Nova Ljubljanska Banka d.d. (NLBR) Earnings Call Transcript & Summary

Hello, everyone. Thank you for your patience, and welcome to the Management Board of NLB webcast, where they will present key highlights and business performance of NLB Group for 2021. Today's presenters are Blaz Brodnjak, CEO; Archibald Kremser, CFO; Andreas Burkhardt, CRO. [Operator Instructions] And before we go on, we would like to draw your attention to the disclaimer on Slide 2 of the presentation. So by this time, I pass the word to Mr. Brodnjak. Please go ahead.

Thank you very much. It is difficult to hold the call in such circumstances, obviously, and talk about performance of the banking last year where you heard of the suffering people somewhere else. But so be it, right? We are pretty much very happy actually with last year's performance and the trends have been continuing this year as well. So this has been in many, many dimensions a breakthrough year for the banking group, turning positive in client perception winning awards, such as the Advertiser of the Year, such as the Stock of the Year in last year and so on. Continuing strong digitization agenda and the ESG agenda as one of the pioneers definitely in the region. But above all, delivering very robust recurring results in practically all client dimensions, for example, just the growth of the market share in housing loans in Slovenia has been at the level of 1.9 percentage points in a single year, which is enormous achievement. We have been growing market shares also in consumer lending, despite the total book has been decreasing given the macro prudential restrictions from the Bank of Slovenia. But generally, NLB has been improving its market position. And it's been similar in corporate lending in Slovenia and other markets also in the region. So very, very strong organic evolution. Very good progress also in delivering the integration of the banks in Serbia. In the meantime, selling, obviously, one bank in the [indiscernible] and for successfully integrating already banks in Montenegro. So delivering practically in all dimensions, also the revenue and being still rational when it comes to cost. Clearly, one -- a couple of one-offs in the last quarter, which we announced related to the integration and restructuring efforts in Serbia on one side. On the other hand, certain legal challenges coming from the region, but all within managed more or less dimensions. There have been obviously some surprises coming beyond the balance sheet dates, such as, for example, the introduction of the Swiss franc law in Slovenia, which has been -- will be challenged as of Monday in front of the constitutional court of Slovenia. And we would have high hopes that this law would at least get suspended, if not then fully enough but clearly, we need to wait -- sit and wait how this plays out. Otherwise, NLB has been very solidly positioned from recurring, as mentioned, organic evolution and more or less analyzing eventual opportunities. Depending on the outcome of Swiss franc's law, actually, of course, defining the potential capacity for inorganic growth. But from the recurring and organic evolution, very strong opportunities ahead of us, we believe, and of course, not simply ignoring what's happening today and in the last days. Of course, certain instabilities are lying in front of us, but any such instability and crisis, on the other hand, can also, of course, introduce certain opportunities, which the bank might, of course, actively address. So just as a short summary, very strong year, especially in recurring results in both client segments, in practically all geographies and significant breakthroughs in public recognition. The bank has again become the most reputable bank in Slovenia, which is one of the really important milestones given the fact that we have been more or less an anchor point for negative publicity for a decade. Now actually, there has been very, very limited negative publicity around NLB Group and furthermore, being recognized, as I said before, a pioneer in ESG efforts and digitization efforts again. So from this point of view, very solid performance. And as I mentioned at the beginning of the year, it's pretty strong as well. Of course, we now have high hopes that we will see stability in Europe when it comes to the Ukrainian situation on one side and of course, with that related impacts on the energy pricing and the availability of energy sources and so on. But on the other hand, again, for the region of Southeastern Europe, we would hope there would be no material implications rather even more opportunities to position itself within the global reshift of supply chains. By that, I would pass the word to Archibald to guide you through the key numbers. Andreas will speak about the asset quality, and then I will wrap up at the end. And of course, we will be available for any questions. Thank you.

Thank you, Brodnjak. Well, in a nutshell, financially speaking, NLB Group had a great year in all dimensions, much as that we fundamentally strengthened the underlying business performance. We saw visible improvements on all key business lines from retail, corporate and importantly, growing revenues in these areas, both interest and noninterest income. And on top of that, we are also very successfully progressed in the integration of KB Group and actually even absorbed the restructuring charges, a large part of the restructuring charges with extraordinary income, both from Serbia, but very much still from NPL resolution results throughout the year. So in this sense also Q4 was extraordinary both in positive terms. Also in booking, finally, the announced restructuring charges in relation to KB. And so in this sense, Q4 was, of course, affected and burdened with the salary restructuring charges, both the straight restructuring charges and as well the effect from the divestment of the KB subsidiary in Bosnia. But by and large, it was really a great financial performance. And we are really particularly proud that the underlying business performance is robustly strong and then giving really rise to hope for more to come as we are absolutely programmed for growth. And of course, important pillar in revenues, interest income. And clearly, all eyes on the rates environment also, of course, from our side. And in this sense, we are also slightly optimistic that finally, the long-term low environment, to some extent, is over. We are starting to reprice assets also on the regular business side, retail and corporate, of course. You see a relatively stable margin and operational business margin evaluation throughout the year, slight uptick in Q4 with realization of a small contribution from TLTRO repayments, but nothing material, but robust performance on the main business lines, and that's something we are really very, very proud of. You see this in the absolute numbers, both interest income and noninterest income, very solid growth. If you look at 10% even results Serbia growth in fee and commission income, so I think really an impressive result. So congratulations to the colleagues in business achieving this impressive performance. Key commission income, 15% actually year-on-year result KB. Overall, of course, noninterest income is affected year-on-year by divestment of certain assets in Q4, in particular, of course, you see the effects of the sale of KB Banja Luka in this number, but a very, very robust fundamental business performance. On the cost side, again, if you take out seasonal effects and one-off charges, we are very, very solidly performing with keeping costs containment, as you call it. And that means we finance the necessary investments in scale and technology from rationalization efforts that are continuing as we speak. And you see in front of yourself a quite visible reduction already from both staff and branch comp. And this is of course something that will continue in Q4 in itself. We have, of course, some seasonal effects. So Q4 is a traditionally a bit more cost heavy cost recognitions. On the other side, bolus payments are being recognized in this quarter. Of course, they are subject to performance, but this year was a great performance. So you see a bit of an uptick in this sense of a variable HR cost element. But by and large, the underlying cost discipline remains very strong. And of course, that's continued focus going forward. Not to repeat the essence of very solid business growth. You see here pretty much in all dimensions, especially, I think noteworthy the very strong growth of retail books in excess of double digits. And what makes us particularly happy also visibly in Slovenia, of course, the main contributions coming from the mortgage market. Our housing market and still a relatively benign development in consumer finance, given restrictions in Slovenia. Also, I think noteworthy is now visible growth also already in Serbia. And you see also a quite healthy development both on retail and corporate. Corporate even in the double digits, retail in the high single digits. And here, of course, we expect acceleration going forward. All other markets from our point of view really very, very nicely performing both retail and corporate. And in this sense, we actually visibly exceeded our guidance of group level growth on the loan side. Capital, unchanged, very strong position, well in excess of course, of regulatory and risk appetite needs. And obviously, there is no immediate need to engage in capital measures, but we are indeed considering to even start up on our current strong position to be simply ready for all growth opportunities to be organic or not organic. By that, I would pass over to Andreas on asset quality.

Yes. Archibald, thank you. As mentioned already by Blaz at the beginning, I mean, this was a good year. It was also a good year for asset quality. The distribution between the countries you know a little bit of uptick last year here for Slovenia. Blaz mentioned is the strong development here. On segmentation, obviously, here also clearly visible is the good performance for retail mortgage loans. And if we come to staging, if we talk about staging, actually, it continued what we saw actually throughout the entire period now. The impact of COVID in reality is very, very limited. So first of all, the stage development is very moderate. On the other side, also what we had before COVID in the rating system proved to be really robust and reliable indicator because if you map it to ratings, the portfolio behaved also very, very in line what you would have predicted. When we talk NPLs, last year was, again, I have to say, pretty successful in a sense that we were solving a lot of old cases, actually to a surprising extent, almost. So we ended up with nonperforming loans of EUR 367 million, that's a 2.4%, whereas we have to say that some 40% of that are without 0 delays. And as you know, already cash coverage and general collateral coverage is strong, and the surprise we also didn't change last year. In last year, we have been releasing provisions on a net basis or credit risk provisions. It's minus 41 bps. That's quite a change to the previous year. In 2020, we saw some COVID impact obviously. And you remember, we had the 62-bps cost of risk, so positive. By the way, that's wrong in the chart, our Investor Relations will correct that. So that's missing in comparison. But again, '21 was very good. On the other side, we had some restructuring charges, some legal provisions. Archibald already mentioned it before. But overall, obviously, still a very good result from here. With this, I'm closing the risk part for now and would hand actually back over once again to Archibald for the -- for some more details on KB integration.

Thank you, Andreas. Well, speaking of KB preparation for our big milestone in April are these days. Clearly, it's now very much our focus on the technical pieces because many, many other elements are in place. So the leading merger is pretty much prepared. HR integration is to a good extent, not implemented, obviously, but prepared. So we have a robust setup here and our key appointment, in a sense identified. And of course, we have been running already quite visible headcount reductions. So that is, to some extent continuing, and we continue also after the merger. We are already in deep preparation for the post-merger phase with a substantial improvement of the process environment, in particular, which focus on branches. That's a project we just launched. Obviously, we'll immediately after the merger start heavily investing in digital enhancements of the business. So plenty of things have happened, plenty of things still to happen. But of course, at the moment, fully focused on the technical integration and making sure this process runs smoothly. We had one successful merger already, in fact, traded in Montenegro on the same or similar technical platform. In this sense, we are quite confident that we are in charge of the process. But still, it's a complex exercise. And of course, there is no margin for error. So we are really putting a lot of emphasis and efforts both from colleagues on the ground as well as external support. The equation on the financial side hasn't changed much. So in this sense, I'm not going to dwell too much. This slide, we are pretty much at 50% of the charge rate in terms of integration costs, and we don't expect bigger surprises. Actually, if anything, we have been positively surprised, especially also from NPL resolution coming actually better than expected, in particular from the Serbian book. So in this sense, still not every box ticked off, but a lot of confidence in the process and of course, all eyes on realizing the potential in this, for us, very important market. I'll hand off to Blaz on the outlook.

Thank you, Archibald. I mean, in these uncertain times, it is, of course, now difficult to fully stick to what you're saying since no one knows how this Ukrainian situation is going to play out. Our hopes like with Southeastern Europe not really being affected besides eventual shortages of gas supply or some other commodity shocks. But generally, we have been actually the beneficiaries of the in-sourcing of global supply chains back to Europe. And there has been significant demand for our production capacities throughout the entire region of ex-Yugoslavia. And of course, we are very well positioned to simply be part of this shift. So what we are showing here obviously is assuming normalization and is assuming clearly a normal recurring evolution, finalized integration in Serbia, and this is clearly our purely organic scenario. There has been another uncertainty when it comes to the results, which is directly linked to the Swiss franc law just adopted in Slovenia and coming into force tomorrow. So there will be filings for the suspension of the law and constitutional assessments from the banks following on Monday already. And as mentioned, there will be a high hopes that there would be at least a suspension, which would potentially, of course, not require provisioning. And by that, of course, no impact to the P&L capital and, of course, capacity for growth and dividend and dividend payout. So this scenario assumes pretty normal evolution. So Swiss franc issue will not jeopardize by any means, capital adequacy of the bank. And of course, the bank can still afford to pay out dividends. On the other hand, clearly, we have, by that subdued potential for the growth through the M&A and more aggressively eventually than as was so far somehow perceived as the planned scenario. So in this respect, I believe this is a solid enough indication of what we plan for in sense of pretty much normal environment. And by that, we believe this is still a very strong performance. We are talking about normalized ROEs of 12%, clearly. We have to understand that there is significant dividend stock potential and there is a significant still clearly stock of capital available for growth, which we do see and feel. So practically double-digit growth of retail books across the board and corporate demand picking up and especially in Serbia after -- beyond the integration. We really already are seeing the growth, but we would see even significantly higher chance for growth. And then allowing obviously for better results in terms of bottom line and, of course, dividend payout capacity in one side, but of course, further leverage to the growth. Our agenda of efficiencies and the digitization and of course, the entire shift towards the digital, not only channels, but hopefully also higher usage of our services through these channels. And then, of course, the ESG component is becoming more and more dominant. So in this respect the bank will be focusing on this territory and will be communicating pretty ambitious road map with committed delivery deliverables from this road map and by that, we believe we will be really improving quality of lives in the region. And, of course, also conditions for conducting business in the same part of the world, which we call home. By that, I would wrap up the presentation and would kindly invite everyone to the Investor Day, the first ever in history, consciously organized in Belgrade on 12th of May. This should cater for easier logistics, given, of course, the connections of Belgrade with the world of one side, but we believe it is worthwhile showing everyone the most promising market, Belgrade itself being the largest city in the region on one side, but very purposive growth indicators and prospects. And then, of course, Serbian market as such, after the acquisition of KB becoming besides Slovenia actually the second most important, with very, very solid growth opportunities. And we are welcoming you all, our front cordially are inviting you, hopefully, you will be able to take time and see us live in Belgrade. By that, we are coming to the Q&A session. In the meantime, obviously, our PR team and IR team is available to any of your subsequent questions or clarifications. But of course, we will gladly be responding to ones also to the eventual ones right now. Thank you.

[Operator Instructions] Our first question is from Simon Nellis from Citibank.

Well done on the results. I guess my first question is really on your dividend payment outlook. I think you've given pretty specific guidance for EUR 100 million out of this years -- of last year's earnings at EUR 110 million. But given that your SREP ratio has come down and you have quite a bit of headroom, do you think you could pay out higher dividends than that if, I don't know, maybe in the future if things pan out better than expected. If you can comment on that, that would be very helpful.

Yes. This depends a bit on the growth opportunities. So we believe that the payout of dividends, as signaled, has been pretty high, especially the correction of the price is happening. But on the other hand, this crisis, as I mentioned at the beginning, might introduce certain opportunities that we have not been thinking of before, right? So there might be some other strategic or nonstrategic investors in the region reconsidering their position which might introduce certain opportunities for M&A also for the NLB Group. There is nothing concrete as we speak. But in the upcoming months, situation might unfold a bit. So the dividend payout is in direct relation with the assessed growth opportunities for value accretive improvement of the market position. And by that, of course, also midterm and long-term benefit of stakeholders. So this would be the general principle answer. It's too early to talk about dividends. And of course, we are committing to what we communicate here and more would only be more or less considered in case we wouldn't see any more relevant opportunities for value-accretive growth, yet we do believe that we have significant opportunity to grow both organically and eventually through M&A. That this could be my view. Archibald, do you might add some thoughts?

Nothing to add other than it's consistent, if you remember, with our original announcement for the '23 period, which is a cumulative dividend for EUR 300 million. So in this sense, we didn't change anything. And as Blaz said, already at that time, it was clear that both positive and negative events could happen. I mean, Swiss franc is, of course, a burden. If you look at it, if it comes to effect. Also, we strongly believe it shouldn't come to effect. But it could become a burden on one side. On the other side, as Blaz said, that would be a good use of capital still. And so in this sense, I think we are consistent and leaving room [indiscernible].

And longer term, you used to have a payout ratio target of 70%. So is that kind of off the table for now? Like 2023, what are you....

Yes. So I mean, listen, we have a target capitalization ratio, and then that guides our thinking to a large extent. It's just sort of 16%. And of course, if we were sustainably above target, we would increase our payout ratio. If, as Blaz said, there is no other use for capital. Of course, there is no need to retain it. So it's a bit of a balancing act, which is why quite early on, we said we put out a cumulative cash target. And this is what, for the time being, we still believe we can stick to. But of course, we will not be slave to numbers. We will always act emotional and in the interest of shareholders. At the moment, there is no news, if you want. And so we simply stick to current outlook. We are, by the way, working, of course, even more elaborate view on that for the Investor Day, which we see will be a forum to discuss this also likely with our investors, hopefully.

Our next question is from Mehmet Sevim from JPMorgan.

I just have one question on your interest rate sensitivity, which you have very helpfully provided on Slide 27. Can I please ask what you have assumed in your guidance for '22 and '23 in terms of the ECB interest rates, first of all? And secondly, is this sensitivity relating to the whole group? So also parallel shift in the countries such as Serbia, et cetera, or is this just the Eurozone?

So in a sense, this is always, of course, a group view. And on ECB, there is no specific move of ECB [indiscernible]. What we typically do is look at your LIBOR positions and your LIBOR sensitivities. And this is pretty much what you see reflected in these numbers. So no, no specific ECB move.

Okay. And would you have any color on what percent -- I mean, what the sensitivity would be just from the ECB?

Well, I think if you look at our cash position, it becomes very much straightforward. I mean there is roughly, let's say, short of EUR 2 billion position that is sensitive to directly to ECB and so you run the numbers.

Okay. Great. And just to confirm, in your guidance, there is no interest rate moves assumed for now by the ECB?

No ECB move, no.

There's is additional information, there is a EUR 3 billion approximately long LIBOR position as well, right? And you can make your math as well here.

Yes. Absolutely.

I mean in short as all other banks, and that's why I was mentioning on the rates environment. I mean, so far, we have survived and actually been growing rates revenues even in this extremely challenging rates environment. Now rates environment might recover somehow. And for us, of course, predominantly that's an opportunity. The risk we are watching is no sudden moves. We wouldn't like to see sudden moves [indiscernible] rates inflation or any of the other indicators because turmoil and volatility is nothing that none of us would like or appreciate. But if there were a gradual increase of rate environment, of course, for all banks, that's great news, including us. So that's for sure. ROE upside in the range of 100 bps easily.

[Operator Instructions] So I'll move over to the webcast questions. Our first question is from Miha from Slovenia. It reads to what extent is NLB Group exposed to Ukraine and Russia? How are you planning to project NLB Group against economical and geopolitical consequences of the war in Ukraine?

Andreas, will you?

Sure. So look, the -- obviously, we are not directly working in these countries. So that's one major point. Secondly, our client base is well relatively mildly exposed directly to these countries. Of course, you have the one client who has some Russian ownership. Obviously, you have the next client who is doing some business there. We are following that, of course, very, very closely also related to potential sanctions, which we now don't see a direct impact at all. But we are following that very closely. At the moment, it looks like that the direct impact will be very, very mild. Of course, what is the next sensitivity is now what will go on with energy prices, with other commodities and so on. We saw already in the last period here some turmoil could almost say some changes already for that reason. And of course, still also for COVID and all the supply chain interruptions, which you see here. We are following that very closely. So for the time being, I can just say it looks all very, very controlled, and very, very controllable. Of course, not everything which might evolve we can predict today. But for our group, I would say, if the situation doesn't further evolve, then we see it right now. So on top of that, then the impact on our group should be from that perspective rather mild.

Our next question is from Anton from Allianz, Croatia. And it reads, could you please provide more details for the following 3 topics: Swiss francs exposure, Tier 2 bond issue and the potential exposure to Russian-owned businesses and high net individuals.

Well, indirectly, we responded to a majority of these issues, right? So Swiss franc has been dimensioned to EUR 70 million to EUR 75 million provisioning threat in bracket. So we -- and this would be one-off, obviously. Operational burden, but at the same time, also P&L implication. This by no means shakes up the capital adequacy, no liquidity acquisition of the banking group. There might be some other banks that are more affected in relative terms, but then, of course, can sustain that. It does reduce midterm development potential. This is clearly something that I mentioned before as well. So Ukrainian situation was explained a bit by Andreas, and I cannot add much more. So we have to sit and wait what this really means in indirect terms. So what will be food pricing, commodity pricing, energy pricing and so on, right? That is then, of course, having a direct implications to the businesses. Yet, this is partly offset by the fact that the order books of the businesses from the region, as I mentioned, have been full, given the in-sourcing shift of supply chains. And turmoil in some other countries in Europe can even provide more opportunities, unfortunately, as much is painful for someone on the other side, it might bring more opportunities to this region as well. So it has to be seen from this balance perspective. The Tier 2 instrument, we basically have been considering for a while. The markets have been extremely volatile as we speak. So we have consciously not decided to continue because we are not in distress. We are not in the immediate need of capital. This will be raised in principle to actually address the 3 topics. One is front-loading the expiring lines in a couple of years. So there is no immediate need. This is expiring a couple of years. The MREL dimension clearly is something that, of course, comes on top. And if we are issuing an instrument that also ticks the MREL box, it's killing 2 flies. And of course, the third is to provide additional boost to capital. So there is no immediate pressure, but we have been more or less ready. So as soon as we see the markets allow something like that, we might consider opening the books. So this is not something that has been forgotten. It might come. We might even think of in case of further improvement of tax environment because in Slovenia we have seen actually not an arm's length or a level playing field taxation of AT1 instruments. So there have been some progress in potentially withdrawing or removing the hurdle of taxation. And we might then, of course, start thinking of potentially adding the AT1, which would serve, again, the purpose of, on one side, optimizing capital, on the other side, clearly boosting the capital for growth. And then we're thinking as well, the MREL box and so helps additionally. So we are -- we have the plans, but we have -- we are now in a desperate needs, so we will simply here be rational. And as long as the situation doesn't stabilize, you wouldn't see us there. But if it stabilizes a bit, and there is a favorable win of opportunity, we might go for it.

And no business with Russian high net worth individuals.

Or Ukrainian.

Our next question from the webcast comes from Jovan from Raiffeisen. The question reads update on retroactive CHF law. EUR 70 million to EUR 75 million has not been included in the 10% ROE guidance. Is that right?

That's right. I mentioned the outlook that this is a one-off. We still believe we can avoid. If this hit the books, of course, this would be one-off very likely to hit. But that's something that is premature at this point of time. We have high hopes this would not crystallize.

Our next question is also from Jovan. And it reads, do you still stick to EUR 100 million plus net profits from Serbia from 2024?

We believe so.

Our next question is from Gaspar from Slovenia. It reads good job on the results. Can you tell us how Q1 is looking so far?

I imagine what I could have mentioned. So as said, we see strong recurring trends, and we cannot say more than that. So we are happy about the first 2 months.

Our next question is from Jovan. And it reads, have you been stress-tested by BS last year or recently? If yes, can you please share the impact on capital?

Andreas, would you or Archi?

Yes, sure. So the stress test results in the recent years have continuously been improving in a sense of impact. Impact is getting milder and milder. And here, of course, a key parameter is also the continuously reducing NPL numbers. What -- obviously, this year will be a very interesting exercise. And I'm sure you know that is the Euro-wide is stress testing. I think here, the point is simply that European Central Bank was jumping pretty quick then finally on that boat. So obviously, that gives us at the moment a lot of work, and we will see what we get from that. That's now less a question which will directly influence us this year, but it's growing actually, well, on the one side, in the direction, anyhow want to go. So we give a lot of emphasis from our side to ESG topics. But on the other side, it's, of course, still a new and a little bit unusual exercise. So that will be an interesting one. I'm obviously not expecting here any dramas, especially since this will be an interesting exercise actually for the whole banking industry in Europe, but that's something which is eminently obviously this year.

We have another question on the telephone line. This is from Mladen from Erste.

Congratulations on the results. I was wondering if you can just remind us on the time line for the Swiss franc loan. So you said on Friday, it becomes active on Monday, banks will file injunction motion. So what's the time line next? Should everything be over, as I understood previously in 2 months or maybe earlier or maybe later?

Yes. The law is pretty ambitious in terms of your obligation to deliver the new contracts or [ annexes ] and then the payment, right? So this is more or less a matter of 3 months altogether, more of that give or take. And in this respect, we are filing immediately once the law comes into force, which is Monday. There will be 2 injunctions coming from various pools of banks. We would be hoping that also the CBN Bank of Slovenia clearly opine on something that is into the mandate the European Central Bank and is against the legal order of the European legal order besides being retractive and so on. So there are many, many boxes this law is breaching. And if -- my hope is that the constitutional court would act immediately with at least opining on whether to suspend or not to suspend the law. And this we will hope to be happening in a matter of days or latest weeks and not months. Once suspended, this might then mean years before clarity because constitutional court might take enough time even consult with European institutions and so on to really properly understand all dimensions, and this might really take time. So we would hope for suspension. In case of no suspension, we would more or less within 3 months have a clear view and know clear position whether we need to pay and we will simply need to pay in Q2, and then, of course, provisioning would be happening in Q2 very likely. This will impact even impossible to avoid now. In case of suspension of the law, of course, provisioning would not necessarily happen, but this is something we need still talk about with auditors. But at the end of the day, we believe it should not.

Okay. So there is no kind of a legal deadline for the constitutional court to give the final verdict on the thing?

There is no formal deadline, especially not for the final verdict. Given such unclarity and practically -- even regarding the implementations, they are conflicting regulations of the law. The banks on one side should be pulling off the contracts and [ annexes ] and then is a GDPR legislation, which actually prevents and prohibits banks of holding any of this information for more than 10 years ago, and the law is actually affecting loans originated 18 to 12 years ago, right? So it is really so ridiculously written that is very difficult to even perform and execute. So we would hold that constitutional court with -- from the difficulty of execution point of view, solely from this -- besides this being, in our opinion, counter constitutional and against the European legal order, at least immediately suspend the law. And then, of course, they could take time. There is no deadline. This could be as -- of course, but theoretically, they could tool very fast. It is in the hands of constitutional court. And the banks, of course, will not stop there. So even if constitutional court validated the law, we would go for the European Justice. So we simply believe this against the legal order of European Union and the spirit of European Monetary Union, and it's getting into the mandate of European Central Bank and so on. Besides, of course, socializing the cost from the budgetary perspective because if in case the banks won then in European instances, which I would believe would be the final case eventually. This would then eat directly into the taxpayers' interest. So this is really ridiculous law. But it is what it is. We have to live with it. We will deliver operationally and also monetary if needed, but we will not stop fighting. So even we had to pay and provision this year, we would continue to fight in European Court and potentially be reimbursed in years from now with hopefully [indiscernible] interest. Unfortunately against...

And maybe just, are there any updates, news from potential entries into Croatian market?

Unfortunately, I had high hope. So it was also pretty public because the Prime Ministers and other high state officials have been publicly mentioning our meetings. So I had high hopes that the Slovenia and Croatia have matured enough in the meantime to be able to put legacy issues aside. Unfortunately, we have not simply come to this point. So I'm not sure whether there is anything until the elections or beyond the elections. So we, at that point of time -- at this point in time, cannot count on being able to enter into Croatian market, unfortunately.

We have our final question via the webcast, which reads, can you comment on macroeconomic impact from possible energy shortage in light of possible Russia-Ukraine issues? This is from [ Bade from Rohatyn Group ].

Well, that's the real question, right? So what the shortage in gas supply and pricing of these energy and other energy will mean for the potentially disruption or continuation of the production. Luckily, the heating system is going to be some -- heating season will gradually fade out. So I'm in the hope for some warmer weather soon so that the total quantities of gas coming into Slovenia would not be compromised. There is clearly a solid dependency on Russian supplies, but there are also other streams that Ukrainian-related streams. So we would hope that Russia will not discontinue with the shortage with the supply. Of course, it remains to be seen how European Commission and generally within the sanctioning eventual reactions would address this issue and how this could impact eventually the predictability and reliability of the supplies and especially the pricing. So far, there have been gas terminals even also closer. They have been, of course, African capacities and so on. It's a mix of it. That is difficult to really not properly give the full information on that and to properly understand the whole thing. But there have been certain doubts on supplies in the past and it crystallized in a radical form. So we would hope it wouldn't this time around as well.

This is all the questions we have today. So I'll hand back over for any closing remarks.

Thank you very much to everyone for hanging in there with us today on such a specific day. So our hearts and minds are with the people suffering at this time. We hate to see that in 2022. We hope it would not be possible anymore it is, obviously. But generally, when it comes to our business, we are happy about how it has been evolving, NLB has been positioning itself as a regional champion. And we do have the potential, we do have the ambition and the capacity actually to get there. So we are closely monitoring all the growth opportunities to actually pursue and address them in a value-accretive way. If there were not -- if there are not sufficient ones, we would consider, of course, awarding our shareholders by dividends. In parallel, we pursue both, and we believe we have still been an attractive investment opportunity. So let's stay healthy, let's stay alive all of us and all the best.