Update: banking sector performance in February 2012
Financial and Capital Market Commission releases the Latvian bank performance data1 for February 2012.
The bank capital adequacy ratio* was still high and at end-February stood at 17.4% (regulatory minimum capital requirement – 8%), whereas the Tier 1 capital ratio2 was 14.2% (at end-January –17.3% and 14.1%, respectively). Since the beginning of 2012, four banks had increased their capital for the total of 1.6 million lats and the banking sector paid-up share capital accounted for 1 977.5 million lats by end-February.
In February 2012, the banking sector reported losses of 6.8 million lats. However, leaving out losses suffered by JSC “Latvijas Krājbanka” and JSC “Parex banka”, the banking sector overall operated with profit in February, earning the total of 43.3 million lats, including 16 Latvian banks and six branches of foreign banks (making up 90.4% of total banking sector assets).
Profit of the banking sector (before tax and provisions) by end-February accounted for 41.4 million lats or up by 39% year-on-year. In comparison with February 2011, both net commission income and net interest income grew by 40.8% and 12.6%, respectively (though the loan portfolio continued shrinking, a decrease in the banking sector interest income continued, however, in the wake of decreasing deposit interest rates the aggregate banking sector interest expenses declined.
The banking sector liquidity ratio* did not change since the end of January and by end-February it was still 62.3%.
In February, the banking sector deposit stock rose by 1.6% or 177.2 million lats, where resident deposit stock grew by 1.2% or 67.1 million lats (mainly deposits of financial institutions and non-financial undertakings grew), but non-resident deposit stock increased by 2.1% or 110.1 million lats.
In February, total loan portfolio of the banking sector shrank by 0.9% or 112.2 million lats and it was mainly due to still less amounts of new loans granted by banks in comparison with those repaid by clients and written-off by banks. The balance of loans granted to resident corporate clients shrank by 0.5% and to resident households – by 0.7%, while non-resident loan portfolio shrank by 2.6%.
In February, new loans3 in the amount of 151.6 million lats were granted in the banking sector (where 86.6 million lats million lats were granted for the development of the Latvian non-financial undertakings, 4 million lats – to Latvian financial institutions, 12.3 million lats – resident households, but 48.5 million lats – non-residents). The banks were most active in transport and storage sector lending (almost one fourth of all corporate loans in February were granted to this sector), financial and insurance activities, as well as the power sector, whereas in the household sector about two thirds of new loans in February were granted for purchasing, reconstruction and/or housing repair.
The amount of loans with more than 90 days overdue payments and total amount of overdue loans did not change essentially over the month. At end-February, the share of loans with more than 90 days overdue payments in the total banking sector loan portfolio made up 17.4%, whereas total share of overdue payments – 26.3%. over the month, the amount of loans with more than 90 days overdue payments increased in the corporate (resident) loan portfolio (with largest gains in real estate transactions and manufacturing industry), and as a result the share of loans with more than 90 days overdue payments in the corporate (resident) loan portfolio grew up to 15.8%, returning to the level of November 2011, whereas the amount of loans with more than 90 days overdue payments in the household sector shrank and the share of loans with more than 90 days overdue payments made up 19.3% as of end-February.
Also, the amount of loan loss provisions made by banks did not change essentially during the month (shrank by 0.2%) and at end-February totalled 1.53 billion lats or 11.7% of total banking loan portfolio (compared to 11.6% month-on-month).
Summary of balance sheet statements of 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.
For additional information:
Public Relations Specialist
Financial and Capital Market Commission
Phone: +371 67774808;
* Data on performance of JSC Parex banka and JSC Krājbanka are not included.
1 Information prepared based on the statistical data submitted by banks, including information on the JSC Latvijas Krājbanka, operations of which were halted by the 21.11.2011 decision of the FCMC Board.
2 Only the highest quality capital elements are included in Tier 1 own funds: paid-up share capital and reserves, as well as retained earnings of previous years.
3 Except the loans that replace the loans in the loan portfolio by entering into a new loan contract.