Publication of the audited Annual Report of Deželna banka Slovenije Group for the financial year 2011
26. 4. 2012
On the basis of the provisions of the Ljubljana Stock Exchange Rules and pursuant to the legislation in force, Deželna banka Slovenije d. d. is publishing the audited Annual Report of Deželna banka Slovenije Group for the financial year 2011.
In compliance with the temporary legislation, the content of this release will be available on the Banks website www.dbs.si from 26 April 2012 for a period of no less than 5 years.
Deželna banka Slovenije d. d.
Deželna banka Slovenije Operating Results for 2011 - Commentary
In its risk management efforts in 2011, the Deželna banka Slovenije focused on monitoring and managing credit risk, and on mitigating its related exposures. Despite the difficult situation it preserved a stable capital structure, with its capital adequacy ratio at 11.93% and Tier 1 capital ratio at 10.85%.
With respect to sources of financing in 2011, the Bank decreased its exposure to the banking sector and adjusted its investments into debt securities, which are its pool of secondary liquidity and guarantee the maximum safety of its operations. With a view to decreasing the costs of borrowing and increasing return on investment, the Bank decreased its total assets by 9% (at 31 December 2011 total assets amounted to EUR 892,789 thousand), while at the same time maintaining good cooperation with depositors, which represent a traditionally reliable resource for the Banks lending. Due to the stability of their deposits, the Bank has a good liquidity ratio and therefore operates a sufficient liquidity pool so as to not be very dependent on drawing funds from the uncertain financial markets.
With respect to retail lending, Deželna banka Slovenije met its planned objectives in 2011 despite increasingly strong competition, increasing the scope of its retail loans and advances by 14%.
Due to the limited growth in loans and advances, market competition, a substantial drop in the Euribor rate and lower extraordinary revenues, the Banks net interest income year-on-year was lower than expected, which, however, the Bank partially offset through cost rationalisation. By implementing measures to rationalise operations, the Bank decreased its administrative expenses by EUR 690 thousand.
The difficult and volatile conditions in the micro- and macroeconomic environment and the fierce financial situation all influenced the operations of Deželna banka Slovenije in 2011, leaving the Bank report EUR 8,801 thousand of net loss for financial year 2011. The negative operating result is largely due to the large scope of impairments and provisions (up 107% year-on-year), which were mainly formed for corporate loans.
Deželna banka Slovenije has continued devoting a lot of attention to risk management in 2012, further improving its balance sheet structure and rationalising operations.