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Annual report for the financial year 2016

In accordance with the provisions of the Act Defining the Measures of the Republic of Slovenia to Strengthen Bank Stability (ZUKSB), Družba za upravljanje terjatev bank, d. d. has published the annual report for the financial year 2016.

The highlights of BAMC's operations in 2016 include the successful merger of Factor banka and Probanka and substantial cash flows generated from asset management operations, which exceeded the statutory goal. Cash generated from asset management in 2016 amounted to €369.2 million, corresponding to 18.3% of the transfer value of the assets and substantially exceeding the ZUKSB requirement of annual liquidation of at least 10% of the estimated value of the assets. Since its incorporation, BAMC thus generated cash flows of €862.8 million, meaning that 43% of the transferred assets' value was cashed.

BAMC reported a €7.8 million loss for 2016. The reported loss comes as a result of the fact that the operating result from loans was not sufficient to cover the financing costs and operational costs, in addition to the costs of the operational restructuring of BAMC as a result of the merger of Factor banka and Probanka. The merger also contributed to lowering the equity of BAMC, which amounted to €79.4 million as of the end of 2016. The decrease of equity was partly covered by the state's €50.0 million capital increase of BAMC's capital reserves. At year-end 2016, the Economic Return to Equity was 9.5%, which is higher than the target set by the Government of the Republic of Slovenia in the BAMC Operational Guidelines.

In 2016 BAMC fully repaid €369.0 million of its financial obligations toward the Ministry of Finance, which were acquired in the merger of Factor banka and Probanka, and successfully refinanced the matured bond. This importantly decreased BAMC's of financing costs for 2017 and subsequent periods.

KPMG Slovenija, d.o.o., Železna cesta 8a, Ljubljana, performed the audit of the 2016 financial statements, and issued an unqualified opinion on 25 April 2017. The BAMC Board of Directors reviewed the audited annual report on 25 April 2017, and will send it to the Government of the Republic of Slovenia for approval at the BAMC General Meeting. The annual report has not yet been approved by the Government of the Republic of Slovenia.

The information contained in this formal announcement will be posted on the official website of DUTB, d.d., Ljubljana, www.dutb.eu, for a period of at least five years from the date of the posting.

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