NLB Group H1 2025 slides reveal strong loan growth and solid profitability

Introduction & Market Context

Nova Ljubljanska Banka (LJSE:NLBR) presented its first-half 2025 financial results on August 7, showcasing strong asset growth and consistent profitability across its Southeast European operations. The banking group, which maintains leading positions in multiple SEE markets, reported an 11% year-over-year increase in total assets to €29.57 billion, despite varying economic conditions across its regional footprint.

The presentation comes as NLB’s stock has experienced a slight decline, with shares down 1.21% to €163.5 during the August 7 trading session. The bank continues to trade significantly above its 52-week low of €117 but remains below its 52-week high of €168.

H1 2025 Performance Highlights

NLB Group reported a profit after tax of €274.4 million for the first half of 2025, maintaining a solid return on equity of 16.4%. This represents a slight decline from the 19.4% ROE achieved in the same period last year, reflecting changing market conditions and interest rate environments across the region.

The bank’s loan portfolio showed robust growth, with gross loans to customers increasing to €17.83 billion, representing a 7% increase from December 2024 and a 14% year-over-year growth excluding the SLS Group. Customer deposits grew at a more moderate pace of 3% since December 2024 to reach €22.84 billion.

As shown in the following chart of key financial metrics:

The bank maintained strong asset quality, with a group-wide non-performing loan ratio of just 1.5%. The cost-to-income ratio stood at 46.7%, slightly above the sub-45% target mentioned during the bank’s Q1 earnings call. The net interest margin remained healthy at 3.40%, though this varied significantly across different markets.

Regional Market Positioning

NLB Group continues to maintain strong market positions across its core Southeast European markets. In Slovenia, its home market, NLB holds a dominant 32.7% market share. The bank also maintains significant positions in the Republic of Srpska (21.6%), Kosovo (17.7%), North Macedonia (15.5%), Montenegro (14.3%), Serbia (10.1%), and the Federation of Bosnia and Herzegovina (6.1%).

The following image illustrates NLB’s market share across different countries:

This diversified regional presence provides NLB with stability and multiple growth avenues. The bank serves nearly 3 million active clients through 386 branches across the region, with particularly strong client bases in Serbia (over 1 million clients) and Slovenia (over 730,000 clients).

The bank’s operational footprint is detailed in this comprehensive overview:

Financial Metrics Deep Dive

A closer examination of NLB’s performance reveals varying profitability and efficiency metrics across its regional operations. The Slovenian operation delivered the highest absolute profit at €296 million, while operations in Serbia, North Macedonia, and Kosovo also contributed significantly to the group’s results.

Net interest margins varied considerably across markets, from 2.58% in Slovenia to 4.59% in Montenegro, reflecting different competitive landscapes and interest rate environments. Cost efficiency also showed significant variation, with Slovenia achieving the best cost-to-income ratio at 29.9%, while Bosnia and Herzegovina operations were less efficient at 53.8%.

The detailed performance metrics across all markets are illustrated in the following table:

The bank’s cost of risk has shown volatility, moving from -18 basis points in H1 2024 to 14 basis points for full-year 2024, and back to -4 basis points in H1 2025. This reflects the bank’s prudent risk management approach and the generally improving economic conditions across most of its markets.

Economic Outlook and Strategy

NLB operates in a region with varying economic growth prospects. For 2025, GDP growth projections range from 1.6% in North Macedonia to 4.6% in Kosovo, with most markets expected to outperform the Eurozone’s projected 1.0% growth. Inflation rates are generally moderating but remain above Eurozone averages in most markets except Slovenia and Kosovo.

The bank’s presentation highlighted the untapped growth potential in its markets, with relatively low banking penetration compared to Western European standards. This presents significant opportunities for continued expansion of both loans and deposits across the region.

NLB Group’s key strengths include its diversified regional presence, strong capital position with total capital of €3.42 billion, and solid credit ratings (Moody’s A3 with positive outlook, S&P BBB+ with stable outlook). The bank also emphasizes its ESG credentials, with a Sustainalytics ESG Risk Rating of 10.5, placing it in the low-risk category.

As shown in this overview of the bank’s key metrics and vision:

During the Q1 earnings call earlier this year, CEO Blas Brodnjak emphasized the bank’s focus on digitization, stating, "We want to see a step change in digitization." The bank aims to digitize 80% of new production processes as part of its strategic initiatives to enhance operational efficiency and customer experience.

With its strong market positions, solid capital base, and focus on digital transformation, NLB Group appears well-positioned to navigate the varying economic conditions across its Southeast European markets while continuing to deliver consistent profitability and growth.

Full presentation:

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.