Ljubljana, 30 May (STA) - The group around Slovenia's second largest bank, NKBM, generated EUR 8.5m net loss in the first quarter of 2013, down from EUR 1.4m in net profit in the same period last year. The group booked almost EUR 20m in provisions and impairments, up 5% compared to the first three months of 2012.
The year-on-year deterioration in the performance of the group was attributable mainly to a 32% decrease in net income from interest, the management said in a filing posted on the website of the Ljubljana Stock Exchange.
Provisions and impairments excluded, the NKBM group generated over EUR 8.6m profit from continuing operations in the first three months, which accounts for 14% of the annual plan.
The group's total assets amounted to EUR 5.39bn at the end of March, up EUR 66m or 1.2% compared to the end of 2012. Deposits by businesses and households remained level compared to the same period last yearm, whereas loans to the non-banking sector decreased by 2%.
"The operations of the group continued to be affected by adverse market conditions and declining economic activities, resulting in enhanced credit risk and, consequently, fairly high impairment losses and provisions recorded by the group," the banks said in the bourse filing.
NKBM CEO Aleš Hauc said in the letter to shareholders that Slovenia's economic development at the beginning of the year was "more positive than it was at the end of last year, mainly due to a pick-up in economic activity registered by export-oriented industries that have managed quite successfully to penetrate the eurozone markets that have seen a growth in demand."
"The results of the NKBM group for the three-month period that ended on 31 March were affected by an increased number of bankruptcy proceedings and, consequently, a deterioration in its loan portfolio. Reversing this negative trend is the primary objective of the management board and all employees for 2013," Hauc said.
He added that the bank drafted a restructuring plan in the first quarter of 2013 and sent it for approval to the European Commission.
The plan, once approved, will serve as one of the main pillars to support the implementation of necessary changes within the bank and the formulation of a new overall strategy for the group, Hauc said.
"By raising additional capital, restructuring the NKBM group, and setting up a new strategy, we plan to strengthen the financial position and performance of both the bank and the group," he stressed.