OREANDA-NEWS. May 03, 2011. Swedbank is implementing new customer oriented business model moving towards to becoming a long-term relationship bank, reported the press-centre of Swedbank.

In Q1 Swedbank Latvia earned a net profit of LVL 24 million.

This improved result is based on net recoveries. At the same time, deleveraging continues.

The economy continues to recover in Latvia and the labour market situation is gradually improving. The main contributor to economic growth is strong exports. Inflation is generally influenced by trends in global commodity prices.

Maris Mancinskis, the Head of Swedbank Latvia: “After a two-year preparatory stage, Swedbank is implementing new customer oriented business model moving towards to becoming a long-term relationship bank.. Through better understanding the needs of customers, we seek to offer sound and sustainable solutions and support for customers. To assist customers in more efficient and convenient management of their personal finances, a new-generation tool ‘My Finance Manager’ has been launched in Swedbank’s internetbank. This is the first phase in the development of online banking based financial consultancy that we plan to develop together with customers. This year, we also expect to triple the number of customers with their own personal financial advisor at a branch. Swedbank Latvia set up the Entrpreneurship Competence Centre in March with a view to supporting the sustainability of Latvian businesses . We are convinced that customers will experience added value as a result of this new business model.”

Swedbank Latvia reported a profit of LVL 24m in Q1 2011 in contrast to a loss of LVL 48m a year ago. The improved result was achieved due to net recoveries. This is related to economic recovery and improved solvency of borrowers, especially in the corporate segment.

Loans and deposits
In Q1 Customer deposits increased by 8 per cent on a year-on-year basis  A general deleveraging process continues as net lending volumes decreased by 16 per cent compared to  the same period a year ago. In Q1, Swedbank issued LVL 49m in new loans. Loan portfolio growth is expected in Q2-4, while the amortization of the loan portfolio is expected to slow down.
The loan-to-deposit ratio improved to 195 per cent in Q1, 2011.

Credit quality
Credit impairment in the first quarter amounted to LVL 11m in Q1 2011.
Decreasing for a 3rd consecutive quarter, impaired loans amounted to LVL 831m at the end of Q1 compared to LVL 972m at the end of Q1 2010.

Revenues and costs
Total income has increased by 10 per cent to LVL 32m in Q1, 2011 compared to the previous year, whereas expenses have decreased by 13 per cent to LVL 14m. The cost/income ratio was 45 per cent in Q1 2011. 

Activating the relationship bank business model
In 2011, Swedbank Latvia is moving towards a more customer oriented business model, which requires both raised competence on the part of employees and front line empowerment. The bank has already shifted its attention away from its previous product focused approach. The bank aims to build strong customer relationships, centered on an enhanced appreciation of the customer’s financial needs, followed by sound financial advice based on those needs.