This week, the Bank of Estonia said local banks' profits for the first quarter totaled €368 million. Swedbank reported a net profit of €67 million for the same period, and SEB €43.3 million.

The banks posted combined profits of €110.3 million. This raised the question of how the two banks with the largest market shares could account for less than a third of the total profits.

Bank of Estonia economist Taavi Raudsaar told ERR that the differences are related to the commercial banks' reported profits and the profit figures published by the Bank of Estonia.

"These differences largely stem from two factors, which in turn result from the fact that commercial banks report the profits of their subsidiaries on an ongoing basis, whereas the Bank of Estonia only includes those profits in its report when dividends are paid," he said.

"This is why, in the first-quarter figures published by the Bank of Estonia, dividends from both foreign and domestic subsidiaries play a significant role."

Dividend income in the first quarter of this year was substantial, reaching €256 million, but this is mostly not included in the banks' own reported figures.

A second factor pointed out by Raudsaar is that the profit figure published by the Bank of Estonia includes only the profit earned by the bank operating in Estonia, and not the ongoing profits of other companies within the Estonian banking group.

"Commercial banks often publish profit figures at the local group level, which also includes, for example, income earned during the period by insurance, pension funds, leasing, and other such services. However, dividend payments that would be included in the Bank of Estonia's calculation may not be received during the same period," the economist added.

LHV reported a net profit of €29.2 million in the first quarter, Coop Pank €7.9 million, and Bigbank €9.8 million. Luminor will release its first-quarter financial results in mid-May.

--

Follow ERR News on Facebook and Twitter and never miss an update!