Swedbank's Estonian arm saw its profit for the first quarter of 2021 decline by €2.1 million on year to €37.6 million.
The decrease in profit is mainly due to higher loan loss provisions, the bank said.
In the first quarter of this year, Swedbank's retail and corporate loan volumes grew by 3 percent year-on-year, while deposits grew by 18 percent. In the first quarter of 2021, new loans were issued to individuals for a total of €262 million and to companies for €286 million.
Revenues increased by 5 percent year-on-year, mainly due to higher insurance and financial revenues. At the same time, net interest income decreased by 4 percent - mainly due to a decline in the microfinance portfolio.
Net service charge income increased by 4 percent, mainly due to payments and other fees. Changes in consumer behavior and lower administrative fees had a negative impact.
Net income from financial instruments increased by €3.8 million quarter-on-quarter due to the write-down of assets due to COVID-19 a year ago. Other income increased by 23 percent due to higher insurance income.
Expenses increased by 7 percent during the year. According to the bank, the main reasons for the increase in costs were higher personnel costs, the strengthening of anti-money laundering and risk and compliance control functions. Investment in digital solutions also continued.
Due to the continuing slowdown in economic activity and uncertainty, the expected credit losses have increased to €10.3 million, while at the same time in 2020 the same indicator was €5.5 million.
The main reason for the increase in credit losses was the increase of the reserve for possible loan losses by €12.5 million. It makes up 0.15 percent of the bank's loan portfolio. This was a preventive step in case loan losses should increase due to the uncertainty in the economy.
Swedbank said the persistent and extensive spread of the coronavirus, the continuation of movement restrictions in several countries that are economically important to Estonia and the slower-than-expected pace of vaccination have increased the possibility that the economic recovery will take longer than expected.
In the first quarter of 2021, Swedbank AS, together with its subsidiaries, paid €10.8 million in labor tax.
Among the most important events in the first quarter, the bank announced the establishment of a new holding company, Swedbank Baltics AS, which will bring together Swedbank Estonia, Latvia and Lithuania. New investment opportunities in the form of Robur funds were also introduced to the Estonian market and the bank's climate position was updated, aiming to align Swedbank's business with the Paris Agreement.
Editor: Helen Wright