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Annual Report of SID Bank 2019

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Annual Report of SID Bank 2019 ANNUAL REPORT OF SID BANK 2019 Business name: SID – Slovenska izvozna in razvojna banka, d.d., Ljubljana Abbreviated business name: SID banka d.d., Ljubljana Registered office: Ulica Josipine Turnograjske 6, 1000 Ljubljana Registration number: 5665493 Tax number: 82155135 VAT ID number: SI82155135 Settlement account: 0100 0000 3800 058 IBAN: SI056 0100 0000 3800 058 SWIFT: SIDRSI22 LEI: 549300BZ3GKOJ13V6F87 Website: www.sid.si E-mail: [email protected] Tel.: +386 (1) 200 75 00 Major financial data and performance indicators Major financial data1 EUR thousand 2019 2018 2017 Statement of financial position Total assets 2,406,164 2,318,834 2,451,641 Total deposits by the non-banking sector measured at 827,545 548,452 454,828 amortised cost Total loans to the non-banking sector 816,550 706,787 597,740 Total equity 463,860 422,051 409,893 Allowances and provisions for credit losses 66,472 80,917 145,380 Off-balance sheet items 274,689 360,760 89,272 Statement of profit or loss Net interest 23,932 22,986 20,294 Net non-interest income 41,524 7,969 2,641 Labour costs, general and administrative costs (15,562) (13,270) (12,394) Depreciation/amortisation (914) (881) (852) Impairments and provisions (credit losses) (11,603) 853 6,648 Pre-tax profit from ordinary and discontinued operations 37,238 17,519 16,224 Corporate income tax on profit from ordinary and discontinued (5,198) (3,205) (2,268) operations Net profit for the financial year 32,040 14,314 13,956 Statement of other comprehensive income Other comprehensive income before tax 11,829 (12,735) 2,603 Corporate income tax on other comprehensive income (2,061) 2,418 (495) Number of employees as at 31 December 201 185 170 Shares Number of shareholders 1 1 1 Number of shares 3,121,741 3,121,741 3,121,741 Nominal value of one share or corresponding amount of share 96.10 96.10 96.10 capital of one no-par-value share Book value of one share 149.47 136.00 132.08 Long-term credit rating as at 31 December Standard & Poor’s AA- A+ A+ 1 Prescribed data and indicators are calculated in accordance with the Guidelines for compiling the statement of financial position, income statement and statement of comprehensive income, and calculating the performance indicators of banks and savings banks, which were prescribed by the Bank of Slovenia on the basis of the Regulation on the books of account and annual reports of banks and savings banks (Official Gazette of the Republic of Slovenia, Nos. 69/17 and 73/19). Selected indicators2 (in %) 2019 2018 2017 Shareholder equity Common equity Tier 1 capital ratio 34.0 34.2 36.8 Tier 1 capital ratio 34.0 34.2 36.8 Overall capital ratio 34.0 34.2 36.8 Leverage ratio 16.5 16.3 15.5 Quality of assets in statement of financial position and commitments given Non-performing (on-balance-sheet and off-balance-sheet) 2.5 3.7 - exposures / classified on-balance-sheet and off-balance-sheet exposures Non-performing loans and other financial assets / classified 4.0 6.1 - loans and other financial assets Allowances and provisions for credit losses / non-performing 60.3 66.5 - exposures Collateral received / non-performing exposures 33.3 28.8 - Profitability Interest margin 1.0 1.0 0.8 Financial intermediation margin 2.8 1.3 0.9 Return on assets (ROA) after tax 1.4 0.6 0.6 Return on equity before tax 8.3 4.2 4.0 Return on equity after tax 7.2 3.4 3.5 Operating costs Operating costs/average assets 0.7 0.6 0.5 Operating costs/net income 25.2 45.7 57.8 January– April– July– October– Liquidity in 2019 March June September December Liquidity coverage ratio (%) 823% 455% 764% 1,019% Liquidity buffer, in EUR thousand 242,938 243,738 246,028 245,537 Net liquidity outflows, in EUR thousand 67,113 72,293 53,079 33,115 2 The quality indicators for assets in the statement of financial position and commitments given have not been calculated for 2017, as the figures are not comparable because of the transition to IFRS 9 in 2018. For reasons of comparability, the “Non-performing loans and other financial assets / classified loans and other financial assets” indicator has been recalculated for 2018 in accordance with the methodology that applies to the calculation of indicators for 2019. According to the methodology that applied to the calculation of indicators for 2018, the aforementioned indicator for 2018 stood at 5.6. List of abbreviations and terms AJPES Agencija Republike Slovenije za javnopravne evidence in storitve (Agency of the Republic of Slovenia for Public Legal Records and Related Services) ALM Assets Liabilities Management GDP Gross Domestic Product BGN Bloomberg Generic Price BPI Banque publique d'investissement CET1 Common Equity Tier 1 Capital CFI Capital Finance International CMSR Centre for International Cooperation and Development CRR Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 CVA Credit Valuation Adjustment O-SIIS Other Systemically Important Institutions EAD Exposure at Default EAPB European Association of Public Banks EBA European Banking Authority ECB European Central Bank EFSI European Fund for Strategic Investments EIAH European Investment Advisory Hub EIB European Investment Bank EIF European Investment Fund ECP European Cohesion Policy ELTI European Long-Term Investors EU European Union EUA European Emission Allowances EUAA European Aviation Allowances EWS Early Warning System FARS Financial Administration of the Republic of Slovenia GODECP Government Office for Development and European Cohesion Policy GURS Surveying and Mapping Authority of the Republic of Slovenia HBOR Croatian Bank for Reconstruction and Development ICAAP Internal Capital Adequacy Assessment Process ILAAP Internal Liquidity Adequacy Assessment Process IT Information Technology KfW Kreditanstalt für Wiederaufbau LCR Liquidity Coverage Ratio LGD Loss Given Default AOP Annual Operational Plan MEIP Minimum Export Insurance Premiums MF Ministry of Finance MEDT Ministry of Economic Development and Technology MREL Minimum Requirements for Own Funds and Eligible Liabilities IAS International Accounting Standards SMEs Small and Medium-Sized Enterprises IFRS International Financial Reporting Standards as adopted by the EU NEFI Network of European Financial Institutions for Small and Medium-Sized Enterprises N/A Not applicable NSFR Net Stable Funding Ratio OECD Organisation for Economic Co-operation and Development IASB International Accounting Standards Board IFRIC IFRS Interpretations Committee POCI Purchased or Originated Credit-Impaired Assets PD Probability of Default PwC PricewaterhouseCoopers RS Republic of Slovenia RWA Risk-Weighted Assets SSH Slovenian Sovereign Holding SEGIP Slovenian Equity Growth Investment Programme SID-PKZ SID - Prva kreditna zavarovalnica SPPI Solely Payments of Principal and Interest SREP Supervisory Review and Evaluation Process TLTROs Targeted Longer-Term Refinancing Operations ZBan-2 Banking Act ZGD-1 Companies Act ZIPRS Republic of Slovenia Budget Implementation Act ZJShemFO Republic of Slovenia Guarantee Scheme for Natural Persons Act ZJShemRS Republic of Slovenia Guarantee Scheme Act ZPFIGD Act on Guarantees of the Republic of Slovenia to Finance Corporate Investments ZPPOGD Act Governing the Remuneration of Managers of Companies with Majority Ownership held by the Republic of Slovenia or Self-Governing Local Communities ZSIRB Slovene Export and Development Bank Act ZZFMGP Insurance and Financing of International Commercial Transactions Act BUSINESS REPORT A word from the president of the management board___8 Supervisory board report for 2019_12 About SID Bank___15 About the SID Bank Group___21 Corporate governance statement___23 Social responsibility___36 SID Bank’s strategy____42 Risk management____44 Declaration of the management body on the adequacy of the risk management framework____51 Performance in 2019____52 A word from the president of the management board Dear Stakeholders, The final year of the previous decade was Last year SID Bank nevertheless provided EUR characterised by what seemed to be a relatively 357 million in new financing and EUR 635 stable dynamic, but was really quite significant. million in new insurance operations or EUR 3.7 The economic cycle finally underwent a billion in total financial services to over two downturn, as global economic growth stood at thousand Slovenian companies, in particular 2.9%, while economic growth in the EU was just SMEs and exporters. To that end, we finance 1.3%. It was at 2.4% in Slovenia, which was and insure Slovenian companies during their 20% less than expected, and thus brought to sustainable growth and development, and over an end a five-year period of high growth, in the their entire life cycle, primarily during their context of low inflation (1.6%) and an internationalisation, particularly on new extremely low unemployment rate (4.5%). markets. In the previous year new markets Despite the European Central Bank lowering were mostly in Africa and in the Middle East, interest rates, and the appropriate response which was linked to growth in exports (4.4%). and actions of market participants, the volatility The funds mobilised by SID Bank in the previous of financial, commodities and trade markets year and funds that were managed by us thus increased, as the result of geopolitical and trade collectively accounted for total assets of EUR disputes and Brexit, and particularly in 2.4 billion, which corresponded to 3.8% growth, anticipation of a certain negative, so-called while the volume of non-marketable insurance black swan event. The latter occurred at the end operations rose to EUR 1.3 billion, representing of the year, but did not yet affect developments an increase of 57%. in the European and Slovenian economy. Increased demand for loans, which already SID Bank and the SID Bank Group performed began in 2018 primarily for corporate working well and, taking into account certain one-off capital and also for residential real-estate and events, recorded a historically record year in consumer loans, continued on the domestic terms of profit, which amounted to EUR 32 credit market in 2019.
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