OREANDA-NEWS. November 02, 2009. The 9-month profits for Nordea Bank Estonia, part of the largest Nordic banking group, were EEK 86.1 million. In the 3rd quarter, the bank earned EEK 6.6 million in profits, the leasing subsidiary was in the red, reported the press-centre of Nordea Bank Estonia.

„In a falling market, Nordea Bank managed to continue increasing the volumes of both deposits and loans. As the largest Nordic bank, Nordea has been an example of strategically planned stable growth in Estonia,” head of Nordea Bank Estonia Vahur Kraft said. “Leasing products are more dependent on the general economy and the need for provisions was expected. If we take into account the general economic situation, Nordea’s loan portfolio continues to be of high quality and will ensure good profits.”

The quality indicator for Nordea’s loan portfolio is the low ratio of loan losses to total lending compared to the market average – 0.662% as at the end of September.

At the end of September, the Nordea loan portfolio amounted to EEK 34.4 billion – 15% more than last year, in spite of the market recession. Of this, the corporate loan portfolio made up nearly EEK 20 billion and the retail portfolio more than EEK 13 billion; their growth per year 10% and 8% correspondingly.

By the end of September, the leasing portfolio of Nordea Finance Estonia had decreased by 3% on 3rd quarter last year to EEK 6.6 billion. The 3rd quarter loss from leasing services amounted to EEK 30 million due to necessary provisions, typical of the leasing market and arising from the general state of the economy. However, new sales of Nordea Leasing continue to increase, regardless of the contracting Estonian leasing market.

The head of Nordea Finance Estonia Silver Kuus noted that in contrast with the other market players, Nordea has continued to actively issue new credit – EEK 1.5 billion during the first nine months of the year. ”The new sales volume has made Nordea Leasing the largest financing service partner in the market. While the general trend in the market is downward, Nordea is one of the few to have managed to retain the volume of its leasing portfolio,” Kuus said. With 34%, Nordea Finance Estonia, a separate business entity, is the Estonian leasing market leader in new sales.

Similarly to the loan portfolio, the volume of both corporate and retail deposits is going up as well. At the end of September, Nordea Estonia had more than EEK 10 billion of client deposits. The deposits grew by 7% compared to the same time last year.

At the end of September, Nordea Bank had 120 508 clients, 22 branch offices and 498 employees. By the end of the 3rd quarter, the bank had issued 82 515 bank cards and had 75 919 users of the online bank.

At the beginning of October, the bank opened its new headquarters in Liivalaia Street, Tallinn. The nine storeys of the new building house the bank, Nordea Leasing and Nordea Pensions; there is a branch office on the ground floor.

At the end of September, Nordea Estonia had nearly EEK 44.9 billion worth of assets, a 3% increase on 3rd quarter last year. The whole group has EUR 488.3 billion in assets, making it the largest Nordic bank.

Nordea group strong performance continued in the third quarter.
Operating profit up 2% from the second quarter, due to continued strong income generation and lower loan loss provisions. Net interest income as well as net fee and commission income increased and net gains/losses remained strong. Risk-adjusted profit was up 30% from third quarter last year, and down by 6% from the previous quarter.

Firm risk and cost management gives lower loan losses and cost/income ratio. The loan loss ratio was in line with the outlook and was 54 basis points. The cost/income ratio was 48%, down from 53% one year ago, and the target to reduce number of employees by 2% this year was met during the quarter.

Impaired loans increased at a slower pace. The macroeconomic trend in Nordea's home markets as well as the increase in impaired loans have stabilised. Impaired loans for the Group increased 9% from the second quarter, significantly slower increase than previous quarters. The provisioning ratio increased to 51% from 49%.

Risk-adjusted profit is expected to be higher in 2009 compared to 2008. Full-year cost growth is expected to be at approx. the same level as in the first nine months. Loan losses in relation to lending are expected to remain broadly at the same level for the full year, even though the risk of somewhat higher loan losses remains.

"Nordea continues to deliver strong income growth, increasing efficiency and stable loan losses in line with our decided risk profile. It is very satisfactory that we continue to perform well above our long-term target of doubling risk-adjusted profit in seven years. The underlying business shows solid results with a strong increase in number of customers. Overall risk levels have gone down, but the uncertainty of the strength of the economic recovery is high. Nordea will therefore, from a position of strength, proceed on a prudent organic growth path, with careful balance between risks and opportunities", says Christian Clausen, President and Group CEO of Nordea.

Nordea has around 10 million customers, approx.1,400 branch offices and a leading net banking position with 5.9 million e-customers.

More information:
http://www.nordea.com/sitemod/upload/root/eu/interim/Q3_2009_UK.pdf

and
http://www.nordea.com/sitemod/upload/root/eu/interim/Media_analyst_presentation_Q309.pdf.