Consolidated, unaudited financial results of Slovenská sporiteľňa as of 31 March 2017 according to International Financial Reporting Standards (IFRS).
„The results for the first quarter are in line with our expectations. The record-low interest rates on housing loans made it possible for more Slovaks to get a housing loan or save money on monthly instalments. As a result, the total volume of housing loans went up by almost 15% y/y. However, not even the very strong business growth in deposits and loans was able to compensate for the significant decline of interest rates on the market and the impact on revenues. I am pleased that the corporate social responsibility of Slovenská sporiteľňa was again recognized by the jury of Via Bona award as our bank was among the three finalists,” Štefan Máj, Chairman of the Board of Directors and CEO of Slovenská sporiteľňa commented on the results.
Financial highlights as of 31 March 2017 (y/y comparison)
- Net interest income went down by 5.6% y/y from EUR 115.9 million to EUR 109.4 million
- Net fee and commission income decreased by 14.2% y/y from EUR 30.9 million to EUR 26.5 million
- Operating profit went down by 15% y/y from EUR 84.6 million to EUR 71.9 million
- Net profit after tax decreased by 11.5% y/y from EUR 46.1 million to EUR 40.8 million
- Volume of loans and receivables to customers grew by 12.2% y/y from EUR 9.4 billion to EUR 10.6 billion
- Deposits from customers increased by 9.6% y/y from EUR 10.7 billion to EUR 11.7 billion
- Cost income ratio reached 48.8 %
- Capital adequacy reached 21.41% and considerably exceeds the limit stipulated by the law (according to ECB/ NBS, Basel III requirements and IRB approach)
- Loan-to-deposit ratio increased y/y from 88% to 90.2%
Business performance overview of Slovenská sporiteľňa as of 31 March 2017
Net interest income decreased by 5.6% y/y from EUR 115.9 million to EUR 109.4 million. This decrease is the result of low interest rates on the market, strong pressure on margins for new and refinanced loans and legislative changes which were fully felt from the second quarter of 2016.
Net fee and commission income went down by 14.2% y/y from EUR 30.9 million to EUR 26.5 million. This is also the result of the changes on the banking market which occurred in the course of last year. The decrease of net fee income was partially caused by the transfer of part of the undertaking (merchant acquiring business) into the newly founded company Global Payments, s.r.o. in the third quarter of 2016.
The net profit in the amount of EUR 3.5 million in the area of net trading and fair value result is mainly related to revaluation of derivate instruments and comparable with the first quarter of 2016 (EUR 4.6 million).
General administrative expenses went up slightly by 1.0% in y/y comparison and reached EUR 68.6 million (in 2016 it was EUR 67.9 million). This result was achieved despite the bank’s continuing effort to improve client service quality.
Cost income ratio changed from 44.5% to 48.8% y/y.
Risk costs for loans and receivables achieved EUR 9.4 million in 2017 which is a decrease by EUR 2.1 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 and the bank’s prudent lending approach. The share of defaulted loans on total loan volume remained low at 4.5% and their coverage amounted to 75.2%.
Total risk costs of the bank (for loans, receivables and off-balance items) went down considerably despite the 12.2% increase of loan portfolio and amounted to EUR 7.0 million compared with EUR 11.3 million in 2016.
Consolidated net profit after tax attributable to owners of parent company went down by 11.5% y/y and reached EUR 40.8 million. In the first quarter of 2017 the bank reported a contribution into the Resolution fund in the amount of EUR 5.0 million (in 2016 it was EUR 6.5 million) and the contribution into the Deposit Protection Fund in the amount of EUR 0.8 million (in 2016 it was EUR 2.5 million). Total levies (bank levy, contribution into the Deposit Protection Fund, contribution into the Resolution Fund) amounted to EUR 12.4 million in 2017 (EUR 15.2 million in 2016).
The volume of loans to customers increased by 12.2% compared with 2016 and achieved EUR 10.6 billion. Retail loans were the major driving force; they increased by 13.0% y/y (by EUR 969 million.). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.6%. The main growth driver were housing loans which grew by 14.7% (by EUR 808 million) and consumer loans which grew by 6.5% (by EUR 94 million). The growth of consumer loans (as well as the growth of total volume of loans to customers) was affected by the sale of portfolio of defaulted loans in the amount of EUR 28.1 million (without this sale the consumer loans would have grown by 8.4%, i.e. EUR 122 million). Loans to corporate clients increased by 5.7% y/y (by EUR 133 million) and reached EUR 2.5 billion.
Deposits from customers rose by 9.6% from EUR 10.7 billion to EUR 11.7 billion compared with the year 2016. Retail deposits increased from EUR 8.9 billion to EUR 9.9 billion, providing a solid base for financing and room for further growth of the bank.