Baltic, Banks, Deposits, Financial Services, Loan

Pretax earnings from core activities in Lithuania dropped by 24% to 4.8 million euros, according to the bank's first-half financial report.

"Increased operating expenses, negative interest rates as well as a decline in fee and net trading income were key factors for Danske Bank Lithuania's financial performance in the first half of 2017," Danske Bank Lithuania CEO Gintautas Galvanauskas said in a press release.

The Lithuanian branch's total income declined by 8% to 9.1 million euros, with net interest income down by 4% to 6.7 million euros, net fee income down by 11% to 1.6 million euros and net trading income down by 27% to 0.8 million euros.

Its operating expenses, meanwhile, grew by 21% to 5.8 million euros.

The branch's loan portfolio shrank by 3% over the year to 723 million euros, while its deposit portfolio grew by 21% to 999 million euros.

 Net profit of the Latvian branch of Danske Bank in the first half of this year was EUR 1.9 million, down 17% from the respective period last year, the bank reported.

The bank's profit before impairment charges was EUR 1.7 million in the first six months of 2017 or by 11% lower than in January-June 2016.

As a result of growing business volumes, total income rose 18% to EUR 4.7 million in the first half of 2017. Net interest income grew 24% to EUR 3.6 million. Net fee income stood at EUR 1 million, unchanged year-on-year.

The bank's expenses grew 43% compared to the first half of 2016, reaching EUR 3 million. Because of the sale of the bank’s retail business, a larger share of expenses is now allocated to the bank's core activities. Another reason was expenses related to the upcoming launch of a single platform for Baltic operations. The single platform will allow us to further improve internal processes, and thus the bank expects to see lower expense growth in the future.

The deposit portfolio rose 14% to EUR 369.3 million, with increases in deposits from both institutional and corporate customers.

The loan portfolio for core segment customers rose 28% to EUR 352.8 million. The loans in the said period amounted to EUR 104 million.

Danske Bank is committed to continuing to increase its business banking volume in Latvia, and pursue this goal by offering customers sophisticated advice and tailor-made financing solutions. The bank also focuses on the efficient use of capital in order to compete successfully and provide the best offerings to its customers.

The profit of Danske Bank in Estonia in the first six months of 2017 was 6.1 million euros, 5% bigger than in the same period last year.

Operating income meanwhile dropped 14% year over year.

Ivar Pae, manager of the Estonian branch of Danske, said that profit for the period grew 5% thanks to an improvement in portfolio quality as a result of loan impairment reversals.

The bank's operating income fell 14% year over year to 9.1 million euros. Expenses decreased from 5.8 million to 5.7 million euros. The cost-income ratio in the first half-year was 62.6%, compared with 55% a year ago.

The net value of the loan portfolio grew by 9 million euros. Deposits declined by 421 million euros or 44%, as in the present negative interest rate environment raising funds from local customers is not attractive for the bank.

The bank did not book additional impairment charges in the first half of 2017 because the quality of the loan portfolio was very good. As at June 30, accumulated impairment charges amounted to seven million euros, and the ratio of impairments to loans was 0.8%.