On the performance of Latvian banking sector in January 2009
The Financial and Capital Market Commission (FCMC) has aggregated operative data on the Latvian banking sector performance in January 2009.
In January 2009, the Latvian banks earned 8 million lats, by 19 million lats, or 70% down year-on-year.
Upon a decrease in the bank claims both on the Bank of Latvia and on other monetary financial institutions in January 2009, the Latvian banking sector assets overall fell by 1%, totalling almost 23 billion lats at the end of January.
Total amount of loans issued in January went up slightly, by 0.1% (compared to –1.1% in December 2008), and at the end of month the banking sector overall had issued 16.6 billion lats in loans. In January, loans granted to private corporations rose by 0.6%, whereas total household loan portfolio shrank by 0.2%. In January, the banks carried on raising loan loss provisions (by 17% or 57 million lats), and at the end of month total provisions accounted for 403 million lats (compared to 345 million lats at the end of 2008), or 2.4% of loan portfolio.
Total deposit stocks in the banking sector in January amounted to 9.6 billion lats, or by 2% down from the end of 2008. Of total deposit decrease in January, namely, 192 million lats, the greater part, or 108 million lats, were resident deposits. Domestic economic difficulties certainly had an impact on that decrease, including the growing unemployment rate, as demand deposits mainly experienced a downward trend and about a half of the Latvian banks faced a decrease in deposits.
By the end of January, the liquidity indicator of the Latvian banking sector was 48.9%, which was well above regulatory minimum requirement of 30%.
The average capital adequacy ratio (CAR) of the banking sector has not diminished since the end of December 2008, and at the end of January 2009 it was 12.5% (compared to 11.8% in December 2008), considerably exceeding the minimum CAR requirement of 8%.
Public Relations Specialist
Financial and Capital Market Commission