Swedbank Estonia earned a net profit of €148.6 million at the end of the third quarter of 2018, marking an on-year increase of 19%. Homegrown banks LHV and Coop Pank, meanwhile, also enjoyed increases in net consolidated profits of respectively 12.7% on year to €6.2 million and 30% on year to €3.1 million without extraordinary proceeds from the sale of real estate.
Swedbank said on Tuesday that its profit increase resulted from higher incomes, higher customer activity, credit recoveries and lower tax expenses.
Some of Swedbanks published figures (y-o-y) were:
- Lending volumes, evident in all major portfolios including morgates and consumer finance, and driven by economic growth and wage increases: +8.5%.
- Deposits increased +10.4% (largely from higher lending volumes).
- Net interest income: +6.4%.
- Net commission income: +4.7% (largely due to higher customer activity).
- Revenue: -2% (€50.3 million).
LHV Pank.Source: (Martin Dremljuga/ERR)
Some of LHV's Q3 2018 y-o-y stats were:
- Consolidated net profit: +12.7%.
- Return on equity belonging to LHV shareholders: +15.9%.
- Consolidated net loan portfolio: +5% (€812 million).
- Consolidated deposits: +6% (€1.6 billion).
- Volume of funds managed by LHV: +3% (€1.2 billion).
"In terms of growing activity of customers, but also the activities of LHV itself, the third quarter was significantly strong. Our business is growing. Over the three quarters of the year, more than 20,000 new customers joined LHV Bank. Several activity indicators, including salary receipts, number of customers with assets and payments, use of cards, acceptance of card payments and number of new investment contracts reached record levels in the third quarter," Madis Toomsalu, CEO of LHV Group, said, adding that the quarterly profit of €6.2 million was positively influenced by income related to transaction advisory services of €0.7 million and negatively by specific allowances of €1.2 million.
LHV's credit portfolio remains strong, and together with growing volumes, interest income is also increasing, the bank says.
The difference between the two
One key difference between the two banks according to data released by the Bank of Estonia on Monday is that at year end 2015, LHV had a larger proportion of market share in its cross border payments, than its overall market share (7.1% as against 3.2% overall share). For Swedbank, this was reversed – the bank had an overall market share of 40% but a share in cross-border payments of 25.4%.
The Bank of Estonia had taken the decision to make an extraordinary release of data concerning individual banks during the period 2008-2015, during the period when Danske Bank Estonia, as well as now-defunct Versobank, had much larger market shares in cross-border payments than their overall share.
Versobank had its licence revoked in March this year at the request of the Estonian Financial Supervisory Authority (FSA) due to suspect payments; Danske Bank Estonia has been at the centre of a money laundering scandal where as much as €200 billion is thought to have passed through the bank over roughly the same period, despite the FSA's repeated warnings to its Danish counterpart.
Danske and Versobank both exhibited much larger shares in cross-border payments, than their overall share, 2008-2015, according to the Bank of Estonia data; Danske's rising to as much as over 40% some years, despite its overall market share being barely 10%.
Coop Pank.Source: (Merilin Pärli/ERR)
Compared to the beginning of the year, deposits in Coop Pank increased by 16% to €368 million, while its loan portfolio grew 28% to €312 million, the bank said on Tuesday.
According to the interim report for the third quarter of 2018, the number of clients of Coop Pank increased by nearly 6,000, or 17%, since the start of the year to 42,582 at the beginning of October. In addition, Coop Finants, the bank's subsidiary specialising in small-scale financing, has nearly 99,000 clients.
The market share of Coop Pank in deposits among Estonian banks increased from 1.9% to 2.2% compared to the beginning of the year, while its market share in loans grew from 1.3% to 1.6%.
According to CEO Margus Rink, Coop Pank has managed to increase its business volume over its first year of operation faster than the major banks that rule the market.
"The numerous new approaches we have been using have shaken up the banking market, which has been rather slack for the past decade," Rink said. "What's especially important about it — we are also turning a healthy profit."
Established on the basis of the former Krediidipank, Coop Pank has 16 branch offices and 29 banking points across Estonia. This summer, the opportunity was introduced for clients to use their Coop Pank cards to withdraw money at any of the 350 Coop stores without a service fee. The main shareholder of the bank is the domestic retail chain Coop Eesti. As of the end of September, Coop Pank employed 216 people.
Editor: Andrew Whyte, Aili Vahtla