Riga, Latvia, 2017-02-27 21:44 CET (GLOBE NEWSWIRE) -- The Group’s after tax profit attributable to the equity holders of the Bank for the year 2016 was EUR 80 million (2015: 69 million). The Group generated an after tax return on equity of 17.32% (2015: 17.5%) and an after tax return on assets of 2.3% (2015: 1.9%). Operating income reached EUR 181 million (2015: EUR 159 million) which represents an increase of 14% from 2015. Net fee and commission income was EUR 41,1 million (2015: EUR 44.1 million). The Group’s cost to income ratio was 33% for the year ended 31 December 2016 (2015: 34%). The Group’s goal is to continue to maintain a cost income ratio of less than 40%. As a result of increasing tax exempt income such as income from listed securities, the effective income tax rate for the 2016 year was 7% (2015: 14%). The cumulative result of the above is that the Group reached a pre-tax profit margin of 49% compared to 51% in 2015.
As at 31 December 2016 the Group’s total assets were EUR 3,474 million. This represents a decrease of 8.4% compared to 2015. The Group follows a conservative approach to asset allocation and about 42% of the Group’s assets invested in liquidity management portfolios. About 82% of the liquidity management portfolio is invested in short term money market placement with large mainly European banks. The tenure of these placements is up to 7 days. The remaining 18% of the liquidity management portfolios are invested in collateralized instruments with large and stable financial institutions and a short term bond portfolio. The held to maturity portfolio was EUR 320 million as at 31 December 2016 compared to 2015 balance of EUR 221 million. The bond portfolio is primarily invested in corporate investment grade securities. Loans and receivables due from customers represent about 30% of total assets. Since 2010 this ratio has not exceeded 45% and the Bank does not plan that this ratio exceeds 45% in the nearest future. Loans and receivables to customers have fallen to EUR 1,045 million compared to the balance of 2015 of EUR 1,102 million. This decrease is due decreases in Russian lending exposure. The commercial loan portfolio represents about 89% of the total Bank’s loans of EUR 1,117 million and the effective average interest rate for 2016 was 5.7%. Latvia, Russia and Belarus represent the largest commercial lending markets with real estate management, financial services and transport representing the largest industries in the commercial loan portfolio. The second largest category of lending is margin lending to customers against liquid securities as collateral and this represents about 8% of the total loan portfolio. The effective average interest rate for 2016 for margin loans was 4%.
Current accounts and deposits due to customers in amount of EUR 2,743 million decreased by 14% compared to 2015. The fall in deposits occurred due to the economic downturn primarily in Russia as well as a result of the new customer policy adopted by the Bank. Current accounts represented EUR 2,399 million or 87.5% of total current accounts and customer deposits. Current accounts can be withdrawn at any time but they can be considered a relatively stable funding source as outlined in Note 4 d) Liquidity risk. Term deposits amounted to EUR 344 million as at 31 December 2016 including EUR 111 million of subordinated deposits. The average remaining tenor of term deposits is 2.3 years with the average effective interest rate in 2016 of 2%. The average effective interest rate for subordinated deposits in 2016 was 5%. Group total shareholders’ equity reached EUR 494 million as of 31 December 2016 representing an 8.1% increase from 2015. Group Tier I and total capital adequacy capital adequacy ratios were 16.45% (2015: 13.06%) and 22.36% (2015: 19.2%) respectively.
Eleonora Gailisha
Mass Media and Public Relations
Phone: +371-67020506
Fax: +371-67020563
E-mail: egailisha@rietumu.lv
