Performance of “Aizkraukles banka” in H1 2010

August 27, 2010, 10:42 / Banking

JSC “Aizkraukles banka” audited report for H1 2010 has been approved.

During the first half of 2010, the Aizkraukles Banka business has grown in all areas of operations — providing services to private and corporate customers, lending, securities transactions, and asset management.

In the reporting period, the amount of the bank’s deposits and assets has reached the highest level in the bank’s history, and Aizkraukles Banka became the largest private bank in Latvia in terms of the amount of assets and deposits. Since 31 December 2009, the amount of deposits has grown by LVL 149 million, i.e. 17%, to reach LVL 1.049 billion. This result is considerably above the amount planned at the beginning of the year and has been achieved due to attracting new customers and actively cooperating with existing ones. As of 30 June 2010, the value of the bank’s assets amounted to LVL 1.15 billion. The bank’s liquidity ratio reached 61.61% as of 30 June 2010, which exceeds that planned by the bank. Whereas the bank’s capital adequacy ratio was equal to 14.96% as of the end of June 2010.

The bank’s operating income, before allowances for credit losses, totalled LVL 21 million as of 30 June 2010. Due to consistent implementation of the bank’s strategy, the share of revenues associated with transactions subject to credit risk and interest rate risk in the bank’s operating income has decreased during the first half of 2010. Consequently, the share of commission and equivalent income in the operating income structure has grown from 37% to 57%.

The bank has resumed lending to corporate customers. The bank’s gross loan portfolio has increased by LVL 1.5 million to amount to LVL 595 million, as of 30 June 2010. Meanwhile, active work on restructuring problematic part of the loan portfolio, loan recovery and property takeover is performed. Applying caution in evaluating quality of the loan portfolio, the bank continued making allowances for credit losses. The total amount of allowances for non-bank loans equalled LVL 59.5 million, which is almost 10% of the gross loan portfolio. Given consistent implementation of the above allowance policy, the bank’s losses for the six-month period ended 30 June 2010 totalled LVL 5.16 million.

Given considerable increase of deposits within the reporting period, the bank invested in securities. As of 30 June 2010, the total value of securities portfolio was equal to LVL 211 million. The securities of highest investment grade constitute 56% of the bank’s total securities portfolio, which is another evidence of the bank’s cautious investment policy. Annual yield of the securities portfolio amounted to 6.86% in the reporting period.

The bank also applies efficient expenditure control, therefore, despite growing number of customers and transactions, as well as overall amount of operations, the bank’s expenses, as compared with the respective period in 2009, have decreased.

The Group’s subsidiaries have successfully ended the first half of 2010 as well, and their overall profit for the reporting period reached LVL 0.55 million. The most successful among the Group’s subsidiaries in the first half of 2010 was brokerage joint stock company AB.LV Capital Markets, with value of financial instruments of its customers reaching LVL 182 million as of 30 June 2010.

Considering the bank’s development and market trends in Latvia and worldwide, the Aizkraukles Banka management is sure that Aizkraukles Banka will make profit in 2011, alongside successfully continuing expansion of its business and improving efficiency of operations.

Aizkraukles Banka is the largest independent private bank in Latvia with controlling interest owned by Latvian shareholders. The bank’s major shareholders — Oļegs Fiļs, Ernests Bernis and Nika Berne — hold 85.90% of the bank’s share capital. Aizkraukles Banka Group includes brokerage joint stock company “AB.LV Capital Markets”, investment management joint stock company “AB.LV Asset Management”, “AB.LV Transform Partnership” LP, “AB.LV Transform 1” Ltd, JSC “AB Konsultācijas”, “AB.LV Corporate Services” Ltd, “New Hanza City” Ltd, “Elizabetes 21a” Ltd, and other companies.

Additional information:

Ilmars Jargans
Head of Public Relations Department
+ 371 6700 2296