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Banks back on track with healthy profits

By Anatol Steven. 29.03.2011

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Latvian banks report almost €27 million in profits over two months

In another sign that the country is back on track following its debilitating recession, Latvia’s banking sector has reported that it operated with an overall profit for the second straight month in 2011.
The sector posted LVL 18.91 million (€26.9 million) in aggregate profit for the period January-February, recovering from a loss incurred during the same two-month period in 2010, according to data from the Finance and Capital Market Commission reported on March 25.
In total, 15 Latvian banks and four local branches of international banks, whose assets represent an 81.1% aggregate share in the Latvian banking sector, closed the first two months of 2011 with revenues of LVL 28.8 million (€40.9 million). Officially, there are 31 banks registered in Latvia, including 10 branches of foreign banks, two of which have yet to launch operations.
Anna Dravniece, a representative of the Finance and Capital Market Commission, commented that the banks’ revenues are now higher than their costs mostly due to a reduced necessity for new provisions for bad loans and a reduction in such provisions created previously. All of the banks’ indicators were in compliance with statutory requirements in February, she confirmed.
“The liquidity ratio of the banking sector was 66.2% at the end of February 2011 – down from 67.5% at the end of January – and the capital adequacy ratio was 15%, up from 14.4%,” Dravniece said.
Newly-issued loans in February came to LVL 65.5 million (€93.2 million) in total, including LVL 23.6 million (€33.6 million) for business development, LVL 9.2 million (€13.1 million) to households, and LVL 32.7 million (€46.5 million) to non-residents.
[pictured: Latvia’s Amber Coin, struck in Finland in 2010, with a transparent amber cylinder set in the center]