Andmed seisuga: 08.07.2024 00:14 (GMT+3)
HANSABANK FINANCIAL REPORTS 28.04.2005
Consolidated financial results, Q1 2005
Highlights:
- Loan growth 8% qoq, +38% yoy
- Deposit growth 8% qoq, +25% yoy
- Net interest margin 3.17%, -5bp qoq, -23bp yoy
- Net profit EUR 54.3 million, +11% qoq, +27% yoy
- Return on equity 25.7%
- Revenues EUR 114.5 million, +2% qoq, +19% yoy
- Expenses EUR 51.6 million, -11% qoq, +12% yoy
- Cost-income ratio 44.9%
Q1 2005 was characterised by intense competition and rapid growth in
all important product areas. Hansabank Group managed to successfully
strengthen its market position and maintain the leading position in
the Baltic banking market.
The Group’s net profit totalled EUR 54.3 million in the first quarter,
which exceeds previous year’s first quarter result by 27%. Operating
profit before provisions increased by 25% over the year. Part of the
growth resulted from changes to International Financial Reporting
Standards (IFRS). Starting from 2005, the bank is no longer amortising
goodwill on a monthly basis, but has to perform an annual impairment
test. In 2004 the quarterly goodwill amortisation cost amounted to EUR
2.0 million. Excluding this change, annual growth rates were 22% for
net profit and 21% for operating profit.
The bank also adjusted its provisioning principles according to the
requirements of IAS 39 (revised). As a result, the bank’s recurring
provisioning expense in the income statement will be smaller than
previously. The effect on the business units’ Q1 2005 net profit was
the following: EUR 0.8 million for Estonia, EUR 0.4 million for
Latvia, EUR 0.8 million for Lithuania. The Group also released EUR
25.5 million worth of provisions from the allowance for credit losses
in the balance sheet and EUR 4.6 million of off-balance sheet
provisions. The release was recorded under retained earnings from
previous periods.
All business units showed excellent results in the first quarter of
2005. Russian net profit almost doubled compared to Q1 2004 to EUR 4.3
million, Lithuanian net profit increased by 57% to EUR 10.2 million,
Latvian result improved by 36% to EUR 11.4 million and Estonian net
profit rose by 11% to 29.1 million.
Revenues
Total revenues increased by 2% qoq to EUR 114.5 million in the first
quarter of 2005, annual growth was 19%.
The main growth engine was rapid loan growth which increased both,
interest as well as fee income. Total loans increased by 8.3% or EUR
0.5 billion to EUR 6.4 billion during the first quarter. 40% of the
growth came from the retail segment and 60% from business lending.
During the quarter our clients signed close to 4,500 new mortgage loan
agreements and over 16,000 credit card agreements. Faster lending
growth increased net interest income by 24% yoy and 6% qoq to EUR 68.1
million. For the first time in several quarters the average lending
margin increased, driven by a rise in US dollar interest rates, as
well as faster growth in consumer lending and the Russian credit
portfolio. The average yield of the loan portfolio increased by 3bp
during the quarter to 5.84%. At the same time net interest margin
reduced by 5bp to 3.17%. Net interest margin was negatively influenced
by a slight increase in the cost of funding and a considerable
increase in other assets due to amounts in transit related to the
minority buy-out offer made by Swedbank.
Client deposits increased by 8% EUR or 0.4 billion to EUR 5.4 billion
during the first quarter. 40% of the growth came from the Estonian
business unit, where deposits increased by EUR 158 million during the
quarter. The Lithuanian business unit showed strong deposit growth for
the second consecutive quarter, with client deposits growing by EUR
115 million. A slight increase in the average cost of deposits has
also pushed up the interest expense on deposits – annual increase of
deposits was 25% at the end of first quarter 2005 while the increase
in the cost of deposits was 29%.
Net fee income rose by 27% yoy to EUR 33.7 million in Q1 2005. Usually
the Group experiences a small decrease in net fee income in the first
quarter of the year compared to the fourth quarter of the previous
year due to seasonal factors (customer activity is at its highest in
the fourth quarter of the year). However, thanks to very strong
results in investment services and lending products in the first
quarter of the year, the Group achieved a 3% quarterly increase and
the best annual increase for several years.
The fastest growth, both in the last quarter as well as over the past
year was in fees related to investment services. Custody, equity
trading and investment services fees increased by 74% yoy and by 31%
qoq to EUR 4.7 million. Part of the growth was caused by the buy-out
offer made by Swedbank to Hansabank’s minority shareholders and the
resulting increase in trading activity. The Group is also seeing
stable increase in fees from asset management and pension savings
products. At the end of March 2005 over 0.7 million clients had
selected one of Hansabank’s II pillar pension funds for their
retirement savings. At the end of the period, the Group’s total assets
under management amounted to EUR 0.6 billion, +46% yoy.
Lending fees increased by 44% yoy, but decreased by 1% qoq to EUR 10.5
million. The Group had a very strong first quarter in lending services
in 2005. Quarterly increase of the credit portfolio reached 0.49
billion euros, which is the best result ever and exceeds last year’s
same period result by 91%. Growth was equally strong in all business
units. Estonian portfolio increased by EUR 184 million qoq (+7%),
Latvian portfolio by EUR 141 million (+10%), Lithuanian portfolio by
EUR 118 million (+8%) and Russian portfolio by EUR 61 million (+30%).
Settlement (cash services and transfers) fees decreased by 9% qoq. The
decrease was caused by seasonally higher customer activity in the
fourth quarter of the year. Annual growth of these fee items was 14%.
The same trends influenced also card fees, which reduced by 6% qoq,
but increased by 20% yoy.
Expenses
Operating expenses increased by 12% yoy, but reduced by 11% qoq to EUR
51.6 million in Q1 2005. Most of the growth resulted from an increase
in personnel and administrative expenses. Expense growth was reduced
by the previously mentioned change in accounting policies regarding
goodwill amortisation.
Personnel expenses reached EUR 27.7 million in Q1 2005. Annual
increase of personnel expenses was 23% while quarterly growth rate was
2%. A significant part of the annual growth came from an increase in
the employee performance pay reserve. There has also been a slight
increase in the average salary per employee.
Administrative expenses increased by 11% yoy, but reduced by 14% qoq
to EUR 9.9 million. Fourth quarter 2004 administrative expenses were
higher than usual due to several one-off projects. In the fourth
quarter our Latvian business unit started to move to the new
headquarters, which temporarily increased the cost on supplies and
other office expenditures. In the fourth quarter the Group also paid
EUR 0.9 million to outside consultants for two ongoing strategic
projects. We are enhancing the Group’s management reporting system and
developing a performance and talent management system.
IT expenses (does not include IT related personnel expenses and
depreciation) reduced to EUR 3.9 million in Q1 2005, which is the same
level as in Q3 and Q2 in 2004. This represents an increase of 18% yoy.
Other expenses decreased by 5% yoy and by 44% qoq to EUR 5.9 million.
The biggest change under other expenses is related to goodwill
amortisation which according to IFRS guidelines is no longer performed
on a monthly basis. Instead the Group will have to perform an annual
asset impairment test. Previously goodwill amortisation totalled EUR
2.0 million for the Group. Excluding the effect from goodwill
amortisation, annual increase of other expenses would be 27%. The
strongest impact has come from promotion and marketing activities.
With intensifying competition banks are forced to step up their
marketing activities with more aggressive and frequent advertising
campaigns. As a result, expenses related to promotion and marketing
increased by 43% yoy to EUR 3.0 million in Q1 2005.
At the end of 2004 the Group set a target to reduce its cost-income
ratio below 45%. As a result of strong volume growth and improved
scale, the Group managed to achieve this target in Q1 2005. With
improvements in all business units results, the Group’s cost-income
ratio reduced to 44.9%.
The improved scale and operational efficiency is reflected in the
operating expenses to total assets ratio, which improved from 2.70% in
Q1 2004 to 2.37% in Q1 2005.
Asset quality
Asset quality indicators were stable in the first quarter. Loans
overdue more than 60 days totalled EUR 19.4 million, ie 0.3% of total
loans. The Group’s risk cost was 0.03% in Q1 with write-offs amounting
to EUR 3.5 million and recoveries to EUR 3.0 million.
Based on the changes to international reporting standards (IAS 39,
revised) the Group revised its provisioning principles in the
beginning of 2005. Until the end of 2004 the Group calculated
provisions based on estimated losses. According to the new
requirements, provisions may only be based on loss events. As a result
the Group released EUR 25.5 million of the loan loss allowance
recorded in the balance sheet and EUR 4.6 million of off-balance sheet
provisions in the first quarter of 2005. These provision releases were
booked under shareholders’ equity in retained earnings of previous
periods. As a result, the ratio of loan loss allowance to total loans
decreased from 1.25% at the end of December 2004 to 0.81% at the end
of March 2005.
These changes in accounting principles also have an effect on the
recurring provisioning expense in the income statement. As a result,
losses on loans and guarantees were smaller by approximately EUR 2
million in Q1 2005.
The complete Q1 2005 interim report is available on Hansabank Group’s
internet home page <a href='http://www.hansagroup.com' target='_blank'>http://www.hansagroup.com</a>
1 EUR = 15.6466 EEK
Mart Tõevere
Head of Corporate Communications and IR
Tel. +372 6131 569
CONSOLIDATED BALANCE SHEETS
(in millions of euros, unaudited)
31.03.05 31.12.04 31.03.04
Assets
Cash 145.7 161.8 132.0
Due from Central Bank 633.7 395.6 343.5
Due from other financial 1,109.8 854.0 621.3
institutions
Treasury securities 338.5 379.6 375.4
Trading securities 71.1 62.9 98.3
Investment securities 202.6 187.5 177.7
Loans 6,418.4 5,924.0 4,654.2
- Allowances for credit losses -52.0 -74.1 -65.1
Net loans 6,366.4 5,849.9 4,589.1
Tangible assets 108.0 109.6 118.0
Intangible assets 27.7 23.8 30.0
Prepayments and accrued interest 145.1 124.4 141.4
Other assets 375.9 70.2 76.4
Total assets 9,524.5 8,219.3 6,703.1
Liabilities
Due to Central Bank and government 6.7 7.1 21.4
Due to other financial institutions 671.3 487.9 483.3
Deposits 5,368.5 4,972.0 4,298.7
Demand deposits 3,817.9 3,577.9 3,001.3
Time deposits 1,550.6 1,394.1 1,297.4
Debt securities issued to the 2,027.6 1,527.1 777.1
public
Accrued liabilities 129.0 143.9 106.0
Appropriations 143.8 132.9 100.7
Deferred tax liability 2.1 2.0 1.3
Other liabilities 274.0 122.0 142.6
Total liabilities 8,623.0 7,394.9 5,931.1
Subordinated liabilities - - 44.1
Shareholders' equity
Common stock 202.8 202.8 50.7
Share premium 31.4 30.2 181.1
Treasury stock -2.4 -0.2 -0.3
Reserves 31.3 29.8 29.5
Other restricted equity 6.4 6.4 6.4
Currency translation reserve -13.1 -15.8 -5.9
Retained earnings 644.7 561.8 457.6
Minority ownership 0.4 9.4 8.8
Total shareholders' equity 901.5 824.4 727.9
Total liabilities and shareholders' 9,524.5 8,219.3 6,703.1
equity
CONSOLIDATED INCOME STATEMENTS
(in millions of euros, unaudited)
Q1 2005 2004 Q1 2004
Interest income 104.3 362.7 82.9
Interest expense -36.2 -121.9 -27.8
Interest income, net 68.1 240.8 55.1
Fee and commission income 41.9 155.6 33.7
Fee and commission expense -8.2 -34.8 -7.1
Fees and commissions, net 33.7 120.8 26.6
Net result from financial 10.6 39.3 10.6
operations
Net income from insurance 0.2 5.8 0.9
activities
Other income 1.9 14.1 3.1
Total income 114.5 420.8 96.3
Operating expenses
Personnel expenses 27.7 97.5 22.5
Data network expenses 3.9 16.1 3.3
Administrative expenses 9.9 38.7 8.7
Other expenses 5.9 30.4 6.5
incl. goodwill amortisation - 7.9 2.0
Depreciation 4.2 18.1 5.0
Total operating expenses 51.6 200.8 46.0
Operating profit before provisions 62.9 220.0 50.3
Losses on loans and guarantees -7.5 -34.2 -8.4
Recovered loans 3.0 13.2 3.0
Share of profits from associates - 0.2 -
Profit before income tax 58.4 199.2 44.9
Income tax -4.1 -14.3 -1.5
Profit after income tax 54.3 184.9 43.4
Minority interest - -2.1 -0.6
Net profit 54.3 182.8 42.8
CONSOLIDATED INCOME STATEMENTS - QUARTERLY
(in millions of euros, unaudited)
Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004
Interest income 104.3 98.1 93.4 88.3 82.9
Interest expense -36.2 -33.6 -31.4 -29.1 -27.8
Interest income, net 68.1 64.5 62.0 59.2 55.1
Fee and commission income 41.9 42.8 38.7 40.4 33.7
Fee and commission expense -8.2 -10.0 -8.7 -8.9 -7.2
Fees and commissions, net 33.7 32.8 30.0 31.5 26.5
Net result from financial 10.6 10.6 9.6 8.5 10.6
operations
Net income from insurance 0.2 1.9 1.3 1.7 0.9
activities
Other income 1.9 2.1 5.0 3.9 3.1
Total income 114.5 111.9 107.9 104.8 96.2
Operating expenses
Personnel expenses 27.7 27.1 24.4 23.5 22.5
Data network expenses 3.9 5.0 3.9 3.9 3.3
Administrative expenses 9.9 11.5 9.4 8.9 8.9
Other expenses 5.9 10.6 6.2 7.4 6.2
incl. goodwill amortisation - 1.9 2.0 2.0 2.0
Depreciation 4.2 4.1 4.4 4.6 5.0
Total operating expenses 51.6 58.3 48.3 48.3 45.9
Operating profit before 62.9 53.6 59.6 56.5 50.3
provisions
Losses on loans and guarantees -7.5 -5.6 -10.7 -9.5 -8.4
Recovered loans 3.0 3.9 3.1 3.2 3.0
Profit from associates - - 0.1 0.1 -
Profit before income tax 58.4 51.9 52.1 50.3 44.9
Income tax -4.1 -2.7 -2.9 -7.2 -1.5
Profit after income tax 54.3 49.2 49.2 43.1 43.4
Minority interest - -0.5 -0.5 -0.5 -0.6
Net profit 54.3 48.7 48.7 42.6 42.8
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