Estonia, Financial Services, Funds, Investments

The total assets of investment firms grew 6% in the second quarter to nearly 100 million euros. In the structure of assets of investment firms, loans issued and investments in subsidiaries increased the most, the Estonian Financial Supervision Authority (FSA) said on Monday, October 12th.

Despite the changes that took place in assets, liquid assets continue to account for the biggest proportion of the sector's assets. Of the assets 42% were bank deposits and deposits in other financing institutions and 14% were investments in liquid bonds.

The total balance of investment firms continues to be liquid.

The reduction in the numbers of clients of investment firms that had continued for several quarters reversed in the second quarter. Customer assets grew by 23% to 371 million euros.

The investment firms' return on equity for the past 12 months was 39%. All investment firms finished the quarter with a profit. 

All investment firms met both the Pillar 1 and Pillar 2 capitalization requirements. The sector's average CET1 indicator declined from 35.8% to 28.7%.

The economic crisis caused by coronavirus had a limited impact on investment firms. The sector earned a profit in the second quarter and the sector's income is significantly bigger than last year due to increased activity of clients. 

Investment firms continue to acquire positions entailing market risk in big amounts. Trading in positions entailing market risk accounts for the biggest proportion of the sector's income, but also brings with it volatile and rapidly materializing risks which require effective risk management systems. 

The capitalization of investment firms in the sector as a whole is satisfactory. Despite the assumption of significant risks, the risks are generally covered with capital. The capitalization of a few individual loss-making market participants is on the borderline.