Annual Report Nova Ljubljanska banka d.d., Ljubljana

Transcription

1 Annual Report 2001 Nova Ljubljanska banka d.d., Ljubljana

2 The Mission of Nova Ljubljanska banka d.d., Ljubljana CREATING NEW MODEL OF BANKING CULTURE WITH EXCELLENCE, TRUST AND TRADITION Nova Ljubljanska banka supports Slovenian artists Nova Ljubljanska banka is actively involved in all segments of Slovenia s economic, social and cultural affairs. We recognise the importance of national identity, and in particular that which is expressed through artistic creativity. As we believe that part of our mission is to support Slovenia s cultural heritage, we have established the Bank s Art Collection to collect the most important works by Slovenian artists. Some of these works are used to illustrate Annual Report 2001.

3 Profile of the Group and NLB Nova Ljubljanska banka Group ( the Group ) is the largest banking and financial services organisation in Slovenia with total assets accounting for more than one third of the total assets of the Slovenian banking sector, encompassing 21 banks. Nova Ljubljanska banka d.d., Ljubljana ( the Bank or NLB ) is a universal bank with a leading position in retail, corporate and investment banking. It has over 50,000 corporate and 900,000 retail customers in Slovenia alone. The Bank and its domestic bank subsidiaries have a market share of 38 per cent of total assets, 37 per cent of customer loans and 39 per cent of customer deposits, as at 31 December Within the Group, NLB is the largest institution, accounting for over seventy per cent of the Group s total assets and loans to non-banking customers. The Republic of Slovenia s shareholding in the Bank s total share capital has been reduced by integration of daughter banks by 8.37 percentage points and is at the end of year per cent, with the state owned fund management companies Pension Capital Fund, holding 4.53 and the Restitution Fund, holding 4.15 per cent. The Bank is one of the highest rated banks in Central and Eastern Europe with recent upgrades from Fitch IBCA, Moody s and Capital Intelligence. Investment Grade Credit Ratings (long-term) are: Moody s Baa2, Fitch IBCA A-, Standard & Poor s BBB-, Capital Intelligence A-. The Bank ranks amongst the 10 largest banks in Central Europe, has won Euromoney s Best Slovenian Bank award for five consecutive years, and The Banker selected NLB as Slovenian Bank of the Year Investments in Slovenia In 2001 the first steps were taken towards the consolidation of the Group; three banks becoming wholly owned subsidiaries of NLB. On 1 October NLB issued 776,894 new shares that were swapped for the shares of three daughter banks: Dolenjska banka d.d., Novo mesto, Banka Velenje d.d., Velenje and Pomurska banka d.d., Murska Sobota. As a result of the share swaps NLB increased its shareholding in these banks to 100 per cent and in a simultaneous act merged their operations. Consequently, these banks ceased to exist as legal entities and their minority shareholders became shareholders of NLB. At the year end NLB held per cent of the regular voting shares of Koroπka banka d.d., Slovenj Gradec and 40.0 per cent of the share capital in both Banka Zasavje d.d., Trbovlje and Banka Domæale d.d., Domæale. The Group as a whole held a per cent share in Banka Celje d.d., Celje of which per cent was held by NLB itself. NLB also owns per cent of LB Maksima d.o.o., Ljubljana which manages investment funds, the balance is owned by other banks in the Group. Maksima manages five authorised investment companies and the Piramida mutual fund. The shares of all these investment companies are quoted on the Ljubljana Stock Exchange. On 1 January 2001 Skupna pokojninska druæba d.d., Ljubljana was established as a pension fund by both NLB and Zavarovalnica Triglav d.d., Ljubljana. They are the largest shareholders, each holding per cent. NLB, together with the member banks of the Group, holds a per cent stake in Bankart d.o.o., Ljubljana, a card processor. LB Leasing, d.o.o., Ljubljana, is wholly owned and deals with financial leasing and/or leases real estate, vehicles, ships and boats, farming and construction machines, office space, information technology and offers leasing of other equipment. The company has its own leasing operations in Maribor and in Koper and owns Optima Leasing d.o.o., Ljubljana. NLB now owns a further two leasing companies: Feniks d.o.o., Murska Sobota and Fit Leasing d.o.o., Velenje. LB Hipo d.o.o., together with its subsidiary LB Propria d.o.o., are wholly owned Ljubljana based companies dealing with real estate and renting office space. Real d.o.o., Novo mesto, operates in the same market and is 90 per cent owned by NLB following the acquisition of Dolenjska banka. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 1

4 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN P r o f i l e o f N L B a n d t h e G r o u p Investments outside Slovenia LBS Bank was established in New York in 1986 and is wholly owned by NLB. LBS is a universal bank, mainly financing trade between the United States, Slovenia and other Central European and Mediterranean countries. LB InterFinanz AG, Zurich, is wholly owned and deals principally in forfaiting. Its subsidiary, LB InterFinanz Praha, performs financial and commercial consulting and also offers factoring and forfaiting services in Central and East European markets. LB Factors d.d., Ljubljana, involved in factoring insurance claims, is 70 per cent owned by LB InterFinanz AG, Zurich with the balance held by NLB. NLB s shareholding in LHB Internationale Handelsbank AG in Frankfurt now exceeds fifty per cent and it has become a subsidiary. NLB holds per cent of Adria Bank AG, Vienna, an Austrian affiliate of NLB. 2 Nova Ljubljanska banka d.d., Ljubljana As of December 2001, NLB had an percentage share in the capital of Tutunska banka a.d., Skopje while the share of LHB Internationale Handelsbank AG, Frankfurt in this bank amounted to per cent. In compliance with adoption of Bosnian banking legislation, Banka Domæale d.d., and LHB Internationale Handelsbank AG, Frankfurt increased the capital in Commercebank d.d., Sarajevo, member of the Group, in After the buyout of a part of shares from existing shareholders the indirect shareholding of NLB in the capital of this bank amounts to 67.6 per cent. NLB has enhanced its presence on the Southeast European markets. During the year, NLB expanded its operations in the Federal Republic of Yugoslavia, principally to support Slovenian companies in that territory. This is in line with NLB s strategy.

5 Table of Contents 1 Profile of the Group and NLB 4 Financial Highlights 7 Supervisory Board Members 8 Chairman's Statement 10 Statement of the President and Chief Executive Officer 15 Financial Review 16 NLB Group Financial Performance 19 NLB Group Consolidated Balance Sheet 24 Key Performance Indicators 25 NLB Group - Overview and Comparison of the Key Financial Figures 27 Group Risk Management 30 Business Review 30 Retail and E-Banking 32 Corporate Banking 32 International and Trade Finance 34 Investment Banking 35 Human Resources Management 35 Information Technology Support 37 Economic Environment 40 Organisation 45 Audited Consolidated Financial Statements for NLB Group under Slovenian Accounting Standards 80 Selected Financial Data and Performance Figures for NLB d.d. under Bank of Slovenia Methodology 81 Audited NLB d.d. Financial Statements under Slovenian Accounting Standards 118 Selected Financial Data for the Group on the Basis of Audited Consolidated Financial Statements under International Accounting Standards 119 Audited Consolidated Financial Statements for NLB Group under International Accounting Standards 169 Directory Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 3

6 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Financial Highlights Table 1: Selected Financial Data for the Group on the Basis of Audited Consolidated Financial Statements prepared under Slovenian Accounting Standards 1) NLB Group IN BILLION TOLARS INCOME STATEMENT Net interest income Net non-interest income General administrative expenses Profit before tax Minority interest Net profit BALANCE SHEET at year end Total sheet , ,742.4 Loans to non-banking customers Non-bank customer deposits ,110.1 Total equity Minority interests FIGURES IN % Capital adequacy ratio 2) n.a. n.a Return on equity (before tax) Return on average total assets (before tax) Costs covered by net non-interest income Costs as a share of total assets ) For financial results and figures for the Group under International Accounting Standards please refer to the section of Financial Statements under IAS on page ) Calculated in accordance with Bank of Slovenia Decree for the Supervision of the Banks on Consolidated Basis, valid since 1999 EXCHANGE RATE (Bank of Slovenia midrate at year-end) EURO 1= tolars USD 1= tolars Nova Ljubljanska banka d.d., Ljubljana

7 F i n a n c i a l H i g h l i g h t s Table 2: Selected Financial Data for the Bank on the Basis of Audited Unconsolidated Financial Statements prepared under Slovenian Accounting Standards NLB IN BILLION TOLARS INCOME STATEMENT Net interest income Net non-interest income General administrative expenses Profit before tax Net profit BALANCE SHEET at year end Total assets ,382.3 Loans to non-banking customers Non-bank customer deposits Total equity FIGURES IN % Capital adequacy ratio Return on equity (before tax) Return on average total assets (before tax) Costs covered by net non-interest income Costs as a share of total assets Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 5

8 A r t C o l l e c t i o n o f N o v a L j u b l j a n s k a b a n k a Gabrijel Stupica Flora 1961 tempera and mixed technique on wood 72 x 100 cm

9 Supervisory Board Members Chairman M.Sc. Igor Kuπar State Secretary Ministry of Finance, Ljubljana Vice Chairman Uroπ Slavinec President of the Management Board HELIOS d.d., Domæale Members Rudi Gabrovec Minister Counsellor Office of the President of the Government of Republic of Slovenia, Ljubljana Zvone IvanuπiË Advisor to the Management Board Pozavarovalnica SAVA d.d., Ljubljana Dr. Bogomir KovaË Professor Faculty of Economics, University of Ljubljana Marjan Kramar President of the Management Board Slovene Export Company, Ljubljana M.Sc. Joæe LeniË President of Management Board Pension Capital Fund, Ljubljana M.Sc. Boris kapin Manager CONSULTA d.o.o., Ljubljana Dr. Metka TekavËiË Professor-Senior University Teacher Faculty of Economics, University of Ljubljana All members of the Supervisory Board were appointed at the 4th Annual Meeting for a four-year mandate, starting July 9, Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 7

10 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 8 Nova Ljubljanska banka d.d., Ljubljana Chairman's Statement The year 2001 was a year of dynamic change for Nova Ljubljanska banka d.d., Ljubljana. In July 2001 the mandate for the Supervisory Board, that with the Management Board successfully steered NLB in the period , ended. A new Board was appointed with the following members: Rudolf Gabrovec, Zvone IvanuπiË, Dr. Bogomir KovaË, Marjan Kramar, M.Sc. Joæe LeniË, M.Sc. Boris kapin, Uroπ Slavinec, Dr. Metka TekavËiË and M.Sc. Igor Kuπar. The new Board continued the work of its predecessor focusing its attention on issues identified in the annual business plan. The Supervisory Board paid special attention to the business informatics project as the infrastructure backbone of the Bank, expected to be operational by the end of The start of the privatisation in 2001 is among key strategic moves. After a long period of preparation and search for an optimal program the implementation started in May of As the majority shareholder the Republic of Slovenia, by international tender, invited key investors to buy its 34 per cent of shares of Nova Ljubljanska banka d.d., Ljubljana. Key investors were defined as financial institutions able to provide effective business partnership within the framework of NLB s long term developmental strategy. NLB undertook the demanding work of privatisation. Preparatory activities and interactions with potential key investors and in financial due diligence required substantial additional effort by the Management as well as Senior Bank Staff. It is expected that these efforts will bear fruit in the second half of 2002, when with the closure of privatisation projects an appropriate shareholder structure will be achieved. Around one third of shares shall be owned by key shareholder, one third by institutional - majority domestic - investors and one third shall remain either in direct or indirect state ownership. I am confident that such a change in ownership structure will further improve the corporate governance and efficiency of the Bank, which will with a key business partner also further increase financial strength and expand its offer on bank-assurance products. Linked with privatisation the most important business change was the integration of Dolenjska banka, Banka Velenje and Pomurska banka into NLB. This enabled both NLB and the Group to further strengthen their core competitive advantages in the domestic market. The integration project was not only important for consolidation of market share, but also for the expected synergies resulting from the integration. The Bank is now faced with the second, more complex part of the integration project: optimisation of the base costs, including rationalisation of labour costs.

11 NLB and the Group had a successful financial year in First, solid financial results were achieved and market share increased. Most of the planned business goals were achieved. NLB Group achieved net profit of 7.3 billion tolars (77.0 million euros), and its balance sheet increased to 1,742.4 billion tolars (7.8 billion euros). Profit resulted from solid net interest income growth and especially high non-interest income growth. Return on capital was somewhat higher compared to 2000, however achieved an after-tax return on equity of 7.9 per cent at NLB Group level provide room for further increase of shareholders equity. NLB intends to further strengthen its leading position in the domestic market where we expect stronger competition compared to previous years. There is no doubt that NLB will be able to further increase and/or defend its market share only with new, competitive banking products and continued focus on customer needs. Lastly, NLB will need to further improve internal efficiency in order to improve cost parameters to the level of international competition. Given its share in the domestic market there will be a stronger emphasis on the growth in the markets of Southeast Europe, especially in the markets of countries of the former Yugoslav republics, in the future. Subsidiaries in Western Europe will remain important instruments for future growth, especially in business activities in the markets of the former Yugoslav republics. A strategic decision regarding our New York subsidiary, either in defining its form of a market niche player or in the form of reduction of its business activity, has been discussed widely and will be formalized this year. I expect that the period of important change will continue in Upon consolidation of ownership structure the Bank will, in the interest of all especially small shareholders, be publicly quoted. Reorientation in business philosophy toward the creation of shareholder value will enable further introduction of performance related rewards for Senior Management. These mechanisms will be closely related with the basic measure of business efficiency - increase in earnings per share. Good business results can only be achieved from motivated and committed staff. I hope that all employees in the NLB Group will work in a friendly and stable environment in That shall be the basis to achieve above average business results. M.Sc. Igor Kuπar Chairman of Supervisory Board C h a i r m a n ' s S t a t e m e n t AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN

12 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Statement of the President and Chief Executive Officer Solid financial results, integration of daughter banks, further expansion abroad and the start of privatisation program were the key features in 2001 The Nova Ljubljanska banka Group ( the Group ) made significant progress during the year and its principal operating unit, Nova Ljubljanska banka d.d. ( the Bank or NLB ), delivered a sound financial performance. The Group achieved a record pre-tax profit under Slovene Accounting Standards ( SAS ) of 17,046.3 million tolars (77.0 million euros) equivalent to million euros under International Accounting Standards ( IAS ). Return on equity reached 14.9 percent under SAS or 20.1 per cent under IAS. The Group further consolidated its position as the leading financial institution in Slovenia; volume growth moved ahead significantly. The Group s consolidated balance sheet reached 1,742.4 billion tolars (7,869.8 million euros under SAS equivalent to 7,778.8 million euros under IAS) at the end of 2001, an increase of 49.5 percent. Market share, measured in assets size, increased by three percentage points to 38 per cent of the Slovenian banking industry. We achieved high volume growth while maintaining the quality of the asset portfolio, exposure to A and B grade clients was 94.6 per cent of the Group s total asset portfolio. These results reflect a good performance in the increasingly competitive business environment in Slovenia; at the same time we integrated three daughter banks into NLB as fully-fledged retail divisions. In addition, the Group continued its expansion into Southeast Europe, which started in 2000 and undertook the consolidation of some of its foreign operations. Domestically, our growth drivers embraced a number of key features including a strong retail franchise, encouraging increase in non-interest income and cost saving synergies. I expect this to continue in the future. Abroad, LHB Bank, Frankfurt and Tutunska banka, Skopje were consolidated into the Group as subsidiaries with effect from 31 December LB Inter- Finanz, Zurich and LBS Bank-New York continued to consolidate their operations. Commercebank, Sarajevo achieved good volume growth. 10 Nova Ljubljanska banka d.d., Ljubljana NLB is building its domestic position as a springboard for further expansion into the wider region. It is a core element of the Group s strategy for the forthcoming period for which privatisation is a key component. The strategy is embedded in the Slovenian Government s privatisation program, which is designed to provide NLB with key shareholder(s) while also helping to drive its growth strategy. With over 103 billion tolars under SAS (465 million euros) or billion tolars under IAS (495 million euros), the Group is well capitalised, these resources include non-equity funds and have been sufficient to finance both organic growth and expansion. However the Group's future plans will be facilitated and accelerated by partnership built with key shareholder(s) in the privatisation program. Economic environment domestically and abroad conducive to domestic growth and further foreign expansion The Slovenian economy slowed in 2001, along with activity levels in most developed countries; nevertheless GDP increased by 3.0 per cent. As a result of domestic demand growth and general capacity growth in Central and especially Southeast Europe, following the end of the conflict in the Balkans, the region achieved above average growth in the year. In Slovenia, the current account was virtually in balance for the first time since 1997 and inflation fell to 7 per cent at 2001 year end. Unemployment by ILO standards decreased to 6.4 percent. Slovenia is one of a small group of countries in the region expected to be in the first wave of new members of the European Union, probably in 2004.The Government has introduced fiscal policies to boost economic activity and bring Slovenia into line with the EU average. It has also laid out a post-transition development paradigm including higher share of investment, external trade and FDI and an increasing share of services in GDP (e.g. education, telecommunications, productive services and business services). The accession to EU membership is expected to have a positive effect on economic growth, while lowering inflation and unemployment rates. Markets of Southeast Europe have an important role in the Group s strategy. Despite current difficulties, the region is likely to experience positive economic development and growth over the medium term. This provides considerable opportunity for the NLB Group, which has the experience and background to establish itself as the leading financial institution in the region.

13 S t a t e m e n t o f t h e P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r Core competencies of retail franchise, corporate banking and corporate finance to be further expanded domestically and abroad The Group's core competencies and comparative competitive advantages have enabled it to expand internationally while simultaneously carrying out a program of integration within its home market. I am satisfied that virtually all members of the Group have successfully realised their business and strategic objectives. The Group and NLB have strengthened their position as the leading financial institution(s) in Slovenia and successfully re-entered the markets of Central and Southeast Europe. The management of NLB is aware of the present and future challenges and opportunities it faces. We are actively introducing new products and services, provided through both traditional and modern distribution channels. At the same time, with the introduction of new Information Technology platforms, we are redesigning NLB s and the Group s business processes and introducing an integrated database and new information management systems. I am satisfied with the continued progress of Project Sigma, one of our most important IT system developments, which is expected to become fully operational in the course of Sigma will enable us to undertake significant operational cost reductions and enhance financial efficiency by shifting resources to more productive uses. This will further strengthen our retail operations. As in previous years our efforts have attracted widespread recognition. Last year, for the fifth consecutive time, NLB received Euromoney's Award for Excellence in Slovenia. We were awarded similar distinctions by Global Finance and the Banker magazines. While we are proud to receive this recognition, we firmly believe that the only true measure of progress is customer satisfaction and their continued confidence in NLB and the Group as a whole. Strategic objective: A profitable NLB Group with total assets of 20 billion euros providing services in a market of more than 20 million people The year under review saw us commence the implementation of our business policies aimed at realising the Group's strategic objectives and vision. These envisage the Group establishing itself as one of the leading, most competitive and financially sound financial institution in the region, with the capacity to meet the financial services requirements of private and corporate customers throughout Central and Southeast Europe. We believe that 2002 and beyond will further contribute to the realisation of the Group's strategic and business targets. The main focus in the period will be to strengthen and build the size and profitability of NLB and the Group commensurate with a steady improvement in the quality and efficiency of their operations. In this way we aim to satisfy all our stakeholders - customers, shareholders and employees. Our key strategic objectives for the period , aimed at strengthening the Group s position in Central Europe, are: Grow the balance sheet domestically and internationally. Our aim is to grow NLB's total balance sheet, to reach 20 billion euros by 2006, with profitability continuing to exceed the average for the Slovenian banking sector. We expect to achieve these goals through a combination of organic growth and acquisitions of banks and other financial organisations in Slovenia and beyond. Expand in foreign markets. As a consequence of growing internationally, we expect 40 per cent of the Group s balance sheet to be outside Slovenia, serving a market of more than 20 million people across Southeast Europe. Further development of fee business banking services. Given the narrowing of interest rate margins, the target of the Group is to increase the proportion of its total non-interest related earnings to reach 40 per cent. Improvement in NLB s internal efficiency and NLB s value maximization. Further investment in information management technologies is already underway to facilitate the development of new services, that will create better flexibility of transactions and increase automation and e-banking franchises, each at lower costs, resulting in an increase in earnings per share ratios. As part of this value creation programme, the Group and NLB will introduce appropriate management incentive schemes. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 11

14 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN S t a t e m e n t o f t h e P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r Increase levels of customer satisfaction. We will continue to analyse our performance and introduce initiatives to raise levels of service aimed at increasing customer satisfaction and loyalty. Our aim is that over time this programme will contribute to profitability. Private banking and bankassurance. Expand our offering focused on serving the needs of high net worth individuals and to offer clients bankassurance services. Continue to invest in our people. Education and development of all of the Group s staff and management is an on-going process of high priority that will be continued. We need to ensure that our skills and competencies are continually upgraded, that opportunities are provided for career progression, and well structured succession plans are implemented. The past year has witnessed considerable change within our organisation as we move towards privatisation, an event that we unreservedly support. After the year end, on April 19, 2002 the Government of Slovenia agreed to sell 34 per cent of the shares in NLB to KBC, a leading Belgium banking-insurance Group, for 435 million euros. This transaction represents the end of the development phase, which started in We are looking forward to work closely with KBC and we welcome our new shareholders to Slovenia. 12 Nova Ljubljanska banka d.d., Ljubljana NLB is the major bank, and the Group the major financial services institution, in Slovenia and a growing force in the region. I am confident that we are well placed to expand our influence, not only in Slovenia but also in the whole Southeast European region, as we utilise our considerable financial strength and expertise to deliver results in line with the expectations of our shareholders. The performance of the Group is dependent on the quality and commitment of its staff. Our results again reflect their hard work, skill and dedication. Our employees have an average of fifteen years service and many are university graduates. Education is a key element in our human resources program to ensure that staff at all levels are allowed to develop and grow their skills to ensure that they are able to realise their true potential and enjoy exciting and productive careers within the organisation. Finally I would like to express my heartfelt thanks to all the management and staff for their loyalty and tremendous efforts to achieve success, not only in the past year but also throughout the process of the Group s restructuring. I would also like to express my gratitude to NLB s Supervisory Board for its support in development of our successful medium-term strategy. Marko VoljË President & CEO

15 M a n a g e m e n t B o a r d Alojz Jamnik Deputy President and Deputy CEO Marko VoljË President and CEO Boris Zakrajπek Deputy President and Deputy CEO

16 A r t C o l l e c t i o n o f N o v a L j u b l j a n s k a b a n k a Silvester Komel Search of Exit 1971 acrylic, oil on canvas 145 x 181 cm

17 Financial Review This review analyses the financial performance of the NLB Group ( the Group ) including the parent bank, Nova Ljubljanska banka d.d. (the Bank or NLB ), and its domestic and overseas subsidiaries and nonbank companies. The analysis is based on the Group's audited consolidated financial statements, prepared under the Slovene Accounting Standards (SAS) and Bank of Slovenia prescribed reporting methodology. They are fully disclosed in the Financial Report section of this Annual Report. Full disclosure of the Bank s non-consolidated financial statements, prepared under SAS, are shown in the Financial Report on pages 81 to 116 of this Annual Report. The Financial Review describes and analyses the performance of the Group according to SAS standards. In order to meet international requirements and facilitate international comparison, the financial performance, the results and accounts under the International Accounting Standards (IAS) are shown separately on pages 119 to 167. The main differences between SAS and IAS are described in Note 50 of IAS financial accounts. The 2001 consolidated accounts are not directly comparable with those of the previous year because of the corporate activity. The 2001 accounts include LHB Internationale Handelsbank AG, Frankfurt for the first time as it was an affiliate until 29 December, 2001, when it was consolidated as a subsidiary. In addition Tutunska banka, a.d., Skopje and Commercebank, d.d., Sarajevo are consolidated for the first time. On 1 October 2001 the Bank issued new shares which were immediately swapped with those held by the minority holders in Banka Velenje, Pomurska banka and Dolenjska banka 1. Following this transaction these three former daughter banks ceased to exist as independent legal entities and were transformed into the regional retail divisions of the Bank. 1 Until 30 June 2001 Dolenjska banka, previously an affiliate of Nova Ljubljanska banka, became a daughter bank (subsidiary), which resulted in the consolidation of its 2001 half-year accounts within the Group's interim accounts as at 30 June, The bank was merged with NLB d.d. and ceased to exist as a separate legal entity with effect from 1 October Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 15

18 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN F i n a n c i a l R e v i e w NLB Group Financial Performance In the year to 31 December 2001, the Group generated net after tax income of 7.3 billion tolars, a 25.1 per cent increase over the previous year. The pre-tax income, including 913 million tolars attributable to the minority shareholders, reached 17.1 billion tolars, up by 27.6 per cent over Nova Ljubljanska banka d.d., Ljubljana The major contributor to the Group's total income was the Bank. It made a net after tax income of 6.05 billion tolars, up by 21.3 per cent over The domestic daughter banks also increased their net income, as did LHB Bank and LB Leasing and LB Maksima. It should also be noted that the Bank's effective tax rate of 50 per cent, which is the highest due to balance sheet levy, is considerably higher than the effective tax rate applicable to other daughter banks and subsidiaries. For most of them the balance sheet levy, due to the structure of their investments is almost insignificant, which means that their tax charge is calculated by applying the ordinary income (corporate) tax at the rate of 25 per cent. The effect of the different tax position of the Bank and the remaining subordinated companies is clearly evident when comparing the pre-tax income figures and their per cent increase over the preceding year. At the Group level, net interest income grew by 30.2 per cent. In this context, note that in accordance with the Slovene Accounting Standards and the Slovene regulatory reporting scheme, the interest income earned on loans and other investments and the interest paid on deposits and borrowing include only the real part of the total (nominal) interest rate. The revaluation part (TOM), calculated by using the rolling Slovenian inflation index, is shown separately under the other operating income heading. The total amount found within this item (23.3 billion tolars) includes both the net figure for the revaluation interest (received less paid), the balance of the revaluation account (showing the revaluation of fixed assets and capital investments as income items and revaluation of capital as a charge to the income account) and the net F/X gains/losses (see Notes 9b on page 56 and 7b on page 91). During the year, as a result of the tapering of the indexation system and the introduction of the interest nominalism, as recommended by the Slovenian Central Bank, the interest rate charged on certain short-term investments, including short-term inter-bank deposits and investments in Treasury bills issued by the Slovenian Central Bank, has been quoted as a nominal interest rate. As a consequence, the interest calculated by applying the nominal rate of interest, both received and paid, were booked as a real interest income/expense. The inconsistency caused by this Slovenian regulation will be abolished in The inconsistency caused by the fact mentioned above will be removed in 2002, due to the changes in both the domestic accounting standards and the regulatory reporting scheme prescribed by the Central Bank. Consequently both components of interest income and expenses, real and revaluation part, will be shown under common item - net interest income.

19 Based on the net income attributable to shareholders, diluted earnings per share increased to tolars per share from tolars per share in 2000, a 12.5 per cent increase, although it does not include the charge made for the obligatory revaluation of capital 3. In June 2001, at the Bank s Annual Shareholder meeting, a dividend payment of 2 billion tolars or tolars per ordinary (common) share was declared, representing a 41 per cent payout ratio. In April 2002, at the Bank s Supervisory Board meeting, a dividend payment of 3,292 million tolars or tolars per ordinary share was proposed. F i n a n c i a l R e v i e w Table 3: Earnings of the Group and the Bank TOLARS MILLION The Group % Growth The Bank % Growth The Bank 2001 over over 2000 as % of the Group in 2001 Net interest income (real part only) 32, , Net interest income including the revaluation part 52, , Net non-interest income 24, , Operating costs 45, , Net operating result 24, , Profit before tax 17, , Tax 8, , Minority interest Net profit 7, , Net interest income Customer loans and advances and investment securities are the key generators of interest income. A rise in net interest income, as a result of an increase in business volumes, more than compensated for the lower net interest margin. Falling interest margins were directly related to a decrease in the indexed component of the aggregate net interest margin. Interest charged on tolar loans and other interest bearing investments, as well as interest paid on deposits with maturities exceeding 30 days, are calculated as a combination of the "real" interest rate and the "revaluation rate. The real spread component of the aggregate net interest margin remained almost unchanged during 2001 compared to The net revaluation interest margin calculated as the TOM interest income divided by the average tolar investments on which TOM rate is applied less the TOM interest divided by the average tolar denominated sources of funds narrowed by 0.49 percentage points, i.e. from 4.16 per cent in 2000 to 3.67 per cent in The drop in the TOM rate from 9.06 per cent on the average annual basis recorded in 2000 to an average 8.61 per cent during 2001 had direct impact on the net interest margin. Due to the fact that the average TOM earning liabilities exceeded the average TOM assets the Bank s net revaluation interest income decreased. The negative effect of the falling TOM rate was further exaggerated by the higher rate at which the term deposits, i.e. deposits over 30 days to maturity grew in comparison to the growth of sight tolar deposits which are not indexed. 3 The revaluation of capital in line with the monthly increase in the consumer price index was compulsory for all Slovenian financial institutions and businesses, until the end of the year The monetary amount of the revaluation was a charge to the income statement and thus reduced the net income available to shareholders. As a result of this action the value of shareholders' funds is increased by the same amount, thus maintaining the value of shareholders' equity at the current purchasing power level. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 17

20 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN F i n a n c i a l R e v i e w Net non-interest income Non-interest income, which include both net fees and commissions as net gains arising from dealing operations, reached 24.7 billion tolars, 34 per cent above the level of the previous year. Net fees and commissions increased by 35.2 per cent to 18.5 billion tolars, and this growth was a key element in the rise in non-interest income. All fee generating items attributable to the core activities, i.e. lending and guarantee issuance fees, fees from international payment services, fees from credit card business, surpassed levels achieved in Fees generated from domestic tolar payments and settlements made notable progress during the past year, due to the payments system reform. The total net non-interest income earned by the Bank was 17.2 billion tolars, up 26.5 per cent over Fee income from the core business remained the most important contributor of non-interest earnings although the net income from dealing in securities recorded a 70.0 per cent growth over the previous year. 18 Nova Ljubljanska banka d.d., Ljubljana Operating expenses Consolidated total operating expenses, including material, services and labour costs and depreciation, rose by 31.4 per cent to 52.5 billion tolars. The Bank s general administrative expenses were 29.3 billion tolars, an increase of 26.8 per cent over The percentage of increase would have been only 16.2 per cent if the daughter banks had been included on a like to like basis. The cost of labour, the most important single cost item for practically every company within the NLB Group, reached 25.7 billion tolars on consolidated basis, up by 27.3 per cent over A significant element of this increase relates to the additional labour costs attributable to the three daughter banks, which were consolidated for the first time in The other important cost items in 2001 continued to be the development projects which included the IT modernization and integration-project Sigma, and a newly launched Data Warehouse project. The growth in electronic banking transaction volumes was resulting in higher telecommunication costs. Costs, related to the introduction of the euro (principally exchange transaction costs) also contributed to the overall increase in operating costs. The rise in labour costs, after adjusting for inflation, was below the volume growth rate. Total costs, as a percentage of average consolidated total assets dropped from 3.72 to 3.61 per cent. Other operating cost levels were in line with our expectations.

21 NLB Group Consolidated Balance Sheet On December 31, 2001 the NLB Group's consolidated total assets were 1,742.4 billion tolars, 49.5 percent above the 2000 year end figure. The Bank's total assets rose by 50.4 to 1,382.3 billion tolars. Key factors influencing the assets growth were those related to customer lending on the asset side of the balance sheet and customer deposits and acquisitions on the liabilities side. The Bank s balance sheet also experienced significant growth in many of the customer related items due to the merger of the three daughter banks and also the consolidation of LHB Bank, Frankfurt, Commercebank, Sarajevo and Tutunska banka, Skopje. F i n a n c i a l R e v i e w Sources of Funds Customer deposits Throughout the NLB Group customer deposits again represented the main source of funding for financing, lending and investment activities. At the Group level customer deposits and borrowings grew by 46.6 per cent to 1,170.5 billion tolars by the 2001 year end. As a result, 67.2 per cent of total consolidated assets were financed from non-bank customer deposits. There was a substantial increase in deposits from retail and corporate customers. Retail deposits again increased its share in the total non-banking customer deposit, from 63.9 per cent as at 31 December 2000 to 66.0 per cent as at the 2001 year end. Retail deposits increased by 54.8 per cent to 733 billion tolars. The mentioned increase in share could be ascribed in particular to the exceptional increase in foreign currency deposits recorded in the last two to three months of the past year, in expectation of the introduction of euro in At the Group level retail foreign currency deposits recorded a 66.1 per cent increase, compared to a 47.7 per cent increase in tolar deposits. Corporate deposits reached 29.5 per cent of non-bank customer deposits. The volume of corporate deposits increased by 41.0 per cent to billion tolars. The level of state deposits continued to fall and accounted for 4.5 per cent of nonbank customer deposits at 2001 year end. The Bank saw a substantial rise in its customer deposit base, mainly due to the consolidation of the daughter banks on 1 October At the 2001 year end customer deposits and borrowings held with the Table 4: The Balance Sheet Structure and Growth - The Group vs. the Bank TOLARS BILLION The Group: Growth over The Bank: Growth over The Bank's in % in % share in % in 2001 Loans to non-banking customers Non-bank customer deposits and borrowings 1, Shareholder s equity Minority interests Total Assets 1, , Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 19

22 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN F i n a n c i a l R e v i e w Bank amounted to billion tolars, up 71.2 per cent over the previous year. Borrowings from banks and subordinated liabilities The Group s high credit ratings and strong long-term relationships with many international banks continue to provide good conditions for generating medium and long-term sources of funds on favourable terms. Borrowings from banks show an 80.9 per cent increase over the 2000 year-end figure. However, most of the increase is attributable to the inclusion, for the first time, of LHB Bank s 113 billion tolars balance sheet figure in the consolidated Group financial accounts. Out Table 5: Long- term Currency Deposit Counterpart Credit Risk Ratings 20 Nova Ljubljanska banka d.d., Ljubljana of the total figure of billion tolars (the balance on 31 December 2001) the Bank contributed a further billion tolars. In November 2001 NLB raised a 100 million euros (22 billion tolars) syndicated loan in the international money market. The proceeds of the loan were partly used for refinancing some more expensive long-term borrowings secured under the NFA foreign debt-rescheduling program dating back to the 1980 s. Another part of the proceeds was used as a long-term funding source for providing favourable currency loans to the corporate clients of both the Bank and some of its domestic banking subsidiaries. In addition a number of bilateral loan agreements with foreign banks were concluded to meet the specific needs of corporate clients for financing in foreign currency. During the past year no new subordinated loans were raised, consequently capital requirement needs were successfully met from internally generated means. Credit rating Further improvements in NLB s credit rating occurred during the year. In July 2001 the FITCH credit rating agency improved its long-term F/X debt credit rating to A-. The announcement by Standard & Poor's in February 2002 to shift the credit outlook from stable to positive was welcomed. The table below shows the Bank s long-term currency debt credit ratings (counterparty risk) assigned by the leading rating agencies and also includes the sovereign credit rating assigned to the Republic of Slovenia. Agency NLB Last Republic of improvement ( ) Slovenia confirmation (c) sovereign rating Standard & Poor's BBB- January, 2001(c) A Moody's Baa2 August, 2000 ( ) A2 FITCH A- July, 2001 ( ) A Capital Intelligence A- November 2000 ( ) A

23 Shareholders` equity and ownership structure At the 2001 year end the Bank s shareholders equity was distributed among 7,682,015 ordinary shares with a nominal price of 2,000 tolars each. The number of shareholders increased from 137 in 2000 to 883, among which percent of equity was held by 10 largest shareowners. On October 1, 2001 the Bank issued 776,894 new shares that were swapped for the shares of Dolenjska banka d.d., Banka Velenje d.d. and Pomurska banka d.d. The structure of the share register can be seen in the table below. Table 6: Largest NLB Shareholders as at 31 December 2001 Own shares In compliance with Slovenian legislation the Bank sold its own shares in 2001, which it had purchased in At 2001 year end the Bank owned 3,944 own shares, in nominal value 7,888,000 tolars, accounting for 0.05 per cent of total shareholders equity. F i n a n c i a l R e v i e w Application of funds Loans and advances to customers Non-banking customer loans recorded a strong increase in the year reaching billion tolars, a rise of 37.5 per cent. As a result of the very rapid increase in customer deposits, particularly in the final two months of the year, investment in securities rose by 61.5 per cent over 2001; the share of customer loans in the Group s consolidated total assets fell from 51.5 to 47.4 per cent. The breakdown of customer loans by business segment remained virtually unchanged over the year. The biggest share in the Group s customer loans to the corporate Shareholder Number of shares % 1 Republic of Slovenia 5,739, Kapitalska druæba d.d. 347, Slovenska odπkodninska druæba d.d. 318, Poteza naloæbe d.o.o. 226, Zavarovalnica Triglav d.d. 86, NFD 1-investicijski sklad d.d. 78, Premogovnik Velenje d.d. 58, Gomar d.d. 53, Zlata moneta II d.d. 46, RTH d.o.o. Trbovlje 42, sector represented 67.6 per cent of total customer loans in Corporate lending increased by 52.2 per cent over the year. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 21

24 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN F i n a n c i a l R e v i e w Loans to retail customers provided through the branch network rose 19.8 per cent and reached 209 billion tolars by the 2001 year end. In absolute terms the highest growth was recorded in the area of long-term lending (maturities exceeding one year). As at 31 December 2001 their balance stood at billion tolars and was up by 26 billion tolars (17.8 per cent) over the previous year. Although lower in absolute terms, the growth of shortterm lending to retail customers reached 30 per cent of the total. Both growth figures indicate that private individuals requirement for Bank financing remained high despite the fact that their borrowing capacity was somewhat suppressed following the peak in term borrowing in 1999, before VAT introduction. The Bank s rate of customer lending was even higher than that of the Group. By the 2001 year end the Bank s total loans to non-banking customers reached billion tolars, an increase of 43.7 percent. Loans to the corporate sector grew by 48.6 per cent and accounted for 63.4 per cent of total customer loans. The Bank loans to retail customers also showed a significant increase. At the end of 2001 they had reached billion tolars, up by 57 billion tolars or 46.5 per cent. The growth in the Bank s lending includes both the organic growth and a contribution from the former daughter banks. 22 Nova Ljubljanska banka d.d., Ljubljana The quality of credit portfolio and provisioning policy The quality of the Group s loan portfolio improved further despite the considerable growth in lending and investments in securities, mainly short-term Treasury bills issued by the Bank of Slovenia and the Ministry of Finance. This demonstrates prudent risk management policies. The Group s risk management policy is further described in the section on pages from 27 to 29 and in the Notes to the Financial Report on pages from 130 to 132. As at 31 December per cent of the Group's customer loans were graded high-quality A and B credit grade, which qualify them to be considered as performing portfolio. At the same time the level of specific provisions (B, C, D, E provisions) has been grown faster than the level of non-performing loans (C, D, E exposures). Consequently the coverage of such loans increased by 0.4 per cent and reached per cent. Investment portfolio An important change in the balance sheet structure was recorded this year as a result of the strong increase in investments in securities and LHB Bank consolidation. The share of investments in securities in the NLB Group s consolidated total assets increased from 29.1 to 31.4 per cent and to 31.6 per cent, in the Bank s balance sheet, up by 4 per centage points. Investments were mainly in risk-free Republic of Slovenia (i.e. Ministry of Finance) and the Bank of Slovenia (the Central Bank) short-term treasury bills and similar securities. Total investments in securities, i.e. investment securities and trading securities, reached billion tolars and were up by 61.5 per cent over the preceding year. Out of the 208 billion tolars absolute increase, 56.2 billion were contributed by LHB Bank on consolidation.

25 Liquidity management Liquidity management is the most important function of treasury departments throughout the NLB Group. The coordination of treasury activities at the Group level was performed by the Group Treasury department, organized within the Bank s Financial Markets and International Division. The treasury is responsible for ensuring that the financial commitments of the individual companies are fulfilled as well as in maintaining sufficient domestic and foreign currency reserves above the minimum requirements set by the Bank of Slovenia. F i n a n c i a l R e v i e w The treasury department supervised many transactions, particularly those that included purchasing of foreign exchange from corporate clients (net exporters of goods and services) and its simultaneous sale to the Bank of Slovenia under the continuing repurchase agreements. These transactions with the Central Bank represented also an important source of tolar shortterm funding for the Bank and other members of the NLB Group. At the same time, more than 50 per cent of all tolar inter-bank placements were transacted among the banks belonging to the NLB Group. The Bank s treasury department also managed a significant portfolio of foreign exchange investments, totalling 304 billion tolars at the 2001 year end. Certificates of Deposit of the Bank of Slovenia in foreign currencies represent over 50 per cent of all foreign exchange (FX) investments, which could be partly explained by the existing monetary regulations. Compared to the previous year the volume of investments in foreign first grade debt securities yielding attractive returns grew significantly in The domestic securities portfolio consisted mainly of Republic of Slovenia government bonds. The active management of this portfolio, within the market limitations, included transferring its smaller part on the trading book and its ultimate sale on the secondary market. These activities went in line with the strategy of helping build and maintain the market for Treasury Bills, approved towards the 2001 year end. Table 7: The Group s Balance Sheet Structured by Contractual Maturity Date (see note 40 on page 78) IN BILLION TOLARS Total Assets Total Liabilities Net Liquidity Gap 2001 % 2000 % 2001 % 2000 % Up to 1 month (179.1) (224.6) 1 month to 3 months (62.3) months to 1 year (96.7) (20.7) 1 year to 5 years Over 5 years Total 1, , , , Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 23

26 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN F i n a n c i a l R e v i e w Key Performance Indicators Performance indicators for 2001 are not directly comparable to those achieved in previous years, due to consolidation effects of the Group and the Bank level. The combination of organic growth and the further consolidation of the NLB Group resulted in a strong increase in the Bank s capital. The Bank`s profitability remains high despite the significant growth in its underlying capital, which is reflected in its improved return on equity. The achieved ROE of 14.9 per cent is one of the highest among Slovenian financial institutions. Table 8: Key Return Ratios 24 Nova Ljubljanska banka d.d., Ljubljana The strong increase in average total assets, which was a combination of the lending and investment activities and the merger of three daughter banks and the consolidation of foreign subsidiaries at 2001 year end, was the reason why the return on average total assets (ROA) fell slightly. Capital adequacy The capital adequacy ratios for 2001 were influenced by the following three factors: the growth of risk adjusted assets, the capital increase due to the influ- The Group The Bank at year end Return on equity (pre-tax) Return on average assets (pre-tax) Table 9: Operational Efficiency % The Group The Bank at year end Cost to income ratio Coverage of cost by fees Operating cost as a % of total assets %

27 ence of the daughter banks at the level of NLB and different consolidation effects at the Group level. Table 10: Capital Adequacy Ratios CAR under Bank of Slovenia regulations at year end The Group The Bank F i n a n c i a l R e v i e w The net effect of these factors resulted in preserving required level of capital adequacy. In accordance with capital management internal policy the Bank and subsidiaries of the Group regularly control, review and calculate the amount of capital and capital adequacy ratio. In order to react immediately on institutional changes or changes of its financial position the amount and structure of capital are planned. On the base of the Group s strategic directives we prepare projections of capital and capital adequacy ratios. NLB Group - Overview and Comparison of the Key Financial Figures Table 11: Financial Highlights of NLB Group Members (Extracted from the consolidated financial accounts prepared under the Slovenian Accounting Standards) % NLB NLB Banka Koroπka Banka LB LB LBS Bank LB Inter- Sum of Group d.d. Domæale banka Zasavje Leasing Hipo New Finanz other Group Group Group York Group members Income statement in the period from to TOLARS MILLION Net interest income 32,862 20,494 1,462 2, ,459 Net non-interest income 44,235 32,618 1,636 1,552 1, , ,683 Pre-tax profit 17,046 12, , ,218 Net Profit 7,323 6, ,571 Growth over % 21.3% 33.5% 54.9% 11.4% 53.5% -93.7% -119% -55.1% - Share in the Group s net profit % 7.2% 9.8% 5.2% 2.4% 0.1% -1.9% 1.3% 21.5% Balance Sheet as at TOLARS BILLION Customer loans Non-banking customer deposits 1, Shareholders equity Total assets 1, , Growth over % 50.4% 35% 19.7% 21.8% 6.4% 13.8% -25.6% 26.2% - Share in the Group s total assets - 73,6% 3.5% 3.2% 2.1% 1.2% 0.5% 2.4% 1.9% 13.4% Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 25

28 A r t C o l l e c t i o n o f N o v a L j u b l j a n s k a b a n k a Janez Bernik Letter 1965 tempera and oil on canvas 110 x 140 cm

29 Group Risk Management The goal of the Group s Risk Management program is to maintain stability and asset quality. The Group achieves this by a disciplined and constant assessment and monitoring of clients and by using the Group s proven and established risk management tools and tests, as described in the IAS Notes to the financial accounts, page 130. Use of these tools improves asset quality, structural liquidity and performance ratios while also providing an early warning signal in order to minimise the Group s exposure to risk. The Group and the Bank, conform with all the control requirements specified by the Bank of Slovenia; in addition the subsidiaries must also comply with the Bank s standards of internal credit risk control, as defined in the contracts which they have already executed or are in the process of execution. The Bank plays a central role applying risk control processes throughout the organisation and works closely with its subsidiaries to prepare credit and market risks policies, set strategies and place limits within the decision making process. Group Credit Risk Management The Group reviews credit risk from three aspects: specific components of risk for each counterparty, portfolio risk, and country risk. Credit risk management includes constantly analysing the loan portfolio and providing credit analyses by considering any adverse issues (both before and after commencement of the contract). The credit portfolio includes loans (to corporate, retail and public sector customers); exposure to other banks and financial institutions; corporate bonds and other credit risk Bank products including guaranties, derivative instruments, etc. The portfolio s quality is analysed by classifying clients into five credit grades (A to E), A being the highest and E the lowest quality credit risk. Migration matrices for the past 28 quarters (1994 to 2001) as well as those based on migrations within the years from 1995 to 2001 show that the quality of the Bank s asset base is strong and stable. Table 12: Average Credit Rating Migration Matrix Weighted with Exposure ( ) From to Rating A Rating B Rating C Rating D Rating E Total exp. Average (tolars million) rating Rating A 98.36% 1.47% 0.12% 0.04% 0.02% 5,542, Rating B 14.94% 80.93% 1.90% 2.02% 0.22% 997, Rating C 0.13% 26.69% 63.10% 8.93% 1.16% 204, Rating D 3.06% 14.56% 14.37% 61.41% 6.60% 146, Rating E 0.01% 0.72% 0.38% 2.57% 96.31% 128, New60.01% 28.74% 4.81% 3.44% 3.00% 528, Withdrawn 66.14% 9.34% 4.31% 3.28% 16.93% 258, The above table also reflects the extent of migration exposure. The computation of average ratings is based on assigning a numerical code to each credit rating grade (A=5, B=4, C=3, D=2, E=1). The average rating indicates the credit quality of the Bank s customers. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 27

30 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN G r o u p R i s k M a n a g e m e n t The following conclusions can be drawn: The major migrations are between grades A and B. There is no significant migration between the groups of performing (A,B) and non-performing (C, D, E) credit exposures. The last two rows in Table 13 show that the credit quality of new clients is higher than that of those clients which, for various reasons (mainly due to paying off the loan or write-off) have been withdrawn from the portfolio. The following table contains the credit rating migration data for 2001 only and shows that it does not differ significantly from the average. Table 13: Credit Rating Migration Matrix Weighted with Exposure for Year Nova Ljubljanska banka d.d., Ljubljana The above cumulative migration matrix confirms the stability of rating migration patterns and thus the stability of the Bank s internal credit rating system. The overall credit quality of the Bank s loan portfolio continues to rise, despite differences in credit quality between various classes of client and variations over time. The comparison between different forms of migration matrices (size of clients, industries etc.) also reflects a healthy diversification across the loan portfolio. All the Bank s subsidiaries in Slovenia apply the same criteria regarding credit grading, limits, quality of collateral, minimum level of provisions and data structure. The cover ratio (provisions (BCDE)/CDE total assets portfolio) is higher than 85 per cent in the Bank and all its Slovenian banking subsidiaries. This is well above the minimum required by the Bank of Slovenia. The Bank s foreign subsidiaries adhere to all local banking requirements. Country risk is managed by applying maximum risk levels appropriate for each country. Assessment of individual risk levels is achieved through reviewing that country s major macroeconomic data, its political situation and also the rating attributed to it by respected international rating agencies. The quality of the Group s portfolio is high, with exposure to clients credit rated A and B reaching 94.6 per cent of the total asset portfolio. The coverage of endangered, impaired or non-performing loans and From to Rating A Rating B Rating C Rating D Rating E Total exp. Average (tolars million) rating Rating A 98.49% 1.46% 0.04% 0.02% 0.00% 1,166, Rating B 19.44% 78.64% 1.43% 0.43% 0.07% 208, Rating C 0.10% 10.83% 64.79% 22.43% 1.85% 14, Rating D 0.00% 2.22% 8.85% 80.19% 8.74% 14, Rating E 0.00% 0.00% 0.00% 1.70% 98.30% 19, New67.55% 19.08% 6.21% 5.84% 1.32% 150, Withdrawn 75.21% 10.42% 3.07% 2.32% 8.98% 64, other credit risk exposures towards clients rated as C, D and E credit rate with specific provisions stood at 86 per cent at 2001 year end.

31 Group market risks management Basic market risks that the Group is facing include foreign exchange, interest rate, securities portfolio and liquidity risks. These risks are analysed and managed on three levels. First, business departments are responsible for managing market risks within their areas of authority determined by each Bank s Board of Directors. Second, at the Bank level, risks are analysed and managed according to the Bank s internal policies and the Bank of Slovenia standards. Third, market risks exposure of each bank and of the Group as a whole, is controlled by the Risk Management Centre of the Bank. Foreign exchange risks Foreign exchange risks result from the Group's FX activities in the existing macro-economic environment (savings in foreign currencies, export financing, intervening in capital flows, borrowing abroad and financing corporate activity in domestic currency). FX risk management calls for a daily revaluation of the Group s FX portfolio on the basis of the historical trend in market prices and their correlation over the past years (Value at Risk methodology). The resulting distribution of profits and losses is used to determine the possible losses in the value of the FX portfolio as a result of market changes. Interest rate risks The measurement of interest rate risk exposure means quantifying the potential loss (in terms of cash flow, P&L and equity market value) of a position resulting from an adverse interest rate change. The Bank and its subsidiaries in Slovenia use gap methodology and duration to assess risk, while its foreign subsidiaries use their own models, applying local scenarios for interest rate movements. G r o u p R i s k M a n a g e m e n t Structural liquidity The Group s liquidity situation should not be viewed solely from the liability side as a set of activities for meeting the required cash outflows. Therefore, at the Group level, we are planning to implement the same methodology of measuring and determining structural liquidity as the Bank. This includes using different ratios such as liquid securities/total assets, asset quality structure, longterm loans/total loans, loan disbursements/loan repayments, net liquid assets (difference between liquid assets and volatile liabilities). Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 29

32 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Business Review Our solid financial results reflect the contribution from all areas across the Group and capitalise on our core competencies in retail and corporate banking and corporate finance both in Slovenia and overseas. These areas are described below. Retail and E-Banking Throughout the year the Group has relentlessly pursued a policy of improving service levels and product offering to its retail customers across its branch network. A personal banking approach The Group s network of 242 branches throughout Slovenia (including Banka Celje) remains one of its key competitive advantages. Nevertheless, a reorganisation was implemented in 2001 aimed at increasing efficiency and quality of service and securing cost reductions. The first results have been rationalisations in certain high branch density regions and the opening of new branches, where the branch network was weak. The branch network offers a range of banking and other financial products to different types of customers - individual, corporate and sole traders, with special emphasis on a personal approach and the provision of advice where required. The branch network also provides access to certain investment banking services such as buying or selling of securities. During the year we created specific products and services for different segments of our market. At the top end we established the High Net Worth Individuals segment with specially developed services tailored to their specific requirements. For the young people s segment we established Toli, First and Student accounts. We also designed special automatic teller machines 30 Nova Ljubljanska banka d.d., Ljubljana (ATMs) called Tolimat for our youngest customers, because we want to introduce them to banking in an educational manner. We have in-store-banking outlets in the largest shopping centres in Ljubljana, Maribor, Ptuj, Nova Gorica and Jesenice, where we actively market modern distribution channels and offer non-cash transaction and advisory services. Constant core business growth At the close of 2001 the Group had more than 630,000 current accounts, 8 per cent more than in Favourable growth of funds in national and foreign currency continued. We registered a larger inflow of new funds than the previous year, due to the exchange of national currencies for the euro. For the third time the Group successfully participated in the Government s National Saving Scheme where it achieved a 52 per cent market share in concluded contracts. We promoted a number of different kinds of loans - personal, long-term home, mortgage and bridge. As a new product, we offered qualifying customers unsecured personal loans. The majority of investments for individuals are financed through long-term loans, both personal and mortgage/home loans. We launched new cards, such as International BA/Maestro and new partnership cards - Renault Karanta Initiale, Kompas Eurocard. The number of new card issues during the year slowed to just over one million. BA/Maestro debit cards accounted for 78 per cent, with Karanta cards at 11 per cent, Eurocard at 10 per cent and Visa with 1 per cent. The Group has a 53 per cent market share in all banking debit cards. The value of card transactions grew during the year, the biggest growth (40 per cent) was recorded for BA/Maestro, which replaced banking cheques. The Group increased the number of Point Of Sale terminals by 23 per cent and at the end of 2001 had over 5,400 installations.

33 Modern distribution channels The number of users, private and corporate, as well as the number and value of transactions through modern distribution channels, is growing year after year. The Group offers its customers a range of options: Proklik electronic banking is for corporate clients and sole traders who were also offered Proklik Plus, which provides internet access. Both allow domestic and foreign payments. Users of Proklik and Proklik Plus made over 3.3 million transactions. Klik, our internet banking service, is designed for individual users and recorded over one million transactions. Teledom, our telephone banking service, is designed for individual users and sole traders and has been operating for several years, providing automatic telephone response, mobile banking with SMS messages and WAP. The Group s 487 ATMs account for nearly half the ATMs in the Slovenian network system. ATMs support cash and non-cash transactions and other inquiries. The majority of ATMs allow cash withdrawals using foreign credit cards. In 2001 we installed our first drivethrough ATM in Slovenia. The Group achieved a 52 per cent market share in electronic banking for private customers and 47 per cent share in electronic banking for corporate customers and sole traders. The telephone banking market share was 77 per cent and the use of Group s ATMs represents a 54 per cent share. The Group expects its market shares for ATMs and electronic banking to grow further. B u s i n e s s R e v i e w Customer satisfaction Research among private customers was carried out for the third successive year and for the first time was extended to corporate clients. The results show general customer satisfaction but also reveal opportunities for improving the quality of our customer relationship, range of services and products on offer and our pricing policy. The results show that both private and corporate segments are mainly satisfied with the personal approach of the Group s employees, including their discretion, reliability and accuracy. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 31

34 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN B u s i n e s s R e v i e w Corporate Banking Preserving and improving quality, range of services and customer approach The Group has continued to enhance both the range and the quality of services on offer to its corporate customers through a combination of its expanding network in Slovenia and abroad, modern distribution channels, specialised Group companies and business cooperation with domestic and foreign financial institutions. To meet the ever changing, and ever more sophisticated, client requirements of medium-to-large corporate clients and financial institutions, we offer a sophisticated mix of financial services, which we continually seek to develop. We have improved our system of account management, re-organised our customer custody, redefined strategically important customers and implemented re-designed standards for the management of business relationships. Decentralisation of services for small-medium size enterprises ( SME ) and sole traders brought the offer closer to existing and potential customers. Our business advisory function is growing and is helping to build strong partnerships with our SME and sole trader customers, we advise many of them in the development of their business strategy and the more formal business plan. We have also established cooperation with the government s Small business development centre. 32 Nova Ljubljanska banka d.d., Ljubljana Payments migration of corporate customers in NLB The Group, through its payments system offered corporate clients foreign payments and cash management services. By the end of 2001 the Group had secured a 47 per cent share of the market with more than 16,500 business accounts. We offer two forms of electronic banking - Proklik and Proklik Plus. The advantage of electronic banking is its favourable pricing, especially for internal payments among Group customers, instant on-line access, and direct control over accounts and transactions. We expect internal payments to reach 60 per cent of all payments by the end of the migration process. We continue to offer all traditional products and services for cash and non-cash transactions including safe deposit boxes in almost all branches for both corporate clients and sole traders. The promotion of electronic banking has enabled us to secure 55 per cent of electronic banking users among all migrated accounts. Advanced growth of investment activity Despite the high growth of investments in 2001, we managed to hold and even improve our credit portfolio structure by grade of claims. The demand for long-term investment funds grew strongly, especially in the field of infrastructure (roads, railways and telecommunications), and was also reflected in the growth of long-term domestic and foreign currency loans to corporations. We financed some large projects ourselves and also through leading loan syndications. For the first time NLB lead managed loan syndications with foreign banks, initially with Sumitomo Mitsui Banking Corporation and West LB, and then with Westdeutsche Landesbank Girozentrale. In 2001 we supported our corporate clients in foreign markets, especially in Central and Southeast Europe, with a range of services - securities, mergers and acquisitions, trade finance. International and Trade Finance NLB operates internationally through a network of representative offices located in major financial centres including New York, London, Frankfurt, Milan and in the capital cities of countries which are important trading partners of Slovenia - Moscow, Prague and Budapest. In 2001 representative offices were opened in Warsaw and Belgrade and closed in Paris and Skopje. NLB maintains its direct presence abroad through its branch in Triest, subsidiaries in New York, Prague, Sarajevo and Zurich, affiliates in Frankfurt and Vienna and through capital investment in Skopje.

35 Over the years, NLB has built strong business relationships with multilateral financial institutions, including the World Bank Group, European Bank for Reconstruction and Development, European Investment Bank, InterAmerican Development Bank, Institute of International Finance and other leading supranational organisations. NLB is also a member of several national and international associations as well as a founding member of the Mediterranean Bank Network consisting of 11 leading banks from Mediterranean countries. Principal activities of the network are linked to exchange of trade, investments and information. International payments In 2001 NLB maintained a correspondent relationship network of more than 1,300 banks in 134 countries, which enabled it to execute efficiently international payments and other forms of trade finance. With these banks we held 97 accounts in foreign currency ( nostro accounts ), whereas the number of foreign banks' accounts in Slovenian tolars or in foreign currency maintained with NLB totalled 319 ( loro accounts ). Compared to previous years the number of these accounts dropped considerably, principally due to the trend in bank mergers and the introduction of the euro. From the point of view of creating non-interest bearing revenues as well as strengthening the Bank s competitiveness, the area of international payments has remained one of NLB's key activities. Compared to the previous year, the total volume of international payments grew by 15 per cent to 8.6 billion euros. Inward remittances were up by 14 per cent, while outgoing payments totalled 3.9 billion euros, a growth of 15 per cent over The share of EMU currencies or euros in the total volume of international payments accounted 72 per cent, followed by US dollar with 19 per cent and others. B u s i n e s s R e v i e w Export financing Trade finance related services include various forms of buyer's credits, forfaiting and arranging of bank-tobank loans and loans to financial organisations as well as providing insurance for trade related business through confirming letters of credit and letters of guarantee. The major share of export financing and insurance facilities provided was to support Slovenian exports to developing countries and emerging markets. Special attention has been paid to Slovenia's major trading partners, CEFTA countries, Croatia, Bosnia and Herzegovina, Macedonia, FR Yugoslavia and the Russian Federation as well as countries in the Middle East and Turkey which are important target markets for Slovenian exports. Export-credit financing and insurance facilities were provided in co-operation with the Slovene Export Credit Insurance Agency ( SID ). One of the bigger transactions in 2001 was financing of the Russian buyer of Slovenian equipment through the Russian bank with insurance provided by the SID in the amount of 14 million euros. An important part of the financing activities offered was also the extension of loans to Croatian companies for the renewal of tourist facilities. In 2001 NLB's aggregate volume of export finance transactions including forfaiting reached 82 million euros. Trade finance By the end of 2001 outstanding foreign exchange guarantees reached 435 million Euros, of which net newly issued guarantees rose by 71 per cent to 245 million Euros. A significant increase in foreign exchange guarantee business is related to the financing of projects in a number of areas including telecommunications, highway construction and electricity generation. In the year 1,461 letters of credit were issued with a total value 16 per cent above the previous year. This growth is due to the expansion of trade-related services such as buyers credits, bank to bank credits, forfaiting, confirmation, assignment of proceeds and transfers, each of which is dependent on letters of credit as part of its integrated offer. Volumes of clearing and settlement of foreign cheques increased by 5 per cent in the last months of 2001, however as NLB has reached saturation level in the domestic market it will focus expansion of its Cash Letter Service outside Slovenia, particularly in Bosnia and Herzegovina, Macedonia and FR Yugoslavia. As the agent for American Express Travellers Cheques, NLB conducted a promotion to enhance sales and as a consequence won a special award by AMEX for achieving the best sales results in Slovenia. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 33

36 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN B u s i n e s s R e v i e w Investment Banking Corporate Finance NLB offers financial and privatisation advisory services to its clients both domestically and internationally. NLB commenced to play an active role on the securities primary market through two private placement debt issues in amount of 28.6 million euros. NLB continued to develop its advisory service capabilities, mainly in the field of arranging financing for investment projects, realisation and privatisation activities. Together with Nomura Inc., NLB successfully arranged a 10 million euros private shares placement for Hermes Softlab, the largest software development company in Slovenia. One of the largest projects in the primary market was the issue of a 40 million euros BTC bond underwritten by NLB. Organising syndicated loans represents an important source of fees. A big increase in syndicated loans was for the financing of large development projects for Slovenia s leading corporations including Telekom Slovenije, Slovenian Railways, Slovenian Highway and Road Construction company DARS, Istrabenz and Mobitel, totalling 598 million euros. Some of the projects were arranged in cooperation with foreign investors and commercial banks including Sumitomo and West LB. NLB and CEB (Council of Europe Development Bank) reached an agreement for the financing of a building project for retirement homes in Slovenia totalling 5.4 million euros, to be realised during NLB has access to favourable funding facilities also with the European Bank for Reconstruction and Development (EBRD) within the framework of EBRD programme for the financing of medium- and small-scale businesses. In the field of privatisation advisory services, NLB successfully co-operated with an international audit firm preparing for the privatisation of energy supply companies in Slovenia. 34 Nova Ljubljanska banka d.d., Ljubljana Securities trading Securities trading services include local and foreign primary and secondary securities markets. NLB established trading operations on the ex- Yugoslavia markets through several business partners thus enabling domestic and foreign clients securities investments in the entire region. The recent abolition of restrictions on foreign portfolio investments, imposed in 1997, resulted in an increase in foreign equity trading. This positive legislative environment increased sovereign international country rating and the improved ratings for several local financial institutions contributed to increased demand for bond over equity trading by domestic and foreign investors. Portfolio management Significant progress has been achieved in the development of our client-based asset management service. Our approach is based on a global perspective with more than half of the portfolios under management being in foreign securities from major international capital markets. Standardised portfolios and competitive pricing are advantages offered to our clients, enabling the asset management service to grow in importance on the domestic market. Custody services Assets under custody, invested on both domestic and foreign markets, have been constantly increasing, achieving an annual growth of 23.8 per cent. Institutional investors from neighbouring countries were the most active players on the domestic market, while Slovenian insurance companies had a leading role on foreign markets. Bonds represent over 90 per cent of all investments. As the first Slovenian bank NLB introduced a credit line to foreign investors as new value added custody.

37 Analytical support NLB s competitive advantage in investment banking is based on its strong analytical and research capabilities, linked to its intimate knowledge of Slovenian companies and their management boards. NLB also undertakes valuations of securities, and on a selective basis, some consulting services. Human Resources Management The average number of employees during the year was 3,201, with almost 4,000 at the end of the year, including 1,157 from the daughter banks who joined the Bank in October. As the Bank believes in the importance of training, the level of investment has increased by 5 per cent in the past year, which goes towards further strengthening our internal training resources via the Bank s Educational Centre which ran over 120 programmes of which 46 were newly introduced; and selective external courses both in Slovenia and internationally. Resourcing is of key importance for any organization, and especially so for a rapidly growing financial institution that has to achieve international competitiveness. The Human Resource function leads this key activity by ensuring that the Bank is well positioned to the external market as a quality employer, that the internal environment is at the cutting edge, and that the terms and conditions are commensurate with best practice. Training, recruitment, retention, internal attitude research, programme development and implementation, as well as HR administration and record keeping are the main functions of HR, all driven to help the Bank achieve recognition not only as one of the largest employer in the financial services sector, but as the best employer, with world class standards. B u s i n e s s R e v i e w Information Technology Support The impact and a potential of information technology is taken into consideration as integrated part of NLB s decision making process. The substantial investment in information technology is commencing to deliver tangible results. One of these results was the first step in the implementation of a new integrated banking transactional system, purchased and customized under the Sigma project. The success of this project was predicated on the effective development of interfaces, data migration and the supporting multiple computer environments. Internet banking, based on a PKI security infrastructure was enhanced with new functionalities for individual and corporate customers. A new data-warehouse project was started as a universal response to different data requirements of several departments within the Bank. Close cooperation between IT departments of banks within the Group in last years has contributed to smooth integration of three merged banks in autumn Complete integration of information systems is due to be completed by year end The modernization of the distributed systems infrastructure (network servers and work stations) in NLB was completed, what enabled important functionalities. Investments in the central computer centre have significantly improved the level of physical security. Backup central computer and storage systems were procured and will be installed in the refurbished backup centre premises in the first quarter of Private fiber-optical communication ring was constructed, connecting main NLB buildings in Ljubljana. Efforts invested in process reengineering and documentation under the NLB-ISO 9001/TickIT project were rewarded by achieving the ISO certification. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 35

38 A r t C o l l e c t i o n o f N o v a L j u b l j a n s k a b a n k a Stane Kregar The Arrogant Philosopher 1966 oil on canvas 65 x 119 cm

39 Economic Environment By Prof. Dr. Franjo tiblar, Chief Economist, NLB The Slovenian economy performed better than predicted in 2001 with the current account almost in balance for the first time since 1997; inflation was down to 7 per cent at the year end, GDP growth a little above 3 per cent, and unemployment remained close to 7 per cent. Slovenia experienced some deceleration in its rate of growth in 2001, although less intensively than in most developed economies. Table 14: Slovenia - Main macroeconomic indicators; (Area: square km; population: 2 million; GDP 20 billion USD) Sustaining Growth in 2001 Growth continued to be export led with components of domestic final demand decelerating. Personal consumption fell due to slower growth of disposable income and higher indebtedness of the population from the 1999 consumption stampede, which was caused by the anticipated effect of introducing VAT; and business fixed investment was also lower due to imported pessimistic economic climate. As a result of lower activity in the global economy, Slovene exports as the driver of growth began to slow, especially in the last quarter of the year, and this led to the overall GDP rate decreasing to 3.0 per cent by the year-end. Imports also fell, resulting in an improvement in the balance of trade deficit. Industrial production in Slovenia increased by 2.9 per cent (6.2 per cent in 2000), construction fell by 0.9 per cent (0.4 per cent in 2000), while tourist overnights increased by 6 per cent (11 per cent in 2000), transport of goods increased by 1.2 per cent (7.1 per cent in 2000), transport of persons was lower by 12.9 per cent (10.2 per cent in 2000) as use of private cars increasingly GDP growth (per cent) Inflation average (per cent) Balance of Trade (million dollars) -1, ,060-1,537-1, Current Account (million dollars) Balance, Forex Market (million euros) Unemployment rate (per cent) Budget deficit/gdp (per cent) Sources: National Statistical Office, Bank of Slovenia, Institute of Macroeconomic Analysis and Development, EIPF replaced public transport. The active working population increased by 1.8 per cent, while the rate of unemployment held steady. Costs of living, the official measure of inflation, averaged 7.0 per cent, while industrial prices increased on average by 7.5 per cent. Wages increased by 13.2 per cent, that is 4.4 per cent in real terms with the public sector showing the largest rises. Slovenia s current account deficit declined significantly in 2001 due to its smaller trade deficit. With exports growing by 6 per cent and imports by only 0.3 per cent, the trade deficit declined from USD 1,384 million in 2000 to USD 893 million in 2001, which is the best result since During the year a strong inflow of foreign exchange was seen due to increased Foreign Direct Investment of USD 442 million as well as the anticipatory effects of the introduction of euro. As a result, Slovenia experienced the second largest yearly surplus (net supply) on foreign exchange market since The nominal exchange rate of the tolar against the euro lagged by less than by 2.5 per centage points behind the domestic average inflation rate; this was largely due to intervention by the Central Bank. External debt increased in 2001 by USD 494 million to USD 6,711 million, while foreign exchange reserves increased even more, by USD 1,376 million to USD 5,738 million. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 37

40 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN E c o n o m i c E n v i r o n m e n t Monetary policy was less restrictive than in preceding years. M1 grew by 17 per cent, bank credits by 16 per cent, while M3, the official Central Bank target, grew by 23.7 per cent. Although monetary expansion has not yet affected price inflation there is the risk of further increase of wages, prices and other expenditure in the public sector in the future. The large increase in primary money was offset by conservative lending of banks (under deceleration of activity), increased financial savings of the population, and by new instruments of the Central Bank. The Government is attempting to keep the nominal goal of the deficit below 3 per cent of GDP (one of the Maastricht criteria) by increasing revenues (and sale of state owned property, enterprises, and banks) together with decreasing expenditures. One of the measures in that direction was to increase the rates of VAT from 18 per cent to 19 per cent and from 8 per cent to 8.5 per cent at the beginning of In September 2001, Central Government Debt was 1,148 billion tolars, which is 10 per cent more than a year ago and accounts for 25.3 per cent of 2001 GDP (but well below the 38 Nova Ljubljanska banka d.d., Ljubljana Maastricht limit of 60 per cent). Increased tax burden and slight appreciation of domestic currency dampened export competitiveness, as they could not be countered by productivity growth (relative to growth in other countries). Interest rates declined significantly both in nominal and real terms. Both active and passive declared interest rates on the tolar declined by almost one sixth to per cent (active bank rates), and 9-12 per cent (passive bank rates) with average interest margin falling to 3.6 percentage points. At the beginning of 2002, the trend of declining interest rates remains unchanged. It is reinforced by announcing the elimination of the indexation clause for deposits and loans with maturity of up to one year, which will be enacted in July Despite the strong performance of the domestic stock exchange, indirect financing of the economy through bank credit has remained dominant over direct financing through capital markets. The size of banking assets is still almost three times the market capitalization of the stock exchange and turnover on the stock exchange in 2001 was 22 per cent of the volume of extended bank loans at the end of the year. Net increase in banking loans in 2001 was, however, only 62 per cent of the turnover of the stock exchange. In 2001, banking assets increased by 21.3 per cent to 3,986 billion tolars (almost 88 per cent of 2001 GDP). The banking sector s performance was satisfactory with only 4 banks incurring losses (3 were foreign owned banks). Increased competition is illustrated by the rapidly decreasing interest margin, which fell from 4.0 per cent in 2000 to 3.1 per cent. At the same time, the market capitalisation of the Ljubljana Stock Exchange increased by 23.8 per cent to 1,380 billion tolars (23.4 per cent in 2000) to exceed a 30 per cent share of GDP. Turnover increased by 79 billion tolars or 29.3 per cent to 349 billion tolars (1.3 per cent in 2000), which is 7.7 per cent of GDP in The aggregate stock exchange index, which remained roughly unchanged in 2000, increased by 19 per cent in The index reached 2,159 points in December and continued to rise to 2,450 points by mid-march 2002.

41 Institutional Changes Slovenia is a front-runner among the European Union (EU) transition countries not only measured by its level of economic growth (71 per cent of the EU average) but also through closing more chapters of the Accession Treaty and with the fewer financial problems than any other candidate country at this time. There are likely to be few obstacles with the remaining negotiations, which relate principally to agriculture (small size with prices already above EU average) and regional structural funds for under-developed regions (not qualified for them). Negotiations are due to be completed by the end of 2002 with membership targeted for Slovenia s government is expected to remain in power for its whole mandate until 2004 providing continuity into the planned membership of the EU. Privatisation of state enterprises and banks remain high on the government s agenda, and will also be facilitated by the likely continuity of the government to the end of its mandate. Economies of the Region The international focus of the Group is Central and Eastern Europe, with special emphasis on Southeast Europe. Following the cessation of military activities in the Balkans, there was strong domestic demand and capacity growth in that region and as a result, GDP growth in 2001 averaged 3 to 4 per cent. In Southeast European countries the average GDP growth rate was 4 per cent, slightly lower than in Albania, Bulgaria, Croatia and Romania achieved faster growth in 2001, while Bosnia and Herzegovina, Yugoslavia and Macedonia slowed. Inflation rates declined throughout Southeast Europe to below 10 per cent with exception of Romania and Yugoslavia. Unemployment rates remained very high (around 24 per cent on average) and the current account deteriorated significantly towards a deficit of 8 per cent of GDP on average (only Bosnia and Herzegovina improved). Inward FDIs and receipts from tourism were helpful but could not cover the trade deficit. E c o n o m i c E n v i r o n m e n t In 2002, GDP growth in the Southeast subregion is expected to be between 3 per cent and 4 per cent except for Macedonia, where stagnation will be an achievement considering the political situation. Slight improvement to 4 per cent average growth is expected for Inflation is expected to calm down further in 2002, especially in Romania and Yugoslavia, which have the highest rates. The employment picture is unlikely to improve in 2002, moderate decrease of unemployment rates are expected for Similarly, small declines in the current account deficit are expected for most countries in Countries in the territory of former Yugoslavia expect positive capacity growth, but severe problems are still present: Croatia has a large external deficit (with appreciating domestic currency), Macedonia underwent an economic setback fuelled by international conflict, Bosnia and Herzegovina is trying to develop its market economy but will need to be dependent on foreign direct financial support. Yugoslavia needs to solve its structural problems and implement further economic transformation. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 39

42 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Organisation 1 April 2002 Management MANAGEMENT BOARD Marko VoljË, President & Chief Executive Officer Boris Zakrajπek, Deputy President & Deputy CEO Alojz Jamnik, Deputy President & Deputy CEO Franci Borsan, Executive Director, Dolenjska Region Milan Martin Cvikl, Executive Director, Finance Nevenka»rnko, Executive Director, Strategic & Business Development Joæe Gaπper FilipliË, Executive Director, Corporate Markets Andrej Hazabent, Executive Director, Financial Markets & International Marjan JeriË, Executive Director, Velenje Region Tomaæ Koπir, Executive Director, Retail Banking Milan MariniË, Executive Director, Group Capital Investments & Management Support Danijel Omahen, Executive Director, Payment Systems & Business Support Janez Maksimiljan SenËar, Executive Director, Group Business Management & Control Viktor bül, Executive Director, Pomurje Region Andrej TavËar, Executive Director, Informatics Aljoπa UrπiË, Executive Director, Primorska Region 40 Nova Ljubljanska banka d.d., Ljubljana Ivan PotoËnik, Senior Executive, Intensive Care & Recovery Franjo tiblar, Prof. Dr., Chief Economist Anton Ribnikar, Head of Institute for Banking & Financial Law Josip koberne, General Manager, Risk Management Metka Türk, Chief Internal Auditor, Internal Audit Group Capital Investments & Management Support Division Savo Dinjaπki, General Manager, Corporate & Marketing Communications Marija Koritnik, General Manager, Capital Investments Joæe Kostanjevec, General Manager, Technical Services Daπa Zupan, General Manager, Human Resources Group Business Management & Control Division Maruπa Kosovinc Dragonja, Assistant Executive Director, Group Business Management Pavel Kobler, General Manager, Group Business Control Strategic & Business Development Division Irena»uk, General Manager, Marketing Management Duπan Gale, General Manager, Technology & Organisation and Director of Project SIGMA Katarina KnapiË, General Manager, Strategic Planning Aljoπa Æonta, General Manager, E-Banking & Telebanking Finance Division Vanja JurjeviË, General Manager, Financial Accounting Ranko NikoliÊ, General Manager, Management Accounting Polona Suhadolnik, General Manager, Accounts Administration & Payrolls Payment Systems & Business Support Division Ana Bandelj, General Manager, Retail Banking Administration Irena Dolinar, General Manager, Domestic Payments Metka Koπmerlj, General Manager, Corporate Banking Administration Branko Pahor, General Manager, Cash Services Helena Svoljπak, General Manager, International Payments Alenka Trop, General Manager, Trade Finance Processing

43 Division for Informatics Matjaæ PogaËar, General Manager, Informatics - Distributed Systems Andrej RazdrtiË, General Manager, Informatics - Applications Zvonko Sitar, General Manager, Informatics - Operations Financial Markets & International Division Zoran Bizjak, General Manager, Corporate Finance Branko Kobal, General Manager, Treasury Miro Medveπek, General Manager, Investment Banking Andreja Zajπek, General Manager, Treasury & Investment Banking Support Doroteja Æerjal, General Manager, Financial Institutions and International O r g a n i s a t i o n 1 A p r i l Corporate Markets Division Marjana Konπtantin, Assistant Executive Director Marko Herzog, General Manager, State Organisation, Financial Institutions & Utilities Tomaæ Jezerc, General Manager, Telecommunication, Technology & End Products Industries Bojan Slapnik, General Manager, Investment Evaluation Matjaæ Zavirπek, General Manager, Construction & Processing Industries Retail Banking Division Elizabeta Filipi, Assistant Executive Director Jelka Fireder, General Manager, Area Branch ViË - Notranjska Janko Gedrih, General Manager, Area Branch Kranj Milena Hribar, General Manager, Area Branch Moste Ivan Pirc, General Manager, Area Branch Kamnik Marija Planinc, General Manager, Area Branch Ptuj Borut Rataj, General Manager, Area Branch Maribor Dragica Slatnar, General Manager, Area Branch Ljubljana - Center Marija Triplat, General Manager, Area Branch iπka - Beæigrad Boris Zavrπnik, General Manager, Area Branch Celje Igor Ævokelj, General Manager, Area Branch Mestna hranilnica ljubljanska Dolenjska Regional Division Marija AbramoviË, General Manager, Area Branch KoËevje Dejan Avsec, Dr., General Manager, Area Branch Posavje - Krπko Andrej Blaæon, General Manager, Payment Systems - Dolenjska Miroslav Doltar, General Manager, Area Branch Dolenjska - Novo mesto Milena Dular, General Manager, Business Support - Dolenjska Joæe Jevnikar, General Manager, General Services - Dolenjska Joæe Mrzljak, General Manager, Area Branch Bela krajina -»rnomelj Pomurje Regional Division Zorica Kerec, Deputy Executive Director Lidija Gumilar, General Manager, General Services - Pomurje Cvetka Ivπek, General Manager, Retail Banking - Pomurje Breda Moπmondor, General Manager, Business Support - Pomurje Sandi Toplak, General Manager, Corporate Banking - Pomurje Velenje Regional Division Lidija Dovπak, Deputy Executive Director Boæa Cajner, General Manager, Business Support - Velenje Kristina Kaligaro, General Manager, Corporate Banking - Velenje Marija Plazar, General Manager, Retail Banking - Velenje SreËko Praznik, General Manager, General Services - Velenje Primorska Regional Division Andrej Bratoæ, General Manager, Area Branch Triest Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 41

44 O r g a n i s a t i o n 1 A p r i l Organisational Chart of Nova Ljubljanska banka Management Board Chief Economist Internal Audit Risk Management Institute for Banking & Financal Law Intensive Care & Recovery Divisions Departments, Area Branches Group Capital Investments & Management Support Capital Investments Corporate & Marketing Communications Human Resources Tehnical Services Group Business Management & Control Group Business Control Group Business Management Bank & Other Financal Institutions Abroad Companies & Financal Institutions in Slovenia Subsidiary Banks in Slovenia Strategic & Business Development E-Banking & Telebanking Organisation & Technology Marketing Management Strategic Planning Finance Accounts Administration & Payrolls Financal Accounting Management Accounting Payment System & Business Support Cash Services Corporate Banking Administration Domestic Payments International Payments Retail banking Administration Trade Finance Processing Informatics Informatics - Applications Informatics - Distributed Systems Informatics - Operations Financal Markets & International Corporate Finance Financal Institutions & International Investment Banking Treasury Treasury & Investment Banking Support Corporate Markets Construction & Processing Industries Investment Evaluation State Organisation, Financal Institutions & Utilities Telecommunication, Technology & End Products Industries Retail Banking Area Branch Ljubljana - Center Area Branch Moste Area Branch ViË - Notranjska Area Branch Kamnik Area Branch Maribor Area Branch Mestna hranilnica ljubljanska Area Branch iπka - Beæigrad Area Branch Celje Area Branch Kranj Area Branch Ptuj Dolenjska Region Area Branch Bela krajina -»rnomelj Area Branch Dolenjska - Novo mesto Area Branch KoËevje Area Branch Posavje - Krπko Business Support - Dolenjska General Services - Dolenjska Payment Systems - Dolenjska Pomurje Region Business Support - Pomurje Corporate Banking - Pomurje General Services - Pomurje Retail Banking - Pomurje Velenje Region Business Support - Velenje Corporate Banking - Velenje General Services - Velenje Retail Banking - Velenje Primorska Region Area Branch Koper Area Branch Nova Gorica Area Branch Triest 42 Nova Ljubljanska banka d.d., Ljubljana

45 Nova Ljubljanska banka Group 36.6% 40.0% 40.0% 41.3% 36.7% 100.0% 100.0% 30.0% 100.0% 100.0% 84.0% 100.0% 90.0% Nova Ljubljanska banka d.d. Ljubljana Subsidiaries and Associated Banks and Companies in Slovenia Banka Celje d.d. Celje Banka Domæale d.d. Domæale Banka Zasavje d.d. Trbovlje Koroπka banka d.d. Slovenj Gradec Bankart d.o.o. Ljubljana *39.4% Feniks d.o.o. Murska Sobota Fit Leasing d.o.o. Velenje LB Factors d.d. Ljubljana *100.0% LB Hipo d.o.o. Ljubljana LB Leasing d.o.o. Ljubljana LB Maksima d.o.o. Ljubljana *100.0% Prospera plus d.o.o. Ljubljana Real d.o.o. Novo mesto Skupna pokojninska druæba d.d. 26.9% Ljubljana % NLB shareholding (direct) *% Joint shareholding of the Group members (including NLB) 28.5% 100.0% Subsidiaries and Associated Banks and Companies Abroad Adria Bank AG Vienna LBS Bank - New York LHB Internationale Handelsbank AG 50.4% Frankfurt/Main 18.5% 100.0% O r g a n i s a t i o n 1 A p r i l Tutunska banka a.d. Skopje *53.1% LB InterFinanz AG Zurich Commercebank d.d. Sarajevo *67.6% Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 43

46 A r t C o l l e c t i o n o f N o v a L j u b l j a n s k a b a n k a Bojan Gorenec Hymnical Anthropometry 1997 alkyd on canvas 188 x 210 cm

47 Nova Ljubljanska banka d.d., Ljubljana Audited Consolidated Financial Statements for NLB Group under Slovenian Accounting Standards AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN

48 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Audit Report To the Management and the Supervisory Board of Nova Ljubljanska banka d.d., Ljubljana We have audited the accompanying consolidated financial statements of Nova Ljubljanska Banka d.d., Ljubljana and its subsidiaries (NLB Group), consisting of the consolidated balance sheet as of 31 December 2001, the consolidated profit and loss statement and the consolidated cash flow statement for the year then ended. These financial statements are the responsibility of the managing board of the Bank. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the fundamental auditing principles and the International Auditing Standards. Those principles and standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the consolidated financial statements referred to above give a true and fair view of the financial position of the NLB Group as of 31 December 2001, the results of its operations, and the cash flows for the year then ended, in conformity with the Slovenian Accounting Standards issued by Slovenian Institute of Auditors. Vera Menard, BSc.Ec. Partner and Certified Auditor Ljubljana, 12 April Nova Ljubljanska banka d.d., Ljubljana KPMG SLOVENIJA, podjetje za revidiranje in poslovno svetovanje, d.o.o. Andrej Korinπek, BSc.Ec. Managing Director and Certified Auditor

49 Consolidated Income Statement C o n s o l i d a t e d I n c o m e S t a t e m e n t Notes Year 2001 Year 2000 Interest and similar income 5 72,705,502 56,258,448 Interest and similar expense 5 (39,843,803) (31,015,747) Net interest and similar income 32,861,699 25,242,701 Income from securities 6 472, ,189 Fees and commissions income 7 22,178,687 16,454,137 Fees and commissions expense 7 (3,657,311) (2,752,523) Net fees and commissions 18,521,376 13,701,614 Gains from finance transactions 8 18,179,426 13,318,137 Losses from finance transactions 8 (16,191,091) (11,885,348) Net profit from finance transactions 1,988,335 1,432,789 Other operating income 9 23,252,684 22,126,379 General administrative expenses 10 (45,660,019) (34,907,210) Depreciation 11 (6,382,630) (4,696,316) Other operating expenses 12 (495,822) (393,575) Write-offs (1,961,922) (2,956,846) Recoveries from assets previously written off 3,593,310 1,556,766 Charge for bad and doubtful debts 13 (81,308,992) (62,117,316) Write back of bad and doubtful debts 13 72,156,494 54,014,414 Provision for general banking risks 33 (932,422) (1,154,771) Provision for general banking risks released ,000 Share of profits of associated companies 1,571, ,183 OPERATING PROFIT 17,676,616 12,736,001 Extraordinary (loss)/profit 14 (630,268) 625,929 PROFIT BEFORE TAX 17,046,348 13,361,930 Tax 15 (8,810,608) (6,526,495) Minority interest 35 (912,855) (983,802) NET PROFIT FOR THE YEAR 7,322,885 5,851,633 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 47

50 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN C o n s o l i d a t e d B a l a n c e S h e e t Consolidated Balance Sheet Notes Cash and balances with the Central Bank 16 98,727,898 40,319,852 Placements with, and loans to, other banks ,745,096 91,131,421 Loans and advances to customers ,691, ,502,736 Investment securities ,532, ,958,808 Securities held for trading ,407,174 48,352,092 Investments in associated companies and other investments 21 11,489,800 17,499,274 Intangible assets 22 7,149,907 3,964,128 Property and equipment 23 66,534,725 44,318,857 Own shares 50,254 56,646 Other assets 24 28,443,816 18,824,470 Accrued income and deferred expenses 25 12,669,963 9,611,626 TOTAL ASSETS 1,742,443,123 1,165,539,910 Deposits and borrowings from banks ,330, ,147,073 Deposits and borrowings from other customers 28 1,170,527, ,555,391 Debt securities 29 22,649,730 17,056,533 Other liabilities 30 24,341,920 15,699,521 Accruals and deferred income 31 29,892,845 22,857,979 Provisions for liabilities and charges 32 33,962,168 22,502,025 Provisions for general banking risks 33 6,306,006 2,576,448 Subordinated liabilities 34 14,703,414 14,294,543 Minority interest 35 25,310,667 18,860,519 Subscribed capital 36 15,262,639 13,810,242 Paid in equity surplus 36 12,114,470 - Reserves 36 32,870,765 30,474,552 Capital revaluation adjustment 36 29,005,075 26,049,779 Retained profit 36 6,902,667 4,803,672 Net profit for the year 36 7,262,944 5,851,633 TOTAL LIABILITIES 1,742,443,123 1,165,539,910 Off-balance sheet position ,074, ,552,257 The Management Board approved the financial statements and notes to the financial statements. Alojz Jamnik Boris Zakrajπek Marko VoljË Deputy President & Deputy President & President & Chief Deputy CEO Deputy CEO Executive Officer 48 Nova Ljubljanska banka d.d., Ljubljana

51 C o n s o l i d a t e d S t a t e m e n t o f C h a n g e s i n F i n a n c i a l P o s i t i o n Consolidated Statement of Changes in Financial Position Year 2001 Year 2000 INFLOWS Cash and balances with the Central Bank at 1 January 43,142,242 36,521,753 Capital inflows 29,545,762 4,501,096 Subscribed capital 1,452,397 - Paid in equity surplus 12,114,470 - Reserves 2,396, ,465 Minority interest 5,129,912 33,668 Provisions 4,107,252 (1,270,121) Provisions for general banking risks 3,549,207 1,125,477 Capital revaluation adjustment (2,713,995) (465,414) Retained profit (3,752,638) (1,674,612) Net profit for the year 7,262,944 5,851,633 Other funds inflows 465,769,657 93,197,555 Deposits and borrowings from banks 127,132,663 23,281,189 Deposits and borrowings from other customers 316,073,514 47,187,813 Debt securities 4,399,240 7,027,997 Subordinated liabilities (591,747) 7,612,647 Other liabilities 7,543,431 4,639,655 Accruals and deferred income 5,434,807 2,493,989 Provisions for liabilities and charges 5,777, ,265 TOTAL INFLOWS 538,457, ,220,404 OUTFLOWS - USE OF FUNDS Capital outflows 14,777,058 5,737,457 Own shares (10,357) 60,611 Investment in associated companies and other investments (7,234,423) 2,215,931 Intangible assets 2,908, ,618 Property and equipment 19,113,548 2,491,297 Other funds outflows 424,952,705 85,340,705 Placements with, and loans to, other banks 46,234,476 (3,305,543) Loans and advances to customers 183,153,589 77,018,184 Investment securities 109,207,048 (11,496,483) Securities held for trading 75,670,436 21,056,032 Other assets 8,301, ,290 Deferred expenses and accrued income 2,385,523 1,378,225 Cash and balances with the Central Bank at 31 December 98,727,898 43,142,242 TOTAL OUTFLOWS - USE OF FUNDS 538,457, ,220,404 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 49

52 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Notes to the Consolidated Financial Statements 1. Significant accounting policies The principal accounting policies applied by the Nova Ljubljanska banka d.d., Ljubljana Group ("the Group") for the preparation of the consolidated financial statements are set out below: a) Basis of presentation of financial statements The Group's consolidated financial statements have been prepared in accordance with the Slovenian Accounting Standards and the Bank of Slovenia s regulations, represented by the Decree on the Classification of Balance Sheet and Off-Balance Sheet Asset Items of Banks and Savings Banks, the Decree on Establishing Specific Provisions of Banks and Savings Banks, the Decree on the Supervision of Banks and Savings Banks on a Consolidated Basis, and other Bank of Slovenia s regulations. b) Consolidation The consolidated financial statements include the financial statements of Nova Ljubljanska banka d.d., Ljubljana ( the Bank or NLB ) and its subsidiaries, which are set out in Note 39. Subsidiary undertakings, which are those companies in which the Bank, directly or indirectly, has an interest of more than half of the voting rights, or otherwise has power to exercise control over the operations, have been fully consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Bank and are no longer consolidated from the date of disposal. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Bank. Separate disclosure is made of minority interests. On acquisition of a subsidiary, the Bank calculates the difference between the fair value of the assets and liabilities acquired and the fair value of the consideration given. Where the consideration given exceeds the net assets acquired, goodwill arises; this is amortised to the income statement over a period of five years. Where the net assets acquired exceeds the consideration given, negative goodwill arises; this is treated as a liability and amortised to the income statement over a period of five years. Investments in associated undertakings are accounted for using the equity method of accounting. These are undertakings over which the Group has between 20% and 50% of the voting rights, and over which the Group exercises significant influence, but which it does not control. Provisions are recorded for long-term impairment in value. Equity accounting involves recognising in the income statement the Group s share of the associates profit or loss for the year. The Group s interest in the associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate and includes goodwill on acquisition. Regarding associates, negative goodwill is included in the carrying amount of an investment in an associate over a period of five years. c) Revaluation Assets and liabilities are revalued in accordance with contractual agreements between members of the Group and their clients, or in accordance with the Slovenian Accounting Standards. Assets and liabilities in tolars which fall due for payment more than 30 days after they arise can be revalued at a rate equal to the rolling inflation index (TOM). Assets and liabilities with a maturity of up to 30 days are not revalued. Domestic investments, property and equipment, intangible assets, own shares and capital are revalued using the general price index. Revaluation income and expenses are included in the revaluation statement, which is presented in a net amount in the income statement under other income or expenses. d) Assets and liabilities in foreign currencies Assets and liabilities in foreign currencies are converted into the tolar equivalent at the mid-market exchange rate of the Bank of Slovenia as at the last day of the accounting period. Foreign exchange gains and losses occurring as a result of the conversion are included in the revaluation statement. e) Interest income and expenses Interest is charged in accordance with Slovenian legislation and by agreement with members of the Group and their clients. Interest expenses are included in the income statement as soon as they are accrued, while interest income is included in the income statement depending on the valuation of the client. Where the conditions set out in the Bank of 50 Nova Ljubljanska banka d.d., Ljubljana

53 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Slovenia regulations are met, the income from performing assets (A and B grading groups) are included in the income statement as soon as they are accounted, with appropriate charges being set against assets in B grading group. Income from non-performing assets (C, D and E grading groups) are excluded until paid, and reported under liabilities as suspended income. f) Income and expenses from commission and fees Income and expenses from commission and fees are included in the income statement on the same basis as interest income and expenses. g) Investments in securities Investments in securities are initially recorded at cost. Securities are stated in the balance sheet at the lower of the cost or market value. If there is no market value for securities, then their value is assessed in accordance with the grading group of the issuer. h) Loans Loans are stated in the balance sheet at the amount of the principal outstanding, increased by interest capitalised where appropriate, less any provision for unrecoverable amounts. i) Provisions A specific risk provision is established on loans, other assets and off-balance sheet items based on the Bank of Slovenia s regulation. In determining the rating group of specific asset (A, B, C, D or E group), management considers many factors, including (but not limited to) domestic economic conditions, the composition of the loan portfolio, and prior bad debt experience. General banking risk provision is established for the purpose of protecting against risks arising from the Group s overall operations. Increases and decreases in provisions are shown in the financial statements on a gross basis. k) Property and equipment All property and equipment is initially recorded at cost. The carrying value of property and equipment is subsequently revalued annually to the approximate market value. Depreciation of property and equipment is provided on a straight-line basis at rates designed to write off cost or valuation of buildings and equipment over their estimated useful lives. The following annual depreciation rates are applied: % % Buildings Computers Furniture and equipment Motor vehicles Other assets Property and equipment in the course of construction is not depreciated until it is brought into use. Maintenance and repairs are charged to the income statement when the expenditure is incurred and renewals capitalised. l) Intangible assets Intangible assets include computer software, long-term deferred costs and long-term deferred interest. Amortisation is provided on a straight-line basis at rates designed to write off the cost of software over their estimated useful lives. The current system software and the new information technology system are amortised over a period of ten years and other software over a period of five years. Intangible assets in the course of construction are not amortised until they are brought into use. m) Finance lease When assets are sold under a finance lease the present value of the lease payments is recognised as a receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance income. Income from finance leasing transactions is apportioned systematically over the primary lease peri- Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 51

54 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s od, reflecting a constant periodic return on the lessor s net investment outstanding. In the year 2000 finance lease receivable were transfered from other assets to loans and comparative data has been restated accordingly. n) Derivative financial instruments The Bank enters into derivative financial instruments for hedging and for trading purposes. Derivative financial instruments for trading purposes are carried at their fair value in the balance sheet only when unfavourable to the Bank. Gains and losses on trading derivative instruments are included in net profit/loss arising from finance transactions as they arise. Gains and losses on other derivative instruments used for hedging purposes are deferred and recognised as income or expense on the same basis as the corresponding expense or income on the hedged position. o) Tax on profit and balance sheet tax Slovenian corporate tax is provided on taxable profits at the rate of 25%. Foreign taxes are provided for in accordance with local tax laws and accounting principles. In 2001 the Slovenian balance sheet tax is calculated as a 3% levy on certain balance sheet items. According to Slovenian legislation the maximum balance sheet tax is limited to 50% of pre-tax profit. Where the 3% levy exceeds 50% of profits, the lower tax charge is payable. p) Funds managed on behalf of third parties The Bank manages a significant amount of assets on behalf of legal entities and individuals. A fee is charged for this service. These assets are not shown in the Bank s balance sheet, however details of the funds under management are given in Note Merger of subsidiary banks On 1 October 2001 Banka Velenje d.d., Velenje, Pomurska banka d.d., Murska Sobota and Dolenjska banka d.d., Novo mesto were merged with the NLB. Even before their merger with the NLB, Banka Velenje and Pomurska banka were included in its consolidated financial statements and their merger did not have any particular effect on the financial statements of the Group, only the capital of the Group increased by most of the capital of the minority shareholders. The remaining part of the capital of the minority shareholders was accounted for as negative goodwill in accordance with the share exchange ratio achieved. According to IAS 22 a restructuring provision in amount of tolars 1,400,000 thousand was charged against the negative goodwill. The Bank will amortise the remaining part of negative goodwill over a period of five years. However the merger of Dolenjska banka, which in accordance with the merger agreement was accounted for in the consolidated financial statements as from 1 January 2001, affected both the balance sheet and the income statement of the Group since in the previous year it had not been included in the Group. The transaction increased the capital of the Group in a way similar to the result of the merger of the first two banks. As a result of the acquisition of Dolenjska banka, the Group s total assets rose by tolars 108,332,238 thousand. The income and expenses of the merged banks for the first nine months of 2001 are included in the consolidated income statement as income and expenses of independent banks, while for the last quarter they are included in the income and expenses of the NLB. Because the mergers were accounted for in the consolidated financial statements as from 1 January 2001, the income statement for 2001 no longer shows part of the profit that would belong to the minority shareholders of the merged banks. In addition, that part of the balance sheet tax of the NLB, which belongs to the acquired banks, is shown in the income statement of the Group. 52 Nova Ljubljanska banka d.d., Ljubljana

55 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 3. Change in the scope of consolidation In the financial statements of the NLB Group for 2001 the LHB Internationale Handelsbank AG Group (LHB Bank), Frankfurt/Main, Tutunska Banka AD, Skopje (Tutunska banka) and Commercebank d.d., Sarajevo (Commercebank) are consolidated for the first time. The LHB Bank became a subsidiary of the NLB on 29 December 2001 when the NLB increased its share in the company to 50.41%. Consequently, the LHB bank is included in the consolidated financial statements as a subsidiary bank for the first time on 31 December Consequently, only the balance sheet of the LHB bank is fully consolidated; the income statement includes only the proportional share of its operating result. The following subsidiaries of the LHB bank are also included in the consolidated financial statements of the NLB Group: LHB Finance d.o.o., Ljubljana, LHB Immobilien GmbH, Frankfurt/Main and VB Banka AD, Banja Luka. Due to its immateriality the sub-subsidiary VB Inter Invest AD, Banja Luka is not included in the consolidated financial statements (its total assets account for 0.01 % of the Group s total assets). Due to consolidation of the LHB Bank, Tutunska banka was also consolidated in the Group s financial statements. On consolidation, goodwill amounting to tolars 248,328 thousand was accounted for, which will be amortised over a period of five years. Due to its immateriality the subsidiary Tutunskabroker AD, Skopje is not included in the consolidated financial statements (its total assets accounts for 0.01 % of the Group s total assets). Commercebank became a subsidiary bank of the NLB at the beginning of 2001, and in the financial statements of the NLB Group for 2001 both its balance sheet and income statement are fully consolidated. On consolidation, goodwill amounting to tolars 263,114 thousand was accounted for, which will be amortised over a period of five years. The consolidation of the new subsidiaries increased the Group s assets and liabilities as follows: Placements with, and loans to, other banks 44,932,162 Loans and advances to customers 75,895,916 Securities 56,715,176 Other assets 14,725,678 TOTAL ASSETS 192,268,932 Deposits and borrowings from banks 109,106,743 Deposits and borrowings from other customers 70,033,300 Provisions for general banking risks 2,600,834 Other liabilities 10,528,055 TOTAL LIABILITIES 192,268, Changes in the accounting policies In 2001, pursuant to the Decree on the Supervision of Banks and Savings Banks on a Consolidated Basis and additional instructions from the Bank of Slovenia, and taking into account the criteria based on the specific regulations of the Bank of Slovenia, the NLB set aside additional specific provisions (calculative provisions) in the consolidated financial statements for the balance sheet and off-balance sheet asset items of its subsidiaries. The additional provisions for the existing subsidiaries LBS Bank, New York and LB InterFinanz AG, Zürich are accounted for in the financial statements as a change in the accounting policy. The provisions that refer to previous years adjusted the retained profit of the Group, and the provisions that refer to 2001 are included in the income statement. For the LHB Bank and Tutunska banka, the additional provisions were accounted as a decrease in their net assets, while the additional provisions for Commercebank are shown in the income statement for The provisions which, in accordance with the Bank of Slovenia s regulations, the NLB had itself already set aside for its direct investments and loans to Commercebank and Tutunska banka were retained on a consolidated basis in accordance with the Bank of Slovenia s instructions, and they are shown as provisions for country risk on the liabilities side of the balance sheet. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 53

56 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 5. Interest income and expense a) Analysis by type of assets and liabilities Year 2001 Year 2000 Interest income Deposits with the Central Bank 290, ,521 Placements with, and loans to other banks 1,559,997 1,704,812 Loans and advances to customers 45,210,680 35,498,596 Deposits 3,958,571 2,680,611 Investment securities 17,693,479 13,578,007 Securities held for trading 3,897,452 2,471,060 Other assets 94,393 76,841 TOTAL 72,705,502 56,258,448 Interest expense Demand deposits 3,708,427 3,168,808 Short-term deposits 15,745,972 10,257,188 Long-term deposits 9,998,739 8,886,112 Borrowings 8,707,144 7,484,236 Debt securities 1,452, ,238 Other liabilities 230, ,165 TOTAL 39,843,803 31,015,747 b) Analysis by sector Year 2001 Year 2000 Revenue Expenses Revenue Expenses Enterprises 24,658,327 5,674,091 17,973,999 3,436,544 Government departments and agencies 15,288,942 3,706,386 13,694,823 5,284,120 Banks 14,947,309 10,482,661 9,713,442 8,422,234 Citizens 12,582,202 15,669,027 9,930,710 9,688,744 Other financial organisations 512,301 2,714, ,181 2,123,146 Non-residents 3,162,002 1,260,857 3,647,056 1,787,614 Non-profit service providers to households 208, , , ,000 Default interest 1,345,824 2, ,311 12,345 TOTAL 72,705,502 39,843,803 56,258,448 31,015, Income from securities Year 2001 Year 2000 Income from investments in associated companies - Banks 115,110 41,048 - Enterprises 148, ,256 - Other financial organisations 14,253 12,602 Income from trading securities 194, ,283 TOTAL 472, , Nova Ljubljanska banka d.d., Ljubljana

57 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 7. Income and expenses from fees and commissions Year 2001 Year 2000 Fees and commissions income: - Payments 5,756,833 4,958,143 - Guarantees 4,229,168 1,661,541 - Intermediation 4,533,110 3,338,553 - Administrative services 4,089,705 3,251,995 - Lending 2,232,510 2,144,039 - Privatization investment funds 247, ,190 - Depositing valuables and safe custody 240, ,123 - Other services 849, ,553 TOTAL 22,178,687 16,454,137 Fees and commissions expense: - Banking services 2,815,954 1,950,106 - Intermediation 336, ,626 - Payments 218, ,585 - Brokerage 93,796 91,623 - Other services 192, ,583 TOTAL 3,657,311 2,752, Net profit from finance transactions Year 2001 Year 2000 Income Income from dealing securities 1,823,127 1,188,208 Income from valuation of securities 666, ,655 Income from dealing in foreign currency 6,914,777 7,029,423 Income from derivative financial instruments 8,774,952 4,725,851 TOTAL 18,179,426 13,318,137 Expenses Expenses in dealing securities 1,711,909 1,088,396 Expenses in valuation of securities 1,464,467 1,545,794 Expenses in dealing in foreign currency 5,088,842 4,734,572 Expenses in derivative financial instruments 7,925,873 4,516,586 TOTAL 16,191,091 11,885,348 NET PROFIT FROM FINANCE TRANSACTIONS 1,988,335 1,432, Other operating income a) Analysis by type Year 2001 Year 2000 Net revaluation income 16,913,650 16,874,302 Income from non-banking services 4,434,109 3,491,775 Other income 1,904,925 1,760,302 TOTAL 23,252,684 22,126,379 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 55

58 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s b) Analysis of the revaluation income statement Year 2001 Year 2000 Revaluation income Foreign exchange gains 46,998,252 55,415,202 Revaluation interest - loans 43,544,896 35,410,921 - securities 12,351,156 14,001,284 Revaluation of property, equipment and intangible assets 3,367,247 3,203,982 Revaluation of depreciation 233, ,225 Revaluation of investments 476, ,297 Other revaluation income 208, ,290 TOTAL 107,179, ,817,201 Revaluation expenses Foreign exchange losses 47,718,240 56,255,862 Revaluation interest: - borrowings and deposits 32,996,711 26,452,101 - securities issued 1,548,871 1,082,647 Revaluation of capital 6,463,895 5,966,970 Revaluation of minority interests 976,903 1,528,299 Revaluation of provisions for general banking risks 196, ,677 Revaluation of other provisions 37,728 17,134 Other revaluation expenses 327, ,209 TOTAL 90,265,744 91,942,899 NET REVALUATION INCOME 16,913,650 16,874, General administrative expenses Year 2001 Year 2000 Employee costs - gross salaries 18,639,802 15,194,946 - social security costs 4,235,552 3,310,651 - other employee costs 2,812,266 1,667,682 Other general administrative expenses - services 5,583,668 4,769,224 - materials 4,789,539 2,705,295 - maintenance 3,574,846 2,375,559 - rents 2,014,482 1,590,646 - advertising 1,155, ,654 - consulting services 1,178, ,439 - insurance 573, ,026 - entertainment expenses 354, ,683 - travel costs 423, ,337 - education and scholarships 273, ,774 - other administrative expenses 50,998 20,294 TOTAL 45,660,019 34,907, Nova Ljubljanska banka d.d., Ljubljana

59 11. Depreciation N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Year 2001 Year 2000 Depreciation of property, equipment and intangible assets 6,149,511 4,503,091 Revaluation of depreciation 233, ,225 TOTAL 6,382,630 4,696, Other operating expenses Year 2001 Year 2000 Taxes 117,467 90,170 Membership fees 284, ,047 Other expenses 93,833 86,358 TOTAL 495, , Charge for/write back of bad and doubtful debts Year 2001 Year 2000 Provisions Provisions Provisions Provisions made released made released Provisions for A graded balance sheet and off-balance sheet assets 9,307,801 9,165,685 7,346,808 5,239,303 Provisions for other off-balance sheet assets 18,610,166 18,260,141 13,225,700 15,125,297 Provisions for balance sheet assets, classified in other credit rating groups: - loans to banks 4,592,497 4,343,049 2,740,886 3,556,469 - loans to other customers 36,238,215 31,358,608 31,797,986 24,795,195 - investment securities 645, ,005 38,852 8,597 - securities held for trading 1,652,229 1,543, , ,253 - investments in associated companies 1,979,397 1,411,469 1,159, ,801 - other loans 4,990,697 3,657,711 3,475,441 2,831,951 Provisions for overdrafts 1,111, , , ,838 Country risks provisions 1,271, Provisions for offsetting by groups 273, , ,424 - Other long-term provisions 636, , , ,710 TOTAL 81,308,992 72,156,494 62,117,316 54,014,414 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 57

60 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 14. Extraordinary (loss)/profit Year 2001 Year 2000 Extraordinary income Income from disposal of property and equipment 301, ,484 Other extraordinary income 563, ,386 Interest income for previous years 68, ,206 Extraordinary expenses Expenses from disposal of property and equipment 1,171, ,913 Other extraordinary expenses 377, ,129 Taxes paid for previous years 13,877 1,105 TOTAL (630,268) 625, Tax Year 2001 Year 2000 Tax on profit 6,130,335 4,735,778 Balance sheet tax 1,779,010 1,731,620 Share of tax of associated companies 901,263 59,097 TOTAL 8,810,608 6,526, Cash and balances with the Central Bank Tolars Foreign currency Tolars Foreign currency Cash 11,053,647 45,721,154 7,707,887 5,256,803 Balances with the Central Bank 36,533,800 5,419,297 27,333,575 21, Nova Ljubljanska banka d.d., Ljubljana 47,587,447 51,140,451 35,041,462 5,278,390 TOTAL 98,727,898 40,319,852

61 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 17. Placements with, and loans to, other banks a) Maturity analysis Short-term loans - in tolars 3,114,091 4,039,771 - in foreign currency 124,789,684 78,730,727 Long-term loans - in tolars 446, ,643 - in foreign currency 17,507,900 7,293,802 Current portion of long-term loans - in tolars 1,043,130 1,053,583 - in foreign currency 3,296,479 2,143, ,197,747 93,766,281 Provisions (6,452,651) (2,634,860) TOTAL 143,745,096 91,131,421 A detailed maturity analysis of loans to banks is given in Note 40 - Balance sheet maturity analysis. b) Analysis by type of loan Demand deposits 19,926,505 5,318,796 Time deposits 68,665,960 56,745,174 Loans 58,261,504 30,222,595 Called guarantees 22,512 35,577 Purchased debts and other investments 3,321,266 1,444, ,197,747 93,766,281 Provisions (6,452,651) (2,634,860) TOTAL 143,745,096 91,131,421 c) Geographical analysis Slovenia 48,594,829 17,734,986 OECD countries 90,837,929 69,981,735 Other countries 4,312,338 3,414,700 TOTAL 143,745,096 91,131,421 d) Loans to associated and other related banks Loans extended to associated and other related banks as at 31 December 2001 amounted to tolars 13,139,552 thousand (tolars 17,232,952 thousand as at 31 December 2000). Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 59

62 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s e) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 83,446,6707,684,751 78,813,585 7,706,813 Additional provisions (218,319) (219,100) - - Consolidation of new subsidiaries 46,651,239 10,642, Exchange difference on opening balance of subsidiaries 1,200, ,909 2,698, ,687 Increase - loans made 14,422,446,675 1,142,934 7,363,904,324 2,398,536 - interest added to principal 1,029,389 45, ,786 61,002 - exchange differences 6,357, ,973 6,211, ,539 Decrease - repayments (14,436,452,437) (180,009) (7,370,090,041)(1,868,757) - write-offs (112,471) - (890,650)- Current portion of long-term loans 2,693,325 (2,693,325) 2,079,694 (2,079,694) Provisions (14,687) (234,761) 185, ,625 Balance at 31 December 127,027,557 16,717,539 83,446,670 7,684, Loans and advances to customers 60 Nova Ljubljanska banka d.d., Ljubljana 143,745,096 91,131,421 a) Analysis by type of customer Short-term Long-term Short-term Long-term In tolars - enterprises 135,596, ,951, ,266, ,706,414 - government departments and agencies 10,205,415 63,701,407 5,473,683 41,767,915 - citizens 36,568, ,615,268 28,157, ,800,929 - other financial organisations 6,256,235 2,813,233 6,038, ,593 - non-residents , non-profit household service providers 206, , , ,373 In foreign currency - enterprises 46,473, ,492,370 35,505,577 70,066,586 - government departments and agencies 119,456 1,532,090-19,615,446 - citizens 120,093 1,730,447 94,412 1,452,749 - other financial organisations 12,113 1,302, ,149 - non-residents 46,377,416 44,661,584 16,030,496 15,720,949 - non-profit household service providers - 32,930-31,457 Current portion of long-term loans - in tolars 112,273,769 (112,273,769) 90,949,263 (90,949,263) - in foreign currency 33,445,344 (33,445,344) 24,644,857 (24,644,857) 427,655, ,306, ,418, ,351,440 Provisions (38,932,260) (14,338,981) (21,855,670)(9,411,214) 388,723,690436,967, ,562, ,940,226 TOTAL 825,691, ,502,736

63 b) Analysis by sector N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Citizens 190,588, ,458,719 Industry and mining 193,805, ,717,461 Trade and finance 157,880,812 91,034,646 Services 93,970,238 70,443,912 Ministries 50,037,485 51,435,741 Energy 32,194,595 37,979,309 Transport and communication 92,260,575 56,118,086 Small enterprises 24,846,411 20,133,980 Construction 20,979,850 15,230,715 Agriculture, forestry and fishery 8,594,415 5,050,836 Other 13,804,060 14,166, ,962, ,769,620 Provisions (53,271,241) (31,266,884) TOTAL 825,691, ,502,736 c) Guaranteed loans The loans guaranteed by the Republic of Slovenia and Slovenian banks are: with guarantee of the Republic of Slovenia 101,033,827 88,972,825 - with guarantee of other banks 3,049,687 5,357,259 TOTAL 104,083,514 94,330,084 d) Analysis by type of advance Loans 809,072, ,052,160 Overdrafts 31,539,624 25,804,873 Finance lease receivables 23,193,172 20,287,707 Called guarantees 3,034,908 2,605,658 Purchased debts and other investment 12,122,313 9,019, ,962, ,769,620 Provisions (53,271,241) (31,266,884) TOTAL 825,691, ,502,736 e) Loans to associated and other related parties Loans extended to associated and other related parties as at 31 December 2001 amounted to tolars 9,850,389 thousand (tolars 10,244,311 thousand as at 31 December 2000), while loans extended to members of the management and the Supervisory Board amounted to tolars 94,487 thousand (tolars 54,146 thousand as at 31 December 2000). Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 61

64 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s f) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 288,562,510311,940, ,377, ,950,985 Additional provisions (1,752,215) (871,789) - - Consolidation of new subsidiaries 74,133,422 60,032, Exchange difference on opening balance of subsidiaries 1,740,366 1,557,774 2,701,768 1,741,829 Increase - loans made 1,305,284, ,062, ,187, ,209,799 - interest added to principal 4,320,089 19,011,284 4,039,007 17,136,759 - exchange differences 5,380,930 8,608,583 3,592,886 7,340,330 Decrease - repayments (1,439,983,808) (31,990,965) (443,963,813)(29,940,801) - write-offs (1,419,970) (43,908) (1,810,378)(58,358) Current portion of long-term loans 157,094,474 (157,094,474) 108,010,382 (108,010,382) Provisions (4,636,215) (243,392) (6,572,856)(429,935) Balance at 31 December 388,723,690436,967, ,562, ,940, Investment securities 62 Nova Ljubljanska banka d.d., Ljubljana 825,691, ,502, Short-term Long-term Short-term Long-term In foreign currency - Treasury bills of the Bank of Slovenia 185,672, ,590, Treasury bills of other banks 552, Bonds of the Republic of Slovenia - 4,914,145-5,693,478 - Bonds of the Republic of Croatia - 283,447-6,517 - Bonds of the Republic of Macedonia - 46,074-1,363,037 - Bonds of the Republic of Bosnia and Herzegovina - 795, ,721 - Other securities 4,962,804 11,089, ,275 15,858,989 In tolars - Bonds of the Republic of Slovenia - rehabilitation bonds - 83,142,400-88,739,338 - for unpaid foreign currency deposits - 29,245,078-30,608,949 - for paid foreign currency deposits - 26,921,688-21,433,187 - other - 3,547,879-3,344,339 - Treasury bills of the Bank of Slovenia 58,372, , Bills 10,429,778-1,272, Other securities - 1,110,004-1,648,247 Current portion of investment securities 4,307,881 (4,307,881) 13,762,545 (13,762,545) 264,297, ,788, ,232, ,504,257 Provisions - (553,119) - (777,873) 264,297, ,235, ,232, ,726,384 TOTAL 420,532, ,958,808 The market value of investment securities exceeds the carrying value in amount of tolars 843,068 thousand.

65 20. Securities held for trading N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Bonds - Republic of Slovenia 18,998,981 19,191,378 - Norddeutsche Landesbank Hannover 16,819, other bonds 73,017,146 18,474,132 Shares 17,992,795 10,937,951 Other securities 1,217, , ,046,290 48,938,743 Provisions (639,116) (586,651) TOTAL 127,407,174 48,352,092 The market value of securities held for trading exceeds the carrying value in amount of tolars 1,933,057 thousand (tolars 782,337 thousand as at 31 December 2000). At 31 December 2001 the securities held for trading amounting to tolars 109,946,939 thousand were listed on the stock exchange market. 21. Investments in associated companies and other investments In tolars - banks 4,348,784 4,723,527 - other financial organisations 2,789,492 2,794,696 - enterprises 2,990,898 1,933,629 In foreign currency - banks 2,730,273 9,990,337 - other financial organisations 816, ,161 - enterprises 118,074 1,940 13,793,649 19,904,290 Provisions (2,303,849) (2,405,016) TOTAL 11,489,800 17,499,274 Investments in associated banks decreased due to the LHB Bank, which is at 31 December 2001 accounted for as a subsidiary and Dolenjska banka, which merged with the Bank in In 2001 the Group increased its equity share in Banka Celje to 36.6%. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 63

66 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 21. Investments in associated companies and other investments (continued) The associated companies are: Name Equity as at 31 Profit for the Ownership Investment December 2001 Year 2001 Interest in % as at 31 December 2001 Banka Celje d.d., Celje 23,579,982 1,109, ,347,550 Adria Bank AG, Vienna 7,071, , ,175,298 Bankart d.o.o., Ljubljana 1,242, , ,426 Skupna pokojninska druæba d.d., Ljubljana 866,166 (167,227) ,222 Golf Arboretum d.o.o., VolËji potok 383,389 4, ,103 BanËno-zavarovalna druæba d.o.o., Ljubljana 2,034 (720)50 1,931 The management considers that the fair value of investment in associated companies and other investments is not less then the carrying value, except where provision has been made for any permanent diminution in value. 22. Intangible assets Software Goodwill Deferred Deferred Intangible Assets Total Cost Interest in Course of Transfer or Construction/ Implementation Cost or valuation - at 1 January ,497, ,876 1,203, ,679 2,063,986 5,471,665 Consolidation of new subsidiaries 336, ,857-1, ,688 Exchange difference on opening balance of subsidiaries ,388-8,450 Revaluation 133,287-80, , ,338 Additions 993, , ,379 54,719 1,583,411 3,336,854 Transfers 162,486 - (67,571)- 10, ,760 Disposals (11,334)- (55,878)(8,176)(20,961)(96,349) Disposal of subsidiary (2,441)- - - (910)(3,351) - at 31 December ,110,085 1,082,319 1,477, ,610 3,825,204 9,686,055 Depreciation - at 1 January , , ,209 7,845-1,507,537 Consolidation of new subsidiaries 119,851-72, ,883 Exchange difference on opening balance of subsidiaries Revaluation 59,989-66, ,151 Disposals (9,047)- (51,866)(8,176) - (69,089) Charge for the year 416, , , ,054 Interest and rentals - - 3, ,041 Disposal of subsidiary (2,441) (2,441) - at 31 December ,006, ,463 1,035, ,536,148 Net carrying value - at 1 January ,075, , , ,834 2,063,986 3,964,128 - at 31 December ,103, , , ,610 3,825,204 7,149, Nova Ljubljanska banka d.d., Ljubljana

67 23. Property and equipment N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Land & Computers Furniture & Motor Assets in Total Buildings Equipment Vehicles Course of Transfer or Construction/ Implementation Cost or valuation - at 1 January ,167,281 16,876,945 10,722,177 1,505,293 1,163,166 81,434,862 Consolidation of new subsidiaries 15,115,529 1,059,952 1,993, , ,356 18,619,977 Exchange difference on opening balance of subsidiaries 269,173 14,884 22,889 3, ,382 Revaluation 3,687,307 1,275, , ,340 80,391 6,024,414 Additions 2,587,716 2,847,010 2,182, ,550 1,719,278 9,922,596 Transfers 1,143, , ,861 48,523 (2,156,122)178,023 Disposals (2,171,208)(1,303,712)(921,725)(267,076) (14,454)(4,678,175) Valuations (16,409) (16,409) Disposal of subsidiary - - (6,654)(11,726) - (18,380) - at 31 December ,783,289 21,310,137 15,467,726 2,207,523 1,008, ,777,290 Depreciation - at 1 January ,051,886 12,233,788 7,059, ,933-37,116,005 Consolidation of new subsidiaries 1,125, , ,353 95,919-2,764,193 Exchange difference on opening balance of subsidiaries 21,062 9,807 15,476 2,631-48,976 Revaluation 1,233,860 1,013, ,519 84,944-2,932,354 Disposals (623,871)(1,317,254)(824,407)(209,219) - (2,974,751) Charge for the year 1,160,103 2,285,626 1,554, ,686-5,371,457 Valuation (1,465) (1,465) Disposal of subsidiary - (7)(1,992)(12,205) - (14,204) - at 31 December ,967,240 14,846,247 9,324,389 1,104,689-45,242,565 Net carrying value - at 1 January ,115,395 4,643,157 3,662, ,360 1,163,166 44,318,857 - at 31 December ,816,049 6,463,890 6,143,337 1,102,834 1,008,615 66,534,725 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 65

68 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 24. Other assets a) Analysis by type of asset Accrued interest due 9,872,616 6,703,077 Fees and commissions due 513, ,094 Credit cards receivables 8,917,191 7,315,562 Non authorized overdrafts 3,899,805 2,493,435 Debtors 934,617 1,312,360 Claims for taxes and other dues 959, ,464 Inventories 3,143,276 1,315,533 Prepayments 824, ,318 Receivables in the course of collection 1,020, ,454 Cheques 268, ,804 Net receivables from intercompany relations 45,298 - Other assets 3,825,643 1,575, Nova Ljubljanska banka d.d., Ljubljana 34,225,548 22,981,394 Provisions (5,781,732) (4,156,924) TOTAL 28,443,816 18,824,470 b) Analysis of interest movements Balance at 1 January 6,505,539 5,034,360 Consolidation of new subsidiaries 1,701,068 - Accrued interest 81,963,575 58,806,070 Foreign exchange difference 172, ,415 Interest paid (80,551,037) (57,256,009) Write-offs (151,903) (238,195) Disposal of subsidiary 3,075 - Provisions 42,869 7,898 Balance at 31 December 9,685,599 6,505, Accrued income and deferred expenses Accrued income not yet due 12,441,169 9,260,036 Deferred expenses 228, ,590 TOTAL 12,669,963 9,611,626

69 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 26. Movements in specific provisions by type of asset Balance at Additional Consoli- Exchange Specific Specific Disposal Balance at 1 January provisions dation of difference provisions provisions of sub- 31 Decem new on made released sidiary ber 2001 subsidiaries opening balance Placements with, and loans to other banks 2,634, ,419 3,130,924-4,592,497 (4,343,049)- 6,452,651 Loans and advances to customers 31,266,884 2,624,003 14,464,255 36,492 36,238,215 (31,358,608)- 53,271,241 Investment securities 777, ,251 (870,005)- 553,119 Securities held for trading 586,651-13,543-1,652,229 (1,543,783)(69,524) 639,116 Investments in associated companies 2,405,016 - (641,212)- 1,979,397 (1,411,469)(27,883)2,303,849 Other assets 4,156, , ,990,697 (3,657,711)- 5,781,732 TOTAL 41,828,208 3,061,422 17,259,296 36,528 50,098,286 (43,184,625) (97,407) 69,001, Deposits and borrowings from banks a) Analysis of deposits On demand - in tolars 435, ,454 - in foreign currency 24,937,611 4,781,633 Short-term deposits - in tolars 27,777,536 8,550,521 - in foreign currency - NBY 9,457,161 8,171,525 - from other banks 21,572,861 21,084,839 Long-term deposits - in tolars 110,000 10,000 Current portion of long-term deposits 50,000 11,619 TOTAL 84,340,549 42,997,591 b) Analysis of borrowings Short-term Long-term Short-term Long-term In tolars - Central Bank - 36,923 1,232,931 60,774 - other banks 3,200, ,227 18,214, ,434 In foreign currency - IBRD - 128,957-1,361,510 - other banks 108,099, ,076,830 17,035,499 90,675,248 Current portion of long-term loans 28,673,329 (28,673,329) 22,396,290 (22,396,290) TOTAL 139,972,874 87,016,608 58,878,806 70,270,676 TOTAL a) in b) 224,203,423 87,126, ,866,397 70,280, ,330, ,147,073 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 67

70 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s c) Analysis of deposits and borrowings from associated and other related banks As at 31 December 2001 loans and deposits received from associated and other related banks amounted to tolars 17,576,325 thousand (tolars 19,473,465 thousand as at 31 December 2000). d) Analysis of movement Short-term Long-term Short-term Long-term Balance at 1 January 101,866,397 70,280,676 94,556,286 43,541,926 Consolidation of new subsidiaries 105,659,554 8,274, Exchange difference on opening balance of subsidiary 2,246,761 3,951 3,148,150 45,148 Increase - new borrowings and deposits 3,046,494,353 36,129,511 1,977,840,354 49,537,410 - exchange differences 2,888,352 3,468,599 2,892,389 3,964,994 - interest added to principal 1,125, ,301 58,922 Decrease - repayments (3,064,845,104) (2,263,386) (2,000,239,503)(3,723,304) Current portion of long-term liabilities 28,767,633 (28,767,633) 23,144,420 (23,144,420) Balance at 31 December 224,203,423 87,126, ,866,397 70,280, Nova Ljubljanska banka d.d., Ljubljana

71 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 28. Deposits and borrowings from other customers a) Analysis of deposits by type of customer Short-term Long-term Short-term Long-term Demand deposits: - enterprises - in tolars 47,670,060-41,519, in foreign currency 30,272,823-20,232, Government departments and agencies - in tolars 8,293,279-8,677, in foreign currency 446, , citizens - in tolars 146,413, ,122, in foreign currency 142,866,914-81,318, other financial organisations - in tolars 3,548,054-1,284, in foreign currency 379, , non-residents - in tolars 1,217,029-1,010, in foreign currency 26,734,493-7,927, non-profit household service providers - in tolars 5,580,265-5,213, in foreign currency 585,799-1,271,817 - Time deposits - enterprises - in tolars 73,869,989 25,865,621 62,714,973 17,268,762 - in foreign currency 21,372,758 78,648 12,965,873 32,783 - Government departments and agencies - in tolars 29,586,714 10,971,079 17,940,797 7,980,965 - in foreign currency 124, , citizens - in tolars 221,657,538 59,253, ,064,131 39,197,479 - in foreign currency 123,686,898 38,870,279 75,991,137 26,582,815 - other financial organisations - in tolars 13,097,104 35,538,710 9,219,495 24,062,146 - in foreign currency 104,062 35, non-residents - in tolars 276,234 78, ,173 79,551 - in foreign currency 18,859,387 15,264,780 17,302,811 3,753,583 - non-profit household service providers - in tolars 3,668,739 1,956,579 2,108,399 2,375,468 - in foreign currency 1,835,388-1,347,643 - Current portion of long-term deposits 115,134,389 (115,134,389) 81,231,781 (81,231,781) TOTAL 1,037,280,785 72,778, ,710,969 40,101,771 1,110,059, ,812,740 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 69

72 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s b) Analysis of borrowings by type of customer Short-term Long-term Short-term Long-term Government departments and agencies - in foreign currency - 7,136,650-38,928,377 Other financial organisations - in tolars 5,796, ,216 3,702,969 3,233,803 - in foreign currency - 3,533,789-69,796 Enterprises - in tolars ,819 Non-residents - in foreign currency 39,839,4103,618,806 8,442,102 3,241,785 Current portion of long-term borrowing 2,395,683 (2,395,683) 8,088,006 (8,088,006) TOTAL 48,031,570 12,436,778 20,233,077 37,509,574 TOTAL a) in b) 1,085,312,355 85,215, ,944,046 77,611, Nova Ljubljanska banka d.d., Ljubljana 1,170,527, ,555,391 c) Analysis of deposits and loans from associated and other related companies As at 31 December 2001 loans and deposits received from other associated and other related companies amounted to tolars 17,196,997 thousand (tolars 4,387,174 thousand as at 31 December 2000). d) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 720,944,046 77,611, ,916,877 80,878,928 Consolidation of new subsidiaries 129,766,707 15,454, Exchange difference on opening balance of subsidiaries 2,023,626-4,636,439 - Increase - new borrowings and deposits 18,264,407, ,378,066 13,046,262,892 78,317,791 - exchange differences 68,407,443 5,512,435 15,309,110 7,447,186 - interest added to principal 20,009,092 10,145,300 14,325,723 5,956,637 Decrease - repayments (18,249,918,764) (60,214,040) (13,054,710,314)(11,785,878) Current portion of long-term liabilities 129,672,216 (129,672,216) 83,203,319 (83,203,319) Balance at 31 December 1,085,312,355 85,215, ,944,046 77,611,345

73 29. Debt securities N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Short-term liabilities - in tolars 890,539 2,013,933 - in other currencies 592, ,762 Long-term liabilities - in tolars 12,226,333 14,447,838 Current portion of long-term liabilities 8,940,606 - TOTAL 22,649,730 17,056,533 Liabilities to associated and other related companies for issues of securities as at 31 December 2001 amounted to tolars 2,483,998 thousand (tolars 260,227 thousand as at 31 December 2000). 30. Other liabilities a) Analysis by type of liability Accrued interest due 1,336,675 1,196,798 Fees and commissions due 364, ,891 Items in the course of payment 1,653,389 2,575,672 Suppliers 3,374,928 2,704,549 Liabilities to traders for credit cards 4,443,128 3,313,414 Accrued salaries 1,582,193 1,228,284 Taxes payable 1,985,358 1,784,394 Liabilities for received cash in foreign currency 7,134,447 45,605 Liabilities for purchased debts 781, ,740 Payments received in advance 458, ,740 Net liabilities from funds managed on behalf of third parties 88,332 81,417 Other liabilities 1,139,156 1,404,017 TOTAL 24,341,920 15,699,521 b) Analysis of interest movements Balance at 1 January 1,196, ,940 Consolidation of new subsidiaries 89,799 - Interest accrued 32,375,159 27,229,135 Exchange differences 84,339 97,345 Interest paid (32,407,985) (27,013,622) Disposal of subsidiary (1,435) - Balance at 31 December 1,336,675 1,196,798 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 71

74 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 31. Accruals and deferred income Accrued interest not yet due 16,611,302 12,439,651 Suspended income - interest 5,738,728 3,356,970 - fees and commissions 97,009 74,973 - other 173, ,556 Deferred income 5,172,358 4,609,392 Items in course of collections 566,824 1,561,136 Accrued expenses 725, ,056 Fair value of derivative financial instruments 807,606 53,245 TOTAL 29,892,845 22,857, Provisions for liabilities and charges a) Analysis by type of provision Provisions for A graded balance sheet and off-balance sheet assets 13,310,278 10,653,722 Provisions for other off-balance sheet assets 10,152,122 9,448,981 Provisions for overdrafts 1,391,242 1,013,138 Provisions for offsetting by groups 62, ,424 Country risks provision 2,154,744 - Negative goodwill 1,064, ,165 Provisions for pensions and restructuring costs 3,249,790 22,613 Other provisions 2,577, ,982 TOTAL 33,962,168 22,502, Nova Ljubljanska banka d.d., Ljubljana

75 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s b) Analysis of movements Balance at Consolida- Exchange Provisions Reva- Provisions Provisions Disposal Other Balance 1 January tions of difference made luation released utilised of at 31 new on subsi- December subsidiaries opening diary balance of subsidiaries Provisions for A graded balance sheet and offbalance sheet assets 10,653,722 2,094, ,501 9,313,793 - (9,165,685) ,310,278 Provisions for other off-balance sheet assets 9,448, ,116-18,610,166 - (18,260,141) ,152,122 Provisions for overdrafts 1,013, ,111,639 - (734,189) ,391,242 Negative goodwill 313, ,462,274 15,022 (67,315)(1,400,000) - (258,448) 1,064,698 Provisions for offsetting by groups 373, ,547 - (584,798) ,173 Country risks provision - 883,529-1,271, ,154,744 Provisions for pensions and restructuring costs 22,613 1,770,085-1,445,465 14,000 - (2,373)- - 3,249,790 Other provisions 676,982 1,405, ,873 8,706 (129)(101,895)(2,707) - 2,577,121 TOTAL 22,502,025 6,507, ,501 35,078,972 37,728 (28,812,257) (1,504,268) (2,707) (258,448) 33,962, Provisions for general banking risks Balance at 1 January 2,576,448 1,400,000 Consolidation of new subsidiaries 2,600,834 - Provisions made 932,422 1,154,771 Provisions released - (103,000) Revaluation 196, ,677 TOTAL 6,306,006 2,576,448 The general banking risk provision increased mainly due to consolidation of the LHB in 2001, which established the provision of tolars 2,600,770 thousand in accordance with German regulations. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 73

76 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 34. Subordinated liabilities Currency Maturity Interest rate Subordinated loans SIT 2001 TOM+10% - 79,500 SIT 2005 TOM+6% 400, ,000 EUR 2006 EURIBOR+2.5% 5,535,237 5,287,655 EUR 2007 EURIBOR+2.3% 7,749,333 7,402, Nova Ljubljanska banka d.d., Ljubljana 13,684,570 13,169,872 Subordinated notes SIT 2001 FCC (DEM)+12% - 151,398 SIT 2004 FCC (DEM)+7.5% 1,018, ,273 1,018,844 1,124,671 TOTAL 14,703,414 14,294, Minority interest Balance at 1 January 18,860,519 17,290,224 Consolidation of new subsidiaries 11,014,189 - Share of profits 1,191, ,802 Revaluation 976,903 1,528,299 Dividends paid (482,329) (656,859) Decrease due to merger of subsidiaries (6,100,061) - Other (150,257) (284,947) Balance at 31 December 25,310,667 18,860, Equity a) Analysis of subscribed capital by type of shareholder Enterprises 1,747, ,204 Government departments and agencies 12,164,250 12,154,862 Banks 3,418 - Other financial organisations 1,254, ,254 Citizens 57,848 5,130 Non-residents 26,634 19,792 Own shares 7,888 10,000 TOTAL 15,262,639 13,810,242

77 b) Changes in equity N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s Subscribed Paid in Reserves Retained Total capital equity profits surplus Balance at 1 January ,810,242-30,474,552 10,655,305 54,940,099 Exchange difference on opening balance of subsidiaries ,503 67, ,843 Increase due to merger of subsidiaries 1,553,788 12,650, ,620 14,773,350 Merger - effect on consolidation - - 2,332,813 2,017,493 4,350,306 Cross-holding (101,391)(539,550) - - (640,941) Transfer of retained profits ,041 (513,243)93,798 Additional provisions (3,261,168)(3,261,168) Dividends paid (2,046,000)(2,046,000) Net profit for the year ,322,885 7,322,885 New subsidiary - - (648,296)- (648,296) Disposal of subsidiary - - (12,080)(330,514) (342,594) Other - 3,078 32,232 (315,107)(279,797) Balance at 31 December ,262,639 12,114,470 32,870,765 14,165,611 74,413,485 Capital revaluation adjustment Balance at 1 January ,014,155-15,290, ,527 26,049,779 Increase due to merger of banks 93, , ,284 Revaluation 1,684, ,165 3,852, ,238 6,463,895 Transfer to reserves (93,798)(93,798) Merger - effect on consolidation - - (4,093,157)- (4,093,157) Other - - (31,430)(142,498) (173,928) Balance at 31 December ,791, ,222 15,017,824 1,302,469 29,005,075 Balance at 1 January ,824,397-45,764,649 11,400,832 80,989,878 Balance at 31 December ,054,199 13,007,692 47,888,589 15,468, ,418,560 Banka Zasavje allocated part of the net profit for 2001 to distributable reserves and to the own share s fund in accordance with the provisions of the amended Companies Act. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 75

78 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 37. Off-balance sheet a) Analysis by type of contingent liabilities and commitments Short-term guarantees - in tolars 17,458,918 10,887,045 - in foreign currency 26,971,380 12,257,915 Long-term guarantees - in tolars 34,314,253 26,963,874 - in foreign currency 74,777,792 58,093,699 Letters of credit - in tolars 1,750 6,175 - in foreign currency 5,670,242 3,841,628 Guaranteed and accepted bills - in foreign currency 1,022,595 1,581,448 Commitments to extend credit - in tolars 128,971, ,044,580 - in foreign currency 30,672,665 23,409, Nova Ljubljanska banka d.d., Ljubljana 319,861, ,085,813 Provisions (10,152,122) (9,448,981) TOTAL 309,709, ,636,832 According to the Bank of Slovenia s methodology the total off-balance sheet items of the Group amounted to tolars 731,074,750 thousand. In accordance with the Decree on the Classification of On-Balance Sheet and Off-Balance Sheet Asset Items of Banks and Savings Banks, the Group established provisions only for contingent liabilities and committments amounted to tolars 319,861,494 thousand. b) Analysis of derivative financial instruments Forward contracts - for hedging 78,775,158 8,165,360 - for trading 9,388,924 8,023,551 Swaps - for hedging 197,502,452 15,890,824 Options - for hedging 31,167, for trading 221, ,024 Futures - for hedging 7,040,393 1,989,745 TOTAL 324,096,086 34,569,504 c) Assets pledged Assets pledged as collateral Liabilities Bonds 5,350,013 9,638,850 5,260,886 8,682,953 Finance lease receivables 3,002,890 2,706,122 3,002,890 2,016,429 Land & Buildings 1,710,312 2,583,730 1,432,964 2,393,258 10,063,215 14,928,702 9,696,740 13,092,640

79 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 38. Funds managed on behalf of third parties The Group manages assets totalling tolars 115,938,273 thousand (tolars 69,414,273 thousand as at 31 December 2000) on behalf of third parties. Managed funds assets are accounted for separately from those of the Group. Income and expenses of these funds are for the account of the respective fund and no liability falls on the Group in connection with these transactions. The Group is compensated for its services by fees chargeable to the funds. 39. Subsidiaries The subsidiaries are: Country of The Bank's Ownership Voting Investment incorporation share of interest power held as at 31 subscribed December capital as at December 2001 Group Banka Domæale d.d., Domæale Slovenia 113, ,721,006 Koroπka banka d.d., Slovenj Gradec Slovenia 146, ,631,111 Banka Zasavje d.d., Trbovlje Slovenia 69, ,288,669 Group LBS Bank-New York, New York USA 1,505, ,360,679 Group LHB Internationale Handelsbank AG, Frankfurt / Main Germany 5,991, ,564,752 Commercebank d.d., Sarajevo Republic of Bosnia and Herzegovina 1,202, ,202,462 Tutunska Banka AD, Skopje Republic of Macedonia 2,500, ,500,103 Group LB Leasing d.o.o., Ljubljana Slovenia 336, ,173,596 Group LB HIPO d.o.o., Ljubljana Slovenia 1,667, ,388,331 LB Trading d.o.o., Ljubljana Slovenia 7, ,602 Prospera plus d.o.o., Ljubljana Slovenia 61, ,859 Group LB InterFinanz AG, Zürich Switzerland 747, ,468,760 LB Maksima d.o.o., Ljubljana Slovenia 162, ,831,589 FIT Leasing d.o.o., Velenje Slovenia 197, ,777 Feniks d.o.o, Murska Sobota Slovenia 49, ,530 REAL d.o.o., Novo mesto Slovenia 7, ,438 Equity and net profits of subsidiaries are: Equity as at Net profits 31 December 2001 for the year 2001 Group Banka Domæale d.d., Domæale 6,799, ,534 Koroπka banka d.d., Slovenj Gradec 11,205, ,833 Banka Zasavje d.d., Trbovlje 5,721, ,864 Group LBS Bank-New York, New York 5,317,349 (196,824) Group LHB Internationale Handelsbank AG, Frankfurt/Main 14,905,831 (226,214) Commercebank d.d., Sarajevo 1,801,632 2,935 Tutunska banka AD, Skopje 6,276, ,273 Group LB Leasing d.o.o., Ljubljana 2,183, ,082 Group LB Hipo d.o.o., Ljubljana 3,388,330 3,582 LB Trading d.o.o., Ljubljana (50,759)2,180 Prospera plus d.o.o., Ljubljana 111, Group LB InterFinanz AG, Zürich 1,619,795 97,665 LB Maksima d.o.o., Ljubljana 2,144, ,418 FIT Leasing d.o.o., Velenje 167,088 (97,682) Feniks d.o.o., Murska Sobota 156,531 11,523 REAL d.o.o., Novo mesto 348,702 1,131 The result of the operations of the LHB Bank (a profit of tolars 1,467,815 thousand) and the LHB Group (a loss of tolars 226,214 thousand) differ due to the elimination of intercompany profit arising from the LHB building which was sold to its subsidiary LHB Immobilien. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 77

80 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 40. Balance sheet maturity analysis Up to 1 Month 1 Month 3 Months to 1 Year to Over Total to 3 Months 1 Year 5 Years 5 Years Cash and balances with the Central Bank 98,727, ,727,898 Placements with, and loans to, other banks 80,651,785 33,060,345 13,315,427 16,619,731 97, ,745,096 Loans and advances to customers 45,250,370 89,092, ,381, ,814, ,152, ,691,517 Investment securities 113,021, ,471,606 30,805,220 51,585, ,649, ,532,973 Securities held for trading 117,422, ,848 9,740, ,407,174 Investments in associated companies and other investments ,295,989 9,193,811 11,489,800 Intangible assets ,310 2,147,659 4,902,938 7,149,907 Property and equipment ,191,720 53,343,005 66,534,725 Own shares , ,254 Other assets 21,886,011 1,618, ,451 2,607,127 1,602,228 28,443,816 Accrued income and deferred expense 2,169,864 3,319,952 7,180, ,669,963 TOTAL ASSETS 479,129, ,806, ,301, ,263, ,941,835 1,742,443,123 Deposits and borrowings from banks 80,114, ,149,261 38,939,890 74,601,508 12,525, ,330,031 Deposits and borrowings from other customers 543,224, ,918, ,168,995 74,777,762 10,437,665 1,170,527,782 Debt securities 226,185 1,231,855 8,965,357 12,226,333-22,649,730 Other liabilities 20,343, ,904 2,469, ,635-24,341,920 Accruals and deferred income 8,358,143 4,492,880 13,491,543 3,259, ,954 29,892,845 Provisions for liabilities and charges 5,976, ,672 4,237,266 22,370, ,691 33,962,168 Provisions for general banking risks ,306,006 6,306,006 Subordinated liabilities ,954,081 7,749,333 14,703,414 Minority interest ,310,667 25,310,667 Subscribed capital ,262,639 15,262,639 Paid in equity surplus ,114,470 12,114,470 Reserves ,870,765 32,870,765 Capital revaluation adjustment ,005,075 29,005,075 Retained profit ,902,667 6,902,667 Net profit for the year ,833 1,725,727 4,818,384 7,262,944 TOTAL LIABILITIES 658,243, ,100, ,990, ,803, ,305,416 1,742,443,123 DIFFERENCE BETWEEN ASSETS AND LIABILITIES (179,113,599) (62,293,488) (96,689,186) 225,459, ,636, Nova Ljubljanska banka d.d., Ljubljana

81 N o t e s t o t h e C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s 41. Balance sheet analysis by currency Tolars Tolars with USD EUR Other Total foreign currency clause Cash and balances with the Central Bank 47,587,447-1,067,158 46,239,490 3,833,803 98,727,898 Placements with, and loans to, other banks 4,187, ,428 19,211, ,830,800 13,104, ,745,096 Loans and advances to customers 541,038,381 36,202,868 36,176, ,557,526 6,716, ,691,517 Investment securities 201,785,082 10,983,746 18,983, ,227, , ,532,973 Securities held for trading 22,308,789 6,385,549 18,739,116 79,315, , ,407,174 Investments in associated companies and other investments 7,996, ,325 2,908, ,462 11,489,800 Intangible assets 6,764, ,746 65,951 7,149,907 Property and equipment 52,815,360-2,733,658 9,354,229 1,631,478 66,534,725 Own shares 50, ,254 Other assets 22,258, ,599 2,091,119 3,001, ,223 28,443,816 Accrued income and deferred expenses 6,714, ,614 1,442,750 3,722, ,494 12,669,963 TOTAL ASSETS 913,506,373 55,160, ,795, ,478,172 27,501,962 1,742,443,123 Deposits and borrowings from banks 31,121, ,002 30,898, ,868,392 7,506, ,330,031 Deposits and borrowings from other customers 685,130,125 9,751,864 68,710, ,194,794 30,740,733 1,170,527,782 Debt securities 14,980,666 7,076, , ,233 73,771 22,649,730 Other liabilities 13,813,599 7,393 1,913,057 8,130, ,607 24,341,920 Accruals and deferred income 19,466,144 1,573,908 1,366,569 7,050, ,455 29,892,845 Provisions for liabilities and charges 17,500, ,777 2,388,364 8,838,179 4,946,376 33,962,168 Provisions for general banking risks 3,705, ,600, ,306,006 Subordinated liabilities 400,000 1,018,844-13,284,570-14,703,414 Minority interest 14,143, ,150,235 4,017,086 25,310,667 Subscribed capital 15,262, ,262,639 Paid in equity surplus 12,114, ,114,470 Reserves 31,487,535-15,508 1,253, ,103 32,870,765 Capital revaluation adjustment 29,005, ,005,075 Retained profit 9,436,658 - (492,056)233,961 (2,275,896)6,902,667 Net profit for the year 7,087,943 - (26,152)(155,972) 357,125 7,262,944 TOTAL LIABILITIES 904,654,908 20,653, ,893, ,847,813 46,392,887 1,742,443,123 DIFFERENCE BETWEEN ASSETS AND LIABILITIES 8,851,465 34,507,204 (4,098,103) (20,369,641) (18,890,925) - Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 79

82 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Selected Financial Data and Performance Figures for NLB d.d. under Bank of Slovenia Methodology IN BILLION TOLARS BALANCE SHEET at year end Total Assets ,382.3 Non-bank customer deposits & borrowings a) corporate & state b) retail Non-bank customer loans a) corporate & state b) retail Total equity Provisions Off-balance sheet Retail deposits in average Retail loans in average INCOME STATEMENT Net interest income Net non-interest income General administrative expenses Depreciation Net provisions Profit before tax Tax on profit Other taxes Number of employees (at the year-end) 2,742 2,904 3,979 SHARES Number of shareholders Number of shares 6,905,121 6,905,121 7,682,015 Nominal value of a share 2,000 2,000 2,000 Book value of a share 9,893 11,270 13,615 FIGURES In % a) Capital - amount capital adequacy ratio b) Asset quality - non-performing asset portfolio/gross total assets special provisions for on-balance sheet/gross total assets special provisions for on-balance sheet/non-performing asset portfolio c) Profitability - net interest margin return on total average assets before tax return on total average assets after tax return on capital before tax return on capital after tax d)total operating expenses -total operating expenses/average total assets e) Liquidity - avg. liquidity assets/avg. liquidity sources of funds secondary liquidity/demand deposits Nova Ljubljanska banka d.d., Ljubljana

83 Nova Ljubljanska banka d.d., Ljubljana Audited NLB d.d. Financial Statements under Slovenian Accounting Standards AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN

84 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Audit Report To the Management and the Supervisory Board of Nova Ljubljanska banka d.d., Ljubljana We have audited the accompanying financial statements of Nova Ljubljanska Banka d.d., Ljubljana consisting of the balance sheet as of 31 December 2001, the profit and loss statement and the cash flow statement for the year then ended. These financial statements are the responsibility of the managing board of the Bank. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the fundamental auditing principles and the International Auditing Standards. Those principles and standards require that we plan and perform our review to obtain reasonable assurance about whether the financial statements are free of material misstatements. The audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements referred to above give a true and fair view of the financial position of the company as of 31 December 2001, the results of its operations, and the cash flows for the year then ended, in conformity with the Slovenian Accounting Standards issued by Slovenian Institute of Auditors. Vera Menard, BSc.Ec. Partner and Certified Auditor Ljubljana, 12 April Nova Ljubljanska banka d.d., Ljubljana KPMG SLOVENIJA, podjetje za revidiranje in poslovno svetovanje, d.o.o. Andrej Korinπek, BSc.Ec. Managing Director and Certified Auditor

85 Income Statement I n c o m e S t a t e m e n t Notes Year 2001 Year 2000 Interest and similar income 3 52,892,134 40,747,016 Interest and similar expenses 3 (32,397,409) (24,487,422) Net interest and similar income 20,494,725 16,259,594 Income from securities 4 2,563,996 1,880,886 Fees and commissions income 5 15,674,370 12,015,116 Fees and commissions expense 5 (3,195,501) (2,499,057) Net fees and commissions 12,478,869 9,516,059 Gains from finance transactions 6 18,154,759 12,571,999 Losses from finance transactions 6 (17,020,244) (11,900,781) Net profit from finance transactions 1,134, ,218 Other operating income 7 16,441,354 16,639,655 General administrative expenses 8 (29,322,554) (23,123,654) Depreciation 9 (4,083,160) (3,000,637) Other operating expenses 10 (323,277) (270,944) Write-offs (454,915) (1,772,767) Recoveries from assets previously written off 3,444,752 1,369,064 Charge for bad and doubtful debts 11 (61,002,009) (46,196,503) Write back of bad and doubtful debts 11 52,308,423 38,796,627 Provisions for general banking risks 32 (700,000) (1,011,771) OPERATING PROFIT 12,980,719 9,756,827 Extraordinary (loss)/profit 12 (843,811) 256,183 PROFIT BEFORE TAX 12,136,908 10,013,010 Tax 13 (6,082,896) (5,020,262) NET PROFIT FOR THE YEAR 6,054,012 4,992,748 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 83

86 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN B a l a n c e S h e e t Balance Sheet Notes Cash and balances with the Central Bank 14 79,219,764 32,458,342 Placements with, and loans to, other banks ,210,152 99,839,026 Loans and advances to customers ,659, ,079,953 Investment securities ,241, ,847,838 Securities held for trading 18 72,260,029 43,894,596 Investments in associated companies and other investments 19 6,146,813 11,231,525 Investments in subsidiaries 20 32,131,957 29,713,394 Intangible assets 21 5,702,879 2,997,073 Property and equipment 22 40,924,072 26,760,897 Own shares 50,254 56,646 Other assets 23 21,784,476 12,199,194 Accrued income and deferred expenses 24 9,976,042 7,749,925 TOTAL ASSETS 1,382,307, ,828,409 Deposits and borrowings from banks ,532, ,898,661 Deposits and borrowings from other customers ,506, ,107,961 Debt securities 28 22,131,249 15,780,199 Other liabilities 29 21,928,873 12,012,158 Accruals and deferred income 30 20,910,712 13,778,511 Provisions for liabilities and charges 31 22,996,173 16,200,236 Provisions for general banking risks 32 3,428,616 2,536,371 Subordinated liabilities 33 13,284,570 12,690,372 Subscribed capital 34 15,364,030 13,810,242 Paid in equity surplus 34 12,654,020 - Reserves 34 35,543,390 33,960,519 Capital revaluation adjustment 34 28,802,475 22,386,412 Retained profit 34 5,602,120 2,674,019 Net profit for the year 34 6,622,632 4,992,748 TOTAL LIABILITIES 1,382,307, ,828,409 Off-balance sheet position ,967, ,868,701 The Management Board approved the financial statements and notes to the financial statements. Alojz Jamnik Boris Zakrajπek Marko VoljË Deputy President & Deputy President & President & Chief Deputy CEO Deputy CEO Executive Officer 84 Nova Ljubljanska banka d.d., Ljubljana

87 S t a t e m e n t o f C h a n g e s i n F i n a n c i a l P o s i t i o n Statement of Changes in Financial Position Year 2001 Year 2000 INFLOWS Cash and balances with the Central Bank at 1 January 34,730,426 29,509,029 Capital inflows 24,731,437 3,930,858 Subscribed capital 1,553,788 - Paid in equity surplus 12,654,020 - Reserves 1,582,871 - Provisions 2,699,688 (823,096) Provisions for general banking risks 714,699 1,082,595 Capital revaluation adjustment 968,386 (75,007) Retained profit (2,064,647) (1,246,382) Net profit for the year 6,622,632 4,992,748 Other funds inflows 374,429, ,562,335 Deposits and borrowings from banks 18,161,216 33,497,772 Deposits and borrowings from other customers 333,110,649 47,329,688 Debt securities 5,246,436 7,380,306 Subordinated liabilities (294,128) 7,830,575 Other liabilities 9,075,863 4,107,491 Accruals and deferred income 6,167,705 2,582,937 Provisions for liabilities and charges 2,962,232 (166,434) TOTAL INFLOWS 433,891, ,002,222 OUTFLOWS - USE OF FUNDS Capital outflows 9,243,272 4,573,054 Own shares (10,357) 60,611 Investment in associated companies and other investments (5,870,919) 1,568,790 Investments in subsidiaries 338, ,828 Intangible assets 2,496, ,565 Property and equipment 12,289,912 1,554,260 Other funds outflows 345,428,800 96,698,742 Placements with, and loans to, other banks 5,915,504 16,656,141 Loans and advances to customers 163,031,191 62,284,660 Investments securities 140,774,334 (8,011,645) Securities held for trading 25,292,811 21,461,972 Other assets 8,731,338 2,069,147 Accruals and deferred income 1,683,622 2,238,467 Cash and balances with the Central Bank at 31 December 79,219,764 34,730,426 TOTAL OUTFLOWS - USE OF FUNDS 433,891, ,002,222 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 85

88 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s Notes to Financial Statements 1. Significant accounting policies The principal accounting policies applied by the Nova Ljubljanska banka d.d., Ljubljana ( the Bank or NLB ) for the preparation of the financial statements are set out below : a) Basis of presentation of financial statements The Bank s financial statements have been prepared in accordance with the Slovenian Accounting Standards and the Bank of Slovenia s regulations, represented by the Decree on the Classification of On-Balance Sheet and Off- Balance Sheet Asset Items of Banks and Savings Banks and the Decree on Establishing Specific Provisions of Banks and Savings Banks and other Bank of Slovenia s regulations. b) Revaluation Assets and liabilities are revalued in accordance with contractual agreements between the Bank and its clients, or in accordance with the Slovenian Accounting Standards. Assets and liabilities in tolars which fall due for payment more than 30 days after they arise can be revalued at a rate equal to the rolling inflation index (TOM). Assets and liabilities with a maturity of up to 30 days are not revalued. Domestic investments, property and equipment, intangible assets, own shares and capital are revalued using the general price index. Revaluation income and expenses are included in the revaluation statement, which is presented in a net amount in the income statement under other income or expenses. c) Assets and liabilities in foreign currencies Assets and liabilities in foreign currencies are converted into the tolar equivalent at the mid-market exchange rate of the Bank of Slovenia as at the last day of the accounting period. Foreign exchange gains and losses occurring as a result of the conversion are included in the revaluation statement. d) Interest income and expenses Interest is charged in accordance with Slovenian legislation and by agreement with the Bank and its clients. Interest expenses are included in the income statement as soon as they are accrued, while interest income is included in the income statement depending on the valuation of the client. Where the conditions set out in the Bank of Slovenia s regulations are met, the income from performing assets (A and B grading groups) are included in the income statement as soon as they are accounted, with appropriate charges being set against assets in B grading group. Income from non-performing assets (C, D and E grading groups) are excluded until paid, and reported under liabilities as suspended income. e) Income and expenses from commission and fees Income and expenses from commission and fees are included in the income statement on the same basis as interest income and expenses. f) Investments in securities Investments in securities are initially recorded at cost. Securities are stated in the balance sheet at the lower of the cost or market value. If there is no market value for securities, then their value is assessed in accordance with the grading group of the issuer. g) Investments in subsidiaries and associated companies and other investments Investments in subsidiaries are accounted for using the equity method of accounting and investments in associated companies and other investments are accounted at the lower of cost or market value. If there is no market value for investments, then their value is assessed in accordance with the grading group of the issuer. h) Loans Loans are stated in the balance sheet at the amount of the principal outstanding, increased by interest capitalised where appropriate, less any provision for unrecoverable amounts. i) Provisions A specific risk provision is established on loans, other assets and off-balance sheet items based on the Bank of Slovenia s regulation. In determining the rating group of specific asset (A, B, C, D or E group), management con- 86 Nova Ljubljanska banka d.d., Ljubljana

89 N o t e s t o F i n a n c i a l S t a t e m e n t s siders many factors, including (but not limited to) domestic economic conditions, the composition of the loan portfolio, and prior bad debt experience. General banking risk provision is established for the purpose of protecting against risks arising from the Bank s overall operations. Increases and decreases in provisions are shown in the financial statements on a gross basis. j) Property and equipment All property and equipment is initially recorded at cost. The carrying value of property and equipment is subsequently revalued annually to the approximate market value. Depreciation of property and equipment is provided on a straight-line basis at rates designed to write off cost or valuation of buildings and equipment over their estimated useful lives. The following annual depreciation rates are applied: % % Buildings Computers Furniture and equipment Motor vehicles Other assets Property and equipment in the course of construction is not depreciated until it is brought into use. Maintenance and repairs are charged to the income statement when the expenditure is occurred and renewals capitalised. k) Intangible assets Intangible assets include computer software, long-term deferred costs and long-term deferred interest. Amortisation is provided on a straight-line basis at rates designed to write off the cost of software over their estimated useful lives. The current system software and the new information technology system are amortised over a period of ten years and other software over a period of five years. Intangible assets in the course of construction are not amortised until they are brought into use. l) Derivative financial instruments The Bank enters into derivative financial instruments for hedging and for trading purposes. Derivative financial instruments for trading purposes are carried at their fair value in the balance sheet only when unfavourable to the Bank. Gains and losses on trading derivative instruments are included in net profit/loss arising from finance transactions as they arise. Gains and losses on other derivative instruments used for hedging purposes are deferred and recognised as income or expense on the same basis as the corresponding expense or income on the hedged position. m) Tax on profit and balance sheet tax Slovenian corporate tax is provided on taxable profits at the rate of 25%. Foreign taxes are provided for in accordance with local tax laws and accounting principles. In 2001 the Slovenian balance sheet tax is calculated as a 3% levy on certain balance sheet items. According to Slovenian legislation the maximum balance sheet tax is limited to 50% of pre-tax profit. Where the 3% levy exceeds 50% of profits, the lower tax charge is payable. n) Funds managed on behalf of third parties The Bank manages a significant amount of assets on behalf of legal entities and individuals. A fee is charged for this service. These assets are not shown in the Bank s balance sheet, however details of the funds under management are given in Note 36. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 87

90 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 2. Merger of subsidiary banks On 1 October 2001, Banka Velenje d.d., Velenje, Pomurska banka d.d., Murska Sobota and Dolenjska banka d.d., Novo mesto were merged with the NLB. At the time of the mergers, all the assets and liabilities of the three banks were transferred to the NLB. On the basis of the share exchange ratio, the subscribed capital of the NLB was increased by tolars 1,553,788 thousand, the share premium was increased by tolars 12,650,942 thousand and negative goodwill in the amount of tolars 2,462,274 thousand was calculated. According to IAS 22 a restructuring provision in amount of tolars 1,400,00 thousand was charged against the negative goodwill. The Bank will amortise the remaining part of the negative goodwill over a period of five years. The merger of the banks increased the Bank s assets and liabilities as set out below: Cash and balances with the Central Bank 7,051,023 Placements with, and loans to, other banks 11,808,060 Loans and advances to customers 121,164,700 Investment securities 62,286,316 Securities held for trading 3,911,638 Investments in associated companies and other investments 1,669,098 Investments in subsidiaries (9,201,843) Intangible assets 793,117 Property and equipment 10,268,706 Other assets 4,789,985 Accrued income and deferred expenses 798,238 TOTAL ASSETS 215,339,038 Deposits and borrowings from banks (318,348) Deposits and borrowings from other customers 185,065,646 Debt securities 2,733,009 Other liabilities 1,803,471 Accruals and deferred income 5,739,283 Provisions for liabilities and charges 4,660,343 Subordinated liabilities 30,000 Subscribed capital 1,553,788 Paid in equity surplus 12,650,942 Capital revaluation adjustment 852,284 Net profit for the year 568,620 TOTAL LIABILITIES 215,339, Nova Ljubljanska banka d.d., Ljubljana

91 3. Interest income and expense N o t e s t o F i n a n c i a l S t a t e m e n t s a) Analysis by type of assets and liabilities Year 2001 Year 2000 Interest income Deposits with the Central Bank 222, ,680 Loans and advances to banks 1,533,017 1,229,316 Loans and advances to customers 30,237,386 23,884,559 Deposits to banks 4,030,149 3,224,506 Deposits to customers 178, ,697 Investment securities 13,913,205 10,664,482 Securities held for trading 2,695,027 1,315,231 Other assets 82,453 62,545 TOTAL 52,892,134 40,747,016 Interest expense Demand deposits from banks 34,693 36,365 Time deposits from banks 3,414,209 2,284,947 Borrowings from banks 6,227,222 4,946,046 Demand deposits from other customers 2,578,581 2,127,907 Time deposits from other customers 18,573,849 14,001,575 Borrowings from other customers 348, ,043 Debt securities 1,207, ,624 Other liabilities 13,631 91,915 TOTAL 32,397,409 24,487,422 Analysis by sector Year 2001 Year 2000 Income Expenses Income Expenses Enterprises 17,529,996 4,579,736 13,048,390 2,780,729 Government departments and agencies 13,099,760 3,184,174 11,729,014 4,738,799 Banks 12,019,459 9,717,797 7,872,310 7,296,146 Citizens 7,928,206 11,758,922 6,495,238 7,289,575 Other financial organisations 1,245,691 2,317, ,614 1,698,042 Non-residents 402, , , ,641 Non-profit service providers to households 18,220292,551 13, ,689 Default interest 648,374 1, ,165 6,801 TOTAL 52,892,134 32,397,409 40,747,016 24,487,422 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 89

92 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 4. Income from securities Year 2001 Year 2000 Income from investments in subsidiaries - banks 1,495, ,889 - other financial organizations 407, ,994 - enterprises 8,332 76,462 Income from investments in associated companies and other investments - banks 372, ,605 - other financial organizations 6,475 3,350 - enterprises 147, ,808 Income from trading securities 126, ,778 TOTAL 2,563,996 1,880, Income and expenses from fees and commissions Year 2001 Year 2000 Fees and commissions income: - Payments 4,895,032 3,815,211 - Intermediation 3,986,515 2,997,794 - Administrative services 3,225,379 2,285,890 - Guarantees 1,669,338 1,266,194 - Lending 1,595,110 1,435,771 - Depositing valuables and safe custody 288, ,965 - Other services 14,726 12,291 TOTAL 15,674,370 12,015,116 Fees and commissions expense: - Banking services 2,372,952 1,861,010 - Payments 153, ,314 - Intermediation 334, ,920 - Brokerage 84,764 9,928 - Other services 250,134 86,885 TOTAL 3,195,501 2,499, Net profit from finance transactions Year 2001 Year 2000 Income Income from dealing securities 1,432, ,535 Income from derivative financial instruments 10,022,009 5,107,719 Income from valuation of securities 375, ,987 Income from dealing in foreign currency 6,324,739 6,385,758 TOTAL 18,154,759 12,571,999 Expenses Expenses in dealing securities 712, ,661 Expenses in derivative financial instruments 9,290,801 5,228,046 Expenses in valuation of securities 1,885,328 1,542,901 Expenses in dealing in foreign currency 5,131,433 4,682,173 TOTAL 17,020,244 11,900,781 NET PROFIT FROM FINANCE TRANSACTIONS 1,134, , Nova Ljubljanska banka d.d., Ljubljana

93 N o t e s t o F i n a n c i a l S t a t e m e n t s The increase in income and expenses from trading in derivative financial instruments results from the increased volume of transactions in derivative financial instruments (see note 35b). 7. Other operating income a) Analysis by type Year 2001 Year 2000 Income from non-banking services - information technology services 1,559,294 1,646,177 - other services 1,970,896 1,359,578 Net revaluation income 12,834,615 13,550,835 Other income 76,549 83,065 TOTAL 16,441,354 16,639,655 b) Analysis of the revaluation income statement Year 2001 Year 2000 Revaluation income Foreign exchange gains 40,458,690 49,935,459 Revaluation interest - loans 30,273,051 25,154,892 - securities 10,251,771 11,257,209 Revaluation of property, equipment and intangible assets 2,108,958 2,119,929 Revaluation of depreciation 162, ,574 Revaluation of investments 1,657,600 2,032,481 Other revaluation income 20,436 33,918 TOTAL 84,932,981 90,664,462 Revaluation expenses Foreign exchange losses 40,250,757 50,189,751 Revaluation interest - borrowings and deposits 24,953,833 19,760,735 - securities issued 1,065, ,122 Revaluation of capital 5,564,326 6,009,750 Revaluation of provisions for general banking risks 192, ,600 Revaluation of other provisions 24,517 - Other revaluation expenses 46,954 96,669 TOTAL 72,098,366 77,113,627 NET REVALUATION INCOME 12,834,615 13,550,835 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 91

94 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 8. General administrative expenses Year 2001 Year 2000 Employee costs - gross salaries 12,471,986 10,275,816 - social security costs 2,753,159 2,220,331 - other employee costs 1,733,597 1,071,651 Other general administrative expenses - services 3,526,015 2,552,873 - rents 1,779,842 1,480,789 - maintenance 2,567,739 1,836,270 - materials 1,665,568 1,204,430 - advertising 914, ,590 - consulting services 712, ,661 - insurance 435, ,572 - travel costs 333, ,518 - entertainment expenses 233, ,559 - education and scholarships 175, ,125 - other administrative expenses 19,595 1,469 TOTAL 29,322,554 23,123, Depreciation Year 2001 Year 2000 Depreciation of property and equipment 3,425,911 2,541,241 Depreciation of intangible assets 494, ,822 Revaluation of depreciation 162, ,574 TOTAL 4,083,160 3,000, Other operating expenses Year 2001 Year 2000 Taxes 32,939 32,140 Membership fees 182, ,195 Other expenses 108,068 91,609 TOTAL 323, , Nova Ljubljanska banka d.d., Ljubljana

95 11. Charge for/write back of bad and doubtful debts N o t e s t o F i n a n c i a l S t a t e m e n t s Year 2001 Year 2000 Provisions Provisions Provisions Provisions made released made released Provisions for A graded balance sheet and off-balance sheet assets 8,612,4807,425,146 5,802,457 4,517,147 Provisions for other off-balance sheet assets 12,091,053 11,713,427 8,927,960 10,090,319 Provisions for balance sheet assets, classified in other credit rating groups: - loans and advances to banks 5,158,742 3,883,106 2,470,307 2,561,747 - loans and advances to other customers 24,922,474 20,775,916 23,067,516 17,679,189 - investment securities 22, ,049 37, securities held for trading 1,598,373 1,530, , ,198 - investments in subsidiaries 865, , , investments in associated companies and other investments 1,480,975 1,834, , ,789 - other assets 4,486,312 3,200,213 3,006,997 2,543,328 Provisions for overdrafts 951, , , ,147 Provisions for offsetting by groups 268, , ,190 - Negative goodwill - 53, ,763 Other long-term provisions 543,082-10,181 - TOTAL 61,002,009 52,308,423 46,196,503 38,796, Extraordinary (loss)/profit Year 2001 Year 2000 Extraordinary income Income from disposal of property and equipment 151,019 50,089 Interest income for previous years 33, ,100 Other extraordinary income 133,277 50,669 TOTAL 317, ,858 Extraordinary expenses Expenses from disposal of property and equipment 1,016,597 82,488 Other extraordinary expenses 144, ,187 TOTAL 1,161, ,675 EXTRAORDINARY LOSS/PROFIT (843,811) 256,183 In 2001 the Bank sold to the Slovenian government an office building at Beethovnova 11 in Ljubljana which had been renting to the government since Over the period of the lease the Bank earned tolars 1,089,009 thousand in rent payments, and recorded revaluation amounting to tolars 549,453 thousand and depreciation of tolars 175,028 thousand. Because the selling price was reduced by the amount of the rent payments already made, the Bank recorded the sale as an expense amounting to tolars 999,085 tolars, which is merely a result of the time mismatch in the disclosure of the relevant incomes and expenses. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 93

96 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 13. Tax Year 2001 Year 2000 Tax on profit 4,740,534 3,569,753 Balance sheet tax 1,342,362 1,450,509 TOTAL 6,082,896 5,020, Cash and balances with the Central Bank Tolars Foreign currency Tolars Foreign currency Cash 9,933,729 35,141,465 5,600,492 3,981,540 Balances with the Central Bank 34,144,570-22,876, Nova Ljubljanska banka d.d., Ljubljana 44,078,299 35,141,465 28,476,802 3,981,540 TOTAL 79,219,764 32,458,342 The increase in cash in foreign currency results from the introduction of the euro and the consequent abolition of the old European currencies. The Bank is required to maintain an obligatory reserve with the Bank of Slovenia, relative to the volume and structure of its customer deposits. The current requirement of the Bank of Slovenia regarding the calculation of the amount to be held as obligatory reserve is as follows: - 12 % of sight deposits and time deposits up to 30 days - 6 % of time deposits from 31 to 90 days - 2 % of time deposits from 91 to 180 days - 1 % of time deposits from 181 days and up to one year. In December 2001, the obligatory reserve of the Bank amounted to tolars 34,809,890 thousand. 15. Placements with, and loans to, other banks a) Maturity analysis Short-term loans - in tolars 2,190,000 7,504,000 - in foreign currency 102,904,187 81,906,344 Long-term loans - in tolars 387, ,663 - in foreign currency 8,253,048 8,668,303 Current portion of long-term loans - in tolars 1,043,130 1,046,555 - in foreign currency 2,687,445 2,925, ,465, ,473,886 Provisions (4,255,012) (2,634,860) TOTAL 113,210,152 99,839,026 A detailed maturity analysis of loans to banks is given in Note 38 - Balance sheet maturity analysis.

97 b) Analysis by type of loan N o t e s t o F i n a n c i a l S t a t e m e n t s Demand deposits 10,785,200 4,691,644 Time deposits 85,304,235 71,910,731 Loans 19,323,676 24,391,795 Called guarantees 20,259 35,577 Other investments 2,031,794 1,444, ,465, ,473,886 Provisions (4,255,012) (2,634,860) TOTAL 113,210,152 99,839,026 c) Geographical analysis Slovenia 14,459,924 23,703,949 OECD countries 94,516,004 73,654,931 Other countries 4,234,224 2,480,146 TOTAL 113,210,152 99,839,026 d) Analysis by related party Subsidiaries 24,048,739 23,762,429 Associated companies and other investments 9,574,217 16,872,952 Other banks 83,842,208 61,838, ,465, ,473,886 Provisions (4,255,012) (2,634,860) TOTAL 113,210,152 99,839,026 e) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 90,860,754 8,978,272 69,999,756 7,385,496 Increase: - loans made 13,886,230,841 5,118,924 8,094,233,568 4,057,763 - interest added to principal 1,029,419 45, ,173 61,123 - exchange differences 6,696,270498,582 6,558, ,466 - merger of banks 24,676, Decrease: - repayments (13,896,752,693) (28,076) (8,083,770,164)- - write-offs - - (23,672)- - merger of banks (10,826,975) (2,041,187) - - Current portion of long-term loans 4,045,242 (4,045,242) 3,341,064 (3,341,064) Provisions (944,399) (331,237) (2,048)93,488 Balance at 31 December 105,014,681 8,195,471 90,860,754 8,978,272 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 95

98 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 16. Loans and advances to customers a) Analysis by type of customer Short-term Long-term Short-term Long-term In tolars - enterprises 113,005, ,848,060 66,582,703 99,945,980 - government departments and agencies 7,806,842 59,664,696 2,949,380 37,450,983 - citizens 31,902, ,440,966 20,171,276 97,865,737 - other financial organisations 7,487,312 3,185,731 7,336,059 90,459 - non-profit household service providers 206, , , ,997 In foreign currency - enterprises 37,104,548 94,959,281 30,392,622 58,884,903 - government departments and agencies 119,456 1,532,090-19,566,722 - citizens 119,187 1,611,384 76,136 1,392,540 - other financial organisations 447,024 10,012,975-7,117,397 - non-profit household service providers - 32,930-31,457 - non-residents 14,259,9702,910,571 10,815,600 3,512,351 Current portion of long-term loans 113,434,194 (113,434,194) 81,005,272 (81,005,272) 96 Nova Ljubljanska banka d.d., Ljubljana 325,892,340341,944, ,532, ,970,254 Provisions (24,746,452) (6,430,840) (15,802,914)(5,619,809) 301,145, ,513, ,729, ,350,445 TOTAL 636,659, ,079,953 b) Analysis by sector Citizens 155,496, ,394,628 Manufacturing 114,726,838 66,445,253 Commerce and finance 113,502,688 72,380,722 Services 82,181,982 60,693,843 Transport and communication 78,631,847 48,190,079 Ministries 43,193,706 43,969,567 Energy 27,825,146 33,699,162 Small enterprises 19,705,422 11,111,061 Construction 16,598,118 11,125,006 Agriculture, forestry and fishing 4,400,135 2,237,969 Mining 2,948,847 1,249,277 Other 8,625,547 5,006, ,837, ,502,676 Provisions (31,177,292) (21,422,723) TOTAL 636,659, ,079,953

99 c) Analysis by type of advance N o t e s t o F i n a n c i a l S t a t e m e n t s Loans 633,198, ,041,541 Overdrafts 26,645,775 18,956,731 Called guarantees 2,609,469 1,781,764 Purchased debts 3,597,181 3,153,626 Other investments 1,785,755 1,569, ,837, ,502,676 Provisions (31,177,292) (21,422,723) TOTAL 636,659, ,079,953 d) Guaranteed loans Loans which are guaranteed by the Republic of Slovenia or other Slovenian banks and have not been specifically provided against are as follows: Republic of Slovenia guarantees 90,615,847 74,386,574 Other banks' guarantees 4,223,500 2,165,337 TOTAL 94,839,347 76,551,911 e) Analysis by related party Subsidiaries 22,458,257 14,487,163 Associated companies and other investments 9,003,739 9,195,795 Members of Management and Supervisory Board 33,469 34,889 Other customers 636,341, ,784, ,837, ,502,676 Provisions (31,177,292) (21,422,723) TOTAL 636,659, ,079,953 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 97

100 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s f) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 203,729, ,350, ,975, ,440,928 Increase: - loans made 449,825, ,689, ,852, ,253,708 - interest added to principal 3,039,995 12,964,160 2,358,383 11,260,262 - exchange differences 3,939,169 4,905,951 4,386,246 6,307,330 - merger of banks 75,850,259 45,314, Decrease: - repayments (556,669,518) (12,854,040) (343,947,001)(10,745,729) - write-offs (278,195) (169) (1,636,195)(36,804) Current portion of long-term loans 126,310,174 (126,310,174) 85,135,066 (85,135,066) Provisions (4,600,675) 454,118 (5,394,143)5,816 Balance at 31 December 301,145, ,513, ,729, ,350, Investment securities a) Analysis by type of securities Short-term Long-term Short-term Long-term In foreign currency - Treasury bills of the Bank of Slovenia 161,343,184-87,042, Bonds of the Republic of Slovenia - 2,825,117-3,702,099 - Bonds of the Republic of Bosnia and Herzegovina - 370, ,796 In tolars - Bonds of the Republic of Slovenia - rehabilitation bonds - 83,142,400-88,739,338 - for unpaid foreign currency deposits - 26,846,297-23,282,306 - for paid foreign currency deposits - 20,453,427-3,742,772 - other - 49, Bonds from others - 1,110,004-1,067,064 - Treasury bills of the Bank of Slovenia 58,041, Bills of the Bank of Slovenia 10,429,778-1,272,119 - Current portion of investment securities 4,233,625 (4,233,625) 13,569,980 (13,569,980) 98 Nova Ljubljanska banka d.d., Ljubljana 234,048, ,563, ,884, ,529,395 Provisions - (370,180) - (565,796) 234,048, ,193, ,884, ,963,599 TOTAL 364,241, ,847,838

101 N o t e s t o F i n a n c i a l S t a t e m e n t s At 31 December 2001 the Bank held tolars 83,142,400 thousand of bonds of the Republic of Slovenia (rehabilitation bonds). The bonds are divided among 10 different series with maturities ranging from 2004 to These bonds receive revaluation interest based on the revaluation index and real interest at rates of between 5.3% and 6.5% depending on maturity. Certain series of these bonds allow the holder to elect to receive revaluation interest based on the movement of the deutschemark (from 1 January 2002 euro) against the tolar rather than the revaluation index. Such elections have to be made by 15 October of the preceding year. The Bank did not make any such elections for In 2001 the Bank opted for a further sale of these bonds amounting to tolars 2,382 million and so transferred them from investment portfolio to the dealing portfolio. The bonds of the Republic of Slovenia for unpaid foreign currency deposits represent amounts taken over by the Republic of Slovenia under the law on the settlement of liabilities from unpaid foreign currency deposits. The bonds amounting to tolars 22,317,151 thousand are denominated in tolars with a real interest rate of 4.5% per annum and mature in Other bonds amounting to tolars 4,528,522 thousand are denominated in deutschemark (from 1 January 2002 euro) with a real interest rate of 8% per annum and mature in With the merger of the banks NLB acquired these bonds in the amount of tolars 5,101,718 thousand. The bonds of the Republic of Slovenia totalling tolars 20,453,427 thousand represent amounts taken over by the Republic of Slovenia under the law on the settlement of liabilities from paid foreign currency deposits. In November 1996 the Republic of Slovenia issued the bonds with a maturity of 20 years and revaluation interest of 90% of the general price index and a real interest rate of 3% per annum. With the merger of the banks NLB acquired these bonds in the amount of tolars 16,428,121 thousand. Other securities include Factor banka d.d. bonds with a total value of tolars 150,000 thousand which have the nature of a subordinate debt. Other than its interest entitlement (at an annual rate of 6 per cent) and the right to repayment of the principal the Bank does not have any other rights deriving from these bonds. The market value of investment securities exceeds the carrying value for tolars 636,395 thousand (tolars 500,779 thousand as at 31 December 2000). At 31 December 2001 the investment securities amounting to tolars 27,266,116 thousand (tolars 27,550,201 thousand as at 31 December 2000) were listed on the stock exchange. b) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 101,884, ,963,599 80,748, ,906,400 Increase: - purchase of securities 294,693, ,812 79,813, ,401 - transfer from trading securities ,612 - revaluation and exchange differences 6,166,679 8,837,414 7,299,169 10,367,952 - valuation at market price merger of banks 40,835,661 21,450, Decrease: - sale or repayments of securities (209,537,442) (218,049) (79,104,757)- - valuation at market price - - (2,245)(4,339) - transfer to trading securities (3,960,745) (3,283,096) (124,830)(8,853,477) Current portion of long-term securities 3,965,878 (3,965,878) 13,255,005 (13,255,005) Provisions - 195,615 - (37,945) Balance at 31 December 234,048, ,193, ,884, ,963,599 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 99

102 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 18. Securities held for trading a) Analysis by type of security Bonds - Republic of Slovenia - rehabilitation bonds 6,420,994 6,200,322 - eurobonds 6,096,467 8,212,378 - for unpaid foreign currency deposits 2,178,876 1,506,023 - for paid foreign currency deposits 450,134 1,710,826 - other bonds 2,052, ,057 - other issuers 39,294,883 17,378,743 Shares - banks 172, ,638 - other issuers 15,499,336 8,409,968 Treasury bills 501,477 - Other securities 228, , Nova Ljubljanska banka d.d., Ljubljana 72,896,192 44,463,016 Provisions (636,163) (568,420) TOTAL 72,260,029 43,894,596 The market value of securities held for trading exceeds the carrying value for tolars 1,131,946 thousand (tolars 629,280 thousand as at 31 December 2000). At 31 December 2001 the securities held for trading amounting to tolars 58,922,966 thousand (tolars 33,708,556 thousand as at 31 December 2000) were listed on the stock exchange. b) Analysis of movements Balance at 1 January 43,894,596 21,888,593 Increase: - purchase of securities 111,820,483 75,694,955 - transfer from investment securities 7,243,841 8,978,307 - revaluation and exchange differences 2,871,606 1,974,270 - merger of banks 3,911,638 - Decrease: - sale of securities (96,673,604) (62,637,084) - valuation at market price (728,904) (1,108,476) - transfer to investment securities - (673,612) - write-offs (11,884) - Provisions (67,743) (222,357) Balance at 31 December 72,260,029 43,894,596

103 19. Investments in associated companies and other investments N o t e s t o F i n a n c i a l S t a t e m e n t s a) Analysis by type of investment In tolars - banks 2,486,163 2,342,804 - other financial organisations 693, ,358 - enterprises 2,075,345 1,007,406 In foreign currency - banks 1,002,728 7,492,155 - other financial organisations 648, ,754 - enterprises 4,396 1,940 6,910,877 11,903,417 Provisions (764,064) (671,892) TOTAL 6,146,813 11,231,525 b) Analysis of movements Balance at 1 January 11,231,525 8,967,278 Increase due to merger of banks 1,669,098 - New investments 349,597 2,279,502 Sale of investments (694,528) (317,686) Revaluation and exchange differences 626, ,406 Transfer to investments in subsidiaries (7,849,559) - Valuation 460,465 13,468 Write-offs - (13,744) Provisions 353,888 (410,699) Balance at 31 December 6,146,813 11,231,525 With the merger of the banks in 2001 the Bank increased its equity stake in Banka Celje from per cent to per cent. In December 2001 NLB increased its equity stake in LHB Internationale Handelsbank AG, Frankfurt /Main to per cent, subsequently LHB Bank and Tutunska banka, became its subsidiaries (see Note 20). At the end of 2001 NLB sold its capital investment in Revoz and Papirnico VevËe for tolars 3,328,171 thousand. Management consider that the fair value of the investments in associated companies is not less than the carrying value. The principal associated companies are: Equity as at Profit for Ownership Voting Investment as 31 December the year interest rights at 31 December in % % 2001 Banka Celje d.d., Celje 23,579,982 1,109, ,486,163 Adria Bank AG, Vienna 7,071, , ,002,728 Bankart d.o.o., Ljubljana 1,242, , ,649 Skupna pokojninska druæba d.d., Ljubljana 866,166 (167,227) ,379 BanËno-zavarovalna druæba d.o.o., Ljubljana 2,034 (720) ,931 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 101

104 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 20. Investments in subsidiaries a) Analysis by type of investment In tolars - banks 9,640,786 16,996,859 - other financial organisations 4,380,063 3,525,862 - enterprises 3,845,228 3,282,587 In foreign currency - banks 13,662,252 5,068,887 - other financial organisations 1,468,760 1,326,847 Provisions 102 Nova Ljubljanska banka d.d., Ljubljana 32,997,089 30,201,042 (865,132) (487,648) TOTAL 32,131,957 29,713,394 b) Analysis of movement Balance at 1 January 29,713,394 26,820,888 Increase due to merger of banks 730,875 - Transfer from investments in associated companies 7,849,559 - Revaluation and exchange differences 2,057,548 2,645,968 Decrease due to merger of banks (9,932,718) - Valuation at equity method 2,072, ,512 Provisions (359,589) (475,974) Balance at 31 December 32,131,957 29,713,394 Investment in LHB Bank has been adjusted by using the equity method of accounting which affected the Bank's reserves as a change in accounting policy.

105 The Bank's subsidiaries are: N o t e s t o F i n a n c i a l S t a t e m e n t s Equity as at Profit for Ownership Voting Investment 31 December the Year Interest Rights as at in % in % December 2001 Koroπka banka d.d., Slovenj Gradec 11,205, , ,631,111 Banka Domæale d.d., Domæale 6,799, , ,721,006 Banka Zasavje d.d., Trbovlje 5,721, , ,288,669 LHB Internationale Handelsbank AG, Frankfurt/Main 14,763,052 1,467, ,564,752 LBS Bank-New York, New York 5,317,349 (196,824) ,360,679 Tutunska banka a.d., Skopje 6,276, , ,821 LB InterFinanz AG, Zürich 1,468,835 55, ,468,760 LB HIPO d.o.o., Ljubljana 3,388,330 3, ,388,330 LB Leasing d.o.o., Ljubljana 2,159, , ,173,596 LB Maksima d.o.o., Ljubljana 2,144, , ,800,571 Real d.o.o., Novo mesto 348,702 1, ,438 FIT Leasing d.o.o., Velenje 167,088 (97,682) ,777 Feniks d.o.o., Murska Sobota 156,531 11, ,530 Prospera plus d.o.o., Ljubljana 111, ,859 LB Factors d.d., Ljubljana 337,038 43, ,588 LB Trading d.o.o., Ljubljana (50,759)2, , Intangible assets Software Deferred Deferred Intangible Assets Total Costs Interest in Course of Transfer or Construction/ Implementation Cost or valuation - at 1 January ,246,811 1,147,006 87,863 1,610,421 4,092,101 Revaluation 100,385 73, , ,212 Additions: - due to merger of banks 419, , ,834 1,095,788 - additions 948, ,432 9,415 1,075,323 2,205,532 Disposals - (49,624)(66,989) (3,294)(119,907) - at 31 December ,714,982 1,458,052 30,289 3,391,403 7,594,726 Depreciation - at 1 January , ,843 66,228-1,095,028 Revaluation 41,330 58, ,386 Increase due to merger of banks 203,929 98, ,671 Disposals (227)(49,626)(66,989) - (116,842) Charge for the year 323, , ,774 Interest and rentals - 10,020 6,810-16,830 - at 31 December ,174 1,022,624 6,049-1,891,847 Net carrying value - at 1 January , ,163 21,635 1,610,421 2,997,073 - at 31 December ,851, ,428 24,240 3,391,403 5,702,879 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 103

106 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 22. Property and equipment Land & Computers Furniture and Motor Assets in Total Buildings Equipment Vehicles Course of Transfer or Construction/ Implementation Cost or valuation - at 1 January ,003,110 13,009,012 6,964, , ,965 49,071,014 Revaluation 2,107, , ,786 46,164 29,598 3,690,672 Additions: - due to merger of banks 10,122,079 2,973,505 3,307, ,428 80,062 16,599,050 - additions 2,392,672 2,705,251 1,517, ,646 83,388 6,810,937 Disposals (1,831,975)(872,506)(522,905) (70,378) (5,106)(3,302,870) Valuation (16,409) (16,409) - at 31 December ,776,604 18,785,259 11,805, , ,907 72,852,394 Depreciation - at 1 January ,969,042 9,321,259 4,537, ,673-22,310,117 Revaluation 615, , ,253 38,454-1,803,540 Increase due to merger of banks 2,072,289 2,158,406 2,035,727 63,922-6,330,344 Disposals (517,738)(865,821)(489,806) (66,760) - (1,940,125) Charge for the year 631,993 1,747, ,887 87,042-3,425,911 Valuation (1,465) (1,465) - at 31 December ,769,206 13,129,581 7,424, ,331-31,928,322 Net carrying value at 1 January ,034,068 3,687,753 2,427, , ,965 26,760,897 at 31 December ,007,398 5,655,678 4,380, , ,907 40,924, Other assets a) Analysis by type of asset Accrued interest due 8,025,955 4,361,745 Fees and commissions due 401, ,821 Credit cards receivables 9,057,616 6,698,536 Non authorized overdrafts 3,760,081 2,269,377 Debtors 381, ,920 Receivables in the course of collection 995, ,737 Cheques 336, ,647 Prepayments 557, ,412 Stocks 107,466 75,980 Net receivables from intercompany relations 45,298 - Claims for taxes and other dues 65,459 80,763 Other assets 2,647, ,626 26,381,763 15,176,564 Provisions (4,597,287) (2,977,370) TOTAL 21,784,476 12,199, Nova Ljubljanska banka d.d., Ljubljana

107 b) Analysis of provisions by type of asset N o t e s t o F i n a n c i a l S t a t e m e n t s Credit card receivables 656, ,304 Non authorized overdrafts 3,481,527 2,201,719 Accrued interest due 81, ,045 Other assets 377, ,302 c) Analysis of interest movements 4,597,287 2,977, Balance at 1 January 4,249,700 3,075,551 Accrued interest 64,775,562 48,868,743 Increase due to merger of banks 2,410,714 - Exchange differences 114, ,009 Interest paid (63,591,964) (47,573,713) Write-offs (44,432) (217,787) Provisions 30,661 (42,103) Balance at 31 December 7,944,572 4,249, Accrued income and deferred expenses Accrued interest not yet due 9,106,493 7,539,167 Accrued fees not yet due 28,494 13,500 Deferred expenses 174, ,010 Fair value of derivatives 666,152 89,248 TOTAL 9,976,042 7,749, Movements in specific provisions by type of asset Balance at Share in Specific Increase Specific Balance Share in 1 January 2001 gross provisions due to provisions at 31 gross assets made merger released December assets in % of banks 2001 in % Placements with, and loans to other banks 2,634, ,158, ,516 (3,883,106)4,255, Placements with, and loans to other customers 21,422, ,922,474 5,608,012 (20,775,916)31,177, Investment securities 565, ,434 - (218,049)370, Securities held for trading 568, ,598,373 - (1,530,630)636, Investments in subsidiaries 671, ,480, ,060 (1,834,863)764, Investments in associated companies and other investments 487, ,755 17,895 (506,166)865, Other assets 2,977, ,486, ,818 (3,200,213)4,597, TOTAL 29,328,708 38,535,065 6,750,301 (31,948,943) 42,665,131 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 105

108 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 26. Deposits and borrowings from banks a) Analysis of deposits On demand - in tolars 441, ,299 - in foreign currency 12,082,729 8,023,028 Other short-term deposits - in tolars 37,717,549 14,570,521 - in foreign currency 30,461,938 35,632,526 Long-term deposits - in tolars 110,000 10,000 Current portion of long-term deposits - in tolars 50, in foreign currency TOTAL 80,863,667 58,608,010 b) Analysis of borrowings Short-term Long-term Short-term Long-term In tolars - Central Bank - 35,302 1,053,901 21,562 - other banks 5,700,000-18,650,024 - In foreign currency - commercial banks 447, ,357, ,159 83,776,495 - IBRD - 128,958-1,361,510 Current portion of long-term borrowings 27,530,025 (27,530,025) 20,015,278 (20,015,278) TOTAL 33,677,844 78,991,272 40,146,362 65,144,289 TOTAL a) and b) 114,431,511 79,101,272 98,744,372 65,154,289 c) Analysis by related party 106 Nova Ljubljanska banka d.d., Ljubljana 193,532, ,898, Subsidiary banks 27,302,162 28,864,352 Associated banks and other investments 13,410,438 18,514,917 Other banks 152,820, ,519,392 TOTAL 193,532, ,898,661 d) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 98,744,372 65,154,289 81,360,593 40,395,451 Increase: - new borrowings and deposits 6,406,384,490 34,524,408 4,476,607,562 43,007,780 - exchange differences 3,565,904 3,166,683 4,196,446 3,527,308 - interest added to principal 25, ,497 58,922 - merger of banks 8,723,327 3,991, Decrease: - repayments (6,417,714,532) - (4,483,924,437)(2,262,461) - merger of banks (10,992,415) (2,041,187) - - Current portion of long-term liabilities 25,694,848 (25,694,848) 19,572,711 (19,572,711) Balance at 31 December 114,431,511 79,101,272 98,744,372 65,154,289

109 27. Deposits and borrowings from other customers N o t e s t o F i n a n c i a l S t a t e m e n t s a) Analysis by type of customer Short-term Long-term Short-term Long-term Demand deposits -enterprises - in tolars 42,130,774-32,229, in foreign currency 28,275,468-17,717, Government departments and agencies - in tolars 7,116,243-5,549, in foreign currency 423, , citizens - in tolars 124,194,215-75,455, in foreign currency 124,875,115-57,452, other financial organisations - in tolars 3,476, , in foreign currency 456, , non-profit household service providers - in tolars 5,006,491-3,783, in foreign currency 585,785-1,250, non-residents - in tolars 1,175, , in foreign currency 10,079,320-6,768,590 - Time deposits - enterprises - in tolars 70,042,540 24,305,809 53,968,154 14,846,584 - in foreign currency 20,400,325 78,648 12,679,813 32,783 - government departments and agencies - in tolars 27,649,55010,562,918 14,515,101 5,968,432 - in foreign currency 124, , citizens - in tolars 194,138,464 53,001, ,463,412 31,450,028 - in foreign currency 109,632,710 35,257,342 54,696,854 18,326,323 - other financial organisations - in tolars 13,819,29033,215,428 8,702,310 16,471,617 - in foreign currency 104,062 35,188 - non-profit household service providers - in tolars 3,573,814 1,953,471 1,935,068 1,575,223 - in foreign currency 1,818,459-1,347, non-residents - in tolars 272,631 67, ,556 69,807 - in foreign currency 8,983,377 5,224,562 6,532,637 3,318,998 Current portion of long-term deposits 103,075,073 (103,075,073) 61,561,415 (61,561,415) TOTAL 901,429,825 60,627, ,718,888 30,498,380 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 107

110 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s b) Analysis by type of customer Short-term Long-term Short-term Long-term Government departments and agencies - in foreign currency - 7,136,650-38,928,377 Other financial organisations - in tolars 5,063, ,503 2,284,950 3,199,586 - in foreign currency - 3,533,789-50,761 Non-residents - in foreign currency - 1,269,662-2,427,019 Current portion of long-term borrowings 2,336,434 (2,336,434) 8,051,016 (8,051,016) TOTAL 7,399,627 10,049,170 10,335,966 36,554,727 TOTAL a) and b) 908,829,452 70,676, ,054,854 67,053,107 c) Analysis by related party 979,506, ,107, Subsidiaries 3,223,619 3,322,213 Associated companies and other investments 16,594,313 1,401,697 Other customers 959,688, ,384,051 TOTAL 979,506, ,107,961 d) Analysis of movements Short-term Long-term Short-term Long-term Balance at 1 January 537,054,854 67,053, ,015,209 72,102,888 Increase: - new borrowings and deposits 14,245,613, ,943,878 10,702,170,304 56,651,956 - exchange differences 12,418,129 4,862,268 12,488,423 7,072,763 - interest added to principal 15,129,754 9,427,767 11,038,234 5,260,627 - merger of banks 169,550,487 15,515, Decrease: - repayments (14,187,317,431) (47,744,864) (10,704,569,293)(123,150) Current portion of long-term liabilities 116,380,600 (116,380,600) 73,911,977 (73,911,977) Balance at 31 December 908,829,452 70,676, ,054,854 67,053, Nova Ljubljanska banka d.d., Ljubljana

111 28. Debt securities N o t e s t o F i n a n c i a l S t a t e m e n t s a) Maturity analysis Short-term liabilities - in tolars 890,539 2,013,933 - in foreign currency 73,771 82,958 Long-term liabilities - in tolars 12,226,333 13,683,308 Current portion of long-term liabilities - in tolars 8,940,606 - TOTAL 22,131,249 15,780,199 A detailed maturity analysis of bonds is given in Note 38 - Balance sheet maturity analysis. b) Analysis by related part Subsidiaries - 35,470 Associated companies and other investments 2,483, ,277 Other customers 19,647,251 15,618,452 TOTAL 22,131,249 15,780, Other liabilities a) Analysis by type of liability Accrued interest due 1,073, ,747 Fees and commissions due 368, ,429 Items in the course of payment 1,036,053 2,573,743 Liabilities to traders for credit cards 4,443,088 3,173,389 Suppliers 2,886,246 2,183,324 Taxes payable 1,747,599 1,330,918 Accrued salaries 1,311, ,911 Net liabilities from funds managed on behalf of third parties 82,410 63,672 Liabilities for received cash in foreign currency 8,085,505 45,605 Other liabilities 894, ,420 TOTAL 21,928,873 12,012,158 b) Analysis of interest movements Balance at 1 January 859, ,341 Interest accrued 28,872,817 24,802,186 Increase due to merger of banks 129,935 - Exchange differences 87,764 97,351 Interest paid (28,876,341) (24,683,131) Balance at 31 December 1,073, ,747 Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 109

112 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 30. Accruals and deferred income Accrued interest not yet due 14,701,835 10,036,534 Suspended income - interest 4,243,554 1,392,812 - fees and commissions 79,465 48,186 - other 66,095 46,994 Items in course of collections 423,684 1,357,074 Accrued expenses 64, ,225 Fair value of derivative financial instruments 800,685 53,245 Deferred income 530, ,441 TOTAL 20,910,712 13,778, Provisions for liabilities and charges a) Analysis by type of provision Provisions for A graded balance sheet and off-balance sheet assets 9,385,217 6,469,632 Provisions for other off-balance sheet assets 9,085,948 8,239,534 Provisions for overdrafts 1,262, ,959 Provisions for offsetting by groups - 314,190 Negative goodwill 1,019,252 - Other provisions 2,243, ,921 TOTAL 22,996,173 16,200,236 Other provisions include: - restructuring provisions amounting to tolars 1,447,120 thousand, - provisions for potential liabilities from the legal action in connection with Træaπka kreditna banka in the amount of tolars 500,000 thousand. At the first hearing in connection with this suit, on 15 April 2002, NLB will lodge a preparatory submission in which it will contest all the statements made by Træaπka kreditna banka in the suit. - provisions for payment system strategic project of the Bank in the amount of tolars 154,844 thousand (31 December 2000: tolars 154,844 thousand), - provisions for resolving the issues of unconfirmed transactions of debt conversion under the New Financial Agreement in the amount of tolars 110,464 thousand (31 December 2000: tolars 110,464 thousand), - provisions for pensions in Triest Branch in the amount of tolars 30,893 thousand (31 December 2000: tolars 22,613 thousand). 110 Nova Ljubljanska banka d.d., Ljubljana

113 b) Analysis of movements N o t e s t o F i n a n c i a l S t a t e m e n t s Balance at Provisions Increase Revaluation Provisions Provisions Balance at 1 January 2001 made due to released utilised 31 merger December of banks 2001 Provisions for A graded balance sheet and off-balance sheet assets 6,469,632 8,618,472 1,722,260 - (7,425,147)- 9,385,217 Provisions for other off-balance sheet assets 8,239,534 12,091, ,788 - (11,713,427)- 9,085,948 Provisions for overdrafts 888, ,691 6,324 - (584,539)- 1,262,435 Provisions for offsetting by groups 314, , (582,828)- - Negative goodwill - 2,462,274-10,517 (53,539)(1,400,000) 1,019,252 Other provisions 287,921 1,943, ,000 - (2,373)2,243,321 TOTAL 16,200,236 26,335,208 2,198,065 24,517 (20,359,480) (1,402,373) 22,996, General banking risks provisions Balance at 1 January 2,536,371 1,400,000 Provisions made 700,000 1,011,771 Revaluation 192, ,600 Balance at 31 December 3,428,616 2,536, Subordinated liabilities Currency Due date Interest rate Subordinated loans EUR EURIBOR + 2,5% 5,535,237 5,287,655 EUR EURIBOR + 2,3% 7,749,333 7,402,717 TOTAL 13,284,570 12,690,372 In accordance with the Decree on the calculation of capital, capital requirements and capital adequacy of banks and savings banks subordinated long-term loans are included in the Bank's Tier2 capital. The loan agreements do not contain any provisions on conversion to capital or any other liabilities. In the year 2001, the interest expense of the Bank on the basis of this loan amounted to tolars 922,004 thousand. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 111

114 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 34. Equity a) Analysis of subscribed capital by type of shareholder Enterprises 1,779, ,204 Government departments and agencies 12,164,250 12,154,862 Banks 73,266 - Other financial organisations 1,254, ,254 Citizens 57,848 5,130 Non-residents 26,634 19,792 Own shares 7,888 10,000 TOTAL 15,364,030 13,810,242 At 31 December 2001 there were 883 entities having the status of Bank s shareholders. With a holding of 5,739,270 shares, being 74.71% of the share capital, the Republic of Slovenia remained the majority shareholder of the Bank. As at 31 December 2001 the share capital was represented by 7,682,015 ordinary shares, each with a nominal value of tolars 2,000. b) Changes in equity Subscribed Paid in equity Reserves Retained Total capital surplus profits Balance at 1 January ,810,242-33,960,519 7,666,767 55,437,528 Increase due to merger of banks 1,553,788 12,650, ,620 14,773,350 Dividends paid (2,046,000)(2,046,000) Profit-sharing (18,647)(18,647) Net profit for the year ,054,012 6,054,012 Valuation at equity method - - 1,584,267-1,584,267 Sale of own shares - 3,078 (1,396)- 1,682 Balance at 31 December ,364,030 12,654,020 35,543,390 12,224,752 75,786,192 Capital revaluation adjustment Balance at 1 January ,014,155-12,134, ,988 22,386,412 Increase due to merger of banks 93, , ,284 Revaluation 1,684, ,165 3,337, ,696 5,564,326 Sale of own shares - - (547)- (547) Balance at 31 December ,791, ,222 15,471, ,684 28,802,475 Balance at 1 January ,824,397-46,094,788 7,904,755 77,823,940 Balance at 31 December ,155,590 13,547,242 51,014,399 12,871, ,588,667 Dividends are accounted for in the period in which they are declared. A dividend of tolars per share was declared at the Bank s Annual General Meeting in June Nova Ljubljanska banka d.d., Ljubljana

115 N o t e s t o F i n a n c i a l S t a t e m e n t s c) Analysis of capital in accordance with the amended Companies Act In accordance with the provisions of the amended Companies Act and decision of Supervisory Board of NLB and taking account of Slovenian Accounting Standard 8.53, for the purpose of the financial statement the Bank reclassified the capital categories. The adequate postings in the Bank s accounts will be made as at 1 January NLB's capital categories under the amended Companies Act are as follows: 2001 Subscribed capital 15,364,030 Capital revaluation adjustment 11,791,560 Capital reserves 13,547,242 Profit reserves 57,253,212 Net profit for the year 6,632,623 TOTAL 104,588, Off-balance sheet a) Analysis by types of contingent liabilities and commitments Tolars Foreign currency Tolars Foreign currency Short-term guarantees - financial 4,820,845 8,038,052 3,789,052 1,014,875 - service 10,474,672 11,722,935 4,674,808 9,329,300 Long-term guarantees - financial 9,695,175 34,610,534 6,544,406 39,095,470 - service 20,219,617 37,083,808 13,871,890 17,949,374 Letters of credit 1,751 1,922,704 6,175 3,428,551 Guaranteed and accepted bills - 1,022,595-1,568,265 Commitments to extend credit 117,492,475 18,413,727 92,786,754 14,743, ,704, ,814, ,673,085 87,129,504 Provisions (3,595,389) (5,485,120) (2,893,175)(5,341,813) TOTAL 159,109, ,329, ,779,910 81,787,691 According to the Bank of Slovenia s methodology the total off-balance sheet items amounted to tolars 636,967,161 thousand. In accordance with the Decree on the Classification of On-Balance Sheet and Off-Balance Sheet Asset Items of Banks and Savings Banks, the Bank established provisions only for contingent liabilities and commitments amounted to tolars 275,518,889 thousand. Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 113

116 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s b) Analysis of derivative financial instruments Forward contracts - for hedging 77,414,914 11,105,374 - for trading 4,233,401 7,484,362 Swaps with Bank of Slovenia - for hedging 166,079,535 2,115,062 Other swaps - for hedging 37,922,802 13,935,944 Options - for hedging 31,167, for trading 221, ,024 Futures - for hedging 7,372,507 1,989,745 Provisions 114 Nova Ljubljanska banka d.d., Ljubljana 324,412,318 37,130,511 (5,439) (4,546) TOTAL 324,406,879 37,125,965 c) Assets pledged Assets pledged as collateral Liabilities Bonds of the Republic of Slovenia 331, ,000 - TOTAL 331, , Funds managed on behalf of third parties The Bank manages assets totaling tolars 114,873,153 thousand (as at 31 December 2000: tolars 68,210,843 thousand) on behalf of third parties. Managed funds assets are accounted for separately from those of the Bank. Income and expenses of these funds are for the account of the respective fund and no liability falls on the Bank in connection with these transactions. The Bank is compensated for its services by fees chargeable to the funds. 37. Foreign branches The Bank has a branch in Triest, which total assets amounted to tolars 20,817,854 thousand as of 31 December 2001 and net profit for the year 2001 tolars 11,624 thousand.

117 38. Balance sheet maturity analysis N o t e s t o F i n a n c i a l S t a t e m e n t s Up to 1 month 1 Month 3 Months to 1 Year to Over Total to 3 Months 1 Year 5 Years 5 Years Cash and balances with the Central Bank 79,219, ,219,764 Placements with, and loans to, other banks 72,471,733 22,917,939 9,625,009 8,097,663 97, ,210,152 Loans and advances to customers 37,589,848 69,856, ,699, ,906,116 85,607, ,659,851 Investment securities 105,018, ,210,370 20,818,991 37,636,436 92,556, ,241,521 Securities held for trading 65,388,901-6,871, ,260,029 Investments in associated companies and other investments ,596,448 4,550,365 6,146,813 Investments in subsidiaries ,131,957 32,131,957 Intangible assets ,366,536 4,336,343 5,702,879 Property and equipment ,916,674 30,007,398 40,924,072 Own shares , ,254 Other assets 21,266, , , ,784,476 Accrued income and deferred expenses 1,628,424 1,517,749 6,829, ,976,042 TOTAL ASSETS 382,584, ,502, ,001, ,929, ,288,603 1,382,307,810 Deposits and borrowings from banks 63,994,734 17,452,595 32,984,182 72,473,625 6,627, ,532,783 Deposits and borrowings from other customers 456,241, ,212, ,375,642 62,294,895 8,381, ,506,167 Debt securities 80, ,795 8,965,357 12,226,333-22,131,249 Other liabilities 19,509, ,730 1,510, ,034-21,928,873 Accruals and deferred income 6,979,714 2,450,306 11,030, ,004-20,910,712 Provisions for liabilities and charges 2,626, ,092 2,002,270 17,091, ,470 22,996,173 Provisions for general banking risks ,428,616 3,428,616 Subordinated liabilities ,535,237 7,749,333 13,284,570 Subscribed capital ,364,030 15,364,030 Paid in equity surplus ,654,020 12,654,020 Reserves ,543,390 35,543,390 Capital revaluation adjustment ,802,475 28,802,475 Retained profits ,602,120 5,602,120 Net profit for the year ,622,632 6,622,632 TOTAL LIABILITIES 549,433, ,735, ,868, ,878, ,391,553 1,382,307,810 DIFFERENCE BETWEEN ASSETS AND LIABILITIES (166,848,693) 35,767,008 (125,866,567) 139,051, ,897,050 - Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 115

118 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN N o t e s t o F i n a n c i a l S t a t e m e n t s 39. Balance sheet analysis by currency Tolars In Tolars USD EUR Other Total with foreign currency clause Cash and balances with the Central Bank 44,078, ,495 32,539,975 1,897,995 79,219,764 Placements with, and loans to, other banks 3,204, ,428 25,692,589 70,529,482 13,373, ,210,152 Loans and advances to customers 471,550,041 11,645,722 18,790, ,592,746 6,080, ,659,851 Investment securities 194,584,284 5,488,936 5,767, ,401, ,241,521 Securities held for trading 19,374,266 5,771,033 18,415,690 28,041, ,993 72,260,029 Investments in associated companies and other investments 4,661, ,325 1,133,524-6,146,813 Investments in subsidiaries 17,000,945-5,360,679 7,918,426 1,851,907 32,131,957 Intangible assets 5,622,714 29,915-50,250-5,702,879 Property and equipment 40,886, ,988-40,924,072 Own shares 50, ,254 Other assets 17,811, ,686 1,224,615 1,745, ,819 21,784,476 Accrued income and deferred expenses 6,320, ,764 1,342,649 1,901, ,930 9,976,042 TOTAL ASSETS 825,145,139 24,399,484 77,648, ,891,669 24,222,614 1,382,307,810 Deposits and borrowings from banks 43,557, ,692 6,804, ,987,232 4,686, ,532,783 Deposits and borrowings from other customers 612,696,922 8,509,994 54,686, ,281,486 17,331, ,506,167 Debt securities 14,980,666 7,076, ,771 22,131,249 Other liabilities 11,206, ,585,194 8,840, ,814 21,928,873 Accruals and deferred income 16,227, ,298 1,275,349 2,630, ,124 20,910,712 Provisions for liabilities and charges 13,314, ,313 2,350,409 4,716,265 2,324,424 22,996,173 Provisions for general banking risks 3,428, ,428,616 Subordinated liabilities ,284,570-13,284,570 Subscribed capital 15,364, ,364,030 Paid in equity surplus 12,654, ,654,020 Reserves 35,543, ,543,390 Capital revaluation adjustment 28,802, ,802,475 Retained profits 5,602, ,602,120 Net profit for the year 6,622, ,622,632 TOTAL LIABILITIES 820,001,728 17,015,328 66,702, ,740,655 24,847,857 1,382,307,810 DIFFERENCE BETWEEN ASSETS AND LIABILITIES 5,143,411 7,384,156 10,946,662 (22,848,986) (625,243) Nova Ljubljanska banka d.d., Ljubljana

119 Selected Financial Data for the Group and Audited Consolidated Financial Statements under the International Accounting Standards AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN

120 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN Selected Financial Data for the Group on the Basis of Audited Consolidated Financial Statements under International Accounting Standards IN BILLION TOLARS INCOME STATEMENT Net interest income Net non-interest income General administrative expenses Profit before tax Minority interest Net profit BALANCE SHEET at year end Total assets , ,722.3 Loans to non-banking customers Investment and maket securities Non-bank customer deposits ,110.1 Total equity FIGURES In % Capital adequacy ratio Return on equity (before tax) Return on average total assets (before tax) Costs covered by net non-interest income Costs as a share of total assets Nova Ljubljanska banka d.d., Ljubljana

121 Nova Ljubljanska banka d.d., Ljubljana Audited Consolidated Financial Statements for NLB Group under International Accounting Standards AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN

122 AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN S t a t e m e n t o f M a n a g e m e n t ' s R e s p o n s i b i l i t i e s Statement of Management's Responsibilities The management are responsible for preparing financial statements for each financial year that present fairly the state of affairs of the Bank and its subsidiaries as at the end of the financial year and of the profit or loss for that period. The management confirm that suitable accounting policies have been used and applied consistently and reasonable and prudent judgements and estimates have been made in the preparation of the financial statements for the year ended 31 December The management also confirm that applicable International Accounting Standards have been followed and that the financial statements have been prepared on the going concern basis. The management are responsible for keeping proper accounting records, for taking reasonable steps to safeguard the assets of the Bank and its subsidiaries and to prevent and detect fraud and other irregularities. Management Board Alojz Jamnik Boris Zakrajπek Marko VoljË Deputy President & Deputy President & President & Chief Deputy CEO Deputy CEO Executive Officer 120 Nova Ljubljanska banka d.d., Ljubljana

123 Audit Report A u d i t o r R e p o r t Report of the Auditor to the Shareholders of Nova Ljubljanska banka d.d., Ljubljana We have audited the accompanying consolidated balance sheet of Nova Ljubljanska banka d.d. ( the Group ) as at 31 December 2001 and the related consolidated statements of income, cash flows and changes in shareholder s equity for the year then ended (collectively the consolidated financial statements ). The consolidated financial statements are the responsibility of management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing as promulgated by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2001 and the results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards adopted by the International Accounting Standards Board. Ljubljana, 26 April 2002 KPMG SLOVENIJA, podjetje za revidiranje in poslovno svetovanje, d.o.o. John Varsanyi Partner Nova Ljubljanska banka d.d., Ljubljana AL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 ANNUAL REPORT 2001 AN 121