In accordance with the applicable legislation and good business practice, Nova KBM hereby gives the following notice:

For the nine-month period ended 30 September 2014, Nova KBM reported a pre-tax, pre-provision profit of €57.1 million, compared to €21.8 million reported for the same period last year. The pre-tax profit from continuing operations recorded by Nova KBM in the first nine months of the year was €22.3 million, while its net profit hit €17.8 million. Net interest income totalled €68.1 million (9M 2013: €51.1 million), net fee and commission income totalled €31.5 million (9M 2013: €31.2 million), and other non-interest income reached €11.2 million (9M 2013: a loss of €1.5 million). The operating costs incurred by Nova KBM in the first nine months of the year amounted to €53.7 million, down 9.1% on the comparable period last year, while its net provisioning charges stood at €34.9 million.

The year-on-year increase in the net interest income was the result of a 48.9% drop in interest expenses, partially offset by a 13.4% decrease in interest income. Lower interest expenses were mainly the result of the December 2013 conversion of state deposits into equity, and the write-off of subordinated liabilities, while the decrease in the interest income was attributable to a change in Nova KBM´s income structure following its recapitalisation and the transfer of bad assets to BAMC, which also took place in December 2013. As a result of this transfer, interest generated on loans fell to two-thirds of the total interest income, with the amount of interest earned on securities making up the remainder. The interest margin, calculated on the average total assets, stood at 2.38%, against 1.44% recorded in the same period last year.

The bulk of other non-interest income earned by Nova KBM in the first nine months of the year derived from the sale of securities.

Net fees and commissions earned by Nova KBM in the first nine months of the year were sufficient to cover 58.7% of its operating costs. The year-on-year decrease of 9.1% in operating costs was attributable to a decline in material and service costs as well as staff costs, with the latter falling by 7.0%. The reduction in operating costs was in line with the commitments set out in the restructuring programme. During a one-year period from 30 September 2013 to 30 September 2014, the number of staff working at Nova KBM was reduced by 96.

At the end of September 2014, Nova KBM´s total assets amounted to €3,611.9 million, down €298.1 million, or 7.6%, on the end of 2013. This reduction was in line with the requirements of the restructuring programme. The decrease in business volume was largely the result of Nova KBM repaying a portion of its financial liabilities to its creditor banks, including the central bank, but also due to a lower level of loans outstanding to the non-banking sector. The balance of loans and deposits from customers saw an increase in the first nine months of the year.

Net loans and advances to customers totalled €1,697.3 million, down €129.0 million on the end of 2013, with Nova KBM´s market share in this segment decreasing by 0.1 percentage point to 7.4% at the end of September 2014. Deposits from the non-banking sector amounted to €2,506.2 million, an increase of 6.0% on the end of 2013, giving Nova KBM a market share in this segment of 10.2% at the end of September 2014. The customer net loans-to-deposits ratio fell in the first nine months of the year by just over nine percentage points, to reach 67.72% at the end of September 2014.

As of 30 September 2014, Nova KBM´s total equity amounted to €564.5 million, up €46.8 million on the end of last year. This increase was partially a result of the net profit generated by Nova KBM in the first nine months of the year, and partially due to the increase in the prices of securities that are valued through equity. Nova KBM´s total capital adequacy ratio was 24.54% at the end of September 2014.

The restructuring of the Nova KBM Group is being carried out in accordance with the commitments given to the European Commission. The Nova KBM Group is gradually concentrating on its core business, banking, while at the same time making efforts to divest and dispose of its non-strategic assets. In addition, work is in progress to partially integrate the operations of PBS into those of Nova KBM, and to restructure the Nova KBM Group´s leasing companies, while the liquidation of KBM Fineko is nearing completion. Provided the current economic trends are preserved, Nova KBM expects to end the financial year of 2014 with a profit.

This notice will be available on Nova KBM´s website (www.nkbm.si) from 30 October 2014.