On the performance of Latvian banking sector in January 2010

23.02.2010
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Riga, 22.02.2010

Press Release

On the performance of Latvian banking sector in January 2010

The Financial and Capital Market Commission has prepared operative data on the Latvian banking sector performance in January 2010.

Also in January, the banking sector liquidity ratio (61.4%) exceeded regulatory minimum twofold (regulatory requirement – 30%), (at end-December – 62.8%). Capital adequacy ratio for the banking sector was still high at end-January, 14.3% (at end-December – 14.6%). During 2009, capital was increased in 13 Latvian banks for a total of 998.2 million lats, also in January 2010 banks continued increasing of their capital (by 13 million lats), and banking sector paid-up share capital totalled 1.6 billion lats by end-January.

In January, eight Latvian banks and one branch of foreign bank (covering 19.4% of total banking sector assets) posted profit and in total earned 2.5 million lats, however, the banking sector reported total loss of 36.1 million lats, mainly due to expenses on loan loss provisioning. Bank sector profit in January (before provisioning and tax) amounted to 9.1 million lats.

Following an increase in deposits for three successive months, total amount of deposits in the banking sector has slightly shrunk by 0.6% or 59 million lats in January, mainly due to a decrease in resident deposits by 1.2%, or 70 million lats, but non-residents deposited by 0.3% or 11 million lats more than in the previous month. At end-January, the amount of deposits in the Latvian banking sector totalled 9.5 billion lats.

In January, continuing repayment of funding attracted through parent banks under loan agreement conditions, total bank liabilities to MFI (monetary financial institutions) contracted by 3% or 235.5 million lats and also Latvian banking sector assets decreased (by 1.2%, or 250.4 million lats) totalling 21.4 billion lats at end-January. Total loan portfolio of banking sector shrank by 0.6% in January and at end-January made up 15.3 billion lats, including loan balance to resident companies contracted slightly slower than loan balance to resident households, i.e. by 0.3% and 0.4%, respectively, however, loan portfolios of eight Latvian banks and one foreign bank branch have increased in January (covering 10.3% of total market share in the banking sector loan portfolio).

At end-January, loan balance without payment delays constituted 72.1% of loans issued by banks (at end-December – 74.5%). In January, the amount of loans with more than 90 days overdue payments grew by 5.7%, and their share in banking loan portfolio at end-January totalled 17.4% (at end-December – 16.4%). For loans with more than 90 days overdue payments, the major share constituted loans granted to resident corporate companies for real estate transactions (29%) and to resident households for purchase of housing (28.6%).

In January, loan loss provisions in the banking sector overall increased by 2.3%, or 31 million lats (in December by 1%, or 13 million lats), amounting to 1.4 billion lats, or by 8.9% of total bank loan portfolio (at end December – 8.6%).

Anna Dravniece
Head of Office
Financial and Capital Market Commission
Phone: +371 6777 4800, email: anna.dravniece@fktk.lv

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