Consolidated, unaudited financial results of Slovenská sporiteľňa as of 31 March 2020 according to International Financial Reporting Standards (IFRS).

“Business results for the first quarter are quite positive in terms of the banking business. We grew in loans and deposits, the number of active clients increased, we are sufficiently capitalised and the share of non-performing loans continues to be low. The risk already pointed out by us last year is now reflected in the y/y decrease of profit by 45%. The main reason for this drop is the non-systemic and in our view unconstitutional bank levy along with the decrease of market rates. The negative effects of the global COVID-19 pandemic had only a minor impact on the bank’s results in the first quarter. However, the negative impact on the economy is becoming more substantial which will probably translate into a worse ability of clients to repay their loans. That is why we decided to offer our clients the option to defer their loan payments by 9 months and many made use of this opportunity. We believe that this measure along with other ones for businesses will mitigate the impact of the pandemic on clients and soon we’ll be able to restart the Slovak economy. We are hopeful that EUR 1 million dedicated together with Foundation of Slovenská sporiteľňa will also help battle the negative effects of the pandemic,” says Pavel Cetkovský, CFO and Member of the Board of Directors of Slovenská sporiteľňa.

Financial highlights as of 31 March 2020 (Y/Y comparison)

• Net interest income went up by 2.5% y/y from EUR 107.0 million to EUR 109.6 million
• Net fee and commission income increased by 6.0% y/y from EUR 32.5 million to EUR 34.5 million
• Operating profit went down by 7.1% y/y from EUR 72.4 million to EUR 67.3 million
• Net profit after tax decreased to EUR 26.1 million (2019: EUR 47.4 million)
• Volume of loans and receivables to customers grew by 6.9% y/y from EUR 13.1 billion to EUR 14.0 billion
• Deposits from customers increased by 1.7% y/y from EUR 13.8 billion to EUR 14.0 billion 
• Cost income ratio reached 52.1%
• Capital adequacy reached 20.9% 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 95.2% to 100.0%

Business performance overview of Slovenská sporiteľňa as of 31 March 2020

Net interest income went up by 2.5% from EUR 107.0 million to EUR 109.6 million. This increase was mainly achieved as a result of decreased interest costs, positive effect of negative interest rates on the interbank market and also increased interest income from leasing products.

Net fee and commission income increased by 6.0% y/y from EUR 32.5 million to EUR 34.5 million, mainly due to higher income from the mediation of insurance contracts and investment products by Asset Management Slovenská sporiteľňa.

The bank recorded a net loss of EUR 4.1 million in the area of net trading and fair value result. This is related to the negative development of the stock market and currency exchange rates in the first quarter of 2020.

General administrative expenses went up by 2.9% y/y to EUR 73.0 million (in 2019 it was EUR 71.0 million). This increase was mainly recorded in the area of other administrative expenses (by 8.9%) and personal expenses (by 4.7%). On the other hand, the bank recorded a decrease of write-offs by 14% in y/y comparison.  

Cost income ratio went up y/y and reached 52.1%.  

Total risk costs of the bank increased from EUR 2.4 million to EUR 11.3 million. Higher risk costs are mainly related to the development of the bank’s portfolio and methodological changes implemented in the first quarter of 2020.

The share of defaulted loans on total loan volume decreased from 3.1% to 2.8% while the coverage with provisions improved from 80.2% to 82.4%.   

The bank levy went up by 112% y/y to EUR 17.0 million. The annual contribution into the Single Resolution Fund reached increased by 85% and reached EUR 5.0 million (EUR 2.7 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 97% y/y and are at EUR 22.9 million.

Consolidated profit after tax reached EUR 26.1 million. Return on equity (ROE) dropped by more than a half; from 12.7% to 6.2%

The volume of loans to customers increased by 7.1% y/y and achieved EUR 14.3 billion.

Retail loans were the major driving force; they increased by 6.7% y/y (by EUR 0.7 billion) compared with 2019. Slovenská sporiteľňa again confirmed its position as market leader in retail loans; its market share reached 26.0% at the end of 2019. The main growth driver were housing loans which grew by 8.8% (EUR 0.7 billion in absolute terms), while consumer loans went down moderately by 3.7% y/y (EUR 0.1 billion in absolute terms).

Loans to corporate clients (including factoring and leasing products) increased by 12.2% y/y (by EUR 0.4 billion) and reached EUR 3.9 billion.

Retail deposits increased from EUR 11.4 billion to EUR 12.3 billion, providing a solid base for financing and room for further growth of the bank. Deposits from customers rose from EUR 13.8 billion to EUR 14.0 billion compared with the year 2018.