ABLV Bank, AS audited profit in H1 2013 – LVL 15.2 million

Riga, Latvia, August 29, 2013, 13:35 / Banking

In H1 2013 increased customer activity was observed, and therefore, compared to H1 2012, operating income has increased by 24.4%. The number of active corporate and private banking customers has grown as well – by 9.9%, compared to the beginning of the period. Whereas allowances for credit losses were the lowest during the last 5 years. Therefore we managed to increase efficiency and actively make investments in future development.

One of the most significant events during the reporting period was another issue of ABLV Bank, AS, shares performed, and the bank's equity was increased by LVL 11.5 million (EUR 16.4 million) consequently. The sale price of one newly issued share equalled LVL 1 755 (EUR 2 499), and 38 current shareholders of the bank participated in the issue. Compared to the share issue performed in 2010, the price of one share of the bank increased 2.7 times. This clearly evidences financial return ensured by the shareholders’ contribution. The funds obtained as a result of the share issue will be invested in the bank’s further development.

Continuing gradual replacement of long-term deposits with bonds, there were several new bond issues performed during the reporting period. In total, this year we have already performed three issues of subordinated 10-year bonds for the sake of raising the capital, their amount being USD 40 million and EUR 20 million, as well as four issues of straight 2-year bonds, amounting to USD 100 million and EUR 40 million. These bonds have been also included in the NASDAQ OMX Riga stock exchange list of debt securities. After the issues, the investors own ABLV Bank, AS, bonds worth LVL 217.5 million (EUR 309.5 million). Since the end of 2011, we have already performed 16 public bond issues in total.

We planned to create the total of 90 new jobs this year. In H1 2013 the ABLV Group staff was increased by 56 officers, and 43 of those started their work at the bank’s units. As at 30 June 2013, there were 664 officers working in ABLV Group, and 556 of those – in the bank. The office building that the bank rented before – at 4a Mednieku Street – became insufficient. Therefore, a decision on moving part of the bank’s structural units to new business centre Jupiter Centre, at 7 Skanstes Street, was taken. Now moving is completed, the bank has two administrative buildings in Riga – at 23 Elizabetes Street and 7 Skanstes Street, and the room for development in the following years is completely ensured.

Intensive preparation takes place to ensure that ABLV Bank, AS, subsidiary bank in Luxembourg begins active offering of its services. ABLV Luxembourg, S.A. has already obtained banking licence, equipped office premises and employed key specialists.

"First half of the year was very successful for us in all major lines of ABLV Group business. The growth was considerably furthered by historical decision on Latvia’s accession to the eurozone, substantially increasing competitiveness of Latvian financial sector, especially given the lack of stability in many other European countries. We managed to even more strengthen our already very good key financial performance indicators. Therefore, we look to the future with confidence and increase investments in development of the bank and the whole ABLV Group,” said ABLV Bank Chief Executive Officer (CEO) Ernests Bernis.

Financial results

The bank’s major financial indicators for the first half of 2013 reached historic maximum, and those evidence stable growth. ABLV Bank, AS, is the largest bank in Latvia with local capital and is ranked third in terms of the amount of assets.

  • The bank’s profit in H1 2013 amounted to LVL 15.2 million (EUR 21.6 million). Whereas in H1 2012 it was equal to LVL 5.7 million (EUR 8.1 million).
  • The bank’s operating income before allowances for credit losses totalled LVL 39.5 million (EUR 56.2 million). Compared to H1 2012, operating income has increased by 24.4%.
  • The amount of the customers’ deposits equalled LVL 1.86 billion (EUR 2.65 billion) as at the end of the reporting period.
  • The amount of issued debt securities equalled LVL 217.5 million (EUR 309.5 million).
  • As at 30 June 2013, the amount of the bank’s assets was LVL 2.23 billion (EUR 3.18 billion). Since the beginning of the year, the amount of assets has grown by 4.4%, the total assets increasing by LVL 93.8 million (EUR 133.5 million).
  • The bank’s loan portfolio equalled LVL 503.9 million (EUR 716.9 million), as at the end of June.
  • The bank’s capital and reserves amounted to LVL 115.3 million (EUR 164.0 million).
  • As at 30 June 2013, the bank’s capital adequacy ratio was 13.91%, whereas liquidity equalled 79.69%.
  • ROE reached 27.32%, and ROA – 1.35%, as at 30 June 2013.

The bank continued investing in securities. The total amount of the securities portfolio was equal to LVL 914.7 million (EUR 1.30 billion), as at 30 June 2013. The bank’s securities portfolio is mostly composed of fixed-income debt securities, and 68.3% of the portfolio is constituted by securities having credit rating AA- and higher. In terms of the major countries, securities are allocated as follows: USA – 20.5%, Russia – 16.2%, Canada – 14.8%, Germany – 12.0%, Sweden – 7.3%, Latvia – 6.8%, Netherlands – 4.2%, Norway – 2.2%, Great Britain – 1.6%, and Kazakhstan – 1.2%. Whereas 7.1% is constituted by securities issued by international institutions – the European Commission, ERAB, etc. In the reporting period, annual yield of the securities portfolio amounted to 1.5%.

The first half of 2013 was especially successful for ABLV Asset Management, IPAS – as of 30 June the total assets under management amounted to LVL 62.8 million (EUR 89.3 million).The assets of open-end mutual funds under ABLV management in the first half of the year grew by EUR 32.9 million or by 64%, whilst the total value of the assets reached EUR 84.0 million. The net amount of the customers’ investments in funds continues to grow steadily during the fourth quarter in a row. Starting from June 2013, the range of open-end mutual funds was expanded by adding two new corporate bond funds: ABLV European Corporate EUR Bond Fund and ABLV Global Corporate USD Bond Fund.

Beginning of 2013 was also successful for ABLV Capital Markets, IBAS, which executes customers’ instructions for purchasing and selling all types of financial instruments in the world’s major stock markets. In the first half of the year, profit of ABLV Capital Markets, IBAS amounted to LVL 1.4 million (EUR 2.0 million). As at 30 June 2013, total assets of the company’s customers invested in financial instruments were equal to LVL 526.6 million (EUR 749.3 million).

Another affiliate company of the bank – real estate development and trade group Pillar – also continued successful development. The sales amounted to EUR 19.3 million. Whereas during the whole 2012, Pillar sold properties for EUR 15.7 million. In total, there were 237 property sale transactions made during the first six months.

ABLV Bank, AS condensed consolidated report for H1 2013, public quarterly report, management report, and report of independent auditor Ernst & Young Baltic, SIA are available at home page www.ablv.com.

ABLV Bank, AS 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 Bank Luxembourg, S.A.; ABLV Capital Markets, IBAS; ABLV Asset Management, IPAS; Pillar Holding Company, 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, Vladivostok, Kiev, Odessa, Minsk, Almaty, Dushanbe, Baku, and Tashkent.

Ilmārs Jargans
Head of Public Relations Department
+371 6777 5296