2017 financial results
The Tatra banka Group ended 2017 with a consolidated profit of EUR 124.4 million. Loans to customers grew by more than 11 per cent and there was a decreasing percentage of non-performing loans. Deposits from customers also grew by almost 12 per cent.
“I am extremely pleased that we managed to grow in 2017 without exposing ourselves to higher risks. We recorded the highest sales of mortgage and consumer loans in 2017. Nevertheless, we are one of the banks with the lowest risk costs. We successfully acquired the Slovak portion of the portfolio of ZUNO bank and retained an overwhelming majority of its active clients. In cooperation with our parent, Raiffeisen Bank International, we implemented the securitization of a portion of our loan portfolio, a rare process in Slovakia. Despite extremely tough competition and decreasing interest income, we achieved profits of more than EUR 124 million,” commented Michal Liday, the CEO and Chairman of the Management Board of Tatra banka.
“The high standard of Tatra banka services is confirmed by awards received from a number of renowned Slovak and international institutions. The British financial magazine, Euromoney, awarded Tatra banka the Best Bank in Slovakia title for the thirteenth time. Last year, Tatra banka also won the title of best bank from EMEA Finance magazine. Moreover, the magazines Global Finance and Euromoney also recognized our innovative approach by awarding us as the “Best Consumer Digital Bank in Central and Eastern Europe”. Our website design was recognized as the best in Central and Eastern Europe. And these are just a few of a multitude of awards received last year by the bank and our colleagues,” added the CEO of Tatra banka.
Key financial ratios
The consolidated after-tax profit of the Tatra banka Group decreased 1.3 per cent year-on-year, from EUR 126.0 million in 2016 to EUR 124.4 million in 2017. The lower profit was largely due to one-time income in 2016 related to the purchase of shares of Visa Europe Ltd. by Visa Inc. There was a slight decrease in interest income, while on the other hand fee and commission income grew in 2017. The growth in operating income and decrease in operating expenses led to improvement of the cost-income ratio to 56.3 per cent from last year’s 60.3 per cent. In March 2017, Moody’s international ratings agency increased Tatra banka’s rating to A3 with a stable outlook.
Development of income and expenses
Net interest income continued to decrease in 2017 with a 1.1 per cent decrease to EUR 271.6 million. However, compared to 2016 the rate of decrease slowed due to faster growth in the volume of loans. The main reason was the fact that interest rates in EU countries fell to their lowest levels in 2016 and there was limited room for their further decrease.
Compared to 2016, the growth in the volume of loans accelerated in 2017 from 5.0 per cent to 11.4 per cent for three reasons. The first reason was accelerated growth in mortgage loans originated by Tatra banka despite the slowing growth of the whole market. The second reason was the recovery of corporate loans in 2017, which started to grow following a long period of previous stagnation. The third reason was the purchase of the Slovak portion of ZUNO bank’s portfolio. On the other hand, in 2017 the National Bank of Slovakia (NBS) started to tighten the options for providing mortgage and consumer loans. While mortgage loans had become subject to stricter rules since 2017, this will be the case for consumer loans in 2018. This is why the bank expects a slower rate of growth on the market of loans to individuals in 2018.
Net fee and commission income increased 4.8 per cent year-on-year to EUR 125.2 million. The fee income grew largely due to an increase in the number of clients’ accounts and growth in card services. This subsequently translated into higher income from transaction processing. Net trading income rose by 19.3 per cent to EUR 27.2 million.
General administrative expenses decreased by 2.7 per cent to EUR 242.4 million largely due to lower depreciation and lower operating costs.
Development of assets
The consolidated assets of the Tatra banka Group increased 9.9 per cent to EUR 12.50 billion. Loans to customers grew 11.4 per cent to a total of EUR 9.53 billion and were a significant contributor to this growth. The share of non-performing loans in the total portfolio decreased from 3.5 per cent to 2.9 per cent, which is considerably better than the figures for the rest of the banking sector and confirms the very good quality of the bank’s loan portfolio. The growth in loans to customers was mainly due to housing loans. The volume of government securities decreased while the volume of funds deposited with the central bank also decreased.
Development of liabilities and equity
Deposits from customers increased to EUR 10.04 billion. The growth was recorded particularly in current accounts in all client segments and to the contrary, term deposits decreased. The consolidated ratio of loans to deposits was 94.9 per cent as of December 31, 2017. As of December 31, 2017, the consolidated capital adequacy ratio was 17.74 per cent, which is substantially more than required by the National Bank of Slovakia and the European Central Bank.
Zuzana Žiaranová, Spokesperson
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