Increasing volume of new loans in the banking sector this year
Since the beginning of 2012, new loans totalling almost one billion lats (996.6 million lats) were granted in the banking sector, which is up by 47.3% in comparison with seven months of 2011.
In July, new loans in the amount of 125.7 million lats were granted in the banking sector (compared to 156 million lats in July 2011), where. 34.8 million lats were granted for the development of Latvian enterprises, 10.6 million lats – to the Latvian financial institutions, 17.6 million lats – to resident households, whereas 62.4 million lats – to non-residents. In the corporate segment, the major part of new loans in July were granted to the agricultural sector (6 million lats), followed by the trading sector (4.5 million lats), power sector (4.4 million lats), manufacturing industry (4.3 million lats) and transport and storage (3.9 million lats). As for the household sector, 75% of new loans were issued for the purchase, reconstruction and/or repair of housing (13.2 million lats).
Banking sector profit
The banking sector ended the first seven months of 2012 with the profit 90 million lats in total, where 14 Latvian banks and five foreign bank branches posted profit (with market share of 90.8%). By the end of July, the banking sector had achieved a profit of 163 million lats (before provisions and tax), i.e. almost one fourth up from the respective period in 2011.
In comparison with seven months of previous year, most significant banking income items continued growing, i.e. net interest income by 7.6% and net fee and commission income by 28.2%, whereas one of the most significant banking sector expenditure item – provisions for bad debts reduced by 9.7%.
Liquidity and capital adequacy ratios
The banking sector liquidity remained high as the liquidity ratio was 59.2% at end of July (compared to 59.3% at the end of June). Also the capital adequacy ratio was high and by end July stood at 17.4% (minimum capital requirement – 8%), whereas tier 1 capital ratio was 15% (compared to 17.2% and 14.9% at the end of June, respectively). Since the beginning of 2012, 10 banks had raised their capital in total by 64.75 million lats.
In July, the banking deposit stock remained unchanged. Resident deposit stock slightly reduced by 0.3%, or 17.2 million lats (an increase was only in non-financial institution deposits), but non-resident deposit stock slightly grew – by 0.3%, or 17.9 million lats. In July, the share of demand deposits continued growing and made up 69.2% of total deposit structure (at the end of June 67.7%).
In July, the total banking loan portfolio increased by 0.2%, (where loans granted to corporate resident clients grew 0.1% and non-resident loan portfolio by 2.7%, whereas the balance of loans granted to resident households shrank by 0.5%).
Share of overdue loans
The share of loans with more than 90 days overdue payments in the total loan portfolio at the end of July made up 12.4% (compared to 12.5% at the end of June). The share of such loans in resident loan portfolio was 16.1%, but in the corporate resident loan portfolio – 11.2%. Total share of the loans past due by the end of July reached 19.9% (compared to 19.6% at the end of June). The amount of loan loss provisions made by the banks at the end of July accounted for 1.06 billion lats or 8.9% of total banking loan portfolio (compared to 9% at the end of June).
Please find the summary of the balance sheet statements of Latvian banks broken down by months 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