Danske Banka's corporate lending grows 35%
Danske Banka's financial results 2010
Total income: LVL 3.0 million, down 62%
Loan impairment charges: LVL 2.0 million
Profit before tax: LVL -2.5 million
Cost/income ratio: 113.6%
Deposits: LVL 101.2 million, up 0.1%
Customer base: 12,415, up 10%
Bank branches: 4
Employees: 116 (103 FTE)
|
BANKING ACTIVITIES LATVIA (LVL thousands) |
2010 |
2009 |
Index 10/09 |
| Net interest income | 3,391 | 5,936 | 57 |
| Net fee income | (61) | 66 | (93) |
| Net trading income | (706) | 1,383 | (51) |
| (Portion attributable to market value adjustments of fin instruments) | (1,020) | 1,302 | (78) |
| Other income | 382 | 454 | 84 |
| Total income | 3,006 | 7,839 | 38 |
| Operating expenses | 3,416 | 3,550 | 96 |
| Profit before loan impairment charges | (410) | 4,289 | (10) |
| Loan impairment charges | 2,044 | 42,030 | 5 |
| Profit before tax | (2,454) | (37,741) | 7 |
| Loans and advances, end of period | 226,119 | 218,755 | 103 |
| Retail loans | 138,975 | 154,092 | 90 |
| Corporate loans | 87,144 | 64,663 | 135 |
| Deposits, end of period | 101,197 | 101,066 | 100 |
| Allocated capital (avg.) | 9,868 | 10,890 | 91 |
| Profit before loan imp. charges as % p.a. of allocated capital | (4.2) | 39.4 | - |
| Pre-tax profit as % p.a. of allocated capital (ROE) | (24.9) | (346.6) | - |
| Cost/income ratio (%) | 113.6 | 45.3 | - |
Note: Deposits do not include MM funds of LVL 8 million in 2010 and LVL 4.6 million in 2009.
In 2010, Danske Banka strengthened its corporate banking position, increased corporate lending, reduced losses and loan impairment charges significantly, and continued to focus on the quality of its customer service and offerings.
In our assessment of the economic situation in Latvia in 2011, businesses will continue to benefit from the measures taken in recent years to improve efficiency: reducing costs, conducting more thorough financial planning, and looking for new markets and opportunities. Economic recovery in many foreign markets will also aid success. The unemployment rate will continue to decline, albeit slowly, and this will improve the financial situation for consumers.
We expect a steady improvement of the country credit rating that will make both investors and lenders more active.
Raivis Kakānis, CEO of Danske Banka, comments on the bank’s annual financial results as follows:
"The past year was another year of challenges and hard work, although it brought renewed optimism about both social and economic developments. The bank continued to improve its operating result in the last quarter of 2010 and was able to reduce loan impairment charges significantly.
"There was a sizable decline in net interest income, mainly because of low market interest rates, but the result, at LVL 3.4 million, remained solid. Net trading income also fell, reflecting the mark-to-market revaluation of financial instruments made in 2009 and amortised in 2010, which had a negative effect of LVL 1.0 million. Excluding the amortisation of revaluation gains, the financial markets operations posted earnings of LVL 0.3 million, almost a fourfold increase from the level a year ago.
"As a result of our steady efforts to work with delinquent borrowers and restructure loans subject to impairment test, loan impairment charges decreased substantially in 2010. The bank also wrote off the part of its doubtful and unrecoverable loans for the first time during the year. These loans amounted to EUR 16.9 million. We expect that in 2011 there will be no significant new impairment charges.
"Our efforts to expand our corporate banking services bore fruit. The corporate loan portfolio grew 35% over the year, and the corporate customer base increased 34%. The retail customer base grew 8% too. The total loan portfolio grew 3%, despite a 10% decline in retail loans. In the last quarter of 2010, corporate customer deposits increased significantly, bringing the total deposit portfolio to the same level as a year before, LVL 101.2 million.
"We continued to focus on excellence of service and were pleased that in an independent survey the bank was rated the best in the market, far above the market average. In order to further improve our competitiveness, we continued to develop our online banking services. In the first quarter of 2011, Danske Banka’s eBanking facilities will be upgraded with new features that will allow customers to trade in shares, bonds and unit trusts.
"Danske Banka’s priorities in the coming years are increasing our corporate customer base further, developing investment and brokerage offerings for retail customers, and investing in strengthening our competencies in order to maintain the standard of excellence in our customer service.
"We expect that in 2011 Danske Banka will further improve its operating result and will increase the corporate loan portfolio and customer transaction volume while keeping costs at the current level. We expect impairment charges to continue to decline."
The Danske Bank Group’s Annual Report 2010 is available at www.danskebank.com.
DANSKE BANK GROUP’S CURRENT RATINGS:
Long-term: AA3 (Moody's); A (S&P); A+ (Fitch)
Short-term: P-1 (Moody's); A-1 (S&P); F1 (Fitch)