The overall 1998 results are not cheerful, though, since most Estonian banks finished the year in the red.
The Estonian banking sector's consolidated loss, excluding the results of the closed banks, amounted to 600 million kroons ($14.2 million). The Latvian banking sector's loss may amount to 800 million kroons last year, reports Hansapank.
Hansapank Group ended last year with a loss of 60.5 million kroons which is a disappointing result compared to a net profit of 446.1 million kroons for 1997.
Hansapank CEO Indrek Neivelt, however, said the loss is not considerable compared to the bank's assets and the general situation on the financial markets.
According to the predictions made by Hansa Investments, an investment firm partially owned by Hansapank, the bank may end this year with a 650 million kroon profit.
Hansapank's financial director, Erkki Raasuke, said the predictions of the investment company fell within correct limits, but he did not reveal the bank's predictions.
Hansapank is not making public its forecast and budget for 1999, but using it for internal decisions only, he said.
Last year, the Hansa Capital leasing company was Hansapank's most profitable subsidiary, while Hansabank - Latvija brought the biggest losses.
Hansa Capital earned a 151.3 million kroon profit in 1998. Hansabank-Latvia's loss, which largely arose from the unification and the quality of assets of Hoiupank's Zemes Banka, amounted to 77.5 million kroons.
Hoiupank's former insurance company Eesti Kindlustus, which Hansapank Group had been trying to sell to a Finnish company, was not doing well either.
Two insurance subsidiaries, Hansapank Kindlustus together with Eesti Kindlustus, ended the year with a 51.1 million kroon loss. Together they control about 60 percent of the Estonian insurance market.
Loan and guarantee provisions of 594.3 million kroons, almost nine times higher than in 1997 largely decreased the profits of Estonian banks for 1998.
Substantial provisions made in 1998 went to fix the banking sector's 1997 mistake. When banks were doing well in 1997, they set aside insufficient provisions.
Neivelt said the bank has achieved a very good level of provisioning by today.
Hansapank is also writing off 17.1 million kroons worth of goodwill monthly, which arose from a merger with Hoiupank. The total goodwill amounting to 821 million kroons will be written off in four years.
The consolidated assets of Hansapank Group, the biggest banking group in the Baltics, stood at 27.7 billion kroons at the end of 1998. The assets increased by 13.3 billion kroons during the year, about 9.8 billion kroons of which came from the merger with Hoiupank.
The bank wrote off a total of 252.1 million kroons in bad loans. A year before, the corresponding figure was only 20.2 million and according to Neivelt, the bank is still hoping to recover some of the money written off in 1998.
Hansapank Group's total capital adequacy by the end of 1998 was 18.8 percent. The bank's capital adequacy was 19.1 percent. According to Raasuke, Hansapank has never before been as strong in terms of capital as presently. Last year the bank was almost at the minimum 10 percent level required by the Bank of Estonia.
Hansapank will release a summary of its audited economic results on March 10. Present results can be observed in more detail on the Tallinn Stock Exchange homepage.