Consolidated, audited financial results of Slovenská sporiteľňa as of 31 December 2017 according to International Financial Reporting Standards (IFRS).  

In 2017, Slovenská sporiteľňa was again able to achieve a high profitability. The absence of extraordinary income was offset by favourable economic environment, resulting in lower risk costs despite the continued growth of loans. The successful launch of George, the new smart banking, which is already used by more than 150 thousand clients, was another important milestone, Peter Krutil, Chairman of the Board of Directors and General Manager of Slovenská sporiteľňa commented on the results.

FINANCIAL HIGHLIGHTS AS OF 31 DECEMBER 2017 (Y/Y COMPARISON)

• Net interest income went down by 4.8% y/y from EUR 461.6 million to EUR 439.3 million 
• Net fee and commission income decreased by 7.4% y/y from EUR 121.7 million to EUR 112.7 million 
• Operating profit went down by 11.5% y/y from EUR 323.2 million to EUR 286.1 million 
• Net profit after tax decreased by 23.6% y/y from EUR 214.6 million to EUR 163.9 million 
• Volume of loans and receivables to customers grew by 14.3% y/y from EUR 10.3 billion to EUR 11.7 billion 
• Deposits from customers increased by 9.6% y/y from EUR 11.4 billion to EUR 12.5 billion  
• Cost income ratio reached 49.7 %
• Capital adequacy reached 18.7 % and considerably exceeds the limit stipulated by the law (according to ECB/NBS, Basel III and IRB approach)
• Loan-to-deposit ratio increased y/y from 90 % to 93.9 %
  

BUSINESS PERFORMANCE OVERVIEW OF SLOVENSKÁ SPORITEĽŇA AS OF 31 DECEMBER 2017

Net interest income decreased by 4.8% y/y from EUR 461.6 million to EUR 439.3 million. This decrease is the result of low interest rates on the market and strong pressure on margins for new and refinanced loans. Market development was also significantly influenced by legislative changes and stricter rules for provision of new loans. The decrease in net interest income was also influenced by matured bonds with higher interest income in the first half of 2017 which the bank was unable to replace under the same or similar market conditions. 

Net fee and commission income went down by 7.4% y/y from EUR 121.7 million to EUR 112.7 million. Among the main factors having an impact on fee development in 2017 were the sale of payment terminals to the company Global Payments in 2016 and legislative changes related to early loan repayment. The share of net fee and commission income on total operating income remained unchanged at the level of 20%.   

The net profit in the amount of EUR 13.3 million in the area of net trading and fair value result is mainly related to the development of the valuation of derivate instruments and higher by 5.6% compared with to 2016 (EUR 12.6 million).  

General administrative expenses went up slightly by 2.2% in y/y comparison and reached EUR 282.7 million (in 2016 it was EUR 276.7 million). The increase in general administrative expenses was related to activities of the bank focusing on improvement of client service quality and increased personal costs. Cost income ratio changed from 46.1% to 49.7% y/y as a result of the lower operating income. 

Risk costs for loans and receivables achieved EUR 30.0 million in 2017 which is a decrease by EUR 18.2 million compared with the previous year. The current status and development throughout the year are influenced by the positive development of risk profiles in all client segments and the bank’s prudent lending approach. The share of defaulted loans on total loan volume decreased from 4.5% to 3.8% while the coverage with provisions went up from 72.1% to 79.7%. 

Total risk costs of the bank (for loans, receivables and off-balance items) went down despite the 14.3% increase of loan portfolio and amounted to EUR 33.6 million compared with EUR 43.8 million in 2016.

Consolidated net profit after tax attributable to owners of parent went down by 23.6% y/y and reached EUR 163.9 million. The main reasons behind this decrease are two extraordinary transactions which influenced business results in 2016. The revenue from the sale of the stake in the company Visa Europe Ltd. to the company Visa Inc. in the amount of EUR 26.8 million out of which the bank dedicated 10% to the Foundation of Slovenská sporiteľňa and the extraordinary revenue of EUR 14.5 million from the transfer of part of the undertaking (merchant acquiring business) into the company Global Payments, s.r.o.  

The volume of loans to customers increased by 14.3% compared with 2016 and achieved EUR 11.7 billion. Retail loans were the major driving force; they increased by 12.7% y/y (by EUR 1.0 billion). Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 27.7% at the end of 2017. The main growth driver were housing loans which grew by 13.6% (EUR 828 million in absolute terms) and consumer loans which grew by 9.4% (by EUR 145 million). Loans to corporate clients increased by 16.2% y/y (by EUR 391 million) and reached EUR 2.8 billion.

Retail deposits increased from EUR 9.7 billion to EUR 10.3 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose by 9.6% from EUR 11.4 billion to EUR 12.5 billion compared with the year 2016.