OREANDA-NEWS. For Swedbank Latvia profit for the first nine months of 2015 amounted to 83 million euros, a decrease of 5 per cent compared with the same period in 2014.

“This year the demand for financing has increased both with individuals and businesses. Many companies have consolidated their market position, have started or plan to start exporting, and they need higher production capacity. A rise in salaries, a marginal increase in consumer prices and a gradual decrease in unemployment, in turn, improve the financial situation of households, which boosts confidence about the future and increases demand for financing, mostly for housing. During the last three months, access to banking services has improved, especially outside the bigger cities – we have installed 7 new cash machines as part of Swedbank’s regional development programme within a goal to ensure 100% cash machine coverage in all the regions of Latvia by the end of the year,” says M?ris Man?inskis, Head of Swedbank Latvia.”

Loans and deposits

Lending volumes increased by 0.4 per cent compared with 31 December 2014, driven by increased credit demand in light of continued economic growth in Latvia. The positive trend in lending portfolio continued during the third quarter as well. New lending volumes increased, reaching 587million euros in nine months of 2015, against 407million euros in the same period last year. The new lending increase was observed both in the corporate and retail segment. Swedbank’s market share in lending was 22 per cent as of 30 June 2015 (22 per cent as of 31 December 2014).

Deposit volumes increased by 7 per cent from 31 December 2014. Swedbank’s market share in deposits was 17 per cent as of 30 June 2015 (17 per cent as of 31 December 2014). The loan-to-deposit ratio was 84 per cent (89 per cent as of 31 December 2014).

Credit quality

Net recoveries amounted to 13 million euros (10 million euros in the first nine months of 2014) driven by recoveries mainly from a few large commitments.

Revenues and costs

Net interest income decreased by 8 per cent compared with the nine-month period in 2014 as low market interest rates pushed down deposit margins. Compared with the previous quarter net interest income decreased by 2 per cent.

Net commission income increased by 1 per cent compared with the nine-month period 2014 driven by increased customer activity. Compared with the previous quarter net commission income decreased by 1 per cent. The number of card purchases increased by 13% in nine month period while mobile app transactions surged by 68 per cent year-on-year. Recent Swedbank survey about the shopping habits of consumers showed that already 86 per cent of the residents of Latvia are paying by card on day-to-day basis.

Total expenses decreased by 3 per cent year-on-year, mainly as a result of lower expenses for premises, consultancy and IT. Compared with the previous quarter expenses increased by 3 per cent. The cost-income ratio was 0.40 (0.38 in the first nine months of 2014).

In the annual survey of “Most Loved Brands” Swedbank has been named as the 3rd Most Loved Brand in Latvia with the highest score among financial institutions. Only two companies ahead of Swedbank were the global brand Google and local e-mail service Inbox. This year Swedbank Latvia ranked second in Latvia’s most valuable company TOP101, lagging behind Latvenergo by a very narrow margin.

Swedbank has reached an agreement with Danske Bank to acquire its retail banking business in Latvia. The acquisition affects around 7 000 private customers in Latvia with approximately 116 million euros in loans. The acquisition, which is subject to regulatory approval, is targeted for closing in the first quarter of 2016.