Baltic, Banks, Deposits, Financial Services, Loan

International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 13:04

Danske profits fell in Baltics in 2015

BC, Riga, 02.02.2016.Print version
Danske Bank generated EUR 3.57 million in net profit in Latvia last year, the bank said in a statement to the media. The Lithuanian branch of Danske Bank, said that its net profit from core activities of corporate and private banking last year came in at 11.9 million euros, down 19.2% from 16.8 million euros in 2014. The net profit of Danske Bank Estonia dropped 10% year on year to 8.8 million euros in 2015, reports LETA/BNS.

In 2015, Danske Bank's core business in Latvia, namely, providing services to corporate and individual clients, brought in EUR 3.18 million before provisions (EUR 3.76 million in 2014). The bank's profit before paying income tax was EUR 3.15 million (EUR 2 million in 2014).

 

Thanks to last year's business growth, the bank's total operating revenue grew by 2% to EUR 7.5 million. Despite dropping interest rates, the bank's growing portfolio of corporate clients provided EUR 5.3 million in net interest, up 39% from 2014. Net commissions rose 1% to EUR 2 million.

 

The bank's costs increased by 19% last year on growing related expenditure, an increase in the financial stability contribution and investments in the single Baltic IT system, which Danske Bank is developing in Latvia, Lithuania and Estonia.

 

Deposits by the bank's basic client segment contracted 43% to EUR 165.8 million in 2015. In the second half of last year attracting financing from the Danske Bank Group was more effective than the attraction of deposits in the local market. In order to offer its clients financing for better prices, the bank decided to reduce its deposit portfolio.

 

The amount of loans granted to the bank's basic client segment expanded by 7% to EUR 244.6 million in 2015. Danske Bank is determined to continue reinforcing its position in Latvia's corporate banking segment, offering professional consultations and custom tailored lending solutions.

 

The Latvian branch of Danske Bank became part of the Danish Danske Bank Group in 2007.

 

In 2015, Danske Bank concluded a deal with Swedbank Lithuania and Swedbank Latvia to sell its retail banking business to Swedbank. Danske Bank said it intended to focus on serving corporate clients and related individuals in the Baltic states and to gradually leave the retail banking segment.

 

The transaction should be completed in the first quarter of 2016.

 

The Lithuanian branch of Danske Bank, the second-biggest financial group in Northern Europe by assets, said on Tuesday that its net profit from core activities of corporate and private banking last year came in at 11.9 million euros, down 19.2% from 16.8 million euros in 2014.

 

"Although the year has been full of challenges, given the improving business environment, stronger macroeconomic indicators and increasing demand for credit from businesses, the outlook is positive," Gintautas Galvanauskas, CEO of Danske Bank Lithuania, said in a press release.

 

"We invested heavily in our systems to improve the services and solutions we offer business customers, and will continue to do so to fulfill our strategic ambitions," he said.

 

Net income interest last year fell by 18% to 14.8 million euros and net commission income went down by 22% to 4 million euros.

 

The branch blamed the decline in net interest income on low interest rates and attributed the drop in commission income to euro adoption in Lithuania, which drove fees for payments in euros lower and reduced currency conversion volumes.

 

The branch's total revenue last year fell by 21% to 21.1 million euros, while its operating expenses rose by 2% to 11.4 million euros.

 

Its loan portfolio contracted by 5% over the year to 554 million euros and its deposit portfolio shrank by 14% to 873 million euros.

 

In Lithuania, Danske Bank also has a leasing subsidiary, Danske Lizingas, as well as asset management operations (Danske Capital) and financial market operations (Danske Markets Lithuania).

 

The net profit of Danske Bank Estonia dropped 10% year on year to 8.8 million euros in 2015, whereas profit before loan impairment charges surged from 2.6 million to 6.7 million euros.

 

"The profit for the period declined because the loan impairment reserve contracted by significantly less than in the previous period. Profit before impairments increased as a result of an increase in revenues and a decrease in expenses," Danske Bank Estonia manager Ivar Pae said in a press release.

 

The bank's total income grew 14% year over year to 20.4 million euros and net interest income was up 17% at 15.2 million euros. Fee income meanwhile dropped from 4.2 million to 3.9 million euros. Costs dropped 10% compared with the previous year, and operating costs totaled 13.7 million euros.

 

The cost-income ratio was 67%, compared with 85% in 2014. The return on allocated capital was 15.4%, 5.9%age points less than the year before.

 

"A year ago Danske Bank announced a decision to reposition its business activity in the Baltic states to focus on serving local and group corporate customers and associated private banking customers. Over the past year the bank has presented its target segments with the best offers on the market, which is reflected in an increase in business volumes," Pae said.

 

Corporate loans rose by 193 million euros or 35% and corporate deposits by 257 million euros or 46% year over year.

 

Danske Bank said it made no additional loan impairment provisions during 2015 because the quality of its loan portfolio is very high.

 

"In 2015, Danske Bank conducted a review of the way it is represented in Estonia and will do the same in 2016. The bank will be represented in Estonia's main business hubs also in the future," the manager added.






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