Unaudited profit of ABLV Bank for 2016 – EUR 79.3 million

Riga, Latvia, February 27, 2017, 09:29 / Banking

Although last financial year can be said to be full of surprises, price fluctuations that were hard to explain, and historic turns, as well as the overall economic growth slowed down, ABLV Bank managed to achieve and surpass the planned results, gaining the historically highest profit so far.

In the reporting period, regulatory requirements in the banking sector became even more stringent. Their implementation required a lot of time and resources, and therefore business development was hindered. Since the position regarding acceptable risk level has changed, the bank refused cooperation with some clients and continues thorough assessment of its client base. Therefore, the amount of deposits decreased by 23.5% over the year, which conforms to the planned values. The importance of settlement business is gradually declining, and even higher value is placed on business project financing, including structured financing involving raising of risk capital, operating capital and trade financing, as well as arrangement of securities issues. The bank possesses high competence in this area, has the necessary expert resources, cooperation partner network, and accumulated significant experience. In the field of lending to business in Latvia, ABLV Bank currently is one of the most important banks.

To improve the capital adequacy and ensure funds required for development, another issue of ABLV Bank shares was performed at the beginning of 2016 for the sake of share capital increase. Under the issue, there were 2 700 000 registered shares issued to the amount of EUR 38.2 million. Following the increase, the ABLV Bank, AS share capital amounts to EUR 38.3 million and consists of 34 470 000 registered voting shares and 3 830 000 employee shares. Continuing the bond issue programme, we performed 7 bond issues in 2016: six issues of straight bonds and one issue of subordinated bonds. The total amount of issues performed last year constituted USD 225 million and EUR 80 million. As at the end of 2016, there were 21 bond issues included in the Nasdaq Riga Baltic Bond List.

In 2016, the number of vacancies grew in both the bank and the group: by 11 in the bank and by 30 – in the group in total. As at the end of the year, the number of the bank’s employees reached 665, and the total number of employees of ABLV Group companies – 827.

Given the bank’s long-term experience and knowledge of debt securities issuing, in the reporting period we launched a new service – arrangement of bond issues for the clients. Bond issues enable companies to raise additional financing both with and without collateral, as well as for a longer term than it is usually possible in the case of loans. The costs of such raising of resources are relatively lower, and diversification of investor base is possible as well. For example, using the new service, our client – real estate holding company Baltic RE Group – performed the issue of straight bonds amounting to EUR 4 million. ABLV Bank arranged the issue and ensured complete underwriting.

In Q2 2016, the VISA Europe Ltd. share buyback transaction was completed, under which the shares owned by the bank were sold to VISA Inc. Following the performed transaction, the income gained by ABLV Bank from selling the said shares amounted to approximately EUR 16.4 million.

Financial results

ABLV Bank, AS remains the largest bank in Latvia with local capital and is ranked second in terms of the amount of assets:

  • The bank’s profit for 2016 amounted to EUR 79.3 million, which is historically the highest one so far and exceeds the profit for 2015 by EUR 10.3 million.
  • The bank’s operating income totalled EUR 141.9 million. Compared with 2015, operating income has increased by 12.3%.
  • The amount of the clients’ deposits equalled EUR 2.90 billion as at the end of the reporting period.
  • The amount of issued debt securities reached EUR 528.3 million.
  • As at 31 December 2016, the amount of the bank’s assets was EUR 3.85 billion.
  • The bank’s loan portfolio equalled EUR 1.00 billion, as at the end of December.
  • The bank’s capital and reserves amounted to EUR 321.8 million.
  • As at 31 December 2016, common equity Tier 1 capital adequacy ratio was equal to 12.84%, the bank’s capital adequacy ratio was 19.49%, and liquidity – 78.40%.
  • ROE reached 27.26%, and ROA – 1.85%, as at 31 December 2016.
  • Taxes paid by the group to the state budget amounted to EUR 22.0 million.

The total amount of the bank’s securities portfolio was equal to EUR 1.98 billion, as at 31 December 2016, and average annual yield of the portfolio amounted to 2.68%.

Total asset value of the open-end mutual funds managed by the bank’s affiliate company ABLV Asset Management, IPAS amounted to EUR 125.6 million, as at the end of 2016. Whereas ABLV Capital Markets, IBAS, which executes clients’ instructions for purchasing and selling all types of financial instruments, gained profit of EUR 3.1 million in 2016. As at 31 December 2016, total assets of the company’s clients invested in financial instruments were equal to EUR 1.3 billion.

The assets of our subsidiary bank in Luxembourg ABLV Bank Luxembourg, S.A. and assets under its management reached EUR 310.2 million, as at 31 December 2016.

In 2016, the real estate group Pillar continued selling its property portfolio and made more than 200 sale transactions in total, their amount being EUR 12.9 million. Due to decreasing the property portfolio, resources become available, and Pillar is able to allocate those to the large-scale future project – construction of New Hanza area. On 4 July 2016, construction of the first stage of New Hanza infrastructure was started. On 9 December 2016, ABLV Bank established a new company – ABLV Building Complex, SIA. The new company will be the customer of the construction of the group of buildings for ABLV Bank headquarters.

The bank's public quarterly reports as at 31 December 2016 and reports of the Council and the Board are available at the bank’s website www.ablv.com.

This announcement contains inside information.

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 86.55 % 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, Limassol, and New York.