Baltic, Banks, Deposits, Financial Services, Loan

The result in Latvia was impacted by the recovery of earlier loan provisions and reduced expenses, the bank informs.

The volume of deposits in the nine month period remained at previously high levels. This is the legacy of skyrocketing deposit activity at the end of 2013, which took place to ensure easier transition to the euro. Swedbank’s deposit portfolio stood at EUR 3.28 billion at the end of the third quarter. Credit portfolio amortization still continues and the aggregate volume of loans in the nine month period amounted to EUR 3.18 billion, writes Nozare.lv.

The volume of new lending in the nine month period reached EUR 407 million. The mortgage lending market picked up with volumes rising by 28% year-on-year. Future mortgage lending, however, is likely to be affected by recent amendments to insolvency legislation. The bank is working on solutions to mitigate the effect on the availability of financing to families but overall, the banking industry will be forced to implement more conservative policies, Swedbank in Latvia informs.

Swedbank also points out that the demand for new financing among companies remains subdued. The Ukraine-Russia conflict has not had any direct effect, however some customers have put new investments on hold. The bank is working on financing products to target the current needs of businesses, especially small and medium-sized enterprises – the bank has strengthened its leasing offer and created a lending product for small business purchases.

Credit quality continued to improve in Q3 with the volume of impaired loans down to EUR 174 million. Swedbank is taking preventive measures to help its customers affected by the current geopolitical situation. However, thus far, the impact on Swedbank customers in Latvia has been insignificant. Net recoveries amounted to EUR 5 million in Q3 (10 million in nine month period).

In nine month period the bank's revenue fell by 3%, while costs decreased by 10% year-on-year. Customers’ active use of day-to-day financial services mitigated the increase in expenses and decrease in revenue related to the euro introduction. The number of active customers has increased by 28,213 since September 30, 2013. The cost/income ratio stood at 38% in Q3.

The bank has also observed that the customer habit of doing day-to-day banking online becomes stronger – the use of cards, internet banking and mobile devices is on the rise. The number of card purchases increased by 28% in the nine month period. Foreign and online transactions also rose sharply, up by 23%.

''The bank’s performance reflects current trends in the economy – people are able to set aside more for savings and to borrow in order to fulfil their dreams. Unfortunately, due to amendments to the Insolvency Law, banks will be forced to implement more conservative policies. The demand for financing among business is still restrained, yet such low activity is not economically justified. We will, therefore, work on solutions to meet the current needs of private customers and businesses in today’s challenging conditions. There is some homework to be done also on the part of the state, including the removal of barriers to the availability of mortgage loans, and supporting new business, growth as well as encouraging existing companies to invest,'' said Maris Mancinskis, the head of Swedbank in Latvia.

Lithuania's profit for the first nine months 2014 was 3% up year-on-year and amounted to LTL 291 million (EUR 84.347 million) compared with LTL 283 million (EUR 82.028 million) for the same period 2013, the bank said in a statement.

The increase was mainly due to higher income which compensated for a rise in expenses. The ongoing conflict between Russia and Ukraine had no real impact on the financial result, writes LETA/ELTA.

"Our financial results proceed hand in hand with the Lithuanian economy, which has demonstrated resilience and flexibility in a context of geopolitical risk and stagnation in the euro zone as well as Russia. Although export growth slowed in Q3, domestic demand remained a powerful engine for overall economic growth. Despite the fact that the risk of larger geopolitical shockwaves remains, we expect that business and consumer confidence will normalize in the near term. This is also reflected in our bank clients' behaviour," said Dovile Grigiene, head of Swedbank Lithuania.

Lending volumes grew by 0.4% year-on-year (LTL 57 million/EUR 16.5 million). Although the corporate lending portfolio decreased by 2%, new corporate sales were higher compared with the previous year. Signs of improvement in new household lending also became noticeable in Q3. The total loan portfolio amounted to LTL 13.9 billion (EUR 4.028 billion) at the end of Q3 2014.

Deposits increased by 5% (LTL 745 million/EUR 215.9 million) year-on-year to LTL 15.1 billion (EUR 4.376 billion). Deposits from private customers grew by 9% while corporate deposits decreased by 2% in this period.

The loan-to-deposit ratio was 92% compared with 96% for the same period in 2013.

Swedbank’s Estonian subsidiary earned a total of 119.4 million euros in nine-month profits this year, writes Postimees Online.

This is by 10% less than during the same period of time last year.

“Despite deepening instability in Russia and Ukraine, the economic activity level in Estonia did not fall, and that is also reflected in our positive commercial results,” said Swedbank Estonia’s CEO Priit Perens in the bank’s press release.

“Demand for loans is solid, in corporate clients segment as well as that of retail clients,” he added, noting that increased economic activity level of private clients is indicated by an increase in Swedbank’s revenue from service fees.

Since the fourth quarter of 2013, loan volumes have remained virtually unchanged. The volume of consumer loans and private clients’ mortgage loans increased while corporate loans remained stable, and leasing portfolio shrank. Swedbank’s market share in loans in the second quarter of 2014 was 38.8%. In the last quarter of 2013, the market share was 39.5%.