Swedbank Estonia net profit drops 9.8 percent in 2020
Swedbank Estonia finished 2020 with a net profit of €178.7 million, which is 9.8 percent less than the net profit earned in 2019.
The reduction in earnings was mainly attributable to increased costs and funds to cover credit impairments, the bank said on Monday.
Lending volumes increased by 3 percent year on year. Household lending increased 4 percent, while corporate lending increased 2 percent. Deposits increased 17 percent.
In 2020, new loans in the total amount of €827 million were issued to private customers and enterprises received loans worth altogether €1.03 billion.
Net interest income rose 3 percent, largely due to increased lending volumes. Net commission income decreased 12 percent, mainly driven by a reduction in income from cards and asset management. Changes in customer behavior and lower management fees explain the decrease in income.
Net gains and losses on financial items decreased 21 percent. The decrease was largely brought on by higher unrealized losses in the asset management and insurance businesses.
Other income increased 1 percent, mainly due to higher insurance income.
Total expenses grew 7 percent, largely due to higher staff costs and expenses related to AML work and strengthening of risk and compliance functions. Investments in digital solutions continued as well.
As a result of continued economic slowdown and uncertainty during the reporting period, credit impairments increased to €12.4 million, compared to 1.9 million euros in the equivalent period in 2019.
In adherence to its dividend policy, Swedbank AS paid out €210.5 million in dividends in December 2020. Swedbank AS will pay income tax on the dividend in the amount of €28 million.
The demand for amortization exemptions was low in the fourth quarter of 2020. During the quarter, more than half of the customers of the Estonian operation of Swedbank who had been granted exemptions resumed repayments according to their previous amortization schedule.
People's interest in joining the III pension pillar grew exponentially over the last two months of 2020. During the year, more than 20,000 people joined Swedbank's III pillar funds in Estonia.
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Editor: Helen Wright
