Editor’s note: First of a three-part series on Baltic state banks’ struggle in 2009 and outlook for 2010.
TALLINN — All the banks operating in Estonia, besides Nordea, declared major losses in 2009.
The biggest deficit went to Sampo Bank whose pretax deficit in 2009 was 2 billion krooni (€128 million), mainly from loan losses. Profit before loan impairment charges totaled 647 million krooni (€41.3 million), less than 2008’s [private_supervisor] 707 million krooni (€45 million) preloan impairment profit.
SEB Estonia followed Sampo with a 1.53 billion krooni (€97,8 million) loss, largely due loan losses, which was 1,962 billion krooni (€125,4 million). The bank’s income in 2009 was 2.1 billion krooni (€134.2 million), which is less by 16 percent than in 2008. SEB Group’s loan deficit was 3.16 billion Swedish kronor (€323,6 million), and 82 percent of it — 2.5 billion Swedish kronor (€265 million) — accumulated in the Baltics.
Swedbank’s Estonian subsidiary lost 1.1 billion krooni (€70.3 million) in 2009. The bank’s loan losses of 3.8 billion krooni (€245 million) is far greater than SEB’s. Meanwhile profit before loan impairment charges at the fourth quarter totaled 667 million krooni (€42.6 million).
The only bank who did not declare any losses was Nordea ending the year with a modest 20.2 million krooni (€1.2 million) profit. The bank’s income grew by 12 percent from 2008, and the operating profit grew by 14 percent to 513 million krooni (€32.8 million) within a year. However, Nordea was also hit with loan losses were 1.21 percent of the loan portfolio which was 40.7 billion krooni (€ 2,6 billion).
2010 results depend on recovery
Karel Lember, an economic analyst in the Ministry of Economic Affairs and Communications said the bank deficits were largely caused by the mammoth loan losses that accompanied the double-digit gross domestic product decline, more than doubled unemployment and widespread wage cuts.
Lember said the situation of the banks in 2010 depends if how Estonia recovers from the rending crisis. If economy stabilizes as expected this year, then loan losses will probably be smaller than in 2009.
“Some of the banks have also decreased their expenses, and their work has become more efficient, which gives good chances to reach profit again,” Lember told Baltic Reports.
Ana Kask, head of the financial sector policy division of Eesti Pank said in January that if the improvement of the economic environment continues, it is possible that the banking sector will show profit in the second half of this year.
“These were mostly caused by one-off write-downs of investments in subsidiaries. But a decline in loan write-downs provided a positive impetus on the results of banks. Profitability before write-downs improved also as a result of higher net interest income,” Kask told the press.[/private_supervisor] [private_subscription 1 month]2008’s 707 million krooni (€45 million) preloan impairment profit.
SEB Estonia followed Sampo with a 1.53 billion krooni (€97,8 million) loss, largely due loan losses, which was 1,962 billion krooni (€125,4 million). The bank’s income in 2009 was 2.1 billion krooni (€134.2 million), which is less by 16 percent than in 2008. SEB Group’s loan deficit was 3.16 billion Swedish kronor (€323,6 million), and 82 percent of it — 2.5 billion Swedish kronor (€265 million) — accumulated in the Baltics.
Swedbank’s Estonian subsidiary lost 1.1 billion krooni (€70.3 million) in 2009. The bank’s loan losses of 3.8 billion krooni (€245 million) is far greater than SEB’s. Meanwhile profit before loan impairment charges at the fourth quarter totaled 667 million krooni (€42.6 million).
The only bank who did not declare any losses was Nordea ending the year with a modest 20.2 million krooni (€1.2 million) profit. The bank’s income grew by 12 percent from 2008, and the operating profit grew by 14 percent to 513 million krooni (€32.8 million) within a year. However, Nordea was also hit with loan losses were 1.21 percent of the loan portfolio which was 40.7 billion krooni (€ 2,6 billion).
2010 results depend on recovery
Karel Lember, an economic analyst in the Ministry of Economic Affairs and Communications said the bank deficits were largely caused by the mammoth loan losses that accompanied the double-digit gross domestic product decline, more than doubled unemployment and widespread wage cuts.
Lember said the situation of the banks in 2010 depends if how Estonia recovers from the rending crisis. If economy stabilizes as expected this year, then loan losses will probably be smaller than in 2009.
“Some of the banks have also decreased their expenses, and their work has become more efficient, which gives good chances to reach profit again,” Lember told Baltic Reports.
Ana Kask, head of the financial sector policy division of Eesti Pank said in January that if the improvement of the economic environment continues, it is possible that the banking sector will show profit in the second half of this year.
“These were mostly caused by one-off write-downs of investments in subsidiaries. But a decline in loan write-downs provided a positive impetus on the results of banks. Profitability before write-downs improved also as a result of higher net interest income,” Kask told the press.[/private_subscription 1 month] [private_subscription 4 months]2008’s 707 million krooni (€45 million) preloan impairment profit.
SEB Estonia followed Sampo with a 1.53 billion krooni (€97,8 million) loss, largely due loan losses, which was 1,962 billion krooni (€125,4 million). The bank’s income in 2009 was 2.1 billion krooni (€134.2 million), which is less by 16 percent than in 2008. SEB Group’s loan deficit was 3.16 billion Swedish kronor (€323,6 million), and 82 percent of it — 2.5 billion Swedish kronor (€265 million) — accumulated in the Baltics.
Swedbank’s Estonian subsidiary lost 1.1 billion krooni (€70.3 million) in 2009. The bank’s loan losses of 3.8 billion krooni (€245 million) is far greater than SEB’s. Meanwhile profit before loan impairment charges at the fourth quarter totaled 667 million krooni (€42.6 million).
The only bank who did not declare any losses was Nordea ending the year with a modest 20.2 million krooni (€1.2 million) profit. The bank’s income grew by 12 percent from 2008, and the operating profit grew by 14 percent to 513 million krooni (€32.8 million) within a year. However, Nordea was also hit with loan losses were 1.21 percent of the loan portfolio which was 40.7 billion krooni (€ 2,6 billion).
2010 results depend on recovery
Karel Lember, an economic analyst in the Ministry of Economic Affairs and Communications said the bank deficits were largely caused by the mammoth loan losses that accompanied the double-digit gross domestic product decline, more than doubled unemployment and widespread wage cuts.
Lember said the situation of the banks in 2010 depends if how Estonia recovers from the rending crisis. If economy stabilizes as expected this year, then loan losses will probably be smaller than in 2009.
“Some of the banks have also decreased their expenses, and their work has become more efficient, which gives good chances to reach profit again,” Lember told Baltic Reports.
Ana Kask, head of the financial sector policy division of Eesti Pank said in January that if the improvement of the economic environment continues, it is possible that the banking sector will show profit in the second half of this year.
“These were mostly caused by one-off write-downs of investments in subsidiaries. But a decline in loan write-downs provided a positive impetus on the results of banks. Profitability before write-downs improved also as a result of higher net interest income,” Kask told the press.[/private_subscription 4 months] [private_subscription 1 year]2008’s 707 million krooni (€45 million) preloan impairment profit.
SEB Estonia followed Sampo with a 1.53 billion krooni (€97,8 million) loss, largely due loan losses, which was 1,962 billion krooni (€125,4 million). The bank’s income in 2009 was 2.1 billion krooni (€134.2 million), which is less by 16 percent than in 2008. SEB Group’s loan deficit was 3.16 billion Swedish kronor (€323,6 million), and 82 percent of it — 2.5 billion Swedish kronor (€265 million) — accumulated in the Baltics.
Swedbank’s Estonian subsidiary lost 1.1 billion krooni (€70.3 million) in 2009. The bank’s loan losses of 3.8 billion krooni (€245 million) is far greater than SEB’s. Meanwhile profit before loan impairment charges at the fourth quarter totaled 667 million krooni (€42.6 million).
The only bank who did not declare any losses was Nordea ending the year with a modest 20.2 million krooni (€1.2 million) profit. The bank’s income grew by 12 percent from 2008, and the operating profit grew by 14 percent to 513 million krooni (€32.8 million) within a year. However, Nordea was also hit with loan losses were 1.21 percent of the loan portfolio which was 40.7 billion krooni (€ 2,6 billion).
2010 results depend on recovery
Karel Lember, an economic analyst in the Ministry of Economic Affairs and Communications said the bank deficits were largely caused by the mammoth loan losses that accompanied the double-digit gross domestic product decline, more than doubled unemployment and widespread wage cuts.
Lember said the situation of the banks in 2010 depends if how Estonia recovers from the rending crisis. If economy stabilizes as expected this year, then loan losses will probably be smaller than in 2009.
“Some of the banks have also decreased their expenses, and their work has become more efficient, which gives good chances to reach profit again,” Lember told Baltic Reports.
Ana Kask, head of the financial sector policy division of Eesti Pank said in January that if the improvement of the economic environment continues, it is possible that the banking sector will show profit in the second half of this year.
“These were mostly caused by one-off write-downs of investments in subsidiaries. But a decline in loan write-downs provided a positive impetus on the results of banks. Profitability before write-downs improved also as a result of higher net interest income,” Kask told the press.[/private_subscription 1 year]
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