ABLV Bank profit in H1 2017 – EUR 26.3 million

Riga, Latvia, August 29, 2017, 13:45 / Banking

ABLV Bank results in H1 2017 allow expecting achievement of the objectives set for this year. All the bank’s major performance indicators remain high, including capital adequacy and liquidity ratios.

To ensure further stable development, we focus even more on high-quality wealth management with high added value – the services like arrangement of securities issues, lending to businesses, support under complex trade transactions, and investment services. Our employees possess necessary expert qualification and considerable experience, and this is a substantial advantage under rendering those services.

During the last year and a half, we have considerably reduced the AML and reputational risks associated with the clients’ transactions. Consistent review of the client base is performed, and as at 30 June 2017 the client base has been decreased by almost 20%, compared with the end of 2015. We have refrained from cooperation with the clients whose activities might cause unacceptably high risk or the clients unwilling to cooperate in terms of supplying sufficient amount of information on their transactions.

To fulfil the commitments under the administrative agreement made with the Financial and Capital Market Commission (FCMC) on 26 May 2016, investments of EUR 6.6 million have been made in improvement of the IT systems and business processes concerning the client and transaction control since then. Now the resources spent on compliance verification per transaction are on average at least one third higher than in last year. The overall capacity of structural units engaged in risk management and financial crime prevention has been increased considerably: now job duties of one in six employees of the bank, i.e., about 16%, are related to compliance. Special AML training was also held for employees whose everyday work does not involve client servicing and transaction processing directly.

In the reporting period, the bank made the agreement with the US company Financial Integrity Network (FIN), engaging it to be a major strategic advisor on compliance matters in the field of anti-money laundering. Financial Integrity Network provides advice on strengthening the risk management and financial crime prevention systems, based on the independent risk assessment.

On 21 April this year, ordinary meeting of shareholders made the decision on paying the profit for 2016 in the form of dividends. The payments per share amounted to EUR 1.91, and their total amount equalled EUR 73.2 million. At the same time, another issue of ABLV Bank shares was performed, so that the bank’s shareholders were provided the opportunity to re-invest the profit derived from dividends in the bank’s further growth. There were 3 780 000 registered shares issued to the total amount of EUR 50.7 million. Following the issue, the bank’s share capital is comprised of 38 250 000 ordinary voting shares and 3 830 000 employee shares without voting rights attached.

On 15 June 2017, the meeting of ABLV Bank shareholders approved new Council of the bank. During the following 5 years, Oļegs Fiļs, Jānis Krīgers, Jānis Butkevičs, and Aivis Ronis will hold the positions of the Members of the Council. Oļegs Fiļs and Jānis Krīgers were the members of the bank's Council previously, and now Oļegs Fiļs will be the Chairman of the Council and Jānis Krīgers will be the Deputy Chairman of the Council again.

Having received the approval from the European Central Bank, ABLV Bank Council re-elected current members of the bank's Board for the following 5-year term of office. The following persons were re-elected to the bank’s Board: Chairman of the Board, Chief Executive Officer (CEO) Ernests Bernis, Deputy Chairman of the Board, Deputy Chief Executive Officer (dCEO) Vadims Reinfelds, Member of the Board, Chief Compliance Officer (CCO) Aleksandrs Pāže, Member of the Board, Chief Information Officer (CIO) Rolands Citajevs, Member of the Board, Chief Risk Officer (CRO) Edgars Pavlovičs, Member of the Board, Chief Financial Officer (CFO) Māris Kannenieks, and Member of the Board, Chief Operating Officer (COO) Romans Surnačovs.

Unaudited financial results

ABLV bank’s major financial indicators of H1 2017 evidence stable operations in accordance with the previously adopted plan. 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 2017 amounted to EUR 26.3 million.
  • The bank’s operating income totalled EUR 55.3 million.
  • The amount of the clients’ deposits equalled EUR 2.81 billion as at the end of the reporting period.
  • The amount of issued debt securities reached EUR 459.3 million.
  • As at 30 June 2017, the amount of the bank’s assets totalled EUR 3.72 billion.
  • The bank’s loan portfolio equalled EUR 1.00 billion as at the end of June.
  • The bank’s capital and reserves amounted to EUR 326.9 million.
  • As at 30 June 2017, the bank’s total capital ratio was 21.96%, whereas liquidity ratio equalled 76.78%.
  • ROE reached 16.46%, and ROA – 1.38%, as at 30 June 2017.

Continuing the bond issue programme, this year the bank performed four new issues of coupon bonds: two of them under the Sixth Bond Offer Programme, and two other – under the Seventh Bond Offer Programme. The total size of the bond issues amounted to USD 150.0 million and EUR 40.0 million at face value respectively. Including new bonds and those already redeemed, we have performed 43 public bond issues so far.

We continue granting the commercial loans. In H1, new loan agreements to the total amount of EUR 62.1 million were made, mostly on lending to the companies in Latvia. As at 30 June 2017, the commercial loan portfolio amounted to EUR 639.9 million.

The total amount of the bank’s securities portfolio was equal to EUR 1.59 billion, as at 30 June 2017. The bank’s securities portfolio is mostly composed of fixed-income debt securities, and 88.5% 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 – 21.5%, Germany – 17.7%, Latvia – 14.0%, Russia – 11.0%, Canada – 7.4%, Sweden – 5.7%, Netherlands – 3.7%, Austria – 2.4%, and Finland – 2.2%. Whereas 4.4% is constituted by securities issued by international institutions. In the reporting period, annual yield of the securities portfolio amounted to 2.5%.

As at the end of June 2017, total assets under ABLV Asset Management, IPAS management amounted to EUR 123.5 million, of which EUR 122.9 million were the clients’ investments in mutual funds managed by the company, and EUR 0.6 million were the clients’ funds invested in individual investment programmes.

The first half of 2017 was also successful for ABLV Capital Markets, IBAS, which executes clients’ instructions for purchasing and selling all types of financial instruments. In the first half of the year, profit of ABLV Capital Markets, IBAS amounted to EUR 1.4 million. As at 30 June 2017, total assets of the company’s clients invested in financial instruments were equal to EUR 1.40 billion.

In the reporting period, ABLV group company operating in the field of investments in commercial properties acquired new name – New Hanza Capital, AS – and began working on achievement of new business goals. In 2015, new goals were set: to invest own funds and funds of third parties in commercial properties, ensuring long-term capital growth, to achieve sustainable increase in income from renting the premises, and to enlarge the value of properties in the long term, engaging a team of professionals for managing the properties.

ABLV group companies that operate in the field of real estate trade, management, and development and form the Pillar group demonstrated rapid development as well. Implementation of large-scale project – development of modern New Hanza area in Riga – is continued, and new administrative building of ABLV will be located there. Investments in New Hanza development made by Pillar so far exceed EUR 21 million, and those were allocated to placemaking, development of building designs, renovation of existing buildings, construction of Pillar administrative building, infrastructure equipment, construction of roads, as well as other projects under territory development.

We express our gratitude to our clients for their loyalty and to the employees for their contribution to the bank’s and the group’s growth!

The bank's public quarterly report as at 30 June 2017 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 87.03% 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; Pillar Development, SIA, and other companies. ABLV Consulting Services has representative offices in Moscow, St. Petersburg, Vladivostok, Kiev, Odessa, Minsk, Almaty, Baku, Tashkent, Hong Kong, and Limassol.