Update on the banking sector performance in Latvia: May 2010

30.06.2010
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Riga, 22 June 2010
 
Press Release

Update on the banking sector performance in Latvia: May 2010

Financial and Capital Market Commission has prepared recent data on the performance of Latvian banks [1] for May 2010.

In May, performance of all the Latvian banks complied with regulatory requirements, still retaining high level, i.e. liquidity ratio reached 63.5% at end-May, while capital adequacy ratio was 14.4% (compared to 67.3% and 14.5%, respectively, at end-April). Since the beginning of 2010 eight banks increased their capital in total by 148.8 million lats and banking sector paid-up share capital totalled 1.7 billion lats at end-May (13 Latvian banks increased their capital in total by 998.2 million lats during 2009).

At end-May, the amount of deposits in the Latvian banking sector amounted to 10.3 billion lats, i.e. deposits were by 1.8% or 177.2 million lats more than at end-April. In May, deposit stock annual growth rate was positive for second month in a row, i.e. by 10.1% (compared to 3.6% at end-April). In May, both resident deposit stock increased by 1.1% or 70.2 million lats (both corporate deposits and household deposit stock), as well as non-resident deposit stock – by 2.8% or 107 million lats.

The Latvian banking assets fell by 0.5% in May, or 108.2 million lats, and at end-May amounted to 21.4 billion lats. In May, for the first time since January 2009 the banking sector total loan portfolio grew by 0.2%, or 27.6 million lats and at end-May totaled 15 billion lats, of which resident deposit stock decreased by 0.1% or 12.4 million lats, while non-resident loan portfolio increased by 2.2%, or 40 million lats. Following an increase in lending, loan portfolios of 13 Latvian banks and three foreign bank branches increased in May (making up 60% of total market share in the banking sector loan portfolio).

By end-May, of total loans issued by banks 72.2% were without payment delays (at end-April – 72.3%). The quality of bank loan portfolio continued stabilizing. The amount of loans with less than 90 days overdue payments shrank by 6.6%, whereas the amount of loans with more than 90 days overdue payments grew by 3.8%, and their share in bank loan portfolio by end-May made up 8.7% and 19%, respectively (at end-April– 9.4% and 18.3%).

In May, loan loss provisions in the banking sector overall rose by 2%, or 32.3 million lats (in April – by 2.3% or 35.4 million lats), totaling 1.6 billion lats, or 10.9% of bank total loan portfolio (at end-April – 10.6%).

In five months of 2010 six Latvian banks and one branch of a foreign bank posted profit (10.3% of total banking sector assets) and earned a total of 4.7 million lats, however, the banking sector overall reported a 207 million lats total loss at end-May, mainly because of expenses on loan loss provisioning. The banking sector’s profit (before provisioning and tax) amounted to 48.9 million lats at end-May.

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

Prepared by:
Ieva Upleja
Public Relations Adviser
Financial and Capital Market Commission’s Office
Phone: +371 67774807; email: ieva.upleja@fktk.lv

[1] Bank and their EU branches’ data

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