SIA Ernst & Young Baltic has completed audit of AS Aizkraukles Banka and the group report for the financial year 2010.

Major indicators as of 31 December 2010 are as follows:

• The bank’s operating income in 2010, before allowances  for credit losses: LVL 46.2 million.
• The bank continued making allowances for credit losses. At the end of 2010, the total amount of allowances for credit losses reached LVL 65.4 million. During the period from the end of 2007 until the end of 2010, the bank has made allowances equal to LVL 86.2 million.
• Reporting year losses: LVL 6.9 million.
• Amount of deposits: LVL 1.25 billion. During the year, the amount of deposits has increased by LVL 379 million, i.e. 43.6%. This is substantially above the increase planned at the beginning of the year.
• The bank’s net assets: LVL 1.38 billion.
• The bank’s shareholders’ equity: LVL 75.4 million. During 2010, the bank’s shareholders’ equity has grown by LVL 1.3 million.
• Capital adequacy ratio: 12.45%
• Liquidity ratio: 68.1%.

In 2010, the group’s business has considerably grown in all major areas of operations – providing services to private and corporate customers, asset management, and investment in securities. The Bank is proud to be the largest private bank in Latvia currently. The group’s and the bank’s financial objectives set for the reporting year have been considerably surpassed. Increase in deposits with Aizkraukles Banka in 2010 constituted 1/4, i.e. 25.5% of the total increase in deposits with all the Latvian commercial banks. The bank’s operating efficiency has substantially improved – operating income, before allowances for credit losses, has grown by 17% year-on-year.

In 2010, annual yield of the bank’s debt securities portfolio reached 5.53%, the portfolio average balance in 2010 being equal to LVL 217 million. The bank’s securities portfolio is mainly composed of debt securities of central governments of OECD countries, credit institutions and private companies of other countries.

During the reporting period, the share of net commission income and their equivalents in the bank’s operating income structure has grown to reach 55%. The total amount of net commission income has increased by 41%, and the Bank has exceeded the pre-crisis number of transactions.

An important event in the reporting period was issue of shares, completed by the bank in July 2010. There were 10 000 shares issued additionally to 100 000 that constituted the bank’s share capital before. After issue, the new shares equal 9.09% of the bank’s share capital. Though the issue was in the form of a non-public offering to a limited group of persons, the overall paid amount of applications exceeded LVL 9 million, which is 40% above the offer amount. Due to the issue of shares, the bank now has about  30 new shareholders. As a result of the issue, the bank’s share capital has grown by LVL 6.5 million.

In 2010, the bank continued the programme of issuing subordinated bonds that began in 2008. In September 2010, the Bank’s third issue of subordinated bonds was successfully completed. The received applications for purchasing the bonds exceeded the bond issue amount by 16%. The bank issued 200 000 bonds, with each bond’s face value being equal to USD 100. The overall amount of the bond issue totalled USD 20 million. Considering great interest of the bank’s customers in acquiring the bonds, it is planned to continue issuing subordinated bonds in future.

Main tasks for 2011 will be expansion of the group’s and the bank’s operations and increase of their profitability. The amount of customers’ deposits is expected to grow by 15% in 2011.

Given signs of economic recovery found at the bank’s target markets and since the bank will not need to make significant allowances, the bank plans to increase the amount of granted commercial loans in 2011.

The bank’s Chairman of the Board and CEO Ernests Bernis is sure that Aizkraukles Banka will make profit in 2011, successfully continuing started business expansion and increasing operations efficiency. This is supported by performance in the first month of 2011, which is above expectations. The bank’s and the group’s profit in 2011 is expected to exceed LVL 15 million.

The complete audited report for 2010 alongside reports of the Council and the Board will be available at Aizkraukles Banka homepage www.ab.lv in the near future.

AS Aizkraukles Banka is the largest independent private bank in Latvia with controlling interest owned by Latvian shareholders. The bank’s majority shareholders – Oleg Fil, Ernest 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, SIA AB.LV Private Equity Management, KS AB.LV Transform Partnership, SIA AB.LV Transform 1, AS AB Konsultācijas, SIA AB.LV Corporate Services, SIA New Hanza City, SIA Elizabetes 21a, and other companies.