OREANDA-NEWS. July 23, 2010. Nordea Bank Estonia, member of the leading European financial group, continues with stable growth, earning EEK 156.4 in profits for the first half-year and reaching 46% profit growth. Compared to the same period last year, the company’s total income increased by 27% to EEK 520 million, reported the press-centre of Nordea Bank Estonia.
 
„In the last few years, Nordea Bank has grown from a small lender to a big universal bank and become a top-three bank in Estonia. Its income has grown in the sectors of loans and bank cards, as well as savings and investment products. Compared to last year, the number of bank cards issued grew by 9304, we have 32 868 new customers and the number of pension customers has increased by almost a third,“ - Vahur Kraft, head of Nordea Estonia, illustrated the bank’s growth in both product and customer terms.

At the end of June, Nordea Estonia had approximately EEK 48.8 billion worth of assets, which means 2% growth compared to last year. The bank’s loan portfolio amounted to nearly EEK 42 billion, growing by 2% compared to the same period last year.

„The Estonian banking market is undergoing positive changes in thinking. Customers are becoming more aware of the importance of financial decisions, thereby increasing the importance of good cooperation with clients – professional and personalised counselling that helps to find new opportunities,“ Kraft said, and added that the keyword for the current year is undoubtedly the euro. Adoption of the euro entails a number of changes and developments for all companies, most of all for banks. According to Kraft, Nordea has made considerable investments in its systems to ensure the IT-preparedness for conducting the necessary banking tasks for its customers from January 1.

„The euro acts as a framework, providing us with new growth opportunities; both the state and the private sector should make the best possible use of these opportunities, “ Kraft explained. In his view, one of the specific opportunities lies in strengthening economic ties with Finland.

At the end of June, the loan and leasing portfolio of Nordea’s Estonian companies was EEK 25.1 billion; the volume of corporate loans grew by 3% compared to the same period last year. Retail loan and leasing portfolio increased by 3% year-on-year, amounting to EEK 14.5 billion at the end of June.

In the first half-year, loan losses made up 0.36% of the whole loan portfolio, remaining below the Estonian average. „Successful credit management has so far been one of Nordea’s clear strengths in the Estonian banking scene; high level of capitalization and strong credibility enable us to continue fulfilling our clients’ expectations concerning both financing and other products,“ Kraft said and added that both the credit market as well as the sector in general are vulnerable to economic insecurity and fast regulatory changes.

The volume of customer deposits at Nordea Estonia continued to go up, reaching more than EEK 12.6 billion by the end of the first half-year. A growing share of clients’ funds find its way from deposits to investment products. ”Nordea’s deposit volume has increased, however, falling deposit interest rates have made people contemplate different investment products. We have increased sales of structured bonds,” Kraft added.

At the end of June, Nordea had 141,566 customers, 21 branch offices and 522 employees. By the end of the quarter, it had issued 84 938 bank cards and had 88 767 online bank users.

The Q2 results of Nordea Group were in line with expectations. CEO Christian Clausen's comment to the report: "We have seen a positive development in our customer business with a record level of new Gold and Private Banking customers and we have strengthened relationships with our large corporate customers. Our market shares have increased and income in customer segments is up 9%. Net interest income is holding up well despite the low interest rate levels. We are especially pleased with the continued development of our relationship banking model and our growth initiatives. Together, they lay a strong foundation for reaching our long-term financial targets."

Second quarter vs. first quarter:
income from corporate customers up by 10% and from household customers up by 7%;
number of Gold and Private Banking customers up by 73,000 or 2.6%;
net loan losses down 28% to 26 basis points, excluding provisions for the Danish guarantee scheme, and the growth in impaired loans levelled out and a slight decrease was seen;
operating profit down 17%, due to lower result from items at fair value.

Outlook:
The outlook is improved regarding the Nordic macroeconomic development. Net loan losses in 2010 are now expected to be lower than in 2009. Credit quality continues to stabilise, in line with the economic recovery. Nordea continues to expect risk-adjusted profit to be lower in 2010 compared to 2009, due to lower income in Treasury and Markets.

Full overview of Nordea Group’s Q2 2010 results:
http://hugin.info/1151/R/1433057/378998.pdf 
 
Additional materials on Nordea Group’s Q2 2010 results:
http://www.nordea.com/Investor+Relations/Financial+reports/Interim+reports/Second+quarter+report+2010/1328362.html?lnkid=com-uk%2fQ110%2fFP%2fbanner