SEB makes EUR 41 mln operating profit in Estonia in H1

Photo: Liis Treimann / Postimees

The operating profit of SEB Bank in Estonia in the first six months of this year was 386 million Swedish kronor compared with 353 million kronor in the same period last year; measured in euros operating profit grew 5 percent from to 39 million to 41 million euros.

The units of SEB in Estonia finished the second quarter of 2015 with a profit of 18.9 million euros, compared with a profit of 18.4 million euros earned in the second quarter of 2014. Operating income of SEB in the second quarter amounted to 34.1 million euros compared with 33.6 million euros the year before, while operating expenses were unchanged year over year at 15.1 million euros, the bank said on Tuesday.

The bank increased loan loss provisions by 0.1 million euros in the second quarter, compared with 0.2 million euros added to provisions in the second quarter of 2014.

«The second quarter of the year brought no significant changes for the Estonian economy. Increased domestic consumption, upheld by growing wages and low inflation, remains the main engine of economic growth. Although in the global economy mainly negative news of a possible Greek bankruptcy, slowdown of U.S. economic growth and continuation of the Russia-Ukraine crisis are setting the tone, for employees in Estonia a somewhat better era seems to have arrived,» SEB Pank CEO Riho Unt said.

The growth in real wages that has happened of late enables people to again start improving their living conditions and begin saving to create a financial buffer, Unt said. Under conditions of rather low unemployment workers also can be more confident as regards future in the near term, he added.

Deposits of private customers at SEB grew by 6.2 percent year over year. «Low deposit and loan interest rates are directing families to improving their living conditions, hence the issuance of housing loans at SEB in the second quarter grew by 35 percent compared with the same period a year ago,» Unt said. «The loan portfolio of private individuals grew by 4 percent year over year, which means we have no reason to speak of too fast loan growth yet.»

The profitability of businesses continues to be on a downtrend, which gives the message that wage growth continuing at the present speed without growth in value-added is not sustainable.

«However, wage growth may also have a positive effect in the long term, making entrepreneurs to manage their business more effectively and look for new markets and market niches,» he said.

Unt said it is evident that under conditions of low external demand and uncertain geopolitics entrepreneurs are not willing to make investments to ensure continued revenue growth. Besides it can be felt that geopolitical tensions have reduced the attractiveness of the Baltic economic environment as a destination for investments in the eyes of foreign investors. Few new and long-term investments have been made in the Baltic region lately and most of these have been made by local capital or foreign investors already active here.

«For Estonian businesses negative impacts from the Russia-Ukraine conflict can be seen to be materializing, especially in the sectors of transport, accommodation and agriculture. Since on the basis of current information there is no hope that normal trade relations could be restored in the near future, entrepreneurs are actively looking for clients in other countries or are forced to reorganize their business in certain areas. For many entrepreneurs growth is held back also by the economic crunch in Finland. Despite the complex economic situation, the economic indicators of Estonian businessess remain strong,» Unt added.

The operating income of the SEB operation in Estonia grew from 603 million kronor in the first half of 2014 to 645 kronor this year, it appears from the interim report.

Operating expenses increased from 263 million to 285 million kronor.

The operating income of the SEB group in the six-month period totaled 22.7 billion kronor and operating expenses 11.2 billion kronor, marking increases of respectively 5 percent and 3 percent. The group's operating profit grew 9 percent to 11 billion kronor while net profit was up 6 percent at 8.6 billion kronor.