_{Consolidated, unaudited financial results of Slovenská sporiteľňa as of 31 March 2019 according to International Financial Reporting Standards (IFRS).}  

“I am very pleased that we are successfully fulfilling our main mission: being a partner for our clients’ personal and professional lives, also by introducing digital innovations. The number of George users already exceeded 750 thousand and the mobile application is used for comfortable banking by almost 300 thousand clients. All this proves that we are a trendsetter in digital banking in Slovakia. New features such as biometric login and state-of-the-art financial management tools help make the user experience in George even more compelling. At the same time, our relationship with clients is not just about lending and managing deposits, our goal is to be a responsible advisor in the world of finance. And it seems we are successful, as the clients appreciate our added value – for example, in form of insurance – and this translates into excellent business results,“ Pavel Cetkovsky, Member of the Board of Directors and CFO of Slovenská sporiteľňa commented on the results.

Financial highlights as of 31 March 2019 (Y/Y Comparison)

• Net interest income went down by 1.6% y/y from EUR 108.8 million to EUR 107.0 million
• Net fee and commission income increased by 21.8% y/y from EUR 26.7 million to EUR 32.5 million 
• Operating profit went up by 3.9% y/y from EUR 69.7 million to EUR 72.4 million
• Net profit after tax increased by 16.0% y/y from EUR 40.9 million to EUR 47.4 million
• Volume of loans and receivables to customers grew by 9.6% y/y from EUR 11.9 billion to EUR 13.1 billion
• Deposits from customers increased by 5.1% y/y from EUR 13.1 billion to EUR 13.8 billion 
• Cost income ratio reached 49.5%
• Capital adequacy reached 19.44% and continues to considerably exceed the limit stipulated by the law (according to ECB/NBS, Basel III and IRB approach)
• Loan-to-deposit ratio increased y/y from 91.2% to 95.2%
  

Business performance of Slovenská sporiteľňa as of 31 March 2019

Net interest income went down slightly by 1.6% from EUR 108.8 million to EUR 107.0 million. This decrease is the result of the continuing demand for low interest rates on loan products and strong competition.

Net fee and commission income increased by 21.8% y/y from EUR 26.7 million to EUR 32.5 million. The increase of fee and commission income was mainly achieved from mediation of insurance products (increase by EUR 5.8 million). The share of net fee and commission income on total operating income went up to 22.7% y/y.

The net profit in the amount of EUR 3.0 million in the area of net trading and fair value result related mainly to the development of the valuation of derivate instruments is lower by 10.6% compared with the comparable period of 2018 when it achieved EUR 3.4 million. This decrease is mainly the result of lower yields from market positions which is related to the relatively quiet situation on financial markets.

General administrative expenses went up slightly by 1.1% to EUR 71.0 million (in 2018 it was EUR 70.2 million).

Cost income ratio improved from 50.2% to 49.5% y/y as a result of operating income growing faster than costs.

Despite a massive growth of loan portfolio, total risk costs of the bank reached EUR 2.4 million in the first quarter of 2019, i.e. a decrease by 63.9% compared with 2018.

The positive development of risk costs is a combined result of the healthy loan portfolio and partial sale of the NPL portfolio.

The share of defaulted loans on total loan volume decreased from 3.7% to 3.1% while the coverage with provisions went down from 80.5% to 80.2%.

Consolidated profit after tax went up by 16.0% y/y and reached EUR 47.4 million.

The bank levy went up by 0.7 billion to EUR 7.8 million. The annual contribution into the Single Resolution Fund reached an estimated amount of EUR 2.7 million (EUR 2.8 million in 2018). The contribution into the Deposit Protection Fund increased by 11% y/y to EUR 1.0 million (EUR 0.9 million in 2018). Total levies of the bank are at EUR 11.6 million.

The volume of loans to customers increased by 9.6% y/y and achieved EUR 13.1 billion. Retail loans were the major driving force; they increased by 6.3% y/y (by EUR 0.6 billion) compared with the first quarter of 2018. Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 26.4% at the end of the first quarter of 2019. The main growth driver were housing loans which grew by 6.5% (EUR 0.5 billion in absolute terms) and consumer loans which grew by 4.2% (by EUR 0.1 billion). Loans to corporate clients (including factoring and leasing products) increased by 14.9% y/y (by EUR 0.5 billion) and reached EUR 3.5 billion.

Retail deposits increased from EUR 10.5 billion to EUR 11.4 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose from EUR 13.1 billion to EUR 13.8 billion compared with the first quarter of 2018.