According to the bank, its increase in profit was a result of loan impairment reversals arising from improved portfolio quality.

Income decreased 19 percent on a year-over-year basis. The decrease in net interest income was related to a continuing negative interest rate environment. Fee and trading income decreased as a result of somewhat lower level of customer activity and the decrease in fee income following the sale of the Estonian fund management company.

"The Estonian economy has finally recovered from a period of low economic growth," said Ivar Pae, CEO of Danske Bank Estonia. "After a slowdown in recent years due to external conditions, we now expect the Estonian economy to accelerate and grow at a moderate pace over the next few years. This is reflected in business sentiment, which has become more positive lately."

The bank's net loan portfolio grew by €2 million, while deposits decreased by €404 million, or 44 percent, as the present negative interest environment means that it is better for the bank to use cross-group financing solutions instead of institutional clients from local markets.

The bank did not book additional impairment charges in the first quarter of 2017 as the quality of the loan portfolio was very good. As of March 31, accumulated impairment charges amounted to €7.8 million and the ratio of impairments to loans was 0.9 percent.