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In 4Q 2019, Baltic International Bank continues to increase the number of local clients and boost the level of capital adequacy

News - March 2, 2020

In 4Q 2019, JSC “Baltic International Bank” continued to implement its chosen business strategy to grow into a rock solid investment bank underpinned by stable financial performance. The Bank’s net fee and commission income surged by 2.1 percent (2.1 percent) on a YoY basis. The Bank also lowered its operating costs. The assets under management totalled EUR 81 million (EUR 81 million), the 8-percent increase from 2018-end. The Bank’s total capital ratio (TCR) stood at 15.11 percent (14.71 percent).


In 2019, the Bank’s senior management and team tangibly improved, albeit with support of the Bank’s shareholders, the strength of the Bank’s balance sheet and reinforced the Bank’s capital base and financial condition. In doing so, the Bank achieved a rise in its capital ratios while maintaining the high liquidity coverage ratio (157%). As of 31 December 2019, the Bank’s own funds totalled EUR 19.43 million (EUR 18.86 million). The Bank’s Tier 1 capital ratio was 10.13 percent (9.71 percent). The Bank’s total capital ratio (TCR) attained the level of 15.11 percent (14.71 percent).

The ratios enable the Bank to develop further its lending and financing activities and provide a sound basis for implementing the business model. Last year, the Bank revisited its client portfolio, trimmed down the overall portfolio-specific risk, and reduced its loan portfolio in an effort to improve the portfolio’s credit quality. The Bank therefore saw a decline in its assets. However, the level of the Bank’s capital adequacy soared, thus enabling the Bank to build up and expand its loan portfolio in 2020.

In 2019, the banking sector continued to undergo significant structural changes. As a bank, we also participate in the process that poses ever-new challenges. Implementation of the changes and rearrangement of the system in an effort to put it on the right track cannot be done overnight. Reshaping of the business model, the quality of banks’ assets and capital adequacy are the key challenges facing a major part of European banks. Within that context, reshaping of the Bank’s income structure and improvement of the strength of the Bank’s balancer sheet are the biggest challenges. The Bank revisited its client portfolio, including changes related to our target markets. We continue to modify our product offerings and customer service model. We succeed in developing the chosen business models while remaining compliant with the financial-market requirements.


"The European Economic Area is the Bank’s main target market, albeit with a great emphasis on the Latvian market and the Baltic region. We are happy to see an increasingly growing interest from local Latvian businesses in the Bank’s services and an increasing number of local clients banking with us. Moreover, our services have earned the clients’ trust. Shortly after opening the account, the clients gradually intensify their activities and make up an ever-rising percentage of the Bank’s portfolio. With a support from our shareholders, we have made the Bank’s balance sheet stronger while concurrently achieving the high capital ratios. This is essential for our further development and lending activities”, the Chairperson of the Management Board of Baltic International Bank Viktor Bolbat emphasises.

Bank invested vast sums of money in rearrangement of client structure, development of information technologies, infrastructure and internal control system, and enhancement of the professional competence of personnel. The implementation of the ambitious changes and loss allowances for risk assets set aside before switching over to the Bank’s new strategy exerted a short-term negative effect on the Bank’s financial results. The Bank posted a loss of EUR 2.77 million (EUR 3.05 million) in 2019. However, the Bank is operating ever more efficiently. Compared to 2018, the Bank succeeded in 2019 to trim substantially its operating expenses. In 4Q 2019, the operating income totalled EUR 14.13 million (EUR 14.14 million).

While keeping up with the tech advancement, Bank has worked tirelessly to put its infrastructure in order and to develop data storage and management solutions. We have integrated automated customer service tools. We have also automated Bank’s AML/CFT/CPF practices.


"In 2019, we received the positive assessment by Sigma Ratings, a New York-based rating agency. The agency assigned BBB+ financial crime compliance (FCC) rating to Bank. In the first half of this year, the Bank will roll out the new Internet Banking version. The Bank’s sandbox solution for Open Banking is currently available to clients. Bank has opened the Investment Opportunity platform where its current and potential clients can use an interactive calculator to choose the most suitable investment portfolio“, Viktor Bolbat accentuates the Bank’s major tech milestones.

As of 31 December 2019, the total customer funds reached EUR 404 million. The assets under management totalled EUR 81 million (EUR 81 million), the 8-percent increase from 2018-end. The volume of financial instruments in brokerage service are EUR 140 million (EUR 140 million) worth.

In 4Q 2019, the net fee and commission income surged by 2.1 percent (2.1 percent) on a YoY basis and totalled EUR 8.64 million (EUR 8.64 million). In percentage terms, the increase is up to 61.2 percent (61.1percent). The net interest income totalled 15.5 percent (15.5 percent). Administrative expenses reached EUR 12.36 million (EUR 12.54 million), a 7.7-percent (6.9-percent) decrease on a YoY basis.

The Bank’s high-quality liquid assets (assets carrying investment-grade credit rating and balances due from the Bank of Latvia) totalled EUR 133.79 million (EUR 133.79 million) or 59 percent (59 percent) of the total assets. Investments in government bonds totalled EUR 18.05 million (EUR 18.05 million) or 8 percent (8 percent) of the total assets.

The Bank maintains a well-diversified structure of liquid assets represented by bonds (12 percent), due from credit institutions (7 percent), due from the Bank of Latvia (79 percent) and cash (2 percent). The liquidity coverage ratio (LCR) was157 percent. The net stable funding ratio (NSFR), characterizing the availability of a stable funding profile in relation to the composition of assets and off-balance sheet activities, reached 129 percent.

Last year, the Bank completed the main structural works undertaken under a large-scale renovation and reconstruction project in Kalēju Kvartāls. Kalēju Kvartāls (Kaleju Quarter) is a quarter in the Old Riga situated between Kalēju Street and Vecpilsētas Square where refurbishment of the five-building complex is underway. The Bank’s new office premises will be located in the Quarter. The new office premises will be equipped in accordance with the principles of modern working environment. The solution resonates with the ESG concept that focuses on environmental protection, social responsibility and corporate governance and encompasses aspects such as environmental sustainability and corporate social responsibility. The Bank is committed to integrating ESG factors at the highest level. It is envisaged that the Bank’s employees will move to the new office spaces in 2020.

The Bank is a steadfast supporter of culture and works of art, participates in the projects aimed at safeguarding cultural environment, supports events that focus on cultivating and instilling human values, and supports sustainable projects in Latvia and abroad. The Bank provided financial support for Day Childcare Centre St. Theresa’s Home and supported publication of the collection of memories “Mans XX gadsimts” (My Twentieth Century) by Marina Kosteņecka who is an outstanding publisher, writer and journalist. The Bank sponsored the exhibition titled “Ilmārs Blumbergs. Beigas Ir” dedicated to Ilmārs Blumbergs (1943-2016), a legendary Latvian artist and scenic designer Ilmārs Blumbergs (1943-2016). An urban site Latvijas dzimtu sols was opened in Riga’s oldest park Viesturdārzs. In Kyiv (Ukraine), Latvijas skvērs (Latvian square) was created. The Bank participated financially in all those projects. In 2019, the Bank started successful cooperation with Stockholm School of Economics in Riga (SSE Riga) by supporting SSE’s Scholarship Foundation.

Last year, the Bank became the first locally owned bank honoured with the highest Platinum Award from the Sustainability Index. The award is a testimony of that the Bank has fully integrated social corporate responsibility and impact assessment standards into its strategies and practices. The Bank also issued its first-time non-financial report (ESG Report) prepared in accordance with NASDAQ’s ESG Reporting Guide (a support program for Nasdaq’s Nordic and Baltic markets). For the third consecutive year, the Bank has received the Family-Friendly Company Status. The Ministry of Welfare of the Republic of Latvia assigns the status to Latvian enterprises that adhere, in their daily activities, to the principles underpinning family-friendly enterprise. 

The 4Q 2019 Financial Statements of Baltic International Bank are available for viewing here.

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