Consolidated, unaudited financial results of Slovenská sporiteľňa as of 30 September 2020 according to International Financial Reporting Standards (IFRS).

“Considering the circumstances this year, the third quarter was quite satisfactory. The business results were mainly influenced by trends from the first half of the year. What’s important is that our banking business is growing despite the pandemic, as the volume of loans grew by 7 percent. In summer, the large guarantee scheme for businesses was launched and even though it fails to meet expectations, we managed to utilize this scheme to support several viable businesses in these difficult times. Together with the guarantee scheme launched in spring, we provided new loans in the amount of EUR 100 million and the same amount is currently undergoing the Bank’s approval process. The volume of new mortgage loans is also growing because people still prefer to have their own housing. I am especially pleased that we received the Mortgage of the Year award as recognition of our loan quality for the second year in a row. Even though the Slovak economy was quickly getting back on track in the third quarter, we continued creating provisions in line with international accounting standards and our expectations with regard to the impact of the pandemic on the loan portfolio quality,” said Pavel Cetkovský, CFO and Member of the Board of Directors of Slovenská sporiteľňa.  

Financial highlights as of 30 September 2020 (Y/Y comparison)

• Net interest income went up by 1.0% y/y from EUR 322.7 million to EUR 325.2 million
• Net fee and commission income increased by 0.6% y/y from EUR 105.7 million to EUR 106.4 million
• Operating profit went down by 3.5% y/y from EUR 233.9 million to EUR 225.7 million
• Net profit after tax decreased to EUR 74.1 million (2019: EUR 141.7 million)
• Volume of loans and receivables to customers grew by 7.0% y/y from EUR 13.5 billion to EUR 14.4 billion
• Deposits from customers increased by 1.6% y/y from EUR 14.1 billion to EUR 14.3 billion 
• Cost income ratio reached 48.7%
• Capital adequacy reached 19.68% 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 95.8% to 100.9%

Business performance overview of Slovenská sporiteľňa as of 30 September 2020

Net interest income went up by 1.0% from EUR 322.7 million to EUR 325.2 million. This increase was mainly achieved as a result of decreased interest costs, positive effect of operations with the European Central Bank and also increased interest income from leasing products.

Net fee and commission income increased slightly by 0.6% y/y from EUR 105.7 million to EUR 106.4 million, mainly due to the income from mediation services, particularly from sales of mutual funds and insurance services. 

The bank recorded a net profit of EUR 5.9 million in the area of net trading and fair value result which is mainly attributable to derivative transactions.  

General administrative expenses went up by 1.8% y/y to EUR 214.0 million (in 2019 it was EUR 210.3 million). This increase was mainly recorded in the area of personal expenses (by 10.1%). Other administrative expenses increased just moderately by 0.5%. On the other hand, the bank recorded a decrease of write-offs by 20.8% in y/y comparison.  

Cost income ratio went up y/y and reached 48.7%.   

Total risk costs of the bank increased from EUR 28.0 million to EUR 86.6 million as a result of the expected higher credit risk of clients and their inability repay their loans due to the COVID-19 pandemic.  

The share of defaulted loans on total loan volume decreased from 3.3% to 2.6% while the coverage with provisions improved from 77.6% to 105.0%. However, this improvement is mainly the result of the state program for deferral of loan payments by nine months and not a sign of improving loan portfolio quality.

The bank levy went up by 111% y/y to EUR 33.8 million. The annual contribution into the Single Resolution Fund reached increased by 30% and reached EUR 4.0 million (EUR 3.1 million in 2019). The contribution into the Deposit Protection Fund also increased by 10% y/y to EUR 1.1 million (EUR 1.0 million in 2019). Total levies of the bank went up by 94% y/y and are at EUR 38.8 million.

Consolidated profit after tax reached EUR 74.1 million. Return on equity (ROE) dropped by more than a half; from 12.4% to 5.7%. 

The volume of loans to customers increased by 7.0% y/y and achieved EUR 14.4 billion.

Retail loans were the major driving force; they increased by 5.1% y/y (by EUR 0.5 billion) compared with 2019. Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 25.8% in the third quarter of 2020. The main growth driver were housing loans which grew by 8.5% (EUR 0.7 billion in absolute terms), while consumer loans went down moderately by 8.3% y/y (EUR 0.1 billion in absolute terms). 

Loans to corporate clients (including factoring and leasing products) increased by 12.6% y/y (by EUR 0.5 billion) and reached EUR 4.2 billion.

Retail deposits increased from EUR 11.8 billion to EUR 12.7 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose from EUR 14.1 billion to EUR 14.3 billion compared with the third quarter of 2019.