Baltic, Banks, Deposits, Financial Services, Loan

The bank's representative in Latvia said that the profit increase has been due to higher credit recoveries.

“Year 2015 has been a milestone when for the first time since economic crisis we saw the positive development in bank’s loan portfolio, supported by both economic growth in Latvia and the low interest rates. Given that the Latvian economy keeps developing at the current pace and with the European structural fund money becoming available, we see that there is potential for demand to increase for corporate financing as well as for retail lending” said Maris Mancinskis, Head of Swedbank Latvia.

Savicka said that lending volumes increased by 0.1% compared to December 31, 2014, driven by increased credit demand both in the corporate and retail segment. New lending volumes increased, reaching EUR 741 million in 2015, against EUR 584 million last year. In the fourth quarter lending volumes were practically unchanged in Latvia. Swedbank Latvia market share in lending was 22% as of November 30, 2015, which is the same as December 31, 2014.

At the same time, deposit volumes increased by 7% during the year. Swedbank Latvia market share was 17% as of November 30, 2015, compared to 17% as of December 31, 2014. The loan-to-deposit ratio was 83%, compared to 89% as of December 31, 2014.

Savicka also said that net recoveries amounted to EUR 24 million in 2015, compared to EUR 12 million in 2014. Credit quality remained strong despite market uncertainty. During the fourth quarter, net recoveries reached EUR 11 million.

The bank's spokeswoman noted that net interest income decreased by 6% during the year, as low market interest rates put pressure on deposit margins. Compared to the previous quarter, net interest income rose by 1%.

Net commission income increased by 7% during the year. "Higher customer activity strengthened card-related commissions, and the number of card transactions rose by 14%. At the same time net commission income was negatively affected by the new regulation on interchange fees that took effect in December. Compared to the previous quarter net commission income increased by 28% due to higher asset management income related to the annual performance fee for the second pillar pension plans," Savicka said.

Total expenses decreased by 1% during the year, mainly as a result of lower expenses for premises, consultancy and IT. Compared to the previous quarter Swedbank Latvia expenses increased by 8%, driven by seasonally higher expenses.

Swedbank reached an agreement with Danske Bank to acquire its retail banking business in Lithuania and Latvia. The acquisition is subject to regulatory approval in both Lithuania and Latvia and is scheduled to close in the first half of 2016.

Swedbank is the largest Latvian bank by assets. It is also boasts the biggest loan portfolio and deposits.

The Latvian banking sector last year posted EUR 415.9 million in aggregate profit, according to the Finance and Capital Market Commission's data.

Swedbank, a leading bank in Lithuania, said on Tuesday that its net profit last year fell by 21% to 85 million euros, from 108 million euros in 2014.

The bank blamed the decline on lower income and credit impairments.

"In 2015 the banking sector operated in a record-low interest rate environment that put pressure on Swedbank's net interest income. Besides, revenue from international payments and foreign exchange dropped following euro introduction," Dovile Grigiene, the bank's CEO, said in a press release.

"Nevertheless, Swedbank's performance improved from quarter to quarter throughout the year and we managed to maintain strong efficiency," she said.

The bank's total revenue last year fell by 12% to 184 million euros. Net interest income dropped by 12% to 97 million euros and net commission income was down by 3% to 72 million euros.

Swedbank Lithuania's assets grew by 377 million euros, or 6%, over the year to reach 6.668 billion euros in late December. Its loan portfolio, which makes up the largest part of the assets, remained unchanged from a year ago at 4 billion euros.

The bank's total deposits last year increased by 8% to 5.3 billion euros, with private individuals' deposits up by 9% and business customers' deposits up by 3%.

The Estonian operation of Swedbank earned a net profit of 59.2 million euros in 2015, which is 62% less than in 2014 as a result of the payout of 100 million euros in extraordinary dividend.

The unit's operating profit meanwhile grew 2% to 186.9 million euros.

"The operating result of Swedbank for last year demonstrated the good health of the Estonian economy – both the private and corporate loan portfolios are growing at a stable rate, which testifies to a high level of confidence of consumers and enterprises' readiness to invest," Swedbank Estonia Chairman of the Board Robert Kitt said in a press release.

Compared with the end of 2014, the size of the bank's loan portfolio grew by 4.2%. While both the private and corporate loan portfolios increased, growth resulted mainly from an increased feeling of confidence of consumers and bigger household spending that this entails.

Lending volumes increased by 0.6% in the final quarter of the year. Swedbank's market share for lending was 38.5% at the end of the year, 0.2%age points smaller than at the end of 2014.

Deposit volumes grew by 12.4% year over year. Swedbank's market share in deposits was 47.4% as on Dec. 31, 3.7% percentage points bigger than the year before.

The loan to deposit ratio was 94.4%, down from 101.8% at the end of 2014.

Credit impairments amounted to 3.6 million euros in 2015, compared with negative credit impairments of 3.5 million euros the year before. Credit impairments in the final quarter of the year amounted to 1 million euros.

Net interest income grew by 2.2% primarily as a result of growth in lending. Compared with the third quarter of the year net interest income was bigger by 3.9%.

Net commission income grew by 5.3% year over year. Increased activity of clients boosted fees from bankcard transactions, as the volume of such transactions increased by 8%.

Total expenses dropped by 2.2% as a result of a reduction in administrative costs. Labor costs on the other hand grew as a result of wage growth. Compared with the third quarter the total costs of the Estonian unit of Swedbank grew by 9.9% due to higher seasonal costs.