On the financial results of Baltic International Bank

News - February 28, 2018

In 2017, Baltic International Bank actively worked to transform its operations in line with the Bank’s new investments-based business model. Upon concluding the organisation of the Bank’s assets and introducing the new business model, the structure and number of customers of the Bank changed, and deposits decreased significantly.

In the 2nd half of 2017, Baltic International Bank significantly strengthened its clients service team and actively focused on attracting new clients, as well as establishing a new level of business relations with existing clients, thus in the 2nd half of 2017, all financial indicators relating to the amount of client funds increased.

In the 2nd half of 2017, the total of customer funds grew by 18% and reached EUR 444 million, the amount of deposits attracted by Baltic International Bank went up by 25,5% during the reporting period. The assets under management at the end of 2017 amounted to EUR 68,17 million, and the value of financial instruments in brokerage service – EUR 120,71 million.

At the end of December 2017 term deposits amounted to 33% of the total deposit portfolio, providing opportunities for new investment projects and financing for Bank customers – private individuals and companies both in Latvia and overseas.

According to the unaudited results of Baltic International Bank, at the end of December 2017 the bank’s assets amounted to EUR 303,35 million, which is 13,5% more than at the end of first half of 2017. The Bank’s loan portfolio totalled EUR 69,77 million or 23,0 percent of the total assets as of 31 December 2017.

The financial asset structure is still predominantly represented by investments in available-for-sale financial assets: EUR 43,72 million or 14,4 percent of the total assets. High-quality liquid assets (assets carrying investment-grade credit rating and balances due from the Bank of Latvia) amounted to EUR 159,44 million or 52,6 percent of the total assets. Investments in government bonds totalled EUR 26,87 million or 8,9 percent of the total assets.

Operations related to changing the business model and customer structure, as well as the quality assessment of some historically acquired assets of the Bank created an expected temporary negative impact on the Bank’s financial indicators, thus the Bank ended 2017 with a loss of EUR 2,67 million. The financial results were also influenced by investments in continued improvement of the internal control system, development of information technologies and infrastructure that Baltic International Bank carried out in 2017, as well as investments in staff and strengthening their competence.

The operating income totalled EUR 15 million, which is less than at the end of previous period. The management of the bank appreciates the dynamics of the income structure - the percentage of fee and commission income increased to 24,8 percent compared to the same period last year when the fee and commission income totalled 17,7%. The net interest income increased by 17,3 percent compared to the same period last year when The net interest income totalled 11,3%.

Administrative costs reached EUR 13,74 million, which is 5,8 percent below the level of the previous year.

The liquidity ratios exceed the regulatory thresholds. As of 31 December 2017, the liquidity ratio was 92,29 percent. The structure of liquid assets is well diversified, as represented by bonds 20 percent, due from credit institutions 13 percent, due from the Bank of Latvia 66 percent and cash 1 percent. The liquidity coverage ratio (LCR) totalled 376,43 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 154,64 percent.

As of 31 December 2017, the Bank’s own funds totalled EUR 29,97 million. The Bank’s Tier I capital ratio (CETI) totalled 11,60 percent. Total capital ratio reached 14,98%.

Having reached 14,98 percent, the total capital ratio by 2,08 percentage points exceeds the individual ratio set for the Bank by the Financial and Capital Market Commission.

As Bank’s shareholders actively support the development of Baltic International Bank, basing on the new business model, shareholders’ meeting in January 2018 made the decision to increase Bank’s capital by EUR 6 million. We firmly believe that the capital-increase will give a decisive fillip to the expansion of bank’s business both domestically and internationally, and the bank’s current and potential customers will all be winners!

In 2017, Baltic International Bank continued to implement a broad range of social responsibility projects promoting the development of culture, art and public opinion in Latvia. Baltic International Bank supported the publication of several books in the series “Mēs. Latvija, XX gadsimts” (Us. Latvia. The XX century) and other publications of significance to Latvia’s cultural history. In 2017, the Bank also supported the development of start-ups. The Baltic International Bank Latvian Barometer surveys were carried out throughout the year, providing a unique monthly insight into the general mood and public opinion in Latvia regarding various current topics of national importance. Thanks to its sustainable model of operations and broad range of social responsibility initiatives, Baltic International Bank ranked in the Gold category of the 2017 Sustainability Index.

Financial report for the period ended 31 December 2017

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