Riga, 20.08.2010
Press Release
Update: Latvian bank performance July 2010
Financial and Capital Market Commission has prepared recent data on the performance of Latvian banks for July 2010.
Performance results of Latvian banks for July met regulatory requirements for capital, retaining high level, i.e. liquidity ratio was 65.4% at end-July, and capital adequacy ratio stood at 13.8% (compared to 64.5% and 14.2% at end-June). As from the beginning of 2010 nine banks increased their capital overall by 150.3 million lats and at end July paid-up share capital in the banking sector accounted for 1.75 billion lats (where 13 Latvian banks increased capital by 998.2 million lats during 2009).
In first seven months of 2010, eight Latvian banks and two branches of foreign banks (constituting 14.1% of total banking sector assets) posted profit earning in total 7.1 million lats, however, the banking sector total loss at end-July amounted to 312.8 million lats – mainly because of loan loss provisions (i.e. by 21.9% down from the respective period in 2009 with total loss of 400.5 million lats). The banking sector profit (before provisioning and tax) accounted for 83 million lats at end-July.
Deposit base in the Latvian banking sector has been still above 10 billion lats (i.e. 10.1 billion), namely, by 1% or 106.2 million lats less than by end-June, it can be explicable by a 99 million lats decrease in the deposit made by the State Treasury during the JSC "Parex banka" restructuring process, transforming above amount into the share capital of the JSC "Citadele banka".
In July, loan portfolio of the banking sector continued shrinking at the same pace – contracting by 0.7% monthly or 98.5 million lats and at end-July totalled 14.9 billion lats, where resident household loan balance decreased at a slightly slower pace than resident corporate loan balance, namely, by 0.6% and 1%.
Though in July new loans issued in the banking sector made up 217 million lats in total, it was still less than the amount of banking loans at amortised cost (repaid by clients and bank write-offs), consequently the loan portfolio was still on the decline.
By the end of July, of total loans granted by banks 71.5% were without payment delays (compared to 71.4% at end of June). Though the total amount of overdue loans fell in July (by 1.3%), the amount of loans with more than 90 days overdue payments grew (by 1.5%) and their share in the banking loan portfolio at end-July made up 19.4% (compared to 19% at end-June). For loans with more than 90 days overdue payment, the major share constituted resident household loans for housing acquisition (26.8%) and resident corporate loans for real estate transactions (24.7%).
Following the trends of loan quality stabilization, loan loss provisioning monthly growth rate continued decreasing in the banking sector in July, namely, from 2.5% in June to 1.4% in July, the amount of provisions in the banking sector totalled 1.7 billion lats at end-July or 11.4% of total banking loan portfolio (compared to 11.2% at end-June).
From now on, graphic material will be added to the Press Releases regarding the banking performance on the Commission's website (available at: http://www.fktk.lv/texts_files/FKTK_presentation_press_release_20_08_2010.pdf).
Anna Dravniece
Head of Office
Financial and Capital Market Commission
Phone: +371 6777 4800, email: anna.dravniece@fktk.lv
Prepared by:
Agnese Joela
Public Relations Specialist
Financial and Capital Market Commission's Office
Phone: +371 67774808; email: agnese.joela@fktk.lv
Graphic material - bank performance July 2010