Slovenská sporiteľňa achieved profit after tax in the amount of EUR 214.6 million in 2016, the volume of loans exceeded EUR 10 billion Consolidated, audited financial results of Slovenská sporiteľňa as of 31 December 2016 according to International Financial Reporting Standards (IFRS).
„As far as net profit goes, the year 2016 was historically the most successful year for us but it was influenced by two one-off transactions – sale of our stake in the company Visa Europe and the forming of a joint venture Global Payments. Without taking these effects into consideration, our result would be at the level of the year 2015 which, in my opinion, is very positive. Especially when considering the tough competition on the market which is affected by many regulations and legislative measures,” Štefan Máj, Chairman of the Board of Directors and CEO of Slovenská sporiteľňa summarized the results.
Financial highlights as of 31 December 2016 (Y/Y comparison)
- Net interest income went down by 1.6% y/y from EUR 469.0 million to EUR 461.6 million
- Net fee and commission income increased by 0.2% y/y from EUR 121.4 million to EUR 121.7 million
- Operating profit went down by 4.1% y/y from EUR 337.1 million to EUR 323.2 million
- Net profit after tax increased by 15.9% y/y from EUR 185.1 million to EUR 214.6 million
- Volume of loans and receivables to customers grew by 9.5% y/y from EUR 9.4 billion to EUR 10.3 billion
- Deposits from customers increased by 6.7% y/y from EUR 10.7 billion to EUR 11.4 billion
- Cost income ratio reached 46.1%
- Capital adequacy reached 21.51% and considerably exceeds the limit stipulated by the law (according to ECB/ NBS, Basel III requirement and IRB approach)
- Loan-to-deposit ratio increased y/y from 87.8% to 90%
Business performance overview of Slovenská sporiteľňa as of 31 December 2016
Net interest income decreased by 1.6% y/y from EUR 469.0 million to EUR 461.6 million. This slight decrease is the result of low interest rates on the market and strong pressure on margins for new and refinanced loans. Additionally, the market development was noticeably hit by legislative changes resulted in higher volume of early repaid and repriced loans mainly in the first half of the year. Net interest margin went down y/y from 3.7% to 3.4%. Despite continuing activities in the area of fulfilling customer needs and change in the structure and interest rates on deposit products, the mentioned negative impact of low interest rates was only partially offset.
Net fee and commission income went up by 0.2% y/y from EUR 121.4 million to EUR 121.7 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 2016 the bank achieved a profit in the amount of EUR 12.6 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 by 3.4% in y/y comparison and reached EUR 276.7 million (in 2015 it was EUR 267.7 million). This increase of administrative expenses is connected with the bank’s activities aimed at client service quality improvement and merger of the subsidiary EGIT SK with the bank which resulted in a direct impact mainly on personal expenses. Cost income ratio changed from 44.3% to 46.1% y/y.
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 48.2 million in 2016 which is a decrease by EUR 9.9 million compared with the previous year. The current status and development throughout the year are influenced by the positive development of bank clients in the area of credit risk. The segment of corporate clients saw a very positive change as the financial situation of several clients improved and as a result the risk profile of the whole segment improved. The share of non-performing loans on total loan volume remained low at 4.5% (in 2015 it was 5.6%).
Total risk costs of the bank (for loans, receivables and off-balance items) went down considerably despite the 9.5% increase of loan portfolio and amounted to EUR 43.8 million compared with EUR 55.0 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 15.9% y/y and reached EUR 214.6 million.
In 2016 the bank reported a contribution into the Resolution fund in the amount of EUR 4.0 million (in 2015 it was EUR 7.3 million). Total levies (bank levy, contribution into the Deposit Protection Fund, contribution into the Resolution Fund) amounted to EUR 31.6 million in 2016 (EUR 33.3 million in 2015).
The volume of loans to customers increased by 9.5% compared with 2015 and achieved EUR 10.3 billion. Retail loans were the major driving force; they increased by 12.8% y/y (by EUR 927 million). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.5%. The main growth driver were housing loans which grew by 13.4% (by EUR 718 million) and consumer loans which grew by 9.9% (by EUR 139 million). Loans to corporate clients decreased by 2.8% y/y (by EUR 70 million) and reached EUR 2.4 billion. In the SME segment the volume of loans to customers went up by 6.4% and as of the end of 2016 reached EUR 980 million.
Deposits from customers rose by 6.7% from EUR 10.7 billion to EUR 11.4 billion compared with the year 2015. Retail deposits increased from EUR 8.7 billion to EUR 9.7 billion, providing a solid base for financing and room for further growth of the bank.