ABLV Bank performance in H1 2015

Riga, Latvia, August 25, 2015, 10:58 / Banking

In H1 2015, ABLV Bank, AS gained the profit of EUR 43.5 million. The bank’s other key performance indicators remain high as well, despite complex and strained situation persistent in several target markets, and according to our business model greater attention is paid to risk management. Therefore, we can be confident about achieving the financial and growth targets set for 2015.

Financial indicators of H1 2015

The bank’s major financial indicators in the first half of 2015 evidence stable and consistent growth of the bank. ABLV Bank, AS is the largest bank in Latvia with local capital and is ranked second in terms of the amount of assets.

  • The bank’s profit in H1 2015 amounted to EUR 43.5 million. Whereas in H1 2014 it was equal to EUR 32.9 million.
  • The bank’s operating income before allowances for credit losses totalled EUR 73.0 million. Compared with H1 2014, operating income has increased by 22.6%.
  • The amount of the customers’ deposits equalled EUR 3.65 billion as at the end of the reporting period.
  • The amount of issued debt securities reached EUR 476.0 million.
  • As at 30 June 2015, the amount of the bank’s assets totalled EUR 4.55 billion. Since the beginning of the year, the amount of assets has grown by 9.1%, the total assets increasing by EUR 378.4 million.
  • The bank’s loan portfolio equalled EUR 833.3 million as at the end of June.
  • The bank’s capital and reserves amounted to EUR 249.3 million.
  • As at 30 June 2015, the bank’s capital adequacy ratio was 17.66%, whereas liquidity equalled 76.63%.
  • ROE reached 38.10%, and ROA – 1.91%, as at 30 June 2015.

On 31 March, the ordinary meeting of the bank’s shareholders made the decision to pay EUR 58.4 million out of the profit for 2014 in the form of dividends. The payment per share amounted to EUR 1.79. Payment of the dividends allowed the bank’s shareholders to re-invest the profit derived from dividends in the bank’s further growth by acquiring the bank’s newly issued shares, and therefore the decision on increasing ABLV Bank, AS share capital by issuing 2 385 000 new registered voting shares was made as well. The sale price of one share was EUR 13.85. Following the issue, the bank’s equity has been increased by EUR 33.0 million, thus ensuring the funds required for implementation of the bank’s further development plans.

Continuing the bond issue programme, in this year the bank performed four new issues of coupon bonds: two of them under the Fourth Bond Offer Programme, and the other two – under the Fifth Bond Offer Programme. The total size of the bond issues amounted to USD 150 000 000 and EUR 40 000 000 at face value respectively. Following these bond issues, there are 19 bond issues included in the Nasdaq Riga Baltic list of debt securities. The bank initiated gradual replacement of long-term deposits with bonds at the end of 2011. Including new bonds and those already redeemed, we have performed 29 public bond issues so far.

The bank continued investing in securities. The total amount of the securities portfolio was equal to EUR 2.60 billion, as at 30 June 2015. The bank’s securities portfolio is mostly composed of fixed-income debt securities, and 75.0% of the portfolio is constituted by securities having credit rating AA- and higher. In terms of major countries, the securities are allocated as follows: USA – 30.5%, Germany – 14.5%, Latvia – 9.1%, Canada – 9.1%, Russia – 8.7%, Sweden – 7.4%, Netherlands – 3.2%, and Norway – 1.9%. Whereas 3.9% is constituted by securities issued by international institutions – the European Commission, EBRD, etc. In the reporting period, annual yield of the securities portfolio amounted to 2.4%.

In the reporting period, we have implemented several new products and services for the convenience of our customers. From 1 April 2015, the bank’s customers can make payments in five new currencies: THB (Thai baht), TRY (Turkish lira), HKD (Hong Kong dollar), AMD (Armenian dram), and GEL (Georgian lari).

Expanding the range of our financing services, the bank resumed offering cargo ship financing that meets the market demand. Maximum amount of financing of one ship is EUR 10 million, and the ship’s maximum age – 25 years as at the moment of the loan repayment.

Whereas on 16 June this year ABLV Bank signed an agreement with the development finance institution ALTUM on cooperation within the programme of providing guarantees under housing loans. ABLV Bank is the fifth commercial bank joining the programme implemented by ALTUM. Within the programme, ALTUM provides guarantees under loans for housing acquisition or construction granted by commercial banks to families with children. Although our bank primarily focuses on private banking services, mortgage lending is an important line of business, and we will continue its development by offering new competitive products. Currently, we offer six different mortgage lending programmes.

Under development of remote account management services, we pay great attention to security of using our Internetbank and therefore introduced considerable changes in customer recognition, including two-factor authentication. For the convenience of our customers, in May we began implementation of new code cards – electronic code cards Digipass GO 100, which generate unique codes for authorization of each transaction.

Open-end mutual funds managed by ABLV Asset Management, IPAS, demonstrated good results in the reporting period. As at the end of June this year, their total asset value amounted to EUR 122.5 million. Since the beginning of the year, the total value of funds has increased by 14.9%, i.e., approximately by EUR 15.9 million. The growth of the funds’ value was due to increasing interest in financial markets and customers more and more willing to diversify their investment portfolios by acquiring shares of ABLV funds.

From 17 February this year, we offer an eleventh fund – ABLV Multi-Asset Total Return USD Fund. Taking into account growing demand for our products, we plan to expand the range of offered funds in future by adding at least one new fund each year, so that customers have wider opportunities of investing in financial instruments.

The first half of 2015 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 securities markets. In the first half of the year, profit of ABLV Capital Markets, IBAS, amounted to EUR 3.3 million. As at 30 June 2015, total assets of the company’s customers invested in financial instruments were equal to EUR 1.05 billion.

In the reporting period, issue of AmberStone Group, AS shares arranged by ABLV Bank was completed successfully. The Bank provided support to the issuer – AmberStone Group by arranging subscription to newly issued shares. Following the issue of shares, share capital of AmberStone Group has been increased by EUR 21.0 million, reaching EUR 35.0 million in total. After the issue completion, the number of AmberStone Group shareholders reached 103, and the largest one is ABLV Bank holding 24.64% of the company’s shares. AmberStone Group, AS is a holding company established in 2013 and managing its affiliate companies operating in different sectors. Its major long-term financial objective is to increase the value of the whole holding and to ensure sustainable operations of its affiliate companies. The holding company owns 70% of Vaiņode Agro Holding, SIA, 60% of Orto klīnika, SIA, and 100% of ASG 1, SIA.

In the first half of the year, ABLV Group companies Pillar made transactions on sale of 180 properties, which is twice less than in the respective period last year. At the beginning of the year, wait-and-see mood prevailed in real estate market, which was due to amendments made to the programme of granting residence permits and uncertainty regarding implementation of ‘hand keys back’ principle. However, in the second quarter the situation changed and positive trends returned to the market – the demand for housing was gradually resumed, which was facilitated by attractive property prices, decreasing prices of credit resources, and new mortgage lending programmes. The total amount of transactions over six months of this year reached EUR 7.7 million. It should be mentioned that in the first half of the year Pillar started to make reservations for apartments in the premium-class apartment block Miera Park House, at 57a Miera Street in Riga.

In the reporting period, the bank’s affiliate company ABLV Corporate Services, SIA, improved its range of services by starting to offer accounting services of new quality to the customers. There is a team of professional accountants working in ABLV Corporate Services and having the experience of rendering services to companies in such jurisdictions as Latvia, Cyprus, and Singapore.

To expand into new target regions and to be closer to its customers, in the reporting period ABLV Group company ABLV Consulting Services, AS has opened new representative office – in global financial centre of Hong Kong. The new representative office has obtained the registration certificate and started its operations. Major advantages of Hong Kong are liberal tax system and developed sector of financial services.

Currently, ABLV group has 11 representative offices in 8 countries – Russia, Ukraine, Belarus, Kazakhstan, Azerbaijan, Uzbekistan, Hong Kong, and Cyprus.

In the reporting period, Risk Committee of the international payment system VISA Europe has approved assignment of VISA Associate Membership status to ABLV Bank Luxembourg, S.A. Thus ABLV Bank Luxembourg will be able to offer payment cards to its customers on its own. At the beginning, it is planned to offer Visa Gold and Visa Gold Business payment cards to the customers.

As at 30 June 2015, ABLV Bank Luxembourg assets and assets under management reached EUR 181.5 million. ABLV Bank, AS is the first bank from the Baltic countries to establish subsidiary bank in Luxembourg. The bank started offering its services to broad range of customers in September 2013.

In 2015, we plan to retain net fee income and profit of ABLV Bank at the level of the previous year. Average increase of deposits is planned to amount to 10%, and thus the total amount of deposits might exceed EUR 4 billion by the end of 2015. We plan granting new commercial loans for financing large business projects, and their total amount will be about EUR 130 million. Net profit in 2015 is planned to be approximately the same as that in 2014.

Complete report for H1 2015, quarter reports, and reports of the Council and the Board are available at the bank’s home page www.ablv.com.

ABLV Bank, AS, is the largest independent private bank in Latvia. The bank’s major shareholders — Oļegs Fiļs, Ernests Bernis and Nika Berne – directly and indirectly hold 86.25% of the bank's voting 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, Vladivostok, Kiev, Odessa, Minsk, Almaty, Baku, Tashkent, Hong Kong, and Limassol.

Ilmārs Jargans
Head of Public Relations Department
+371 6777 5296