Q1 2019: Operating Results of Latvian Banks - Total Loan Portfolio Increased
The banking sector in Latvia continues to focus on serving the local customers, implements changes in business models and actively uses technologies to provide financial services.
Total assets of Latvian commercial banks were 22.9 billion as of March 31, 2019. The value of total assets had a negative trend since 2016. Main reasons for assets’ decrease were the change of strategy for some of the universal banks, change of business models for specialized financial service providers, optimization of capital expenses, as well as the license withdrawal of ABLV Bank. However, the value has stabilized in the 1st quarter of 2019, it remained at the same level as of 31.12.2018.
Total loan portfolio increased in the 1st quarter of 2019
The total portfolio was 13.8 billion EUR as of March 31, 2019. The value increased by EUR 0.2 billion or +1% in the 1st quarter of 2019. The increase was observed in the private and corporate segments. Loan portfolio of seven banks increased in the 1st quarter of 2019.
The Lending Index of the Finance Latvia Association for the private customer segment also shows that the 2018 index for individuals has grown nearly as fast as the previous year, whereas the desire and ability of the Latvian population to apply for loans have experienced its sharpest growth in the period of last three years. This is due to a positive impact created by the overall economic growth in the country, which, in turn, has increased the population's financial stability and optimism. It must be noted, that Latvia's inhabitants are still somewhat cautious of loans, and their ability to undertake credit agreement obligations is greater than their desire to borrow
Deposits have increased by 2%
Total deposits of the Latvian banking sector were EUR 16.7 billion as of March 31, 2019. The portfolio increased by EUR +0.35 billion or +2% in the first quarter of 2019. The increase was mainly observed in deposits of private persons, which make 53% of deposits portfolio.
Eight Latvian banks exceed the average return on equity of European banking sector
The total capital of the Latvian banking sector decreased by EUR -0.05 billion or -2% in the 1st quarter of 2019. It decreased by EUR -0.35 billion or -11% since the beginning of 2018. It was affected by the license withdrawal of ABLV Bank.
The average return on equity in the banking sector of Eurozone was 5.0% in 2018. Eight Latvian banks exceed the average return on equity of the banking sector.
Total profit of banks in Latvia in the 1st quarter of 2019 was by EUR 24 million or 26% smaller compared to the results of the 1st quarter of 2018.
TOP 3 most profitable Finance Latvia Association member banks in the 1st quarter of 2019:
- Swedbank – EUR 29.1 million;
- SEB banka – EUR 12.6 million;
- Citadele banka – EUR 5.4 million.