Riga, 22 January 2010
Data on the Latvian bank performance in 4Q 2009
Financial and Capital Market Commission (hereinafter – the Commission) has prepared information on the performance of the Latvian banks by the end of December 2009.
Performance indicators of all Latvian banks complied with the regulatory requirements in 4Q 2009 – the banking sector liquidity ratio had grown and was 62.8% at end-December (compared to 51.8% at end-November). Banks still continued capital raising, and at end-December the capital adequacy ratio for the banking sector was still increasing and retained high – 14.6% by end-December (compared to 13.6% at end-November). During 2009, capital was increased in 13 Latvian banks for a total of 998.2 million lats, including share capital by 728.2 million lats, subordinated capital by 221.7 million lats and reserve capital by 48.3 million lats.
Total amount of deposits has increased in the banking sector already for the third successive month, i.e. in December by 4.7% or 426 million lats (compared to 0.8% or 71 million lats in November, 0.5% or 48 million lats in October) including resident deposits rose by 3.4% in December, or by 196 million lats and non-resident deposits – by 6.8%, or 230 million lats. By end of December, total deposits in the Latvian banking sector made up 9.6 billion lats.
In December, assets of Latvian banking sector increased by 1.2% or 267 million lats and amounted to 21.7 billion lats by end-December. Total banking sector loan portfolio shrank by 0.7% in December and at end-December was 15.4 billion lats, including loan balance to resident companies contracted slightly faster than loan balance to resident households, namely, by -1,5% and -0.6%. However, loan portfolios of eleven Latvian banks and two foreign bank branches increased totally by 37 million lats in December (covering 12.4% of total market share in the banking sector loan portfolio).
In December 2009, loan balance without payment delays increased in December for the first time since autumn 2008 and by end-year totalled 11.5 billion lats, or 74.5% of banking sector loan portfolio (compared to 72.6% at end November). Total amount of outstanding loans in December contracted by 7.5% and by end of the year amounted to 3.9 billion lats or 25.5% of total banking loan portfolio, while the amount of loans with more than 90 days overdue payments rose by 3.2% in December, and their share in banking loan portfolio by end-year totalled 16.4% (at end-November – 15.8%). For loans with more than 90 days overdue payments, the major share constituted loans granted to resident households for purchase of housing (29.4%) and to resident corporate companies for real estate transactions (29.1%).
In 2009, banks were focused on dealing with ‘clients in difficulty’, and therefore the volume of restructured loans increased and at end-December made up 2.5 billion lats (including loans to legal entities – 1.7 billion lats, natural entities – 785 million lats) or 16.3% of total loan portfolio (at end-September – 15.8%). While client creditworthiness has been still on the decline and accordingly loans in work-out process increased and at end-December totalled 1.5 billion lats (including to legal entities – 759 million lats, natural entities – 703 million lats) or 9.5% of total banking loan portfolio (at end-September – 8%). Likewise 3Q, a major share of restructured loans and loans in work-out process at end-December were secured with real estate, i.e. 81.4% and 88.5%, respectively.
In December, loan loss provisions in the banking sector overall grew by 0.8% or 11 million lats, totalling 1.4 billion lats. Thus, at end-December provisions in the banking sector totalled 9.4% of total bank loan portfolio (compared to 9.3% in November).
In 2009, nine Latvian banks (covering 16.2% of total banking sector assets) posted profit and in total earned 19.6 million lats, however, the banking sector reported total loss of 773.4 million lats, mainly due to expenses on loan loss provisioning. Bank sector profit in 2009 (before provisioning and tax) amounted to 322 million lats (by 21% down from 2008).
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