OREANDA-NEWS. On July 23, 2008 Nordea Estonia, part of the largest financial group in the Nordic countries, has released its results for the first six months of 2008, indicating stable growth. Nordea’s operating profit grew 16% compared to the same period last year, reaching the 165 million kroon mark, while the bank’s assets increased 51% during the same period to 40 billion kroons, reported the press-centre of Nordea Estonia.

Nordea Estonia earned an operating profit of 165 million kroons in the first six months of 2008, which is 16% more than the same period a year ago. In 2008, Nordea Estonia made a shift to a cut-off method for loan service fees, in line with international financial reporting standards (IFRS).

As a result, Nordea Estonia now amortises service fees over the entire length of the loan period. Previously service fees for loans were recognized in the income statement immediately after the respective loans were issued. As a result of the change, income from loan service charges in the first six months of 2008 appears to be down by 12.2 million kroons. Had the change not been implemented, operating profit would have been 25% higher than in the same period a year ago.

The volume of the assets of Nordea Estonia at the end of the second quarter amounted to 40 billion kroons, having grown 51% in the year. The lion’s share of the asset growth occurred in the corporate banking field.

The deposits volume made up 8.2 billion kroons as of 30 June 2008, and the most important trend in the first half-year is the increase of the volume of individuals’ deposits. The volume of individuals’ deposits was 3 billion kroons at the end of the second quarter and the volume of companies’ deposits was 4 billion kroons.

The Nordea loan and leasing portfolio increased at a more leisurely pace compared to the previous quarter, reaching 34 billion kroons by the end of the second quarter. Compared to the same period a year ago, growth has been stable – 47% on the companies’ side with a total portfolio volume of 22 billion kroons; and 21% growth in the individuals’ side and a total portfolio of 12 billion kroons. In spite of the cooling economic climate, Nordea Estonia’s loan portfolio has been of high quality and the ratio of loan loss to total portfolio volume was 0.03% as of 30 June 2008.

According to Nordea Bank’s head of retail banking, Olavi Pakkonen, the financial results for the first half-year point to changes in the financial behaviour of customers stemming from the cooling of the economic climate. “Individuals are displaying a strong trend toward savings, while requests for financing offers have become less attractive. On the companies’ side, however, loan capital is still in high demand and loans are primarily taken to be invested into a company's main line of business,” noted Pakkonen.

As of 2008, Nordea Estonia had over 82,000 customers. As of the end of June, Nordea Bank had 19 offices. Bank cards had been issued to 45,946 clients and there were 37,372 Internet bank users. Nordea employed a workforce of 465 as of 30 June 2008.