On the performance of Latvian banking sector in August
The Financial and Capital Market Commission (FCMC) has summarized information on the performance of the Latvian banking sector in August 2009.
In August, the performance ratios of all Latvian banks complied with regulatory requirements; the average liquidity indicator was stable, 52.5% (compared to 52.6% at end-July) (regulatory minimum 30%). The average capital adequacy ratio of the banking sector at end-August was sufficient – 12.9% (compared to 13.1% at end-July) (minimum requirement 8%).
Total deposits attracted by the banking sector in August shrank by 0.2%, or 17 million lats (compared to 1.4%, or 132 million lats, in July). The volume of non-resident deposits in August grew by 1.3%, or 42 million lats. Total volume of resident deposits attracted by the banking sector declined by 1%, or 59 million lats, though total of resident corporate deposits in August climbed by 1.5%, or 24 million lats, however, the amount of resident household deposits decreased by 1.9%, or 52 million lats.
Following an ongoing decrease for eight months, in August the volume of the Latvian banking assets grew by 0.6%, or 138 million lats (compared with a decrease by 1.1%, or 245 million lats, in July). Though the total loan portfolio of the banking sector in August contracted by 0.4%, or 56 million lats, loan balance in the reporting month grew in six banks and one branch of a foreign bank (total market share in the loan portfolio of banking sector– 24.4%).
By the end of August, 74.9% of bank loans were without payment delays (compared to 76% at end-July). The amount of loans with payments overdue more than 90 days grew by 6% and their share in the total bank loan portfolio made up 13.9% at the end of August (compared to 13% at end-July). Therefore loan loss provisions in the banking sector increased by 6.8%, or 72 million lats in August, totalling 1.1 billion lats. Loan loss provisions made up 7.1% of banking loan portfolio in August (compared to 6.6% in July).
In the first eight months of 2009, ten Latvian banks operated with profit earning a total of 18.2 million lats, though overall the banking sector ended the period with losses of 455.4 million lats, mainly due to above loan loss provisioning.
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