The performance results of Baltic International Bank continue to demonstrate a positive trend
In 1Q 2019, the Bank has substantially improved its performance results, compared to 1Q 2018. While continuing to implement its new business model, the Bank achieved a 64.9-percent rise in the net fee and commission income, compared to 1Q 2018. In 1Q 2019, the total customer funds reached EUR 508 million, and the assets under management grew by 23% to reach EUR 91.23 million. The value of financial instruments in brokerage service was EUR 168 million.
“The Bank’s new business model implies an emphasis on fee and commission income that comprises customer service fee, brokerage fee and custody fee (for safekeeping securities). The model also envisages concentration on high value-added services. In 2018, we succeeded to hit a record as the fee and commission income totalled circa EUR 10 million. One more challenge that we are facing while switching over to the new business model is to boost business efficiency while taking into account all costs. The results are indicative of that the Bank posts profit. The Bank has made a huge stride as the total customer funds have reached half a billion euro. This figure is quite impressive. Why is this important? Once we have clients who deal with such a huge volume of resources, we can offer them high value-added services and hence increase our fee and commission income. I think it is important to keep a sharp eye on dynamic behaviours of client assets. Currently they are showing growth patterns,” the Bank’s CEO Viktor Bolbat says.
At the beginning of the year, Baltic International Bank invested in new digital solutions. The Bank continues to develop new digital tools and channels. The Bank is also working towards improving its Internet Banking facility. Committed to providing convenience to its clients, the Bank will offer new functionality, security enhancements and a wider array of improved services. The new Internet Banking will serve as a platform for developing new products and services in the future. As part of the new Internet Banking project, the Bank offers its sandbox solution for Open Banking. In March 2019, Bank rolled out Application Programming Interface (API). Open Banking is an open banking platform for cooperation with financial technology companies and other partners. Sandbox is a safe isolated environment where third-party service providers are able to test their ideas and innovations in the financial sector in general and in asset management in particular. In 1Q 2019, the Bank opened the “Investment Opportunity” platform where its current and potential clients can use an interactive calculator to choose the most suitable investment portfolio.
In 1Q 2019, the Bank has substantially improved its performance results, compared to 1Q 2018. While continuing to implement its new business model, the Bank achieved a 64.9-percent rise in the net fee and commission income, compared to 1Q 2018. In 1Q 2019, the total customer funds reached EUR 508 million, and the assets under management grew by 23% to attain the level of EUR 91.23 million (EUR 91.23 million). The value of financial instruments in brokerage service was EUR 168 million (EUR 168 million).
The loss incurred in the reporting period is associated with setting aside allowances for doubtful debts, including also indebtedness. In this case, the allowances are set aside concurrently with trimming the number of clients posing high risk. In 1Q 2019, the operating income increased by 30% (35%) on a year-over-year basis and totalled EUR 3.34 million (EUR 3.50 million). The net fee and commission income surged up to 59.0% (56.4%). The net interest income totalled 19.8% (18.9%). Administrative expenses reached EUR 2.67 million (EUR 2.70 million).
The Bank’s high-quality liquid assets (assets carrying investment-grade credit rating and balances due from the Bank of Latvia) totalled EUR 169.41 million (EUR 169.41 million) or 58% (58%) of the total assets. Investments in government bonds totalled EUR 21 million (21 million) or 7.2% (7.2%) 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 (80 percent) and cash (1 percent). The liquidity coverage ratio (LCR) was 226 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 158 percent (158 percent).
As of 31 March 2019, the Bank’s own funds totalled EUR 23.59 million (EUR 23.44 million). The Bank’s Tier I capital ratio (CETI) was 9.46% (9.41%). The total SREP ratio (TSCR ratio) reached 13.36% (13.32%).
At the beginning of this year, several external stakeholders evaluated the Bank’s efforts. The Ministry of Finance and the Latvian tax authority [VID] have admitted Baltic International Bank to the Gold Level of the In-depth Cooperation Programme (aka White List) administered by the VID, in recognition of transparency of the Bank’s operations and fiscal discipline.
Sigma Ratings, a New York-based rating agency, assigned BBB+ financial crime compliance (FCC) rating to Baltic International Bank placing it among industry leaders. Sigma’s report also noted that the bank’s outlook is positive. Sigma Ratings reviewed Baltic International Bank’s inherent risk environment and control effectiveness around FCC. The review included FCC factors specific to AML, CFT, sanctions, and aspects of other non-credit risk issues such as geo-political risk and national-level regulatory proficiency.
In 1Q 2019, the Bank continued to support Latvian literature and to implement a project titled “Library”. The project aims to educate the public regarding the importance of literature in people’s lives and to tell people about private libraries and collections held in private libraries. The project involves Latvian literati and other active shapers of the literary life in Latvia.
The Bank’s (Group’s) key financial indicators:
To view the Bank’s financial statements for 1Q 2109, please click here.