NOVAKBM (KBM): The Q3 2013 results of the Nova KBM Group indicate positive trends

UNI - EN REPORT No47/2013

In accordance with provisions of the Code of Best Practice for Warsaw Stock Exchange Listed Companies, the Ljubljana Stock Exchange Rules and the applicable legislation, Nova KBM d.d. hereby publishes the following announcement:


(Maribor, 29 November 2013). The Nova KBM Supervisory Board today considered the report on operations of the Nova KBM Group for the first nine months of the year. The results achieved by the Nova KBM Group indicate a positive trend and prove that the efforts made by its management with the aim of transforming the Nova KBM Group into a more efficient financial institution are going into the right direction. For the nine-month period ended 30 September, the Nova KBM Group reported a pre-tax, pre-provision profit of €25.8 million. After accounting for impairment losses and provisions, the Nova KBM Group incurred a net loss of €66.9 million. Apart from discussing the topics most relevant to the operations of the Nova KBM Group, the Supervisory Board consented to the capital injection into Poštna banka Slovenije, for which an approval of the European Commission must be obtained by Nova KBM.

»Also in the third quarter of the year, we took a number of decisions with the aim of stabilising the interest and non-interest income generated by the Nova KBM Group, as well as decisions aimed at improving its cost efficiency. In October, a new, more economical and effective organisational structure of the Bank was implemented. In addition, several other measures and activities were implemented that have helped the performance of the Nova KBM Group to gradually recover while reducing the negative impacts on its profitability«, said Aleš Hauc, President of the Nova KBM Management Board, upon the release of the results for the first three quarters of the year.

As already announced, both the Bank and the Nova KBM Group will end this year with a loss, the level of which will depend largely on the amount of additionally required impairment losses and provisions, as determined based on the outcome of the independent asset quality review that is being conducted at the Bank. The findings and outcome of this review are expected to be released in the middle of December. Based on the current estimates, and taking into consideration the macroeconomic forecasts, both the Bank and the Nova KBM Group expect to report a profit in 2014, provided that the economic climate does not worsen substantially and that no additional operational requirements are imposed on banks by the competent EU authorities.

Enhanced credit risk arising from adverse market conditions continued to affect the operations of the Nova KBM Group, particularly its banking division, forcing it to set aside a further €95.7 million in the first nine months of the year to cover its bad loans. The reduction in the Nova KBM Group´s total assets in the third quarter of the year was in line with the guidelines set out in its restructuring programme that is being examined by the European Commission. Compared to the end of 2012, the total assets of the Nova KBM Group declined by 5.7% to €5.0 billion at the end of September. As of 30 September, the Nova KBM Group´s total capital adequacy was 8.39%. The Bank is implementing all the measures necessary to ensure that its capital adequacy ratio will remain adequate, regardless of the outcome of the independent asset quality review that is being conducted.

A new strategy of Nova KBM for the period 2014 to 2018 has been drafted. This new strategy, which has already been presented to the Supervisory Board, will be finalised once the Nova KBM Group restructuring programme is approved. The new strategy is based on the vision of the Bank to continue providing strong performance, both locally and regionally, taking into consideration that risk management, prudent operations, and a sound loan portfolio will be given priority over business growth.

Every effort will be made in the immediate future to transform both the Bank and the Nova KBM Group into more efficient financial institutions, and to return them to profitability. Apart from measures taken to improve the operations of the Bank and the Nova KBM Group internally, the Management and the Supervisory Boards believe that the following systemic decisions will greatly contribute to the future development of the operations of the Bank and the Nova KBM Group: the transfer of bad loans to the Bank Assets Management Company, recapitalisation, and the implementation of legislation that will ease the rules governing debt recovery proceedings.

This announcement will be available on the Bank's website ( as from 29 November 2013.

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