Slovenská sporiteľňa’s consolidated, unaudited financial results as of 30 June 2020 based on International Financial Reporting Standards (IFRS).

“The best news in the second quarter was the repeal of the bank levy and the introduction of the aid package to support the economy. Although the benefits of this will be seen in the bank’s end-of-year profits, it is already helping to restart our economy, support business growth and satisfy the needs of people in Slovakia. The repeal is thus good news for people and firms. Even so, no bank could avoid the effects of the novel coronavirus pandemic and its impact on people, businesses and the economy in recent months. The volume of lending still grew by nearly 8% because the crisis could not suppress basic needs such as housing. Thanks to the moratorium on loan repayments, we avoided an immediate jump in problem loans, but in compliance with international accounting methods, we set aside provisions to cover expected future losses caused by the pandemic. This is the main reason for the 45-million-euro increase in risk costs. We expect that increased provisioning will continue in the second half of the year. Its volume will depend on developments in the detailed estimates of future economic development,” says Pavel Cetkovský, CFO and Member of the Board of Directors of Slovenská sporiteľňa.

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

• Net interest income went up by 2.5%, from EUR 215.1 million to EUR 109.6 million
• Net fee and commission income was almost unchanged y/y at EUR 67.9 million
• Operating profit went down by 8.7% y/y from EUR 156.4 million to EUR 142.9 million
• Net profit after tax dropped to EUR 29.5 million (2019: EUR 96.0 million)
• Volume of loans and receivables to customers grew by 7.9% y/y from EUR 13.2 billion to EUR 14.3 billion
• Deposits from customers increased by 3.2% y/y from EUR 13.9 billion to EUR 14.4 billion
• Cost income ratio reached 50.3%
• Capital adequacy reached 20.6%, thus remaining significantly above the minimum stipulated by law (based on ECB/NBS, Basel III and IRB approach)
• Loan-to-deposit ratio increased y/y from 95.1% to 99.3%

Business performance overview of Slovenská sporiteľňa as of 30 June 2020

Net interest income went up by 1.0% from EUR 215.1 million to EUR 217.3 million. This increase was mainly due to decreased interest costs, the positive effect of negative interest rates on the interbank market and also increased interest income from leasing products.

Net fee and commission income was almost unchanged at EUR 67.9 million because the decrease in fee income and card operation fees was covered by increased returns on securities transactions.

The bank recorded a net loss of EUR 2.8 million in the area of net trading and fair value result. This is the result of the negative development of the stock market and currency exchange rates in the first quarter of 2020.

General administrative expenses went up by 4.4% y/y to EUR 144.6 million (in 2019 this item was EUR 138.5 million). The increase was mainly in the area of personal expenses (12.3%). Other administrative expenses increased by only 3.2%. On the other hand, the bank recorded a y/y decrease in write-offs by 16.4%.

The cost income ratio went up y/y and reached 50.3%.

The bank’s total risk costs increased y/y from EUR 18.6 million to EUR 63.5 million in response to the increased risk of customers being unable to repay credit obligations to the bank due to the COVID-19 pandemic.

The non-performing loans share in total loans decreased y/y from 3.2% to 2.7%, while provision coverage increased from 77.7% to 95.8%.

The bank levy went up by 111% y/y to EUR 33.8 million. The annual contribution to the Single Resolution Fund increased by 30% to reach 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 paid by the bank went up by 94% y/y to stand at EUR 38.8 million.

Consolidated profit after tax reached EUR 29.5 million. Return on equity (ROE) dropped significantly; from 12.7% to 3.5%.

The volume of loans to customers increased by 7.9% y/y and achieved EUR 14.3 billion.

Retail loans were the major driving force; they grew by 6.4% y/y (by EUR 0.7 billion) compared with 2019. Slovenská sporiteľňa thus retained its position as market leader in retail loans; its market share reached 26.0% at the end of 2020. This growth was mainly driven by housing loans, which grew by 10.0% (EUR 0.8 billion in absolute terms), while consumer loans decreased by 6.5% y/y (EUR 0.1 billion in absolute terms).

Loans to corporate clients (including factoring and leasing products) increased by 12.1% y/y (by EUR 0.4 billion) and reached EUR 4.1 billion.

Retail deposits increased from EUR 11.6 billion to EUR 12.6 billion, providing a solid base for financing and room for the bank to continue its growth. Total liabilities to customers rose from EUR 13.9 billion to EUR 14.4 billion compared with the first half of 2019.