Banking sector deposit stock up by 300 million lats in October
Preliminary data on the Latvian banking performance for October 2012 show that the bank deposit stock has increased by 2.5%, or 300 million lats. The increase was observed both in resident and non-resident deposit stocks, i.e. by 163 million lats and 136 million lats, respectively. As for resident deposits, there was an essential growth in deposits by the private non-financial institutions, as well as government deposits, while household deposits saw a slight increase.
The banking sector liquidity and capital adequacy ratio still remained high. By the end of October the liquidity ratio was 59.7% (compared to 59.4% at the end of September) and capital adequacy ratio was 17.7% (regulatory requirement – 8%), whereas tier 1 capital ratio1 was 15.3% (compared to 17.7% and 15.2% at the end of September, respectively). Since the beginning of 2012, 12 banks have increased their capital by 108.3 million lats in total.
The banking sector ended first ten months of 2012 with profit of 140.5 million lats, where 15 Latvian banks and four foreign bank branches in Latvia operated with a profit (with total share of 92.6% in the banking sector assets). At the end of October, the banking sector profit (before tax and provisions) accounted for 254 million lats, or up 27% year-on-year. In comparison with respective period in 2011, most significant banking income items continued growing, i.e. net interest income by 4.6% and net fee and commission income by 16.6%, while one of the most significant banking sector expenditure items – provisions for bad debts shrank by 27.3%.
In October, there was a marginal increase in the banking sector total loan portfolio (0.04%). The balance of loans granted to resident corporate customers rose by 0.2% in October, already for the fifth month in the row, owing mainly to granting new financing to the energy industry, whereas the balance of loans granted to resident households was still declining (0.6%). The balance of loans granted to non-residents increased by 1.2% in October.
In October the banking sector issued 211.8 million lats in new loans2, including 78.1 million lats were issued for the development of Latvian companies, 37.9 million lats – were granted to the Latvian financial institutions, 16.7 million lats – to resident households, whereas 77.7 million lats – to non-residents. In the corporate sector, the bulk of new loans over the month were granted to the energy sector (34.9 million lats), followed by trading industry (7.8 million lats), real estate transactions (6.4 million lats), agricultural sector (6.3 million lats) and other services (8 million lats). Whereas in the household sector, almost two thirds of new loans in October were the loans for housing purchase, reconstruction and/or repair (10.9 million lats).
The share of loans with more than 90 days overdue payments in the total loan portfolio at the end of September made up 11.9% (compared to 12.0% at the end of September). The share of such loans in the resident household loan portfolio reached 15.9%, whereas in the resident corporate loan portfolio – 10.1%. Following a reduction in loans with up to 30 days overdue payments, the total share of the loans past due in the banking sector contracted from 19.8% to 18.7% over the month. The amount of loan loss provisions made by the banks at the end of October made up 1.01 billion lats, or 8.5% of total bank loan portfolio (compared to 8.6% at the end of September).
Summary of balance sheet statements of Latvian banks broken down by months is available on the Financial and Capital Market Commission’s website at www.fktk.lv/en; Statistics/Credit Institutions/Monthly Reports.
1 Only the highest quality capital elements are included in the tier 1 own funds: paid-up share capital and reserves, as well as retained earnings of previous year
2 The loans that replace the loans in the loan portfolio by entering into a new loan contract are not included.
For additional information:
Head of Communications Division
Financial and Capital Market Commission
Phone: +371 67774860