OREANDA-NEWS. May 04, 2010. With Lithuania's economic decline starting showing early signs of stabilization at the start of the year AB DnB NORD Bankas earned a pre-tax operating profit before provision of LTL 33.2 million in the first three months of 2010, reported the press-centre of DnB NORD Bankas.

However taking into account constrains in domestic consumption and a still depressed labour market as well as evaluating the fact that the economic downturn typically affects the quality of the loan portfolio with a time lag, the bank continued to pursue a conservative customer risk valuation approach and set aside LTL 86.3 million in provisions in the first quarter of the year. As a result AB DnB NORD Bankas recorded LTL 53.1 million loss for the first quarter of the year. To ensure further balanced performance of AB DnB NORD Bankas its reserve capital was increased by LTL 69.1 million (EUR 20 million) in the first quarter of the year.

The quarter before AB DnB NORD Bankas recorded LTL 164.4 million net loss after making LTL 194 in special provisions.

"During the first three months of the year the level of provisions set aside on overdue loans was the lowest since the start of 2009 and that gives us some ground for cautious optimism. However, with economic recovery pace shy and credit risk to individuals persisting due to continuously high unemployment rate, we believe it is too early to speak about turnaround in the credit market, particularly taking into account a delayed effects of economic downturn on the loan portfolio quality. Therefore we will continue focussing on building strong relationships with our customers and work closely together to develop the best possible solutions in order to be ready for the next sustained economic growth phase," - said Werner Schilli, the president and the chairman of the management board of AB DnB NORD Bankas.

Due to the constant focus on further improvement of operating efficiency and productivity AB DnB NORD Bankas first-quarter operating expenses fell 4.3 percent year-on-year to LTL 40.7 million. That helped us to ease the impact of declining income that totalled LTL 77.9 million in the first three months of 2010, on the first quarter financial result.

With total loans worth LTL 722 million extended in the first quarter of 2010, of which LTL 632 million were loans to businesses, AB DnB NORD Bankas net loan portfolio made LTL 9.8 billion as at the end of March. Due to the credit volume extended last year decreasing and special provisions made, the bank's net loan portfolio eased by 5.2 percent during the first three months of the year. Lending to individuals was easing at a slower pace compared to businesses, as small and medium size businesses continued to adapt to the negative impact of weak domestic consumption and slow recovery of exports.

With an increasing number of customers and funds on corporate deposit accounts, the bank’s deposit portfolio rose by 11.3 percent up to LTL 3.8 billion in the first three months of 2010. In line with implementation of the bank’s customer promise to be a financial guide and a rising number of customers who choose DnB NORD as their home bank, the number of individual and corporate customers rose by nine thousand in the first quarter to 680 thousand.
 
Taking into account the positive developments in the country's economic and financial sector the international ratings agency Fitch Ratings affirmed AB DnB NORD Bankas high long-term borrowing rating at “A”, revising its outlook to stable from negative. This rating assigned to the bank is at the country’s ceiling set by the agency.

Due to proper risk management AB DnB NORD Bankas met all prudential requirements of the Bank of Lithuania.