The Hansabank Group, the largest financial group and by far the largest company in terms of market capitalization in the Baltics, announced Feb. 14 a 2002 net profit of 119.8 million euros, an 11 percent increase year on year and an all-time record.
Earnings growth was largely driven by fourth-quarter profits, which at 31.5 million euros were 40 percent higher than during the same period in 2001.
Mortgage loans and loans to small companies remained the main driving force for that performance, and the Hansabank Group's loan portfolio hit 3.3 billion euros, a 29 percent increase year-on-year.
The Estonian segment of the group's working area was responsible for 75 percent of the total profit.
Kristina Siimar, CFO of Hansabank said in an online press conference that 2002 results were in accordance with previous estimations.
"Considering the overall economic slowdown, the result was very good. We expect similar developments in 2003, and Latvia's and Lithuania's contribution will increase," she said.
To balance its portfolio and countermeasure the continuing fall in interest rates Hansabank intends to bolster lending in Latvia and Lithuania, said company officials.
The main driving force for Hansabank's 2002 cash flow was private individuals looking for affordable mortgage loans. Almost half of the loan portfolio growth came from Estonia (336 million euros), with Lithuania contributing 221 million euros and Latvia 154 million euros.
The Bank of Estonia marked this troubling trend in the second half of 2002, saying an increase of self-financing up to 30 percent would make the situation more stable.
Indrek Neivelt, Hansabank CEO, appeared to agree with central bankers.
"We think the growth of the loan market in Estonia was too fast last year. If the local banks would carry on lending at that pace it would be harmful to the economy," said Neivelt.
For this reason the bank has already cut back on financing real estate development, though such restrictions will reportedly not affect mortgage loans.
According to the bank's charter, Hansabank can pay dividends of up to 30 percent of the total profit, which would mean 7.1 kroons (0.45 euros) per share. The bank will announce the 2002 dividend rate in several weeks.
Sander Danil, an analyst at Uhispank, told the Baltic News Service that "even though non-interest expenses were a bit higher than expected, so were operating expenses, which left the outcome neutral."
"In the long term we are positive-minded about the stock. In the short term, as with other stocks, the question will be about general pessimism surrounding the war, which may offer purchase points significantly lower than the present market price," said Danil.