Riho Unt, Chairman of the Management Board of SEB Pank, commented on the result of the entities of SEB in Estonia as follows.
Riho Unt: Year of a mobile tiger leap
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2012 went down in the annals of history as the year of a kind of a ‘tiger leap’ in mobile banking. Both private and business clients discovered a new channel for communicating with the bank – the mobile phone. At the beginning of 2012, the number of clients using the mobile banking service surpassed the number of people going to branches, and by the end of the year the clients of SEB Bank were using the mobile bank three times more than they were using the traditional bank branches. The Internet Bank still remains the most popular banking channel; however, as a result of the triumph of smart phones and tablet computers, it is the mobile bank that may become the most preferred banking channel already in the next few years.
Private clients’ confidence up
2012 saw a significant rally on the private home loan market. Last year, home loan approvals by SEB Pank increased 40 per cent year on year. Improving one’s living conditions has become more topical again, as loan interests are low and family budgets have become more robust through increased savings. Deposits by private individuals have risen to their all time high (since 2008), growing 7.7 per cent last year at SEB alone compared to late 2011.
To support saving, SEB placed several innovations in savings and investment products on the market in 2012. The most popularity was enjoyed by Digital Coin Jar, which allows clients to set aside virtual cents generated by card payments, similarly to a conventional piggy bank. By the end of last year, the new product was being used by almost 15 000 people, who had been able to set aside almost EUR 200 000 in less than two months by saving cents on their everyday purchases.
Business clients cautious yet optimistic
Growth and investment improved for large enterprises, and the same was true of small and medium-sized enterprises as well. There is no county in Estonia that has not gained enterprises, that is, employers, compared to 2007. Over time, our business culture has improved significantly. It is a positive development that small enterprises, too, are capable of exporting their products and services, putting themselves forward as partners on markets abroad, and all this at margins better than those before the crisis.
Compared to their southern neighbours, Estonian enterprises have emerged from the economic crisis sooner, ready to invest more next year. Currently, the loan and leasing projects in the pipeline at SEB total EUR 500 million. Emerging from the cycle ahead of the others provides an advantage but also entails threats. Thus, it pays to make several calculations on the financial impact of any major plans, as any error may put a damper on a company’s development for several years.
In a new important line of business, in 2012 we began to offer financial consultations for our business clients, using a technical application created for that purpose. The novel application enables the bank to present a profound financial analysis of a company in a simple and summarised form. Companies can simulate various scenarios together with their account manager with a view to identifying risks and new business opportunities. In the second half of last year, SEB carried out a consultation project all over Estonia, counselling more than 900 business clients.
We expect slight growth on both the private and business loan markets. Whereas last year a resurgence could be noticed in private home loans and in investments by and operating loans to larger enterprises, our expectations for 2013 include moderate growth materialising also in the investment activities of medium-sized enterprises, in turn translating into increased demand for loans in the relevant segment.
In 2012, the growth of industry in Estonia was hampered by the cooling of the Nordic economies; however, the effects have remained modest, and we expect the situation to improve little by little in 2013. Nonetheless, the risk of setbacks from the external environment has not gone away. With the acuteness of the euro zone crisis easing somewhat in late 2012 and early 2013, an increase may be expected in investors’ interest in higher returns on the cash they park, whether in investments in businesses, real estate or capital markets. We also expect the moderate growth in domestic consumption to continue in 2013.
Evolution of the organisation of SEB
SEB was the first large enterprise in Estonia to start paying an employer’s pension to its employees in 2012. Early last year, the Estonian tax system changed; now, in addition to paying a salary, employers can contribute to the 3rd pillar pension solution of employees without it being considered a fringe benefit. The example of SEB has also inspired other enterprises, and it is my belief that over the next few years it will become standard for an employer to look after not just their employees’ present but also their future.
TNS Emor’s client satisfaction survey regarding the products and services offered by Estonia’s biggest banks revealed that private clients who compared the four largest banks are most satisfied with the banking services offered by SEB. The most valued aspects of SEB were the fact that it is easy to get in touch with the bank, the bank’s employees are friendly, responses are provided within a reasonable length of time, the bank is trustworthy and the bank’s employees have comprehensive knowledge. Business clients also rated SEB highly, highlighting the comprehensive knowledge of and consultations by its employees, which provide suggestions good for business.
SEB received several awards and recognitions in 2012. The global monthly financial publication The Banker selected SEB as the best bank in Estonia. SEB Estonia was the most popular brand in the finance sector according to the TNS Emor brand rankings survey carried out in the beginning of 2012. The international finance magazine Euromoney named SEB Estonia the best private banking provider in Estonia. The financial magazine Global Finance named SEB bank the best trade finance bank in Estonia. The Estonian Banking Association organised a survey in 2011 and SEB’s financial helpers were elected the best banking action of the year.
The entities of SEB Estonia finished 2012 with an operating profit of EUR 73.1 million. SEB finished 2011 with a profit of EUR 94.4 million. The operating profit of SEB amounted to EUR 133.5 million (EUR 134.4 million in 2011) and its operating costs to EUR 62.6 million (EUR 65.3 million in 2011). In 2012, loan loss provisions were reduced by EUR 1.9 million (in 2011, the provisions increased by EUR 24.8 million).”