Aizkraukles Banka financial performance in Q1

April 30, 2009 / Banking

The Aizkraukles Banka priorities for 2009 are to maintain stability and high level of income. During first quarter of this year Aizkraukles Banka actively continued creating provisions for loan impairment.

The provisions made during the first three months of 2009 amounted to LVL 6.7 million. As of 31 March, the bank total provisions for loans impairment were equal to LVL 28.9 million, which is 4.5% of the bank total loan portfolio value. Taking into account the provisions made and related expenses, the losses of LVL 2.4 million are present in the bank profit and loss statement for Q1. The bank capital and reserves remained unchanged, equalling LVL 78.2 million as of 31 March. The amounts hold in correspondent accounts, central bank, and due under other claims to banks total LVL 218.3 million. As of 31 March, the bank capital adequacy was equal to 16.03 %, and liquidity — to 40.45%, exceeding the FCMC minimum requirements — 8% for capital adequacy and 30% for liquidity.

As of 31 March 2009, the value of the bank assets was equal to LVL 1.012 billion, the amount of deposits attracted — LVL 758.3 million. Compared to the results as of 31 December 2008, the amount of the deposits attracted has increased by LVL 48.6 million (6.8%). The average amount of deposits has been steadily growing since the beginning of the year. Meanwhile the amount of loans granted has decreased by LVL 8.2 million toLVL 636.8 million.

Judging by previous years, the first quarter of a year is not the most active time in terms of the bank customers’ activities, and nevertheless the Aizkraukles Banka income from financial operations in Q1 2009 amounted to LVL 9.3 million. Following the bank strategy, commission payments compose growing share in the revenues structure, whereas share of revenues gained from loan interest payments is decreasing. This strategy is successfully implemented. The crisis-driven decrease of average transactions amount and resulting decrease of commission payments were amply compensated by attracting new customers: since the beginning of the year, more than a thousand of new foreign customers started their cooperation with Aizkraukles Banka — they are both individuals and corporate entities. That provides the grounds for the bank sustainable long-term development.

According to Aizkraukles Banka Chief Financial Officer Maris Kannenieks, “despite the bank continued making substantial provisions for loans and the declining amount of interest revenues, resulting from rapid decrease of base interest rates, the Q1 performance is comparatively better than it was planned. The financial plan for 2009 provides for losses due to creation of provisions, but this will not affect the bank operations, since the bank receives sufficient income from financial operations before deductions on creation of reserves.”

The Aizkraukles Banka net profit in 2008 totalled LVL 10.7 million. At the general meeting, the bank shareholders decided to include the profit in Tier 1 capital and to make no dividend payments.

JSC “Aizkraukles banka” is 100% owned by Latvian shareholders. The bank’s majority shareholders are Oleg Fil — 47.04% shares, Ernest Bernis and Nika Berne — 47.04% shares. The Aizkraukles Banka aim is to become the leading independent private bank in the Eastern Europe, combining all banking services, including asset management and advisory services, in a single customer-tailored offer. Aizkraukles Banka Group includes IPAS AB.LV Asset Management, IBAS AB.LV Capital Markets and other companies.

Additional information:
Ilmars Jargans
Aizkraukles Banka
+ 371 6777 5296