TALLINN - The Hansabank Group's first quarter results, released last week, turned out to be better than expected in terms of both growth and profitability and were mainly driven by rapid loan growth, the stabilization of interest margins and stronger than usual financial income.
Meanwhile, it was reported on May 10 that Hansapank, the group's Estonian subsidiary, purchased a stake in a small Lithuanian bank.
The group's aggregate revenues increased 14 percent instead of the anticipated 7 percent and totaled 1.5 billion kroons (97.4 million euros). Net interest income grew 8 percent (compared with a forecast of 3 percent) and reached 862 million kroons.
"The result of the Latvian unit rose surprisingly fast," Uhispank analyst Sander Danil said. "The loan portfolio continues growing at a very fast pace – 33 percent year-on-year – while growth in deposits remains at 15 percent."
Whereas loan growth is still largely dominant in Estonia, the increase in deposits is the fastest in Lithuania, the analyst noted.
Hansabank's net profit was significantly boosted by lower risk expenses, Danil pointed out. Net provisions formed only 85 million kroons whereas forecasts put the provisions up to 150 million kroons.
In light of the results, Uhispank said it was considering an upward revision of its 2004 forecasts for the Baltics' biggest financial institution, which may mean that the price target for Hansa stock would rise from the pre-split level of 24 euros.
"We aren't, however, planning any radical changes at the moment. We expected, till now, a correction in the price to at least the level of the target, but in view of the first-quarter results a further weakening is not likely," Danil said.
Uhispank had predicted Hansabank's first-quarter profit at 570 million kroons, 100 million kroons short of the actual result.
Hansapank purchased 3.45 percent of shares in Siauliu Bankas, one of Lithuania's fastest growing banks, for 3.11 million litas (900,000 euros) last week.
Sweden's East Capital Asset Management, one of the most active foreign investment funds investing in the Baltics, sold the shares and thereby reduced its stake to 5 percent.
Hansapank paid East Capital 1.86 litas per share, almost 90 percent above the share's nominal value of 1 lita, Pranas Gedgaudas, head of Siauliu Bankas' financial brokerage unit, explained.
It is believed that East Capital Asset Management also sold shares last week in a number of other Lithuanian enterprises – Nord/LB Lietuva, Mazeikiu Nafta, Vilniaus Vingis, Vilniaus Degtine, Laivite and Klaipedos Transporto Laivynas. The total value of the transactions was believed to be around 15 million litas.