Banks, Financial Services, Latvia

As of 31 December 2018, assets of the bank amounted to EUR 1.5 bn, the volume of client deposits were EUR 1 bn and total shareholders’ equity EUR 458 mln.

Capital adequacy ratio of the bank is 36.62%, return on equity after tax (ROE) is 4.62%, return on assets (ROA) is 1.14%.

According to the statement of the Council and the Board of Rietumu Bank, 2018 was a year of significant decisions and changes for the bank caused by unexpected and at times dramatic events in the country’s financial industry. Rietumu became the first bank in Latvia to perform the required changes within the shortest terms, correcting its business model in accordance with the new requirements and conditions. In particular, business relations with a whole segment of customers were terminated immediately and, as a result, the share of customers qualifying as high risk decreased from 30%, as of 31 December 2017, to 3.1%, as of 31 December 2018. 

It was possible to implement such decisions efficiently due to the longstanding conservative policy of placing assets and the continuously supported very high level of liquidity. Thus, during the period from February 2018 up to the time of approval of this financial statement, the Liquidity coverage ratio of Rietumu did not go below 652% (the minimum standard being 100%) and, as of 31 December 2018, it was 1290%. 

A large-scale programme for increasing efficiency was implemented and, as a result, high profitability was retained by the bank and the group, in conditions of a considerable reduction of assets caused by the termination of relations with a large number of customers. 

The updated business model of Rietumu Bank anticipates cooperation with large and medium enterprises and private individuals from the EU, including the Baltic countries. In the second half of the year, the bank activated its operation in the lending area, which has already brought a positive result within a short time. Furthermore, the bank retains its traditional conservative approach, devoting special attention to the wide diversification of its credit portfolio. 

Customers are offered innovative products that meet their individual tasks and requirements. 

The bank also develops its work with new sources of financing, including by attracting deposits from EU countries, in particular, residents of Germany. In the coming years, Rietumu will continue its conservative policy for the distribution of assets, which is the foundation for further stable growth of the bank.

“We continue paying close attention to events on the financial markets and evaluating them. Also further on, we will implement prospective business solutions and work at strengthening the bank’s reputation and the financial industry of the country as a whole. I would like to thank our clients and partners for their trust and cooperation during this tough period, which has been covered successfully. We are pleased to see that advantages and services of Rietumu are increasingly being evaluated by more new customers. We look ahead with confidence, set new goals and solve new evolutionary tasks,” said Chairman of the Board of Rietumu Bank Rolf Fuls. 

Considering the auditor’s recommendations and maintaining a strong focus on high financial stability level, the Board of the Bank decided to make an additional provision of 14 million to potential future litigation costs. Thus, in 2018 the net profit of Rietumu Bank is EUR 21.5 mln, the combined profit of Rietumu Group is EUR 23.5 mln.

The audited financial statement and the auditor’s opinion will be later approved at the Rietumu Bank shareholders' meeting.