OREANDA-NEWS. October 26, 2009. Developments in recent months indicate to improved economic situations in the world and to stabilizing of the situation in Estonia. Analysts say that the Estonian economy is slowly starting to recover, but primarily it depends on external demand, reported the press-centre of Swedbank.

Despite to the first signs of stabilization in the economy, Swedbank Estonia 3rd quarter results are still affected by the economical recession. Operational profit of Swedbank in Estonia was 586 million kroons before provisions and quarter loss was 323 million kroons.

The quality of assets and loan losses are the two main factors that affect the performance of the bank in the current environment. Swedbank Estonia net loan losses in 3rd quarter were 903 million kroons.

Clients deposits remained stable during the III quarter, bank's loan portfolio decreased by 3%.

„If you look at the last quarter, you can say, that our clients have begun slowly to perform better. The income reduction has not been as high as predicted. Euribor decrease gave positive impact on customers ability to pay and we can see, that the interest of taking loans again is gradually rising,“ said Head of Swedbank in Estonia Priit Perens. He added, that since real estate prices have stabilized, clients with good income have once again begun to show interests to buy properties.

The growth of impaired loans, which mainly grows because of real estate sector, slowed down during the quarter.

Head of Swedbank Estonia said that the bank is still offering actively preventive solutions to customers in order to avoid payment problems. „The number of clients in trouble is not increasing with the same speed as in previous quarter. More than half of those customers, who required assistance, are now in cooperation with bank to overcome the difficulties," said Perens. The remaining cases are still in process.

The revenue of the bank decreased in the third quarter by 8% to EEK 1.045 billion and operating expenses by 2% to EEK 411m, extraordinary expenses not included.

This quarter revenues were affected by low market rates, smaller credit growth and growth of impaired loans. Since the bank has more Euribor-dependent assets than liabilities, Euribor fall has influenced the net interest income.

The bank is actively involved in the controlling and reducing of risk and has raised management competence in this area.

For today, Baltic Financial Restructuring and Recovery unit (BFRR), which currently on the terms of recession serves customers and businesses priority projects, has started to work properly.

Without taking into account the emergency expenses, operational expenses fell by 2%. IT project write-off costs and reclassification of leasing property selling loss were two main exceptional costs in the third quarter.

Thanks to the support activities undertaken (increase of effectiveness and limiting workers incentives), Swedbank in Estonia was able to adapt to the changed economic environment and able to keep the unit cost-benefit ratio on a good level - 0.44 (0.42 in comparable data).

To adapt the bank to operate at a lower business volumes, the number of employees in Estonia Swedbank  has decreased by 11% in 9 months, as planned at the beginning of the year.

Swedbank has 69 branches in Estonia as of the end of 3rd quarter. Swedbank is still keeping its position as the largest number of bank offices and personnel in Estonia.

The bank analysts predict slower growth in impaired loans closer to the year-end and leave 2009 behind as the most challenging year in terms of credit losses.

In client relationships, Swedbank is keeping the focus on informing clients about how to organise their money matters sensibly. In June this year, Swedbank opened a new web page where clients can get advice about managing their everyday money matters - www.swedbank.ee/rahaasjadkorda.

The bank will disclose the results of year 2009 on 9 February 2010.