
exposure (note 6 .1 .l) . After initial recognition, the
or loss upon derecognition of the assets, or when the
via debt-to-equity swaps, it recognises the acquired
repossessed assets are measured and accounted for in
amount of allowances for ECL decreases due to an event
assets in the statement of financial position at fair value,
accordance with the policies applicable to the relevant
occurring after the impairment was recognised .
recognising the difference between the fair value of the
asset categories . Non-financial repossessed assets
asset and the carrying amount of the eliminated claim in
mainly represent items of real estate that NLB Group
2 .14 . Forborne loans
A forborne loan (or restructured financial asset) arises
profit or loss .
classifies within investment properties measured in
accordance with an IAS 40 Investment property (note
Forborne exposures may be identified in both the
2 .20 .), and other assets measured in accordance with
as a result of a debtor’s inability to repay a debt under
performing and non-performing parts of the portfolio .
IAS 2 Inventories .
the originally agreed terms, either by modifying the
Where the forborne loan is classified in the non-
terms of the original contract (via an annex) or by
performing part of the portfolio, it can be reclassified
Real estate obtained as collateral from the foreclosure
signing a new contract under which the contracting
to the performing part when exposure is no longer
of loans and receivables, classified as other assets
parties agree the partial or total repayment of the
considered as impaired or defaulted, when determined
are initially recognised at fair value less costs to sell
original debt . When receivables from the client receive
amounts were repaid, when one year has passed
(realisable value), wherein only the direct costs of
restructuring status, the debtor must be classified in the
from the latest of the events defined (introduction of
sales can be considered, but up to the amount of gross
rating grade C or lower .
forbearance, classification in the non-performing part,
carrying amount of foreclosed loan . At subsequent
repayment of the last overdue amount, end of the grace
measurement, the realisable value is verified at least
The definitions of forborne loans closely follow
period), and after the introduction of forbearance there
annually . Valuations of the fair value of real estate are
definitions that were developed by the European
have been no overdue amounts or doubts concerning
performed by certified real estate appraisers . The real
Banking Authority (EBA) . These definitions aim to
the repayment of the entire exposure, under the terms
estate is impaired when the carrying value exceeds the
achieve comprehensive coverage of exposures to which
and conditions after the forbearance . The absence of
realisable value . The effect of impairment is recognised
forbearance measures have been extended .
doubt is confirmed by analysis of the financial situation
as the impairment of other assets, and the reversal
of the debtor .
The accounting treatment of forborne loans depends
on the type of restructuring . When NLB Group embarks
The forborne status is withdrawn when:
on a forborne loan via the modified terms of repayment
• at least a 2-year probation period has passed since the
proceeding from extending the deadline for the
latest of:
repayment of the principal and/or interest, and/or a
• the moment of extending the restructuring measures,
forbearance of the repayment of the principal, and/
or
of impairment as income from the reversal of the
impairment of other assets .
2 .16 . Offsetting
Financial assets and liabilities are offset, and the net
amount reported in the statement of financial position
or interest or a reduction in the interest rate, and/or
• the forborne exposure was deemed performing;
when there is a legally enforceable right to offset the
other expenses, it adjusts the carrying amount of the
• regular payments of the principal or interest were
recognised amounts, and there is an intention to settle
forborne loan on the basis of the discounted value of
made, in a substantial total amount, during at least half
on a net basis, or to realise the asset and settle the
the estimated future cash flows under the modified
the probation period;
liability simultaneously .
terms, and recognises the resulting effect in profit or
• no exposure, in the probation period, is more than 30
loss . In the event of the reduction of a claim against the
days in default of more than EUR 100;
debtor via the reduction in the amount of the claims
• the client fulfils determined financial indicators .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Depreciation is calculated on a straight-line basis over
are measured in accordance with IAS 38 Intangible
the assets’ estimated useful lives . The following annual
Assets . Other intangible assets acquired in a business
212
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
depreciation rates were applied:
NLB Group and NLB
Buildings
Leasehold improvements
to sale and repurchase agreements are reclassified in
Computers
the financial statements as pledged assets when the
Furniture and equipment
transferee has the right by contract or custom to sell or
Motor vehicles
in %
2 – 5
5 – 25
14 .3 – 50
10 – 33 .3
12 .5 – 25
re-pledge the collateral . Securities purchased under
agreements to resell (reverse repos) are presented as
loans to other banks or customers, as appropriate .
Depreciation does not begin until the assets are
available for use .
In financial statements, the difference between the sale
and repurchase price is treated as interest and accrued
over the life of the repo agreements using the effective
interest method .
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 loss .
Each year, NLB Group assesses whether there are
indications that property and equipment may be
impaired . If any such indication exists, the recoverable
amounts are estimated . The recoverable amount is the
higher of the fair value less costs to sell and value in use .
If the recoverable amount exceeds the carrying value, the
assets are not impaired . If the carrying amount exceeds
the recoverable amount, the difference is recognised as
an impairment loss in the income statement .
Items of a largely independent property and
equipment which do not generate cash flows are
included in the cash-generating unit and later tested
for possible impairment .
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 over
its estimated useful life . The core banking system is
amortised over a period of 10 years, and other software
over a period of three to five years . Amortisation does
not begin until the assets are available for use .
The identifiable intangible assets acquired in a
business combination and recognised separately from
goodwill, are recorded at fair value on the acquisition
date if the intangible asset is separable or arises from
contractual or other legal rights . After initial recognition,
intangible assets acquired in a business combination
combination (note 5 .10 .) relate to core deposits and
trade name . Their useful life is assessed to be five
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 the asset’s consumption .
2 .20 . Investment properties
Investment properties include properties held to
earn rentals, or to increase the value of a long-term
investment, rather than to be used by NLB Group .
Investment properties are carried at fair value
determined by a certified appraiser . Fair value is based
on current market prices . Any gain or loss arising from
a change in the fair value is recognised in the income
statement .
2 .21 . Non-current assets and
disposal groups classified as
held for sale
Non-current assets and disposal groups are classified
as held for sale if their carrying amount will be
recovered through a sale transaction rather than
through continuing use . This condition is deemed to
be met only when the sale is highly probable, and the
asset is available for immediate sale in its present
condition . Management must be committed to the sale,
which should be expected to qualify for recognition
as a completed sale within one year from the date of
classification . Non-current assets and disposal groups
classified as held for sale are measured at the lower of
the assets’ previous carrying amount and fair value less
costs to sell .
In the case of business combinations, NLB Group
measures an acquired non-current asset (or disposal
group) that is classified as held for sale at the acquisition
date in accordance with IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations at fair value less
costs to sell .
During subsequent measurement, certain assets and
liabilities of a disposal group that are outside the scope
of IFRS 5 measurement requirements are measured
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in accordance with the applicable standards (e .g .,
adjusted for any remeasurement of lease liabilities) and
Sale-and-leaseback transactions
deferred tax assets, assets arising from employee
recognises depreciation of the right-of-use assets on a
NLB Group also enters into sale-and-leaseback
benefits, financial instruments, investment property
straight-line basis over the lease term, and (separately)
transactions (in which NLB Group is primarily a
measured at fair value, and contractual rights under
interest on the lease liabilities . In the statement of
lessor) under which the leased assets are purchased
insurance contracts) . Tangible and intangible assets are
financial position, right-of-use assets are presented in
from, and then leased back to the lessee . These
not depreciated . The effects of sale and valuation are
the line item ‘Property and equipment .’
contracts are classified as finance leases or operating
included in the income statement as a gain or loss from
non-current assets held for sale .
Lease liabilities
leases, depending on the contractual terms of the
leaseback agreement .
At the commencement date, NLB Group measures the
Liabilities directly associated with disposal groups are
lease liability at the present value of the lease payments
Leases recognised in a business combination
reclassified and presented separately in the statement
that are not paid at that date . The lease payments
In most leases acquired in business combinations,
of financial position .
consist of fixed payments, variable lease payments that
the acquiree is the lessee . For such leases, NLB Group
2 .22 . Accounting for leases
A lease is a contract, or part of a contract which creates
depend on an index or a rate, amounts expected to
applies the IFRS 16 initial measurement provisions
be paid under residual value guarantees, the exercise
(with exceptions for leases with remaining term of 12
price of a purchase option if there exists a reasonable
months or less and low value leases), and recognises the
certainty for it to be exercised, and payments of
acquired lease liability as if the lease contract was a new
enforceable rights and obligations and conveys the
penalties for terminating the lease if the lease term
lease at the acquisition date . The right-of-use asset is
right to control the use of an identified asset for a
period of time in exchange for a consideration . Thus,
reflects exercising the option to terminate . Subsequently
(after the commencement date), NLB Group measures
measured at an amount equal to the recognised liability .
There are no favourable or unfavourable terms of the
IFRS 16 requires determination whether a contract is, or
the lease liability by:
leases relative to market terms, which would require the
• increasing the carrying amount to reflect interest on the
adjustment of the right-of-use assets .
contains, a lease .
NLB Group as a lessee
lease liability;
• reducing the carrying amount to reflect the lease
NLB Group recognises a liability to make lease
payments made;
payments and an asset representing the right to use the
• remeasuring the carrying amount to reflect any
2 .23 . Cash and cash equivalents
For the purpose of the statement of cash flows, cash
underlying asset (i .e ., the right-of-use asset) during the
reassessment or lease modifications .
and cash equivalents comprise cash and balances with
lease term for all leases, except for short-term leases
central banks and other demand deposits at banks, loans
and leases of low-value . Short-term leases are defined
In the statement of financial position, lease liabilities are
to banks and debt securities not held for trading with an
as those which at the commencement date have a lease
presented in line item ‘Other financial liabilities .’
original maturity of up to three months . Cash and cash
term of 12 months or less without the option to purchase
the underlying asset . Leases of underlying assets with a
NLB Group as a lessor
value, when new, lower, or equal to EUR 5 thousand are
Payments under operating leases are recognised
defined as low value leases, and are thus recognised as
as income on a straight-line basis over the period of
expenses on a straight-line basis over the lease term .
the lease . Assets leased under operating leases are
Right-of-use assets
At the commencement date, NLB Group measures the
presented in the statement of financial position as
investment property or as property and equipment .
right-of-use asset at cost . The cost of right-of-use assets
NLB Group classifies a lease as a finance lease when the
consists of the amount of lease liabilities recognised,
risks and rewards incidental to ownership of a leased
the initial direct costs incurred, an estimate of costs to
asset lie with the lessee . When assets are leased under
be incurred by the lessee in dismantling and removing
a finance lease, the present value of the lease payments
the underlying asset to the condition required by the
is recognised as a receivable . Income from finance lease
terms and conditions of the lease and lease payments
transactions is amortised over the lifetime of the lease
made at or before the commencement date less any
using the interest rate implicit in the lease . Finance lease
lease incentives received . After the commencement date,
receivables are recognised at an amount equal to the
NLB Group measures the right-of-use asset using a cost
net investment in the lease, /including the unguaranteed
model (the asset is measured at cost, reduced by any
residual value and any initial direct costs of the lessor .
accumulated depreciation and impairment losses, and
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 initially recognised at fair value . Borrowings are
subsequently measured at the amortised cost . The
difference between the value at initial recognition and
the final value is recognised in the income statement as
interest expenses, applying the effective interest rate .
Repurchased own debt is disclosed as a reduction of
liabilities in the statement of financial position . The
difference between the book value and the price at
which own debt was repurchased is disclosed in the
income statement .
213
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
2 .25 . Other issued financial
instruments with
characteristics
of equity
Upon initial recognition, other issued financial
instruments are classified in part or in full as equity
instruments if the contractual characteristics of the
instruments are such that NLB Group must classify
them as equity instruments in accordance with IAS 32
Financial Instruments: Presentation . An issued financial
instrument is only considered an equity instrument if that
instrument does not represent a contractual obligation
for payment .
Issued financial instruments with characteristics of
equity are recognised in equity in the statement of
financial position . Transaction costs incurred for issuing
such instruments are deducted from retained earnings .
The corresponding interest is recognised directly in
retained earnings .
The carrying value of an issued financial instrument
with characteristics of equity is presented in the
statement of changes in equity in the line item ‘Other
Equity Instruments .’
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 make specific payments to reimburse the
holder for a loss it incurs because a specific debtor fails
to make payments when due, in accordance with the
terms of debt instruments . Such financial guarantees are
given to banks, financial institutions, and other bodies
on behalf of the customer to secure loans, overdrafts,
and other banking facilities .
The issued guarantees covering non-financial
obligations of the clients represent the obligation of
the Bank (guarantor) to pay if the client fails to perform
certain works in accordance with the terms of the
commercial contract .
Financial and non-financial guarantees are initially
recognised at fair value, which is usually evidenced by
the fees received . The fees are amortised to the income
statement over the contract term using the straight-line
method . NLB Group’s liabilities under guarantees are
subsequently measured at the greater of:
• the initial measurement, less amortisation calculated to
recognise fee income over the period of guarantee; or
• ECL provisions as set out in note 2 .13 .
Documentary letters of credit
Documentary (and standby) letters of credit constitute
a written and irrevocable commitment of the issuing
(opening) bank on behalf of the issuer (importer) to
pay the beneficiary (exporter) the value set out in the
documents by a defined deadline:
• if the letter of credit is payable on sight; and
• if the letter of credit is payable for deferred payment, the
bank will pay according to the contractual agreement
when and if the beneficiary (exporter) presents the bank
with 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 .
214
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 agreed to be provided is on market terms, are not
recognised in the statement of financial position .
Contingent liabilities recognised in a business
combination
A contingent liability recognised in a business
combination is initially measured at its fair value and
is recognised in the statement of financial position in
the line item ‘Provisions .’ After initial recognition, it is
measured at the higher of:
• the amount that would be recognised in accordance
with IAS 37 Provisions, Contingent Liabilities and
Contingent Assets; or
• the amount initially recognised less, if appropriate, the
cumulative amount of income recognised in accordance
with the principles of IFRS 15 Revenue from Contracts
with Customers . This requirement does not apply to
contracts accounted for in accordance with IFRS 9 .
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 . Income tax rates within NLB
Group ranges from 9 to 32% . The corporate income tax
rate for 2023 in Slovenia was 19% (2022: 19%) . According
to Reconstruction, Development and Provision of
Financial Resources Act, the corporate income tax rate is
increased to 22% from 2024 to 2028 .
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
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
value through other comprehensive income, cash flow
Slovenian tax law does not set deadlines by which
Short-term employee benefits are recognised in the
hedges, and actuarial gains and losses on defined
uncovered tax losses must be utilised .
period to which they relate and included in the income
benefit pension plans is charged or credited directly to
statement line item ‘Administrative expenses .’ Among
other comprehensive income) .
A tax on financial services is a tax on fees, paid for
others, they include the payment of contributions for
prescribed financial services rendered (financial services,
pension and disability insurance, which according to
Deferred income tax is calculated using the balance
exempt from value-added tax (with the exception of
Slovenian local legislation (for employer) amount to
sheet liability method for temporary differences arising
securities transactions) and the services of insurance
8 .85% of the gross salaries .
between the tax bases of assets and liabilities, and their
brokers and agents), paid in Slovenia. The tax rate is 8.5%
carrying amounts for financial reporting purposes .
(2022: 8.5%) and the tax is paid monthly. Given that the tax
According to legislation, employees retire after they
Deferred tax assets are recognised if it is probable
accrued revenues in the financial statements.
severance payment . Employees are also entitled to a
on financial services is classified as a sales tax, it reduces
fulfil certain conditions and are entitled to a lump-sum
that future taxable profit will be available in the
foreseeable future against which the temporary
differences can be utilised .
2 .29 . Fiduciary activities
NLB Group provides asset management services to
These obligations are measured at the present value of
future cash outflows considering future salary increases
long-service bonus for every 10 years of service in NLB .
Deferred tax assets and liabilities are measured at
its clients . Assets held in a fiduciary capacity are not
and other conditions, and then apportioned to past and
tax rates enacted or substantively enacted at the end
reported in NLB Group’s financial statements as they do
future employee service based on the benefit plan’s
of the reporting period that are expected to apply to
the period when the asset is realised, or the liability is
not represent assets of NLB Group . Fee and commission
terms and conditions .
income and expenses relating to fiduciary activities are
settled . At each reporting date, NLB Group reviews the
generally recognised in the income statement when the
Service costs are included in the income statement in
carrying amount of deferred tax assets and assesses
service has been provided (see also note 2 .10 .) . Fee and
the line item ‘Administrative expenses’ as defined benefit
future taxable profits against which temporary taxable
commission income charged for this type of service is
costs, while interest expenses on the defined benefit
differences can be utilised .
broken down by items in note 4 .3 .b) . Further details on
liability are recognised in the line item ‘Interest and
transactions managed on behalf of third parties are
similar expenses .’ These interest expenses represent
Deferred tax assets for temporary differences arising
disclosed in note 5 .25 .
from impairments of investments in subsidiaries,
the change during the period in the defined benefit
liability that arises from the passage of time . For post-
associates and joint ventures are recognised only to the
Based on the requirements of Slovenian legislation, NLB
employment benefits, actuarial gains and losses
extent that it is probable that:
Group has, in note 5 .25 ., additionally disclosed the assets
from the effect of changes in actuarial assumptions
• the temporary differences will be reversed in the
and liabilities on accounts used to manage financial
and experience adjustments (differences between
foreseeable future; and
• taxable profit will be available .
assets from fiduciary activities, i .e ., information related
the realised and expected payments) are recognised
to the receipt, processing, and execution of orders and
in other comprehensive income under the line item
NLB Group recognises a deferred tax liability for
all taxable temporary differences associated with
investments in subsidiaries to the extent that NLB is
able to control the timing of reversal of the temporary
related custody activities .
2 .30 . Employee benefits
Employee benefits include:
‘Actuarial Gains/(Losses) on Defined Benefit Pensions
Plans,’ and will not be recycled to the income statement .
Actuarial gains and losses that relate to other
employment benefits are recognised in the income
statement as defined benefit costs . In the statement of
differences and that it is probably that the temporary
• short-term employee benefits (such as salary,
financial position, liabilities for short-term employee
differences will reverse in the foreseeable future . As NLB
compensations, annual holiday allowance, separation
benefits are included in the line item ‘Other liabilities,’
controls the dividend policy of its subsidiaries, NLB Group
allowance, and non-monetary benefits);
while liabilities for post-employment benefits and other
recognised the deferred tax liability on withholding tax
• reimbursement of commuting costs, meal allowance,
employment benefits (jubilee long-service benefits) are
payable on future planned dividend pay-out .
compensation for use of own resources;
included in the line item ‘Provisions .’
In the case of business combination, deferred tax
balances are recognised if related to temporary
• retirement indemnity bonuses (post-employment
benefits);
• other employment benefits (jubilee long-service
In the case of a business combination employee benefits
are recognised and measured in accordance with IAS 19
differences and carry-forwards of an acquiree that exist
benefits, voluntary supplementary pension insurance);
Employee Benefits, i .e ., not at fair value .
at the acquisition date, or if they arise as a result of the
• variable remuneration .
acquisition. Income taxes are measured in accordance
with IAS 12 Income Taxes.
215
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Share issue costs
Costs directly attributable to the issue of new shares
with the applicable standard . Estimates and judgments
are evaluated on a continuing basis, and are based
are recognised in equity as a reduction in the share
on past experience and other factors, including
premium account .
expectations with regard to future events .
216
2 .31 . Share-based payment
transactions
Cash-settled share-based payment transactions
If certain conditions are met, members of the
Management Board and employees performing special
work (i .e ., those who can significantly impact the risk
profile of the Group in the scope of their tasks and
activities) receive part of their variable remuneration
in the form of financial instruments, whose value is
linked to the value of NLB share . Upon expiration of the
legally prescribed period (up to five years), beneficiaries
receive cash payments depending on the value of a
NLB share . The first contracts, including share-based
payment transactions, were concluded in the second
quarter of 2022 .
In the statement of financial position, a liability is
recognised in the line item ‘Financial liabilities measured
at fair value through profit or loss .’ Its fair value is
measured initially and at each reporting date up to and
including the settlement date, with changes in fair value
recognised in the income statement line item ‘Gains less
losses from financial liabilities measured at fair value
through profit or loss .’
Equity-settled share-based payment transactions
NLB Group does not have any equity-settled share-
based payment transactions .
2 .33 . Segment reporting
Operating segments are reported in a manner
a) Allowances for expected credit losses on loans
and advances
NLB Group monitors and checks the quality of the
consistent with internal reporting to the Management
loan portfolio at the individual and portfolio levels to
Board of the Bank, which is the executive body that
continuously estimate the necessary allowances for ECL .
makes decisions regarding the allocation of resources
NLB Group creates individual allowances for individually
and assesses the performance of a specific segment .
significant financial assets attributed to Stage 3 . Such
an assignment is based on information regarding the
Transactions between organisational units (OUs) are
fulfilment of contractual obligations or other financial
managed under normal operating conditions . Interest
difficulties of the debtor, and other important facts .
income among individual OUs in the parent bank (NLB)
Individual assessments are based on the expected
and N Banka is allocated using a fund transfer pricing
discounted cash flows from operations and/or the
method and shown within the net interest income of
assessed expected payment from collateral .
each OU . Net non-interest income is allocated to the
OU that actually provides the service that generates
Allowances are assessed collectively for financial assets
income . Direct costs are attributed to the segment
assigned to Stage 1 or 2, or for financial assets in Stage 3
that is directly related to the provided service, and
with exposure below the materiality threshold . The ECL
indirect costs (costs which service centres provide for
in this group of assets are estimated based on expected
profit centres) are attributed to the segment for which
value of risk parameters combining the historic
the service is provided, whereas overhead costs are
movements with the future macroeconomic predictions
allocated according to general keys . External net income
for three separate scenarios . The models used to
is the net income of NLB Group from the consolidated
estimate future risk parameters are validated and back-
income statement . Income tax is not allocated between
tested on a regular basis to make the loss estimations as
segments . Analysis by segment for NLB Group is
realistic as possible .
presented in note 7 .
2 .32 . Share capital
Dividends on ordinary shares
Dividends on ordinary shares are recognised in
equity in the period in which they are approved by
NLB’s shareholders .
In accordance with IFRS 8, NLB Group has the following
to collectively assess the allowances for credit risk:
reportable segments: Retail Banking in Slovenia,
optimistic, baseline, and severe scenario . The key features
Corporate and Investment Banking in Slovenia, Strategic
of each scenario are described in note 2 .13 .a) Forward-
Foreign Markets, Financial Markets in Slovenia, Non-
looking information . Recognised allowances represent a
core members, and Other Activities .
weighted average of the results of the three scenarios .
NLB Group applies 3 different macroeconomic scenarios
Treasury shares
If NLB or another member of NLB Group purchases NLB
shares, the consideration paid is deducted from the total
shareholders’ equity as treasury shares . If such shares
are subsequently sold, any consideration received is
included in equity . If NLB shares are purchased by NLB
itself or other NLB Group entities, NLB creates reserves
for treasury shares in equity .
2 .34 . Critical accounting estimates
and judgments in applying
accounting policies
NLB Group’s financial statements are influenced by
accounting policies, assumptions, estimates, and
management’s judgment . NLB Group makes estimates
and assumptions that affect the reported amounts of
assets and liabilities within the next financial year . All
estimates and assumptions required in conformity with
the IFRS are best estimates undertaken in accordance
In terms of credit risk parameters, the scenarios differ
in the level of default rates (transfer of assets from
performing to non-performing status) and loss rates (the
% of exposure that will not be repaid in case of default
occurrence) . Applying a 100% probability on each of the
scenario provides an overview of severity or optimism
reflected in the two remaining scenarios .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The results for NLB Group show the following deviations
to ensure they appropriately reflect current market
which themselves are sensitive to the assumptions used .
of the severe and optimistic scenario from the baseline
conditions, including the relative liquidity of the market
The review of impairment represents management’s
as at 31 December 2023:
and the applied credit spread . Changes in assumptions
best estimate of the facts and assumptions such as:
217
Optimistic
scenario
Baseline
scenario
Severe
scenario
regarding these factors could affect the reported fair
• Future cash flows from individual investments present
values of financial instruments held for trading, and
the estimated cash flow for periods for which adopted
financial assets measured at fair value through other
business plans are available . For core members,
Level of
collective allowances
91%
100%
137%
comprehensive income .
estimated cash flows are based on a five-year business
plan . For non-core members, estimated cash flows
The result shows that the optimistic scenario would
The fair values of derivative financial instruments are
are based on a period in line with the strategy of
result in 91% of the baseline provisions, while the severe
determined on the basis of market data (mark-to-
divestment . The business plans of individual entities are
scenario and its conservative assumptions lead to an
market), in accordance with NLB Group’s methodology
based on an assessment of future economic conditions
increase of 37% compared to the baseline .
for the valuation of financial instruments . The market
that will impact an individual member’s business and
exchange rates, interest rates, yield, and volatility curves
the quality of the credit portfolio;
b) Fair value of financial instruments
The fair values of financial investments traded on the
used in valuations are based on the market snapshot
• The growth rate in cash flows for the period following
principle . Market data are saved daily at 4 p .m ., and later
the adopted business plan is between 2 .8 and 4 .0%;
active market are based on current bid prices (financial
used for the calculation of the fair values (market value,
• The target capital adequacy ratio of an individual bank
assets) or offer prices (financial liabilities) .
NPV) of financial instruments . NLB Group applies market
is between 14 and 17%;
The fair values of financial instruments that are not
traded on the active market are determined by using
valuation models . These include a comparison with
yield curves for valuation, and fair values are additionally
adjusted for credit risk of the counterparty .
• The discount rate derived from the capital asset
pricing model that is used to discount future cash
The fair value hierarchy of financial instruments is
individual investment . The discount rate reflects the
flows is based on the cost of equity allocated to an
recent transaction prices, the use of a discounted cash
disclosed in note 6 .5 .
flow model, valuation based on comparable entities,
and other frequently used valuation models . These
valuation models at their best estimate reflect current
associates and joint ventures
management’s control . The pre-tax discount rate is
market conditions at the measurement date, which
The process of identifying and assessing the impairment
between 10 .2 and 20 .25% (31 December 2022: between
may not be representative of market conditions either
of investments in subsidiaries, associates and joint
13 .1 and 22 .2%) .
before or after the measurement date . Management
ventures is inherently uncertain, as the forecasting of
reviewed all applied models as at the reporting date
cash flows requires the significant use of estimates,
c) Impairment of investments in subsidiaries,
of variables used is subject to fluctuations outside
impact of a range of financial and economic variables,
including the risk-free rate and risk premium . The value
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
d) Employee benefits
Liabilities for certain employee benefits are calculated
by an independent actuary . The main assumptions
included in the 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
Number of employees eligible for benefits
A sensitivity analysis of significant actuarial assumptions
for post-employment benefit:
NLB Group
2023
2022
NLB
2023
2022
3 .6% - 8 .0% 3 .1% - 8 .3%
4 .0%
3 .1%
2 .4% - 13 .4% 2 .3% - 14 .2%
2 .4% - 8 .0% 3 .0% - 7 .0%
7,177
7,154
2,519
2,369
31 Dec 2023
NLB Group
NLB
Impact on provisions for employee benefits
- post-employment benefits (in %)
Discount rate
Future salary increases
Discount rate
Future salary increases
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
(4 .4)
4 .8
4 .8
(4 .5)
(4 .2)
4 .5
4 .5
(4 .2)
31 Dec 2022
NLB Group
NLB
Impact on provisions for employee benefits
- post-employment benefits (in %)
Individual analysis is done by changing one assumption
for +/- 0 .5 percentage points, while all other
assumptions stay the same .
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:
Post-employment benefit
Discount rate
Future salary increases
Discount rate
Future salary increases
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
+0 .5 p .p .
-0 .5 p .p .
(4 .7)
5 .0
5 .1
(4 .8)
(4 .5)
4 .8
4 .9
(4 .7)
NLB Group
2023
(470)
141
(115)
(444)
2022
4,093
-
(62)
4,031
in EUR thousands
NLB
2023
614
-
(26)
588
2022
1,759
-
289
2,048
NLB Group
2023
2022
9 .6 - 20 .9
11 .1 - 22 .0
NLB
2023
10 .9
2022
11 .1
218
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
e) Taxes
NLB Group operates in countries governed by different
clarify how companies should distinguish changes
assets and liabilities . In periods in which Pillar Two
in accounting policies from changes in accounting
legislation is enacted or substantively enacted, but not
laws . The deferred tax assets recognised as at 31
estimates . That distinction is important because
yet in effect, an entity is required to disclose known or
December 2023 are based on profit forecasts and
changes in accounting estimates are applied
reasonably estimable information that helps users of
take the expected manner of recovery of the assets
prospectively only to future transactions and other
financial statements understand the entity’s exposure
into account . Changes in assumptions regarding
future events, but changes in accounting policies
to Pillar Two income taxes arising from that legislation .
the likely manner of recovering assets or changes in
are generally also applied retrospectively to past
NLB Group has disclosed impact on financial
profit forecasts can lead to the recognition of currently
transactions and other past events . There was no
statements in note 4 .15 .
unrecognised deferred tax assets or derecognition
impact on NLB Group financial statements .
of previously created deferred tax assets . If profit
• IFRS 17 (new standard including amendments) –
Accounting standards and amendments to existing
projections used for estimation of the amount of
Insurance Contracts is effective for annual periods
standards that were endorsed by the EU, but not
deferred tax assets which are expected to be reversed
beginning on or after 1 January 2023 . The new
in the foreseeable future (i .e ., within five years) would
standard provides a comprehensive principle-based
adopted early by NLB Group
New and revised accounting standards and
change by 10%, the estimated amount of deferred tax
framework for the measurement and presentation of
interpretations endorsed by the EU that are not
assets would change by approximately EUR 10 .7 million
all insurance contracts . The new standard will replace
mandatory for annual accounting periods beginning
(notes 4 .15 . and 5 .17 .) .
IFRS 4 Insurance Contracts and requires insurance
on 1 January 2023, were not adopted early by NLB
2 .35 . 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
that are endorsed by the EU that are effective for annual
accounting periods beginning on 1 January 2023 .
Accounting standards and amendments to existing
standards effective for annual periods beginning on
1 January 2023 that were endorsed by the EU and
adopted by NLB Group
• 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 to disclose their material
accounting policy information rather than their
significant accounting policies . The amendments to
IFRS Practice Statement 2 provide guidance on how
to apply the concept of materiality to accounting
policy disclosures . There was no impact on NLB Group
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
contracts to be measured using current fulfilment
Group . These standards and amendments are not
cash flows, and for revenue to be recognised – as the
service is provided over the coverage period . The
expected to have a material impact on the consolidated
financial statements of NLB Group in the future reporting
additionally issued amendments to IFRS 17 simplify
periods and on foreseeable future transactions .
some requirements and explanation of financial
NLB Group plans to adopt the accounting standards
performance, and provide additional transition reliefs
and amendments listed below for reporting periods
to reduce the complexity of applying standard for the
commencing on or after the effective date .
first time . There was no impact on NLB Group financial
statements .
• IAS 12 (amendment) – Income Taxes: Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction is effective for annual periods beginning
• 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 2024 .
on or after 1 January 2023 . IAS 12 specifies how a
The amendments clarify that liabilities are classified
company accounts for income tax, including deferred
as either current or non-current, depending on the
tax, which represents tax payable or recoverable in
rights that exist at the end of the reporting period .
the future . In specified circumstances, companies
Classification is unaffected by the expectations of the
are exempt from recognising deferred tax when they
entity or events after the reporting date . The amendment
recognise assets or liabilities for the first time . The
also clarifies what IAS 1 means when it refers to the
amendments clarify that the exemption does not apply
‘settlement’ of a liability . NLB Group does not expect an
and that companies are required to recognise deferred
tax on such transactions . There was no impact on NLB
Group financial statements .
impact on the financial statements .
• IAS 1 (amendment) – Presentation of Financial
Statements: Non-current Liabilities with Covenants
• IAS 12 (amendment) – Income taxes: International
is effective for annual periods beginning on or after
Tax Reform – Pillar Two Model Rules is effective for
1 January 2024 . The amendments improved the
annual periods beginning on or after 1 January 2023 .
information an entity provides when its right to defer
The amendments to IAS 12 introduce a temporary
settlement of a liability for at least 12 months is subject
exception from accounting for deferred taxes arising
to compliance with covenants . The amendments
from the implementation of the OECD Pillar Two Model
also responded to stakeholders’ concerns about the
Rules . Applying the exception, an entity does not
classification of such a liability as current or non-
recognise deferred tax assets and liabilities related
current . NLB Group does not expect an impact on the
to the OECD Pillar Two income taxes . It also does not
financial statements .
disclose any information about these deferred tax
219
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
• IFRS 16 (amendment) – Leases: Lease Liability
in a Sale and Leaseback is effective for annual
periods beginning on or after 1 January 2024 . The
determine a spot exchange rate when exchangeability
ownership of NLB Lease&Go leasing d .o .o . Beograd
is lacking . A currency is exchangeable when an entity
is 50 .73%, meanwhile, NLB Komercijalna banka a .d .
is able to exchange that currency for another currency
Beograd ownership of NLB Lease&Go leasing d .o .o .
220
amendments affect only the subsequent measurement
through market or exchange mechanisms that create
Beograd is 48 .91% .
of lease liabilities arising from a sale and leaseback
enforceable rights and obligations without undue delay
transaction with variable lease payments, which
at the measurement date and for a specified purpose .
Other changes:
occurred from the date of initial application of IFRS
If a currency is not exchangeable at the measurement
• In April 2023, after merging with REAM d .o .o ., Beograd,
16 and for which the seller-lessee’s accounting policy
date, the entity is required to estimate the spot exchange
subsidiary SPV 2 d .o .o ., Beograd ceased to exist . All its
differs from the requirements specified in these
rate as the rate that would have applied to an orderly
assets and liabilities were transferred to REAM d .o .o .,
amendments . NLB Group does not expect an impact
exchange transaction between market participants
Beograd which become after merger its universal
on the financial statements .
at the measurement date under prevailing economic
legal successor .
conditions, and disclose expected affects to the entity’s
• In May 2023, NLB Group sold its subsidiary Tara Hotel
Accounting standards and amendments to existing
financial statements . NLB Group does not expect an
d .o .o . Budva (note 5 .12 .c) .
impact on the financial statements .
• In July 2023, a purchase agreement was signed for the
standards, but not endorsed by the EU
• IAS 7 (amendment) – Statement of Cash Flows and IFRS
7 (amendment) – Financial Instruments: Disclosures:
Supplier Finance Arrangements is effective for annual
periods beginning on or after 1 January 2024 . The
amendments add a disclosure objective to IAS 7 stating
that an entity is required to disclose information about
3 . Changes in the
composition of the
NLB Group
its supplier finance arrangements that enables users
of financial statements to assess the effects of those
Changes in 2023
Capital changes:
sale of NLB Group`s subsidiary Optima Leasing d .o .o .,
Zagreb – u likvidaciji . The transfer of the ownership was
entered into Register of Companies on 13 September
2023 (note 5 .12 .b) .
• In August 2023, NLB received an authorisation of the
ECB for the merger of the N Banka . On 1 September
2023, with entry of the merger in the Register of
Companies, the process of legal merger of N Banka
arrangements on the entity’s liabilities and cash flows,
• In January 2023, NLB Lease&Go, leasing, d .o .o .,
with NLB was closed . As at the date of the merger, N
and the entity’s exposure to liquidity risk . Supplier
Ljubljana increased share capital in the form of a cash
Banka ceased to exist as an independent legal entity,
finance arrangements are characterised by one or
contribution in the amount of EUR 2,100 thousand in
and NLB as a universal successor, took over all of its
more finance providers offering to pay amounts an
company Zastava Istrabenz Lizing, d .o .o ., Beograd .
rights and obligations (note 5 .12 .d) .
entity owes its suppliers and the entity agreeing to
Ownership interest increased from 95 .20% to 99% .
• In September 2023, NLB Leasing d .o .o ., Beograd – u
pay according to the terms and conditions of the
In January 2023, the company was renamed to ‘NLB
likvidaciji was liquidated . In accordance with the court
arrangements at the same date as, or a date later
Lease&Go leasing d .o .o . Beograd .’
order, the company was removed from the court register .
than, suppliers are paid . The amendments note that
• In June 2023, NLB Lease&Go, leasing, d .o .o ., Ljubljana
• In September 2023, after cross boarder merging with
arrangements that are solely credit enhancements
increased share capital in the form of a cash
S-REAM d .o .o ., Ljubljana, subsidiary REAM d .o .o,
for the entity or instruments used by the entity to
contribution in the amount of EUR 1,195 thousand
Zagreb ceased to exist . All its assets and liabilities were
settle directly with a supplier the amounts owed are
in company NLB Lease&Go leasing d .o .o . Beograd .
transferred to S-REAM d .o .o ., Ljubljana, which become
not supplier finance arrangements . Meanwhile, the
Ownership interest increased from 99% to 99 .30% .
after merger its universal legal successor .
amendments to IFRS 7 require from an entity to disclose
• In September 2023, NLB Komercijalna banka a .d .
• On 30 November 2023, NLB concluded a purchase
a description of how it manages the liquidity risk
Beograd increased share capital in the form of a cash
agreement for the acquisition of a 100% stake in the
resulting from financial liabilities . The amendments
contribution in the amount of EUR 767 thousand in
company SLS HOLDCO d .o .o ., the parent company of
include as an additional factor whether the entity
company KomBank Invest a .d . Beograd .
Summit Leasing Slovenija d .o .o . and its subsidiaries
has accessed, or has access to, supplier finance
• In September 2023, NLB Lease&Go, leasing, d .o .o .,
from funds managed by affiliates of Apollo Global
arrangements that provide the entity with extended
Ljubljana and NLB Banka a .d ., Skopje increased
Management, Inc . and the European Bank for
payment terms or the entity’s suppliers with early
share capital in the form of a cash contribution in the
Reconstruction and Development . The purchase price
payment terms . NLB Group does not expect an impact
total amount of EUR 1,571 thousand in company NLB
for the mentioned deal is equal to the book value of
on the financial statements .
• IAS 21 (amendment) – The Effects of Changes in Foreign
Exchange Rates: Lack of Exchangeability is effective for
annual periods beginning on or after 1 January 2025 .
Lease&Go, d .o .o . Skopje .
Summit Leasing with an additional small mark-up .
• In December 2023, NLB Komercijalna banka a .d .
Completion of the transaction depends on obtaining
Beograd increased share capital in the form of a cash
regulatory approvals and approvals from competent
contribution in the amount of EUR 3,804 thousand
authorities/institutions for the protection of competition
The amendments clarify how an entity should assess
in company NLB Lease&Go leasing d .o .o . Beograd .
and is expected in the second half of 2024 .
whether a currency is exchangeable and how it should
After that, NLB Lease&Go, leasing, d .o .o ., Ljubljana
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Changes in 2022
Capital changes:
of this Serbian bank . Prior to the squeeze-out process,
• In December 2022, an increase in share capital in the
NLB owned 90 .2155% of share capital and 91 .7294% of
form of a cash contribution in the amount of EUR 21,130
221
• In March 2022, in accordance with Resolution and
voting rights . Through the squeeze-out process, NLB
thousand in S-REAM d .o .o ., Ljubljana for the purpose of
Compulsory Winding-Up of Banks Act, NLB became
acquired 1,528,110 regular shares and 316,260 preferred
consolidation of real estate companies in Slovenia .
an owner of 100% shares of Sberbank banka d .d .,
shares with a total value of EUR 61,865 thousand .
Ljubljana . The purchase price for the bank was EUR
• In September 2022, an increase in share capital in the
Other changes:
5,109 thousand and was fully paid in cash (note 5 .12 .e) .
form of a cash contribution in the amount of EUR 306
• After obtaining all regulatory licenses, as well as by
At the General Meeting of Shareholders of Sberbank
thousand in NLB Lease&Go, leasing, d .o .o ., Ljubljana
registering the merger with the Business Registers
banka d .d ., Ljubljana, held in April 2022, a decision was
for the purpose of achieving NLB Group’s leasing
Agency, the integration process of Komercijalna
made to rename Sberbank banka d .d ., Ljubljana to ‘N
strategy .
banka a .d . Beograd and NLB Banka a .d ., Beograd,
Banka d .d ., Ljubljana .’
• In September 2022, NLB Lease&Go, leasing, d .o .o .,
was successfully completed . From 30 April 2022, the
• In March 2022, Komercijalna banka a .d . Beograd
Ljubljana (51%) and NLB Banka a .d ., Skopje (49%)
bank operates under the new name NLB Komercijalna
bought 2 .90% of all ordinary shares in the amount of
established the financial company named ‘NLB Liz&Go
banka a .d . Beograd . Based on the merger of NLB
EUR 19,047 thousand of treasury shares from dissenting
d .o .o . Skopje .’ In December 2022, the company was
Banka a .d ., Beograd to Komercijalna banka a .d .
shareholders, which Komercijalna banka a .d . Beograd
renamed to ‘NLB Lease&Go d .o .o . Skopje .’
Beograd as the acquirer, NLB Komercijalna banka a .d .
should dispose of within 12 months of their takeover .
• In November 2022, NLB Lease&Go, leasing, d .o .o .,
Beograd is its universal legal successor .
• In April 2022, NLB established IT services company
Ljubljana became an owner of 95 .20% of financial
• In November 2022, NLB Komercijalna banka a .d .
named ‘NLB DigIT d .o .o ., Beograd .’
• In May 2022, NLB acquired an additional 442,799
company ‘Zastava Istrabenz Lizing, d .o .o ., Beograd .’
The purchase price for the company was EUR 1,036
Beograd sold its 23 .97% ownership interest in NLB
Banka a .d ., Podgorica to NLB .
ordinary shares of NLB Komercijalna banka a .d .
thousand and was fully paid in cash (note 5 .12 .f) . In
• In December 2022, NLB sold its 100% ownership
Beograd and combined with existing shareholding
January 2023, the company was renamed to ‘NLB
interest in PRO-REM d .o .o ., Ljubljana – v likvidaciji to
reached the ownership of 90 .2155% of the basic capital
Lease&Go leasing d .o .o . Beograd .’
S-REAM d .o .o ., Ljubljana .
and 91 .7294% of shares with voting rights . The increase
• In December 2022, an increase in share capital in the
in capital investment was recognised in the amount of
form of a cash contribution in the amount of EUR 2,100
EUR 15,715 thousand .
thousand in NLB Lease&Go, leasing, d .o .o ., Ljubljana
• In July 2022, NLB successfully squeezed out the
for the purpose of achieving NLB Group’s leasing
remaining shareholders of NLB Komercijalna banka
strategy .
a .d . Beograd and thereby became the owner of 100%
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
The line item ‘Negative interest’ classified under the
NLB Group
NLB
line item ‘Interest income calculated using the effective
2023
2022
2023
2022
interest method’ in 2022 mainly includes the interest from
targeted longer-term refinancing operations (TLTRO) in
952,875
558,826
477,154
217,881
the amount of EUR 3,902 thousand for NLB Group and
38,645
38,840
9,184
11,215
36,886
130,829
21,616
16,791
12,067
3,770
24,237
122,807
9,584
11,431
10,868
6,106
EUR 3,677 thousand for NLB (note 5 .15 .b) .
The line item ‘Negative interest’ classified under the line
item ‘Interest expenses calculated using the effective
interest method’ in 2022 includes the interest from
deposits with banks and central banks in the amount
of EUR 8,746 thousand for NLB Group and EUR 6,238
thousand for NLB . It also includes interest from deposits
with financial organisations in the amount of EUR 186
thousand for NLB Group and NLB, and interest from
securities with a negative yield in the amount of EUR 369
thousand for NLB Group and NLB .
4 . Notes to the income statement
4 .1 . Interest income and expenses
Analysis by type of assets and liabilities
Interest and similar income
Interest income calculated using the effective interest method
Financial assets measured at fair value through
other comprehensive income
Securities measured at amortised cost
Deposits with banks and central banks
Loans and advances to banks measured at amortised cost
Loans and advances to customers at amortised cost
724,899
483,392
311,342
174,543
Negative interest
Other interest and similar income
Financial assets held for trading
Non-trading financial assets mandatorily at
fair value through profit or loss
Derivatives - hedge accounting
Finance leases
Other
Total
-
3,966
40,530
10,950
6,213
3,732
48
14,529
18,959
781
48
559
6,607
4
-
21,184
6,459
417
14,308
-
-
3,718
4,081
3,352
166
559
-
4
993,405
569,776
498,338
221,962
Interest and similar expenses
Interest expenses calculated using the effective interest method
148,034
53,086
115,779
34,166
Deposits from banks and central banks
Borrowings from banks and central banks
Due to customers
Borrowings from other customers
Subordinated liabilities
Debt securities issued
Lease liabilities (note 5 .11 .a)
Negative interest
Other interest and similar expenses
Derivatives - hedge accounting
Financial liabilities held for trading
Interest expenses on defined employee benefits (note 2 .30 ., 5 .16 .c)
Other
Total
795
1,236
6,914
712
692
617
19,464
36,266
5,116
3,372
1,880
68,784
1,515
35,155
36,579
728
21
939
12,737
8,183
431
9,301
12,037
11,768
4,470
5,595
668
1,304
7,468
3,497
374
429
-
35,155
36,579
132
21
9,993
4,444
5,191
330
28
-
12,737
8,183
28
6,793
10,769
7,468
3,144
144
13
160,071
64,854
125,772
44,935
Net interest income
833,334
504,922
372,566
177,027
222
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
in EUR thousands
2023
116
116
-
-
53
169
2022
173
173
-
-
69
242
2023
2022
-
-
-
-
144,930
55,244
275
53
754
46
145,258
56,044
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
Agency of insurance products
Other services
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
130,460
113,358
93,527
89,277
50,094
53,355
44,476
52,120
88,334
32,994
13,425
10,381
94,035
29,640
10,511
17,336
24,977
24,005
9,916
9,679
3,816
9,034
7,973
11,019
Total fee and commission income from contracts with customers
369,121
354,157
151,837
148,627
Guarantees
Total
17,954
16,417
9,577
8,418
387,075
370,574
161,414
157,045
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
91,543
78,291
33,387
28,390
13,169
13,812
1,351
1,148
1,516
4,627
1,691
4,314
1,335
4,036
1,713
5,594
888
679
1,598
606
841
944
1,580
917
116,860
104,781
38,509
33,820
Net fee and commission income related to banking activities
270,215
265,793
122,905
123,225
223
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
2023
2022
2023
2022
1,661
1,724
228
6,027
1,942
75
9
1,928
1,601
143
5,150
1,696
34
473
1,546
1,657
-
228
5,842
1,942
-
9
-
143
5,426
1,696
-
473
Total
11,666
11,025
9,567
9,395
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
3,844
76
3,920
3,374
94
3,468
3,847
76
3,923
3,377
94
3,471
Net fee income related to fiduciary activities
7,746
7,557
5,644
5,924
Total fee and commission income a) and b)
Total fee and commission expenses a) and b)
398,741
381,599
170,981
166,440
120,780
108,249
42,432
37,291
Total net fee and commission a) and b)
277,961
273,350
128,549
129,149
224
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
c) Analysis of fee and commission income and expenses by type and by segments
in EUR thousands
225
2023
Fee and commission income
Fee and commission income relating to financial
instruments not at fair value through profit or loss
Other fee and commission
Total fee and commission income from contracts with customers
Guarantees
Total
Fee and commission expenses
Total
Retail Banking
in Slovenia
Corporate and
Investment
Banking in
Slovenia
Strategic
Foreign
Markets
Financial
Markets in
Slovenia
NLB Group
Non-Core
Members
Other
activities
Intercompany
relations
Total
84,170
71,260
120
155,550
(41,434)
(41,434)
22,043
117,756
23,400
71,358
10,361
55,804
(15,593)
(15,593)
7,545
196,659
(72,547)
(72,547)
125
493
35
653
-
46
-
46
(2,727)
(2,727)
(122)
(122)
14
(121)
223,987
2,763
(12,520)
156,800
13
2,790
(1,118)
(1,118)
(120)
(12,761)
17,954
398,741
12,761
12,761
(120,780)
(120,780)
Net fee and commission income
114,116
40,211
124,112
(2,074)
(76)
1,672
-
277,961
2022
Fee and commission income
Fee and commission income relating to financial
instruments not at fair value through profit or loss
Other fee and commission
Total fee and commission income from contracts with customers
Guarantees
Total
Fee and commission expenses
Total
Retail Banking
in Slovenia
Corporate and
Investment
Banking in
Slovenia
Strategic
Foreign
Markets
Financial
Markets in
Slovenia
NLB Group
Non-Core
Members
Other
activities
Intercompany
relations
Total
in EUR thousands
76,956
71,481
120
148,557
(35,312)
(35,312)
19,022
106,491
29,072
70,320
9,365
57,459
(13,907)
(13,907)
7,014
183,825
(65,087)
(65,087)
635
687
32
1,354
(3,012)
(3,012)
-
182
-
182
(184)
(184)
11
(480)
202,635
2,132
(11,327)
162,547
-
(114)
2,143
(11,921)
16,417
381,599
(2,668)
(2,668)
11,921
11,921
(108,249)
(108,249)
Net fee and commission income
113,245
43,552
118,738
(1,658)
(2)
(525)
-
273,350
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
- losses
Total
Sales of debt instruments measured at amortised cost in
2022 were made due to increase in credit risk .
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
94
96
(836)
(1,764)
-
-
(742)
3,269
(735)
866
2
(836)
-
-
-
(316)
1
(735)
(834)
(1,050)
4 .5 . Gains less losses from financial assets and liabilities held for trading
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
35,774
43,213
12,308
19,388
(7,394)
(13,988)
(7,299)
(11,465)
188
(28)
2,462
1,182
3
237
(175)
3,636
512
16
134
(28)
(1,512)
(4,014)
3
195
(175)
2,768
605
16
32,187
33,451
(408)
11,332
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 .) .
226
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Interest income from non-trading financial assets
mandatorily at fair value through profit or loss is
included in the income statement line item ‘Interest and
similar income’ (note 4 .1 .)
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
2,667
(985)
3,481
(3,162)
1,901
(712)
2,699
(1,925)
122
(44)
24
1,784
70
(299)
-
90
-
-
-
-
1,256
2,445
(2,225)
(1,451)
.
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
2023
(2,549)
(7)
(222)
(2,778)
2022
(95)
(11)
403
297
in EUR thousands
NLB
2023
2022
3,232
(1,980)
(7)
(222)
3,003
(11)
403
(1,588)
227
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Donations
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
2023
2022
2023
2022
7,933
3,455
2,133
221
2,124
1,755
617
427
6,676
6,952
3,327
1,252
254
2,119
2,912
3,766
2,450
7,366
6,862
3,481
485
1,249
1,647
359
223
17
6,367
3,383
475
1,020
1,489
459
85
393
2,915
2,912
17,408
23,446
10,376
10,216
12,008
1,535
11,564
3,597
545
1,734
7,813
22,100
451
674
4,008
6,668
545
41
2,232
14,382
451
1
1,756
5,805
Other net operating income
(4,692)
16,778
(4,006)
4,411
The line item ‘Donations,’ classified under the ‘Other
Other operating expenses mainly include expenses
operating expenses’ in year 2023 also include donations
associated with the changes in proportional deduction
of NLB for floods mitigation in Slovenia to municipalities
of VAT, licences, penalties and damages .
in the total amount of EUR 4,000 thousand, and to the
Budget of the Republic of Slovenia to a particular budget
Other operating income mainly include reimbursement
line to raise funds to recover the consequences of the
of costs and taxes and income from sale of gold .
August floods in the amount of EUR 5,000 thousand .
228
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
4 .9 . Administrative expenses
Employee costs
Gross salaries, compensations, and other short-term benefits
252,731
230,277
118,962
104,278
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
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
Other tax expenses
Membership fees and similar
Business travel
Marketing
Buildings and equipment
Electricity
Rents and leases
Maintenance costs
Costs of security
Insurance for tangible assets
Other costs related to buildings and equipment
Technology
Maintenance 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
17,424
12,612
(602)
(1,134)
532
16,343
11,404
(365)
(82)
(283)
8,225
6,864
(279)
(452)
173
7,217
6,002
(207)
(38)
(169)
282,165
257,659
133,772
117,290
6,672
46,735
18,385
4,942
23,408
4,454
903
1,684
17,373
32,680
8,285
3,012
9,370
5,952
656
5,405
43,093
22,527
12,612
3,267
4,687
6,091
47,053
20,393
5,422
21,238
4,096
833
1,230
15,340
33,092
10,212
2,079
8,846
6,181
689
5,085
32,735
15,792
9,725
3,022
4,196
12,490
11,146
4,868
5,141
2,481
4,374
4,043
4,717
2,386
3,611
1,624
26,824
9,768
2,806
14,250
1,040
359
561
9,213
15,290
4,307
526
4,977
2,203
152
3,125
23,100
10,232
8,829
2,157
1,882
4,567
2,814
558
1,195
2,057
1,529
24,748
9,932
3,325
11,491
956
322
326
7,916
15,230
5,740
273
4,335
1,935
156
2,791
16,349
6,140
6,760
1,876
1,573
4,423
2,612
649
1,162
1,776
170,458
155,227
84,635
73,575
Total administrative expenses
452,623
412,886
218,407
190,865
Number of employees
7,982
8,228
2,554
2,418
Costs of other services include costs for cash transport,
archiving costs, costs for certification agency and
e-business, and other attorneys and notaries
services costs .
229
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
944
28
972
750
412
1,162
333
28
361
275
287
562
In the table below are presented expenses related to the
services of the statutory auditor:
External audit services
Audit of annual report
Other audit services
Total
The contractual amount of remuneration of auditor for
audit of annual report (without VAT, predefined costs
and inflation, if exceeds 3% in individual state of the NLB
Group member) in 2023 in the NLB Group amounted to
EUR 757 thousand of which in NLB EUR 341 thousand .
Additionally, to the services included in the paragraph
above, the statutory auditor in 2023 performed
also other assurance services in the amount of
EUR 343 thousand (Group: EUR 350 thousand) and
non-assurance services in the amount of EUR 7
thousand (Group: EUR 17 thousand), both related to the
issuance of bonds . Amounts are presented without VAT .
Payment was included in the calculation of the effective
interest rate on the instrument issued . In 2023 and 2022,
the statutory auditor did not performed any other non-
audit services .
Tax on banks’ balance sheets
For the years 2024-2028 tax on banks’ balance sheets
was introduced in Slovenia . The yearly tax liability is
estimated to be more than EUR 30 million .
4 .10 . Cash contributions to resolution funds and deposit guarantee schemes
Cash contributions to deposit guarantee schemes
Cash contributions to resolution funds
Total
in EUR thousands
NLB Group
NLB
2023
36,946
2,147
39,093
2022
33,884
2,260
36,144
2023
9,686
1,697
11,383
2022
7,614
2,099
9,713
230
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
in EUR thousands
NLB Group
2023
2022
16,402
15,757
NLB
2023
7,528
24,832
7,998
49,232
22,941
8,692
47,390
10,508
1,421
19,457
2022
5,769
10,260
972
17,001
4 .12 . Gains less losses from modification of financial assets
NLB Group
Financial assets modified during the period
Amortised cost before modification
Net modification gains/(losses)
2023
2022
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
510,682
(16,043)
4,141
(123)
4,145
(105)
518,968
(16,271)
1,046
(56)
1,361
5
698
25
3,105
(26)
The majority of modification loss of financial assets in
The loss represents the difference between the balance
2023 refers to the Decision on temporary measures
of the loan on the modification date and the discounted
for banks in relation to housing loans to natural
value of the cash flows of the modified repayment plans
persons, which limited the interest rates of housing
using the original effective interest rate .
loans in Serbia .
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
4 .13 . Provisions
Provisions for credit losses
Guarantees and commitments (note 5 .16 .b)
Provisions for other liabilities and charges
Restructuring provisions (note 5 .16 .d)
Provisions for legal risks (note 5 .16 .e)
Other provisions (note 5 .16 .f)
Total
in EUR thousands
31 Dec 2023 31 Dec 2022
775
-
NLB Group
NLB
in EUR thousands
2023
(5,055)
(5,055)
25,925
3,654
7,280
14,991
20,870
2022
3,050
3,050
5,932
10,325
1,645
(6,038)
8,982
2023
(3,074)
(3,074)
14,422
3,800
(2,678)
13,300
11,348
2022
(282)
(282)
2,325
-
125
2,200
2,043
231
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
4 .14 . Impairment charge
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
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)
(504)
23
(6,600)
67
110
(80)
10
34
Loans and advances to individuals measured at amortised cost (note 5 .14 .a)
37,632
17,140
15,689
13,523
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)
Total impairment of financial assets
(41,396)
(2,629)
(4,254)
(4,744)
(7,054)
1,749
2,833
3,870
474
2,132
(5,058)
5,826
672
589
161
158
(6,717)
14,454
7,668
14,968
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 .b)
Other assets
Total
-
-
-
-
-
-
(96,876)
(22,685)
(241)
(88)
(97,117)
(22,773)
47
(100)
(53)
1,620
3,813
5,433
-
3
3
-
6
6
Total impairment of non-financial assets
(53)
5,433
(97,114)
(22,767)
Total impairment
(6,770)
19,887
(89,446)
(7,799)
Impairment of financial assets in 2022 includes EUR
The recoverable amounts have been calculated based
8,900 thousand of 12-month expected credit losses for
on value in use, determining by discounting the future
Stage 1 financial assets, acquired through a business
cash flows expected to be generated from holding the
combination (note 5 .12 .e) . Of that, EUR 8,894 thousand
investments . The values assigned to the key assumptions
relates to financial assets measured at amortised cost,
represent management’s assessment of future trends in
EUR 5 thousand to financial assets measured at fair
the relevant sectors and have been based on historical
value through other comprehensive income, and EUR 1
thousand to cash balances at central banks and other
data from both internal and external sources (discount
rate from 10 .2% to 20 .25%; growth rate from 2 .8% to 4%;
demand deposits at banks .
target capital adequacy ratio between 14% and 17%) .
Details of the assumptions used in the estimates are
Impairment of debt securities measured at amortised
presented in note 2 .34 .c) .
cost in 2022 relates mainly to impairment of Russian
sovereign debt, which was sold in February 2023
In 2023, NLB impaired equity investment in non-core
(note 5 .4 .) .
In 2023, NLB released impairments related to equity
investments in subsidiaries and an associate in total
amount of EUR 97,847 thousand (2022: EUR 23,388
thousand) . Release of impartments in subsidiaries was
due to increase in their estimated recoverable amounts .
subsidiary in amount of EUR 730 thousand (2022: EUR
615 thousand), which is included in the amount in the line
item ‘Investments in subsidiaries .’
232
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
4 .15 . Income tax
Current income tax
Deferred income tax (note 5 .17 .)
Total
Reconciliations of differences from the amount of tax
determined by applying the Slovenian statutory tax rate
and reconciliation of effects:
NLB Group
2023
66,072
(50,982)
15,090
2022
26,753
(1,523)
25,230
in EUR thousands
NLB
2023
25,210
(60,751)
(35,541)
2022
5,992
(1,524)
4,468
Profit before tax
NLB Group
2023
578,413
2022
483,063
2023
478,746
in EUR thousands
NLB
2022
164,070
Tax calculated at prescribed rate of 19%
109,898
19 .0%
91,782
19 .0%
90,962
19 .0%
31,173
19 .0%
Tax effect of:
Income not subject to tax
Non-deductible expenses
Utilization of previously non-deductible expenses
Tax reliefs
Use of previously unrecognised tax losses
Unrecognised deferred tax assets on current period tax losses
Recognition of previously unrecognised deferred tax on tax losses
Recognition of previously unrecognised deferred
tax on deductible temporary differences
Changes in deferred taxes due to the increase of tax rate
Effect of different tax rates in other countries
Withholding tax for which no tax credit was available
Deferred tax liability on undistributed profits
Adjustment to tax in respect of prior years
Other
Total
(13,180)
10,572
(16,034)
(3,324)
(22,266)
14,218
(46,697)
(1,918)
(13,491)
(18,636)
6,920
9,626
50
(648)
15,090
-2 .3%
1 .8%
-2 .8%
-0 .6%
-3 .8%
2 .4%
-8 .1%
-0 .3%
-2 .3%
-3 .2%
1 .2%
1 .7%
-
-0 .1%
2.6%
(45,621)
7,332
(3,370)
(4,132)
(5,022)
487
-
-9 .4%
1 .5%
-0 .7%
-0 .8%
-1 .0%
0 .1%
(45,966)
3,130
(2,578)
(3,301)
(21,898)
-
-
(46,697)
(4,688)
-1 .0%
(1,918)
-
(12,963)
1,617
-
(282)
90
25,230
-
(13,544)
-2 .7%
0 .3%
-
-0 .1%
-
5.2%
-
6,920
-
(3)
(648)
(35,541)
-9 .6%
0 .7%
-0 .5%
-0 .7%
-4 .6%
-
-9 .8%
-0 .4%
-2 .8%
-
1 .4%
-
-
-0 .1%
-7.4%
(14,548)
1,605
(3,370)
(2,792)
(4,641)
-
-
-8 .9%
1 .0%
-2 .1%
-1 .7%
-2 .8%
-
-
(4,688)
-2 .9%
-
-
-
-
1,617
1 .0%
-
-
112
4,468
-
-
0 .1%
2.7%
Each member of NLB Group (disclosed in note 5 .12 .a) is
dividend income in 2023 which amounts to EUR 137,994
(non-taxable income in 2022 amounts to EUR 172,810
taxable as required by local tax legislation . Income tax
thousand (2022: EUR 53,242 thousand) .
thousand) .
rates within NLB Group ranges from 9 to 32% .
• release of impairments of equity investments in 2023
amounted to EUR 18,591 thousand (2022: EUR 4,444
NLB recognised deferred tax assets accrued on the
A tax rate of 19% was applied in Slovenia in 2023 (2022:
thousand) . They are based on non-taxable income
basis of temporary differences in an amount that, given
19%) . For the years 2024-2028 the rate in Slovenia will
from release of impairments of equity investments in
future profit estimates, is expected to be reversed in the
be 22% .
2023 in amount of EUR 97,847 thousand (2022: EUR
foreseeable future (i .e ., within five years) . Due to some
The effect of income not subject to tax of NLB in 2023,
23,388 thousand) .
uncertainties regarding external factors (regulatory
environment, market situation, etc .), a lower range of
related to:
The effect of income not subject to tax of NLB Group for
expected outcomes was considered for the purposes of
• dividends in 2023 amounted EUR 26,219 thousand (2022:
2022 mostly relates to the gain from a bargain purchase
deferred tax assets calculation .
EUR 10,116 thousand) . They are based on non-taxable
of N Banka, and amounted to EUR 32,834 thousand
233
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Based on a highly successful year in 2023 and
assets with respect to which simultaneously deferred
NLB has a special tax status at the Financial
substantially increased profit projections for the
tax liabilities are recognised are excluded from this
Administration of the Republic of Slovenia (FURS) .
upcoming 5 years, NLB increased recognised deferred
calculation (e .g ., deferred tax assets for temporary non-
The purpose of the status is to establish cooperation
tax assets for EUR 56,668 thousand in 2023 . The
deductible expenses for impairment of debt securities
between FURS and the taxpayers, with the aim of
increased amount consists of recognition of previously
measured at fair value through other comprehensive
encouraging voluntary compliance and reduce
unrecognised deferred tax on tax losses in the amount
income and deferred tax assets related to fair value
administrative burdens on financial supervision . FURS
of EUR 46,697 thousand, recognition of previously
hedge accounting) .
unrecognised deferred tax on deductible temporary
cooperates with NLB and responds quickly to resolve
NLB’s tax compliance issues, which reduces NLB’s tax
differences (tax non-deductible impairments of non-
NLB Group members did not recognise deferred tax
risks and uncertain tax positions .
core equity investments) in the amount of EUR 1,681
assets for tax losses if there is uncertainty about whether
thousand, and recognition of unrecognised deferred tax
the tax losses can be utilised, because it is not probable
assets for valuation of financial instruments which was
that future taxable profits will be available against which
Global minimum tax
The Minimum Tax Act was adopted in Slovenia in
recognised in other comprehensive income in amount of
the deferred tax assets can be utilised . The majority
December 2023, providing a global minimum tax for
EUR 8,290 thousand .
of the impact of unrecognised deferred tax assets on
multinational and large domestic groups . It is expected
current period tax losses for 2023 relates to the tax
that the parent company NLB will be liable to pay
Deferred tax assets were also increased by EUR 14,924
loss of a non-strategic subsidiary that realised tax loss
the top-up tax concerning subsidiaries in non-EU
thousand due to an increase of the tax rate to 22% for
due to the utilisation of previously tax non-deductible
jurisdictions that have a statutory tax rate below 15%
the next 5 years (2024 to 2028), of which EUR 13,544
thousand was recognised in the income statement, and
expenses for impairments in the subsidiary, which was
divested in 2023 .
and have not enacted the new legislation on Global
minimum tax in domestic legislation . Based on first
EUR 1,380 thousand in other comprehensive income .
estimates for the year 2024, we expect that the tax
Deferred tax liability related to undistributed profits
liability will amount to approximately EUR 4 million .
In 2023, NLB recognised deferred tax assets on all
includes withholding tax which shall be paid in the year
However, since the newly enacted legislation in Slovenia
temporary differences (non-recognised deferred tax
2024 on projected dividends .
is only effective from 1 January 2024, there is no current
assets on temporary differences in 2022 are disclosed in
tax impact for the year 2023 .
note 5 .17 . Deferred Income tax) . The deferred tax assets
The tax authorities may audit operations of NLB Group
for tax losses in 2023 are recognised in the amount
entities . In general, tax inspection, which may result in
The NLB Group applied a mandatory temporary
that takes into account other recognised deferred
the emergence of additional tax liability, default interest,
exception from the requirements of IAS 12, according to
tax assets, reaches the total amount of deferred tax
and penalties, may be initiated at any time within four
which information on deferred tax assets and liabilities
assets, for which a reversal is expected within five
to six years from the date of tax statement or from the
related to Global minimum tax are not recognised .
years (in 2022 deferred tax assets for tax loses were not
year in which tax should have been assessed . NLB is
recognised, due to the consideration of the total amount
not aware of any circumstances that could give rise to a
of recognised deferred tax assets) . The deferred tax
potential material tax liability in this respect .
234
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
4 .16 . Earnings per share
Earnings per share are calculated by dividing the net
profit by the weighted average number of ordinary
shares in issue, less treasury shares .
Diluted earnings per share are the same as basic
earnings per share for NLB Group and NLB, since
subordinated bonds and other 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)
NLB Group
2023
2022
NLB
2023
2022
550,700
446,862
514,287
159,602
Weighted average number of ordinary shares (in thousands)
20,000
20,000
20,000
20,000
Basic earnings per share (in EUR per share)
Diluted earnings per share (in EUR per share)
27 .5
27 .5
22 .3
22 .3
25 .7
25 .7
8 .0
8 .0
5 . Notes to the statement of financial position
5 .1 . Cash, cash balances at central banks, and other demand deposits at banks
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Balances and obligatory reserves with central banks
5,435,460
4,536,526
4,077,399
3,104,442
Cash
Demand deposits at banks
Allowance for impairment
Total
470,902
198,489
489,197
246,815
181,735
59,365
180,483
54,456
6,104,851
5,272,538
4,318,499
3,339,381
(1,290)
(1,173)
(467)
(357)
6,103,561
5,271,365
4,318,032
3,339,024
Slovenian banks are required to maintain a compulsory
reserve with the Bank of Slovenia relative to the volume
and structure of their customer deposits . Other banks in
NLB Group maintain a compulsory reserve in accordance
with local legislation . NLB and other banks in NLB Group
fulfil their compulsory reserve deposit requirements .
235
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Treasury bills
Total securities
Total
- quoted securities
of these debt instruments
The notional amounts of derivative financial instruments
are disclosed in note 5 .24 .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
The notional amounts of derivative financial instruments
are disclosed in note 5 .24 .b) .
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
13,867
3,687
10,180
1,249
1,229
20
602
602
16,169
743
15,426
2,312
2,295
17
2,904
2,904
16,135
3,712
12,423
1,249
1,229
20
573
573
16,274
849
15,425
2,312
2,295
17
2,903
2,903
15,718
21,385
17,957
21,489
-
-
203
203
-
-
203
203
15,718
21,588
17,957
21,692
-
-
203
203
-
-
203
203
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
11,139
2,035
9,104
1,573
1,573
505
505
15,903
1,550
14,353
2,800
2,800
2,886
2,886
15,440
4,216
11,224
1,573
1,573
497
497
16,535
1,963
14,572
2,742
2,742
2,873
2,873
13,217
21,589
17,510
22,150
236
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 equity instruments
of these debt instruments
- unquoted securities
of these equity instruments
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
6,300
2,658
5,217
-
14,175
5,217
-
5,217
8,958
8,958
5,579
10,336
3,116
-
19,031
3,484
368
3,116
15,547
15,547
6,300
2,558
-
7,785
16,643
-
-
-
8,858
8,858
5,211
2,308
-
7,892
15,411
-
-
-
7,519
7,519
As at 31 December 2023, NLB Group did not have any
December 2022, NLB did not have any assets received
assets received by taking possession of collateral
by taking possession of collateral and included in
and included in financial assets mandatorily at fair
financial assets mandatorily at fair value through profit
value through profit or loss (31 December 2022: EUR
or loss (note 6 .1 .l) .
368 thousand) . As at 31 December 2023 and as at 31
b) Financial liabilities measured at fair value through profit or loss
Liabilities
Loans and advances to companies
Other financial liabilities (note 2 .31 .)
Total
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
-
4,482
4,482
-
1,796
1,796
1,234
1,976
3,210
1,786
728
2,514
237
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
- other non-EU members
Commercial bills
Total
of these debt securities
of these equity securities
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
1,836,604
2,506,224
1,398,036
1,895,891
246,155
200,914
579,333
371,634
413,926
24,642
26,467
60,625
301,838
19,902
247,827
34,109
26,022
269,853
271,464
898,531
456,043
578,552
31,781
22,285
58,122
310,748
52,723
170,382
87,643
21,824
962,084
523,516
210,509
194,599
4,482
113,926
413,926
24,642
303
60,625
-
-
-
-
-
1,196,760
586,427
199,224
253,346
3,913
129,944
578,552
31,781
269
42,515
94,517
32,908
10,888
50,721
-
2,251,556
2,919,203
1,023,012
1,334,061
2,164,464
2,838,796
962,084
1,291,277
87,092
80,407
60,928
42,784
Allowance for impairment (note 5 .14 .b)
(7,329)
(15,876)
(2,448)
(8,799)
- quoted securities
of these debt instruments
of these equity instruments
- unquoted securities
of these debt instruments
of these equity instruments
1,997,126
2,612,330
1,992,263
2,593,533
4,863
254,430
172,201
82,229
18,797
306,873
245,263
61,610
962,084
962,084
-
1,291,277
1,291,277
-
60,928
42,784
-
-
60,928
42,784
As at 31 December 2023, the Bank does not have any
The credit quality analysis for financial assets and
exposure towards the Russia anymore . A Russian
contingent liabilities is disclosed in note 6 .1 .j) and
government bond in the nominal amount of USD 8,000
movements in allowance for the impairment of debt
thousand that would otherwise mature in September
securities in note 5 .14 .b) .
2023, was sold at the beginning of February 2023 .
238
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Movements of financial assets measured at fair value through other comprehensive income
in EUR thousands
239
2023
Debt
securities
2,838,796
(293)
-
1,446,746
(2,249,943)
38,624
1,901
88,633
-
NLB Group
NLB
2022
2023
2022
Equity
securities
Debt
securities
Equity
securities
Debt
securities
Equity
securities
Debt
securities
80,407
3,395,261
66,599
1,291,277
42,784
1,541,042
Equity
securities
44,709
(34)
1,358
30
53,223
16,164
-
-
1,699,839
(82)
(2,141,377)
-
-
38,471
3,104
-
-
-
-
6,801
(211,083)
(2,386)
-
-
-
-
-
59,345
(479,962)
9,163
(766)
49,410
33,617
-
-
-
-
-
-
-
-
290,245
(414,666)
10,846
4,484
-
-
-
-
-
-
2,284
15,860
60,928
(140,674)
(1,925)
-
-
1,291,277
42,784
2,164,464
87,092
2,838,796
80,407
962,084
Balance as at 1 January
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiary (note 5 .12 .e)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Changes in fair values
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December
As at 31 December 2023, and as at 31 December 2022,
NLB Group and NLB do not have any equity instruments
measured at fair value through other comprehensive
income obtained by taking possession of collateral in
the statement of financial position (note 6 .1 .l) .
c) Accumulated other comprehensive income related to financial assets measured at fair value through other comprehensive income
Balance as at 1 January
Effects of translation of foreign operations
to presentation currency
Net gains/(losses) from changes in fair value
Gains/losses transferred to net profit on disposal (note 4 .4 .)
Impairment (note 4 .14 .)
Transfer of gains/losses to retained earnings
Deferred income tax (note 5 .17 .)
Merger of subsidiary
Balance as at 31 December
NLB Group
NLB
2022
2023
2022
in EUR thousands
2023
Debt
securities
(144,578)
(31)
77,269
742
(7,054)
-
6,718
-
Equity
securities
1,332
(5)
Debt
securities
7,481
(12)
Equity
securities
3,257
3
6,801
(168,581)
(2,386)
-
-
(63)
(1,054)
-
1,668
3,870
-
10,996
-
-
-
-
458
-
Debt
securities
(78,283)
Equity
securities
(1,460)
Debt
securities
12,365
Equity
securities
99
-
-
38,046
834
(5,058)
-
11,849
(2,643)
-
-
2,284
(98,172)
(1,925)
-
-
-
(434)
(246)
144
316
5,826
-
1,382
-
-
-
-
366
-
(78,283)
(1,460)
(66,934)
7,011
(144,578)
1,332
(35,255)
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .5 . Derivatives for hedging purposes
NLB Group entities measure exposure to interest rate
interest rate . All fair value hedges are made on assets
regularly for macro hedges where the characteristics of
risk using repricing gap analysis and by calculating the
and liability items .
sensitivity of the statement of financial position and off-
both items in the hedge relationship do not fully match
by comparing the change in the fair value of both items
balance-sheet items in terms of the economic value of
Hedge accounting principles (i .e ., fair value and cash
to the shift in the yield curve .
equity . The portfolio duration is used as a measure of risk
flow hedging) were applied in the hedging of interest rate
in the management of securities in the banking book .
risk using interest rate swaps . These hedge relationships
Sources of hedge ineffectiveness may arise from to
are designated in such a way that the characteristics
the different of discount rates used for valuation of
NLB Group entities use interest rate swaps (IRS) to
of the hedging instrument and those of the hedged
hedged and hedging instruments, notional and timing
close open positions in an individual maturity bucket .
item match (i .e ., the principal terms match), while the
differences, as well differences in the amortisation plan
Micro and macro fair value hedges are used for that
dollar-offset method is used to regularly measure hedge
between hedged items and the hedging instrument .
purpose, i .e ., the swapping of a fixed interest rate on a
effectiveness retrospectively . Efficiency is considered
Hedge effectiveness is assessed monthly, by comparing
hedged item for a variable interest rate . Micro cash flow
when total difference is within range 80%–125% or within
changes in the fair value of the hedged item that are
hedges are also occasionally used, i .e . the swapping
materiality threshold defined at origination of hedge .
attributable to a hedged risk with changes in the fair
of a variable interest rate on a hedged item for a fixed
Prospective testing of hedge effectiveness is carried out
value of the hedging instrument .
a) Fair value adjustment in hedge accounting recognised in profit or loss
Fair value hedge from assets items
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
Fair value hedge from liability items
Net effects from hedging instruments
- interest rate swap for micro hedge
Net effects from hedged items
- debt securities issued
NLB Group
in EUR thousands
NLB
2023
2,735
(24,799)
(15,677)
(9,122)
27,534
(3)
2,684
11,293
13,560
2022
1,655
89,894
57,981
31,913
(88,239)
(57)
(14,834)
(42,499)
(30,849)
NLB Group
2023
1,164
6,505
6,505
(5,341)
(5,341)
2022
-
-
-
-
-
2023
2,424
(22,803)
(13,681)
(9,122)
25,227
(3)
2,684
11,293
11,253
2022
1,655
89,894
57,981
31,913
(88,239)
(57)
(14,834)
(42,499)
(30,849)
in EUR thousands
NLB
2023
1,164
6,505
6,505
(5,341)
(5,341)
2022
-
-
-
-
-
In both years presented, all fair value hedges were
a foreign operation . NLB Group applied a hedge of a
effective, with actual results of the hedge ratio within a
net investment in a foreign operation in years 2011 and
range of 80–125%, therefore, no discontinuation of the
2012, and at that time recognised a EUR 754 thousand
hedge accounting was required .
gain on the hedging instrument in other comprehensive
As at 31 December 2023 and 2022, NLB Group and
consolidated income statement when the foreign
NLB had no relationships designated for cash flow
operation is disposed of as a part of the gain or loss on
hedge accounting or for hedge of a net investment in
the disposal .
income (note 5 .22 .b) . This gain will be included in the
240
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Notional amounts of interest rate swaps
Fair value hedge of assets items
31 Dec 2023
31 Dec 2022
Fair value hedge of liability items
31 Dec 2023
31 Dec 2022
Notional
amount
633,798
644,132
Notional
amount
450,000
-
The hedging instrument is included in the statement
of financial position in the line item Derivatives –
hedge accounting .
NLB Group
Fair value
Asset
Liability
38,738
59,362
3,540
2,124
Change in fair value
of hedging instrument
used for calculating
hedge ineffectiveness
19,708
90,439
Notional
amount
573,798
644,132
NLB
Fair value
Asset
Liability
38,738
59,362
1,420
2,124
in EUR thousands
Change in fair value
of hedging instrument
used for calculating
hedge ineffectiveness
17,843
90,439
NLB Group
Fair value
Asset
Liability
8,876
-
-
-
Change in fair value
of hedging instrument
used for calculating
hedge ineffectiveness
8,774
-
Notional
amount
450,000
-
NLB
Fair value
Asset
Liability
8,876
-
-
-
in EUR thousands
Change in fair value
of hedging instrument
used for calculating
hedge ineffectiveness
8,774
-
241
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
c) Accumulated fair value adjustments arising from the
corresponding continuing hedge relationships
The table below presents accumulated fair value
presented in the same line of statement of financial
adjustment is presented in a separate line item ‘Fair
adjustments arising from the corresponding continuing
position as a hedged item, except for macro fair
value changes of the hedged items in portfolio hedge of
hedge relationships, irrespective of whether there
value hedges . In such relationships, hedged items are
interest rate risk .’
has been a change in the hedge designation during
presented in the line item ‘Financial assets measured
the year . The accumulated fair value adjustment is
at amortised cost,’ while the accumulated fair value
NLB Group
NLB
2023
2022
2023
2022
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
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
in EUR thousands
-
108,494
242,347
464,393
-
(4,349)
(15,841)
5,341
573
108,979
261,879
-
3
(6,721)
(27,205)
-
-
108,494
242,347
464,393
-
(4,349)
(15,841)
5,341
573
108,979
261,879
-
3
(6,721)
(27,205)
-
267,908
(10,207)
153,594
(23,767)
205,601
(12,514)
153,594
(23,767)
Micro fair value hedges
Fixed rate corporate loans measured at AC
Fixed rate bonds measured at AC
Fixed rate bonds measured at FVOCI
Fixed rate issued bonds
Macro fair value hedges
Fixed rate retail loans
The change in fair value of the hedge item used as the
basis for recognising hedge ineffectiveness:
Micro fair value hedges
Macro fair value hedges
NLB Group
2023
3,591
10,577
2022
57,201
31,122
in EUR thousands
NLB
2023
3,591
8,540
2022
57,201
31,122
d) IBOR reform
NLB Group continuously monitors the development
NLB Group no longer offers new products that would
of Benchmark Interest Rate Reform and is actively
be tied to reference rates in termination . With regards
preparing for the changes imposed by the regulation . In
to the reference rates, the NLB Group offers only
2018, NLB formed a special working group which deals
products related to EURIBOR, which is not scheduled for
with the preparation for the discontinuation of some
discontinuation . Therefore, NLB Group’s attention in the
important reference interest rates and reports on this to
past few years has been focused on the modification of
the NLB Group ALCO .
new contractual relationships with customers in which
EURIBOR occurs .
242
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
EURIBOR’s possible discontinuation
Due to the timely transition to the new hybrid EURIBOR
fallback clause into all new EURIBOR (both retail and
include fallback provisions in legacy contracts . The exact
methodology which meet the BMR requirements,
corporate) contracts .
timing depends on regulatory/market development and
243
EURIBOR can continue to be used in new and legacy
best practice .
contracts for the foreseeable future .
In May 2021, the Euro RFR Working Group produced
its recommendations on EURIBOR fallback trigger
NLB as a supervised entity, is required to comply
EU-supervised entities are bound to include robust
events and €STR-based EURIBOR fallback rates . Our
with the Benchmark regulation and, as a user of
fallback clauses into contractual documentation with the
mid-term activities are expected to undertake on the
benchmarks, must produce and maintain a robust
clients . In November 2019, the Euro risk-free rates (RFR)
implementation of more precise fallback provisioning,
written plan setting out the actions NLB would take
Working Group published high level recommendations
based on these recommendations . NLB identified
in the event that a benchmark materially changes or
for fallback provisions for products referencing
potential €STR-based fallbacks for EURIBOR, in line
ceases to be provided . NLB has prepared a plan, which
EURIBOR . The inclusion of robust fallback language is a
with the current market consensus on those fallbacks
sets out an inexhaustive/summary action list, and will
requirement in contracts subject to the EU Benchmark
and intends to proceed with the activities for inclusion
continue to closely follow market standards to identify
Regulation . The Bank already incorporated the generic
on EURIBOR fallbacks into all new EURIBOR-based
alternative benchmarks that could be referenced in
contracts . In the next step, the Bank is also expected to
substitute of existing benchmarks .
LIBOR discontinuation
Since many LIBOR settings ceased to exist at the
beginning of 2022, the Bank finished the process of
winding-down the exposures in a most efficient way .
NLB Group
Incremental LIBOR transactions were not allowed
Interest rate swaps (assets)
unconditionally .
NLB Group activities for implementation of LIBOR
transition were as follows:
· review of outstanding LIBOR referencing loans,
· identification of alternative reference rate to be used
for loan portfolio,
· analysis of how the alternative reference rate will
be calculated and how to calculate any economic
difference between LIBORs and the selected alternative
reference rates,
· consideration of IT system accommodation with
alternative reference rates,
· documentation of the transition of the loans .
EURIBOR (3 months)
EURIBOR (6 months)
USD LIBOR (6 months)
Interest rate swaps (liabilities)
EURIBOR (3 months)
EURIBOR (6 months)
NLB
Interest rate swaps (assets)
EURIBOR (3 months)
EURIBOR (6 months)
USD LIBOR (6 months)
The tables indicate the notional amount and weighted
Interest rate swaps (liabilities)
average maturity of derivatives on the NLB Group level
and separately NLB d .d . sole in hedging relationships
EURIBOR (3 months)
EURIBOR (6 months)
2023
in EUR thousands
2022
Notional amount
(in EUR
thousands)
Weighted
average
maturity (years)
Notional amount
(in EUR
thousands)
Weighted
average
maturity (years)
318,509
315,289
-
350,000
100,000
2023
8 .94
5 .68
-
2 .49
2 .49
280,981
355,651
7,500
-
-
10 .01
6 .06
0 .71
-
-
in EUR thousands
2022
Notional amount
(in EUR
thousands)
Weighted
average
maturity (years)
Notional amount
(in EUR
thousands)
Weighted
average
maturity (years)
258,509
315,289
-
350,000
100,000
9 .72
5 .68
-
2 .49
2 .49
280,981
355,651
7,500
-
-
10 .01
6 .06
0 .71
-
-
that will be affected by the IBOR reform, analysed on an
interest rate basis . The derivative hedging instruments
provide a close approximation to the extent of the
risk exposure NLB Group manages through hedging
relationships .
As can be seen from the table, the majority of long-
EURIBOR could be expected . As at 31 December 2023,
term derivatives in hedging relationships are exposed
derivatives with remaining maturity of five or more
to EURIBOR, therefore, the uncertainty arising from
years amount to EUR 285,280 thousand (31 December
interest rate benchmark reform derives mainly from
2022: EUR 295,580 thousand) .
derivatives with longer maturities, when a change of
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
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
in EUR thousands
NLB Group
NLB
31 Dec 2023
2,522,229
547,640
31 Dec 2022
1,917,615
222,965
13,734,601
13,072,986
165,962
177,823
16,970,432
15,391,389
31 Dec 2023
1,966,169
149,011
7,148,283
101,596
9,365,059
31 Dec 2022
1,597,448
350,625
6,054,413
114,399
8,116,885
in EUR thousands
NLB Group
NLB
31 Dec 2023
1,898,725
79,679
536,096
13,251
31 Dec 2022
1,486,496
84,979
323,944
25,980
31 Dec 2023
1,347,161
72,458
536,096
13,251
31 Dec 2022
1,184,601
64,913
323,944
25,980
2,527,751
1,921,399
1,968,966
1,599,438
Allowance for impairment (note 5 .14 .b)
(5,522)
(3,784)
(2,797)
(1,990)
Total
2,522,229
1,917,615
1,966,169
1,597,448
b) Loans and advances to banks
Loans
Time deposits
Reverse sale and repurchase agreements
Purchased receivables
Allowance for impairment (note 5 .14 .a)
Total
c) Loans and advances to customers
Loans
Overdrafts
Finance lease receivables (note 5 .11 .b)
Credit card business
Called guarantees
Allowance for impairment (note 5 .14 .a)
Total
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
623
249,765
294,069
3,482
547,939
(299)
547,640
782
118,241
102,358
1,853
223,234
(269)
222,965
119,914
25,865
-
3,482
149,261
(250)
149,011
127,717
221,271
-
1,853
350,841
(216)
350,625
NLB Group
NLB
in EUR thousands
31 Dec 2023
13,117,311
31 Dec 2022
12,626,259
449,145
337,610
154,664
4,498
425,135
193,948
148,870
2,772
14,063,228
13,396,984
(328,627)
(323,998)
13,734,601
13,072,986
31 Dec 2023
6,946,199
236,792
-
82,457
2,403
7,267,851
(119,568)
7,148,283
31 Dec 2022
5,873,443
208,499
-
64,460
1,423
6,147,825
(93,412)
6,054,413
244
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Analysis of loans and advances to customers by sector
Governments
Financial organisations
Companies
Individuals
Total
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
Prepayments
Other financial assets
Allowance for impairment (note 5 .14 .a)
Total
in EUR thousands
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
386,291
91,523
6,169,972
7,086,815
303,443
116,078
6,031,795
6,621,670
13,734,601
13,072,986
118,220
384,995
3,101,465
3,543,603
7,148,283
124,736
286,504
2,606,674
3,036,499
6,054,413
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
43,608
54,748
9,265
9,734
-
7,171
2,176
50,065
176,767
(10,805)
165,962
36,712
41,364
8,516
8,737
31,587
3,390
2,563
53,988
186,857
(9,034)
177,823
20,207
42,753
2,013
2,924
-
6,247
-
29,066
103,210
(1,614)
101,596
19,370
30,544
2,710
2,359
31,081
3,413
-
25,935
115,412
(1,013)
114,399
Receivables in the course of settlement are temporary
‘Act for Value Protection of Republic of Slovenia’s Capital
balances which will be transferred to the appropriate
Investment in Nova Ljubljanska banka d .d ., Ljubljana’
item in the days following their occurrence .
(note 5 .16 .a) . The remaining balance includes claims for
fees and legal costs, and claims from refunds .
Other financial assets in the amount of EUR 22,745
thousand (31 December 2022: EUR 23,508 thousand)
relate to a receivable recognised in accordance with the
Analysis of other financial assets by sector
Banks
Government
Financial organisations
Companies
Individuals
Total
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
51,020
44,233
30,715
5,062
34,932
38,362
78,285
23,644
6,368
31,164
165,962
177,823
19,779
25,756
23,554
723
31,784
101,596
11,918
55,708
17,578
670
28,525
114,399
245
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Merger of subsidiary
Write-offs
Balance as at 31 December
NLB Group
NLB
in EUR thousands
2023
397
(1)
1,184
(534)
-
(62)
984
2022
717
1
891
(1,087)
-
(125)
397
2023
90
-
-
-
32
(62)
60
2022
420
-
82
(287)
-
(125)
90
5 .7 . Non-current assets held for sale
The line item ‘Non-current assets held for sale’ includes
thousand (31 December 2022: EUR 651 thousand) . As at
business premises and assets received as collateral
31 December 2023, and as at 31 December 2022, NLB
that are in the process of being sold . As at 31 December
did not have any non-current assets obtained by taking
2023, the value of assets received by taking possession
of collateral and included in non-current assets
possession of collateral and included in non-current
assets held for sale (note 6 .1 .l) .
held for sale by NLB Group amounted to EUR 474
Analysis of movements of non-current assets held for sale
Balance as at 1 January
Effects of translation of foreign
operations to presentation currency
Transfer from/(to) property and
equipment (note 5 .8 .)
Disposals
Valuation
Balance as at 31 December
5 .8 . Property and equipment
a) Analysis by type
Own property and equipment
Right-of-use assets (note 5 .11 .)
Total
NLB Group
NLB
in EUR thousands
2023
15,436
11
584
(10,861)
(321)
4,849
2022
7,051
9
8,226
(637)
787
15,436
2023
4,235
-
584
(655)
(116)
4,048
2022
4,089
-
617
(532)
61
4,235
in EUR thousands
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
249,920
28,114
278,034
228,944
22,372
251,316
80,240
5,730
85,970
75,262
3,330
78,592
246
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Movement of own property and equipment
in EUR thousands
247
Cost
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Additions
Disposals
Transfer to/from investment property (note 5 .9 .)
Transfer to/from non-current assets held for sale (note 5 .7 .)
Merger of subsidiary (note 5 .12 .d)
Disposal of subsidiaries (note 5 .12 .b), c)
Balance as at 31 December 2023
Depreciation and impairment
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Disposals
Depreciation (note 4 .11 .)
Impairment (note 4 .14 .)
Transfer to/from non-current assets held for sale (note 5 .7 .)
Merger of subsidiary (note 5 .12 .d)
Disposal of subsidiaries (note 5 .12 .b), c)
Balance as at 31 December 2023
Net carrying value
Balance as at 31 December 2023
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
347,252
84,875
95,075
9,304
536,506
195,685
42,180
43,783
3,722
285,370
(68)
(20)
(3)
-
(91)
-
-
-
16,827
(5,519)
86
(1,051)
-
-
14,104
(4,969)
15,217
(5,627)
-
-
-
-
-
-
(22)
(50)
7,604
53,752
3,527
(1,904)
(18,019)
-
-
-
-
86
(1,051)
-
(72)
-
-
(1,051)
3,919
-
4,737
(1,357)
2,829
(2,403)
-
-
992
-
-
-
657
-
-
482
(2)
-
-
-
-
-
11,575
(3,762)
-
(1,051)
5,568
-
357,527
93,968
104,612
15,004
571,111
202,080
46,552
44,866
4,202
297,700
177,896
53,340
72,310
4,016
307,562
138,264
29,619
38,891
3,334
210,108
(10)
(914)
6,782
47
(467)
-
-
(3)
11
-
(2)
(4,615)
10,123
(4,845)
6,412
(335)
1,515
(10,709)
24,832
-
-
-
-
-
-
(22)
(50)
-
-
-
-
47
(467)
-
(72)
-
-
3,750
-
(467)
233
-
-
-
(1,350)
4,635
(2,359)
1,884
-
-
515
-
-
-
274
-
-
(2)
239
-
-
-
-
-
(3,711)
10,508
-
(467)
1,022
-
183,334
58,823
73,838
5,196
321,191
141,780
33,419
38,690
3,571
217,460
174,193
35,145
30,774
9,808
249,920
60,300
13,133
6,176
631
80,240
Balance as at 1 January 2023
169,356
31,535
22,765
5,288
228,944
57,421
12,561
4,892
388
75,262
As at 31 December 2023, the value of assets received by
taking possession of collateral and included in property
and equipment by NLB Group amounted to EUR 11,641
thousand (31 December 2022: EUR 11,962 thousand) . As
at 31 December 2023 and as at 31 December 2022, NLB
did not have any assets received by taking possession
of collateral and included in property and equipment
(note 6 .1 .l) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group
NLB
in EUR thousands
248
Cost
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiary (note 5 .12 . e), f)
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 .)
Land &
Buildings
Computers
Other equipment
Total
Land &
Buildings
Computers
Other equipment
Total
for own use
in
operating
lease
for own use
in
operating
lease
346,858
80,131
94,729
5,609
527,327
195,852
43,899
46,143
3,519
289,413
39
4,552
8,118
(1,242)
79
(1,358)
(9,794)
13
818
13,508
(9,595)
-
-
-
3
1,154
10,767
(11,550)
-
(28)
-
-
-
4,262
(567)
-
-
-
55
6,524
36,655
(22,954)
79
(1,386)
(9,794)
-
-
1,448
-
-
-
(1,615)
-
-
-
-
3,072
(4,791)
1,420
(3,780)
-
-
-
-
-
-
-
-
271
(68)
-
-
-
-
-
6,211
(8,639)
-
-
(1,615)
Balance as at 31 December 2022
347,252
84,875
95,075
9,304
536,506
195,685
42,180
43,783
3,722
285,370
Depreciation and impairment
Balance as at 1 January 2022
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 .)
172,160
53,833
74,415
3,326
303,734
135,514
30,087
37,782
3,125
206,508
(3)
7
4
(1,109)
7,030
1,699
(313)
(1,568)
(9,608)
9,108
(8,084)
5,979
-
-
-
-
(4)
-
-
(134)
824
-
-
-
8
(18,935)
22,941
1,699
(317)
(1,568)
-
-
3,748
-
-
(998)
-
(4,713)
4,245
-
-
-
-
(904)
2,013
-
-
-
-
(45)
254
-
-
-
-
(5,662)
10,260
-
-
(998)
Balance as at 31 December 2022
177,896
53,340
72,310
4,016
307,562
138,264
29,619
38,891
3,334
210,108
Net carrying value
Balance as at 31 December 2022
169,356
31,535
22,765
5,288
228,944
57,421
12,561
4,892
388
75,262
Balance as at 1 January 2022
174,698
26,298
20,314
2,283
223,593
60,338
13,812
8,361
394
82,905
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group
2023
35,639
(14)
-
-
(3,392)
(86)
86
(1,117)
-
2022
47,624
22
766
70
(17,004)
1,069
-
3,092
-
31,116
35,639
in EUR thousands
NLB
2023
6,753
-
-
-
(79)
-
-
182
784
7,640
2022
9,181
-
-
-
(2,512)
-
-
84
-
6,753
5 .9 . Investment property
Balance as at 1 January
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5 .12 .e), f)
Additions
Disposals
Transfer from/(to) property and equipment (note 5 .8 .)
Transfer from/(to) other assets
Net valuation to fair value (note 4 .8 .)
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December
As at 31 December 2023, the value of assets received
by taking possession of collateral and included in
investment property by NLB Group amounted to
EUR 21,253 thousand (31 December 2022: EUR 25,326
thousand), and in NLB amounted to EUR 2,263 thousand
(31 December 2022: EUR 1,901 thousand) (note 6 .1 .l) .
Operating expenses arising from investment properties:
Leased to others
Not leased to others
Total
NLB Group
2023
1,986
459
2,445
2022
2,496
564
3,060
in EUR thousands
NLB
2023
373
298
671
2022
355
300
655
249
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .10 . Intangible assets
Cost
Balance as at 1 January 2023
Effects of translation of foreign operations to presentation currency
Merger of subsidiary (note 5 .12 .d)
Additions
Disposals
Write-offs
Disposal of subsidiary (note 5 .12 .b)
Balance as at 31 December 2023
Amortisation and impairment
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Merger of subsidiary (note 5 .12 .d)
Disposals
Amortisation (note 4 .11 .)
Write-offs
Disposal of subsidiary (note 5 .12 .b)
Balance as at 31 December 2023
Net carrying value
Balance as at 31 December 2023
Balance as at 1 January 2023
Other intangible assets represent additionally identified
intangible assets in a business combination, namely
core deposits and trade name .
Software licenses
NLB Group
Other
intangible assets
Goodwill
Total
Software licenses
in EUR thousands
NLB
259,684
(25)
-
20,697
(4)
(7,740)
(167)
272,445
210,821
(16)
-
(4)
14,037
(7,336)
(167)
217,335
55,110
48,863
13,227
(13)
-
-
-
-
-
32,336
-
-
-
-
-
-
13,214
32,336
305,247
(38)
-
20,697
(4)
(7,740)
(167)
317,995
207,769
-
979
13,797
-
(4,366)
-
218,179
7,384
(13)
-
-
2,365
-
-
9,736
3,478
5,843
28,807
247,012
177,344
-
-
-
-
-
-
28,807
3,529
3,529
(29)
-
(4)
16,402
(7,336)
(167)
255,878
62,117
58,235
-
294
-
7,528
(4,366)
-
180,800
37,379
30,425
250
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Software licenses
NLB Group
Other
intangible assets
Goodwill
Total
Software licenses
in EUR thousands
NLB
251
Cost
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5 .12 .e), f)
Additions
Disposals
Write-offs
Balance as at 31 December 2022
Amortisation and impairment
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Amortisation (note 4 .11 .)
Write-offs
Balance as at 31 December 2022
Net carrying value
Balance as at 31 December 2022
Balance as at 1 January 2022
5 .11 . Leases
a) NLB Group as a lessee
Right-of-use assets
Land and buildings
Vehicles
Computers
Furniture and equipment
Total
Lease liabilities
245,607
(7)
1,444
14,170
(535)
(995)
259,684
198,997
(8)
12,655
(823)
210,821
48,863
46,610
13,211
32,336
291,154
201,028
16
-
-
-
-
-
-
-
-
-
9
1,444
14,170
(535)
(995)
13,227
32,336
305,247
4,274
8
3,102
-
7,384
5,843
8,937
28,807
-
-
-
28,807
3,529
3,529
232,078
-
15,757
(823)
247,012
58,235
59,076
-
-
6,741
-
-
207,769
171,575
-
5,769
-
177,344
30,425
29,453
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
24,541
19,567
92
395
3,086
28,114
28,944
130
-
2,675
22,372
23,840
2,794
2,681
255
-
5,730
5,793
2,241
1,089
-
-
3,330
3,349
In the statement of financial position, right-of-use assets
Additions to the right-of-use assets during 2023 in NLB
are included in the line item ‘Property and equipment’
Group amounted to EUR 19,149 thousand (2022: EUR 6,411
and lease liabilities are included in the line item ‘Other
thousand), and in NLB EUR 4,656 thousand of which
financial liabilities .’
EUR 500 thousand from N Banka merger (2022: EUR
1,751 thousand) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The income statement shows the following amounts relating to leases:
Depreciation of right-of-use assets (note 4.11.)
Land and buildings
Vehicles
Computers
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)
in EUR thousands
NLB Group
2023
2022
NLB
2023
6,519
160
61
1,258
7,998
7,092
276
-
1,324
8,692
692
705
24
-
1,421
2022
511
448
-
13
972
NLB Group
2023
(728)
(1,554)
2022
(431)
(855)
in EUR thousands
NLB
2023
(132)
(403)
2022
(28)
(158)
(1,237)
(1,129)
(182)
(185)
140
77
-
-
The total cash outflow for leases in 2023 in NLB Group
Lease terms are negotiated on an individual basis and
was EUR 8,242 thousand (2022: EUR 8,547 thousand), and
contain a range of different terms and conditions . The
in NLB EUR 1,386 thousand (2022: EUR 1,001 thousand) .
lease agreements do not impose any covenants other
than the security interests in the leased assets that are
NLB Group leases various offices, branches, vehicles, and
held by the lessor . Leased assets may not be used as
other equipment used in its business . Rental contracts
security for borrowing purposes .
for offices and branches generally have lease terms
between 5 to 20 years, while some contracts are made
NLB Group also has certain leases of other equipment
for indefinite periods . Contracts for indefinite periods are
with a lease term of 12 months or less, and equipment
included in the measurement of the liability in accordance
with low value . For these leases, NLB Group applies
with planning projections . Normally, a lease term of
five years is assumed, with the exemption of business
the short-term lease and the lease of low-value assets
recognition exemptions . Lease payments on short-term
premises on strategic locations where management
leases and leases of low-value assets are recognised as
assesses a different (longer) lease term . Vehicles and
expenses on a straight-line basis over the lease term .
other equipment generally have lease terms between
1 and 5 years . There are several lease contracts that
For calculation of the net present value of the future
include extension and termination options . These options
lease payments, NLB Group applies the internal transfer
are negotiated by management to align with the Group’s
price as a discount rate .
business needs . Lease payments to be made under
reasonably certain extension options are included in
NLB Group and NLB do not have expenses relating to
measurement of the liability .
variable payments and gains or losses arising from a
sale and leaseback transactions .
252
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The following table sets out a maturity analysis of lease liabilities .
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
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
448
446
2,125
15,693
10,232
28,944
3,440
431
2,913
16,300
756
23,840
149
258
1,187
3,592
607
5,793
82
155
664
2,056
392
3,349
The increase in lease liabilities in the NLB Group in
2023 arising from the newly concluded long-term lease
contracts for business premises .
b) NLB Group as a lessor
Finance and operating leases of motor vehicles
Finance leases
Operating lease
Loans and advances to customers in NLB Group include
A maturity analysis of lease payments, showing the
and operating leases of business premises and POS
finance lease receivables .
undiscounted lease payments to be received after the
terminals represent the majority of agreements in which
NLB Group acts as a lessor .
The following table sets out a maturity analysis of lease
receivables, showing the undiscounted lease payments
Most of the lease agreements entered into by NLB Group
to be received after the reporting date .
as lessor contracts are finance lease agreements . Most
of the finance lease agreements are concluded for a
non-cancellable period of between 48 and 60 months .
NLB Group
By paying the last instalment at the end of the contract,
Less than 1 year
the leasing object becomes the lessee’s property . The
financial leasing receivables are secured by the object
of financing . NLB Group does not have finance lease
contracts with variable payments not included in the
measurement of the net investment in the lease .
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than 5 years
Total undiscounted
lease receivable
in EUR thousands
2023
115,449
89,047
76,876
62,091
31,172
20,787
2022
70,629
46,515
39,899
29,423
17,422
13,878
395,422
217,766
The investment properties are leased to the lessee
under operating leases with rentals payable monthly .
There are no variable lease payments that depend on
an index or a rate . The investment properties generally
have lease terms between 2 and 10 years . Some
contracts are made for an indefinite period .
Unearned finance income
(57,812)
(23,818)
Net investment in the lease
337,610
193,948
During 2023, NLB Group recognised interest income on
lease receivables in the amount of EUR 18,959 thousand
(2022: EUR 6,607 thousand) .
reporting date .
Less than
1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than
5 years
Total
in EUR thousands
NLB Group
NLB
2023
2022
2023
2022
4,991
2,580
2,920
1,678
1,434
1,013
1,657
1,028
694
488
689
1,314
300
297
271
254
189
592
345
343
340
315
315
1,224
12,725
7,761
1,903
2,882
NLB Group realised rental income arising from:
investment properties in the amount of EUR 1,755
thousand (2022: EUR 2,912 thousand); and movable
property in the amount of EUR 2,133 thousand (2022:
EUR 1,252 thousand) . NLB realised rental income arising
from: investment properties in the amount of EUR 359
thousand (2022: EUR 459 thousand); and movable
property in the amount of EUR 485 thousand (2022: EUR
475 thousand) (note 4 .8 .) .
253
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 2023
31 Dec 2022
901,765
813,362
30,407
43,585
32,126
58,552
975,757
904,040
Data of subsidiaries as included in the consolidated financial statements of NLB Group as at 31 December 2023:
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 Komercijalna banka a.d. Beograd
KomBank Invest a .d . Beograd
NLB Skladi d.o.o., Ljubljana
NLB Lease&Go, leasing, d.o.o., Ljubljana
NLB Lease&Go, d .o .o . Skopje**
NLB Lease&Go leasing d .o .o . Beograd***
NLB Zavod za upravljanje kulturne dediščine, Ljubljana
NLB DigIT d.o.o., Beograd
Non-core members
NLB Leasing d.o.o., Ljubljana - v likvidaciji*
NLB Crna Gora d.o.o., Podgorica
NLB InterFinanz AG, Zürich in Liquidation
NLB InterFinanz d .o .o ., Beograd
LHB AG, Frankfurt
REAM d.o.o., Podgorica
REAM d.o.o., Beograd - Novi Beograd
S-REAM d.o.o., Ljubljana
PRO-REM d .o .o ., Ljubljana - v likvidaciji
OL Nekretnine d .o .o ., Zagreb - u likvidaciji
NLB Srbija d.o.o., Beograd
Privatinvest d.o.o., Ljubljana
Nature of
Business
Country of
Incorporation
Equity as at
31 Dec 2023
(in EUR
thousands)
Profit/(loss)
for 2023
(in EUR
thousands)
NLB Group
NLB
Shareholding
(in %)
Voting rights
(in %)
Shareholding
(in %)
Voting rights
(in %)
Banking
North
Macedonia
279,987
Banking
Montenegro
120,390
Banking
Bosnia and
Herzegovina
Banking
Kosovo
Banking
Banking
Finance
Finance
Finance
Finance
Bosnia and
Herzegovina
Serbia
Serbia
Slovenia
Slovenia
North
Macedonia
Finance
Serbia
Cultural
heritage
management
Slovenia
IT services
Serbia
Finance
Finance
Finance
Finance
Finance
Slovenia
Montenegro
Switzerland
Serbia
Germany
Real estate
Montenegro
Real estate
Serbia
Real estate
Slovenia
Real estate
Slovenia
Real estate
Croatia
Real estate
Serbia
Real estate
Slovenia
107,270
149,669
95,980
827,575
769
13,707
21,251
1,493
7,115
3,500
2,569
2,021
3,643
9,762
3
684
2,156
2,042
22,452
20,447
1,153
18,252
110
44,517
26,658
24,269
35,968
12,819
132,313
(1,201)
9,498
1,664
(605)
(736)
86
204
1,487
348
(2,321)
1
(402)
389
(576)
(384)
635
(314)
(603)
(11)
86 .97
99 .87
99 .85
82 .38
97 .34
100
100
100
100
100
86 .97
99 .87
99 .85
82 .38
97 .35
100
100
100
100
100
99 .64
99 .64
100
100
100
100
100
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 .87
99 .85
82 .38
97 .34
100
-
100
100
-
-
100
100
-
100
100
-
100
100
100
100
-
-
100
100
86 .97
99 .87
99 .85
82 .38
97 .35
100
-
100
100
-
-
100
100
-
100
100
-
100
100
100
100
-
-
100
100
*100% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana.
**51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.
***50.73% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 48.91% NLB Komercijalna banka a.d. Beograd.
254
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Data of subsidiaries as included in the consolidated financial statements of NLB Group as at 31 December 2022:
Nature of
Business
Country of
Incorporation
Equity as at
31 Dec 2022
(in EUR
thousands)
Profit/(loss)
for 2022
(in EUR
thousands)
NLB Group
NLB
Shareholding
(in %)
Voting rights
(in %)
Shareholding
(in %)
Voting rights
(in %)
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 Komercijalna banka a.d. Beograd
KomBank Invest a .d . Beograd
N Banka d.d., Ljubljana
Privatinvest d .o .o ., Ljubljana
NLB Skladi d.o.o., Ljubljana
NLB Lease&Go, leasing, d.o.o., Ljubljana
NLB Lease&Go, d .o .o . Skopje**
Banking
North
Macedonia
265,844
Banking
Montenegro
106,937
Banking
Bosnia and
Herzegovina
Banking
Kosovo
Banking
Banking
Finance
Banking
Bosnia and
Herzegovina
Serbia
Serbia
Slovenia
Real estate
Slovenia
Finance
Finance
Finance
Slovenia
Slovenia
North
Macedonia
96,237
113,844
90,608
737,972
1,203
186,423
123
12,598
19,578
529
766
37,874
16,613
19,281
32,402
11,436
66,014
(148)
11,085
(99)
8,404
810
(68)
(390)
86 .97
99 .87
99 .85
82 .38
97 .34
100
100
100
100
100
100
100
86 .97
99 .87
99 .85
82 .38
97 .35
100
100
100
100
100
100
100
95 .20
95 .20
NLB Lease&Go leasing d .o .o . Beograd
Finance
Serbia
NLB Zavod za upravljanje kulturne
dediščine, Ljubljana
NLB DigIT d.o.o., Beograd
Non-core members
NLB Leasing d.o.o., Ljubljana - v likvidaciji*
Optima Leasing d .o .o ., Zagreb - „u likvidaciji“
NLB Leasing d.o.o., Beograd - u likvidaciji
NLB Crna Gora d.o.o., Podgorica
NLB InterFinanz AG, Zürich in Liquidation
NLB InterFinanz d .o .o ., Beograd
LHB AG, Frankfurt
Tara Hotel d.o.o., Budva
REAM d.o.o., Podgorica
REAM d.o.o., Beograd - Novi Beograd
SPV 2 d.o.o., Beograd - Novi Beograd
S-REAM d.o.o., Ljubljana
REAM d .o .o ., Zagreb
PRO-REM d .o .o ., Ljubljana - v likvidaciji
OL Nekretnine d .o .o ., Zagreb - u likvidaciji
NLB Srbija d.o.o., Beograd
Cultural
heritage
management
Slovenia
3,414
2,601
IT services
Serbia
2,368
(36)
Finance
Finance
Finance
Finance
Finance
Finance
Finance
Slovenia
Croatia
Serbia
Montenegro
Switzerland
Serbia
Germany
Real estate
Montenegro
Real estate
Montenegro
Real estate
Real estate
Serbia
Serbia
Real estate
Slovenia
Real estate
Croatia
Real estate
Slovenia
Real estate
Croatia
Real estate
Serbia
16,936
821
5,899
3,295
366
(434)
(91)
165
10,029
(2,213)
4
1,086
13,546
1,767
1,758
867
23,141
994
19,974
1,467
31,591
1
(646)
(3,255)
71
(90)
35
(184)
66
162
153
(709)
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
*100% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana.
**51% ownership of NLB Lease&Go, leasing, d.o.o., Ljubljana and 49% ownership of NLB Banka a.d., Skopje.
Changes in ownership interest in the subsidiaries of NLB Group in 2023 and 2022 are presented in note 3 .
86 .97
99 .87
99 .85
82 .38
97 .34
100
-
100
-
100
100
-
-
100
100
-
-
100
100
100
-
100
86 .97
99 .87
99 .85
82 .38
97 .35
100
-
100
-
100
100
-
-
100
100
-
-
100
100
100
-
100
12 .71
12 .71
100
100
100
100
-
-
-
100
100
100
100
-
-
-
100
100
255
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Data of subsidiaries with significant non-controlling interests, before intercompany eliminations:
Non-controlling interest in equity in %
Non-controlling interest‘s voting rights in %
Income statement and statement of comprehensive income
Revenues
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
Statement of financial position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Attributable to non-controlling interest
NLB Banka,
Skopje
2023
13 .03
13 .03
111,640
44,517
5,801
3,363
47,880
6,239
4,391
2022
13 .03
13 .03
94,624
37,874
4,935
(5,071)
32,803
4,274
1,332
867,333
826,723
1,034,922
1,020,798
1,393,480
1,404,491
228,788
279,987
36,482
177,186
265,844
34,639
in EUR thousands
NLB Banka,
Prishtina
2023
17 .62
17 .62
68,468
35,968
6,339
(141)
35,827
6,314
-
716,000
513,757
856,340
223,748
149,669
26,376
2022
17 .62
17 .62
58,296
32,402
5,710
(309)
32,093
5,656
3,014
563,629
520,009
806,646
163,148
113,844
20,063
256
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Disposal of subsidiary Optima Leasing d .o .o ., Zagreb – u likvidaciji
In September 2023, NLB Group sold its subsidiary
The assets and liabilities derecognised from NLB Group
Optima Leasing d .o .o ., Zagreb – u likvidaciji .
financial statements as a result of disposal are as follows:
Cash, cash balances at central banks and other demand deposits at banks
Financial assets measured at amortised cost
- other financial assets
Other assets
Total assets
Provisions
Other liabilities
Total liabilities
Net assets of subsidiary
Total disposal consideration
Cash and cash equivalents in subsidiary sold
Cash outflow on disposal
Consideration for disposal of the subsidiary
Carrying amount of net assets disposed of
Loss from disposal of subsidiary in consolidated financial statements
in EUR thousands
713
4
104
821
30
22
52
769
470
(713)
(243)
470
769
(299)
At sale of subsidiary Optima Leasing d .o .o ., Zagreb – u
likvidaciji, NLB Group realised a loss in the amount of
EUR 299 thousand .
c) Disposal of subsidiary Tara Hotel d .o .o ., Budva
In May 2023, NLB Group sold its subsidiary Tara Hotel
d .o .o ., Budva .
The assets and liabilities derecognised from NLB Group
financial statements as a result of disposal are as follows:
in EUR thousands
Cash, cash balances at central banks and other demand deposits at banks
Financial assets measured at amortised cost
- other financial assets
Other assets
Total assets
Financial liabilities measured at amortised cost
- borrowings from banks and central banks
- other financial liabilities
Deferred income tax liabilities
Other liabilities
Total liabilities
Net assets of subsidiary
Total disposal consideration
Cash inflow on disposal
Consideration for disposal of the subsidiary
Carrying amount of net assets disposed of
Loss from disposal of subsidiary in consolidated financial statements
At sale of Tara Hotel d .o .o ., Budva NLB Group realised a
loss in the amount of EUR 467 thousand and NLB in the
amount of EUR 105 thousand .
2
19
13,938
13,959
178
20
193
82
473
13,486
13,019
13,019
13,019
13,486
(467)
257
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
258
d) Merger of N Banka d .d ., Ljubljana
On 1 September 2023, with entry of the merger in the
Register of Companies, the process of legal merger of
N Banka d .d . with NLB d .d . was closed . As at the date of
the merger, N Banka ceased to exist as an independent
Items of the statement of financial position at the day of the merger were as follows:
Cash, cash balances at central banks and other demand deposits at banks
Financial assets measured at fair value through other comprehensive income
legal entity, and NLB, as a universal legal successor,
Financial assets measured at amortised cost
took over all of its rights and obligations .
Merger was accounted for using merger accounting
principles, due to the fact that such a merger is
considered to be a business combination involving
entities under common control . NLB has applied for the
merger the following accounting policy:
• As of 1 September 2023 all assets, liabilities and off-
balance sheet items of N Banka were recognised as
they were reported for the purposes of NLB Group
financial statements as of 31 August 2023 in relevant
line items of assets, liabilities and off-balance sheet
items of merged bank; and
- debt securities
- loans and advances to banks
- loans and advances to customers
- other financial assets
Investments in associates and joint ventures
Tangible assets
Property and equipment
- own property and equipment
- right-of-use assets
Investment property
Intangible assets
Deferred income tax assets
Other assets
Total assets
• As of 1 September 2023 all income and expenses of
Financial liabilities held for trading
N Banka were recognised as they were reported
Financial liabilities measured at amortised cost
for the purposes of NLB Group financial statements
- deposits from banks and central banks
as of 31 August 2023 directly into retained earnings .
- borrowings from banks and central banks
Therefore only income and expenses from 1 September
2023 onwards were recognised in the income statement
of merged bank .
As at the day of the merger, NLB also took over
control of the company Privatinvest d .o .o ., which was
100% owned by N Banka and whose assets consist
only of repossessed real estate . N Banka also had an
investment in Bankart d .o .o ., Ljubljana, which was on the
day of the merger transferred to NLB .
- due to customers
- other financial liabilities
Provisions
Current income tax liabilities
Other liabilities
Total liabilities
Equity
Total liabilities and equity
118,158
49,477
13,044
3
765,552
2,664
134
4,884
4,546
338
784
685
2,426
68
957,879
189
131,070
40,084
574,747
2,193
7,881
1,026
943
758,133
199,746
957,879
As a result of the merger, NLB’s off-balance sheet
Items of the N Banka income statement for the period
liabilities increased by EUR 200,933 thousand:
1 January - 31 August 2023 as they were reported for the
purposes of NLB Group financial statements:
Guarantees
Commitments to extend credit
Total
108,673
92,260
200,933
Net interest income
Net fee and commission income
Profit for the year
in EUR thousands
in EUR thousands
27,822
6,016
13,389
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
259
e) Acquisition of N Banka d .d ., Ljubljana
On the level of the European Central Bank and the
Single Resolution Board, a decision was made on 28
The assets and liabilities recognised as a result of the acquisition are as follows:
February 2022 to suspend the business operations of
Cash, cash balances at central banks and other demand deposits at banks
the banking group Sberbank Europe AG, which also
Financial assets held for trading
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 . In
the process of finding a new owner of Sberbank banka
d .d ., Ljubljana, a sale agreement was concluded with
NLB, which became an owner of 100% of the bank’s
shares as at 1 March 2022 . At the date of acquisition,
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
Investments in associates and joint ventures
Tangible assets
Property and equipment
- own property and equipment (note 5 .8 .b)
- right-of-use assets
Investment property
Intangible assets
Current income tax assets
Deferred income tax assets
Other assets
Total assets
the acquired bank had one 100% owned subsidiary,
Financial liabilities held for trading
company Privatinvest d .o .o ., whose assets consist only
Financial liabilities measured at amortised cost
- deposits from banks and central banks
- borrowings from banks and central banks
- due to customers
- other financial liabilities
Provisions
Current income tax liabilities
Other liabilities
Total liabilities
Net identifiable assets acquired
Consideration given
Gain from bargain purchase
of repossessed real estate . It also had an investment
into Bankart d .o .o ., Ljubljana, which is in individual
financial statements of the acquired bank accounted for
as financial asset measured at fair value through other
comprehensive income, while on the level of NLB Group
it is an associate .
In April 2022, Sberbank banka d .d ., Ljubljana was
renamed to N Banka d .d ., Ljubljana .
The purchase price for the bank was EUR 5,109 thousand
and was fully paid in cash . There are no contingent
consideration arrangements . At the acquisition date, cash
in acquired entities amounted to EUR 265,062 thousand,
therefore the net inflow of cash amounted to EUR 259,953
thousand (included in the statement of cash flows within
payments from investing activities) .
NLB owns 100% of N Banka, therefore no non-controlling
Current market conditions, when banks are generally
interests were recognised as a result of acquisition .
valued below their net book values, usually result in
The acquisition of N Banka resulted in a gain from
in the case of N Banka even higher than it would be as
a bargain purchase in the amount of EUR 172,810
a result of an orderly transaction, since the bank was
thousand, which is recognised in the income statement
acquired in the process of resolution . Gain from bargain
under the line item ‘Gain from bargain purchase .’
purchase is not taxable .
recognition of a gain from a bargain purchase, which is
265,062
4,788
332
69,387
12,819
2,489
1,148,615
3,465
11
10,905
6,387
4,518
464
1,424
46
4,481
2,169
1,526,457
4,698
24,937
190,008
1,072,411
30,155
21,896
2,249
2,184
1,348,538
177,919
5,109
172,810
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
As a result of the acquisition, NLB Group’s off-balance
The valuation techniques used for measuring the fair value of material assets and liabilities acquired were as follows:
sheet liabilities increased by EUR 277,772 thousand:
Guarantees
- financial
- non-financial
Commitments to extend credit
Letters of credit
Total
in EUR thousands
136,309
41,615
94,694
138,749
2,714
277,772
Since the bank was acquired within a very short
timeframe in the process of resolution, acquisition-
related costs were immaterial .
NLB obtained all the necessary information for
measuring fair values, therefore no amounts were
measured and recognised on a provisional basis .
Assets acquired
Performing loans
Non-performing loans
Debt securities
Real estate
Valuation technique
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 N Banka individual financial statements, by reducing future cash
flows accordingly . Also prepayment risk was estimated for consumer and mortgage loans .
The discount rates used for fair value measurement of loans were based on the publicly available interest
rates published by Bank of Slovenia, that represent market rates and are thus considered the most
appropriate . Discount rates differ based on product type, client segment, maturity and currency .
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 15% .
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 .
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 .
Liabilities acquired
Deposits
Valuation technique
Discounted cash flow approach: Aggregated future cash flows were discounted by applying market
interest rates for term deposits . As a discount rate, average market rates on the deposits, published by
Bank of Slovenia, were used .
The fair value of acquired loans and advances to
Immediately after acquisition, 12-month expected credit
customers is EUR 1,148,615 thousand, of which EUR
losses for Stage 1 financial assets in the amount of
1,127,261 thousand relates to performing portfolio and
EUR 21,354 thousand to non-performing portfolio .
EUR 8,900 thousand and attributable deferred taxes
in the amount of EUR 1,691 thousand were recognised .
The latter was recognised as purchased or originated
Additionally, EUR 39,657 thousand of revenue, EUR 18,294
credit-impaired financial assets (POCI) . The gross
thousand of gain after tax, and EUR 2,650 thousand of
contractual amount for performing loans and advances
other comprehensive loss were recognised in NLB Group
to customers is EUR 1,135,072 thousand and for this
financial statements since the acquisition date . Had the
exposure 12-month expected credit losses in the amount
acquisition occurred on 1 January 2022, management
of EUR 8,552 thousand were recognised through the
estimates that the consolidated revenue (excluding gain
income statement . The gross contractual amount for
non-performing loans and advances to customers
from bargain purchase) would have been approximately
EUR 960 million, and the consolidated profit for the year
is EUR 49,641 thousand, and it is expected that
(excluding gain from bargain purchase) approximately
approximately EUR 23 million of the contractual cash
EUR 265 million . The exact result is difficult to determine
flows will not be collected .
due to the changed circumstances during the year,
especially the impact of the war in Ukraine .
260
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
f) Acquisition of NLB Lease&Go leasing d .o .o . Beograd
In November 2022, NLB Lease&Go, leasing, d .o .o .,
no contingent consideration arrangements . At the
Ljubljana became an owner of 95 .20% of financial
acquisition date, cash in acquired entity amounted to EUR
company Zastava Istrabenz Lizing, d .o .o ., Beograd .
117 thousand, therefore the net outflow of cash amounted
to EUR 919 thousand (included in the statement of cash
In January 2023, Zastava Istrabenz Lizing, d .o .o ., Beograd
flows within payments from investing activities) .
was renamed to NLB Lease&Go leasing d .o .o . Beograd .
The assets and liabilities recognised as a result of the
The purchase price for the company was EUR 1,036
acquisition are as follows:
thousand and was fully paid in cash . There are
in EUR thousands
Cash, cash balances at central banks and other demand deposits at banks
Financial assets measured at amortised cost
- loans and advances to banks
- loans and advances to customers
- other financial assets
Tangible assets
Property and equipment
- own property and equipment (note 5 .8 .b)
Investment property
Intangible assets
Current income tax assets
Other assets
Total assets
Financial liabilities measured at amortised cost
- borrowings from other customers
- other financial liabilities
Provisions
Other liabilities
Total liabilities
Net identifiable assets acquired (100%)
Less: non-controlling interests
Net assets acquired (NLB Group share)
Consideration given
Gain from bargain purchase
117
171
913
5
137
137
302
20
5
2
1,672
490
7
7
8
512
1,160
56
1,104
1,036
68
NLB Group recognises non-controlling interests in NLB
The acquisition of NLB Lease&Go leasing d .o .o . Beograd
Lease&Go leasing d .o .o . Beograd at the non-controlling
resulted in a gain from a bargain purchase in the
interest’s proportionate share of the acquired entity’s net
amount of EUR 68 thousand, which is recognised in the
identifiable assets .
income statement under the line item ‘Gain from bargain
purchase .’ Gain from bargain purchase is not taxable .
261
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
4,282
289
4,571
in %
g) Analysis by type of investment in associates and joint ventures
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Carrying amount of the NLB Group‘s interest
Other financial organisations
Enterprises
Total
12,519
11,677
-
-
12,519
11,677
4,293
530
4,823
NLB Group’s associates
2023
Bankart d .o .o ., Ljubljana
ARG - Nepremičnine d .o .o .,
Horjul
2022
Bankart d .o .o ., Ljubljana
ARG - Nepremičnine d .o .o .,
Horjul
Nature of
Business
Card
processing
Country of
Incorporation
Slovenia
Real estate
Slovenia
NLB Group
NLB
Shareholding
Voting rights
Shareholding
Voting rights
46 .03
75 .00
46 .03
75 .00
46 .03
75 .00
46 .03
75 .00
in %
Nature of
Business
Card
processing
Country of
Incorporation
Slovenia
Real estate
Slovenia
NLB Group
NLB
Shareholding
Voting rights
Shareholding
Voting rights
46 .03
75 .00
46 .03
75 .00
45 .64
75 .00
45 .64
75 .00
By contractual agreement between the shareholders,
NLB does not control ARG-Nepremičnine, Horjul, but
does have a significant influence . Therefore, the entity is
accounted as an associate .
The carrying amount of interests in associates included
in the consolidated financial statements of NLB Group:
Carrying amount of the NLB Group‘s interest
NLB Group‘s share of:
- Profit for the year
- Other comprehensive income
- Total comprehensive income
NLB Group’s interest in an associate was in previous
years reduced to zero, consequently NLB Group did
not recognise a share of profit in the amount of EUR
347 thousand in 2023 (2022: EUR 87 thousand) . The
cumulative unrecognised share of losses of an associate
as at 31 December 2023 amounted to EUR 1,742 thousand
(31 December 2022: EUR 2,083 thousand) .
in EUR thousands
2023
12,519
1,072
45
1,117
2022
11,677
781
121
902
262
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group’s joint ventures
Prvi Faktor Group, Ljubljana
NLB Group’s interest in a joint venture was in previous
years reduced to zero, consequently NLB Group did
not recognise a share of profit in the amount of EUR
751 thousand in 2023 (2022: EUR 429 thousand) . The
cumulative unrecognised share of losses of a joint
venture as at 31 December 2023 amounted to EUR 13,645
thousand (31 December 2022: EUR 14,396 thousand) .
h) Movements of investments in associates
NLB Group
Balance as at 1 January
Acquisition of subsidiary (note 5 .12 .e)
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
Assets, received as collateral on NLB Group in the
amount of EUR 27,122 thousand (31 December 2022: EUR
50,913 thousand), and on NLB in the amount of EUR
3,129 thousand (31 December 2022: EUR 3,170 thousand)
consist of real estate (note 6 .1 .l) .
Nature of
Business
Finance
Country of
Incorporation
Slovenia
in %
2023
2022
Voting rights
Voting rights
50
50
in EUR thousands
2023
11,677
-
1,394
(322)
45
(275)
12,519
2022
11,525
11
827
(46)
121
(761)
11,677
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
27,637
12,313
5,825
1,599
1,780
51,586
12,200
4,961
1,509
2,287
3,129
6,915
2,943
531
389
3,170
6,929
2,324
417
321
49,154
72,543
13,907
13,161
263
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Balance as at
1 Jan 2023
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
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 banks
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
161
31,385
59,840
1,246
14,582
31,230
38
108
75,807
111,154
7,750
(499)
(3,134)
185
-
(13)
(17)
-
(5)
1
-
-
(5)
645
-
-
(6)
(2)
-
31,614
(1,229)
(17)
(28,704)
(1,988)
(36)
-
(2,910)
3,217
53
-
-
-
4.14.
49
(22,681)
5,634
(201)
34,051
(9,837)
82
(26)
29,543
(8,614)
3,374
(414)
(4,817)
185
4.14.
-
(419)
(13,134)
(117)
5,121
156
(26)
-
720
(364)
(18)
-
-
-
-
(221)
-
(42)
(18)
(8)
(17)
-
(23,445)
(19,399)
(764)
(456)
(1,026)
-
in EUR thousands
Disposal of
subsidiary
Balance as at
31 Dec 2023
Repayments
of written-off
receivables
5.6.b), c), d)
4.14.
3
3
(7)
-
-
-
(225)
(20)
24
224
(1)
4
4,070
22,624
17
2,393
14,968
863
-
-
-
-
-
-
(271)
-
-
-
213
39,668
51,087
624
25,051
19,778
40
86
83,780
109,263
10,141
1,024
5,985
1,231
-
-
-
-
-
-
-
-
8,703
15,237
261
1,377
2,012
-
264
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Balance as at
1 Jan 2022
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
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 banks
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
198
18,336
50,961
476
7,398
26,624
36
-
76,047
136,607
5,714
(157)
613
(608)
1
(6)
6
1
(4)
2
(1)
-
4
626
(3)
1
(2)
-
-
19,708
(4,026)
(263)
(12,893)
2,175
13
-
(6,815)
1,851
250
-
-
-
4.14.
(46)
(12,932)
18,487
911
16,206
2,943
1
108
28,969
(9,912)
1,556
24
(11,136)
(1,034)
-
(239)
(1)
(72)
(18)
(1)
(26)
-
(21,199)
(27,759)
(1,136)
(219)
(244)
-
4.14.
5
6,521
(5,585)
20
3,897
(493)
12
-
(751)
144
(22)
-
-
-
in EUR thousands
Balance as at
31 Dec 2022
Repayments
of written-off
receivables
5.6.b), c), d)
4.14.
3
(3)
(2)
173
(4)
(20)
3
-
(448)
9,597
1,391
(148)
7,635
1,827
161
31,385
59,840
1,246
14,582
31,230
38
108
75,807
111,154
7,750
(499)
(3,134)
185
-
-
-
-
-
-
-
-
8,213
24,770
346
1,537
3,546
12
Column Increases/(Decreases) also includes 12-month
Other movements relate mainly to income from
expected credit losses recognised at the acquisition of
repayments of non-performing exposures in NLB
N Banka in the amount of EUR 187 thousand for Loans
Komercijalna banka a .d . Beograd and N Banka, which
and advances to banks, in the amount of EUR 8,552
were at acquisition recognised at fair value, without a
thousand for Loans and advances to customers, and
corresponding allowance for the impairment and to
in the amount of EUR 95 thousand for Other financial
expenses due to initial recognition of non-performing
assets (notes 4 .14 . and 5 .12 .e) .
exposure at fair value in NLB .
265
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Balance as at
1 Jan 2023
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
in EUR thousands
266
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 banks
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
216
6,161
14,880
203
7,385
800
2
-
34,286
29,900
808
-
638
1
-
15,744
(1,199)
(193)
(14,921)
1,344
(6)
-
(823)
(145)
199
-
-
-
4.14.
(54)
(14,192)
(2,541)
(92)
15,949
(2,647)
7
(28)
15,358
11,822
785
1,672
4,661
-
-
(189)
-
(7)
(10)
(1)
(1)
-
(5,797)
(7,292)
(296)
(20)
(247)
-
4.14.
2
(603)
(3,622)
(34)
2,127
(444)
-
-
17
(29)
-
-
-
-
Merger of
subsidiary
Balance as at
31 Dec 2023
Repayments
of written-off
receivables
5.12.d)
5.6.b), c), d)
4.14.
-
1
25
(1)
24
-
-
4
819
1,677
(8)
88
626
1
-
1,151
5,939
222
935
3,501
-
110
1,803
2,375
26
15
-
-
164
8,073
13,482
98
11,489
2,553
2
86
45,663
38,308
1,514
1,755
5,678
2
-
-
-
-
-
-
-
-
2,967
6,793
77
-
-
-
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 2022
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
182
3,503
10,101
62
2,421
1,787
1
31,497
47,110
1,090
838
6
-
7,665
833
16
(6,808)
1,192
-
(857)
(2,025)
(16)
-
-
4.14.
34
(6,686)
5,358
95
8,313
(2,277)
2
9,321
3,922
225
4,801
(5)
-
(238)
(1)
(17)
(15)
(1)
(1)
(5,761)
(11,178)
(491)
-
-
4.14.
-
1,916
(1,440)
46
3,474
100
-
(279)
(94)
-
-
-
in EUR thousands
Balance as at
31 Dec 2022
Repayments
of written-off
receivables
5.6.b), c), d)
4.14.
-
1
29
1
-
(1)
-
365
(7,835)
-
(5,001)
-
216
6,161
14,880
203
7,385
800
2
34,286
29,900
808
638
1
-
-
-
-
-
-
-
2,536
10,313
210
-
-
Other movements relate mainly to expenses due to initial
recognition of non-performing exposure at fair value .
The contractual amount outstanding on financial
assets that were written off during the year ending 31
December 2023 and that are still subject to enforcement
activity for NLB Group amounted to EUR 43,080
thousand (31 December 2022: EUR 29,654 thousand), and
for NLB amounted to EUR 15,715 thousand (31 December
2022: EUR 9,949 thousand), of which EUR 2,962 thousand
in NLB Group (31 December 2022: EUR 1,730 thousand)
and EUR 1,904 thousand in NLB (31 December 2022: EUR
1,140 thousand) represent interest receivables that have
not been recognised in the income statement prior to the
write-off .
267
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Movements in allowance for the impairment of debt securities
in EUR thousands
268
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
Balance as at
1 Jan 2023
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
Balance as at
31 Dec 2023
3,519
9,029
265
70
6,777
2
4
(1)
-
-
(52)
-
52
-
-
4.14.
1,478
(2,470)
(253)
(13)
-
-
-
-
(4,483)
(1,537)
4.14.
9
(87)
515
(1)
-
5.4.a), 5.6.a)
4,946
6,475
576
56
798
(10)
(1)
(2)
-
41
Release of lifetime ECL credit-impaired debt securities
measured at fair value through other comprehensive
income relates to impairment of Russian sovereign debt,
which was sold in February 2023 .
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
Balance as at
1 Jan 2022
Effects of
translation
of foreign
operations to
presentation
currency
3,253
11,148
52
70
798
(2)
5
1
-
-
Transfers
Increases/
(Decreases)
Changes in models/
risk parameters
Foreign exchange
differences and
other movements
4.14.
158
(2,049)
271
739
-
(25)
-
(803)
828
5,235
4.14.
104
(67)
(59)
12
-
in EUR thousands
Balance as at
31 Dec 2022
5.4.a), 5.6.a)
3,519
9,029
265
70
6
17
-
52
(84)
6,777
Column Increases/(Decreases) includes also 12-month
Impairment of debt securities measured at fair value
expected credit losses recognised at the acquisition of
N Banka in the amount of EUR 60 thousand for Debt
through other comprehensive income relates mainly to
impairment of Russian sovereign debt (note 5 .4 .) .
securities measured at amortised cost, and in the
amount of EUR 5 thousand for Debt securities measured
at fair value through other comprehensive income (notes
4 .14 . and 5 .12 .e) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 not credit-impaired
Debt securities measured
at amortised cost
Lifetime ECL credit-impaired
Debt securities measured at fair value
through other comprehensive income
Balance as at
1 Jan 2023
Transfers
Increases/
(Decreases)
Write-offs
Changes in
models/risk
parameters
Merger of
subsidiary
Foreign exchange
differences and
other movements
1,990
2,022
-
6,777
(52)
-
52
-
4.14.
585
(554)
123
-
-
-
(4,483)
(1,537)
4.14.
(36)
(21)
-
-
5.12.d)
140
204
-
-
in EUR thousands
Balance as at
31 Dec 2023
5.4.a), 5.6.a)
(3)
(1)
(2)
41
2,624
1,650
173
798
Release of lifetime ECL credit-impaired debt securities
measured at fair value through other comprehensive
income relates to impairment of Russian sovereign debt,
which was sold in February 2023 .
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 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 2022
Transfers
Increases/
(Decreases)
1,826
2,203
-
798
-
(25)
(803)
828
4.14.
119
(192)
751
5,235
Impairment of debt securities measured at fair value
through other comprehensive income relates mainly to
impairment of Russian sovereign debt (note 5 .4 .) .
Changes in
models/risk
parameters
4.14.
Foreign exchange
differences and o
ther movements
in EUR thousands
Balance as at
31 Dec 2022
5.4.a), 5.6.a)
42
32
-
-
3
4
52
1,990
2,022
-
(84)
6,777
269
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
in EUR thousands
270
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5 .12 .e), f)
Increases/(Decreases)
Exchange differences on monetary assets
Transfers
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December
NLB Group
2023
2022
NLB
2023
Lifetime
ECL credit-
impaired
12-month
expected
credit losses
Lifetime
ECL credit-
impaired
12-month
expected
credit losses
223,126
(105)
-
322,034
2,771
-
-
108
140,881
-
-
5
-
-
-
74
2,660
75,516
4,103
(108)
-
547,826
113
223,126
12-month
expected
credit losses
350,841
-
-
(202,175)
482
-
-
149,148
Lifetime
ECL credit-
impaired
-
-
-
-
-
-
113
113
-
-
-
-
-
108
-
108
2022
12-month
expected
credit losses
199,469
-
-
150,644
728
-
-
350,841
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of gross carrying amount of loans and advances to individuals
in EUR thousands
271
Individuals
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4 .12 .)
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December 2023
Individuals
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5 .12 .e)
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4 .12 .)
Balance as at 31 December 2022
NLB Group
NLB
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
6,422,877
190,121
130,446
6,743,444
2,922,907
101,744
59,680
3,084,331
(1,606)
(24)
(12)
(1,642)
-
(103,434)
551,995
(221)
783
(15,669)
-
70,870
(12,564)
(18)
124
(85)
-
32,564
(7,469)
(23,445)
186
(105)
-
-
531,962
(23,684)
1,093
(15,859)
(48,707)
204,972
(189)
1,914
-
-
298,616
6,854,725
248,424
132,165
7,235,314
3,379,513
-
34,682
5,439
(10)
127
-
10,279
152,261
-
14,025
(346)
(5,797)
189
-
-
-
210,065
(5,996)
2,230
-
9,303
318,198
77,054
3,608,828
in EUR thousands
NLB Group
NLB
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
5,372,551
120,235
128,285
5,621,071
2,570,925
66,035
57,396
2,694,356
672
411,068
(106,876)
746,532
(239)
(746)
(85)
(12)
-
78,073
(8,179)
(18)
34
(12)
8
668
6,583
28,803
(12,059)
(21,199)
12
13
417,651
-
726,294
(21,456)
(700)
(84)
-
-
(46,023)
396,545
(238)
1,698
-
-
-
35,084
596
(15)
44
-
-
-
10,939
(2,932)
(5,761)
38
-
-
-
-
394,209
(6,014)
1,780
-
6,422,877
190,121
130,446
6,743,444
2,922,907
101,744
59,680
3,084,331
In year 2023, the loss allowance for loans and advances
In year 2022, the loss allowance for loans and advances
Acquisition of subsidiaries in 2022 (note 5 .12 .f)
to individuals increased by EUR 26,725 thousand at the
to individuals increased by EUR 19,993 thousand at
contributed EUR 417,651 thousand to the gross carrying
NLB Group level, while at the NLB level it increased by
the NLB Group level, while at the NLB level it increased
amount of loans and advances to individuals on the NLB
EUR 17,393 thousand . The reasons for increases are
by EUR 10,411 thousand . The main reasons for these
Group level .
also changed risk parameters, which increased the loss
increases are changed risk parameters, which increased
allowance by EUR 5,422 thousand at the NLB Group level,
loss allowance by EUR 9,667 thousand at the NLB Group
and by EUR 1,541 thousand at NLB level . At the NLB level,
level, and by EUR 5,111 thousand at NLB level and an
it also increased due to the merger of N Banka by EUR
increase of the gross carrying amount . At the NLB Group
3,889 thousand . At the NLB Group level, the gross carrying
level, the gross carrying amount increased by EUR
amount increased by EUR 491,870 thousand, mainly due
1,122,373 thousand, mainly due to increased exposure
to increased exposure, while at the NLB level it increased
and the acquisition of subsidiaries, while at the NLB level
by EUR 524,497 thousand due to increased exposure and
it increased by EUR 389,975 thousand .
the merger of N Banka (EUR 318,198 thousand) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of gross carrying amount of loans and advances to other customers
in EUR thousands
272
Other customers
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4 .12 .)
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December 2023
Other customers
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5 .12 .e), f)
Transfers
Increases/(Decreases)
Write-offs
Exchange differences on monetary assets
Modification losses (note 4 .12 .)
Balance as at 31 December 2022
NLB Group
NLB
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
6,028,285
423,671
201,584
6,653,540
2,960,455
51,906
51,133
3,063,494
(1,887)
(128)
960
(1,055)
-
(94,306)
277,557
-
(1,622)
(374)
-
80,889
(53,135)
(8)
(97)
(38)
-
13,417
(27,449)
(19,399)
(6)
-
-
-
196,973
(19,407)
(1,725)
(412)
(41,456)
115,612
-
(91)
-
-
400,313
6,207,653
451,154
169,107
6,827,914
3,434,833
-
36,860
26,546
(1)
-
-
-
4,596
(2,303)
(7,292)
-
-
-
-
139,855
(7,293)
(91)
-
47,665
162,976
15,080
61,214
463,058
3,659,023
in EUR thousands
NLB Group
NLB
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
4,630,485
412,184
239,354
5,282,023
2,351,275
123,304
72,637
2,547,216
1,189
716,577
(154,654)
87
-
123,967
835,299
(112,477)
(1)
(639)
29
(1)
(106)
17
893
2,169
15,300
30,687
(56,944)
(27,759)
41
12
731,877
-
665,878
(27,761)
(704)
58
-
-
34,662
572,648
(1)
1,871
-
-
-
(37,337)
(34,158)
(1)
98
-
-
-
2,675
(13,056)
(11,178)
55
-
-
-
-
525,434
(11,180)
2,024
-
6,028,285
423,671
201,584
6,653,540
2,960,455
51,906
51,133
3,063,494
In 2023, the gross carrying amount of loans and advances
In 2022, the gross carrying amount of loans and
to other customers increased by EUR 174,374 thousand at
advances to other customers increased by EUR 1,371,517
the NLB Group level mostly in Stage 1 due to the increased
thousand at the NLB Group level and EUR 516,278
exposure . Irrespective of that, the loss allowance
thousand at the NLB level, mostly in Stage 1 due to the
decreased by EUR 22,096 thousand . The main reason for
acquisition of subsidiaries and the increased exposure .
the decrease were write-offs in the amount of EUR 19,407
Regardless of that, the loss allowance decreased by EUR
thousand . Also, in 2023, the gross carrying amount of
11,968 thousand at the NLB Group level and EUR 12,631
loans and advances to other customers increased by EUR
thousand at the NLB level, mainly in Stage 3 . The main
595,529 thousand at the NLB level, mostly due to merger
reason for the decrease were write-offs in the amount
of N Bank (EUR 463,058 thousand) . The loss allowance
of EUR 27,761 thousand at the NLB Group level and EUR
increased by EUR 8,925 thousand, the main reason was
11,180 thousand at the NLB level .
the merger of N Banka (EUR 11,815 thousand) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of gross carrying amount of other
level by EUR 601 thousand . The main reason for this
did not contribute significantly to the increase of the
financial assets
moderate increase at the NLB Group level and on the
loss allowance . Therefore, the loss allowance for other
273
The gross carrying amount of other financial assets
NLB level are write-offs (EUR 823 thousand at the NLB
financial assets in year 2022 on the NLB Group level
in 2023 decreased (by EUR 10,090 thousand at the
Group level and EUR 304 thousand at the NLB level) .
increased only by EUR 2,808 thousand, while at the
NLB Group level and EUR 12,202 thousand at the NLB
NLB level it decreased by EUR 140 thousand . The main
level), with the majority of these decreases relating
The gross carrying amount of other financial assets in
reason for this moderate increase at the NLB Group level
to receivables for the sale of securities . As these
2022 increased (by EUR 58,402 thousand at the NLB
and decrease on the NLB level are write-offs (EUR 1,234
receivables are by their nature short-term, they did
Group level and EUR 21,855 thousand at the NLB level),
thousand at the NLB Group level and EUR 509 thousand
not contribute significantly to the decrease of the loss
with the majority of this increase relating to credit card
at the NLB level) .
allowance . Therefore, the loss allowance for other
receivables and receivables for the sale of securities . As
financial assets in year 2023 on the NLB Group level
these receivables are by their nature short-term, they
increased only by EUR 1,771 thousand, while at the NLB
Movement of gross carrying amount of debt securities measured at amortised cost
in EUR thousands
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5 .12 .e)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Other
Merger of subsidiary (note 5 .12 .d)
Transfers
Balance as at 31 December
NLB Group
2023
2022
NLB
2023
Lifetime ECL
not credit -
impaired
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
12-month
expected
credit losses
Lifetime ECL
not credit -
impaired
12-month
expected
credit losses
1,914,170
(344)
-
1,023,233
(453,836)
36,750
(2,234)
2,684
-
(4,993)
7,229
1,713,711
7,220
1,599,438
(8)
-
-
(24)
136
(5)
-
-
4,993
(187)
12,819
411,724
(226,884)
16,791
1,030
(14,834)
-
-
9
-
-
-
-
-
-
-
-
-
531,650
(200,534)
24,101
(1,664)
2,684
13,184
(4,993)
2,515,430
12,321
1,914,170
7,229
1,963,866
2022
12-month
expected
credit losses
1,438,250
-
-
310,394
(146,939)
11,431
1,136
(14,834)
-
-
1,599,438
-
-
-
-
(24)
136
(5)
-
-
4,993
5,100
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of gross carrying amount of debt securities measured at fair value through other comprehensive income
in EUR thousands
274
Balance as at 1 January 2023
Effects of translation of foreign operations
to presentation currency
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Merger of subsidiary
Balance as at 31 December 2023
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Acquisition of subsidiaries (note 5 .12 .e)
Additions
Derecognition
Net interest income
Exchange differences on monetary assets
Transfers
Balance as at 31 December 2022
12-month
expected
credit losses
2,999,030
(262)
1,446,746
(2,233,255)
38,624
1,914
-
12-month
expected
credit losses
3,396,101
1,370
53,223
1,699,839
-
-
-
-
-
-
NLB Group
NLB
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
165
8,337
3,007,532
1,367,496
-
-
-
-
(262)
-
1,446,746
59,345
(21)
(7,526)
(2,240,802)
(463,403)
-
(13)
-
798
38,624
1,901
-
9,163
(753)
37,085
2,253,739
1,008,933
-
-
-
-
-
-
-
-
8,337
1,375,833
-
-
-
59,345
(7,526)
(470,929)
-
(13)
-
798
9,163
(766)
37,085
1,009,731
2,252,797
144
NLB Group
NLB
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
184
798
3,397,083
1,526,972
-
-
-
-
(121)
77
7,583
8,337
1,370
53,223
1,699,839
(2,185,558)
38,471
3,104
-
-
-
290,245
(443,781)
10,929
3,434
(20,303)
3,007,532
1,367,496
-
-
-
-
(13,731)
38
973
12,720
-
798
1,527,770
-
-
-
-
(121)
77
7,583
8,337
-
-
290,245
(457,512)
10,846
4,484
-
1,375,833
(2,171,808)
(13,750)
38,554
2,054
(20,303)
2,999,030
38
973
12,720
165
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Debt securities issued
Other financial liabilities
Total
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
95,283
140,419
106,414
198,609
147,002
82,797
212,656
57,292
20,732,722
20,027,726
11,881,563
10,984,411
99,718
1,338,235
357,116
82,482
815,990
294,463
-
1,338,235
198,020
216
815,990
164,567
22,763,493
21,525,684
13,647,617
12,235,132
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
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
75,756
86,892
127,726
193,523
17,454,515
17,386,022
10,674,541
10,268,908
351,313
285,540
421,770
306,836
64,406
225,295
151,251
254,948
4,639,997
4,374,028
2,543,280
2,241,793
12,177,665
12,283,388
7,841,560
7,620,916
19,527
19,522
19,276
3,278,207
2,641,704
1,207,022
61,880
215,457
718,230
91,662
237,758
646,944
2,282,640
1,665,340
35,813
90,590
378,340
702,279
19,133
715,503
42,049
95,637
282,560
295,257
20,828,005
20,134,140
12,028,565
11,197,067
b) Borrowings from banks and central banks and other customers
Loans
- banks and central banks
- other customers
- governments
- financial organisations
- companies
Total
As at 31 December 2023, NLB Group and NLB had EUR
95,249 thousand in undrawn borrowings (31 December
2022: EUR 96,878 thousand) .
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
140,419
198,609
82,797
99,718
20,357
79,361
-
82,482
21,535
60,731
216
-
-
-
-
240,137
281,091
82,797
57,292
216
-
-
216
57,508
275
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Targeted longer-term refinancing operations (TLTRO)
In June 2021, NLB participated in the ECB TLTRO III .8
threshold, and in the case of NLB, also expected early
In December 2021, N Banka participated in ECB TLTRO
operation and had drawn a credit tranche of EUR
repayment was taken into account . As the lending
III .10 operation and had drawn a credit tranche of EUR
750,000 thousand for three years . The loan was repaid
performance threshold was achieved in both banks,
93,000 thousand for three years . In December 2022,
early in June 2022 .
N Banka repaid a part of the loan early in the amount
there were no changes in estimates of payments due to
the revised assessment of meeting the eligibility criteria .
of EUR 30,000 thousand . In June 2023, N Banka also
NLB Group accounted for these loans according to the
Changes in the interest rate applied by the ECB were
repaid the remaining part of the loan early in the
requirements of IFRS 9 and recognises interest income
implemented prospectively . NLB Group does not consider
amount of EUR 63,000 thousand .
by applying the expected effective interest rate (note 4 .1 .) .
these loans as loans at below-market rate of interest, as
The expected effective interest rate was estimated based
these targeted longer-term refinancing operations were
on the expectation of achieving a lending performance
available to all banks under the same conditions .
c) Debt securities issued
NLB Group and NLB
Subordinated bonds
Total Subordinated bonds
Senior Preferred notes
Total Senior Preferred notes
Total Debt securities issued
Currency
Due date
Interest rate
EUR
EUR
EUR
EUR
EUR
EUR
06 .05 .2029
19 .11 .2029
05 .02 .2030
28 .11 .2032
4 .20% to 06 .05 .2024, thereafter 5Y MS + 4 .159% p .a .
3 .65% to 19 .11 .2024, thereafter 5Y MS + 3 .833% p .a .
3 .40% to 05 .02 .2025, thereafter 5Y MS + 3 .658% p .a .
10 .75% to 28 .11 .2027, thereafter 5Y MS + 8 .298% p .a .
19 .07 .2025
27 .06 .2027
6% to 19 .07 .2024, thereafter 1Y MS + 4 .835% p .a .
7 .125% to 27 .07 .2026, thereafter 1Y MS + 3 .606% p .a .
31 Dec 2023
31 Dec 2022
Carrying
amount
Nominal
value
Carrying
amount
Nominal
value
in EUR thousands
45,980
119,781
123,176
220,458
509,395
45,000
120,000
120,000
225,000
510,000
45,941
119,677
123,106
220,054
508,778
45,000
120,000
120,000
225,000
510,000
307,507
521,333
828,840
300,000
500,000
800,000
307,212
300,000
-
-
307,212
300,000
1,338,235
1,310,000
815,990
810,000
All issued subordinated bonds represent non-
convertible Tier 2 instruments (note 5 .23 .) . In the event
of bankruptcy or liquidation of the issuer, obligations
arising from Tier 2 instruments shall be repaid:
a) after repayment of all unsubordinated obligations of
the Issuer, as well as at all subordinated obligations
(if any) which are expressed to rank in priority to Tier 2
instruments;
b) with the same priority (pari passu) as, and
proportionally with the obligations arising from other
instruments which qualify as Tier 2 instruments or
have the same priority of repayment as the Tier 2
instruments;
c) in priority to the obligations arising from shares
or other instruments which qualify as Common
Equity Tier 1 capital instruments or Additional Tier 1
instruments or have the same priority of repayment as
these instruments .
276
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of debt securities issued
NLB Group and NLB
Subordinated bonds
Senior Preferred notes
in EUR thousands
Balance as at 1 January
Cash flow items:
- new issued
- repayments of interest
Non-Cash flow items:
- accrued interest
- other
2023
508,778
(34,538)
-
(34,538)
35,155
35,155
-
2022
288,519
207,523
217,873
(10,350)
12,736
12,736
-
2023
307,212
479,708
497,708
(18,000)
41,920
36,579
5,341
2022
-
299,029
299,029
-
8,183
8,183
-
Balance as at 31 December
509,395
508,778
828,840
307,212
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
93,425
113,398
22,872
28,944
35,628
1,242
288
61,319
357,116
70,232
72,148
19,608
23,840
33,574
751
224
17,957
90,495
16,614
5,793
17,065
1,133
268
16,281
54,920
13,455
3,349
15,898
633
205
74,086
294,463
48,695
198,020
59,826
164,567
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
Other financial liabilities in the amount of EUR 24,025
thousand (31 December 2022: EUR 24,788 thousand)
relate to a liability recognised in accordance with the
‘Act for Value Protection of Republic of Slovenia’s Capital
Investment in Nova Ljubljanska banka d .d ., Ljubljana’
(note 5 .16 .a) . The remaining balance also includes
liabilities to insurance companies, liabilities for received
EIB financial initiatives, that can be used for specified
purposes, received warranties, and obligations for the
purchase of securities .
277
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .16 . Provisions
a) Analysis by type of provisions
Provisions for guarantees and commitments (note 5 .24 .a)
Stage 1
Stage 2
Stage 3
Employee benefit provisions
Restructuring provisions
Provisions for legal risks
Other provisions
Total
Provisions for guarantees and commitments represent
expected credit losses in accordance with IFRS 9,
employee benefits are recognised in accordance
with IAS 19, while all other provisions are recognised
according to IAS 37 .
Legal risks
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
32,548
18,429
1,655
12,464
17,892
12,592
44,833
5,440
37,609
18,826
1,953
16,830
18,026
21,036
43,209
2,772
17,941
7,653
319
9,969
11,795
7,198
6,219
5,303
20,299
8,156
378
11,765
11,876
7,288
3,584
2,169
113,305
122,652
48,456
45,216
Provisions for legal risks are formed based on
the old foreign currency savings, based on numerous
Zagreb, ruled in six claims (as explained below in detail)
expectations regarding the probable outcome of legal
process and content-related reasons, NLB has all along
in favour of the plaintiff . In four of those cases, NLB
disputes . As at 31 December 2023, NLB Group was
objected to these claims . Two key reasons NLB is not
filed a constitutional suit after an extraordinary legal
involved in 41 (31 December 2022: 41) legal disputes with
liable for the old foreign currency savings are that it was
measure of NLB with the Supreme Court of the Republic
material claims against Group members in the total
only founded on the basis of the Constitutional Act on 27
of Croatia was not successful, and in two, NLB filed an
amount of EUR 463,122 thousand, excluding accrued
July 1994 (at the time the savings were deposited with LB
extraordinary legal measure with the Supreme Court of
interest (31 December 2022: EUR 462,564 thousand) . As at
Branch Zagreb, NLB did not yet exist), and NLB did not
the Republic of Croatia .
31 December 2023, NLB was involved in 21 (31 December
assume any such obligations . Moreover, this is a former
2022: 17) legal disputes with material monetary claims
Yugoslavia succession matter, as the governments of the
Contrary to the decisions of the court described above
against NLB . The total amount of these claims, excluding
Republic of Slovenia and the Republic of Croatia agreed
in another case, a claim filed by the PBZ was refused
accrued interest, was EUR 236,727 thousand (31
in a Memorandum of Understanding signed in 2013
and the judgment became final in favour of NLB . The
December 2022: EUR 219,847 thousand) .
whose intent was to find a solution to the transferred
extraordinary legal measure with the Supreme Court
In connection with legal risks, the largest amount of
material monetary claims relates to civil claims filed
(LB) on the basis of the Agreement on Succession
Issues . The Memorandum also said that the Republic
dismissed by the Supreme Court on 16 June 2015 .
by Privredna banka Zagreb (the PBZ) and Zagrebačka
of Croatia would ensure the stay of all the proceedings
In the other cases, with respect to which court
banka (the ZaBa) against NLB, referring to the old
commenced by the PBZ and the ZaBa in relation to the
procedures described above are pending, final court
savings of LB Branch Zagreb savers, which were
transferred foreign currency savings until the issue was
decisions have not yet been issued .
foreign currency savings of Ljubljanska banka in Croatia
of the Republic of Croatia, filed by the plaintiff, was
transferred to these two banks in a principal amount
finally resolved .
of approximately EUR 174 .4 million (as per 31 December
2023) . Due to the fact the proceedings had been pending
Despite the agreement in the Memorandum of
for such a long time, the penalty interest already
Understanding to stay all of the proceedings
exceeds the principal amount . As NLB is not liable for
commenced, the Court of Appeal, the County Court of
278
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The table below summarises the amounts according to final 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
2,094 .53 EUR
April 2018
PBZ
222,426 .39 EUR
33,616 .48 EUR
September 2017
ZaBa
492,430 .53 EUR
99,354 .14 EUR
November 2017
PBZ
220,115 .98 EUR
91,348 .88 EUR
December 2018
PBZ
3,855,173 .35 SEK
90,241 .70 EUR
March 2019
PBZ
9,185,141 .76 USD 424,548 .41 EUR
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 .
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, which rejected NLB‘s revision on 22 November 2023 (judgment received on 5 January 2024) . NLB intends to
challenge the judgment in question with a constitutional lawsuit before the Constitutional Court of the Republic
of Croatia .
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 3 October 2023
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
Croatian courts with regard to the transferred foreign
compensation of the sums recovered from NLB by
Management Board of NLB with instructions how to act
currency deposits, that is the principle amount, accrued
enforcement . In the aforementioned case from May
in the event of existing or potential new final decisions
interest, expenses of court, attorney’s expenses and
2015, the Succession Fund of the Republic of Slovenia
by Croatian courts against LB and NLB regarding the
other expenses of the plaintiff, and expenses related
has already compensated the sums recovered from NLB
transferred foreign currency deposits, especially not
to enforcement with the accrued interest, and shall
by enforcement .
to voluntarily settle the adjudicated amounts, and also
not compensate NLB for its own costs or for the
gave some additional instructions on the usage of
difference between the book value of its assets sold
Provisions for legal risks for existing claims filed by PBZ
legal remedies and regarding the management of the
in enforcement proceedings and the price obtained
and ZaBa are not formed, since NLB believes that based
property from that perspective .
for such assets in enforcement proceedings . There
on the factual and legal evaluation there are greater
shall be no compensation for any voluntarily made
prospects for the court proceedings to end in favour of
On 19 July 2018, the National Assembly of the Republic
payments by NLB . In accordance with the ZVKNNLB
NLB than the opposite .
of Slovenia passed the ‘Act for Value Protection of
and pursuant to the agreement between NLB and
Republic of Slovenia’s Capital Investment in Nova
the Fund, as envisaged by the ZVKNNLB (which was
Regardless of the negative outcomes for claims for
Ljubljanska banka d .d ., Ljubljana’ (Zakon za zaščito
vrednosti kapitalske naložbe Republike Slovenije v
concluded on 14 August 2018), NLB has to contest the
claims made against it in court proceedings in relation
which the final ruling was issued, in the financial
statements NLB Group did not recognise the negative
Novi Ljubljanski banki d .d ., Ljubljana, hereinafter: ‘the
to transferred foreign currency deposits, and use
impact on profit and loss due to protection provided
ZVKNNLB’) which entered into force on 14 August 2018 .
against court decisions that are disadvantageous for
by the ZVKNNLB . For final judgements, NLB Group
In accordance with the ZVKNNLB, the Succession Fund
NLB, all reasonable legal remedies and to continue to
recognised the liabilities and related assets, which are
of the Republic of Slovenia (Sklad Republike Slovenije
actively challenge the judicial decisions of the courts of
included within other financial assets (note 5 .6 .d) and
za nasledstvo, javni sklad, hereinafter: ‘the Fund’),
the Republic of Croatia in relation to transferred foreign
other financial liabilities (note 5 .15 .d) .
shall compensate NLB for the sums recovered from
currency deposits on the basis of which enforcement
NLB by enforcement of final judgements delivered by
took place, leading, on the basis of ZVKNNLB, to the
279
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
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 2023
Effects of
translation
of foreign
operations to
presentation
currency
18,826
1,953
16,830
4,095
(3)
-
-
1
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
583
(263)
(320)
4.13.
2,609
(873)
(4,039)
-
(1,015)
4.13.
(3,587)
837
(2)
-
in EUR thousands
Balance as at
31 Dec 2023
Foreign
exchange
differences
and other
movements
5.16.a)
18,429
1,655
12,464
3,095
1
1
(5)
14
Balance as at
1 Jan 2022
Effects of
translation
of foreign
operations to
presentation
currency
12,912
1,640
18,889
4,344
2
(1)
(1)
-
Acquisition of
subsidiaries
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
in EUR thousands
Balance as at
31 Dec 2022
5.12.e)
921
-
180
180
4.13.
4.13.
1,468
2,765
740
(55)
291
(685)
(1,462)
(11)
(444)
76
(88)
-
5.16.a)
18,826
1,953
16,830
4,095
18
2
(3)
26
280
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
281
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 2023
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
Merger of
subsidiary
Balance as at
31 Dec 2023
8,156
378
11,765
2,876
158
147
(305)
-
4.13.
(146)
(616)
(1,589)
(3)
4.13.
(1,142)
387
32
-
5.12.d)
627
23
66
62
5.16.a)
7,653
319
9,969
2,935
Balance as at
1 Jan 2022
Transfer
Increases/
(Decreases)
Changes in
models/risk
parameters
Foreign
exchange
differences
and other
movements
in EUR thousands
Balance as at
31 Dec 2022
3,909
141
16,510
4,041
570
60
(630)
(11)
4.13.
(229)
192
(4,146)
(1,179)
4.13.
3,910
(15)
6
-
(4)
-
25
25
5.16.a)
8,156
378
11,765
2,876
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movement of contractual amounts of guarantees and commitments in off-balance sheet
Balance as at 1 January 2023
Effects of translation of foreign
operations to presentation currency
Increases/(Decreases)
Foreign exchange differences
Transfers
Merger of subsidiary (note 5 .12 .d)
12-month
expected credit
losses
3,843,293
(837)
224,499
231
(34,627)
-
83,270
(28)
(9,271)
-
32,645
-
NLB Group
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
in EUR thousands
26,897
3,953,460
2,397,742
35,243
15,019
2,448,004
(2)
(7,960)
-
1,982
-
(867)
207,268
231
-
-
-
216,455
152
(28,955)
198,583
-
1,071
-
28,362
1,943
66,619
-
-
(2,041)
215,485
-
593
407
13,978
152
-
200,933
2,864,574
Balance as at 31 December 2023
4,032,559
106,616
20,917
4,160,092
2,783,977
NLB Group
NLB
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
Balance as at 1 January 2022
3,027,971
97,536
38,998
3,164,505
1,913,572
49,102
26,903
1,989,577
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiary (note 5 .12 .f)
Increases/(Decreases)
Foreign exchange differences
Transfers
541
277,325
543,028
703
(6,275)
24
-
(14,927)
16
621
Balance as at 31 December 2022
3,843,293
83,270
4
447
(18,212)
6
5,654
26,897
569
277,772
509,889
725
-
-
-
477,730
631
5,809
3,953,460
2,397,742
-
-
(8,465)
16
(5,410)
35,243
-
-
(11,491)
6
(399)
15,019
-
-
457,774
653
-
2,448,004
282
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 .e), f)
Merger of subsidiary (note 5 .12 .d)
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 subsidiary (note 5 .12 .e)
Merger of subsidiary (note 5 .12 .d)
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
2023
16,021
(3)
-
-
227
(1,361)
587
(447)
444
15,468
NLB Group
2023
2,005
(1)
-
-
636
(104)
81
(193)
2,424
2022
19,227
2
1,393
-
1,046
(1,128)
335
(823)
(4,031)
16,021
2022
2,220
-
167
-
275
(558)
39
(138)
2,005
in EUR thousands
NLB
2023
10,672
-
-
531
587
(1,039)
297
(91)
(588)
10,369
2022
12,781
-
-
-
635
(673)
130
(153)
(2,048)
10,672
in EUR thousands
NLB
2023
1,204
-
-
79
173
-
33
(63)
1,426
2022
1,425
-
-
-
90
(259)
14
(66)
1,204
Other employee benefits include NLB Group’s obligations for jubilee long-service benefits .
d) Movements in restructuring provisions
Balance as at 1 January
Effects of translation of foreign
operations to presentation currency
Additional provisions (note 4 .13 .)
Provisions released (note 4 .13 .)
Utilised during year
Balance as at 31 December
NLB Group
NLB
in EUR thousands
2023
21,036
(1)
4,006
(352)
(12,097)
12,592
2022
19,217
10
10,335
(10)
(8,516)
21,036
2023
7,288
-
3,800
-
(3,890)
7,198
2022
11,131
-
-
-
(3,843)
7,288
Additional restructuring provisions recognised during
Additional restructuring provisions recognised during
the year 2023 relate mainly to NLB for the purpose of
the year 2022 relate mainly to N Banka and NLB
continuing the reorganisation, optimisation of work
Komercijalna banka a .d . Beograd and are based on
processes/business in individual segments and HR
reorganisation plans in both banks .
restructuring (restructuring of workforce in accordance
with business demands) and the related reduction in the
number of employees .
283
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
e) Movements in provisions for legal risks
Balance as at 1 January
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiary (note 5 .12 .e)
Disposal of subsidiaries (note 5 .12 .b)
Merger of subsidiary (note 5 .12 .d)
Additional provisions (note 4 .13 .)
Provisions released (note 4 .13 .)
Utilised during year
Balance as at 31 December
f) Movements in other provisions
Balance as at 1 January
Effects of translation of foreign
operations to presentation currency
Acquisition of subsidiary (note 5 .12 .e)
Merger of subsidiary (note 5 .12 .d)
Additional provisions (note 4 .13 .)
Provisions released (note 4 .13 .)
Utilised during year
Other
Balance as at 31 December
NLB Group
2023
43,209
8
-
(30)
-
16,354
(9,074)
(5,634)
44,833
NLB Group
2023
2,772
1
-
-
15,019
(28)
(12,324)
-
5,440
2022
45,288
54
1,790
-
-
7,595
(5,950)
(5,568)
43,209
2022
11
-
17,452
-
2,372
(8,410)
(106)
(8,547)
2,772
in EUR thousands
NLB
2023
3,584
-
-
-
5,382
899
(3,577)
(69)
6,219
2022
3,466
-
-
-
-
125
-
(7)
3,584
in EUR thousands
NLB
2023
2,169
-
-
1,173
13,300
-
(11,339)
-
5,303
2022
-
-
-
-
2,200
-
(31)
-
2,169
Other provisions in year 2023 in the NLB Group and NLB
March 2022, some unfavourable events, which were
relate mainly to liability in relation to reimbursement of
taken into account already at assessing initial fair
fees in case of early loan repayment .
values realised, therefore EUR 8,547 thousand of
At the acquisition of N Banka on 1 March 2022, other
receivables, mainly for unsettled derivative transactions .
provisions increased by EUR 17,452 thousand, which
Additionally, the amount of other provisions significantly
represents the assessed fair value of contingent
decreased in December 2022 (for EUR 8,400 thousand),
liabilities of N Banka as at the acquisition date . During
when possible obligation ceased to exist .
provisions were used to decrease the amount of related
284
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .17 . Deferred income tax
a) Analysis by type of deferred income taxes
NLB Group
NLB
31 Dec 2023
Deferred income
tax assets
Deferred income
tax liabilities
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
Fair value adjustments of financial
assets measured at amortised cost
Tax losses
Undistributed profit of subsidiaries
Other
Total
59,640
9,704
9,047
4,141
1,940
54,069
-
248
7,218
3,589
-
1,304
6,651
-
9,626
522
138,789
28,910
8,055
801
(928)
(452)
(1,398)
54,069
(9,626)
461
50,982
The table above does not include the effects of the merger of N Banka.
Included
in other
comprehensive
income
Deferred income
tax assets
Deferred income
tax liabilities
Included in the
income statement
4,322
1,342
81
-
-
-
-
-
55,098
3,556
1,153
1,856
123
1,412
54,069
-
-
538
-
168
-
-
-
-
7,517
(961)
23
9
94
54,069
-
-
5,745
113,711
4,262
60,751
11,384
31 Dec 2022
Deferred income
tax assets
Deferred income
tax liabilities
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
Fair value adjustments of financial
assets measured at amortised cost
Unpaid dividends
Tax losses
Tax reliefs
Other
Total
48,415
9,480
9,899
4,737
2,046
-
-
-
141
74,718
8,375
5,501
-
1,641
5,366
-
-
-
877
21,760
6,416
2,934
(1,718)
962
(2,540)
(3,876)
(253)
(945)
543
1,523
Temporary differences on which NLB did not recognise
deferred tax assets, as related deferred tax assets would
exceed the amount of deferred tax assets expected to be
reversed in five years are presented in the table below,
together with non-recognised deferred tax assets .
NLB Group
NLB
Included
in other
comprehensive
income
12,346
(892)
(441)
-
-
-
-
-
-
Deferred income
tax assets
Deferred income
tax liabilities
Included in the
income statement
38,028
2,050
1,819
109
-
-
-
-
-
5,283
1,672
-
163
-
-
-
-
-
4,819
1,133
(555)
3
-
(3,876)
-
-
-
11,013
42,006
7,118
1,524
1,462
in EUR thousands
Included
in other
comprehensive
income
10,244
1,171
(31)
-
-
-
-
-
in EUR thousands
Included
in other
comprehensive
income
2,850
(1,102)
(286)
-
-
-
-
-
-
285
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB
Tax loss
Impairments and valuation of capital investments and financial instruments
31 Dec 2023
31 Dec 2022
Temporary
difference
580,388
-
Non-recognised
deferred tax assets
Temporary
difference
Non-recognised
deferred tax assets
127,686
-
950,469
116,913
180,589
22,213
in EUR thousands
Due to highly successful year 2023 and the projected
loss in amount of EUR 54,069 thousand . The tax loss on
NLB did not recognise deferred tax assets on
good profits in the 5 years profit projections and also
which NLB did not recognise deferred tax assets, as at
temporary differences arising from the impairments of
due to the increase of tax rate to 22% for the years
31 December 2023 amounts to EUR 580,388 thousand
investments in subsidiaries and associates where it is
2024-2028, NLB importantly increased the amount of
(31 December 2022: EUR 950,469 thousand) . Slovenian
not probable that the temporary difference will reverse
recognised deferred tax assets in 2023 . NLB recognised
tax law does not set deadlines by which uncovered tax
in the foreseeable future . These temporary differences
all previously non-recognised deferred tax assets for
losses must be utilised, but the use of tax loss is limited
amount to EUR 189,311 thousand as at 31 December
impairments and valuation of capital investments and
to 50% of the actual tax base . Other banking members
2023 (31 December 2022: EUR 282,092 thousand) .
financial instruments and deferred tax assets for tax
have no tax losses .
286
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Movements in deferred income taxes
Deferred income tax assets
NLB Group
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
Balance as at 1 January 2022
10,128
33,002
3,505
5,879
3,876
6
2
3
7
-
Fair value
adjustments
of financial
assets
measured at
amortised cost
320
-
Tax
relief
945
-
253
-
Effects of translation of
foreign operations to
presentation currency
(Charged)/credited to
profit and loss
(Charged)/credited to other
comprehensive income
Acquisition of subsidiary
(note 5 .12 .e)
Balance as at 31 December 2022
Effects of translation of
foreign operations to
presentation currency
(Charged)/credited to
profit and loss
(Charged)/credited to other
comprehensive income
(1,718)
4,837
1,229
3,583
(3,876)
(253)
(945)
(516)
(441)
10,270
304
-
-
-
11
1,924
9,899
(5)
(928)
81
48,415
4,737
9,480
1
-
7,490
3,734
(596)
-
(8)
232
-
-
-
-
-
-
-
-
-
-
-
-
54,069
-
54,069
-
-
-
-
-
-
-
-
2,242
2,046
2
(108)
-
1,940
Balance as at 31 December 2023
9,047
59,640
4,141
9,704
in EUR thousands
Other
Total
62
-
79
-
-
57,970
18
2,420
9,829
4,481
141
74,718
-
(10)
107
60,266
-
3,815
248
138,789
in EUR thousands
NLB
Balance as at 1 January 2022
(Charged)/credited to
profit and loss
(Charged)/credited to other
comprehensive income
Balance as at 31 December 2022
(Charged)/credited to
profit and loss
(Charged)/credited to other
comprehensive income
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December 2023
Provisions for
liabilities and
charges
Valuation
of financial
instruments
and capital
investments
Depreciation
and valuation
of non-financial
assets
Impairment of
financial assets
Tax
losses
Fair value
adjustments of
financial assets
measured at
amortised cost
2,660
(555)
(286)
1,819
23
(31)
45
1,856
31,696
4,688
1,644
38,028
7,517
8,517
1,036
55,098
112
(3)
-
109
14
-
-
123
917
1,133
-
2,050
(961)
-
64
-
-
-
-
54,069
-
-
1,153
54,069
-
-
-
-
94
-
1,318
1,412
Unpaid
dividends
3,876
(3,876)
-
-
-
-
-
-
Total
39,261
1,387
1,358
42,006
60,756
8,486
2,463
113,711
287
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Deferred income tax liabilities
NLB Group
Impairment of
financial assets
Balance as at 1 January 2022
Effects of translation of foreign operations
to presentation currency
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Balance as at 31 December 2022
Effects of translation of foreign operations
to presentation currency
Charged/(credited) to profit and loss
Charged/(credited)to other comprehensive income
Disposal of subsidiaries
Balance as at 31 December 2023
3,960
-
649
892
5,501
(1)
(569)
(1,342)
-
3,589
Valuation
of financial
instruments
and capital
investments
12,026
4
(1,579)
(2,076)
8,375
(4)
(565)
(588)
-
7,218
Depreciation and
valuation of
non-financial
assets
Undistributed
profit of
subsidiaries
Fair value
adjustments of
financial assets
measured at
amortised cost
1,374
-
267
-
1,641
-
(144)
-
(193)
1,304
-
-
-
-
-
-
9,626
-
-
3,338
4
2,024
-
5,366
(5)
1,290
-
-
9,626
6,651
NLB
Balance as at 1 January 2022
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Balance as at 31 December 2022
Charged/(credited) to profit and loss
Charged/(credited) to other comprehensive income
Merger of subsidiary (note 5 .12 .d)
Balance as at 31 December 2023
Impairment of
financial assets
570
-
1,102
1,672
-
(1,171)
37
538
Valuation
of financial
instruments
and capital
investments
6,620
(131)
(1,206)
5,283
-
(1,727)
-
3,556
Depreciation and
valuation of
non-financial
assets
169
(6)
-
163
5
-
-
168
in EUR thousands
Other
Total
1,340
22,038
1
(464)
-
877
(1)
(354)
-
-
522
9
897
(1,184)
21,760
(11)
9,284
(1,930)
(193)
28,910
in EUR thousands
Total
7,359
(137)
(104)
7,118
5
(2,898)
37
4,262
288
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .18 . Income tax relating to components of other comprehensive income
289
2023
Actuarial gains and losses
Financial assets measured at fair value through other comprehensive income
Share of associates and joint ventures
Total
2022
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
Total
NLB Group
NLB
Before tax
Tax expense
Net of tax
Before tax
Tax expense
Net of tax
(444)
77,722
45
77,323
81
5,664
-
5,745
(363)
83,386
45
83,068
588
36,106
-
36,694
(31)
11,415
-
11,384
557
47,521
-
48,078
in EUR thousands
NLB Group
Before tax
Tax expense
NLB
Before tax
Tax expense
4,031
(165,438)
121
(161,286)
(441)
11,454
-
Net of tax
3,590
(153,984)
121
2,048
(93,955)
-
11,013
(150,273)
(91,907)
in EUR thousands
Net of tax
1,762
(92,207)
-
(90,445)
(286)
1,748
-
1,462
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
28,228
7,657
11,376
7,015
4,377
58,653
21,948
6,886
11,177
5,724
3,346
49,081
19,461
2,761
4,376
4,895
857
32,350
14,014
2,569
4,749
4,023
32
25,387
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .21 . Other equity instruments issued
On 23 September 2022, NLB issued subordinated notes
intended to qualify as Additional Tier 1 Instruments in
the aggregate nominal amount of EUR 82 million . The
notes have no scheduled maturity date . The issuer
has the option for early redemption of the notes in the
period between 23 September 2027 and 23 March 2028,
and on each distribution payment date after 23 March
2028 . Until 23 March 2028, the interest on the principal
of the notes will accrue at the interest rate of 9 .721% per
annum, and for each subsequent 5-year period, will
accrue at the applicable interest rate, which shall be
reset prior to the commencement of each such period
(5Y MS + 7 .20% per annum) . The coupon payments are
discretionary and non-cumulative . The notes terms
provide for a temporary write-down in the event that
the Common Equity Tier 1 ratio of NLB Group and/or
NLB drop(s) below 5 .125% . The issue price was equal to
100% of the nominal amount of the notes . The ISIN code
of the notes is SI0022104275 . The carrying amount as at
31 December 2023 is EUR 84,178 thousand (31 December
2022: EUR 84,184 thousand) .
5 .20 . Share capital
The share capital of NLB amounts to EUR 200,000
thousand and did not change in 2023 . 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 2023, the
major shareholder of NLB with significant influence is the
Republic of Slovenia, who owns 25 .00% plus one share .
The book value of a NLB share on a consolidated level
as at 31 December 2023 was EUR 139 .9 (31 December
2022: EUR 114 .1), and on a solo level was EUR 108 .3
(31 December 2022: EUR 75 .9) . 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 2023 amounts to
EUR 1,116,689 thousand (31 December 2022: EUR 515,463
thousand) and consists of NLB net profit for 2023 in the
amount of EUR 514,287 thousand (2022: EUR 159,602
thousand), and retained earnings from previous years in
the amount of EUR 405,463 thousand, increased for the
N Banka merger effect in the amount of EUR 204,904
thousand and reduced for the interests of subordinated
bonds issued in the year 2023 – which are considered
instruments of additional basic capital in the amount of
EUR 7,965 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 the
Management and the Supervisory Board, considering
restrictions imposed by the regulators, the Group’s risk
appetite, the target capital adequacy at the Group’s
level and actual prevailing capital position at the time of
the proposal .
The shares give to their holders the right to vote at the
NLB’s meeting of shareholders where, as a rule, each
share entitles its holder to one vote . Nevertheless, a
shareholder who acquires shares which, together with
the shares already held by such shareholder or by a
third person on behalf of such shareholder, represent
more than 25% of the NLB’s share capital, may only
exercise its voting rights under such shares if NLB’s
Supervisory Board approves such an acquisition . The
Supervisory Board’s approval may only be rejected
if, following such an acquisition, such a person would
hold shares representing more than 25% of NLB’s
issued share capital plus one share . The approval
shall be considered given if not expressly rejected in
20 days . No such approval is necessary with respect
to the shares acquired by a person on behalf of third
persons provided that such a person is not entitled to
exercise the voting rights arising out of such shares at
its own discretion and undertakes to NLB that it will not
exercise the voting rights based on voting instructions
unless such voting instructions are accompanied with
a confirmation that the person giving such instructions
is the beneficial owner of the shares with respect to
which votes are to be exercised and does not hold in the
aggregate, directly or indirectly 25% or more NLB shares
with voting rights .
The shares also give their holders the right to be
informed, as well as the pre-emptive right to subscribe
for new shares on a pro rata basis in the case of a
share capital increase, the right to a pro-rata share of
remaining assets in case of bankruptcy or liquidation
or NLB, and the right to receive a dividend . In 2023,
NLB paid dividends for the previous year in the amount
of EUR 5 .5 per share (2022: EUR 5 .0 per share), which
decreased retained earnings by EUR 110,000 thousand
(2022: EUR 100,000 thousand) .
As at 31 December 2023 and 31 December 2022,
NLB holds no own shares . In June 2019, the General
Assembly of NLB authorised the Management Board
that in the period of 36 months from the adoption of
the shareholders’ resolution, it can buy own shares of
the Bank for the payment of variable remuneration to
certain employees as required by the Banking Act and
other relevant regulations . NLB did not buy any own
shares based on this authorisation .
290
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .22 . Accumulated other
comprehensive income
and reserves
a) Reserves
The share premium account as at 31 December 2023 and
31 December 2022 comprises paid-up premiums in the
amount of EUR 822,173 thousand and the revaluation of
share capital from previous years in the amount of EUR
49,205 thousand .
As at 31 December 2023 and 31 December 2022, profit
reserves in the amount of EUR 13,522 thousand relate
entirely to legal reserves in accordance with the
Companies Act .
In 2023, NLB recorded a net profit in the amount of EUR
514,287 thousand (2022: net profit EUR 159,602 thousand)
which is included in the retained earnings as at 31
December 2023 .
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
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
(66,666)
(143,954)
(35,255)
(78,283)
6,647
1,045
(2,265)
(14,588)
754
(1,948)
(16,485)
754
144
(1,205)
-
-
(1,460)
(1,934)
-
-
(76,118)
(160,588)
(36,316)
(81,677)
291
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .23 . 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
(-) Deferred tax assets
(-) Insufficient coverage for non-performing exposures
COMMON EQUITY TIER 1 CAPITAL (CET1)
Capital instruments eligible as AT1 Capital
Minority interest
Additional Tier 1 capital
TIER 1 CAPITAL
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
TOTAL RISK EXPOSURE AMOUNT (RWA)
Common Equity Tier 1 Ratio
Tier 1 Ratio
Total Capital Ratio
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
200,000
871,378
1,235,363
327,398
(75,662)
13,522
28,798
(2,295)
(3,529)
(37,153)
(47,002)
(907)
200,000
871,378
908,965
334,297
(98,470)
13,522
26,806
(2,981)
(3,529)
(41,351)
-
(418)
200,000
871,378
602,402
159,833
(36,316)
13,522
-
(1,067)
-
(20,846)
(54,069)
(246)
200,000
871,378
355,861
49,602
(50,527)
13,522
-
(1,385)
-
(23,675)
-
(80)
2,509,911
2,208,219
1,734,591
1,414,696
82,000
5,907
87,907
82,000
5,481
87,481
2,597,818
2,295,700
507,516
3,874
511,390
3,109,208
12,168,121
1,447,713
14,200
1,707,128
507,516
3,159
510,675
2,806,375
11,797,851
1,359,476
85,600
1,410,132
82,000
-
82,000
1,816,591
507,516
-
507,516
2,324,107
7,449,829
818,113
15,613
923,943
82,000
-
82,000
1,496,696
507,516
-
507,516
2,004,212
6,356,959
776,963
86,138
612,654
15,337,162
14,653,059
9,207,498
7,832,714
16 .4%
16 .9%
20.3%
15 .1%
15 .7%
19.2%
18 .8%
19 .7%
25.2%
18 .1%
19 .1%
25.6%
European banking capital legislation – CRD IV, is based
In addition to the aforementioned ratios which form the
of the buffers are prescribed by law for all banks and
on the Basel III guidelines . The legislation defines three
capital ratios reflecting a different quality of capital:
Pillar 1 requirement, NLB must meet other requirements
and recommendations that are imposed by the
some of them are bank-specific, set by the supervisory
institution (CBR and TSCR together form the overall
- Common Equity Tier 1 ratio (ratio between common
supervisory institutions or by the legislation:
capital requirement – OCR),
or CET1 capital and risk-weighted exposure amount
- The Pillar 2 Requirement (SREP requirement): bank-
- Pillar 2 Capital Guidance: capital recommendation
or RWA), which must be at least 4 .5%,
specific, obligatory requirement set by the supervisory
set by the supervisory institution through the SREP
- Tier 1 capital ratio (Tier 1 capital to RWA), which must
institution through the SREP process (together with the
process . It is bank-specific and is a recommendation,
be at least 6%, and
Pillar 1 requirement it represents the minimum total
and not obligatory . Any non-compliance does not
- Total capital ratio (total capital to RWA), which must
SREP capital requirement – TSCR),
affect dividends or other distributions from capital;
be at least 8% .
- The applicable combined buffer requirement (CBR):
however, it might lead to intensified supervision and
a system of capital buffers to be added on top of
the imposition of measures to re-establish a prudent
TSCR – breaching of the CBR is not a breach of capital
level of capital (including preparation of capital
requirement, but triggers limitations in the payment of
restoration plan) .
dividends and other distributions from capital . Some
292
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Overall capital requirements of NLB Group on consolidated level:
SREP requirement
Pillar 1 (P1R)
Pillar 2 (P2R)
Total SREP Capital Requirement (TSCR)
Combined buffer requirement (CBR)
Capital Conservation buffer
O-SII buffer
Systemic risk 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
CET1
Tier 1
Total Capital
CET1
CET1
Tier 1
Total Capital
2023
4 .5%
1 .5%
2 .0%
1 .35%
1 .80%
2 .40%
5 .85%
7 .80%
10 .40%
2 .50%
1 .25%
0 .10%
0 .26%
9 .96%
11 .91%
14 .51%
1 .0%
10 .96%
12 .91%
15 .51%
2022
4 .5%
1 .5%
2 .0%
1 .46%
1 .95%
2 .60%
5 .96%
7 .95%
10 .60%
2 .5%
1 .0%
0 .0%
0 .0%
9 .46%
11 .45%
14 .10%
1 .0%
10 .46%
12 .45%
15 .10%
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%
0 .0%
9 .55%
11 .56%
14 .25%
1 .0%
10 .55%
12 .56%
15 .25%
As at December 31, 2023, the Group’s Overall Capital
Effective as at 1 January 2025, there will be some
indicator approach . The same approaches are used
Requirement (OCR) on a consolidated basis was 14 .51% .
changes in the capital buffer rates for Slovenia . The
for calculating the capital requirements for NLB on
This requirement has two components:
countercyclical capital buffer rate for exposures in
a standalone basis, except for the calculation of the
· The Total SREP Capital Requirement (TSCR) is
Slovenia will increase from 0 .5% to 1 .0% . At the same
capital requirement for operational risks where the
10 .40%, including 8 .00% Pillar 1 and 2 .40% Pillar
time, the sectoral systemic risk buffer for retail exposures
standardised approach is used .
2 Requirements . As at 1 January 2023, the Pillar 2
to natural persons secured by residential real estate will
Requirement decreased by 0 .2 p .p . to 2 .40% due to a
decrease from 1 .0% to 0 .5% .
better overall SREP assessment .
As at 31 December 2023, the TCR for the NLB Group
stood at 20 .3% (or 1 .1 p .p . increase compared to 31
· The second component is the Combined Buffer
The Bank and NLB Group’s capital covers all the current
December 2022), and the CET1 ratio stood at 16 .4%
Requirement (CBR), which is 4 .11%, and includes a
and announced regulatory capital requirements,
(1 .3 p .p . increase compared to 31 December 2022), well
2 .50% Capital Conservation Buffer, a 1 .25% O-SII Buffer,
a 0 .26% Countercyclical Buffer and a 0 .10% Systemic
including capital buffers and other currently known
requirements, as well as the P2G .
above requirements . The higher total capital adequacy
derives from higher capital (EUR 302 .8 million compared
risk buffer .
to 31 December 2022), which compensated for the
As at 31 December 2023, NLB Group capital ratios on a
increase of the RWA (EUR 684 .1 million compared to 31
In addition to the above requirements, the Pillar 2
consolidated basis stand at:
Guidance (P2G) is 1 .0% of Common Equity Tier 1 (CET1) .
· 16 .4% CET1 ratio,
· 16 .9% Tier 1 ratio,
Effective from 1 January 2024, NLB has lower capital
· 20 .3% Total Capital ratio .
requirements . On 1 December 2023, NLB received
a new SREP decision on a consolidated basis for
In the scope of regulatory risks, which include credit
December 2022) . The NLB Group increased its capital
with a partial inclusion of 2023 profit (EUR 327 .4 million) .
Temporary treatment of FVOCI for sovereign securities
ceased to apply as at 1 January 2023, which decreased
capital by EUR 61 .6 million . This effect was compensated
with EUR 84 .5 million in revaluation adjustments . In
2024 . As per the decision, the Pillar 2 Requirement
risk, operational risk, and market risk, NLB Group
December 2023, a deduction item related to deferred
decreased by 0 .28 p .p . to 2 .12% since the overall SREP
uses a standardised approach for credit and market
taxes appeared in EUR 47 .0 million .
assessment improved .
risks, while the calculation of capital requirement
for operational risks is made according to a basic
293
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
In 2023, the RWA of Group for credit risk increased
and provisions, upgrades, and improved data of real
capital and sustainability on an ongoing basis . The
by EUR 370 .3 million, mainly as the consequence of
estate collaterals for CRR eligibility resulted in the RWA
purpose of this process is to have in place sound,
ramping up lending activity in all NLB Group banks,
reduction for non-performing exposures .
effective, and comprehensive strategies and processes
the most in the Bank, NLB Komercijalna banka a .d .
to assess and maintain capital on an ongoing basis,
Beograd and NLB Banka Pristina . Higher RWA for
The increase in RWAs for market risks and Credit Value
as well the adequate distribution of internal capital for
exposures associated with particularly high risk due
Adjustments (CVA) in the amount of EUR 16 .8 million
covering the nature and level of the risks to which NLB
to new project financing loans given, mainly in the
compared to 31 December 2022 was the result of higher
Group is or might be exposed . In addition, NLB Group
Bank and NLB Komercijalna banka a .d . Beograd, was
RWA for FX risk of EUR 86 .6 million (mainly the result of
gives strong emphasis on its integration into the overall
partially offset by repayments or by withdrawing the
more opened positions in domestic currencies of non-
risk management system in order to assure proactive
high-risk flag after fulfilling the relevant conditions . In
euro subsidiary banks – mostly RSD), lower RWA for CVA
support for informed decision-making .
contrast, an RWA decrease was observed for liquidity
risk of EUR 71 .4 million (due to a change of calculating
assets, mainly in NLB Komercijalna banka a .d . Beograd,
exposure value for derivative transactions subject to
From an economic perspective, NLB Group manages
due to the maturity of some Serbian bonds and
CRR risk based on OEM method) and higher RWA for TDI
its capital adequacy by ensuring that all its risks are
higher MIGA guarantee for assets at central banks in
risk of EUR 1 .2 million (mostly IRS derivatives) .
adequately covered by internal capital . A normative
a foreign currency (EUR) . The higher MIGA guarantee
perspective is a multiyear forward-looking assessment
also reduced the RWA for exposures nominated in
The increase in the RWA for operational risks (EUR 297 .0
of NLB Group which shows its ability to fulfil all of its
EUR at the central bank in Skopje . Furthermore, RWA
million compared to 31 December 2022) derived from
capital-related regulatory and supervisory requirements
also decreased due to the maturity of Macedonian
bonds and Bosnian bonds of Republika Srpska . The
the higher net interests, mainly from the Bank and NLB
Komercijalna banka a .d . Beograd, resulting in a higher
and risk appetite of NLB Group . Within these capital
constraints, NLB Group defines its management buffers
RWA decline for liquidity assets was partly mitigated
three-year average of relevant income . There were no
in the Risk appetite above the regulatory and supervisory
by the RWA increase at institutions, mainly in the Bank
significant deviations from previous years in the other
requirement, and the internal capital needs that allow it
due to the purchase of bank bonds, larger volume of
components used in the calculations .
to sustainably follow its business strategy . A normative
deposits at commercial banks and higher risk weights
perspective includes several stress scenarios which are
for institutions from countries outside the EEA that
The most important goal of internal capital adequacy
integrated into NLB Group’s annual business plan review
are not on the third-party equivalent list (e .g ., the
assessment process (ICAAP) in NLB Group, set up in
and budgeting process .
United Kingdom) . Repayments, higher impairments
accordance with ECB Guidelines, is ensuring adequate
294
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .24 . 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
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
369,849
154,769
215,080
407,967
220,786
187,181
1,261,764
1,103,341
513,523
748,241
427,743
675,598
205,731
88,373
117,358
817,646
309,909
507,737
176,535
96,473
80,062
613,061
230,318
382,743
2,469,800
2,388,468
1,822,847
1,635,498
41,026
17,653
4,160,092
(32,548)
4,127,544
35,029
18,655
3,953,460
(37,609)
3,915,851
10,446
7,904
2,864,574
(17,941)
2,846,633
13,204
9,706
2,448,004
(20,299)
2,427,705
Fee income from issued non-financial guarantees
amounted to EUR 8,628 thousand (2022: EUR 7,535
thousand) in NLB Group, and to EUR 5,552 thousand
(2022: EUR 4,574 thousand) in NLB .
In addition to the instruments presented in the table
above, NLB Group and NLB have also some low-
risk off-balance sheet items, for which a 0% credit
conversion factor is applied in accordance with the
Capital Requirements Regulation (credit and other lines
which can be irrevocably cancelled by a bank) . As at
31 December 2023, these items at the NLB Group level
amount to EUR 915,450 thousand (31 December 2022:
EUR 657,232 thousand), and at the NLB level EUR 412,330
thousand (31 December 2022: EUR 316,977 thousand) .
295
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Analysis of derivative financial instruments by notional amounts
in EUR thousands
296
Swaps
- currency swaps
- interest rate swaps
Options
- interest rate options
- securities options
Forward contracts
- currency forward
Total
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
NLB Group
NLB
Short-term
486,874
482,463
4,411
-
-
-
74,351
74,351
Long-term
1,526,962
10,799
1,516,163
45,924
30,189
15,735
6,640
6,640
Short-term
257,015
256,820
195
72
72
-
54,660
54,660
Long-term
1,111,946
-
1,111,946
60,626
46,963
13,663
11,720
11,720
Short-term
715,173
710,762
4,411
-
-
-
72,120
72,120
Long-term
1,586,962
10,799
1,576,163
45,924
30,189
15,735
6,640
6,640
Short-term
359,978
359,587
391
72
72
-
54,384
54,384
Long-term
1,111,690
-
1,111,690
60,626
46,963
13,663
11,720
11,720
561,225
1,579,526
311,747
1,184,292
787,293
1,639,526
414,434
1,184,036
2,140,751
1,496,039
2,426,819
1,598,470
As at 31 December 2023, the NLB Group held interest
hedge the fair value of bonds issued in 2023 with a total
rate swaps intended as fair value hedges of assets
contractual value of EUR 450,000 thousand (note 5 .5 .b) .
with a total nominal value of EUR 633,798 thousand (31
December 2022: EUR 644,132 thousand) and intended to
Derivatives that qualify for hedge accounting are used
hedge the fair value of bonds issued in 2023 with a total
to hedge interest rate risk .
nominal value of EUR 450,000 thousand (note 5 .5 .b) .
The fair values of derivative financial instruments are
As at 31 December 2023, the NLB held interest rate
disclosed in notes 5 .2 . and 5 .5 .
swaps intended as fair value hedges of assets with
a total nominal value of EUR 573,798 thousand (31
December 2022: EUR 644,132 thousand) and intended to
c) Capital commitments
Capital commitments for purchase of:
- property and equipment
- intangible assets
Total
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
3,131
2,901
6,032
1,651
5,246
6,897
3,022
2,470
5,492
1,496
5,206
6,702
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
5 .25 . Funds managed on behalf of third parties
Funds managed on behalf of third parties are
charged to the respective fund, and no liability falls on
accounted separately from NLB Group’s funds . Income
NLB Group in connection with these transactions . NLB
and expenses arising with respect to these funds are
Group charges fees for its services .
Funds managed on behalf of third parties
Fiduciary activities
Settlement and other services
Total
Fiduciary activities
Assets
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
30,241,726
26,935,868
28,278,498
24,990,075
1,085,213
1,247,360
1,010,624
1,156,361
31,326,939
28,183,228
29,289,122
26,146,436
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Clearing or transaction account claims for client assets
30,196,860
26,886,137
28,243,725
24,950,876
From financial instruments
30,196,322
26,866,494
28,243,237
24,931,891
- receipt, processing, and execution of orders
11,217,662
10,004,881
10,407,489
9,166,585
- management of financial instruments portfolio
573,177
509,000
-
-
- custody services
18,405,483
16,352,613
17,835,748
15,765,306
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
128
410
44,866
27,082
17,784
891
18,752
49,731
22,037
27,694
78
410
34,773
16,989
17,784
233
18,752
39,199
22,037
17,162
Clearing or transaction liabilities for client assets
30,241,726
26,935,868
28,278,498
24,990,075
To clients from cash and financial instruments
30,238,652
26,931,466
28,275,954
24,986,135
- receipt, processing, and execution of orders
11,233,595
10,024,193
10,423,422
9,185,897
- management of financial instruments portfolio
582,790
519,728
-
-
- custody services
18,422,267
16,387,545
17,852,532
15,800,238
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 .
138
2,532
404
444
3,540
418
138
2,002
404
444
3,078
418
Fee income for funds managed on behalf of third parties
Fiduciary activities (note 4 .3 .b)
Settlement and other services
Total
NLB Group
2023
11,666
912
12,578
2022
11,025
1,372
12,397
in EUR thousands
NLB
2023
9,567
806
2022
9,395
1,363
10,373
10,758
297
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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, 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 . A
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 the capital planning process;
- internal capital adequacy assessment process (ICAAP)
and internal liquidity adequacy assessment process
(ILAAP);
- recovery plan activities;
- other internal stress-testing capabilities, early warning
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 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
Besides, the Group also focuses on proactive mitigation,
prevention, and minimisation of potential damage .
proactively manage, assess, and monitor risks within
The conclusion of transactions with derivative financial
the Group . Sound and holistic understanding of risk
instruments at NLB is primarily limited to servicing
management is embedded into the entire organisation,
customers and hedging Bank’s own positions . In the
focusing on risk identification at a very early stage,
area of currency risk, NLB Group pursues the goals of
efficient risk management, and mitigation of them with
low to moderate exposure . The tolerance for other risk
the aim of ensuring the prudent use of its capital and
types is low and focuses on minimising their possible
adequate liquidity structure to support the financial
impacts on NLB Group’s entire operations .
resilience of the Group .
Environmental, social, and governance (ESG) risks
Key strategic risk management principles of NLB Group
do not represent a new risk category, but rather one
are defined by its Risk Appetite and Risk Strategy,
of risk drivers of the existing types of risks, such as
designed in accordance with the Group’s business model,
credit, liquidity, market and operational risk . The Group
integrating forward-looking perspective . The Strategy
integrates and manages them within the established
of NLB Group, the Risk Appetite, Risk Strategy, and the
risk management framework . The management of ESG
key internal policies of NLB Group – which are approved
risks follows ECB and EBA guidelines with the tendency
by the Management and Supervisory Boards – specify
the strategic goals, risk appetite guidelines, approaches,
to comprehensively integrate them into all relevant
processes . Based on environmental and climate risk
and methodologies for monitoring, measuring, and
assessment impact of these risks is estimated as low,
managing all types of risk in order to meet internal
except for transition risk in the area of credit which is
strategic objectives and fulfil all external requirements .
assessed as low to medium . With the NZBA commitment
The main strategic risk guidelines are comprehensively
the Bank made a pledge to align the Bank’s lending
integrated into decision-making, including the business
and investment portfolio with net-zero emissions by
plan review and budgeting process .
2050 .The availability of ESG data in the region where
NLB Group operates is still lacking . Nevertheless, the
NLB Group plans a prudent risk profile and optimal
Group made a large progress in the process of obtaining
capital usage, representing an important element of its
relevant ESG related data from its clients, being
business strategy and related mid-term financial targets .
prerequisite for adequate decision-making and the
The management of credit risk, which is the most
corresponding proactive management of ESG risks .
important risk category in NLB Group, concentrates on
taking moderate risks – a diversified credit portfolio,
Risk management focuses on managing and mitigating
adequate credit portfolio quality, the sustainable costs
risks in line with the Group’s Risk Appetite and Risk
of risk, and ensuring an optimal return considering the
Strategy . Within these frameworks, the Group monitors
risks assumed . As regards liquidity risk, the tolerance
a range of risk metrics, including internal capital
is low, while the activities are geared towards ensuring
allocation in order to assure the Group’s risk profile
an adequate liquidity position on an ongoing basis . The
is in line with its risk appetite . The usage of risk limits
Group limited exposure to credit spread risk, arising
and potential deviations from limits and target values
from the valuation risk of debt securities portfolio
are regularly reported to the respective committees
servicing as liquidity reserves, to moderate level . The
and/or the Management Board of the Bank . The
fundamental orientation in the management of interest
banking subsidiaries within NLB Group adapted a
rate risk is to limit unexpected negative effects on
corresponding approach to monitor and manage their
revenues and capital, therefore, a moderate tolerance
target risk profiles .
for this risk is stated . When assuming operational
risk, the Group pursues the orientation that such a
NLB Group established a comprehensive stress-testing
risk must not significantly impact its operations . On
framework and other early warning systems in different
this basis, changes of control activities, processes,
risk areas with the intention to strengthen the existing
and/or organisation are performed when necessary .
internal controls and timely response when necessary .
298
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Robust and uniform stress-testing programme includes
holders, as well as the EBA Guidelines on remuneration
respective Committees, which is where appropriate
all material types of risk and relevant stress scenario
practices . Several layers of management provide
measures are adopted .
analysis, according to the vulnerability of the Group’s
cohesive risk management governance in NLB Group .
business model . The Group established an internal ESG
The credit ratings of clients that are materially important
stress-testing concept to identify most relevant financial
NLB Group established the three lines of a defence
to NLB Group and the issuing of credit risk opinions
vulnerabilities stemming from climate risk, which will
framework with the aim of managing risks effectively .
are centralised via the Credit Committee of NLB . The
be further enhanced by considering disposable ESG-
The three lines of defence concept provides a
process follows the co-decision principle, in which the
related data . Stress testing is integrated into the risk
clear division of activities and defines roles and
credit committee of the respective Group member first
appetite, ICAAP, ILAAP, Recovery Plan, and budgeting
responsibilities for risk management at different levels
approves their decision, following which the Credit
process to support proactive management of the
within the Group . Risk management in the Group acts as
Committee of NLB gives their opinion . The resolution of
Group’s risk profile, namely the capital and liquidity
a second line of defence, accountable for appropriate
the Credit Committee of NLB is made on the basis of all
positions in a forward-looking perspective . In addition,
managing, assessing, monitoring, and reporting of risks
available documentation, including a non-binding rating
the Group also performs reverse stress tests with the aim
in the Bank as the main entity in Slovenia, and as the
opinion prepared by the underwriting department of
to test its maximum recovery capacity . Other partial risk
competence centre in charge of six banking members,
NLB . This same principle and process is also set for the
assessments are covered by other risk analysis, based
leasing members, and other non-core subsidiaries
issuing of credit exposures for the materially important
on relevant risk parameters, and integrated into the
which are in a controlled wind-out .
clients of NLB Group .
process of setting a risk management limit system .
For the purpose of an efficient risk mitigation process,
Overall, the organisation and delineation of
competencies in NLB Group’s risk management
Risk monitoring in NLB Group members is operating
within an independent and/or separate organisational
NLB Group applies a single set of standards to retail
structure is designed to prevent conflicts of interest
unit . This way, monitoring of risks is established based
and corporate loan collateral, representing a secondary
and ensure a transparent and documented decision-
on standardised and systemic risk management
source of repayment with the aim of efficient credit
making process, subject to an appropriate upward and
approaches . This monitoring enables a comprehensive
risk management and optimal capital consumption .
downward flow of information . Risk management in
overview of the Group’s and of each member’s statement
The Group has a system for monitoring and reporting
NLB Group is managed within the Risk management
of financial position . In compliance with the risk appetite,
collateral at fair (market) value in accordance with the
competence line, which is a specialised competence
risk management strategy, and policies of NLB Group,
International Valuation Standards (IVS) . The eligibility
line encompassing several professional areas for which
risk monitoring in each NLB Group member is separated
of collateral, by types and ratios referring to prudent
the Global Risk Department, the Credit Risk – Corporate
from its management and/or business function to
lending criteria, is set within internal lending guidelines .
Department, the Credit Risk – Retail Department and
maintain the objectivity required when assessing
Credit risk mitigation principles and rules in NLB Group
the Evaluation and Control Department are responsible
business decisions (three lines of defence concept) . The
are described in more relevant details in the section
within NLB, and which reports to the Management
organisational unit for managing risks directly reports
‘Credit risk management .’ When hedging market risks,
Board, Assets and Liabilities Committee (ALCO)
to the Management Board and its committees (Credit
namely interest rate risk and foreign exchange risk, in
Risk Committee (RICO) and Credit Committee of the
Committee, ALCO, RICO and the Operational Risk
line with the set risk appetite, NLB Group follows the
Management Board and the Risk Committee of the
Committee) and Management Board, which report to the
principle of natural hedge or using derivatives in line
Supervisory Board . The risk management competence
Supervisory Board (the Risk Committee of the Supervisory
with hedge accounting principles .
line is in charge of formulating and controlling the
Board or Board of Directors) .
b) Risk management structure and organisation
NLB Group’s corporate governance framework is based
risk management policies of NLB Group, setting
limits, establishing methodologies, overseeing the
harmonisation of risk management policies within the
c) Risk measurement and reporting systems
As a systemic banking group, NLB Group is subject
on the principles of sound and responsible governance,
NLB Group, monitoring NLB Group’s risk exposures, and
to the Single Supervisory Mechanism (SSM), which is
in accordance with the applicable legislation of the
preparing external and internal reports .
supervised by the Joint Supervisory Team (JST) of the
Republic of Slovenia, particularly the provisions of the
ECB and the Bank of Slovenia . The Group member
Companies Act (ZGD-1) and the Banking Act (ZBan-3),
All members of NLB Group that are included in the
complies with the ECB regulation, while NLB Group
the Regulation on Internal Governance Arrangements,
financial statements of NLB Group, report their
subsidiaries operating outside Slovenia are also
the Management Body, and the Internal Capital
exposure to risks to the competent organisational
compliant with the rules set by the local regulators . A
Adequacy Assessment Process for Banks and Savings
units within the Risk management competence line .
third-party equivalent was approved in Serbia, Bosnia
Banks, the EBA Guidelines on internal governance, the
These organisational units then report all relevant
and Herzegovina, and North Macedonia, resulting
EBA Guidelines on the assessment of the suitability of
risk information to the Management Board and its
in alignment of local regulation with CRR rules . With
members of the management body, and key function
respective Committees and the Supervisory Board its
regards to capital adequacy, based on the provisions of
299
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
the Directive (CRD), Decision (CRR), NLB Group applies
objectives of the Group’s risk management function . NLB
closely, remaining prudent in identifying any increase
a standardised approach to credit and market risk, and
Group data governance and data quality framework
in credit risk at a very early stage and proactive in NPL
the basic approach (a simplified approach with less data
consists of identifying risks, developing policies and
management . The cost of risk remained at low level,
granularity) to operational risks, with the exception of
controls on data confidentiality, integrity, accuracy, and
mainly due to the successful collection of previously
NLB which applies the standardised approach .
availability, and by executing the second line of defence
written-off receivables, revised risk parameters, and a
controls by an independent validation unit under the
stable portfolio development .in the whole region . The
Across the Group, risks are assessed, monitored,
responsibility of Group Data Governance Officer . This
liquidity position of the Group remained very robust .
managed, or mitigated in a uniform manner, as defined
framework covers agreed service level standards for
Even if a highly unfavourable liquidity scenario would
in the Group’s Risk management standards, and
both in-house and outsourced data-related processes .
materialise, the Group holds a sufficient level of high-
consider the specifics of the markets in which individual
NLB Group members operate . For the purposes of
measuring exposure to credit risk, liquidity risk, interest
e) Main emphasis of risk management in 2023
Efficient managing of risks and capital remains
quality liquidity reserves . Significant attention was put
into the structure and concentration of liquidity reserves
by incorporating early warning systems, while keeping in
rate, and credit spread risk in the banking book,
crucial for NLB Group to sustain long-term profitable
mind the potential adverse negative market movements .
operational risk, market risk, ESG, and non-financial
operations . The Group further enhanced the robustness
risks, in addition to the prescribed regulations, NLB
of its risk management system in all respective risk
The management of ESG risks follows ECB and EBA
Group uses internal methodologies and approaches
categories in order to manage them proactively,
guidelines with a tendency of their comprehensive
that enable more detailed monitoring and management
comprehensively, and prudently . Risk identification
integration into all relevant processes . It addresses
of risks . These internal methodologies are aligned with
ECB, EBA, and Basel guidelines, as well as best practices
in a very early stage, its efficient managing, and the
corresponding mitigation processes represent essential
the Group’s overall credit approval process and
related credit portfolio management . Sustainable ESG
in banking methodologies .
steps in such a system . The business and operating
financing in accordance with Environmental and Social
environment relevant for NLB Group operations is
Management System is integrated into the Group’s Risk
As for risk reporting, NLB Group’s internal guidelines
changing with trends, such as sustainability, social
Appetite Statement . As part of its strategy, the Group
reflect, in addition to internal requirements, the
responsibility, governance, changing customer
does not finance companies that extract fossil fuels or
substance and frequency of reporting required by the
behaviours, emerging new technologies and
operate coal-fired power plants . Moreover, in December
Bank of Slovenia and the ECB . In addition, each member
competitors, as well as increasing new regulatory
2023 NLB as a member of the UN Net-Zero Banking
of NLB Group also complies with the requirements of its
requirements . Respectfully, the risk management
Alliance, publicly disclosed its Net-Zero commitment .
local regulations . Risk reporting is carried out in the form
framework is regularly adapted with the aim of
With this step, the Bank made a pledge to align the
of standardised reports, pursuant to risk management
detecting and managing new potential emerging risks .
Bank’s lending and investment portfolio with net-zero
policies based on common methodologies for
emissions by 2050 .
measuring exposure to risks, uniform database structure
The NLB Group gives special focus on the inclusion
within Data Warehouse (DWH), comprehensive data
of risk analysis into the decision-making process on
As a systemically important institution, the Group was
quality assurance, and automated report preparation,
strategic and operating levels, diversification in order to
included in the ECB Stress Test exercise performed in H1
which ensures the quality of reports and reduces the
avoid a large concentration, optimal usage of internal
2023 . On 30 July, the results of stress tests carried out for
possibility of errors .
capital, appropriate risk-adjusted pricing, regular
important banks by the ECB to assess the resilience of
d) Data and IT system
Risk data are calculated and stored in NLB Group DWH
and collected from NLB and other Group member’s
education/trainings at all levels of management, and the
the financial institutions were disclosed . The final results
assurance of overall compliance with internal policies/
of the bottom-up stress test showed that even in a very
rules and relevant regulations .
unfavourable market condition defined by the EBA and
ECB, the Group holds sufficient resilience in terms of
DWH . The established process provides an integrated
During 2023, the Group’s credit portfolio quality
capitalisation . The qualitative outcomes were included
information in common reference structure where
remained of high quality, well diversified, with a stable
in the determination of capital requirements by the ECB,
business users can access in a consistent and subject-
rating structure and lower level of NPLs . In the light
namely setting Pillar 2 Guidance .
oriented format . Data are regularly checked and
of inflationary pressures, higher interest rates and
validated . Data used for internal risk assessment,
low GDP growth, the Group recorded a slower credit
Besides, the Group is also included in two ECB Stress
management, and reporting are the same as data which
portfolio growth in all segments . Impacts of the floods
test exercises – 2024 EBA Fit-for-55 climate risk scenario
NLB Group uses for regulatory reporting .
in Slovenia were estimated as negligible, and only
analysis and the 2024 ECB Cyber Resilience Stress Test
minor client credit quality deteriorations or received
Exercise, which started in Q3 2023 and will be concluded
The Group has established a strong and robust data
collaterals were recorded . Besides, the Group monitored
in H1 2024 .
governance program that aligns with the goals and
the macroeconomic and geopolitical circumstances
300
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6 .1 . Credit risk management
a) Introduction
In its operations, NLB Group is exposed to credit risk,
or the risk of losses due to the failure of a debtor to
settle its liabilities to NLB Group . For that reason, it
proactively and comprehensively monitors and assesses
the aforementioned risk . In that process, NLB Group
follows the International Financial Reporting Standards,
regulations issued by the European Central Bank or
Bank of Slovenia, and the EBA guidelines . This area is
governed in greater detail by the internal methodologies
and procedures set out in internal acts .
Through regular reviews of the business practices and
the credit portfolios of NLB entities, NLB ensures that
the credit risk management of those entities function
in accordance with NLB Group’s risk management
standards to enable meaningfully uniform procedures at
the consolidated level .
NLB Group manages credit risk at two levels:
- At the level of the individual customer/group of
customers appropriate procedures are followed in
various phases of the relationship with a customer
prior to, during, and after the conclusion of an
agreement . Prior to concluding an agreement, a
customer’s performance, financial position, and past
cooperation with NLB are assessed . To objectively
assess a client’s operation, internal scoring models for
particular client segments or product types have been
developed . It is also important to secure high-quality
collateral even though it does not affect a customer’s
credit rating . This is followed by various forms of
monitoring a customer, in particular an assessment
of its ability to generate sufficient cash flows for the
regular settlement of its liabilities and contractual
obligations . In this part of the credit process, regular
monitoring of clients within the Early Warning System
(EWS) is important . In the case of client default,
restructuring or work-out is initiated depending on the
severity of the client’s position .
- The quality and trends in the credit portfolio,
including on-balance and off-balance sheet
exposures, are actively monitored and analysed at
the level of the overall portfolio of NLB Group and
single banking entities .
Comprehensive analyses are regularly performed
Expected future cash flows (from ordinary operations
to assure monitoring of the portfolio quality through
and possible redemption of collateral) are assessed
time and to identify any breach of limits or targets .
following an individual review . If their discounted value
Great emphasis is placed on the evolution of portfolio
differs from the book value of the financial asset in
structure in terms of client segmentation, credit rating
question, impairment must be recognised .
structure, structure by stages (based on IFRS 9), and
NPL ratios . Furthermore, the coverage of NPL is an
Collective ECL allowances are made for the remainder
important indicator of potential future losses that is
of the portfolio, which is not assessed on an individual
closely monitored .
basis . Based on IFRS 9 requirements, financial assets
measured at amortised cost or at fair value through
Apart from analysing the portfolio as a whole, the
other comprehensive income are attributed to the
quality of new loans production is monitored to test the
appropriate stage based on the estimated increase of
conservativity of the lending standards, which should
credit risk of a single exposure since initial recognition .
ensure the portfolio quality is maintained within the
The stage of financial assets determines whether a
Group Risk Appetite .
12-month or lifetime ECL must be considered . The ECL
calculation is based on the forward-looking probability
Beside default risk, the portfolio management is also
of default (PD) and loss given default (LGD), which are
focused on monitoring single name and industry
concentration, migration, FX lending, and the
calculated using historic data and statistical modelling,
as well as predicted macroeconomic parameters for
Environmental and climate risks of the credit portfolio .
different scenarios . For off-balance financial assets,
Increasing emphasis is also placed on stress tests that
the probability of the redemption of guarantees is
forecast the effects of adverse negative macroeconomic
considered when creating collective provisions . The
movements on the portfolio, on the level of impairments
models used to estimate future risk parameters are
and provisions, and on capital adequacy . Capital
validated and backtested on a regular basis to make
requirements for credit risk at NLB Group level
loss estimations as realistic as possible .
within the first pillar are calculated according to the
Standardised approach, while within the second pillar
The management of ESG risks addresses the Group’s
an internal IRB approach is used to estimate the RWA
overall credit approval process and related credit
for default, migration, and FX lending risk . In addition,
portfolio management . Sustainable financing is
a single name concentration add-on is based on the
implemented through amended documentary
Granularity adjustment methodology, and an industry
framework:
concentration add-on is estimated based on the HHI
- Lending Policy for Non-Financial Companies in
concentration indexes .
NLB d .d . and NLB Group where in the special
chapter Environmental and Social Framework three
NLB and other NLB Group members assess the level
categories are defined (prohibited, restricted, normal
of credit risk losses on an individual basis for material
activities);
claims, and at the collective level for the rest of
- Policy Environmental and Social Transaction Policy
the portfolio .
Framework in NLB d .d . and NLB Group applies to
certain transactions with the greatest potential for
An individual review is performed for material Stage
significant E&S impact (exclusion list, regulatory
3 financial assets which have been rated as non-
compliance check, category A list);
performing based on the information regarding
- Methodology Environmental and Social Transaction
significant financial problems encountered by a
Categorisation Methodology Framework in NLB d .d .
customer, actual breaches of contractual obligations
and NLB Group provides a guide to the typical level of
such as arrears in the settlement of liabilities, whether
inherent environmental and social risk according to
financial assets will be restructured for economic
NACE codes .
or legal reasons, and the likelihood that a customer
will enter bankruptcy or a financial reorganisation .
301
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Beside addressing ESG risks in all relevant stages of
Lending growth, which was observed in the Corporate,
the credit-granting process relevant ESG criteria were
as well as in the Retail segment in 2022 no longer
also considered in the collateral evaluation process . On
prevailed in 2023 due rising interest rates that led to less
the portfolio level, the Group does not face any large
favourable lending conditions . In the circumstances of
concentration towards specific NACE industrial sectors
the growing EURIBOR, there was certain transfer to fixed
exposed to climate risk, whereby the role of transitional
interest rates, especially in the housing loans market . In
risk is more prevailing . The availability of ESG data in
the Corporate segment, the Bank seized opportunities
the region where NLB Group operates is still lacking,
to finance some of the top corporate clients in the region
nevertheless the Group has made material progress
while keeping the focus on SME as its key segment .
in this respect in 2022 and has ambitious plans for the
Credit portfolio remains well-diversified, there is no large
following year .
b) Main emphasis in 2023
In the process of constantly complementing and
enhancing credit risk management, NLB Group focuses
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 .
on taking moderate risks, and at the same time ensuring
In 2023, the Group’s credit portfolio quality remained
an optimal return considering the risks assumed .
solid with a stable rating structure and diversified
Preserving high credit portfolio quality represents the
most important key aim, with a focus on the quality of
portfolio . Great emphasis was placed on intensive and
proactive handling of problematic customers and an
new placements leading to a diversified portfolio of
early warning system for detecting increased credit
customers . The Group is actively present on the market
risk at a very early stage . The stock of NPE volume
in the region, financing existing and new creditworthy
decreased, as a result of active workout management .
clients . To further enhance existing risk management
As at 31 December 2023, the share of non-performing
tools, the Group is constantly developing a wide range of
exposure by EBA methodology in NLB Group was 1 .1%
advanced approaches supported by mathematical and
(1 .3% at the end of 2022) . Moreover, the coverage ratio
statistical models in credit risk assessment in line with
remains high at 64 .6%, which is above the EU average
best banking practises, while at the same time enabling
published by the EBA (42 .6% in 3Q 2023) .
faster responsiveness towards clients .
302
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 companies
Other financial assets
Derivatives - hedge accounting
Total net financial assets
Guarantees
Financial guarantees
Non-financial guarantees
Loan commitments
Other potential liabilities
Total contingent liabilities
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
6,103,561
5,271,365
4,318,032
3,339,024
15,718
21,588
17,957
21,692
5,217
3,116
7,785
7,892
2,164,464
2,838,796
962,084
1,291,277
2,522,229
1,917,615
1,966,169
1,597,448
386,291
547,640
91,523
303,443
222,965
116,078
118,220
149,011
384,995
124,736
350,625
286,504
7,086,815
6,621,670
3,543,603
3,036,499
6,169,972
6,031,795
3,101,465
2,606,674
165,962
47,614
177,823
59,362
101,596
47,614
114,399
59,362
25,307,006
23,585,616
14,718,531
12,836,132
1,631,613
1,511,308
1,023,377
668,292
963,321
648,529
862,779
398,282
625,095
789,596
326,791
462,805
2,469,800
2,388,468
1,822,847
1,635,498
58,679
53,684
18,350
22,910
4,160,092
3,953,460
2,864,574
2,448,004
Total maximum exposure to credit risk
29,467,098
27,539,076
17,583,105
15,284,136
Maximum exposure to credit risk is a presentation of NLB
Group’s exposure to credit risk separately by individual
types of financial assets and contingent liabilities .
Exposures stated in the above table are shown for the
balance sheet items in their net book value as reported
in the statement of financial position, and for off-balance
sheet items in the amount of their nominal value .
303
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
d) Collaterals from financial assets measured at amortised cost
Collaterals from credit impaired financial assets measured at amortised cost
31 Dec 2023
NLB Group
in EUR thousands
304
Financial assets at amortised cost
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
-
47,586
102,763
119
150,468
-
28,634
47,238
57
75,929
-
133,472
343,157
4,507
481,136
113
83,423
66,332
10,484
160,352
27
17,964
12,606
405
31,002
-
4,511
20,506
54
25,071
31 Dec 2022
NLB Group
in EUR thousands
Financial assets at amortised cost
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
-
46,587
127,938
249
174,774
-
32,322
69,180
104
101,606
-
135,480
426,805
7,301
569,586
108
81,523
71,733
8,979
162,343
-
19,235
19,227
1,374
39,836
-
5,607
22,607
46
28,260
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2023
NLB
in EUR thousands
305
Financial assets at amortised cost
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
-
32,400
41,759
7
74,166
-
20,097
18,968
2
39,067
-
76,149
145,806
355
222,310
113
43,943
19,456
1,655
65,167
27
10,579
3,938
146
14,690
-
3,189
4,028
10
16,374
31 Dec 2022
NLB
in EUR thousands
Financial assets at amortised cost
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
-
22,988
36,494
3
59,485
-
16,518
17,154
2
33,674
-
50,403
93,719
379
144,501
-
36,692
14,637
830
52,159
-
8,876
4,079
23
12,978
-
3,311
2,130
7
5,448
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Collaterals from financial assets measured at amortised cost classified into Stage 1 and 2
31 Dec 2023
NLB Group
in EUR thousands
306
Financial assets at amortised cost
Debt securities
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
113,822
216
3,358,508
2,489,620
1,440
5,963,606
113,724
216
3,351,490
2,466,593
1,436
5,933,459
113,161
1,037
7,084,152
5,645,989
3,296
2,413,929
547,610
3,745,797
4,169,199
164,724
2,408,505
547,397
3,688,727
4,121,349
164,064
12,847,635
11,041,259
10,930,042
-
-
184,220
620,595
487
805,302
31 Dec 2022
NLB Group
in EUR thousands
Financial assets at amortised cost
Debt securities
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
123,860
480
3,245,998
2,467,255
607
5,838,200
123,753
475
3,240,439
2,430,478
604
5,795,749
123,860
972
6,636,980
5,536,384
2,387
12,300,583
1,797,539
222,646
3,369,336
3,986,614
177,022
9,553,157
1,793,862
222,490
3,329,674
3,932,431
175,741
9,454,198
-
-
169,791
645,861
138
815,790
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2023
NLB
in EUR thousands
307
Fully/over collateralised
financial assets
Financial assets not or not fully covered
with collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Financial assets at amortised cost
Debt securities
Loans to banks
Loans to individuals
Loans to other customers
Other financial assets
Total
113,822
-
1,902,110
1,024,057
44
3,040,033
113,724
-
1,900,201
1,025,532
44
3,039,501
113,161
-
4,027,602
2,437,145
130
6,578,038
1,855,144
149,148
1,630,374
2,573,752
101,504
6,309,922
1,852,445
148,984
1,612,726
2,556,242
101,404
6,271,801
-
-
38,207
311,166
18
349,391
in EUR thousands
31 Dec 2022
NLB
Financial assets at amortised cost
Debt securities
Loans to banks
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
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
Gross value of
financial assets
Net value of
financial assets
Fair value of
collateral
123,860
-
1,611,092
837,771
6
2,572,729
123,753
-
1,610,129
836,196
6
2,570,084
123,860
-
3,256,002
1,630,471
19
5,010,352
1,475,578
350,841
1,413,559
2,174,592
114,573
5,529,143
1,473,695
350,625
1,400,976
2,160,485
114,368
5,500,149
-
-
37,933
331,673
11
369,617
e) Collateral from loans mandatorily at fair value through profit or loss
NLB
Loans mandatorily at fair
value through profit or loss
31 Dec 2023
31 Dec 2022
Fully/over collateralised loans
Loans not or not fully covered
with collateral
Fully/over collateralised loans
Loans not or not fully covered
with collateral
Fair value
of loans
Fair value
of collateral
Fair value
of loans
Fair value
of collateral
Fair value
of loans
Fair value
of collateral
Fair value
of loans
Fair value
of collateral
70
149
7,715
5,800
4,345
4,699
3,547
2,000
in EUR thousands
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
f) Credit protection policy
NLB Group applies a single set of standards to retail
g) The processes for valuing collateral
In compliance with relevant regulations, NLB Group
appraiser included on the NLB’s reference list, the NLB’s
expert department which employs certified real estate
and corporate loan collateral, as developed by
has established a system for monitoring and reporting
appraisers in construction with licences granted by the
NLB Group members in accordance with regulatory
collateral at fair (market) value .
requirements . The master document regulating loan
Slovenian Ministry of Justice, and certified real-estate
value appraisers with licences granted by the Slovenian
collateral in the NLB Group is the Loan Collateral
The market value of real estate used as collateral is
Institute of Auditors, will verify the appraisal . The expert
Policy in NLB d .d . and NLB Group . The Policy has been
obtained from valuation reports of licensed appraisers .
department is also responsible for reviewing valuations
adopted by the Management Board of NLB Group . The
The market value of movable property is obtained
of real estate serving as collateral for large loans .
Policy represents the basic principles that NLB Group’s
from valuation reports of licensed appraisers or from
employees must take into account when signing,
sales agreements . Both, valuation reports and sales
Other NLB Group members obtain valuations from
evaluating, monitoring, and reporting collateral, with
agreements must not be older than one year . In NLB
in-house appraisers and outsourced appraisers, all
the aim of reducing credit risk .
and members of NLB Group, most reports of external
possessing the necessary licences . NLB Group has
real estate appraisers are controlled . Controls are
compiled a reference list of appraisers for valuations
In line with the policy, the primary source of loan
performed by internal appraisers . The subject of
of real estate located outside the Republic of Slovenia .
repayment is the debtor’s solvency, and the accepted
control is the content, value, scope, and format of the
Appraisals must be made in accordance with the
collateral is a secondary source of repayment in case
report, its compliance with international valuation
international valuation standards, and for larger
the debtor ceases to repay the contractual obligations .
standards, and the estimated value . If they notice
exposures, real-estate evaluations must also be reviewed
NLB Group primarily accepts collateral complying with
deviations, they estimate the needed correction of the
value of the external valuation (in %) and correct the
by an internal licensed appraiser with knowledge of
the local real-estate market . If the appraisal does not
the Basel II requirements with the aim of improving
value of the external valuation . The value adjustment
correspond to the international valuation standards or
credit risk management and consuming capital
can only be negative and can be applied only in a
if the value adjustment is greater than certain limit, the
economically . In accordance with Basel II, collateral may
limited range . For the purposes of business decisions
appraisal is rejected as inadequate .
consist of pledged deposits, government guarantees,
and the calculation of the necessary impairments and
bank guarantees, debt securities issued by central
provisions, additional deductions (haircuts) are applied
When assuring collateral, NLB Group follows the internal
governments and central banks, bank debt securities,
to the eventual adjusted market value, depending on
regulations which define the minimum security or
and real-estate mortgages (the real estate must be,
the type of collateral . These haircuts for purpose of
pledge ratios . NLB Group strives to obtain collateral with
beside other criteria, located in the European Economic
liquidation value are for real estate in the range of 30 to
a higher value than the underlying exposure (depending
Area or in country recognised in EBA’s third party
70%, depending on the type of real estate and location,
on the borrower’s rating, loan maturity, etc .) with the
equivalent list for the effect on capital to be recognised) .
and for movables they range between 50 and 100%,
aim of reducing negative consequences resulting from
depending on the type of movable .
any major swings in market prices of the assets used as
Loans made to companies and sole proprietors may
collateral . If real estate, movable property, and financial
be secured by other forms of collateral, as well (e .g ., a
The market value of financial instruments held by NLB
instruments serve as collateral, NLB Group’s lien on such
lien on movable property, a pledge of an equity stake,
Group is obtained from the organised market – such
assets should be top ranking . Exceptionally, where the
investment coupons, collateral by pledged/assigned
as the stock exchange, for listed financial instruments
value of the mortgaged real estate is large enough, the
receivables, etc .) if it is assessed that the collateral could
or determined in accordance with the internal
lien can have a different priority order .
generate a cash flow if it were needed as a secondary
methodology for unlisted financial instruments (such
source of payment . If there is of a lower probability that
collateral is used exceptionally and on a small scale in
NLB Group monitors the value of collateral during
this type of collateral would generate a cash flow, NLB
loans granted to companies and sole proprietors) .
the loan repayment period in accordance with the
Group takes a conservative approach and accepts the
mandatory periods and internal instructions . For
collateral while reporting its value as zero .
NLB has compiled a reference list of licensed real estate
example, the value of collateral using mortgaged
appraisers for real estate . All appraisals must be made
real estate is monitored annually, either by preparing
In September 2023, the operational merger of N Banka
for the purpose of secured lending and in accordance
individual assessments or by using the internal
into NLB was successfully completed with the transfer of
with the international valuation standards (IVS, EVS, and
methodology for preparing an own value appraisal
all customers and their business . During the transition
RICS) . Appraisals related to retail loans are generally
of real estate, based either on public records and
period prior to the merger, N Banka has adopted all
ordered only from appraisers with whom the NLB has
indexes of real-estate value published by the relevant
relevant internal acts in the field of collaterals, thus
a contract for real-estate valuations . For corporate
government authorities (the Surveying and Mapping
facilitating the integration into NLB system .
loans, appraisals are usually submitted by clients . If
Authority in the Republic of Slovenia) or on analyses
a client submits an appraisal that is not made by an
carried out . The value of pledged movable property
308
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
is monitored once a year (in NLB automated, with
- Debt and equity securities: bonds and shares which,
Loans are very often secured by a combination of
a straight-line depreciation over the period of the
according to the Bank’s assessment, are suitable for
collateral types . The general recommendations on loan
remaining useful life) .
securing investments and are traded on a regulated
collateral are specified in the internal instructions and
h) The main types of collateral taken by the NLB Group
NLB Group accepts different forms of material and
Slovenian and foreign issuers);
type of collateral and the coverage of loan by collateral
- The pledge of investment coupons of mutual
depends on the client’s creditworthiness (credit rating),
personal security as loan collateral .
funds managed by management companies (a
loan maturity, and varies depending on whether the loan
market (marketable securities of higher-quality
include the elements specified below . The decision on the
priority company NLB Skladi) and are, according
is granted to retail or a corporate client .
Material loan collateral gives the right in the case of
to the Bank’s assessment, suitable for insurance of
a debtor (borrower) defaulting on their contractual
investments .
NLB has also created, in the area of real-estate loan
obligations to sell a specific property to recover
- A pledge of an equity stake: non-marketable capital
collateral, an ‘online’ connection with the Surveying and
claims, keep specific non-cash property or cash, or
shares with a credit rating of at least B are adequate;
Mapping Authority in the Republic of Slovenia, which
reduce or offset the amount of exposure against the
- A pledge or assignment of receivables as collateral:
allows direct and immediate verification of the existence
counterparty’s debt to the Bank .
cash receivables must have longer maturities than the
of property .
maturity of the investment and they must not be due
NLB Group accepts the following material types of loan
and not be paid;
NLB Group strives to ensure the best possible collateral
collateral:
- Other material forms of loan collateral (e .g ., life
for long-term loans, in particular mortgages where
- Collateral in the form of business and residential
real estate: land, buildings, and individual parts of
insurance policies pledged to NLB): The Bank
accepts products of Vita, life insurance company d .d .
possible . As a result, the mortgaging of real estate is
the most frequent form of loan collateral of corporate
buildings in a storeyed property intended for living in
Ljubljana – a pledge of an investment life insurance
and retail clients . In corporate exposures, the next
or performing a business activity, such as land in the
policy and a life insurance policy with a guaranteed
most frequent forms of collateral are government
area foreseen for construction, apartments, residential
return that includes saving, in addition to insurance .
and corporate guarantees, while in retail loans, it is
buildings, garages and holiday homes, business
guarantors .
premises, industrial buildings, offices, shops, hotels,
Personal loan collateral is a method for reducing credit
branches and warehouses, forests, parking spaces, etc .
risk whereby a third party undertakes to pay the debt in
The objects can be completed or under construction .
case of the primary debtor (borrower) defaulting .
Priority is given to property where the pledge right of
i) Risks, deriving from valuation of received collateral
Client/counterparty credit risk is the key decision
parameter when approving exposures . Collateral is a
the Bank is entered in the first place and real estate
NLB Group accepts the following types of personal loan
secondary source of repayment, and therefore decisions
is already owned by the debtor and/or the pledger .
collateral:
on the approvals of exposures should not primarily be
For real estate, there must be a market, and it must be
- Joint and several guarantees by retail and corporate
based on the provided collateral . However, collateral is
redeemable within a reasonable time;
clients: for the collateralisation of private individuals’
an important comfort element in the approval process
- Collateral in the form of movable property: priority
loans, employees, or pensioners are adequate
and, depending on the credit rating of the client, a
is given to the types of movable property, that are
guarantors . They must not be in the process of
prerequisite . NLB Group has prescribed the minimum
highly likely to be sold in the event of execution, and
personal bankruptcy . They are responsible for
ratios between the value of collateral and the loan
the funds received are used to repay the collateralised
fulfilling the debtor’s obligations for loans with a
amount, depending on the type of collateral, loan
claims (their market value must be estimated with
repayment period not exceeding 60 months . For
maturity, and the client rating . The ratios are based on
considerable reliability) . Among the appropriate types
the collateralisation of legal entities investments,
experience and regulatory guidelines .
of movable property, the Bank includes motor vehicles,
legal entities, individuals, or private individuals are
agricultural machinery, construction machinery,
adequate guarantors;
production lines, and series-produced machines, and
- Bank guarantees;
NLB Group pays particular attention to closely
monitoring the fair value of collateral, and to receiving
some custom-made production machines;
- Government guarantees (e .g ., of the Republic of
regular and independent revaluations by applying
- Collateral by a pledge of financial assets (bank
Slovenia);
the International Valuation Standards . Through a
deposits or cash-like instruments, debt securities
- Guarantees by national and regional development
detailed examination of all collateral received, NLB has
of different issuers, investment fund units, equity
agencies with which the Bank has a contract on
ensured that only collateral from which payment can be
securities, or convertible bonds):
the acceptance of guarantees (e .g . the Slovenian
realistically expected if it is liquidated, is considered .
- Cash receivable collateral: bank deposits and
Enterprise Fund);
savings with Bank are appropriate in domestic and
- Other types of personal loan collateral .
foreign currency;
309
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group has the largest concentration of collaterals
Collateral consisting of securities entails market risk,
Collateral consisting of the sureties of corporate clients,
arising from mortgages on real estate, which is a
specifically the risk of changes in the prices of securities
sureties of private individuals, and bank guarantees
relatively reliable and quality type of collateral . Due to
on capital markets . To limit such risks and restrict
entail the credit risk of the provider of the collateral . NLB
the possible decrease of real estate market prices, the
the possibility of the value of instruments received
Group includes the amount of the guarantees received
Group closely monitors the real-estate collateral values
as collateral falling below approved limits, the Rules
in the exposure of the guarantor, and guarantees are
and, where required, establishes higher amounts of
determine minimum pledge ratios for securing loans
only taken into account as collateral if the guarantor has
impairments and provisions for non-performing loans
based on pledged securities and equity shares in
sufficient overall creditworthiness .
secured by real estate, based on estimated discounts of
NLB . Deviations from the Rules are subject to the prior
the real-estate value, which are expected to be achieved
approval of the respective decision bodies of the Bank .
The Business Rules – Collateral for Retail and Corporate
in a sale (expected payment from collateral) . Priority is
The ratio between the loan amount and the securities’
Loans regulate which forms of collateral are acceptable,
given to property where the pledge right of the Group is
value is determined regarding the rating of the issuer,
and which preconditions a type of collateral needs to
entered in the first place and the real estate is already
the securities’ liquidity, maturity, and correlation with
fulfil to be able to be considered .
owned by the debtor and/or the pledger . For real estate,
changes in market indexes, i .e ., by considering the key
there must be a market, and it must be redeemable
features reflecting the level of volatility of market prices,
within a reasonable time .
and the ability to sell the securities at the market price .
310
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
j) Credit quality analysis for financial assets and contingent liabilities
in EUR thousands
311
31 Dec 2023
Debt securities at amortised cost
A
B
C
Loss allowance
Carrying amount
Loans and advances to banks at amortised cost
A
B
D and E
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
NLB Group
NLB
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
Total
1,779,525
735,905
-
(4,946)
2,510,484
166,615
381,211
-
(213)
547,613
6,787,523
64,863
2,339
-
(39,668)
6,815,057
1,344,256
4,724,560
138,837
-
(51,087)
6,156,566
125,514
39,042
819
-
(624)
164,751
1,221,592
1,031,205
-
-
(6,475)
1,691,834
2,286,997
53,728
-
(18,429)
4,014,130
-
-
12,321
(576)
11,745
-
-
-
-
-
111,211
55,590
81,623
-
(25,051)
223,373
3,758
158,829
288,567
-
(19,778)
431,376
77
156
556
-
(40)
749
-
-
144
-
(56)
26,522
33,489
46,605
-
(1,655)
104,961
-
-
-
-
-
-
-
113
(86)
27
-
-
-
126,743
(82,756)
43,987
-
-
-
152,759
(103,278)
49,481
-
-
-
9,346
(8,910)
436
-
-
-
798
(798)
-
-
-
17,221
(9,369)
7,852
- 1,779,525
735,905
-
12,321
-
-
(5,522)
- 2,522,229
1,590,676
373,190
-
(2,624)
1,961,242
-
-
-
-
-
166,615
381,211
113
(299)
547,640
10
514
4,266
(1,024)
632 6,899,366
120,463
84,476
131,009
(148,499)
4,398 7,086,815
- 1,348,014
12 4,883,401
427,404
-
169,095
16,336
(180,128)
(5,985)
10,363 6,647,786
-
-
-
1,257
(1,231)
26
125,591
39,198
1,375
10,603
(10,805)
165,962
- 1,221,592
- 1,031,205
144
-
798
-
(7,329)
-
145,666
3,482
-
(164)
148,984
3,373,404
6,109
-
-
(8,072)
3,371,441
1,167,563
2,182,739
84,531
-
(13,482)
3,421,351
83,727
17,580
122
-
(98)
101,331
854,472
154,461
-
-
(1,650)
-
-
5,100
(173)
4,927
-
-
-
-
-
77,225
31,221
43,815
-
(11,489)
140,772
1,961
59,001
102,014
-
(2,553)
160,423
25
50
44
-
(2)
117
-
-
-
-
-
-
-
-
-
-
-
-
113
(86)
27
-
-
-
72,822
(43,908)
28,914
-
-
-
49,049
(32,631)
16,418
-
-
-
1,658
(1,512)
146
-
-
-
-
-
- 1,590,676
373,190
-
5,100
-
-
(2,797)
- 1,966,169
-
-
-
-
-
145,666
3,482
113
(250)
149,011
8
389
3,521
(1,755)
313 3,450,942
37,338
44,204
76,343
(65,224)
2,476 3,543,603
- 1,169,524
- 2,241,740
186,545
-
61,215
12,166
(54,344)
(5,678)
6,488 3,604,680
-
-
-
4
(2)
2
-
-
-
798
(798)
83,752
17,630
166
1,662
(1,614)
101,596
854,472
154,461
-
798
(2,448)
37 1,718,393
11 2,320,497
100,503
20,699
(32,548)
601 4,127,544
170
3,478
(3,095)
1,358,079
1,383,937
41,961
-
(7,653)
2,776,324
25,286
25,497
15,836
-
(319)
66,300
-
-
-
10,613
(7,034)
3,579
10 1,383,375
1 1,409,435
57,853
13,911
(17,941)
430 2,846,633
56
3,298
(2,935)
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group
NLB
in EUR thousands
312
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
Total
31 Dec 2022
Debt securities at amortised cost
A
B
C
Loss allowance
Carrying amount
Loans and advances to banks at amortised cost
A
B
D and E
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
1,388,564
525,606
-
(3,519)
1,910,651
87,422
135,704
-
(161)
222,965
6,327,508
80,749
14,620
-
(31,385)
6,391,492
1,366,495
4,508,706
153,084
-
(59,840)
5,968,445
138,353
37,103
1,370
-
(1,246)
175,580
1,453,671
1,545,358
-
-
(9,029)
1,500,489
2,294,429
48,375
-
(18,826)
3,824,467
-
-
7,229
(265)
6,964
-
-
-
-
-
82,441
40,465
67,215
-
(14,582)
175,539
1,405
146,749
275,517
-
(31,230)
392,441
57
169
577
-
(38)
765
-
-
165
-
(70)
-
-
-
-
-
-
-
108
(108)
-
-
-
-
122,350
(76,306)
46,044
-
-
-
178,206
(114,288)
63,918
-
-
-
7,940
(7,565)
375
-
-
-
8,338
(6,777)
- 1,388,564
525,606
-
7,229
-
-
(3,784)
- 1,917,615
1,318,134
281,304
-
(1,990)
1,597,448
-
-
-
-
-
87,422
135,704
108
(269)
222,965
50
1,514
5,760
499
772 6,410,721
121,264
83,349
128,110
(121,774)
8,595 6,621,670
- 1,367,900
15 4,655,470
430,499
199,671
(202,224)
26,512 6,451,316
1,898
21,465
3,134
-
-
-
1,288
(185)
1,103
138,410
37,272
1,947
9,228
(9,034)
177,823
- 1,453,671
- 1,545,358
165
-
8,338
-
(15,876)
-
350,138
703
-
(216)
350,625
2,915,578
7,329
-
-
(6,161)
2,916,746
1,007,159
1,907,775
45,521
-
(14,880)
2,945,575
102,414
11,362
759
-
(203)
114,332
1,159,704
207,791
-
-
(2,022)
1,118,801
1,256,792
22,149
-
(8,156)
2,389,586
-
-
-
-
-
-
-
-
-
-
37,725
29,299
34,720
-
(7,385)
94,359
91
23,418
28,397
-
(800)
51,106
2
19
23
-
(2)
42
-
-
-
-
-
4,426
17,906
12,911
-
(378)
34,865
-
-
-
-
-
-
-
-
-
-
-
-
-
59,680
(34,286)
25,394
-
-
-
47,824
(29,262)
18,562
-
-
-
832
(807)
25
-
-
-
8,338
(6,777)
-
-
-
11,575
(8,889)
2,686
- 1,318,134
281,304
-
-
-
-
(1,990)
- 1,597,448
-
-
-
-
-
350,138
703
-
(216)
350,625
- 2,953,303
36,628
-
34,720
-
59,680
-
-
(47,832)
- 3,036,499
- 1,007,250
- 1,931,193
73,920
2
51,131
3,307
(638)
(45,580)
2,671 3,017,914
-
-
-
1
(1)
-
102,416
11,381
782
833
(1,013)
114,399
- 1,159,704
207,791
-
-
-
8,338
-
(8,799)
-
- 1,123,227
101 1,274,799
35,085
14,893
(20,299)
568 2,427,705
25
3,318
(2,876)
6,657
38,878
37,735
-
(1,953)
81,317
-
-
-
20,134
(12,735)
7,399
34 1,507,180
318 2,333,625
86,198
26,457
(37,609)
2,668 3,915,851
88
6,323
(4,095)
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group’s client credit rating classification is based
The NLB Group ratings in the master scale are mapped
on an internally developed methodology, drawing from
to the following PD structure:
internal statistical analyses, good banking practices,
as well as Bank of Slovenia regulations, and ECB and
Rating class
Average PD in %
EBA guidelines and requirements . The aligned rating
methodology is used across the entire NLB Group . It
includes a uniform credit grade scale of 12 rating classes,
out of which nine represent performing clients and three
non-performing clients .
Rating Group A (AAA to A rating classes) includes the
best clients with a low degree of default probability,
characterised by high coverage of financial liabilities
with free cash flow . The Rating Group A is considered as
investment grade classification .
AAA
AA
A
BBB
BB
B
CCC
CC
C
D
DF
E
0 .05
0 .15
0 .30
0 .60
1 .20
2 .40
4 .80
9 .60
19 .20
100
100
100
Rating Group B (BBB to B rating classes) includes
In 2020, NLB Group applied a new default definition
clients with a low credit risk, starting one notch lower
than ‘A’ rating group clients . These clients show
based on the EBA guidelines, where the materiality
threshold for delays is determined in absolute and
stable performance, acceptable financial ratios, and
relative terms (EUR 100 for retail and EUR 500 for the
qualitative elements, and have sufficient cash flow to
non-retail segment and 1% of the total on-balance
settle their obligations, but may be more sensitive to
exposure on the client level) . At the same time, the
changes in the industry or the economy . The Rating
assessment of rating for private individuals was
Group B classification is an investment grade for BBB,
improved by establishing a common rating on the client
and an ‘invest with care’ for BB and B .
level . In 2023, a scoring model for private individual
clients came into effect, which will enable higher degree
Rating Group C (CCC to C rating classes) includes clients
of differentiation among the clients as it introduces 9
who are exposed to a higher and above-average level
performing rating classes (instead of the previous 3) .
of credit risk . CCC rated clients are financed by the Bank
only in the case when such support brings more positive
A standard corporate rating methodology, with
effects for the Bank; however, Rating Group C is overall
the prescribed set of parameters (qualitative and
considered as a substantial risk . The Bank reasonably
quantitative) applies to all the NLB Group bank entities .
restricts cooperation with such clients and decreases its
Groups of connected clients are treated as materially
exposure to them .
important for the NLB Group whenever exposure
exceeds EUR 7 million, or EUR 15 million for NLB Group
Rating Groups D (D and DF rating classes) and E
members with total assets greater than EUR 1 .5 billion .
represent non-performing clients that are treated
Materially important clients are submitted to the NLB
as defaulted . D, DF, and E rating classified clients
Credit Committee .
are ordinarily transferred to the specialised units for
restructuring (which performs business and financial
NLB regularly reviews the business practices and credit
restructuring with a goal of minimising losses and
portfolios of NLB Group entities to make sure they
restoring the client to a performing status) or workout
are operating in accordance with the minimum risk
and legal support (with the goal of minimising losses
management standards of NLB Group . This ensures
due to default) .
appropriate standard processes for managing and
reporting credit risks at the consolidated level .
313
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
k) Forborne loans
31 Dec 2023
Loans and advances (including at
amortised cost and fair value)
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 2022
Loans and advances (including at
amortised cost and fair value)
Governments
Other financial organisations
Non-financial organisations
Households
Debt instruments other than held for trading
Loan commitments given
Total exposures with forbearance measures
NLB Group
All forborne exposures
Impairment, provisions and value
adjustments
Gross
carrying
amount
Performing
Non - performing
Impaired
Defaulted
Performing
forborne
exposures
Non-performing
forborne
exposures
in EUR thousands
Collateral
and financial
guarantees
received on
forborne
exposures
246,402
116,477
129,874
129,925
624
1,388
168,726
75,664
246,402
434
246,836
419
-
77,709
38,349
116,477
84
116,561
205
1,388
90,966
37,315
129,874
350
130,224
205
1,388
91,017
37,315
129,925
350
130,275
(7,883)
(22)
-
(3,857)
(4,004)
(7,883)
(1)
(7,884)
(81,121)
(205)
(1,388)
(59,606)
(19,922)
(81,121)
(27)
(81,148)
92,352
-
-
58,611
33,741
92,352
352
92,704
All forborne exposures
Impairment, provisions and value
adjustments
NLB Group
Gross
carrying
amount
Performing
Non - performing
Impaired
Defaulted
Performing
forborne
exposures
Non-performing
forborne
exposures
272,249
117,808
154,385
154,441
840
1,526
207,473
62,410
272,249
1,392
273,641
604
201
89,871
27,132
117,808
743
118,551
236
1,325
117,546
35,278
154,385
649
155,034
236
1,325
117,602
35,278
154,441
649
155,090
(9,929)
(12)
(6)
(7,267)
(2,644)
(9,929)
(2)
(9,931)
(79,535)
(234)
(1,325)
(61,900)
(16,076)
(79,535)
(209)
(79,744)
in EUR thousands
Collateral
and financial
guarantees
received on
forborne
exposures
121,376
-
-
87,245
34,131
121,376
740
122,116
314
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2023
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
31 Dec 2022
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
Impairment, provisions and value
adjustments
Performing
Non - performing
Impaired
Defaulted
Performing
forborne
exposures
Non-performing
forborne
exposures
42,584
-
15,166
27,418
42,584
84
42,668
68,270
1,388
35,762
31,120
68,270
350
68,620
68,321
1,388
35,813
31,120
68,321
350
68,671
NLB
(3,718)
-
(70)
(3,648)
(3,718)
(1)
(3,719)
(41,050)
(1,388)
(23,142)
(16,520)
(41,050)
(27)
(41,077)
All forborne exposures
Impairment, provisions and value
adjustments
Performing
Non - performing
Impaired
Defaulted
Performing
forborne
exposures
Non-performing
forborne
exposures
16,694
201
3,521
12,972
16,694
41
16,735
67,944
1,325
38,893
27,726
67,944
646
68,590
68,000
1,325
38,949
27,726
68,000
646
68,646
(1,628)
(6)
(40)
(1,582)
(1,628)
(2)
(1,630)
(37,260)
(1,325)
(22,935)
(13,000)
(37,260)
(207)
(37,467)
in EUR thousands
Collateral
and financial
guarantees
received on
forborne
exposures
53,937
-
27,232
26,705
53,937
352
54,289
in EUR thousands
Collateral
and financial
guarantees
received on
forborne
exposures
38,474
-
19,073
19,401
38,474
416
38,890
Gross
carrying
amount
110,905
1,388
50,979
58,538
110,905
434
111,339
Gross
carrying
amount
84,694
1,526
42,470
40,698
84,694
687
85,381
315
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Forborne exposures of debt instruments by periods of forbearance
31 Dec 2023
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
31 Dec 2022
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
NLB Group
in EUR thousands
Up to 3 months
3 to 6 months
6 to 12 months
Over 12 months
7,519
1,569
9,088
2,930
4,343
7,273
1,813
6,838
8,651
45,452
3,472
48,924
8,140
5,071
13,211
4,714
13,351
18,065
91,122
35,275
126,397
54,783
53,684
108,467
31 Dec 2023
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
31 Dec 2022
Performing exposures
Non-performing exposures
Total exposures with forbearance measures
Up to 3 months
3 to 6 months
6 to 12 months
Over 12 months
NLB
in EUR thousands
7,059
1,312
8,371
2,063
1,939
4,002
1,690
6,634
8,324
608
1,261
1,869
2,880
2,455
5,335
1,864
7,300
9,164
27,237
16,819
44,056
10,531
20,184
30,715
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 .
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:
Net value
Nature of assets
Equity securities mandatorily measured at
fair value through profit or loss (note 5 .3 .a)
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 .)
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
in EUR thousands
-
21,253
11,641
-
27,122
515
474
368
25,326
11,962
-
50,913
673
651
-
2,263
-
530
3,129
-
-
-
1,901
-
2,049
3,170
-
-
Total
61,005
89,893
5,922
7,120
316
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
m) Analysis of loans and advances by industry sectors
in EUR thousands
317
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
Gross loans
547,939
154,385
599,988
535,444
1,487,769
14,278
108,204
390,522
31 Dec 2023
Impairment
provisions
(299)
(2,321)
(9,284)
(23,798)
(29,619)
(481)
(3,536)
(4,234)
Net loans
547,640
152,064
590,704
511,646
1,458,150
13,797
104,668
386,288
7,235,314
(148,499)
7,086,815
45,801
388,668
929,438
884,162
1,254,749
34,506
176,767
(1,733)
(7,604)
(34,385)
(20,676)
(41,550)
(907)
(10,805)
44,068
381,064
895,053
863,486
1,213,199
33,599
165,962
(%)
3 .79
1 .05
4 .09
3 .54
10 .09
0 .10
0 .72
2 .67
49 .05
0 .31
2 .64
6 .19
5 .98
8 .40
0 .23
1 .15
31 Dec 2022
Gross loans
Impairment
provisions
223,234
235,737
601,556
547,251
1,415,304
13,246
98,813
285,495
6,743,441
53,854
389,376
809,891
920,149
1,239,161
43,710
186,857
(269)
(2,579)
(10,704)
(27,686)
(25,553)
(1,313)
(3,063)
(4,737)
(121,771)
(2,747)
(9,162)
(41,343)
(19,476)
(53,113)
(751)
(9,034)
Net loans
222,965
233,158
590,852
519,565
1,389,751
11,933
95,750
280,758
6,621,670
51,107
380,214
768,548
900,673
1,186,048
42,959
177,823
(%)
1 .65
1 .73
4 .39
3 .86
10 .31
0 .09
0 .71
2 .08
49 .14
0 .38
2 .82
5 .70
6 .68
8 .80
0 .32
1 .32
Total
14,787,934
(339,731)
14,448,203
100.00
13,807,075
(333,301)
13,473,774
100.00
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 2023
Gross loans
Impairment
provisions
149,261
440,080
429,569
131,462
847,052
3,509
14,566
116,388
3,608,827
19,996
83,802
607,989
580,244
370,514
21,638
103,210
(250)
(2,914)
(2,577)
(8,652)
(11,135)
(63)
(65)
(824)
(65,224)
(71)
(2,753)
(15,368)
(3,814)
(5,521)
(587)
(1,614)
Net loans
149,011
437,166
426,992
122,810
835,917
3,446
14,501
115,564
3,543,603
19,925
81,049
592,621
576,430
364,993
21,051
101,596
(%)
2 .01
5 .90
5 .76
1 .66
11 .29
0 .05
0 .20
1 .56
47 .84
0 .27
1 .09
8 .00
7 .78
4 .93
0 .28
1 .37
31 Dec 2022
Gross loans
Impairment
provisions
350,841
383,781
371,356
150,715
688,517
3,529
15,432
104,303
3,084,331
23,736
64,471
342,882
589,152
308,724
24,788
115,412
(216)
(3,167)
(1,467)
(9,714)
(6,161)
(19)
(70)
(1,176)
(47,832)
(185)
(1,722)
(12,336)
(3,155)
(6,143)
(265)
(1,013)
Net loans
350,625
380,614
369,889
141,001
682,356
3,510
15,362
103,127
3,036,499
23,551
62,749
330,546
585,997
302,581
24,523
114,399
in EUR thousands
(%)
5 .37
5 .83
5 .67
2 .16
10 .45
0 .05
0 .24
1 .58
46 .52
0 .36
0 .96
5 .06
8 .98
4 .64
0 .38
1 .75
7,528,107
(121,432)
7,406,675
100.00
6,621,970
(94,641)
6,527,329
100.00
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 2023
6,705,660
414,732
3,306,766
4,021,045
31 Dec 2022
6,704,603
274,795
2,790,892
3,703,484
31 Dec 2023
6,701,924
222,556
193,376
288,819
31 Dec 2022
5,824,477
180,842
184,530
337,480
14,448,203
13,473,774
7,406,675
6,527,329
318
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
o) Analysis of debt securities and derivative financial instruments by geographical sectors
in EUR thousands
NLB
319
31 Dec 2023
Country
Slovenia
Other members of European Union
- Austria
- Belgium
- Bulgaria
- Czech Republic
- Cyprus
- Denmark
- Finland
- France
- Germany
- Hungary
- Ireland
- Italy
- Latvia
- Lithuania
- Luxembourg
- Malta
- 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
- Other
NLB Group
Financial assets
measured at
amortised cost
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
measured at fair
value through OCI
Derivative financial
instruments
428,163
1,567,873
113,531
173,326
34,226
12,975
18,172
16,662
67,257
239,395
167,538
45,211
58,793
51,566
23,276
20,596
69,567
27,442
117,309
35,024
42,677
53,190
63,406
67,471
41,597
7,666
37,158
489,035
59,073
-
60,109
154,398
140,796
-
26,681
1,638
7,737
7,408
-
19,303
11,892
274,855
805,334
77,472
84,471
1,002
-
1,550
8,187
90,419
136,115
107,278
5,639
31,191
5,989
-
-
7,337
-
112,840
7,126
16,574
5,013
18,900
40,190
48,041
-
58,889
1,025,385
132,027
48,614
22,665
115,535
579,332
27,819
12,133
51,436
8,205
9,062
7,507
6,465
4,585
-
5,217
707
706
-
-
-
-
707
-
505
-
-
100
-
-
-
-
1,092
35,121
-
7,819
-
-
-
-
-
9,227
12,301
-
2,677
-
-
-
-
-
2,492
3,097
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27,119
-
20
-
29
821
-
-
26,249
-
-
-
-
-
416,679
1,440,075
105,552
156,407
34,226
12,975
18,172
16,662
59,293
211,895
136,969
45,211
52,634
51,566
23,276
20,596
69,567
27,442
91,519
35,024
42,677
53,190
58,488
67,471
41,597
7,666
6,831
102,584
4,064
-
6,760
13,129
3,972
-
26,681
1,638
7,737
7,408
-
19,303
11,892
219,307
551,192
46,541
34,407
1,002
-
1,550
8,187
57,919
92,483
54,500
5,639
29,141
5,989
-
-
7,337
-
70,653
7,126
16,574
5,013
18,900
40,190
48,041
-
7,427
184,158
2,917
-
3,008
46,539
4,482
27,819
12,133
51,436
8,205
9,062
7,507
6,465
4,585
1,092
35,121
-
7,819
-
-
-
-
-
9,227
12,301
-
2,677
-
-
-
-
-
3,097
-
-
-
-
-
-
-
-
29,358
-
20
2,243
7
839
-
-
26,249
-
-
-
-
-
Total
2,522,229
2,164,463
5,217
63,332
1,966,169
962,084
65,571
Other members of the European Union included in the line item ‘Other’ are Estonia and Greece .
Other members of the ‘Other countries’ in the line item ‘Other’ are Egypt, Uzbekistan, South Korea and Oman .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial assets
measured at
amortised cost
Financial assets
held for trading
NLB Group
Financial assets
measured
at fair value
through OCI
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
in EUR thousands
NLB
320
31 Dec 2022
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
- Switzerland
- Other
360,623
1,214,523
96,349
129,217
41,233
12,901
10,187
5,975
57,440
184,831
139,370
-
37,346
53,384
37,472
15,507
16,798
91,588
57,523
19,772
46,750
37,802
31,523
55,076
24,753
11,726
25,966
316,503
7,648
-
40,672
189,383
25,490
-
3,007
-
7,746
-
-
16,186
-
19,287
7,084
Non-trading
financial assets
mandatorily
at FV through
profit or loss
-
2,267
-
-
-
-
-
-
-
-
-
-
-
-
99
-
-
-
2,450
36,606
-
11,397
-
-
-
-
-
10,087
10,447
-
-
-
-
-
-
-
2,168
4,675
-
-
-
-
-
-
-
849
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,691
-
17
-
5
-
-
-
41,669
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
331,539
951,992
79,119
94,088
3,029
-
1,553
13,333
114,292
169,157
105,082
10,888
5,260
31,592
13,544
-
-
27,256
112,907
17,691
16,440
4,827
31,592
39,097
61,245
-
62,170
203
1,493,095
-
-
-
-
-
-
-
-
-
-
-
-
-
203
-
203
177,746
58,034
20,949
134,268
898,531
25,866
21,147
54,178
7,892
9,053
12,970
11,206
2,026
54,572
4,657
347,976
1,184,663
96,349
129,217
41,233
12,901
10,187
5,975
57,440
179,844
114,497
-
37,346
53,384
37,472
15,507
16,798
91,588
57,523
19,772
46,750
37,802
31,523
55,076
24,753
11,726
4,690
60,119
4,056
-
6,780
15,260
-
-
3,007
-
7,746
-
-
16,186
-
-
7,084
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
203
-
-
-
-
-
-
-
-
-
-
-
-
-
203
-
203
241,095
774,380
51,193
55,622
3,029
-
1,553
13,333
84,477
137,668
70,207
10,888
5,260
29,525
13,544
-
-
27,256
99,933
17,691
16,440
4,827
31,592
39,097
61,245
-
11,859
263,943
2,905
-
2,819
54,590
3,913
25,866
21,147
54,178
7,892
9,053
12,970
11,206
2,026
50,721
4,657
2,449
36,606
-
11,397
-
-
-
-
-
10,087
10,447
-
-
-
-
-
-
-
4,675
-
-
-
-
-
-
-
-
41,796
-
17
-
31
79
-
-
41,669
-
-
-
-
-
-
-
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Total
1,917,615
2,838,796
3,116
80,747
1,597,448
Other members of the European Union included in the line item ‘Other’ are Malta and Estonia .
Other members of the ‘Other countries’ in the line item ‘Other’ are Egypt, Uzbekistan, and Oman .
1,291,277
80,851
Contents
p) Internal rating of derivatives counterparties
A
B
C
D and E
Total
All derivatives in the banking book are entered into with
counterparties 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 rating, but all such transactions are covered
through back-to-back transactions involving third
parties with an external investment-grade rating .
q) Debt financial instruments
in NLB Group’s and NLB’s
portfolio that represent
subordinated liabilities for the
issuer
in %
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
92 .94
6 .91
0 .08
0 .08
88 .90
11 .10
0 .00
0 .00
93 .80
6 .06
0 .07
0 .07
90 .18
9 .82
0 .00
0 .00
100.00
100.00
100.00
100.00
r) Debt financial instruments in NLB Group’s and NLB’s portfolio that represent subordinated liabilities for the issuer
31 Dec 2023
Internal rating
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
Total
31 Dec 2022
Internal rating
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
Total
A
28,421
9,484
-
-
37,905
A
28,014
2,612
-
-
30,626
NLB Group
C
-
-
-
-
-
NLB Group
C
-
-
-
-
-
B
-
-
-
-
-
B
-
-
-
-
-
D
-
-
-
-
-
D
-
-
-
-
-
Total
A
28,421
28,421
9,484
-
-
9,484
90,153
-
37,905
128,058
Total
A
28,014
28,014
2,612
-
-
2,612
84,713
-
30,626
115,339
NLB
C
-
-
-
7,050
7,050
NLB
C
-
-
-
6,613
6,613
B
-
-
-
-
-
B
-
-
-
-
-
in EUR thousands
D
-
-
-
-
-
Total
28,421
9,484
90,153
7,050
135,108
in EUR thousands
D
-
-
-
-
-
Total
28,014
2,612
84,713
6,613
121,952
321
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
s) Presentation of net financial instruments by measurement category
in EUR thousands
322
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
-
6,103,561
31 Dec 2023
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 2022
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
15,718
14,175
2,251,556
22,737,725
47,614
25,403,056
in EUR thousands
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
-
5,271,365
13,945,973
336,268
-
-
-
-
-
-
-
15,718
-
-
-
-
-
-
-
-
14,175
5,217
6,300
-
-
2,658
-
-
-
-
-
-
-
-
-
203
-
-
-
203
-
21,385
-
-
-
-
-
-
-
-
19,031
3,116
5,579
-
-
10,336
-
-
-
-
-
-
-
-
2,251,556
1,836,604
87,092
26,022
301,838
-
-
-
-
-
-
-
-
-
2,919,203
2,506,224
80,407
21,824
310,748
-
-
-
-
-
-
-
-
-
2,522,229
2,522,229
-
-
-
-
-
386,059
547,640
91,460
6,986,045
5,934,769
165,962
1,917,615
1,917,615
-
-
-
-
-
303,086
222,965
116,046
6,550,704
5,909,928
177,823
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
232
-
63
100,770
235,203
-
336,268
357
-
32
70,966
121,867
-
193,222
13,102,729
193,222
Total
6,103,561
4,787,960
4,364,050
93,392
26,022
301,838
2,658
63,332
14,282,241
386,291
547,640
91,523
7,086,815
6,169,972
165,962
Total
5,271,365
4,856,052
4,426,955
85,986
21,824
310,951
10,336
80,747
13,295,951
303,443
222,965
116,078
6,621,670
6,031,795
177,823
-
-
-
-
-
-
-
47,614
-
-
-
-
-
-
-
-
-
-
-
-
-
-
59,362
-
-
-
-
-
-
-
21,588
19,031
2,919,203
20,469,532
59,362
23,681,938
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
323
Financial assets
held for trading
Non-trading financial
assets mandatorily
at FV through P&L
Financial assets
measured at FV
through OCI
Financial assets
measured at
amortised cost
Derivatives for
hedge accounting
NLB
-
-
-
-
-
17,957
-
-
-
-
-
-
-
17,957
-
8,858
-
6,300
2,558
-
7,785
-
-
-
-
7,785
-
16,643
-
1,023,012
962,084
60,928
-
-
-
-
-
-
-
-
-
4,318,032
1,966,169
1,966,169
-
-
-
7,297,294
118,220
149,011
384,995
3,543,603
3,101,465
101,596
-
-
-
-
-
47,614
-
-
-
-
-
-
-
1,023,012
13,683,091
47,614
14,788,317
NLB
in EUR thousands
Financial assets
held for trading
Non-trading financial
assets mandatorily
at FV through P&L
Financial assets
measured at FV
through OCI
Financial assets
measured at
amortised cost
Derivatives for
hedge accounting
-
203
-
-
203
-
21,489
-
-
-
-
-
-
-
21,692
-
7,519
-
5,211
-
2,308
-
7,892
-
-
-
-
7,892
-
15,411
-
1,334,061
1,196,760
42,784
94,517
-
-
-
-
-
-
-
-
-
3,339,024
1,597,448
1,597,448
-
-
-
-
6,405,038
124,736
350,625
286,504
3,036,499
2,606,674
114,399
-
-
-
-
-
-
59,362
-
-
-
-
-
-
-
1,334,061
11,455,909
59,362
12,886,435
Total
4,318,032
2,998,039
2,928,253
67,228
2,558
65,571
7,305,079
118,220
149,011
384,995
3,543,603
3,109,250
101,596
Total
3,339,024
2,939,231
2,794,208
47,995
94,720
2,308
80,851
6,412,930
124,736
350,625
286,504
3,036,499
2,614,566
114,399
31 Dec 2023
Cash and obligatory reserves with central banks,
and other demand deposits at banks
Securities
- Bonds
- Shares
- 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 2022
Cash and obligatory reserves with central banks,
and other demand deposits at banks
Securities
- Bonds
- Shares
- 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
As at 31 December 2023 and 31 December 2022, all of
NLB Group’s financial liabilities, except for derivatives
designated as hedging instruments, trading liabilities,
and financial liabilities measured at fair value through
profit or loss, were carried at amortised cost .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6 .2 . Market risk
NLB Group 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, backtesting, 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 potential losses that
could occur in severe market conditions .
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
interest income and economic value of equity 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 FX rates, whilst limiting the volatility in the income
of the Strategy on trading with financial instruments in
statement . FX exposures in banking book result from
NLB Group, the trading activities in other NLB Group
core banking business activities .
members are very restricted .
Each member is responsible for its own currency risk
For monitoring and managing NLB Group’s exposure
policy, which also includes a limit system and is in line
to market risks, uniform guidelines and exposure limits
with the parent Bank’s guidelines and standards, as well
for each type of risk are set for individual NLB Group
as local regulatory requirements . Policies are confirmed
entities . The methodologies are in line with regulatory
by either the local Management Board or Supervisory
requirements on individual and consolidated levels,
Board . NLB monitors and manages NLB Group currency
while reporting to the regulator on the consolidated
risk exposure on a monthly basis for each member and
level is carried out using the standardised approach .
on the consolidated level .
Pursuant to the relevant policies, NLB Group entities
must monitor and manage exposure to market risks and
NLB Group banks follow the guidelines for managing FX
report to NLB accordingly . The exposure of an individual
lending in NLB Group . The guidelines’ goal is to address
NLB Group entity is regularly monitored and reported to
risks stemming from the potential excessive growth of
the Assets and Liabilities Committee of NLB Group (NLB
FX lending, to identify hidden risks, and tail-event risks
Group ALCO) .
6.2.1. Currency risk (FX)
Foreign currency risk (FX) is a risk of the potential
related to FX lending, to mitigate the respective risk, to
internalise the respective costs, and to hold adequate
capital with respect to FX lending .
losses from the open FX positions due to the changes
The positions of all currencies in the statement of
of the foreign currency rates . The exposures of NLB to
financial position of NLB, for which a daily limit is set,
the movement of the FX rates have an impact on the
are monitored daily . FX positions are managed on the
financial position and cash flows of the Bank . The Bank
currency level so that they are always within the limits .
measures and manages the FX risk with a usage of
combination of sensitivity analysis, VaR, scenarios, and
Regarding structural FX positions on a consolidation
stress-testing .
level, assets, and liabilities held in foreign operations are
translated into euro currency at the closing FX rate on
In the trading book, similar to the other market risks,
the reporting date . Foreign exchange differences of non-
risk is managed on the basis of VaR limits that are
euro assets and liabilities against euro are recognised in
approved by the Management Board of the Bank and in
OCI, and therefore affect shareholder’s equity and CET1
accordance with the adopted policy of managing market
capital . NLB Group ALM employs strategies to manage
risk in the trading book of NLB . The trading FX risk is
this foreign currency exposure, including matched
managed on an integrated basis at a portfolio level .
funding of assets and liabilities .
NLB monitors and manages FX risk in the banking book
Exposure to currency risks is discussed at daily liquidity
according to the policy of managing FX risk in NLB .
meetings and monthly meetings of the ALCO committee
The policy is primarily composed to protect Common
of the NLB Group, and quarterly on the consolidated
Equity Tier 1 against the negative effects of the volatility
level .
324
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
a) Analysis of financial instruments by currency exposure
31 Dec 2023
Financial assets
EUR
RSD
NLB Group
USD
CHF
Other
Total
in EUR thousands
325
Cash, cash balances at central banks, and other demand deposits at banks
5,117,465
468,397
Financial assets held for trading
Non-trading financial assets mandatorily at fair value through profit or loss
15,718
7,875
-
-
Financial assets measured at fair value through other comprehensive income
1,629,595
389,392
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
2,112,344
173,510
11,215,215
95,883
47,614
(10,207)
117,940
294,884
1,049,206
18,890
-
-
37,052
-
6,300
138,401
96,660
41,070
19,600
23,091
-
-
38,933
441,714
6,103,561
-
-
-
-
28,361
47,409
47
-
-
-
-
15,718
14,175
94,168
2,251,556
195,285
9,815
2,522,229
547,640
1,403,171
13,734,601
28,051
-
-
165,962
47,614
(10,207)
Total financial assets
20,405,012
2,338,709
362,174
114,750
2,172,204
25,392,849
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
- debt securities issued
- other financial liabilities
Total financial liabilities
13,217
2,914
3,540
55,741
127,206
-
532
-
14,320
-
16,968,455
1,418,343
99,718
1,338,235
249,881
-
-
41,067
18,858,907
1,474,262
-
-
-
5,113
13,213
360,062
-
-
36,216
414,604
-
-
-
6,199
-
-
1,036
-
13,910
-
13,217
4,482
3,540
95,283
140,419
212,261
1,773,601
20,732,722
-
-
1,808
220,268
-
-
28,144
99,718
1,338,235
357,116
1,816,691
22,784,732
Net on-balance sheet financial position
1,546,105
864,447
(52,430)
(105,518)
355,513
2,608,117
Derivative financial instruments
(233,578)
(25,498)
55,204
123,650
59,879
(20,343)
Net financial position
31 Dec 2022
Total financial assets
Total financial liabilities
1,312,527
838,949
2,774
18,132
415,392
2,587,774
19,235,733
18,039,672
1,834,866
1,188,425
323,743
416,320
209,176
208,949
2,054,653
1,697,827
23,658,171
21,551,193
Net on-balance sheet financial position
1,196,061
646,441
(92,577)
227
356,826
2,106,978
Derivative financial instruments
(75,897)
42,632
82,411
(2,031)
51,477
98,592
Net financial position
1,120,164
689,073
(10,166)
(1,804)
408,303
2,205,570
Other mostly relates to exposures in currency MKD and BAM .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
326
31 Dec 2023
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
4,284,634
17,957
10,343
989,555
1,891,752
149,011
7,085,715
78,522
47,614
(12,514)
RSD
544
-
-
-
-
-
-
3
-
-
NLB
USD
7,518
-
6,300
28,234
59,625
-
13,205
23,036
-
-
CHF
Other
Total
8,844
16,492
4,318,032
-
-
-
-
-
49,112
4
-
-
-
-
17,957
16,643
5,223
1,023,012
14,792
-
251
31
-
-
1,966,169
149,011
7,148,283
101,596
47,614
(12,514)
Total financial assets
14,542,589
547
137,918
57,960
36,789
14,775,803
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
- debt securities issued
- other financial liabilities
Total financial liabilities
Net on-balance sheet financial position
Derivative financial instruments
Net financial position
31 Dec 2022
Total financial assets
Total financial liabilities
Net on-balance sheet financial position
Derivative financial instruments
Net financial position
Other mostly relates to exposures in currency GBP and CAD .
17,510
3,210
1,420
111,289
69,584
11,595,732
1,338,235
173,942
13,310,922
1,231,667
(157,517)
1,074,150
12,552,661
11,905,320
647,341
(79,626)
567,715
-
-
-
78
-
23
-
2
103
444
5
449
474
104
370
-
370
-
-
-
6,915
13,213
148,346
-
23,703
192,177
-
-
-
11,607
-
84,643
-
135
-
-
-
17,113
-
17,510
3,210
1,420
147,002
82,797
52,819
11,881,563
-
238
1,338,235
198,020
96,385
70,170
13,669,757
(54,259)
(38,425)
(33,381)
1,106,046
55,204
39,957
40,143
(22,208)
945
1,532
6,762
1,083,838
130,881
196,776
115,791
86,245
62,861
73,475
12,862,668
12,261,920
(65,895)
29,546
(10,614)
600,748
65,535
(29,451)
24,326
(19,216)
(360)
95
13,712
581,532
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group and NLB
31 Dec 2023
+/-13 .32%
+/-9 .67%
+/-7 .10%
+/-0 .55%
+/-1 .82%
+/-19 .69%
+/-9 .20%
+/-20 .39%
-
+/-0%
31 Dec 2022
+/-9 .27%
+/-7 .88%
+/-5 .70%
+/-0 .40%
+/-1 .62%
+/-12 .35%
+/-9 .91%
+/-13 .43%
+/-0 .98%
+/-0%
31 Dec 2023
31 Dec 2022
NLB Group
NLB
NLB Group
NLB
Effects on income
statement
Effects on other
comprehensive
income
Effects on income
statement
Effects on other
comprehensive
income
Effects on income
statement
Effects on other
comprehensive
income
Effects on income
statement
Effects on other
comprehensive
income
in EUR thousands
(294)
53
-
2
4
102
(133)
225
(44)
-
(2)
(4)
(71)
104
248
-
-
-
-
-
248
(190)
-
-
-
-
-
(190)
(333)
(662)
(2)
11
1
251
(734)
277
565
2
(11)
(1)
(203)
629
-
463
-
3,167
4,518
48
8,196
-
(396)
-
(3,142)
(4,375)
(48)
(7,961)
(482)
423
7
1
1
1
144
(328)
400
(6)
(1)
(1)
(1)
(121)
270
-
-
-
-
-
423
(351)
-
-
-
-
-
(351)
b) FX sensitivity analysis
Scenarios
USD
CHF
CZK
RSD
MKD
JPY
AUD
HUF
HRK
BAM
Appreciation of
USD
CHF
CZK
RSD
MKD
Other
(342)
(730)
-
(125)
4
100
-
1,330
-
4,775
5,234
93
Effects on comprehensive income
(1,093)
11,432
Depreciation of
USD
CHF
CZK
RSD
MKD
Other
Effects on comprehensive income
262
601
-
124
(4)
(70)
913
-
(1,096)
-
(4,724)
(5,047)
(93)
(10,960)
The effect on the other comprehensive income
statement of NLB Group has increased due to the higher
translation positions in MKD and RSD currencies, and
because of the higher volatility growths’ scenarios for
MKD and RSD currencies .
327
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6.2.2. Managing market risks in the trading book
Market risk exposure in the trading book arises mostly
The interest rate risk in the banking book is measured
its interest rate margin primarily with the pricing policy
and monitored within a framework of interest rate
and a fund transfer pricing policy . An important part
as a result of the changes in interest rates, credit
risk management policy that establishes consistent
of the interest rate risk management is presented by
spreads, FX rates, and equity prices .
methodologies, models, and limit systems . NLB Group
the banking book securities portfolio, whose primary
The Management Board determines low total risk
of two main measures:
it also contributes to the stability of the interest rate
manages interest rate risk exposure through application
purpose is to maintain adequate liquidity reserves, while
appetite and limits by the risk type . The limits are
· Economic value sensitivity – using BPV method (Basis
margin .
monitored daily by the Global Risk Department .
Point Value), which measures the extent to which the
NLB uses an internal VaR model based on the variance-
interest rates change according to the scenario;
plain vanilla derivative financial instruments (interest
covariance method for other market risks . The daily
· Sensitivity of net interest income – which measures the
rate swaps, overnight index swaps, cross currency
calculation of the VAR value is adjusted to Basel
impact of the interest rate change on future net interest
swaps, and forward rate agreements), most of which are
standards (99% confidence interval, a monitored period
income over a one-year period, assuming constant
treated according to hedge accounting rules .
economic value of the banking book would change if
NLB Group also manages interest rates risk by using
of 250 business days, a 10-day holding position period) .
balance sheet volume and structure .
Each member of NLB Group is responsible for its
6.2.3. Interest rate risk
Interest rate risk is the risk to NLB Group’s capital and
NLB Group regularly measures interest rate risk
own interest rate risk policy, which includes the limit
exposure in the banking book under various
system and is in line with the parent Bank’s guidelines
profit or loss arising from changes in market interest
rates . Interest rate risk management of NLB Group
standardised and additional scenarios of changes
in the level and shape of interest rate yield curve,
and standards, as well as with the local regulatory
requirements . NLB regularly monitors the interest rate
includes all interest rate-sensitive on- and off-balance
including all significant sources of risk, taking into
risk exposure of each individual member of NLB Group
sheet assets and liabilities which are divided into the
account behavioural and modelling assumptions . Part
in accordance with the Standards for Risk Management
trading and banking book according to regulatory
of non-maturing deposits, which is considered as a
in NLB Group . The document comprises guidelines for
standards . It takes into account the positions in each
core part is allocated long-term by using replicating
uniform and effective interest rate risk management
currency . Interest rate risk management in NLB Group
portfolio approach . Optionality risk is mainly derived
within individual NLB Group members .
is adopted in accordance with the risk appetite and
from behavioural options, reflected in prepayments
risk strategy, based on general Basel standards on
and withdrawals, and embedded options such as caps
Interest rate risk in the banking book is measured,
interest rate management in the banking book (IRRBB;
and floors . Moreover, considering expected cash flows,
monitored, and reported by the Global Risk Department
hereinafter: ‘Standards’) and European Banking
non-performing exposures, as well as off-balance sheet
(weekly in the case of NLB and monthly on Group level),
Authority guidelines .
items are considered when measuring interest rate risk
while positions are managed by Financial Markets .
In the trading book, interest rate risk is measured
exposure .
Exposure to interest rate risk is discussed on ALCO
monthly on NLB’s individual level and quarterly on the
on the basis of the VaR method and BPV method, in
The interest rate risk is closely measured, monitored,
consolidated level .
accordance with the adopted policy for managing
and managed within approved risk limits and controls .
market risk in the trading book of NLB .
The Group manages interest rate positions and stabilises
328
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
a) Analysis of financial instruments according to the
exposure to interest rate risk
The following table presents open net interest rate risk
positions by the most important currencies of
NLB Group . Financial instruments without maturity
such as sight deposits are presented in the first gap
irrespective of their behavioural characteristics and the
NLB Group’s expectations .
31 Dec 2023
Currency
EUR
RSD
MKD
Other
31 Dec 2022
Currency
EUR
RSD
MKD
Other
31 Dec 2023
Currency
EUR
Other
31 Dec 2022
Currency
EUR
Other
1 - 3 years
(2,109,587)
573,943
253,734
(206,743)
1 - 3 years
(2,061,940)
338,852
192,033
(131,316)
1 - 3 years
(1,772,291)
(176,222)
1 - 3 years
(1,871,890)
(81,512)
NLB Group
3 - 5 years
1,278,722
195,097
25,929
130,171
NLB Group
3 - 5 years
1,461,068
213,972
13,086
73,414
NLB
3 - 5 years
1,004,157
19,729
NLB
3 - 5 years
1,050,116
29,436
5 - 10 years
1,519,103
69,386
(5,110)
87,324
5 - 10 years
1,389,104
52,070
17,792
52,832
in EUR thousands
Over 10 Years
756,545
5
5,960
3,970
in EUR thousands
Over 10 Years
667,013
2
10,070
6,652
in EUR thousands
5 - 10 years
1,436,836
20,418
Over 10 Years
645,084
-
in EUR thousands
5 - 10 years
1,023,946
395
Over 10 Years
550,833
7,189
329
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Net interest income sensitivity analysis and an
economic view of interest rate risk in the banking book
The analysis of interest income sensitivity for the horizon
The assessment of the impact of a change in interest
of the next 12 months assumes a sudden parallel interest
rates of 50/100 basis points on the amount of net
rate shock down by 50 basis points for EUR or 100 basis
interest income of the banking book position:
points for other currencies . The analysis assumes that
the positions used remain unchanged .
Net interest income sensitivity
Net interest income sensitivity - as % of Equity
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
57,595
2 .22%
43,713
2 .02%
33,281
1 .84%
21,393
1 .48%
The ‘EVE’ (Economic Value of Equity) method is a
to the situation on financial markets . Calculations are
measure of the sensitivity of changes in market interest
considering behavioural and automatic options, as well
rates on the economic value of financial instruments .
as the allocation of non-maturing deposits .
The EVE represents the present value of net future
cash flows and provides a comprehensive view of the
The assessment of the impact of a change in interest
possible long-term effects of changing interest rates
rates of 200 basis points on the economic value of the
at least under the six prescribed standardised interest
banking book position:
rate shock scenarios or more if necessary, according
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
108,489
4 .19%
122,276
5 .60%
60,747
3 .36%
82,714
5 .72%
Interest risk in banking book - EVE
Interest risk in banking book - EVE as % of Equity
The applied sudden parallel interest rate shock up is
by 200 basis points, which represents a “worst case”
scenario for NLB Group . The calculation takes into the
account allocation of the core part of non-maturing
deposits and other behavioural assumptions .
330
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 counterbalancing
capacity and arises in case of significant reduction of
market value of an individual financial instrument 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: the liabilities side,
the assets side, and intraday liquidity risk . The origin
of each risk is determined as being internal, external,
or a combination of internal and external (internal
shock, meaning it originates within the Bank, or external
shock; meaning it comes from outside the Bank – e .g .,
a major macroeconomic event, physical or transition
event, ESG rating downgrade) . 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
- to ensure that climate-related and environmental
Group, and one which must be managed carefully . NLB
risks which could have a material impact on net
Group has a liquidity risk management framework in
cash outflows or liquidity reserves, are incorporate
place that enables maintaining a low risk tolerance for
into liquidity risk management and liquidity reserves
liquidity risk . NLB Group formulated a set of liquidity risk
calibration .
metrics and limits to manage liquidity position within
the requirements set by the regulator . By maintaining a
Overall assessment of the liquidity position of NLB
smooth long-term maturity profile, limiting dependence
Group is assessed in the Internal Liquidity Adequacy
on wholesale funding, and holding a solid liquidity
Assessment Process (ILAAP) at least once per year for
reserve, the NLB Group maintains a sound and
NLB Group, and it includes a clear formal statement
robust liquidity position, even under severely adverse
on liquidity adequacy, supported by an analysis of
conditions .
ILAAP outcomes . The ILAAP process is integral to risk
management frameworks and is aligned with the
The Management Board approves the Liquidity Risk
NLB Group’s risk appetite which is consistent with the
Management Policy, which outlines the key principles
business model and approved by the management
for the Bank’s liquidity management . ALCO receives
board . Based on the Risk Appetite, the NLB Group
a regular report on the liquidity position and the
prepares a business plan and financial forecasts which
performance against approved limits and targets . ALCO
oversees the development of the Bank’s funding and
are crucial for defining internal capital needs (the
ICAAP process) and an internal liquidity assessment
liquidity position and decides on liquidity risk-related
(ILAAP process) . Both processes are conducted
issues in NLB Group .
from the normative and economic perspectives and
supplemented by the stress-testing programme .
Risk tolerance for liquidity risk is low, therefore NLB
Group must be able to provide sufficient funds for
NLB Group performs stress tests on a regular basis
settling its liabilities at all times, even if a specific stress
for a variety of bank-specific and market-wide stress
scenario is realised . NLB Group measures and manages
scenarios (individually and in combination) to identify
its liquidity in two stages:
- Static view (current exposure),
sources of potential liquidity strain and to ensure
that current exposures remain in accordance with
- Forward-looking and stress-testing .
the NLB Group’s established liquidity risk tolerance .
The objectives of monitoring and managing liquidity risk
management strategies, policies, and positions, define
in NLB Group are as follows:
minimum amount of counterbalancing capacity, and to
- ensuring a sufficient amount of liquidity for the
develop effective contingency plans .
Stress test outcomes are used to adjust its liquidity risk
settlement of all NLB Group’s liabilities;
- minimising the costs of maintaining liquidity;
NLB Group has a formal liquidity contingency plan
- determining an adequate amount of counterbalancing
(LCP) that clearly sets out the procedures for addressing
capacity and optimal liquidity management;
liquidity shortfalls in stressed situations . The plan
- ensuring adequate control environment;
outlines procedures to manage a range of stress
- ensuring an appropriate level of liquidity for different
environments, establish clear lines of responsibility,
situations and stress scenarios;
include clear invocation and escalation procedures,
- anticipating emergencies or crisis conditions, and
and is regularly tested and updated to ensure that it is
implementing contingency plans in the event of
operationally robust .
extraordinary circumstances;
- ensuring regular projections of future cash flows and
NLB Group maintains a sufficient amount of liquidity
stress-testing of liquidity risk;
reserves in the form of high credit quality debt securities
- preparing proposals for establishing additional
that are eligible for refinancing via the ECB/central bank
financial assets as collateral for sources of funding;
or on the market . In the current situation, NLB Group
also strives to follow as closely as possible the long-term
331
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
trend of diversification on both the liability and asset
sides of the balance sheet . NLB Group regularly performs
a) Managing NLB Group’s liquidity reserves
NLB Group has liquidity reserves available to cover
stress tests with the aim of testing the liquidity stability
liabilities that fall or may become due . Liquidity reserves
and the availability of liquidity reserves in various stress
must become available on short notice . Liquidity
situations . In addition, special attention is given to the
reserves are comprised of cash, the settlement account
fulfilment of the liquidity regulation (CRR/CRD), with
at the central bank above reserve requirement, debt
monitoring and reporting of the liquidity coverage ratio
securities valued at market value, and loans eligible
(LCR) according to the Delegated Act and net stable
as collateral for the Eurosystem’s liquidity providing
funding ratio (NSFR) . This also includes monitoring and
operations on the basis of which the Bank may generate
reporting of Additional Liquidity Monitoring Metrics
the requisite liquidity at any time . The available liquidity
(ALMM) on solo and consolidated levels . In accordance
reserves are liquidity reserves decreased by the required
with the Commission Implementing Regulation (EU), NLB
balances for the continuous performance of payment
Group regularly monitors and issues quarterly reports on
transactions, encumbered securities, and/or credit
asset encumbrance .
claims for different purposes (secured funding) .
The Group manages its liquidity position (liquidity within
The structure of liquidity reserves is shown in the
one day) daily, for a period of several days or weeks in
following table .
advance, based on the planning and monitoring of cash
flows . Each NLB Group member is responsible for its own
liquidity position and carries out the following activities:
- managing intraday liquidity;
- planning and monitoring cash flows;
Liquidity reserves
NLB Group
in EUR thousands
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
- monitoring and complying with the liquidity regulations
Cash, cash balances at central banks*
4,958,969
4,020,397
4,142,013
3,180,523
of the central bank;
- adopting business decisions;
- forming and managing liquidity reserves; and
- performing a liquidity stress test to define the liquidity
reserves for smooth functioning of the payment system
in stressed circumstances .
Trading book securities**
Banking book securities**
ECB eligible loans
Total available liquidity reserves
Encumbered liquidity reserves
*above reserve requirement
**market value
-
203
-
203
4,569,721
4,542,597
2,810,064
2,679,404
678,445
624,278
678,445
624,278
10,207,135
9,187,475
7,630,522
6,484,408
41,502
122,963
41,502
5,451
NLB Group members actively manage liquidity over the
course of a day, taking into account the characteristics
of payment settlements to ensure the timely settlement
of liabilities in normal and stressed circumstances .
Liquidity risk management in NLB Group is under strict
monitoring by NLB as a parent bank . Reporting to NLB
by all Group members is performed daily . Global Risk
gives guidelines and defines minimal standards for
Group members regarding liquidity risk management
in NLB Group Risk Management Standards . Each
Group member is responsible for ensuring adequate
liquidity via the necessary sources of funding and
their appropriate diversification and maturity, and
by managing liquidity reserves and fulfilling the
requirements of regulations governing liquidity . The
exposure of an individual NLB Group member towards
liquidity risk is regularly monitored and reported to
ALCO, and to local Assets and Liabilities Committees .
As at 31 December 2023, 79 .5% (31 December 2022:
for domestic loans are specified in the general terms
81 .0%) of debt securities in the banking book of
about execution of monetary policy framework (Part
NLB Group were government securities (including
4) adopted by the Bank of Slovenia . NLB is the only
government guaranteed bonds – GGB), and 11 .9% (31
member of NLB Group that classifies as an eligible
December 2022: 9 .1%) were senior unsecured bonds .
counterparty to the Eurosystem . As such, these ECB
credit claims are included among liquidity reserves .
The purpose of banking book securities is to provide
liquidity, along with stabilisation of the interest margin
Members of NLB Group manage their liquid assets
and the interest rate risk management, simultaneously .
on a decentralised basis in compliance with the local
When managing the portfolio, NLB Group uses
liquidity regulation and valid policies and standards of
conservative principles, particularly with respect to the
NLB Group .
portfolio’s structure in terms of issuers’ ratings and asset
class . The general rules and principles for managing the
banking book securities are laid in the Framework for
managing debt securities in the banking book .
The ECB-eligible credit claims comprise loans which
fulfil the high eligibility criteria set by the ECB itself and
332
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
b) Encumbered/unencumbered assets
in EUR thousands
333
31 Dec 2023
Loans on demand
Equity instruments
Debt securities
Loans and advances other
than loans on demand
Other assets
Total
31 Dec 2022
Loans on demand
Equity instruments
Debt securities
Loans and advances other
than loans on demand
Other assets
Total
Carrying amount
of encumbered
assets
1,241,906
1,002
42,739
15,171
-
1,300,818
NLB Group
NLB
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
-
1,002
41,502
-
-
4,390,753
95,048
4,649,171
14,433,032
1,073,163
24,641,167
-
95,048
4,568,776
-
-
118,356
-
42,739
8,067
-
169,162
-
-
41,502
-
-
4,017,941
69,786
2,885,514
7,398,608
1,473,765
15,845,614
-
69,786
2,810,064
-
-
Carrying amount
of encumbered
assets
1,109,016
742
77,522
27,000
-
1,214,280
NLB Group
NLB
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
-
742
74,992
-
-
3,673,152
95,580
4,682,208
13,446,808
1,048,212
22,945,960
-
95,580
4,516,292
-
-
112,804
-
57,041
11,413
-
181,258
-
-
54,510
-
-
3,045,737
50,303
2,831,887
6,515,916
1,314,232
13,758,075
-
50,303
2,679,423
-
-
in EUR thousands
c) Collateral received – unencumbered
The table below shows the nominal value of collateral
received and own debt securities issued not available
for encumbrance .
Equity instruments
Loans and advances other
than loans on demand
Other assets
Total
in EUR thousands
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
293,343
175,307
262,947
167,431
13,599,848
12,876,402
14,068,498
13,306,780
265,757
51,190
6,408,890
6,725,837
239,405
16,867
4,721,729
4,978,001
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group
NLB
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
Collateralised
liability
Assets given as
collateral
2,486
-
2,861
5,347
9,638
-
1,291,180
1,300,818
3,238
62,755
2,901
68,894
13,753
65,048
1,135,479
1,214,280
2,486
-
-
2,486
9,638
-
159,524
169,162
9,607
13,001
-
22,608
20,051
12,971
148,235
181,257
in EUR thousands
334
d) Sources of encumbrance
Derivatives
Deposits
Other sources of encumbrance
Total
As at 31 December 2023, 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 1,301 million (31 December 2022:
EUR 1,214 million) .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 2023
Carrying amount
Total
Up to 1 Month
Cash, cash balances at central banks, and
other demand deposits at banks
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
Total financial assets
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
- debt securities issued
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
6,103,561
6,103,561
6,103,561
14,175
14,175
1,009
NLB Group
1 Month
to 3 Months
-
707
in EUR thousands
3 Months
to 1 Year
-
11,586
1 Year
to 5 Years
Over 5 Years
-
873
-
-
2,251,556
2,408,707
283,269
222,258
434,430
1,212,748
256,002
2,522,229
547,640
2,825,397
547,646
13,734,601
16,818,381
165,962
165,962
64,238
500,739
691,501
132,368
115,969
43,829
622,566
1,150
273,677
1,572
1,310,387
1,061,126
1,502
3,068,830
7,109,179
1,732
6,705
4
5,326,305
24,007
25,339,724
28,883,829
7,776,685
1,006,479
3,791,827
9,641,394
6,667,444
4,482
4,482
-
95,283
140,419
95,726
147,519
75,818
1,198
20,732,722
20,857,070
17,921,304
99,718
1,338,235
357,116
3,196,771
963,321
114,387
1,852,163
357,116
3,196,771
963,321
1,101
-
274,348
3,196,771
76,594
-
-
1,417
258,812
1,835
4,079
6,915
-
97,262
370,320
-
4,144
338
15,330
11,311
1,661,298
8,261
84,166
9,111
-
4,332
16,181
928,654
9,021
871,459
26,557
-
246
117,412
87,002
94,169
892,459
40,185
-
338,287
2,127,764
380,994
2,241,342
70,184
1,301,995
Total financial liabilities and credit-related commitments
26,928,067
27,588,555
21,547,134
335
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2022
Carrying amount
Total
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
336
Cash, cash balances at central banks, and
other demand deposits at banks
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
Total financial assets
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
- debt securities issued
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
5,271,365
5,271,370
5,271,370
19,031
19,031
6,028
-
-
-
-
-
-
-
13,003
2,919,203
3,155,399
622,857
210,878
413,150
1,600,987
307,527
1,917,615
222,965
2,015,086
223,182
13,072,986
15,075,576
177,823
177,822
21,204
216,396
625,837
145,170
23,600,988
25,937,466
6,908,862
93,066
763
674,761
5,804
985,272
220,454
4,495
2,959,896
3,100
991,980
1,526
6,047,276
23,699
688,382
2
4,767,806
49
3,601,095
8,665,468
5,776,769
1,796
1,796
-
-
-
1,796
106,414
198,609
106,787
201,625
85,924
1,386
101
2,067
164
5,809
20,027,726
20,069,028
17,972,715
301,188
958,293
82,482
815,990
294,463
3,090,681
862,779
85,495
1,176,970
294,463
3,090,681
862,779
651
-
200,302
3,090,286
238,213
20,598
129,289
819,684
35,338
473,176
61,190
250
1,413
4,427
8,979
70
65,243
383,488
6,247
52,572
22,610
75
155,752
1,201,522
323,300
1,864,621
-
-
63,074
17,148
41,846
646,795
1,382
-
80,271
850,516
Total financial liabilities and credit-related commitments
25,480,940
25,889,624
21,589,477
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
in EUR thousands
337
NLB
1 Month
to 3 Months
-
43
3 Months
to 1 Year
-
12,714
1 Year
to 5 Years
Over 5 Years
-
154
-
4,600
1,023,012
1,063,468
11,640
38,854
241,365
632,002
139,607
31 Dec 2023
Carrying amount
Total
Up to 1 Month
Cash, cash balances at central banks, and
other demand deposits at banks
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
Total financial assets
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
- debt securities issued
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
4,318,032
4,318,032
4,318,032
16,643
17,515
4
1,966,169
149,011
7,148,283
101,596
2,202,821
201,826
8,487,918
101,597
6,764
5,933
405,580
70,972
14,722,746
16,393,177
4,818,925
3,210
3,210
1,234
147,002
82,797
147,442
83,851
127,726
-
11,881,563
11,919,187
10,985,068
1,338,235
198,020
2,239,479
625,095
1,852,163
198,020
2,239,479
625,095
-
149,601
2,239,479
29,712
Total financial liabilities and credit-related commitments
16,515,401
17,068,447
13,532,820
30,167
6,719
212,509
1,131
289,423
-
-
-
97,176
4,079
6,481
-
68,768
176,504
154,110
15,928
1,284,363
1,583
1,057,182
42,789
3,621,788
5,035
954,598
130,457
2,963,678
22,876
1,710,063
5,358,950
4,215,816
-
1,976
-
15,330
1,654
540,607
84,166
6,871
-
196,286
844,914
4,142
1,967
278,051
871,459
9,902
-
244
80,230
18,285
892,459
25,165
-
265,632
1,433,129
64,697
1,081,080
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2022
Carrying amount
Total
Up to 1 Month
in EUR thousands
338
Cash, cash balances at central banks, and
other demand deposits at banks
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
Total financial assets
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
- debt securities issued
- other financial liabilities
Credit risk related commitments
Non-financial guarantees
3,339,024
3,339,024
3,339,024
15,411
16,201
553
NLB
1 Month
to 3 Months
-
102
3 Months
to 1 Year
1 Year
to 5 Years
Over 5 Years
-
330
-
-
7,378
7,838
1,334,061
1,398,203
66,285
105,372
212,998
834,228
179,320
1,597,448
350,625
6,054,413
114,399
1,681,693
390,583
6,975,507
114,399
20,826
112,305
326,426
90,598
30,251
55,403
210,512
375
141,751
40,168
1,174,802
89
848,140
101,332
2,828,633
23,320
640,725
81,375
2,435,134
17
12,805,381
13,915,610
3,956,017
402,015
1,570,138
4,643,031
3,344,409
2,514
2,514
1,786
212,656
57,292
212,967
58,819
193,526
13,086
10,984,411
10,996,371
10,604,437
216
815,990
164,567
1,985,199
462,805
216
1,176,970
164,567
1,985,199
462,805
1
-
122,875
1,985,199
23,682
-
-
681
60,516
-
4,427
4,891
-
52,473
122,988
-
-
-
119,935
-
52,572
6,494
-
106,608
285,609
728
19,441
45,052
208,066
215
473,176
29,915
-
243,618
1,020,211
-
-
-
3,417
-
646,795
392
-
36,424
687,028
Total financial liabilities and credit-related commitments
14,685,650
15,060,428
12,944,592
When determining the gap between the financial
liabilities and financial assets in the maturity bucket of
up to one month, it is necessary to be aware of the fact
that financial liabilities include total demand deposits,
and that NLB may apply a stability weight of 60% to
demand deposits when ensuring compliance with the
central bank’s regulations concerning calculation of
the liquidity position . To ensure NLB Group’s and NLB’s
liquidity, and based on its approach to risk, in previous
years, NLB Group compiled a substantial amount of
high-quality liquid investments, mostly government
securities and selected loans, which are accepted as
adequate financial assets by the ECB .
Liabilities and credit-related commitments are
included in maturity buckets based on their residual
contractual maturity .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
f) Derivative cash flows
The table below illustrates cash flows from derivatives,
broken down into the relevant maturity buckets based on
residual maturities . The amounts disclosed in the table
are the contractual undiscounted cash flows prepared on
the basis of spot rates on the reporting date .
31 Dec 2023
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 2022
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
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
(52,767)
52,821
(264,488)
264,597
(1,000)
3,250
(211)
179
(12,024)
12,035
(150,003)
150,432
(5,613)
4,043
(51)
37
(15,874)
15,890
(77,229)
78,250
(27,240)
34,172
(768)
629
(318,466)
320,847
(167,691)
166,547
(121,111)
128,941
(250)
250
-
-
(51,905)
79,633
(586)
416
(52,741)
80,299
-
-
-
-
(80,915)
80,996
(491,720)
493,279
(22,798)
37,296
(108,556)
158,394
(6)
3
(1,622)
1,264
(22,804)
37,299
(682,813)
733,933
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
NLB Group
(31,846)
31,895
(194,674)
193,719
(819)
816
(14)
45
(22,128)
22,136
(52,726)
53,098
(2,100)
2,560
(36)
30
(5,856)
5,863
(10,042)
9,996
(10,699)
19,982
(667)
850
(6,475)
6,487
-
-
(105,839)
76,356
(16,104)
1,468
(227,353)
226,475
(76,990)
77,824
(27,264)
36,691
(128,418)
84,311
-
-
-
-
(24,177)
44,616
(8,632)
15
(32,809)
44,631
(66,305)
66,381
(257,442)
256,813
(143,634)
144,330
(25,453)
2,408
(492,834)
469,932
339
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2023
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 2022
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
Up to 1 Month
1 Month to 3
Months
NLB
3 Months
to 1 Year
1 Year
to 5 Years
in EUR thousands
340
Over 5 Years
Total
(50,861)
50,894
(310,781)
310,647
(1,455)
3,605
(211)
179
(11,715)
11,726
(279,104)
278,819
(5,763)
4,162
(51)
37
(15,874)
15,890
(131,949)
132,095
(29,050)
35,869
(768)
629
(363,308)
365,325
(296,633)
294,744
(177,641)
184,483
(250)
250
-
-
(57,044)
87,326
(586)
416
(57,880)
87,992
-
-
-
-
(78,700)
78,760
(721,834)
721,561
(23,651)
38,276
(116,963)
169,238
(6)
3
(1,622)
1,264
(23,657)
38,279
(919,119)
970,823
Up to 1 Month
1 Month to 3
Months
NLB
3 Months
to 1 Year
1 Year
to 5 Years
in EUR thousands
Over 5 Years
Total
(31,557)
31,618
(249,950)
248,993
(844)
819
(50)
45
(22,128)
22,136
(110,588)
110,595
(2,027)
2,567
(55)
30
(282,401)
281,475
(134,798)
135,328
(5,856)
5,863
-
-
(12,366)
20,349
(919)
850
(19,141)
27,062
(6,475)
6,487
-
-
(41,180)
77,243
(1,824)
1,468
(49,479)
85,198
-
-
-
-
(22,621)
44,616
(41)
15
(66,016)
66,104
(360,538)
359,588
(79,038)
145,594
(2,889)
2,408
(22,662)
44,631
(508,481)
573,694
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6 .4 . Management of
non-financial risks
a) Operational risk
When assuming operational risks, NLB Group follows
the guideline that such risks may not materially impact
its operations and, therefore, the risk appetite for
operational risks is low to moderate . The risk is also
gradually decreasing due to the reduced complexity of
operations in NLB Group, with the disinvestment process
of non-core activities and optimisation of internal
processes . NLB Group has set up a system of collecting
loss events, identification, assessment, and management
of operational risks, all with the aim of ensuring quality
management of operational risks . This is particularly
valid in strategic banking members .
All NLB Group banking members monitor risk appetite
limits for operational risk . The upper tolerance limit is
defined as the limit amount of net loss that an individual
member still allows in its operations . If the sum of net
loss exceeds the tolerance limit, a special treatment of
major loss events is required and, if necessary, takes
additional measures for the prevention or mitigation of
the same or similar loss events are taken . The warning
and critical limit of loss events are also defined, which
in case of exceeding require escalation procedures an
acceptance of possible additional risk management
measures . In addition, the Bank does not allow
certain risks in its business – for them a so-called ‘zero
tolerance’ was defined . For monitoring some specific
more important key risk indicators that could show
a possible increase of an operational risk, the Bank
developed a specific methodology as an early warning
system . Such risks are periodically monitored in different
business areas, and the results are discussed at the
Operational Risk Committee . The latter was named as
the highest decision-making authority in the area of
operational risk management . Relevant operational risk
committees were also appointed at other NLB Group
banks . The Management Board serves in this role at
other subsidiaries . The main task of the aforementioned
bodies is to discuss the most significant operational
risks and loss events, and to monitor and support the
effective management of operational risks including
their mitigation within an individual entity . All NLB
Group entities, which are included in the consolidation,
have adopted relevant documents that are in line
with NLB Group standards . In banking members,
The capital requirement for operational risk is calculated
these documents are in line with the development of
using the basic indicator approach at the NLB Group
operational risk management and regularly updated .
level and using the standardised approach at the NLB
341
The whole NLB Group uses uniform software support,
level .
which is also regularly upgraded .
In NLB Group, the reported incurred net loss arising
b) Business Continuity Management (BCM)
In NLB Group, business continuity management is
from loss events in 2023 was higher than in the previous
carried out to protect lives, goods, and reputation .
year but remaining within the set tolerance limits for
Business continuity plans are prepared to be used in
operational risk .
the event of natural disasters, IT disasters, epidemic/
pandemic, and the undesired effects of the environment
In general, considerable attention is paid to reporting
to mitigate their consequences .
loss events, their mitigation measures, and defining
operational risks in all segments . To treat major loss
The concept of the action plan that is prepared each year
events appropriately and as soon as possible, the Bank
is such that the activities contribute to the upgrading or
introduced an escalation scale for reporting bigger or
improvement of the Business Continuity Management
more important loss events to the top levels of decision-
System . In 2023, Business Continuity Management was
making at NLB and the Supervisory Board of NLB .
Additional attention is paid to the reporting of potential
upgraded and optimised – rationalisation of Business
Impact Analysis (hereinafter BIA) .
loss events in order to improve the internal controls, and
thus minimise those and similar events . Furthermore, the
The basis for modernising the business continuity plans
methodology to monitor, analyse, and report key risk
is the regular annual Business Impact Analysis (BIA) . On
indicators is established, servicing as an early warning
its basis, the adequacy of the plans for Organisational
system . The aim is to improve business and supporting
Unit Plans (merged office buildings and HR plans) and IT
processes, as well enabling prompt response .
plans are checked . The best indicator of the adequacy
Through comprehensive identification of operational
tested Manual Procedures, backup locations, and
risks, possible future losses are identified, estimated,
the IT Disaster Recovery Plan and external . No major
of the business continuity plans is testing . In 2023, NLB
and appropriately managed . Each year, special
deviations were identified .
emphasis is placed on current risks as a result of the
risk identification process, including ESG risks . For the
In NLB Group, know-how and methodologies are
later key risk indicators (KRIs) have been also addressed
transferred to its members . The members have adopted
for ESG risks, servicing as an early warning system .
appropriate documents which are in line with the
The major operational risks are actively managed with
standards of NLB and revised in accordance with the
the measures taken to reduce them . An operational
development of business continuity management . The
risk profile is prepared once a year based on the
activity of the members is monitored throughout the
operational risk identification . Special emphasis is put
year, and expert assistance is provided if necessary .
on the most topical risks, among which in particular
are those with a low probability of occurrence and very
For more efficient functioning of the business continuity
high potential financial influence . For this purpose, the
management system in NLB Group, training courses and
Bank has developed the methodology of stress-testing
visits to individual banking members are also provided .
for operational risk . The methodology is a combination
All preventive and response measures with regard to
of modelling loss event data and scenario analysis for
business continuity are regularly sent to the members
exceptional, but plausible events . Scenario analyses are
with the purpose to help and act in the uniform
made based on experience and knowledge of experts
way . Besides, workshops are performed to present
from various critical areas .
development of Business Continuity Management
System to all the NLB Group members to be more
resilient in all relevant circumstances .
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
With regards to natural disasters (floods) and IT failures,
the assumptions of NLB Group . This hierarchy gives
Wherever possible, fair value is determined as an
the Bank successfully used the business continuity plans
the highest priority to observable market data when
observable market price in an active market for an
and instructions for manual procedures, and thus also
available, and the lowest priority to unobservable
identical asset or liability . An active market is a market
ensured business operations in emergency situations .
market data . NLB Group considers relevant and
in which transactions for an asset or liability are
observable market prices in its valuations, where
executed with sufficient frequency and volume to provide
c) Management of other types of non-financial risks –
possible . The fair value hierarchy comprises the
pricing information on an ongoing basis . Assets and
strategic risks, reputation risk, and profitability risk
following levels:
liabilities measured at fair value in active markets are
Risks not included in the regulatory capital
- Level 1 – Quoted prices (unadjusted) on active markets .
determined as the market price of a unit (e .g ., share)
requirements (standardised approach) but have or
This level includes listed equities, debt instruments,
at the measurement date, multiplied by the quantity
might have an important influence on the risk profile
gold, derivatives, units of investment funds, and other
of units owned by NLB Group . The fair value of assets
of NLB Group, are regularly assessed, monitored,
unadjusted market prices of assets and liabilities .
and liabilities whose market is not active is determined
and managed . In addition, they are integrated into
When an asset or liability may be exchanged in
using valuation techniques . These techniques bear a
internal capital adequacy assessment process (ICAAP) .
multiple active markets, the principal market for the
different intensity level of estimates and assumptions,
NLB Group established internal methodologies for
asset or liability must be determined . In the absence of
depending on the availability of observable market
identifying and assessing specific types of risk, referring
a principal market, the most advantageous market for
inputs associated with the asset or liability that is the
to the Group’s business model or arising from other
the asset or liability must be determined .
subject of the valuation . Unobservable inputs shall
external circumstances . If a certain risk is assessed
- Level 2 – A valuation technique where inputs are
reflect the estimates and assumptions that other market
as a materially important risk, relevant disposable
preventive and mitigation measures are applied,
observable, either directly (i .e ., prices) or indirectly (i .e .,
derived from prices) . Level 2 includes prices quoted for
participants would use when pricing the asset or liability .
including regular monitoring of their effectiveness .
similar assets or liabilities in active markets and prices
For non-financial assets measured at fair value and
On this basis, internal capital is considered, and its
quoted for identical or similar assets, and liabilities
not classified at Level 1, fair value is determined based
consumption regularly monitored .
in markets that are not active . The sources of input
on valuation reports provided by certified valuators .
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 between market participants
at the measurement date . NLB Group uses various
valuation techniques to determine fair value . IFRS
13 specifies a fair value hierarchy with respect to the
inputs and assumptions used to measure financial
and non-financial assets and liabilities at fair value .
Observable inputs reflect market data obtained from
independent sources, while unobservable inputs reflect
parameters for financial instruments, such as yield
Valuations are prepared in accordance with the
curves, credit spreads, foreign exchange rates, and the
International Valuation Standards (IVS) .
volatility of interest rates and foreign exchange rates,
is Bloomberg .
- Level 3 – A valuation technique where inputs are not
based on observable market data . Unobservable
inputs are used to the extent that relevant observable
inputs are not available . Unobservable inputs must
reflect the assumptions that market participants
would use when pricing an asset or liability . This
level includes non-tradable shares and bonds, and
derivatives associated with these investments and
other assets and liabilities for which fair value cannot
be determined with observable market inputs .
342
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
a) Financial and non-financial assets and liabilities measured at fair value in the financial statements
in EUR thousands
343
31 Dec 2023
NLB Group
NLB
Financial assets
Financial instruments held for trading
Derivatives
Derivatives - hedge accounting
Financial assets measured at fair value
through other comprehensive income
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 investments in
subsidiaries, associates and joint ventures
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
-
-
-
15,698
15,698
47,614
20
20
-
Total
fair value
15,718
15,718
47,614
-
-
-
1,456,684
793,516
1,356
2,251,556
955,638
1,451,824
4,860
5,317
5,217
100
-
-
-
-
-
-
-
-
-
712,570
80,946
-
-
-
-
13,217
13,217
3,540
4,482
10,927
4,048
-
-
70
2,164,464
955,638
1,286
8,858
-
8,858
-
-
-
-
-
20,189
801
89
-
87,092
14,175
5,217
8,958
-
13,217
13,217
3,540
4,482
31,116
4,849
89
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17,937
17,937
47,614
67,071
6,446
60,625
-
-
-
-
17,510
17,510
1,420
3,210
7,640
4,048
-
-
Total
fair value
17,957
17,957
47,614
1,023,012
962,084
60,928
20
20
-
303
-
303
16,643
16,643
-
8,858
7,785
-
-
-
-
-
-
-
-
8,858
7,785
17,510
17,510
1,420
3,210
7,640
4,048
-
1,646
1,646
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2022
NLB Group
NLB
in EUR thousands
344
Level 1
Level 2
Level 3
Financial assets
Financial instruments held for trading
Debt instruments
Derivatives
Derivatives - hedge accounting
Financial assets measured at fair value
through other comprehensive income
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 investments in
subsidiaries, associates and joint ventures
1,746,405
1,169,306
3,492
2,919,203
1,282,584
1,745,896
1,090,664
509
78,642
2,838,796
1,282,584
Level 1
Level 2
Level 3
203
203
-
-
21,368
-
21,368
59,362
17
-
17
-
Total
fair value
21,588
203
21,385
59,362
2,236
1,256
7,519
-
7,519
-
-
-
-
-
23,447
11,201
80,407
19,031
3,116
15,915
-
21,589
21,589
2,124
1,796
35,639
15,436
-
-
-
-
21,589
21,589
2,124
1,796
12,192
4,235
-
-
30,636
30,636
-
-
11,512
3,116
8,396
-
-
-
-
-
-
-
-
-
203
203
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,472
-
21,472
59,362
49,182
6,667
42,515
-
-
-
-
22,150
22,150
2,124
2,514
6,753
4,235
-
-
Total
fair value
21,692
203
21,489
59,362
17
-
17
-
2,295
1,334,061
2,026
269
15,411
-
7,519
7,892
-
-
-
-
-
-
-
1,291,277
42,784
15,411
-
7,519
7,892
22,150
22,150
2,124
2,514
6,753
4,235
-
3,301
3,301
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Gold
Funds
Debt securities
Loans
Equities
Currency
Interest
Derivatives
valuation model
valuation model
valuation model
(underlying
in level 1)
valuation model
(underlying
instrument
in level 3)
from level 2 to 3
underlying
instrument
excluded from
exchange market
from level 3 to 2
underlying
instrument
included in
exchange market
market value from
exchange market
market value from
spot market
official price by
fund management
company
market value from
exchange market
valuation model
valuation model
valuation model
valuation model
valuation model
valuation model
1
2
3
Transfers
from level 1 to 3
equity excluded
from exchange
market
from level 1 to 3
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
from level 1 to 3
from level 1 to 2
fund management
company stops
publishing regular
valuation
from level 3 to 1
fund management
company starts
publishing regular
valuation
debt securities
excluded from
exchange market
from level 1 to 2
debt securities not
liquid (not trading
for 6 months)
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)
For 2023, neither NLB Group nor NLB had any
significant transfers between levels of valuation of
financial instruments measured at fair value in financial
statements .
345
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
c) Financial and non-financial assets and liabilities at
to account for capital preservation are used . Rents at
NLB Group uses three valuation methods for the
Level 2 regarding the fair value hierarchy
Financial instruments on Level 2 of the fair value
similar locations are generated from various sources,
valuation of equity financial assets mentioned in first
like data from lessors and lessees, web databases, and
bullet: income, market, and cost approaches .
hierarchy at NLB Group and NLB include:
own databases . NLB Group has observable data for all
- debt securities: mostly bonds not quoted on active
investment property at its disposal . If observable data
NLB Group selects valuation model and values of
markets and valuated by a valuation model;
for similar locations are not available, NLB Group uses
unobservable input data within a reasonable possible
- derivatives: derivatives except forward derivatives and
data from wider locations and adjusts it appropriately .
range, but uses model and input data that other market
options on equity instruments that are not quoted on
participants would use .
active markets; and
- the National Resolution Fund .
d) Financial and non-financial assets and liabilities at
Level 3 of the fair value hierarchy
At least one of the three valuation methods are used
Financial instruments on Level 3 of the fair value
for the valuation of investment property . The majority
Non-financial assets on Level 2 of the fair value
hierarchy in NLB Group and NLB include:
of investment property is valued using the income
hierarchy at NLB Group and NLB include investment
- equities: mainly financial equities that are not quoted
approach where the present value of future expected
properties and non-current assets held for sale .
on active markets;
returns is assessed .
- debt instruments: bonds not quoted on active markets
When valuing bonds classified on Level 2, NLB Group
and valuated by valuation model with inputs which are
When valuing an investment property, average rents
primarily uses the income approach based on an
not based on observable market data;
at similar locations and capitalisation ratios such as:
estimation of future cash flows discounted to the present
value .
- derivative financial instruments: forward derivatives
and options on equity instruments that are not quoted
the risk-free yield, risk premium, and the risk premium
to account for capital preservation are used . Rents at
on an active organised market . Fair values for forward
similar locations are generated from various sources,
The input parameters used in the income approach are
derivatives are determined using the discounted
like data from lessors and lessees, web databases, and
the risk-free yield curve and the spread over the yield
cash flow model . Fair values for equity options are
own databases . NLB Group has observable data for all
curve (credit, liquidity, country) .
determined using valuation models for options (the
investment property at its disposal . If observable data
Fair values for derivatives are determined using a
and Black-Scholes model) . Unobservable inputs
data from wider locations and adjusts it appropriately .
Garman and Kohlhagen model, the binomial model,
for similar locations are not available, NLB Group uses
discounted cash flow model based on the risk-free
include the fair values of underlying instruments
yield curve . Fair values for options are determined
determined using valuation models . The source of
using valuation models for options (the Garman and
observable market inputs is the Bloomberg information
Kohlhagen model, the binomial model, and the Black-
system;
Scholes model) .
- loans measured at fair value, which according to IFRS 9
do not pass the SPPI test . Fair value is calculated on the
At least one of the three valuation methods are used
basis of the discounted expected future cash flows with
for the valuation of investment property . The majority
the required rate of return . In defining the expected
of investment property is valued using the income
cash flows for loans, the value of collateral and other
approach where the present value of future expected
pay off estimates can be used .
returns is assessed .
When valuing an investment property, average rents
hierarchy at NLB Group include investment properties
at similar locations and capitalisation ratios such as:
and non-current assets held for sale .
the risk-free yield, risk premium, and the risk premium
Non-financial assets on Level 3 of the fair value
346
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Movements of financial assets and liabilities at Level 3
NLB Group
Balance as at 1 January 2022
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
Transfers to Level 3
Balance as at 31 December 2022
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Write-offs
Balance as at 31 December 2023
NLB
Balance as at 1 January 2022
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Transfers to Level 3
Balance as at 31 December 2022
Valuation:
- through profit or loss
- recognised in other comprehensive income
Foreign exchange differences
Increases
Decreases
Write-offs
Merger of subsidiary
Balance as at 31 December 2023
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
in EUR thousands
Total financial assets
Derivatives
Debt instruments
Equity instruments
Equity instruments
1
-
-
16
-
-
-
-
-
17
3
-
-
-
-
-
20
351
-
-
-
239
(25)
-
(141)
1,812
2,236
-
5,768
21
-
(6,418)
(1,537)
70
1,136
(2)
12
-
110
-
-
-
-
1,256
-
49
-
-
(19)
-
1,286
4,472
-
-
477
-
262
2,873
(565)
-
7,519
1,362
-
(173)
150
-
-
8,858
5,960
(2)
12
493
349
237
2,873
(706)
1,812
11,028
1,365
5,817
(152)
150
(6,437)
(1,537)
10,234
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
in EUR thousands
Total financial assets
Derivatives
Debt instruments
Equity instruments
Equity instruments
1
16
-
-
-
-
-
17
3
-
-
-
-
-
-
20
-
-
239
(25)
-
-
1,812
2,026
-
5,768
21
-
(6,278)
(1,537)
-
-
219
-
50
-
-
-
-
269
-
19
-
-
-
-
15
303
4,472
477
-
262
2,873
(565)
-
7,519
1,362
-
(173)
150
-
-
-
8,858
4,692
493
289
237
2,873
(565)
1,812
9,831
1,365
5,787
(152)
150
(6,278)
(1,537)
15
9,181
347
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB Group and NLB recognise the effects from valuation
of trading instruments in income statement line item
‘Gains less losses from financial assets and liabilities held
for trading,’ the effects from valuation of non-trading
equity instruments and loans mandatorily measured at
fair value through profit or loss in the income statement
line item ‘Gains less losses from non-trading financial
assets mandatorily at fair value through profit or
loss,’ and the effects from valuation of financial assets
measured at fair value through other comprehensive
income in the accumulated other comprehensive income
line item ‘Financial assets measured at fair value through
other comprehensive income .’
In 2023 and in 2022, 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
2023
Items of Income statement
Financial assets
held for trading
Financial assets measured at fair value
through OCI
in EUR thousands
Non-trading financial
assets mandatorily at
fair value through
profit or loss
Derivatives
Debt instruments
Equity instruments
Equity instruments
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
3
-
-
-
-
-
-
-
NLB Group
2022
Items of Income statement
Financial assets
held for trading
Financial assets measured at fair value
through OCI
Derivatives
Debt instruments
Equity instruments
Equity instruments
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
16
-
-
-
-
(25)
239
-
-
-
110
-
477
262
-
-
-
-
49
-
1,362
(173)
-
in EUR thousands
Non-trading financial
assets mandatorily at
fair value through
profit or loss
348
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Financial assets
held for trading
Financial assets measured at fair value
through OCI
in EUR thousands
Non-trading financial
assets mandatorily at
fair value through
profit or loss
349
Derivatives
Debt instruments
Equity instruments
Equity instruments
NLB
2023
Items of Income statement
NLB
2022
Items of Income statement
-
-
-
19
-
1,362
(173)
-
in EUR thousands
Non-trading financial
assets mandatorily at
fair value through
profit or loss
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
3
-
-
-
-
-
-
-
Financial assets
held for trading
Financial assets measured at fair value
through OCI
Derivatives
Debt instruments
Equity instruments
Equity instruments
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
16
-
-
-
-
-
(25)
239
-
-
-
50
-
477
262
-
Movements of non-financial assets at Level 3
NLB Group
Balance as at 1 January
Effects of translation of foreign operations to presentation currency
Acquisition of subsidiaries (note 5 .12 .f)
Additions
Disposals
Transfer from/(to) property and equipment
Transfer from/(to) other assets
Net valuation to fair value
Balance as at 31 December
Investment property
in EUR thousands
Non-current assets
held for sale
2023
2022
23,447
27,642
2023
11,201
(14)
-
-
22
302
3
11
-
-
(1,954)
(7,578)
(10,206)
(86)
86
(1,290)
20,189
434
-
2,622
23,447
-
-
(205)
801
2022
2,962
9
-
7,609
(105)
-
-
726
11,201
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
e) Fair value of financial instruments not measured at
fair value in financial statements
Financial instruments not measured at fair value
The table below shows estimated fair values of financial
in financial statements are not managed on a fair
instruments not measured at fair value in the statement
value basis . For respective instruments fair values are
of financial position .
calculated for disclosure purposes only, and do not
impact NLB Group statement of financial position or
income statement .
31 Dec 2023
31 Dec 2022
31 Dec 2023
31 Dec 2022
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
Carrying value
Fair value
NLB Group
NLB
in EUR thousands
Financial assets measured
at amortised cost
- debt securities
- loans and advances to banks
2,522,229
547,640
2,440,596
547,555
1,917,615
222,965
1,749,169
223,077
- loans and advances to customers
13,734,601
13,256,192
13,072,986
12,883,859
- other financial assets
165,962
165,962
177,823
177,823
1,966,169
149,011
7,148,283
101,596
1,889,481
149,011
6,895,232
101,596
1,597,448
350,625
6,054,413
114,399
1,442,453
362,422
5,965,468
114,399
Financial liabilities measured
at amortised cost
- deposits from banks
and central banks
- borrowings from banks
and central banks
- due to customers
95,283
95,657
106,414
106,627
147,002
147,379
212,656
212,880
140,419
134,020
198,609
193,774
82,797
75,152
57,292
52,897
20,732,722
20,746,603
20,027,726
20,031,938
11,881,563
11,892,641
10,984,411
10,989,255
- borrowings from other customers
- debt securities issued
- other financial liabilities
99,718
1,338,235
357,116
101,649
1,363,301
357,116
82,482
815,990
294,463
80,684
788,892
294,463
-
1,338,235
198,020
-
1,363,301
198,020
216
815,990
164,567
216
788,892
164,567
Loans and advances to banks
of cash flows, current market rates, and the credit risk
Loan commitments
The estimated fair value of deposits is based on
of the depository institution itself . A portion of sight
For credit facilities that are drawn soon after the NLB
discounted cash flows using prevailing market interest
deposits is stable, similar to term deposits . Therefore,
Group grants loans (drawn at market rates) and loan
rates for instruments with similar credit risk and residual
their economic value for NLB Group differs from the
commitments to those clients that are not impaired,
maturities . The fair value of overnight deposits equals
carrying amount .
their carrying value .
Loans and advances to customers
The estimated fair value of other deposits and
borrowings from customers is based on discounted cash
the fair value is close to zero . For loan commitments
to clients that are impaired, fair value represents the
amount of the recognised provisions .
The estimated fair value of loans and advances
flows using interest rates for new deposits with similar
Other financial assets and liabilities
represents the discounted amount of estimated future
residual maturities .
cash flows expected to be received . Expected cash flows
are discounted at current market rates for debts with
Debt securities measured at amortised cost and debt
The carrying amount of other financial assets and
liabilities is a reasonable approximation of their fair
value as they mainly relate to short-term receivables
similar credit risk and residual maturities to determine
securities issued
and payables .
their fair value .
Deposits and borrowings
The fair value of debt securities measured at amortised
cost and debt securities issued is based on their quoted
market price or value calculated by using a discounted
The fair value of sight deposits and overnight deposits
cash flow method and the prevailing money market
equals their carrying value . However, their actual value
interest rates .
for NLB Group depends on the timing and amounts
350
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Fair value hierarchy of financial instruments not measured at fair value in financial statements
31 Dec 2023
NLB Group
NLB
Level 1
Level 2
Level 3
Total
fair value
Level 1
Level 2
Level 3
Financial assets measured
at amortised cost
- debt securities
- 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
- debt securities issued
- other financial liabilities
2,030,120
-
-
-
-
-
-
-
1,363,301
-
403,255
547,555
7,221
-
2,440,596
547,555
-
-
13,256,192
13,256,192
165,962
165,962
95,657
134,020
20,746,603
-
-
-
-
-
-
101,649
-
357,116
95,657
134,020
20,746,603
101,649
1,363,301
357,116
1,779,995
-
-
-
-
-
-
-
1,363,301
-
31 Dec 2022
NLB Group
Financial assets measured
at amortised cost
- debt securities
- 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
- debt securities issued
- other financial liabilities
1,476,615
-
-
-
-
-
-
-
748,958
-
265,325
223,077
7,229
-
1,749,169
223,077
-
-
12,883,859
12,883,859
177,823
177,823
106,627
193,774
20,031,938
-
39,934
-
-
-
-
80,684
-
294,463
106,627
193,774
20,031,938
80,684
788,892
294,463
1,350,003
-
-
-
-
-
-
-
748,958
-
in EUR thousands
Total
fair value
1,889,481
149,011
6,895,232
101,596
109,486
149,011
-
-
-
-
6,895,232
101,596
-
-
-
-
-
198,020
147,379
75,152
11,892,641
-
1,363,301
198,020
147,379
75,152
11,892,641
-
-
-
NLB
in EUR thousands
Total
fair value
1,442,453
362,422
5,965,468
114,399
92,450
362,422
-
-
-
-
5,965,468
114,399
212,880
52,897
10,989,255
-
39,934
-
-
-
-
216
-
164,567
212,880
52,897
10,989,255
216
788,892
164,567
Level 1
Level 2
Level 3
Total
fair value
Level 1
Level 2
Level 3
351
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
6 .6 . Environmental and climate-
related risks
The NLB Group is engaged in contributing to sustainable
finance by incorporating environmental, social, and
governance (ESG) risks into its business strategies, risk
management framework, and internal governance
arrangements . With the adoption of the NLB Group
Sustainability programme, NLB Group implemented
sustainability elements into its business model . Thus,
sustainable finance integrates ESG criteria into the
Group’s business and investment decisions for the lasting
benefit of the Group’s clients and society . The NLB Group
Sustainability Committee oversees the integration of the
ESG factors to the NLB Group business model .
ESG risks do not represent a new risk category, but
rather one of the risk drivers of the existing type of
risks . The Group integrates and manages them within
the established risk management framework in the
areas of credit, liquidity, market, and operational
risk . The management of ESG risks follows ECB
and EBA guidelines, following the tendency of their
comprehensive integration into all relevant processes .
The management of ESG risks is incorporated into
the Group’s overall credit approval process and the
related credit portfolio management . Sustainable
financing is implemented in accordance with the Group’s
Environmental and Social Management System (ESMS) .
In addition to addressing ESG risks in all relevant stages
of the credit-granting process, relevant ESG criteria were
also considered in the collateral evaluation process .
The NLB Group conducts a materiality assessment as
part of its overall risk identification process to determine
the level of transitional and physical risk to which the
Group is exposed . In this process, the identification
of environmental risk factors, relevant transmission
channels, and their materiality and impact on the Group’s
financial performance in short-, mid- and long-term
periods are assessed . From the perspective of physical
risk, the most relevant natural disasters are floods,
landslides, and drought, while hail and windstorms are
also frequent, but less material . Despite this, the Group
can expect its impact to increase in the long run if no
adequate policy changes are implemented in a timely
manner . Chronic risk is not determined as a material
risk . Transition risks already arise in the short term
due to the determination of the EU to reduce carbon
emissions, according to its ambitious net zero strategy by
2050 . With the NZBA commitment and implementation
of NLB Group’s Net Zero Strategy in 2023, its impacts
are expected to diminish gradually in the long run .
Nevertheless, the Group assessed them more materially
than physical risk .
As a systemically important institution, the NLB Group
was included in the ECB Stress test exercise – 2024 EBA
Fit-for-55 climate risk scenario analysis . The exercise
started in December 2023 and will be concluded in March
2024 . By performing this exercise, the ECB assessed
how banks were prepared to deal with financial and
economic shocks stemming from climate risk .
6 .7 . 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 arrangements
are not presented in a net amount in the statement of
financial position because netting rules apply to cash
flows and not to the entire financial instrument .
NLB Group also holds certain standardised derivatives
(some interest rate swaps) with a clearing house or
central counterparty . A system of daily margins assures
the mitigation and collateralisation of exposures, as well
as the daily settlement of cash flows for each currency .
All derivatives are conducted under the conditions of
signed Master Agreements (MA), with international
banks . The ISDA MA is in place along with CSA annex
and for corporates domestic MA is in place, which
enable daily evaluation and exchange of margining .
352
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
31 Dec 2023
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2022
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2023
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
31 Dec 2022
Financial assets/liabilities
Derivatives - assets
Derivatives - liabilities
NLB Group
Amounts not set off
in the statement of financial position
in EUR thousands
Gross amounts
of recognised
financial assets/
liabilities
63,283
16,714
Impact of
master netting
agreements
Financial
instruments
collateral
Net amount
4,992
4,992
52,103
1,563
6,188
10,159
NLB Group
Amounts not set off
in the statement of financial position
in EUR thousands
Gross amounts
of recognised
financial assets/
liabilities
80,724
17,482
Impact of
master netting
agreements
Financial
instruments
collateral
Net amount
3,053
3,053
72,204
1,959
5,467
12,470
NLB
Amounts not set off
in the statement of financial position
in EUR thousands
Gross amounts
of recognised
financial assets/
liabilities
65,551
18,929
Impact of
master netting
agreements
Financial
instruments
collateral
Net amount
5,013
5,013
54,346
1,563
6,192
12,353
NLB
Amounts not set off
in the statement of financial position
in EUR thousands
Gross amounts
of recognised
financial assets/
liabilities
80,834
24,273
Impact of
master netting
agreements
Financial
instruments
collateral
Net amount
3,133
3,133
72,204
8,251
5,497
12,889
NLB Group and NLB have no financial assets/liabilities
set off in the statement of financial position .
353
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
7 . Analysis by segment for NLB Group
a) Segments
2023
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 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
NLB Group
Financial
Markets in
Slovenia
Non-Core
Members
Other
activities
Unallocated
Total
in EUR thousands
Retail Banking
in Slovenia
Corporate and
Investment
Banking in
Slovenia
366,988
246,811
120,177
264,707
147,803
116,904
(141,132)
(12,675)
149,184
204,868
(55,684)
106,462
161,103
(54,641)
(63,955)
(6,240)
Strategic
Foreign
Markets
541,624
541,098
526
423,249
429,464
(6,215)
(223,239)
(27,990)
40,437
95,748
(55,311)
37,752
94,023
(56,271)
(9,202)
(689)
(131)
(578)
447
1,540
1,444
96
5,574
5,349
225
(376)
(503)
127
(13,230)
(508)
(12,740)
(635)
213,181
78,989
290,395
30,546
(13,869)
(7,801)
1,072
(32,592)
181,661
181,661
-
-
-
7,909
86,898
86,898
-
-
-
1,124
291,519
278,896
12,623
-
-
4,757
35,303
35,303
-
-
-
3,729
(10,140)
(10,140)
-
-
-
973
(6,828)
(6,828)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(15,090)
1,103,676
1,093,296
10,380
833,334
833,334
-
(463,498)
(48,737)
591,441
1,072
(14,100)
578,413
565,790
12,623
(15,090)
550,700
Reportable segment assets
3,778,767
3,376,370
11,058,835
7,232,457
47,097
435,940
Investments in associates and joint ventures
12,519
-
-
-
Reportable segment liabilities
Additions to non-current assets
9,381,016
2,512,801
9,329,079
1,540,000
19,775
9,826
40,239
505
-
3,419
4
-
227,680
4,099
-
-
-
-
25,929,466
12,519
22,993,995
74,448
354
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
2022
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 associates and joint ventures
Gain from bargain purchase
Impairment and provisions charge
Profit/(loss) before income tax
Owners of the parent
Non-controlling interests
Income tax
Profit for the year
Retail Banking
in Slovenia
Corporate and
Investment
Banking in
Slovenia
211,474
227,590
(16,116)
104,809
125,541
(20,732)
(132,893)
(11,149)
105,198
121,042
(15,844)
52,930
71,832
(18,902)
(60,471)
(4,629)
Strategic
Foreign
Markets
427,519
429,999
(2,480)
298,042
303,349
(5,307)
(199,593)
(28,538)
67,432
40,098
199,388
781
-
(21,435)
46,778
46,778
-
-
-
-
12,156
52,254
52,254
-
-
-
68
(12,325)
187,131
176,160
10,971
-
NLB Group
Financial
Markets in
Slovenia
Non-Core
Members
Other
activities
Unallocated
Total
46,601
5,558
41,043
47,304
2,169
45,135
(8,812)
(618)
37,171
-
-
(3,363)
33,808
33,808
-
-
4,697
4,426
271
267
453
(186)
(12,109)
(498)
(7,910)
-
-
(829)
(8,739)
(8,739)
-
-
10,024
9,934
90
1,570
1,578
(8)
(7,309)
(621)
2,094
-
172,810
(3,073)
171,831
171,831
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(25,230)
805,513
798,549
6,964
504,922
504,922
-
(421,187)
(46,053)
338,273
781
172,878
(28,869)
483,063
472,092
10,971
(25,230)
446,862
Reportable segment assets
3,665,110
3,372,047
10,179,396
6,514,047
61,563
356,400
Investments in associates and joint ventures
11,677
-
-
-
Reportable segment liabilities
Additions to non-current assets
9,108,497
2,777,001
8,539,025
1,118,681
10,717
6,088
29,042
261
-
3,754
99
-
190,957
4,688
-
-
-
-
24,148,563
11,677
21,737,915
50,895
Segment reporting is presented in accordance with the
The core segments are the following:
• Financial Markets in Slovenia include treasury activities
strategy on the basis of the organisational structure
• Retail Banking in Slovenia, which includes banking with
and trading with financial instruments, while they also
used in management reporting of NLB Group’s results .
individuals and micro companies (NLB and N Banka),
present the results of asset and liabilities management
NLB Group’s segments are business units that focus on
asset management (NLB Skladi), and part of subsidiary
(ALM) in both NLB and N Banka .
different customers and markets . They are managed
NLB Lease&Go Ljubljana that includes operations with
• Other activities include categories in NLB and N Banka
separately because each business unit requires different
retail clients, as well as the contribution to the result of
whose operating results cannot be allocated to specific
strategies and service levels .
the associated company Bankart .
segments, including gain from bargain purchase from
• Corporate and Investment Banking in Slovenia, which
acquisition of N Banka in 2022, as well as subsidiaries NLB
The business activities of the parent bank (NLB) and
includes banking with Key Corporate Clients, SMEs,
Cultural Heritage Management Institute and Privatinvest .
N Banka are divided into several segments . Interest
Cross-border corporate financing, Investment Banking
income and expenses are reallocated between
and Custody, Restructuring and Workout in NLB and
Non-Core Members include the operations of non-core
segments on the basis of fund transfer prices (FTP) .
N Banka, and part of the subsidiary NLB Lease&Go
NLB Group members, namely REAM and leasing entities
Other NLB Group members are, based on their business
Ljubljana that includes operations with corporate clients .
in liquidation, NLB Srbija, and NLB Crna Gora .
activity, included in only one segment except NLB
• Strategic Foreign Markets, which consist of the
Lease&Go Ljubljana, which is according to its business
operations of strategic Group banks in the strategic
NLB Group is primarily a financial group, and net
activities divided into two segments .
markets (North Macedonia, Bosnia and Herzegovina,
interest income represents the majority of its net
Kosovo, Montenegro, and Serbia), as well as investment
revenues . NLB Group’s main indicator of a segment’s
The segments of NLB Group are divided into core and
company KomBank Invest, Beograd, NLB DigIT,
efficiency is net profit before tax .
non-core segments .
Beograd, NLB Lease&Go Skopje, and NLB Lease&Go
in EUR thousands
355
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
leasing Beograd .
No revenues were generated from transactions with a
single external customer that would amount to 10% or
more of NLB Group’s revenues .
Contents
b) Geographical information
Geographical analysis includes a breakdown of items
with respect to the country in which individual NLB
Group entities are located .
NLB Group
Slovenia
South East Europe
Bosnia and Herzegovina
Croatia
Kosovo
Montenegro
North Macedonia
Serbia
Western Europe
Germany
Switzerland
Total
in EUR thousands
Revenues
Net income
Profit/(loss) before income tax
Income tax
2023
729,170
663,042
104,460
-
68,279
62,625
111,599
316,079
103
-
103
2022
445,749
505,855
84,065
23
58,297
49,528
94,660
219,282
13
-
13
2023
556,854
538,752
85,158
(557)
56,374
51,658
90,233
255,886
(2,310)
51
(2,361)
2022
367,121
431,267
71,205
473
49,251
38,251
78,369
193,718
161
58
103
2023
275,533
305,507
40,677
(527)
39,797
32,032
49,895
143,633
(2,627)
(402)
(2,225)
2022
288,563
194,764
33,475
(170)
35,922
15,436
41,807
68,294
(264)
(647)
383
2023
19,447
(34,525)
(3,467)
-
(3,995)
(5,502)
(4,910)
(16,651)
(12)
-
(12)
2022
(9,719)
(15,487)
(2,635)
(45)
(3,693)
(1,838)
(3,795)
(3,481)
(24)
-
(24)
1,392,315
951,617
1,093,296
798,549
578,413
483,063
(15,090)
(25,230)
The column ‘Revenues’ includes interest and
similar income, dividend income, and fee and
commission income .
The column ‘Net Income’ includes net interest income,
dividend income, net fee and commission income, the
net effect of financial instruments, foreign exchange
translation, the effect on the derecognition of assets, net
operating income, and gain less losses from non-current
assets held for sale .
NLB Group
Slovenia
South East Europe
Bosnia and Herzegovina
Croatia
Kosovo
Montenegro
North Macedonia
Serbia
Western Europe
Germany
Switzerland
Total
Non-current assets
Total assets
Number of employees
in EUR thousands
31 Dec 2023
31 Dec 2022
160,574
223,185
38,861
-
13,810
23,163
34,276
152,037
204,802
35,550
377
14,289
17,416
36,348
113,075
100,822
27
27
-
28
28
-
31 Dec 2023
14,851,067
11,072,317
1,934,891
1,194
1,229,426
928,913
1,895,297
5,082,596
18,601
552
18,049
31 Dec 2022
13,935,167
10,216,136
1,799,877
3,557
1,082,474
825,400
1,832,477
4,672,351
8,937
691
8,246
31 Dec 2023
31 Dec 2022
2,689
5,291
990
1
468
390
962
2,833
5,392
971
6
467
380
954
2,480
2,614
2
-
2
3
1
2
383,786
356,867
25,941,985
24,160,240
7,982
8,228
356
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The table below presents data on NLB Group
members before intercompany eliminations and
consolidation journals:
NLB Group
Slovenia
South East Europe
Bosnia and Herzegovina
Croatia
Kosovo
Montenegro
North Macedonia
Serbia
Western Europe
Germany
Switzerland
Total
Revenues
Net income
Profit/(loss) before
income tax
2023
909,550
670,510
105,503
-
68,468
64,729
111,933
319,877
118
-
118
2022
523,774
507,243
84,107
128
58,296
49,738
94,624
220,350
25
1
24
2023
704,971
542,776
83,567
(385)
55,182
50,465
86,612
267,335
(2,467)
51
(2,518)
2022
431,187
429,307
70,211
617
48,391
37,822
75,882
2023
511,693
308,129
40,555
(366)
39,963
32,836
48,822
196,384
146,319
(12)
54
(66)
(2,711)
(402)
(2,309)
2022
191,900
199,981
33,352
(170)
36,095
18,374
41,601
70,729
(2,835)
(646)
(2,189)
in EUR thousands
Income tax
2023
28,958
(34,879)
(3,467)
-
(3,995)
(5,502)
(4,910)
(17,005)
(12)
-
(12)
2022
(9,153)
(15,952)
(2,635)
(45)
(3,693)
(1,838)
(3,795)
(3,946)
(24)
-
(24)
1,580,178
1,031,042
1,245,280
860,482
817,111
389,046
(5,933)
(25,129)
357
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
8 . Related-party transactions
A related party is a person or entity that is related to
members of the Management Board, key management
members and companies these related parties have
NLB Group in such a manner that it has control or joint
personnel, or their family members have control, joint
control, has a significant influence, or is a member
control, or a significant influence; a major shareholder
control, joint control, or significant influence
A number of banking transactions are entered into
of the key management personnel of the reporting
of NLB with significant influence, subsidiaries,
with related parties within regular course of business .
entity . Related parties of NLB Group and NLB include:
associates and joint ventures .
The volume of related-party transactions and the
key management personnel (Management Board,
outstanding balances are as follows:
other key management personnel and their family
Related-party transactions with Management Board
members); the Supervisory Board; companies in which
and other key management personnel, their family
NLB Group
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 liabilities
Other financial liabilities
measured at fair value through
profit or loss (note 2.31.)
Other operating liabilities
Guarantees issued and
loan commitments
Fee income
Other income
Other expenses
Management Board and other Key
management personnel
Family members of the Management
Board and other key management
personnel
Companies in which members
of the Management Board, key
management personnel or their
family members have control, joint
control or a significant influence
2023
2022
2,173
1,214
(1,532)
1,855
57
2,556
2,617
(2,806)
2,367
(33)
1
2,075
11,066
287
19
16
-
2,097
1,526
(1,450)
2,173
41
2,170
2,938
(2,552)
2,556
(7)
2
801
6,559
237
19
17
-
2023
469
307
(332)
444
17
926
1,440
(1,213)
1,153
(6)
-
-
-
64
8
-
-
2022
415
324
(270)
469
10
718
634
(426)
926
-
-
-
-
70
7
-
-
2023
-
-
-
-
-
218
496
(442)
272
-
12
-
-
-
3
-
(94)
2022
532
8
(540)
-
-
590
6,413
(6,785)
218
-
3
-
-
-
66
-
(382)
in EUR thousands
Supervisory Board
2023
2022
54
46
(76)
24
1
348
407
(338)
417
(5)
-
-
-
14
1
-
(1)
60
76
(82)
54
-
505
398
(555)
348
(2)
-
-
-
17
2
-
-
358
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB
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 liabilities
Other financial liabilities
measured at fair value through
profit or loss (note 2.31.)
Other operating liabilities
Guarantees issued and
loan commitments
Fee income
Other income
Other expenses
Management Board and other Key
management personnel
Family members of the Management
Board and other key management
personnel
Companies in which members
of the Management Board, key
management personnel or their
family members have control, joint
control or a significant influence
2023
2022
2,172
1,203
(1,521)
1,854
57
2,536
2,555
(2,734)
2,357
(33)
1
1,975
11,080
279
19
16
-
2,097
1,480
(1,405)
2,172
41
2,170
2,643
(2,277)
2,536
(7)
2
728
6,539
223
18
17
-
2023
469
307
(332)
444
17
926
1,440
(1,213)
1,153
(6)
-
-
64
8
-
-
2022
415
324
(270)
469
10
718
634
(426)
926
-
-
-
70
7
-
-
2023
-
-
-
-
-
218
496
(442)
272
-
12
-
-
3
-
2022
532
8
(540)
-
-
590
6,413
(6,785)
218
-
3
-
-
66
-
(94)
(382)
in EUR thousands
Supervisory Board
2023
2022
54
46
(76)
24
1
348
407
(338)
417
(5)
-
-
14
1
-
(1)
60
76
(82)
54
-
505
398
(555)
348
(2)
-
-
17
2
-
-
Key management compensation
The remuneration for the 2023 for the members of the
Supervisory Board of NLB d .d . and the Management
identified employees who are included in the Policy on
The Bank’s General Meeting may determine and change
the basis of the Bank’s self-assessment .
the remuneration of the members of the Supervisory
Board independently from the Remuneration Policy, and
Board of NLB d .d . is regulated in Remuneration Policy
Members of the Supervisory Board may, in relation to
may change, repeal, or replace any of its resolutions in
for the Members of the Supervisory Board of NLB d .d .
their function of a member of the Supervisory Board,
relation to the remuneration of the Supervisory Board
and the Members of the Management Board of NLB
only receive remuneration that is compliant with the
members at any time, or adopt a new resolution in
d .d . The remuneration for the identified employees and
relevant resolutions of the Bank’s General Meeting .
relation to the remuneration of the Supervisory Board
other employees is regulated in Remuneration Policy for
The Supervisory Board members are entitled to a
members . The last changes of the remuneration of
employees of NLB d .d . and NLB Group .
remuneration for performing their function and/or
attendance fees for their membership in the Supervisory
members of the Supervisory Board were adopted at the
General Meeting of NLB d .d . 19 June 2023 .
In the Remuneration Policy and based thereon and in
Board of the Bank and the committees of the
accordance with Commission Delegated regulation (EU)
Supervisory Board of the Bank, which are determined in
The performance of key management is defined by
2021/923, the Bank designates identified employees .
accordance with respective applicable resolution by the
financial and non-financial criteria . In addition to the
In designating identified employees, the internal
General Meeting of the Bank, and to reimbursement of
salary determined in their employment contract, they
organisation and the nature, scope, and complexity of
travel expenses, daily allowances, and accommodation
are entitled to the annual variable part of the salary
the Bank’s activities are taken into account . The criteria
costs up to the amount provided by the regulations
based on their achievement of the financial and non-
fully take into account the risks that the Bank or the NLB
governing reimbursement of costs related to work and
financial performance criteria, which encompass
Group is or could be exposed to its given risk profile
other income not included in the tax base .
the goals of NLB Group or NLB, the goals of the
and risk appetite . The Remuneration Policy includes
members of the Supervisory Board, members of the
Management Board, senior management, and other
organisational unit, and the personal goals of the
employee performing special work .
359
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
The objectives and performance assessment criteria
day on which the non-deferred part of such variable
of each member of the Management Board shall
remuneration is paid and it is paid in proportional
be determined each year by the Supervisory Board
shares, according to the relevant legislation .
NLB d .d . at the time of adoption of the Bank’s annual
business plan . Also, the Supervisory Board of NLB
The table below shows payments in presented periods:
NLB Group and NLB
Management Board
Other key management
personnel
Supervisory Board
in EUR thousands
Short-term benefits
Cost refunds
Long-term bonuses:
- severance pay
- other benefits
- variable part of payments
Total
2023
3,076
2022
2,282
9
-
53
299
3,437
6
-
7
276
2,571
2023
6,604
112
120
163
1,252
8,251
2022
6,148
98
-
77
1,425
7,748
2023
728
104
-
-
-
2022
696
74
-
-
-
832
770
Short-term benefits include:
- monetary benefits (gross salaries, supplementary
insurance, holiday allowances, and other bonuses);
- non-monetary benefits (company cars, health care,
residential facilities, etc .) .
The reimbursement of cost comprises food allowances,
travel expenses, and use of own resources .
d .d . confirm the objectives of the heads of control or
supervisory functions . The objectives and performance
assessment criteria for the identified employees are
determined by the Management Board .
The variable portion of receipts for a given financial
year may not exceed nine salaries of a member of
the Management Board in the financial year . Other
identified employees are entitled to a variable part of
remuneration according to the category of employee
in the maximum amount of three to six salaries . Key
management shall be entitled to a variable part of
the performance benefit only in proportional part to
the actual period of employment (duration of the term
of office) of the Bank during the period to which the
variable part of the performance benefit relates .
The non-deferred part of variable remuneration is
paid no later than three months after the adoption of
the Annual Report of NLB Group for the business year
to which the variable remuneration relates . Variable
remuneration part of payment of an identified employee
is awarded and paid in cash, provided that the amount
does not exceed EUR 50 thousand or/and is higher
than one-third of his/her total remuneration for each
financial year, and if this is permissible in accordance
with the relevant regulation .
If the variable remuneration part of payment of an
identified employee exceeds EUR 50 thousand or/and
is higher than one-third of his/her total remuneration
for each financial year and if this is permissible in
accordance with the relevant regulation, then at least
50% of the variable remuneration must consist of
instruments . The part of the variable remuneration of an
identified employee consisting of instruments shall be
awarded and paid under the terms and conditions in the
valid Remuneration Policy in instruments whose value is
based on the value of the share of NLB d .d . (with these
instruments not giving any dividends or other yields) .
The deferred part of the variable part of the salary must
be deferred for a period of at least five years of the
360
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Payments to individual members of the Management Board
Member / Mandate
Blaž Brodnjak
1 .12 .2012
Peter Andreas
Burkhardt
18 .09 .2013
Archibald Kremser
31 .07 .2013
Antonio Argir
28 .04 .2022
Andrej Lasič
28 .04 .2022
Hedvika Usenik
28 .04 .2022
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
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
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
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
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
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
2023
in EUR
2022
662,159
542,370
9,040
1,490
2,904
92,854
768,447
552,167
46,318
1,540
3,364
83,480
686,869
632,159
33,364
1,324
3,364
88,539
758,750
352,909
64,854
1,515
37,140
34,047
490,465
6,908
1,318
1,912
95,214
647,722
486,438
33,588
1,243
1,452
89,132
611,853
517,370
39,220
1,302
1,452
91,870
651,214
205,291
30,077
796
859
-
237,023
352,909
205,292
3,756
1,469
3,364
34,047
395,545
352,909
13,234
1,507
2,904
34,047
404,601
4,216
796
859
-
211,163
205,292
5,512
782
859
-
212,445
361
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Payments to individual members of the Supervisory Board
Member / Mandate
Primož Karpe
11 .02 .2016
David Eric Simon
04 .08 .2016
Shrenik Dhirajlal Davda
10 .06 .2019
Mark William Lane Richards
10 .06 .2019
Verica Trstenjak
15 .06 .2020
Sergeja Kočar
17 .06 .2020
Islam Osama Bahgat Zekry
14 .06 .2021
Tadeja Žbontar Rems
22 .01 .2021
Cvetka Selšek
15 .08 .2023
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
André Marc Richard Prudent Toccanier
Annual compensation
15 .08 .2023
Gregor Rok Kastelic
10 .06 .2019 - 19 .06 .2023
Andreas Klingen
22 .06 .2015 - 19 .06 .2023
Bojana Šteblaj
17 .06 .2020 - 12 .09 .2022
Janja Žabjek Dolinšek
20 .11 .2020 - 08 .07 .2022
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
Annual compensation
Other bonuses - benefit
Costs refunds
2023
103,680
279
9,300
87,480
279
13,162
83,683
279
19,444
87,480
279
18,141
73,254
279
3,490
23,659
279
1,017
77,760
279
17,656
44,774
279
309
30,102
279
2,580
33,063
279
6,773
38,025
-
4,527
42,250
-
7,917
-
-
-
-
-
-
in EUR
2022
96,000
382
10,952
81,000
382
7,931
72,000
382
8,767
81,000
382
9,493
66,000
382
1,473
8,327
382
1,183
72,000
382
17,622
31,215
382
185
-
-
-
-
-
-
81,000
382
9,340
90,000
382
7,360
12,014
-
-
1,473
-
32
362
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Related-party transactions with subsidiaries, associates and joint ventures
NLB Group
Loans issued
Balance at 1 January
Acquisition of subsidiaries
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
Income/(expenses) provisions for guaranties and commitments
Fee income
Fee expenses
Other income
Other expenses
Associates
2023
1,057
-
1,161
(2,208)
10
63
825
5,375
-
10,378
(9,585)
6,168
-
7
1,460
30
2
8
(16,167)
53
(1,174)
2022
1,011
77
145
(176)
1,057
39
(8)
7,967
-
5,982
(8,574)
5,375
-
7
1,116
2,034
(1)
69
(12,894)
92
(571)
in EUR thousands
Joint ventures
363
2023
201
-
2
(203)
-
1
6
3,071
(3)
6,902
(8,519)
1,451
(36)
1
-
-
-
-
-
5
-
2022
201
-
2
(2)
201
3
2
3,492
3
1,073
(1,497)
3,071
(46)
-
1
-
-
-
-
5
-
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
of which at amortised cost
of which at fair value through profit or loss
Interest income
Impairment
Valuation
Deposits
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Interest expenses
Impairment
Loans received
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Interest expenses
Deposits received
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest expenses
Derivatives
Fair value
Contractual amount
Interest income
Interest expenses
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
Subsidiaries
2023
337,900
660,088
(539,304)
458,684
450,213
8,471
19,938
11
1,231
2022
250,303
536,279
(448,682)
337,900
328,641
9,259
7,461
(645)
(2,225)
223,492
1,120,256
(1,321,986)
21,762
83,948
2,171,418
(2,031,874)
223,492
985
-
43
13,001
36,887
(49,888)
-
-
(12)
940
(5)
(18)
44,484
13,001
(44,484)
13,001
9
(2)
165,778
68,372
87,107,211
23,967,799
(87,168,040)
(23,870,393)
104,949
(5,205)
54
298,290
25
(208)
2,058
3
4,615
87,094
(76)
10,741
10,632
(5)
1,959
(5,087)
(1,898)
165,778
(465)
(6,681)
113,711
312
(181)
2,514
5
2,710
46,366
(85)
10,983
10,200
(280)
1,543
(5,864)
(7,132)
Associates
2023
982
1,161
(2,133)
10
10
-
63
861
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2022
1,011
145
(174)
982
982
-
39
27
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,375
10,378
(9,585)
6,168
7,967
5,982
(8,574)
5,375
-
-
-
-
-
7
-
1,340
30
2
-
8
(12,698)
43
(1,137)
-
-
-
-
-
-
7
-
972
2,034
(1)
-
69
(9,964)
92
(559)
-
in EUR thousands
Joint ventures
364
2023
201
2
(203)
-
-
-
1
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40
418
(63)
395
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
2022
201
2
(2)
201
201
-
3
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27
82
(69)
40
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Related-party transactions with major shareholder with significant influence
The volumes of related party transactions with major shareholder are as follows:
Loans issued
Balance at 1 January
Increase
Decrease
Balance at 31 December
Interest income
Investments in securities
Balance at 1 January
Exchange difference on opening balance
Acquisition of subsidiaries
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
2023
17,595
2,731
(6,942)
13,384
713
564,287
(27)
-
550,561
(548,065)
10,773
577,529
7,131
(21)
65
20
1,466
574
(28)
272
(5,009)
(656)
-
2022
20,534
3,708
(6,647)
17,595
713
534,522
36
151,047
672,692
(746,698)
(47,312)
564,287
5,816
-
31,141
2
1,194
350
(28)
257
(3)
-
(66)
in EUR thousands
NLB
2023
17,595
2,731
(6,942)
13,384
713
2022
20,534
3,708
(6,647)
17,595
713
473,389
483,656
-
33,617
409,682
(410,346)
10,584
516,926
5,692
(21)
65
20
1,466
574
(28)
272
(5,009)
(656)
-
-
-
553,823
(521,066)
(43,024)
473,389
5,844
-
31,141
2
1,194
350
(28)
257
(3)
-
(66)
365
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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 with exposure above EUR 40 million and
their business accounts .
NLB Group and NLB
Guarantees issued and loan commitments
NLB Group and NLB
Loans
Debt securities measured at amortised cost
Borrowings, deposits and business accounts
Guarantees issued and loan commitments
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
Amount of significant transactions
concluded during the year
Number of significant transactions
concluded during the year
2023
50,000
2022
188,000
2023
1
2022
3
in EUR thousands
Year-end balance of all
significant transactions
Number of significant transactions
at year-end
in EUR thousands
2023
406,005
64,132
30,399
152,500
2022
565,330
64,913
108,606
152,500
2023
10
1
3
2
2022
10
1
3
2
in EUR thousands
Effects in income statement
during the year
2023
18,489
51
2,411
-
2022
5,130
777
(4,940)
(99)
366
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
9 . Events after the reporting date
Subordinated notes
On 24 January 2024, NLB issued subordinated Tier 2
notes in the total nominal amount of EUR 300 million,
10NC5 tenor and ISIN code XS2750306511 . In parallel,
NLB conducted a liability management exercise where
it repurchased EUR 219 .6 million of its two outstanding
subordinated Tier 2 notes with approaching call dates
with ISIN code XS2080776607 and XS2113139195 . The
liability management exercise was concluded on 26
January 2024 .
Notice of early redemption of subordinated notes
as of 2 April 2024
NLB will, based on the obtained permission of the
European Central Bank, redeem its subordinated notes
in the aggregate nominal amount of EUR 45 million,
issued on 6 May 2019 and with maturity on 6 May
2029 (ISIN code SI0022103855), before their maturity .
Pursuant to the terms and condition of the notes the
early repayment of principal and accrued and unpaid
interest will be made on the fifth anniversary from the
issuance, being 6 May 2024 .
367
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
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
Antonio Argir, Responsible for Group governance, payments and innovations
Peter Andreas Burkhardt, CRO
Archibald Kremser, CFO
Andrej Lasič, CMO (responsible for Corporate and Investment Banking)
Hedvika Usenik, CMO (responsible for Retail Banking and Private Banking)
Slovenian network
Area Branch Ljubljana
Trg republike 2
1000 Ljubljana, Slovenia
Area Branch Northwest and Central Slovenia
Ljubljanska cesta 62
1230 Domžale, Slovenia
Area Branch East Slovenia
Titova cesta 2
2000 Maribor, Slovenia
Area Branch Northeast Slovenia
Rudarska cesta 3
3320 Velenje, Slovenia
Area Branch Southeast Slovenia
Seidlova cesta 3
8000 Novo mesto, Slovenia
Area Branch Southwest Slovenia
Cesta Zore Perello - Godina 7
6000 Koper, Slovenia
Private Banking
Trg republike 2
1000 Ljubljana, Slovenia
Micro Enterprises
Trg republike 2
1000 Ljubljana, Slovenia
Mobile banking
Trg republike 2
1000 Ljubljana, Slovenia
Small and Mid-corporates
Central region
Trg republike 2
1000 Ljubljana, Slovenia
Northwest region
Ljubljanska cesta 62
1230 Domžale, Slovenia
Primorsko-Goriška region
Cesta Zore Perello - Godina 7
6000 Koper, Slovenia
Podravsko-Pomurska region
Titova cesta 2
2000 Maribor, Slovenia
Savinjsko-Koroška region
Kocenova 1
3000 Celje, Slovenia
Dolenjsko-Posavska region
Seidlova cesta 3
8000 Novo mesto, Slovenia
CSA & Cross-Border
Financing
Trg republike 2
1000 Ljubljana, Slovenia
Large corporates
Institutional Investors
Trg republike 2
1000 Ljubljana, Slovenia
Large Corporates
Trg republike 2
1000 Ljubljana, Slovenia
Investment Banking and
Custody
Trg republike 2
1000 Ljubljana, Slovenia
Trade Finance Services
Trg republike 2
1000 Ljubljana, Slovenia
368
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Members of NLB Group
NLB Komercijalna Banka AD Beograd
Bulevar Mihajla Pupina 165v
11070 New Belgrade, Serbia
E-mail: kontakt .centar@nlbkb .rs
www . nlbkb .rs
Vlastimir Vuković, President of the Management Board
Dejan Janjatović, Deputy of the President of the
Management Board
Vladimir Bošković, Member of the Management Board
Bojana Kaličanin - Stojanović, Member of the
Management Board
NLB Banka AD Skopje
Vodnjanska 1
1000 Skopje, North Macedonia
E-mail: info@nlb .mk
www .nlb .mk
Branko Greganović, President 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
E-mail: helpdesk@nlb-rs .ba
www .nlb-rs .ba
Goran Babić, President of the Management Board
Marjana Usenik, Member of the Management Board12
Ljiljana Krsman, Member of the Management Board
NLB Banka d .d ., Sarajevo
Ul . Koševo br . 3
71000 Sarajevo, Bosnia and Herzegovina
E-mail: info@nlb .ba
www .nlb .ba
Lidija Žigić, President of the Management Board
Denis Hasanić, Member of the Management Board
Jure Peljhan, Member of the Management Board
NLB Banka sh .a ., Prishtina
Rr . Ukshin Hoti nr . 124
10000 Prishtina, Kosovo
E-mail: qendrakontaktuese@nlb-kos .com
www .nlb-kos .com
Gazmend Kadriu, President of the Management Board
Gem Maloku, Member of the Management Board13
NLB Lease&Go d .o .o . Skopje
Vodnjanska 1
1000 Skopje, North Macedonia
E-mail: info@nlbleasego .mk
www .nlbleasego .mk
Gregor Martinuč, Director
Gjore Andonovski, Director
NLB Banka a .d ., Podgorica
Bulevar Stanka Dragojevića 46
81000 Podgorica, Montenegro
E-mail: info@nlb .me
www .nlb .me
NLB Lease&Go Leasing d .o .o ., Beograd
Mihajla Pupina 165v (prvi sprat)
11070 New Belgrade, Serbia
E-mail: office@nlbleasego .rs
www .nlbleasego .rs
Martin Leberle, President of the Management Board
Boris Stević, Chairman of the Executive Board
Dražen Vujošević, Member of the Management Board
Michael Krenn, Member of the Executive Board
Lana Đurasović, Member of the Management Board
NLB DigIT d .o .o . Beograd
Omladinskih brigada 90b
11070 New Belgrade, Serbia
E-mail: office@nlbdigit .rs
www .nlbdigit .rs
Vladimir Rupar, Director
Mina Popović, Director
KomBank Invest a .d . Beograd
Kralja Petra 19
11000 Belgrade, Serbia
E-mail: vladimir .garic@kombankinvest .com
www .kombankinvest .com
Vladimir Garić, Director
NLB Lease&Go, leasing, d .o .o ., Ljubljana
Šlandrova ulica 2
1231 Ljubljana - Črnuče, Slovenia
E-mail: info@nlbleasego .si
www .nlbleasego .si
Andrej Pucer, Director
Anže Pogačnik, Director
NLB Cultural Heritage Management Institute, Ljubljana
Čopova ulica 3
1000 Ljubljana, Slovenia
E-mail: irena .cuk@nlb .si
www .bankarium .si
Irena Čuk, Director
NLB Leasing d .o .o ., Ljubljana – v likvidaciji
Šlandrova ulica 2
1231 Ljubljana - Črnuče, Slovenia
E-mail: anze .pogacnik@nlbleasing .si
Anže Pogačnik, Liquidator
Prvi faktor d .o .o ., v likvidaciji, Ljubljana
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 165v
Claus-Peter Martin Mueller, Director
11070 New Belgrade, Serbia
E-mail: zeljko .atanaskovic@prvifaktor .rs
Željko Atanasković, Liquidator
369
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
12 Marjana Usenik was a Member of the Management Board until 31 December 2023. Martin Mavrič and Živko Šiftar were appointed as Members of the Management Board starting from 1 January 2024.
13 Mirsad Haskaj was appointed as Member of the Management Board as of 1 January 2024 and Ardian Hasa as of 1 February 2024.
Contents
S-REAM d .o .o ., Ljubljana
Čopova 3
1000 Ljubljana, Slovenia
E-mail: nepremicnine@s-ream .com
www .nlbrealestate .com
Lamija Hadžiosmanović, Director
Miroslav Živković, Director
ARG – Nepremičnine d .o .o .
Vrhniška cesta 30
1354 Horjul, Slovenia
E-mail: matic .kermavnar@cbre .com
Matic Kermavnar, 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
Prvi faktor d .o .o . u likvidaciji, Zagreb
Miramarska cesta 24
10000 Zagreb, Croatia
E-mail: info@prvifaktor .hr
Vjekoslav Budimir, Liquidator
NLB InterFinanz AG in Liquidation, Zürich
Beethovenstrasse 48
8002 Zürich, Switzerland
E-mail: info@nlbinterfinanz .ch
Jean-David Barnezet Llort, Liquidator
Polona Žižmund, Liquidator
NLB InterFinanz d .o .o ., Beograd – u likvidaciji
Bulevar Mihajla Pupina 165v
11070 New Belgrade, Serbia
Liljana Zoraja, Liquidator
NLB Skladi, upravljanje premoženja, d .o .o ., Ljubljana
Tivolska cesta 48
1000 Ljubljana, Slovenia
E-mail: info@nlbskladi .si
www .nlbskladi .si
Luka Podlogar, President of the Management Board
Blaž Bračič, Member of the Management Board
Bankart d .o .o ., Ljubljana
Celovška cesta 150
1000 Ljubljana, Slovenia
E-mail: info@bankart .si
www .bankart .si
Aleksander Kurtevski, Director
Tomaž Borštner, Director
LHB Aktiengesellschaft, Frankfurt am Main
Silberbornstrasse 14
D-60320 Frankfurt, Germany
E-mail: matjaz .jevnisek@lhb .de
Matjaž Jevnišek, President of the Management Board
PRIVATINVEST d .o .o . Ljubljana
Dunajska cesta 128A
1000 Ljubljana, Slovenia
E-mail: info@privatinvest .si
Anže Boris Dugar, Director
Julijana Milić, Director
PRO-REM d .o .o ., Ljubljana – v likvidaciji
Čopova 3
1000 Ljubljana, Slovenia
E-mail: info@prorem .si
www .nlbrealestate .com
Nataša Batagelj, Liquidator
Andrej Novak, Liquidator
REAM d .o .o ., Podgorica
Bul . Džordža Vašingtona br . 102, I . sprat/20
81000 Podgorica, Montenegro
E-mail: gligor .bojic@nlb .me
www .nlbrealestate .com
Gligor Bojić, Director
Marko Furlan, Authorised Representative
OL Nekretnine d .o .o . u likvidaciji, Zagreb
Miramarska 24
10000 Zagreb, Croatia
E-mail: ivan .strek@olnekretnine .hr
Vjekoslav Budimir, Liquidator
Ivan Štrek, Liquidator
REAM d .o .o ., Beograd
Bulevar Mihajla Pupina 165v
11070 New Belgrade, Serbia
E-mail: miroslav .zivkovic@ream-srb .com
www .nlbrealestate .com
Miroslav Živković, Director
Bojana Kostandinović, Director
NLB Srbija d .o .o ., Beograd
Bulevar Mihajla Pupina 165v
11070 New Belgrade, Serbia
E-mail: office@nlbsrbija .co .rs
www .nlbsrbija .co .rs
Željko Atanasković, Director
NLB Crna Gora d .o .o ., Podgorica
Bulevar Džordža Vašingtona 102,
II sprat/38
81000 Podgorica, Montenegro
E-mail: goran .lalicevic@nlb .me
Goran Laličević, Executive Director
Barbara Šink, Authorised Representative
Marko Čelebić, Authorised Representative
370
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
Definitions and Glossary of Selected Terms
AC
ALCO
ALM
ALMM
Amortised Costs
Asset and Liability Committee
Asset and Liability Management
Additional Liquidity Monitoring Metrics
AML/CTF
Anti-Money Laundering and Counter-Terrorism Financing
AT1
AuM
B2C
BCA
BCM
BIA
BiH
BMR
BoS
bps
BPV
CB
CBR
CEE
CEO
CET1
CFO
CGU
CIR
CISO
CMO
CoR
CRD
CRE
CRM
CRO
CRR
CSA
CSD
CSR
CSRD
CVA
DGS
DTA
DWH
EAD
EaR
EBA
EBRD
ECB
ECL
Additional Tier 1 capital
Assets under Management
Business-to-Consumer
Baseline Credit Assessment
Business Continuity Management
Business Impact Analysis
Bosnia and Herzegovina
Benchmarks Regulation
Bank of Slovenia
Basis Points
Basis Point Value
Central Bank
Combined Buffer Requirement
Central Eastern Europe
Chief Executive Officer
Common Equity Tier 1 capital
Chief Financial Officer
Cash-Generating Units
Cost-to-Income Ratio
Chief Information Security Officer
Chief Marketing Officer
Cost of Risk
Capital Requirements Directive
Commercial Real Estate
Customer Relationship Management
Chief Risk Officer
Capital Requirements Regulation
Credit Support Annex
Central Security Depository
Corporate Social Responsibility
Corporate Sustainable Reporting Directive
Credit Value Adjustments
Deposit Guarantee Scheme
Deferred Tax Asset
Data Warehouse
Exposure at Default
Earnings at Risk
European Banking Authority
European Bank for Reconstruction and Development
European Central Bank
Expected Credit Losses
ECRA
EEA
EIB
EMIR
EPS
ESEF
E&S
ESG
ESMS
EU
EVE
EWS
FDI
FTE
FTP
FURS
FVOCI
FVTPL
FX
GAR
GDP
GDPR
GDR
GGB
HHI
HR
IAS
IASB
ICAAP
ICMA
IFRIC
IFRS
ILAAP
IRB
IRRBB
IRS
ISDA
IVS
JST
KB
KDD
KPI
KRI
LCP
LCR
LECL
Enterprise Compliance Risk Assessment
European Economic Area
European Investment Bank
European Market Infrastructure Regulation
Earnings Per Share
European Single Electronic Format
Environmental and Social
Environmental, Social and Governance
Environmental and Social Management System
European Union
Economic Value of Equity
Early Warning System
Foreign Direct Investment
Full Time Equivalent
Fund Transfer Pricing
Financial Administration of the Republic of Slovenia
Fair Value Through Other Comprehensive Income
Fair Value Through Profit or Loss
Foreign Exchange
Green Asset Ratio
Gross Domestic Product
General Data Protection Regulation
Global Depositary Receipts
Government Guaranteed Bonds
Herfindahl-Hirschman Index
Human Resources
International Accounting Standard
International Accounting Standards Board
Internal Capital Adequacy Assessment Process
International Capital Market Association
International Financial Reporting Interpretations Committee
International Financial Reporting Standard
Internal Liquidity Adequacy Assessment Process
Internal ratings-based
Interest Rate Risks for Banking Book
Interest Rate Swaps
International Swaps and Derivatives Association
International Valuation Standards
Joint Supervisory Team
Komercijalna Banka
Central Securities Clearing Corporation
Key Performance Indicator
Key Risk Indicators
Liquidity Contingency Plan
Liquidity Coverage Ratio
Lifetime Expected Credit Losses
371
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
LGD
LPD
LRE
LTD
M&A
MA
MAR
Loss Given Default
Lifetime Probability of a Default
Leverage Ratio Exposure
Loan-to-Deposit Ratio
Mergers and Acquisitions
Master Agreements
Market Abuse Regulation
MiFID II
Markets in Financial Instruments Directive
MiFIR
MIGA
MREL
MS
NACE
NFC
NGW
Markets in Financial Instruments Regulation Rules
Multilateral Investment Guarantee Agency (part of the World Bank Group)
Minimum Requirement of Own Funds and Eligible Liabilities
Mid-swap
Statistical Classification of Economic Activities in the European Community
Non-Financial Corporation
Negative Goodwill, i .e . Gains from Bargain Purchase
NLB or the Bank
NLB d .d .
NPE
NPL
NPS
NPV
NSFR
NZBA
OBM
OCI
OCR
OEM
O-SII
OU
p .p .
P1R
P2eM
P2G
P2M
P2P
P2R
PD
PMI
POCI
POS
PSD2
REAM
Non-Performing Exposures
Non-Performing Loans
Net Promoter Score
Net Present Value
Net stable funding ratio
Net-Zero Banking Alliance
Operational Business Margin
Other Comprehensive Income
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
Purchasing Managers’ Index
Purchased or Originated Credit-Impaired
Point of Sale
Payments Services Directive
Real Estate Asset Management
RFR
RICO
RICS
ROA
ROE
Risk-Free Rates
Risk Committee
Royal Institution of Chartered Surveyors
Return on Assets
Return on Equity
RORAC
Return On Risk-Adjusted Capital
RoS
RSD
RWA
SEE
SICR
SLA
SME
SPPI
SRB
SREP
SRF
SSM
TCFD
TCR
TDI
Republic of Slovenia
Serbian dinar
Risk Weighted Assets
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
Supervisory Review and Evaluation Process
Single Resolution Fund
Single Supervisory Mechanism
Task force on Climate Related Financial Disclosures
Total Capital Ratio
Traded Debt Instruments
The Group
NLB Group
TLTRO
TREA
TSCR
UN
Targeted Longer-Term Refinancing Operations
Total Risk exposure Amount
Total SREP Capital Requirement
United Nations
UN SDG
United Nations Sustainable Development Goals
UNEP FI PRB
United Nations Environment Programme Finance
Initiative’s Principles for Responsible Banking
VaR
VAT
ZBan-3
ZGD-1
ZPIZ
Value-at-Risk
Value Added Tax
Slovenian Banking Act
Companies Act
Slovenian Pension and Disability Insurance Act
ZPPDFT-2
Prevention of Money Laundering and Terrorist Financing Act
ZPPDFT-2A
Act Amending the Prevention of Money Laundering
and Terrorist Financing Act
ZTFI-1
Financial Instruments Market Act
ZVKNNLB
Slovenian Act for Value Protection of Republic of Slovenia’s
Capital Investment in Nova Ljubljanska banka d .d ., Ljubljana
ZVOP-2
Slovenian Personal Data Protection Act
372
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
373
NLB Group
Annual Report
2023
Overview
MB Statement
SB Statement
Key Highlights
Business
Report
Strategy
Risk Factors &
Outlook
Sustainability
Performance
Overview
Segment Analysis
Risk Management
Financial
Report
Financial Report
Contents
NLB d .d ., Ljubljana
nlb .si
NLB d .d .
Production:
Saatchi & Saatchi Ljubljana
Photographs:
Archive of NLB
and
Archives of Sports Associations and Clubs
All rights reserved: NLB d .d ., Ljubljana
Ljubljana, April 2024