Consolidated, unaudited financial results of Slovenská sporiteľňa as of 30 September 2016 according to International Financial Reporting Standards (IFRS).

 “In the third quarter, the demand for mortgages caused by the legislative changes slowly subsided. However, our business managed to grow in loans granted to population mainly due to additional quality services. I am glad that even in times of record low interest rates more and more Slovaks are saving their money in Slovenská sporiteľňa. Currently, 620,000 clients have a savings account in our bank. One of the recent negative news was the cancellation of the bank levy reduction. This legislative change will mean higher costs for banks in future. We would rather invest more money into the development of new services for clients, their quality improvement or faster processes. However, we do not plan to increase our fees due to the bank tax,” Štefan Máj, Chairman of the Board of Directors and General Manager of Slovenská sporiteľňa commented on the results.    

Financial highlights as of 30 september 2016 (y/y comparison) 

• Net interest income went down by 1.1% y/y from EUR 350.3 million to EUR 346.4 million
• Net fee and commission income decreased by 0.3% y/y from EUR 92.9 million to EUR 92.6 million 
• Operating profit went down by 4.7% y/y from EUR 256.9 million to EUR 244.7 million
• Net profit after tax increased by 12.5% y/y from EUR 153 million to EUR 172.1 million
• Volume of loans and receivables to customers grew by 8.5% y/y from EUR 9.1 billion to EUR 9.9 billion
• Deposits from customers increased by 7.5% y/y from EUR 10.4 billion to EUR 11.2 billion
• Cost/income ratio reached 45.8%
• Capital adequacy reached 22.6% and considerably exceeds the limit stipulated by the law (according to NBS, Basel III requirements and IRB approach)
• Loan-to-deposit-ratio increased y/y from 87.2% to 88.0%

Business performance overview of slovenská sporiteľňa as of 30 september 2016 

Net interest income decreased slightly by 1.1% y/y from EUR 350.3 million to EUR 346.4 million. This decrease is the result of the long-lasting development of interest rates on the market and strong pressure on margins for new and refinanced loans which the bank faced over the course of last quarters of this year. Net interest margin decreased year from 3.8 to 3.5% y/y. Despite our ongoing activities to satisfy our clients’ needs it was not possible to fully compensate the mentioned impact.

Net fee and commission income went down slightly by 0.3% y/y from EUR 92.9 million to EUR 92.6 million. The higher fee income as a result of increased number of changes made in loan agreement by clients in the last quarters was offset by lower fees for executed card transactions. The reason behind this is the transfer of part of the undertaking (merchant acquiring business) into the newly founded company Global Payments, s.r.o.   

In 9 months of 2016 the bank achieved a profit in the amount of EUR 9.4 million in the area of net trading and fair value result, i.e. an increase compared with the corresponding period of 2015. The main reason behind this increase was mainly higher revenues from revaluation of derivate instruments. 

General administrative expenses went up in y/y comparison and reached EUR 206.6 million (in 2015 it was EUR 196.5 million). This increase is connected with the bank’s activities aimed at client service quality improvement. These activities include gradual building of the Client centre as the bank’s new sales and service channel or equipping advisors with tablets in all branches in order to increase the client’s experience when interacting with the bank.

Cost/income ratio increased from 43.3% to 45.8%. 

The bank sold its stake in the company Visa Europe Ltd. to the company Visa Inc. in the second quarter. Total one-off yield from this transaction was EUR 26.8 million. Slovenská sporiteľňa decided to donate 10% of this amount to Foundation of Slovenská sporiteľňa to support various projects in line with our corporate social responsibility strategy.

Risk costs for loans and receivables achieved EUR 30.4 million in 2016 which is a decrease by 7.0% compared with the corresponding period of 2015. The reason behind this decrease is the positive development of in the area of credit risk. The share of defaulted loans on total loan volume remained low at 5.2%. 

Total risk costs of the bank (for loans, receivables and off-balance items) stayed at a level comparable with the year 2015 despite the 8.5% increase of loan portfolio. In the first nine months of this year they amounted to EUR 29.4 million compared with EUR 28.9 million in 2015. 

As part of other operating income the bank posted an extraordinary income in the amount of EUR 14.5 million which was generated by contributing part of the undertaking related to merchant acquiring business to the newly established company Global Payments, s.r.o. 

Consolidated net profit after tax attributable to owners of parent increased by 12.5% y/y and reached EUR 172.1 million. 

In the three quarters of 2016 the bank reported a contribution into the Resolution fund in the amount of EUR 4.0 million (in the comparable period of 2015 it was EUR 2.4 million). Total levies (bank levy, contribution into the Deposit Protection Fund, contribution into the Resolution Fund) amounted to EUR 25.1 million in 2016 (EUR 21.6 million in 2015). 

The volume of loans to customers increased by 8.5% compared with 2015 and achieved EUR 9.9 billion. Retail loans were the major driving force; they increased by 12.2% y/y (by EUR 854 million.). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.3%. The main growth driver were housing loans which grew by 12.0% (by EUR 624 million) and consumer loans which grew by 11.6% (by EUR 157 million). Loans to corporate clients decreased by 4.2% y/y (by EUR 104 million) and reached EUR 2.3 billion.Deposits from customers rose by 7.5% from EUR 10.4 billion to EUR 11.2 billion compared with the year 2015. Retail deposits increased from EUR 8.4 billion to EUR 9.3 billion, providing a solid base for financing and room for further growth of the bank.