Baltic, Banks, Deposits, Financial Services, Loan

Interest income in Estonia increased by 20% to 4.2 million euros and net fee income amounted to 1.1 million euros, which is 13% more than a year earlier, the bank said.

Operating expenses meanwhile decreased by 20% to 2.8 million euros.

The bank's loan portfolio stood at the end of the first quarter at 903 million euros, representing a year-on-year increase of 30%. Deposits grew at the same time 6% to 924 million euros.

At the end of January Danske Bank concluded an agreement on selling its Estonian asset management arm Danske Capital AS to the Estonian financial group LHV.

The Lithuanian branch of Danske Bank, the second-biggest financial group in Northern Europe by assets, said on Friday that its first-quarter net profit from core activities of corporate and private banking fell to 3.3 million euros, down 29.8% from 4.7 million euros a year earlier.

Pretax earnings from core activities dropped by 20.5% to 5.5 million euros.

"A month ago, the ECB reduced interest rates on deposits from commercial banks even further to the record-low level of –0.40%. This means that commercial banks incur costs on excess liquidity by depositing it with central banks," Danske Bank Lithuania CEO Gintautas Galvanauskas said in a press release.

"The negative short-term interest rate environment has substantially reduced opportunities for the banking sector to generate income growth from banking operations," he said.

Danske Bank Lithuania's net interest income fell by 14.3% to 3.6 million euros and net commission income remained unchanged at 0.9 million euros. Net trading income slumped down by 44.4% to 0.5 million euros.

The branch's total first-quarter revenue declined by 16.7% year-on-year to 5 million euros. Operating expenses went down by 10.7% to 2.5 million euros.

Its loan portfolio increased by 21.6% over the year to 710 million euros. The deposit portfolio expanded by 10.5% to 1.011 billion euros.

The Latvian branch of Danske Bank closed the first quarter of this year with EUR 0.92 million in profit from its core activities before provisions for unsafe loans, while the bank's net profit was EUR 0.91 million, the bank reported.

In the first quarter of last year the bank's profit before provisions was EUR 0.7 million, and net profit amounted to EUR 0.48 million.

The bank's operating revenue rose 3% year-on-year to EUR 1.9 million in the first quarter of 2016, its net interest income increased by 9% to EUR 1.4 million, and net income from commissions declined by 13% to EUR 0.5 million.

The bank's operating costs contracted 14% to EUR 1 million. The bank indicated that the costs decreased thanks to improved internal processes, as the bank mostly used group services and became more cost efficient. Still, upon assessing our business activities, we are not projecting a significant cost reduction for the full year.

The bank's deposit portfolio declined by 27% to EUR 188 million. The loan portfolio remained at the previous level at EUR 245.5 million.

Danske Bank has resolved to strengthen its position in Latvia in the corporate customers segment, offering its customers professional consultations and individual lending solutions.

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).

The Latvian branch of Danske Bank became part of the Danish Danske Bank Group in 2007. At the end of 2015, the Latvian branch of Danske Bank was the 15th biggest bank in Latvia by assets.

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 half of 2016.