ABLV Bank performance in H1 2012

Riga, Latvia, August 21, 2012, 12:40 / Banking

In the first half of 2012, ABLV Group successfully continued implementation of major tasks set for this year: expansion of the group’s and the bank’s operations and increase of their profitability, alongside improvement of business risks managing methods.

We have established a sustainable and diversified business model, which allowed the group’s profit over the first six months of 2012 to be equal to LVL 4.9 million (EUR 7 million), whereas profit of ABLV Bank, AS amounted to LVL 5.7 million (EUR 8.1 million). Since the beginning of the year, the amount of deposits has grown by 15.3%, reaching LVL 1.85 billion (EUR 2.63 billion), and this trend was also maintained in July. Among commercial banks operating in Latvia, ABLV Bank is ranked first in terms of the amount of deposits and is also the largest private bank in Latvia in terms of the overall business volume.

During H1 2012, liquidation process of bankrupt company MF Global UK was continued. MF Global UK was one of the custodians of our customers’ securities and cooperation partner in securities trading. Taking care of our customers’ assets, in the reporting period the bank assumed the customers’–securities holders’ risks and possible losses related to their assets with MF Global UK, as well as covered administrative expenses under getting the funds and securities back from MF Global UK. The bank used its own funds to acquire securities worth LVL 7.4 million (EUR 10.5 million) to substitute the customers’ securities held with MF Global UK. The bank’s direct expenses and allowances under assuming the customers’ risk equalled LVL 2.6 million (EUR 3.7 million) in the reporting period. Therefore, the bank’s profit indicator for the first half of the year was decreased, but this will definitely pay off in the long-term by growing customers’ loyalty and investment business development. This was also a valuable experience, which will be useful in future.

At the beginning of 2012, the bank’s shareholders were paid dividends for 2011, at the same time allowing a possibility to re-invest the funds in the bank’s growth – i.e., to acquire the bank’s newly issued shares. There were 10 600 shares issued, thus increasing the bank’s equity by LVL 15.0 million (EUR 21.3 million). At the 2nd stage of share offer, the demand was 4.5 times higher than supply. 35 current shareholders of the bank acquired the issued shares. In March 2012, there also were employee shares issued and distributed between 21 key officers of the bank, thus establishing unified motivation system for achieving successful results. Currently, the bank’s equity is constituted by 131 600 shares, i.e., 120 600 voting shares and 11 000 employee shares without voting rights attached.

In 2012, the bank continued gradual replacement of long-term deposits with bonds issued by the bank. At the end of June, there were two issues of subordinated bonds denominated in EUR and USD performed, the amount of which was EUR 5 million and USD 20 million, with the bonds’ maturity term being 10 years, and fixed income of 4.5% p.a. set. The new bonds were offered to customers and officers of ABLV Group, and 90 of them acquired the bonds. Just like previous ones, the new bonds are included in the NASDAQ OMX Riga stock exchange list of debt securities. Since the bank’s customers demonstrate great interest in this type of investments, the bonds will be also issued in the future.

Financial indicators as at 30 June 2012

  • Net profit of ABLV Bank amounted to LVL 5.7 million (EUR 8.1 million).
  • Operating income before allowances for credit losses totalled LVL 31.8 million (EUR 45.3 million).
  • Total amount of deposits with ABLV Bank reached LVL 1.85 billion (EUR 2.63 billion). Since the beginning of the year, the amount of deposits has grown by 15.3%.
  • As at 30 June 2012, the amount of the bank’s assets equalled LVL 2.04 billion (EUR 2.90 billion); ABLV Bank, AS ranked fourth in terms of the amount of assets among commercial banks operating in Latvia.
  • During half of the year, the bank’s loan portfolio has decreased from LVL 470.6 million (EUR 669.6 million) to LVL 459.3 million (EUR 653.5 million). We hold to very conservative approach in crediting – the loan portfolio constitutes 22.5% of the bank’s total assets.
  • Necessary allowances made under the loan portfolio and other assets amounted to LVL 56.3 million (EUR 80.4 million).
  • The bank’s capital and reserves amounted to LVL 94.0 million (EUR 133.8 million). As at 31 December 2011, the bank’s capital and reserves were equal to LVL 90.1 million (EUR 128.2 million).
  • As at 30 June 2012, the bank’s capital adequacy ratio was 14.2%, whereas liquidity equalled 69.8%.
  • ROE reached 12.05%, and ROA – 0.59%.

"We are very conservative in managing our activities, establishing a sustainable and diversified business model. We have a strong, motivated to succeed managerial team. We learn from any mistake. The fact of assuming risks of our customers in the situation with MF Global UK is another evidence of adhering to our mission, which is to stay at our customers’ side, especially at tough times,” the bank’s Chief Executive Officer Ernests Bernis said.

ABLV Bank is the largest independent private bank in Latvia. The bank’s majority shareholders — Oļegs Fiļs, Ernests Bernis and Nika Berne – directly and indirectly hold 86% of the bank's share capital. ABLV Group includes ABLV Bank, AS; ABLV Capital Markets, IBAS; ABLV Asset Management, IPAS; ABLV Transform Partnership, KS; ABLV Consulting Services, AS; ABLV Corporate Services, SIA; New Hanza City, SIA, and other companies. ABLV Group has representative offices in Moscow, St. Petersburg, Yekaterinburg, Kiev, Odessa, Minsk, Almaty, Dushanbe, Baku, and Tashkent.

Ilmars Jargans
Head of Public Relations Department
+ 371 6777 5296