OREANDA-NEWS. April 29, 2013. Nordea Estonia, part of the largest Nordic financial group, is continuing along a stable growth path, having increased deposit volume by 17% y/y and loan volume by 2%, while retaining a high-quality loan portfolio. Q1 profits exceed EUR 12 million.

It is impossible for an open economy like Estonia to continue growing with the current pace while only relying on internal demand, without a recovery in Scandinavia and Europe. A return to fast growth together with increasing export volumes may be expected only in the second half of the next year. Nordea Estonia's growth forecast for Estonia in 2013 is 3.2%.

„Just like in Nordea Group, focus on very good customer relations, efficiency and stability remain the current keywords for Nordea in Estonia. Our aim is to offer our customers the best banking experiences, even in the light of the tough economic climate and new regulations," Vahur Kraft noted.

„We continue to increase cost and capital efficiency and invest in developing customer relations. The key to great customer relationships is trust, based on professional advice and searching for the best solutions together. In the last semesters, Nordea has been focusing on its staff to ensure that we are ready to offer holistic solutions for customers who need help in reaching their goals," Kraft said. According to Estonian Service Index (ETI), Nordea is the bank in Estonia that has most improved its service quality.

At the end of March, Nordea Estonia's customers held nearly EUR 1.1 billion in deposits. „In a year, we strengthened our position in the deposit market by 17%, also creating a better balance between our deposit and loan portfolios. Corporate deposits have grown 24% y/y,“ Kraft said.

Nordea still has the best-quality credit portfolio in the market, ratio of loan losses to the entire portfolio was 0.02% in Q1. Credit demand and portfolio quality are driven by the growing economy in Estonia; next year, the growth should be cemented by a gradual recovery of Eurozone investment volumes.

The factors influencing the income most include decreasing base interest rates and insufficient loan demand induced by the general economic environment.  Thanks to sustainable and cost efficient management, our cost-income ratio has remained impressive (37%).

At the end of March, Nordea Estonian loan portfolio was appr. EUR 3.1 billion, of which leasing represents EUR 575 million. At the end of March, Nordea Estonia's corporate loan and leasing portfolio amounted to EUR 1.9 billion, having grown 6% y/y. This gives Nordea a solid second position in Estonian corporate loan market. Private loan and leasing portfolio grew 3% y/y and exceeded EUR 1 billion at the end of March.

This year's low euro interest rates have increased our customers' interest in investment. Year on year, volume of private savings and investment products has increased by 18%, of which 52% comes from pension products," Kraft noted.

Volume of pension funds managed by Nordea Pensions Estonia AS, increased by 11.4% in Q1; this doubles the average pension market growth (total pension fund market growth 6.1%). Our most conservative fund has earned its customers more than 4%, which, in the current interest environment, is a good result. The Equity 100 pension fund (Nordea's fund with the largest proportion of equity) grew its customers' assets by 9.3% in a year.

Nordea Leasing (Nordea Finance Estonia) issued EUR 60.6 million worth of new leasing and factoring credits in Q1. Nordea Leasing customer base demonstrated 8% annual growth. Thanks to new customers, the leasing and factoring portfolio grew by EUR 11 in Q1, to EUR 575 million. In a year, Nordea Leasing's credit portfolio has grown by 16%. Compared to last year, Nordea Leasing has significantly improved its internal efficiency and productivity, bringing about a 15% growth in income and 20% in profitability.