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In 2019 Baltic International Bank successfully continued to reshape its business model

News - April 1, 2020

2019 was an important year for the implementation of the strategic aims of the Baltic International Bank, continuing to reshape its business model and strengthening balance of the Bank to secure its development.


The Bank succeeded in spurring substantially interest from the local Latvian businesses towards the Bank’s services. The Bank also increased the number of local clients in the Bank. The Bank enjoys a rising local-client trust in the Bank and its services. After opening the account, the clients gradually intensify their activity and make up an ever-increasing percentage of the Bank’s portfolio.

“Already today we are seeing results of our intense work – we have improved capital adequacy of the Bank, reduced risk-weighted assets and amount of unprofitable loans, as well as finalized capital-strengthening plan of the Bank. Last year strengthening of Compliance was amongst our top priorities, also we are successfully continuing to reshape our business model and it has been our focus since 2016 and especially last two years. At the end of the last year private individuals or businesses from Latvia comprised half of the active clients of the Bank. Asset management and financial instruments brokerage and custody services for private individuals, and business banking for legal entities – is what we focused on throughout 2019. The capital adequacy ratio of the Bank, compliance with regulatory framework, as well as client portfolio structure allows the management to continue development of the Bank in 2020, activating allocation of loans to local businesses and private individuals. Lending and financing of the Latvian businesses remain the strategic corner stone of the Bank for the next two years,” tells Viktors Bolbats, Baltic International Bank Chairman of the Board.

Gross fee income of the Bank reached 9.94 EUR million (compared to 9.89 EUR million in 2018), marking this as the record-setting year of the Bank in terms of gross fee income. Interest income of the Bank declined due to decrease of loan portfolio and risk-weighted assets. Total operating income of the Bank has increased by 1.5%, reaching 14.14 million EUR (compared to 13.92 million EUR in 2018).

Total operating costs of the Bank decreased to 14.7 million EUR (14.98 million EUR in 2018, and 17.19 million in 2017). Overall, since 2017 management of the Bank managed to reduce total operating cost by 2.49 million EUR, or by 15%. 

At the end of 2019 Bank achieved the total capital adequacy ratio of 14.84% (compared to 12.9% at the end of 2018). Tier 1 capital ratio was 9.84% (compared to 8.79% at the end of 2018). This was achieved via series of activities, including shareholder support. Buying out of loans from Bank’s balance sheet was the way of capital strengthening.

As of 31 December, 2019, the Bank (the Group-relate financials are enclosed within the parentheses) posted the following financial results:

  • Assets: EUR 227 million (EUR 226 million);
  • Total capital ratio: 14.84% (14.45%);
  • Liquidity coverage ratio: 157%;
  • Losses: EUR 3.16 million (EUR 3.44 million);

Client structure-specific changes and provisions for those risk-weighted assets, that were issued prior to new strategy, resulted in a short-term negative effect on the Bank’s financial results. The Bank net result is a loss of EUR 3.16 in 2019.

The Bank’s high-quality liquid assets (assets carrying investment grade credit rating and balances due from the Bank of Latvia) totaled EUR 122.76 million (EUR 122.76 million) or 54 percent (54 percent) of the total assets. Investments in government bonds totaled 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 (13 percent), due from credit institutions (7 percent), due from the Bank of Latvia (78 percent) and cash (2 percent). The liquidity coverage ratio (LCR) was 157 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.

In 2019 Bank improved its internal transactions monitoring system (TMS) and invested funds in the raising of professional qualification of employees and fostering expertise in the financial crimes combating area in line with the international standards. An evidence of this is the evaluation of the New York (USA) based rating agency Sigma Ratings. The agency assigned BBB+ financial crime compliance (FCC) rating to Bank and placed it amongst the industry leaders.

Digital transformation takes up a significant role in the development of the Bank – introducing new digital tools and channels, offering Open Banking cooperation platform solution to the clients. An Investment Opportunity platform has been introduced allowing existing and potential clients to select their investment portfolio with the help of interactive calculator. Bank continues to work on the development of new internet banking solution.

Last year, the Bank became the first locally owned bank honored 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 Bank continues to engage in active dialogue with governmental authorities and other organizations on the place and role of private banks in the Latvian economy. Participating in the local capital banks working group of the Finance Latvia Association (Association), it raised issues about the transformation of business models of the local capital banks as well as their place in the financial market and contribution to the Latvian economy. As a partner Bank took part in the third International Economic Forum and discussed the Funding solutions for small and medium companies. Representatives of the Bank shared their expertise in the Open Banking area in the Baltic Business Technology Fair RIGA COMM, as well as in cooperation with Tet organized Tet Road Show: Cloud, Security, AI in the Ukrainian cities Kiev, Dnepr and Kharkov.  Bank organized high level Investment Forum presenting to delegates latest investment management strategies to develop business perspectives of the future as well as promote interest of international investors in the Baltic market.

In 2019 the Bank sponsored the exhibition titled “Ilmārs Blumbergs. Beigas Ir” dedicated to Ilmārs Blumbergs (1943-2016), a legendary Latvian artist and scenic designer. The Bank also supported the award ceremony of the Annual Latvian Literature Awards. With the Bank’s support, the TERESA HOUSE day care centre was opened. Promoting the development of Latvian literature, a collection of memoirs ‘My 20th Century’ by Marina Kosteņecka was published. Also in frame of the literature promotion project ‘Library’ the Bank continued its preparation works for the unique exhibition of the books of families ‘Dzimtas grāmata’.

In 2019 Bank celebrated the Phase 1 Rafter Festival for its major renovation and reconstruction project – Kalēju Quarter – marking the completion of an important phase of the construction works.  It is envisaged that the Bank’s employees will move to the new office spaces in the end of 2020.

The Baltic International Bank Annual Report – 2019 is available for viewing here.

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