The Estonian unit of Swedbank earned a profit of 52.2 million euros in the first quarter of this year compared to the year-earlier 44.6 million euros.
The improved result was due to the reduction of loan loss provisions by 8.8 million euros during the period, the bank said. The Estonian operation’s revenues declined by 4 percent year-on-year mostly on account of a drop in net interest income. The bank’s revenues in Estonia were 69.9 million euros compared to 73.1 million euros a year earlier.
Both the economic environment as a whole and the bank’s financial results were in the first quarter influenced the most by the drop in euro base interest rates, director general of Swedbank Estonia Priit Perens said.
The Estonian unit’s net interest income decreased by 9 percent in annual comparison to 47.1 million euros owing to the drop in market base interest rates and the continued amortization of the loan portfolio which exceeded the positive impact of the deposit volume.
The unit’s net commission income decreased by 4 percent to 14.2 million euros mostly on account of smaller income from card and securities transactions. Financial income at the same time soared 59 percent to 2.2 million euros.
Swedbank Estonia’s expenses decreased by 10 percent year-on-year to 26.6 million euros, influenced mainly by declining IT and other expenses. Personnel expenses grew by 1 percent to 7.9 million euros while other expenses decreased by a fifth to 17.2 million euros. The number of employees was 1,476 compared to 1,431 in the first quarter of 2011.
The loan portfolio decreased by 6 percent compared to March 31, 2011 and by 1 percent compared to the preceding quarter. The decrease was mainly due to corporate loans but at the same time new lending grew the fastest in this segment during the first quarter.
The volume of deposits increased by 8 percent year-on-year but showed a decline of 1.8 percent compared to the end of 2011. Swedbank Estonia’s share of the deposit market was 45.2 percent at the end of February compared to 46.2 percent at the end of last year. The loan to deposit ratio was 118 percent compared to 117 percent at the end of 2011.
The amount of problem loans continued decreasing in the first quarter, dropping to 379 million euros by the end of March from the year-earlier 504 million euros. The bank said the improvement was due to improved ratings, better quality of new sales and writing off of nonperforming loans.
Source: Estonian Review
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