Banks in Estonia Earn 70 Million Euros in Net Profits

Source: Photo: Postimees/Scanpix

Banks earned 70.5 million euros in net profits in 2010, with the 23.4 million euros in the last quarter amounting to only one-half of the third-quarter figure.

Profitability was undercut significantly by impairments on investments into subsidiaries, although the writedown was only a fraction of what it  was a year ago. 

Greater net profit from interest supported higher profitability prior to the impairments.
The volume of loans and leasing granted to Estonian individuals and companies dropped by 126 million euros in December, to 15.1 billion euros, a drop of 0.8 percent compared to November. Over 12 months, the size of the loan and leasing portfolio shrank by close to a billion euros - 6.3 percent. 
About 70 percent of the drop in loan volume stemmed from the business sector, where construction and real estate companies accounted for the greatest share. The individuals' loan portfolio was hit by a significant drop in shorter-term loan products such as consumer loans and car leasing. The volume of housing loans was more than two percent lower in late 2010 compared to the year before.
The share of loans more than 60 days past due dropped in December by 0.5 percentage points to 6.3 percent. 
For the first time in recent years, the volume of new provisions in the fourth quarter was smaller than the amount of loans declared to be working again. The 12-month figure for provisions for loan losses was 149 million euros - one percent of the loan portfolio.
The growth in deposits remained rapid, despite lower interest rates. The volume of deposits increased in December by 107 million euros - 1.5 percent - to 7.5 billion euros. Over the 12 months, deposits grew by 573 million euros - 8.3 percent.
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