MANAGEMENT REPORT ON THE BANK’S AND THE GROUP’S OPERATIONS DURING HALF A YEAR 2011
In the first half of the year 2011 early signs of stabilization have been observed in Latvian banking sector and Latvian economy seems to be out of recession and the danger zone. Following nearly two years of loss making operations and decline, Latvia's banking sector appears to be turning a corner. Although macro-economic banking environment in Latvia still is very challenging and we strongly believe in more prudent management and cost control.
During the first half of the year the Bank conducted all the necessary actions to ensure safety and stability for its customers, which continues to be one of our main strategic priorities this year. It was achieved by ensuring high liquidity and capital base that exceeds regulatory requirements. As always, GE Money Bank in Latvia leveraged the experience of its parent company, General Electric Company, one of the largest and most financially secure corporations in the world.
Bank continues to improve its risk management, compliance and controllership systems, introduced several IT projects, as well as implemented cost optimization actions. Exceptional results from risks, sales and collections teams resulted in decrease of the expected losses.
The Bank completed half-a-year 2011 with LVL 4,641 thousand of audited losses which is 59% lower than losses in the same period of 2010. On June 30th, 2011 the Bank's capital adequacy ratio was 13.89%, while the liquidity ratio was 77.51% - both ratios well above the statutory minimum.
The Bank’s total loan portfolio on June 30th, 2011 was LVL 91,065 thousand. Portfolio amount decreased mainly as a result of repayment of issued loans. Total amount of reserves on June 30th, 2011 was LVL 36,836 thousand. Net loan portfolio amount on June 30th, 2011 was LVL 54,229 thousand.
The Bank's total assets in the first half of the year comprised LVL 129,961 thousand, deposit portfolio - LVL 111,086 thousand.
Bank also continued providing support to an independent non-profit organization “Money Planning Centre” (hereinafter – MPC). The primary goal of the MPC is educating society in various financial matters. The Bank and the MPC supported several projects and offered innovative budget planning tools to the society, virtual consultations and seminars were organized by MPC, explaining peculiarities and opportunities of money saving and budget planning.
On the 28th of June GE Capital announced an agreement to sell “GE Money Bank” Latvia to “OTKRITIE Financial Corporation” JSC, for an undisclosed amount. The deal is subject to regulatory approval, and the parties anticipate closing in the next few months. GE Capital will retain ownership of its consumer lending and leasing company, GE Money AS, which will continue to operate in Latvia, focusing on providing ongoing quality customer service.
GE Capital strongly believes this transaction is positive news for the “GE Money Bank”, and will position the Bank for future growth. This deal is in line with GE’s overall strategy to reduce the size of its financial services balance sheet while remaining fully committed to a smaller more focused GE Capital.
AS “GE Money Bank” will continue operating as before ensuring uninterrupted quality customer service. The Bank's management's focus is to ensure a smooth transition to the future owner providing uninterrupted quality customer service, as well as continuing to ensure the Bank's security and stability. We continue to maintain high capital adequacy and liquidity, a healthy deposit base, exercise prudent risk and cost management.
In conclusion, we would like to express gratitude to the employees of the Bank for work contributed to the Bank’s development and to the customers and partners for their trust and loyalty to the Bank!
Between the reporting date and the date of signing this financial report there have been no events that could significantly influence the results of the reporting period.
Kristīne Rasnača
Communications Project Manager
GE Money Bank Latvia
Ph.: +371 67029019
Mob.: +371 26490696
E-mail: kristine.rasnaca@ge.com
