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The Hansapank Group earned a profit of 818.1 million kroons (USD 51.58 mln) in 1999, the bank announced on Friday. The results of the principal business lines are as follows: 552.0 million kroons from banking in Estonia, 29.8 million kroons from banking in Latvia, 217.6 million kroons from leasing and factoring, 14.8 million kroons from banking in Lithuania and 1.9 million kroons from life and non-life insurance.
In addition to the above business lines, the consolidated results also include the results of other support functions and eliminations. Interest income in 1999 amounted to 2.45 billion kroons, an increase of 37.0 percent over the year before. Interest costs during the same period rose 19.7percent to 922.7 million kroons. Net interest income was up 50.1 percent to1.53 billion kroons.
Compared to 1998, the average yield of interest earning assets decreased by 1.36 percentage points, to 9.78 percent, in 1999. At the same time the cost of interest bearing liabilities decreased by 0.66 points to 3.89 percent, whereby the spread narrowed by 0.70 points, to 5.89 percent.
Hansapank Group's net interest margin was up 0.15 percentage points, to 5.09 percent. Financial income last year totaled 491.8 million kroons. Fees and commissions received during 1999 totaled 777.8 million kroons, a rise of 52.1 percent over 1998. At the same time fees and commissions paid increased by 41.6 percent to 222.2 million kroons, falling short of the growth rate of fee income.
The Group's total revenues in 1999 amounted to 2.75 billion kroons, exceeding last year's result by 68.1 percent. The revenue distribution for 1999 is as follows: net interest income 55.7 percent, net fee income 20.1percent, trading income 17.8 percent, income from insurance 2.1 percent, dividends and other income 4.3 percent.
Operating expenses totaled 1.62 billion kroons in 1999, up 42.2 from the previous year. Growth was fastest in IT expens es, which increased by 159.8 percent to 109.1 million kroons, in 1999. The average number of employees during the year was 3,252. The group's average personnel cost per employee was 14,784 kroons per month in 1999.
Loan and guarantee provisions decreased by 18.8 percent from 1998, amounting to 482.5 million kroons last year. Actual loan losses amounted to 562.0 million kroons and actual recoveries were 86.5 million kroons. Total assets of the Hansapank Group stood at 34.26 billion kroons (USD 2.16 bln) at the end of 1999, up 23.7 percent from the same time a year ago.
During the first half of the year asset growth amounted to 3.2 million kroons, while in the second half it was 3.4 million kroons. The growth originated from two main sources: clients' deposits and funds from other financial institutions, the bank said on Friday.
Clients' deposits increased by 34.2 percent in 1999, amounting to 19.78 billion kroons at the end of December. The growth rate of deposits was bigger than the growth rate of either loans or assets. Compared to a flat loan portfolio, deposits grew by 2.16 billion kroons in the first half of the year. In the second half, supported by resumed growth in lending, deposits increased by a further 2.88 billion kroons.
As of December 31, Hansapank's market share by total deposits was 58.3 percent in Estonia (70.3 by retail deposits), and 13.0 percent in Latvia. Hansapank's market share in Estonia and Latvia increased by 0.6 percent and three percent, respectively, during 1999. Total liabilities increased by 25.2 percent during the year to 28.84 billion kroons at the end of December.
Total shareholders' equity, boosted mostly by net profit, amounted to 4.95 billion kroons as of December 31. The group's total capital adequacy was 20.70 percent (Tier I 18.80 percent),while for the bank it stood at 20.47 percent (Tier I 18.48 percent) at the end of December.
The loan portfolio increased by 15.9 percent to 19.46 billion kroons during 1999. As of Dec. 31, Hansabank's market share by total loans was 52.8 percent in Estonia and 10.4 percent in Latvia. The market share had increased by 1.8 percent in Estonia and by 1.9 percent in Latvia. The loan loss reserve improved, at 3.30 percent of the total loan portfolio, down from 4.41 percent at the beginning of the year.
Goodwill created through the merger with Hoiupank amounted to 522.8 million kroons at the end of December. Hansapank has set itself the goal to achieve a return on equity (ROE) ratio of 25 percent with 15 percent capital adequacy, Finance Director Erkki Raasuke said at a news conference Friday. He said increasing the return on equity was a very important task since the bank clearly suffered from overcapitalization.
According to Hansapank's consolidated results released on Friday, ROE last year was 17.9 percent. The cost-income ratio was 51.6 percent, compared to 63.5 percent in 1998.
The target for the cost-income ratio stands at 50 percent, with a positive interest margin and a twofold increase in profit every four years as additional goals. Hansapank is not going to release its profit estimate for the current year, but would do so if the estimates of leading analysts should begin to deviate substantially from the bank's own vision, Raasuke said.
Estonian analysts believe the 1999 consolidated result of Uhispank Group, the second largest banking group after Hansa, was likely to differ less from the bank's own result and would remain somewhere around 100 million kroons(USD 6.3 million)
The Balta insurance group holds 25 percent of the non-life insurance, and 15 percent of the life insurance market in Latvia, the company's representatives told reporters Tuesday. According to provisional figures, last year Balta subscribed 20.2 million lats (USD 34.82 mln) in premiums and paid 8.5 million lats in claims for non-life insurance.
As regards life insurance, 1.8 million lats were received in premiums and 685,700 lats paid in claims. Balta said that the group's consolidated own capital exceeded that of other insurers by several times, and is planned to reach 8.5 million lats before profit distribution. The insurance group expects to receive some 25 million lats (USD 43.10 mln) in premiums this year, Balta insurance company's president Andris Laizans told reporters Tuesday.
Balta insurance group includes Balta, Rigas Apdrosinasanas Sabiedriba (RAS) and Saules Laiks non-life insurers and Latva life insurance company.
RAS is expected to take over Saules Laiks soon. Shareholders of both insurance companies have already approved the deal, and the Insurance Supervision Inspectorate (ISI) has suspended all licenses granted to Saules Laiks. Only permission by ISI is still required to complete the transaction.
Hansabankas, a subsidiary of Estonia's Hansabank, reported a loss of 3.9 million litas (USD 0.98 mln) for six months of operation in 1999. The loss figure is lower than forecasted (4.2 million litas). Hansabankas, which launched its operations in Lithuania in early July 1999, plans to trim losses to 3.2 million litas this year, with a profit expected in the last two months of 2000.
Hansabankas' chief financial officer, Antanas Poska, has claimed to BNS that it is normal for a new bank to have losses in the first three years of operation. As of late December, the banks' assets were valued at 84.9 million litas, its loan portfolio amounted to 35.4 million litas and specific provisions came to 0.6 million litas.
The total volume of deposits stood at 42.3 million litas at the end of the year, including 15.6 million litas deposited by private individuals.