Update: banking sector performance in April 2012

05.06.2012
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Riga, 25.05.2012

Press Release

Update: banking sector performance in April 2012

The Financial and Capital Market Commission provides data covering the Latvian bank performance for April 20121.

The banking sector liquidity remained high and liquidity ratio* at end-April was 62.0% (63.2% at end-March). Also, the capital adequacy ratio* maintained a high level and reached 18.1% (regulatory minimum capital requirement – 8%), whereas the tier 1 capital ratio was 15.0% (compared to 18.1% and 14.9% at end-March, respectively).

Since the beginning of 2012 seven banks had increased their capital for the total of 11.7 million lats and the banking sector paid-up share capital accounted for 1 677.1 million lats by end-April.

In the first four months of 2012 the banking sector overall had a profit of 55.3 million lats, where 17 Latvian banks and five branches of foreign banks (constituting 95.6% of total banking sector assets) reported profits. However, the JSC Latvijas Krājbanka’s losses excluded, the banking sector profit totalled 60.2 million lats by end-April.

The banking sector profit (before provisions and tax) by end-April accounted for 90 million lats, i.e. up by almost 30% year-on-year. In comparison with April 2011, both net commission income and net interest income had grown by 37% and 16%, respectively, whereas expenses for loan loss provisions declined by 14%.

Over the month the banking deposit stock climbed by 2.4%, or 266.3 million lats, including a rise in resident deposit stock by 0.9% or 49.9 million lats (mainly because of an increase in deposits of non-financial private undertakings), but non-resident deposit stock increased by 4.0%, or 216.5 million lats.

In April, total loan portfolio of the banking sector did not change practically (shrinking by 0.01%). The balance of loans granted to resident households shrank by 0.7%, whereas the balance of loans granted to both corporate resident customers and to non-resident customers slightly grew, by 0.3% and by 1.3%, respectively.

During April, new loans in the amount of 157 million lats were granted in the banking sector (where 51.3 million lats – for the development of Latvian enterprises, 13.6 million lats – to Latvian financial institutions, 14 million lats – to resident households, whereas 77.8 million lats – to non-residents). In the corporate segment, the major part of new loans were granted to the agricultural sector (11.2 million lats), as well as for real estate transactions (8.9 million lats), trade (7.4 million lats), financial and insurance activities (5.2 million lats), manufacturing industry (5.1 million lats). As for the household segment, majority of new loans in April were issued for the purchase, reconstruction and/or repair of housing (9.5 million lats).

The share of loans with more than 90 days overdue payments in the total loan portfolio reached 13.8% at end-April (compared to 13.7 at end-March). Such loans made up 16.6% of resident household loan portfolio, and 13.3% of resident corporate loan portfolio. The amount of loan loss provisions made by the banks at the end of April reached 1.24 billion lats, or 10.1% of total banking loan portfolio (compared to 10.2% at end-March).

Summary of the 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.

Ieva Upleja
Chief Public Relations Specialist
Communications Division
Financial and Capital Market Commission
Phone: +371 67774807, email: ieva.upleja@fktk.lv

1 Information prepared based on the statistical data submitted by banks, including information on the JSC Latvijas Krājbanka, which licence was withdrawn on 10.05.2012.
* Data on performance of JSC Krājbanka excluded.
2 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.
3 Except the loans that replace the loans in the loan portfolio by entering into a new loan contract.

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