Consolidated, audited financial results of Slovenská sporiteľňa as of 31 December 2019 according to International Financial Reporting Standards (IFRS) – these business results are subject to approval by the General Assembly which will be held on 25 March 2020.
“The key message of the year 2019 which will have a major impact on Slovak banks and the economy is the unexpected increase of the bank levy. Despite this fact, last year was another successful year for Slovenská sporiteľňa in terms of business results. We are bank of the year according to three prestigious magazines and we owe it to our employees and clients, useful innovations and responsible business. I am pleased that we are able to offset the decreasing interest income with other sources of income - mainly insurance and investing but we are also successful in motivating people to use cards instead of cash. The mobile version of George is already used by more than half a million clients, making us the most popular mobile bank in Slovakia. As a result, we are fulfilling our goal to become not just a bank but also a partner for life and business for our clients,” said Peter Krutil, Chairman of the Board of Directors and CEO of Slovenská sporiteľňa.
Financial highlights as of 31 December 2019 (Y/Y comparison)
- Net interest income went down by 1.6% y/y from EUR 437.8 million to EUR 430.7 million
- Net fee and commission income increased by 12.7% y/y from EUR 128.8 million to EUR 145.2 million
- Operating profit went up by 2.6% y/y from EUR 300.4 million to EUR 308.3 million
- Net profit after tax went down slightly y/y and achieved EUR 180.0 million (2018: EUR 183.7 million)
- Volume of loans and receivables to customers grew by 7.9% y/y from EUR 12.8 billion to EUR 13.8 billion
- Deposits from customers increased by 5.4% y/y from EUR 13.7 billion to EUR 14.4 billion
- Cost income ratio reached 48.4%
- Capital adequacy reached 17.3% 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 93.6% to 95.8%
Business performance overview of Slovenská sporiteľňa as of 31 December 2019
Net interest income went down slightly by 1.6% from EUR 437.8 million to EUR 430.7 million. This decrease is the result of the continuing demand for low interest rates on loan products and a tough competitive environment, resulting in a negative effect on net interest margin which went down from 2.71% to 2.51%.
Net fee and commission income increased by 12.7% y/y from EUR 128.8 million to EUR 145.2 million. The insurance business was particularly successful in 2019 and compared with 2018 the y/y increase of insurance commission income was EUR 7.5 million. Another positive factor was the increase of fees for card transactions by EUR 4 million. Commission income from trading of securities and fees for repricing and early repayment of loans amounted to EUR 6 million and were also among the main growth drivers.
The net profit in the amount of EUR 20.7 million in the area of net trading and fair value result is mainly related to the development of the valuation of derivate instruments.
General administrative expenses went up by 2.6% to EUR 288.5 million (in 2018 it was EUR 281.1 million). This increase was mainly recorded in the area of personal expenses.
Cost income ratio remained stable y/y and reached 48.4%.
Total risk costs of the bank increased from EUR 23.5 million to EUR 42.6 million. Higher risk costs are mainly related to the portfolio of loans and leasing agreements acquired from the company S Slovensko and the increase of provisions for individual clients in the corporate segment.
The share of defaulted loans on total loan volume decreased from 3.3% to 2.9% while the coverage with provisions remains unchanged (from 80.9% to 80.8%).
The bank levy went up by 7% to EUR 32.5 million. The annual contribution into the Single Resolution Fund reached an estimated amount of EUR 3.1 million (EUR 2.7 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 36.6 million.
Consolidated profit after tax reached EUR 180.0 million, decreased by 2.0% y/y. Return on equity (ROE) achieved 11.6 % in 2019 (in 2018 it was 12.6 %).
The volume of loans to customers increased by 7.9% y/y and achieved EUR 13.8 billion. Retail loans were the major driving force; they increased by 6.4% y/y (by EUR 0.6 billion) compared with 2018. Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 26.2% at the end of 2019. The main growth driver were housing loans which grew by 7.5% (EUR 0.6 billion in absolute terms), while the results for consumer loans remained comparable with the end of 2018 and reached EUR 1.8 billion.
Loans to corporate clients (including factoring and leasing products) increased by 14.2% y/y (by EUR 0.5 billion) and reached EUR 3.8 billion.
Retail deposits increased from EUR 11.2 billion to EUR 12.1 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose from EUR 13.7 billion to EUR 14.4 billion compared with the year 2018.