Attention to efficiency and risk management was the main focus for Swedbank in 2008

2009-02-12 Back

Net consolidated profit generated in Lithuania by the Group of Companies of AB bankas Hansabankas, which is changing its name to Swedbank, amounted to LTL  412, 4 million in 2008. This is by LTL 0,3 million less than LTL 412, 7 million earned in 2007. 

Because of the market situation, the number of special provisions increased 3,5 times and was LTL 109,2 million.  

Cost-income ratio dropped to 42,1 %, compared with 43, 2 % in end-2007.  

“We finished the year profitably because of implementation of responsible lending policy, reduction of costs, and appropriate attention paid to the improvement of our performance efficiency. In 2008 Swedbank invested into operating efficiency programmes which guaranteed adequate management of costs. The growth of operating costs in 2008 was only 9  %, compared with 31 % in 2007“, - Antanas Danys, Board Chairman of AB bankas Hansabankas comments on annual results. According to him, in 2008 Swedbank succeeded in saving also in other areas – instead of further development of branch network, the more attention was paid to the quality of services and self-service channels; seeking to make maximum use of the organisation’s potential. In 2008 bank the number of emploees decreased by 7 % -  this was caused by improved efficiency and use of natural staff turnover.  ROE of Swedbank in 2008 was 21,1 % .  

By end-2008, the capital adequacy ratio of Swedbank, which reflects stability of banks, was over 12 % (Lithuanian bank’s norm is 8 %.) In order to maintain rapid growth and improve reliability, the bank kept strengthening its capital base – it borrowed a subordinated loan of EUR 60 million, and the previously taken subordinated loan of EUR 80 million was converted into share capital in the course of the year. As of end-2008, the bank’s capital amounted to LTL 2,3 billion. The capital base of the bank excludes profit of 2008 (LTL 412,4 million), and this will considerably improve the capital adequacy ratio of this year.  

Long-term financing and stability of Swedbank Group was also guaranteed by borrowing from Swedbank Group in Sweden, the amount of which during 2008 increased by 15% to LTL 10,2 billion. 

Focus on loan quality 

Pursuing sustainable crediting policy and having regard to the macroeconomic situation and related threats, Swedbank limited the growth of its financial portfolio. As of 31 December 2008, its financial portfolio amounted to LTL 19,6 billion, having grown by 6 % during the year (in 2007 the growth of financial portfolio accounted for 46 %).   

The largest share of financial portfolio of Swedbank comprises loans to corporate clients (LTL 7,6 billion) and loans to private companies (LTL 7,5 billion), leasing and factoring (LTL 4,2 billion.) Due to the situation existing in the market banks started paying greater attention to the assessment of their clients’ risk and therefore the amount of provisions against such risk increased. In 2008, the ratio of specific provisions to loan portfolio was 1.04 % (in 2007 – 0,8 %).  

“The tendency of the growth of numbers of defaulting clients of the bank is currently observed in the whole market and the forecast it being even bigger. Nevertheless, we are adequately assessing such situation and always try not only to lend to our clients, but also to advise and consult them how to behave with loans and manage their finances so that a loan is not a burden to them, and we see the fruits of such education”, - comments A.Danys.  

Dynamics of deposits   

Due to responsible crediting policy and maintaining of local borrowing market the ratio of loans-to-deposits of Swedbank was among the lowest in the market and in end-2008 it amounted to 179 % (2008 market average was 223 %).  

Uncertainty in the global markets and worsening macroeconomic indicators of Lithuania forced individuals and companies to change their established saving habits. The tendency of reduction of deposits observed in the whole market also affected deposits held with Swedbank. Nevertheless, Swedbank Group has retained its leading position in the deposit market and its market share at the end of 2008 was 29,2 %, and of current deposits market – even LTL 45,3 %. At the end of the year deposits accounted for LTL 11,2 billion.

The most reliable bank for 41%  

In 2008, clients assessed attempts of the bank to respond to their needs and provide quality service – the survey conducted by RAIT showed that even 41,1 % of respondents identified Swedbank as the most reliable bank in Lithuania.

The focus on clients will be retained in 2009.  In 2009, the bank will continue paying greatest attention to education of clients – during this period it is particularly important to concentrate on management of their personal funds and to control expenses and income. The purpose of Swedbank services (e.g., new version of the internet bank, Personal Financial Plan service) is to encourage clients to pay more attention to their family budgets. We will continue improving youth programme ZOOM, the first and foremost aim of which is to teach people financial literacy from early childhood and adolescence.  

The process of change of our logo launched in 2008 will be further continued in 2009. The new logo enables us, as a member of a large banking group, to offer to our clients a better range of products and services, to accelerate their development and make them cheaper.

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