OREANDA-NEWS. “Demand for new loans increased during this last quarter, particularly in the corporate segment and we have also seen positive development in credit quality. It is pleasing to see some big deals which have also been significant for the Estonian economy and the financing of the buy-out of the Eesti Meedia group is a good example of that. Despite the increase in the volume of business, we have maintained control over costs and with low interest rates continuing, intensive efficiency measures are under way to counter the resulting pressure on revenues.” - said Priit Perens, Head of Swedbank Estonia.

Swedbank Estonia earned EUR 48.9m in net profit in Q3 2013.

Q2 2013 saw a 1 per cent real growth and 5.9% nominal growth in GDP year on year in Estonia. Against the backdrop of recovery in the euro area, growth is expected to remain stable in Estonia. Household spending is expected to be strong on the back of rising income and confidence.

Swedbank Estonia's profit for Q3 2013 amounted to EUR 48.9m, against EUR 39.3m for the previous year. The increase was mainly due to higher net interest income, higher net fee income and higher net recoveries. At the same time, costs decreased slightly.

Loans and deposits

Q3 lending volumes increased by 3 per cent in euros YoY. The increase was mainly attributable to corporate lending. Signs of improvement in new household lending have been increasingly evident in Estonia since May. Swedbank's market share in lending was 40.1 per cent as of 31 August (39.8 per cent - Q4 2012).

Deposits in total increased by 2 per cent, YoY. Private deposits increased by 8.0 per cent while corporate deposits declined by 3.3 per cent. Swedbank's market share for deposits was 44.9 per cent as of 31 August (44.9 per cent - Q4 2012).

The loan-to-deposit ratio was 113 per cent (112 per cent - Q4 2012).

Credit quality

Net recoveries amounted to EUR 4.4m in Q3. For Q1-3, net recoveries amounted to 14.9m, compared to EUR 11.5m for Q1-3 2012. Recoveries were generated in all segments. EUR 190.6m (EUR 316m - Q3 2012). The decrease was due to amortisation, write-offs and loans that started to perform, while the inflow of new impaired loans was limited. Credit quality strengthened through a gradual increase in new, lower risk lending.Impaired loans continued to decline during Q1-3 in Estonia and amounted to

Risk weighted assets decreased by EUR 348m during the first nine months to EUR 4261m. This was driven by the corporate portfolio as a result of increasingly active management of portfolio quality.

Revenues and costs

Net commission income for Q1-3 increased by 7 per cent YoY. The increase was mainly due to higher payment commissions, supported by increasing customer activity and higher commission income from fund management.

The cost/income ratio was 0.39 (0.38 - Q1-3 2012). In order to increase efficiencies and improve collaboration, a unified organisational structure across the Baltic countries is being implemented. At the same time, we are placing an emphasis on developing the bank's channels based on customers' needs and preferences. The intention is to improve the customer experience, support new business and improve channel efficiency.

Customer focus and Swedbank brand

In the annual Most Loved Brand survey, Swedbank placed at number five in the Baltic countries. Swedbank obtained the highest score among all financial institutions and also the highest score among companies which maintain full-time contact with their customers. Swedbank was the only bank among the top 30 companies listed.

Swedbank Estonia, working with the Ethics Centre at the University of Tartu and the University of Tartu Foundation, provides support for research students in the field of business ethics at doctoral level. For the second consecutive year, doctoral students from Estonian universities with an interest in sustainable and ethical business will be eligible for four scholarships for relevant scientific research projects. The scope of cooperation has grown recently and - at the end of September, a public ethics colloquium took place in cooperation with Tartu University Centre of Ethics, to share experiences and views on CSR, business ethics and sustainability.