News Column

SEB Latvia attracts new customers and strengthens profitability

July 16, 2014

ENP Newswire - 16 July 2014

Release date- 15072014 - During first six months of this year more than 13 thousand new clients have chosen SEB Latvia as their banking partner, the bank has issued more than EUR 286 million in new lending and continued to improve the quality of its credit portfolio.

These and other developments have enabled SEB Group in Latvia to improve its financial performance and conclude the first two quarters with a net profit of EUR 14.1 million.

SEB Latvia group's financial result before provisions during Q1 and Q2 reached EUR 23.5 million. According to risk management standards, within first half of the year bank set aside EUR 8.5 million in provisions which is more than two times less in comparison with the respective period last year. Consequently, SEB group in Latvia has concluded first two quarters with a net profit of EUR 14.1 million.

President of SEB banka Ainars Ozols comments on the results:

'For us the first half of this year has been a dynamic period with two main priorities: ensuring successful introduction of euro and seek new opportunities to adjust our services to client's demands. The last significant stage of euro introduction concluded on June 30, ending the period of exchange of lats to euros in commercial banks and double currency pricing. We see that both customers and the bank had thoroughly prepared for euro introduction which has allowed the euro to become a part of our everyday life fairly quickly.

However, we see that the positive effects of euro introduction have materialized only in part. People are able to travel more conveniently, Latvia's credit ratings are improving as well as international confidence in stability of Latvia's economy. At the same time situation in Ukraine and modest growth rates in Western Europe have contributed to increased caution among investors and investment flows we see are not so strong as was expected.

We are putting in a lot of effort to make our services more accessible and easy-to-use for our clients. For example, we are moving our branches to shopping malls and in June we opened our fifth branch of such kind. Furthermore, in our refurbished Vecriga premises we have established a very strong competence centre. Customer's habits are changing and we see that clients expect electronic solutions for their daily banking needs and require assistance from bank's experts in case of more complex services. Therefore we will continue to strengthen expertise and consulting capacity in our branches.

We also see a gradual growth of customer interest opportunities to buy a home for their families. Currently the main obstacle for receiving a mortgage loan is not insufficient income but insufficient savings to cover the first instalment. Accordingly, any legislation changes that could result in the increase of the first instalment should be avoided.

The favourable economic environment allows us to continue improving the quality of our credit portfolio and achieve a significant decrease in the amount of new provisions. Hence, we are able to devote more resources to financing growth-oriented projects both in corporate and retail sectors.'

During first six months SEB continued to finance both companies and private individuals by issuing more than 5400 loans which amount to EUR 286.5 million. Nevertheless, bank's credit portfolio decreased by 8% during this period. 88% of new loans have been issued to companies. There has also been a gradual increase of client interest in opportunities to buy their own home with a mortgage loan. Within first two quarters SEB bank has issued almost 700 mortgage loans for the total sum of EUR 21 million.

In accordance with the Law on Introduction of Euro, between January 1 and June 30 SEB bank provided an opportunity for individuals and companies to exchange lats to euros at the official exchange rate. During this period approximately 102 thousand transactions were completed at bank's branches, issuing to customers more than EUR 71 million.

Financial indices of SEB Group in Latvia in the first 6 months of 2014:

The revenue of SEB Group in Latvia reached EUR 49.7 million, which is 12% less than in the first 6 months of 2013,

Costs increased by 3% compared to the first 6 months of 2013 to EUR 26.2 million,

Profit before taxes reached EUR 23.5 million, which is 24% less than in the first 6 months of 2013,

Provisions made during the first 6 months of 2014 amounted to EUR 8.5 million, which is 53% less than in the first 6 months of 2013,

Operating profit after taxes and savings amounted to EUR 14.1 million,

The total amount of deposits at SEB banka as of 30 June 2014 reached EUR 2.12 billion, which is 5% more than at the end of first quarter,

The total loan portfolio as of 30 June 2014 was EUR 2.68 billion, which is 4% less than at the end of first quarter,

The amount of new loans issued at SEB banka during the first 6 months of 2014 was EUR 286.5 million,

Capital and reserves as of 30 June 2014 amounted to EUR 449.4 million,

Assets as of 30 June 2014 amounted to EUR 3.5 billion,

The capital adequacy ratio of SEB Group in Latvia as of 30 June 2014 was 16.44%,

SEB banka's liquidity ratio as of 30 June 2014 was 37.65%.

SEB's President and CEO Annika Falkengren:

'SEB's investments in its client business have created a stronger, more stable and efficient platform. As a consequence, our result displays the higher activity in the corporate and capital markets in the Nordic countries. Our diversified business contributed to a broad-based increase in operating income, up by 4 per cent while operating expenses decreased by 1 per cent. We continued to generate capital and on a Common Equity Tier 1 capital ratio (Basel III) of 16.0 per cent, return on equity reached 13.1 per cent.'

During the 2nd quarter SEB Latvia has received several international and local awards:

Global Finance has nominated SEB Latvia as the best bank in Latvia in 2014 in custody services;

SEB Latvia was awarded with Gold Category in Sustainability Index 2014;

SEB Latvia scored 8th place in Corporate Reputation TOP and 2nd spot in finance industry;

Ministry of Welfare has awarded SEB Latvia with the 'Family-friendly entrepreneur' award.

Bloomberg Markets Magazine in its TOP20 World's Strongest Banks has named SEB Group as the 9th strongest bank and 3rd strongest bank in Europe.


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Source: ENP Newswire

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