TALLINN - Swedbank Baltic Banking has declared 107 million euros in net profit in the third quarter, a strong result that flies in the face of claims that the bank is flailing under economic pressure.
Despite the figure translating to a 15 percent decrease in net profits compared to the same period last year, Swedbank Baltic's results reveal the bank is weathering the global financial crisis and is producing respectable results in the face of adversity. It will undoubtedly come as a timely display of strength given the prevalent skepticism about the bank's current financial status.
Swedbank Baltic Banking's third-quarter report, released on Oct. 23, additionally outlined a healthy 19.6 percent return on equity and an equally impressive cost-benefit ratio of 37.7 percent; leaving the bank confident about their present situation.
"The results of Swedbank in the Baltic states meet our expectations - we have coped well considering the quickly deteriorating economic situation in the Baltic states and the global financial crisis," said Erkki Raasuke, CEO of Swedbank Baltic Banking.
Raasuke, who has headed Swedbank's Baltic operations since 2005, stressed that the company is focused on maintaining stability and enduring turbulent market conditions.
"We are still earning a profit, and our return on equity and cost-benefit ratio are at the level we want them to be. Our loan losses have remained within the expected limits. Our main focus at the moment is on managing our businesses through the cycle of economic decline and of course also on increasing the efficiency of our activities," he said.
Despite concerns over Swedbank's dabbling in the risky Baltic economies, CEO Jan Liden has stood by the bank's commitment to the region and has downplayed the associated risks on the back of the third-quarter results.
"The global economy and financial system is being affected by unprecedented turbulence. Swedbank is committed to working with and supporting its customers in this extremely testing environment. The bank has solid profitability. Results for the period show stable profits in line with the same period in 2007. The bank's financial risks are limited," Liden said in a press release.
Swedbank's third-quarter report showed Latvia to be the weakest of their Baltic investments; Swedbank Latvia announced a 16 percent drop on last quarter's profits and a 35 percent drop year on year.
Meanwhile Swedbank Lithuania reported a 2 percent increase in net profits over both the previous quarter and the last year, indicating resistance to the economic downturn. Swedbank Estonia, on the other hand, has come away with a 7 percent rise on the second-quarter but a 15 percent fall year on year.
Additionally, Swedbank Estonia's third-quarter results reported the highest return on equity at 32.2 percent and a net loan loss of 0.76 percent 's a figure markedly lower than the other Baltic states. While the loan losses are not ideal, Swedbank Estonia's CEO Priit Perens said the bank was performing well given the circumstances.
"This result completely meets our expectations considering the developments in the economic environment. The quality of our portfolio is good when you consider that the average level on the Estonian market is 1.2 percent," Perens said.