EESTI ÜHISPANK

COMMENTARY TO FINANCIAL RESULTS

 

COMMENT ON THE PERFORMANCE OF EESTI ÜHISPANK IN OCTOBER

 

At  the end  of October the total  balance of Eesti Ühispank  amounted

to  EEK 14.3bn  (EEK 14.4bn in September), decreasing by EEK 120m,i.e.

0.8  per  cent during the month.  The profit of the  Bank was EEK 4.4m

in October and EEK 79.5m for the whole reporting period.

 

In  October   the capital adequacy of  Eesti Ühispank did not   change

and is 12.8 per cent.

 

The  decrease in  total balance is due  to the reduction   of  transit

items  on  the   balance sheet by EEK 178m, i.e.  35.8  per  cent.  In

September the amount  of transit items  was higher than  is customary.

Despite  the   considerably fallen interest  rates, term deposits   of

private individuals continued to  grow and went up  by EEK 25m or  2.8

per cent. The  aggregate private deposits  increased by 2  per cent or

EEK 44m. The   central  and local  government deposits  decreased   by

EEK 16m, i.e. 1 per  cent. The deposits of  other legal entities  fell

by EEK 13m or 0.3 per cent.

 

The total amount due to depositors grew by EEK 42m or 0.5 per cent.

 

On  the  asset  side cash went down by EEK 405m  or  17.8  per   cent,

partly  due   to the restructuring of  deposits in other   banks  into

liquid and highly  rated German government  bonds (Bund Schatz).   The

loan  portfolio of  the Bank increased by EEK 137m, i.e. by   1.7  per

cent.  The growth  was boosted by student  loans (which increased   by

EEK 60m),  housing  loans   (which  increased  by EEK 40m),  and   the

transfer of the  loan portfolio from  Eesti Ühispank's subsidiary   LF

Finants (EEK 10m).  At  the end of October the   net  loan   portfolio

amounted to 54.6 per cent of the total assets of the Bank.

 

The Bank had  the following income  structure: interest income  - 60.4

per  cent,   service fees and charges  20.6 per cent, trading   income

13.8 per cent, other income 5.2 per cent.

 

In   October    the  profitability  of   the  Bank  was   considerably

influenced  by   expenses, which were not  directly related  to   this

particular  month.  Extraordinary expenses in  the  income   statement

amounted  to EEK 11m, the bulk of which (EEK 8m) was a loss  sustained

in  a  currency   dispute  with Marita Bank.  Additionally  the   Bank

incurred  one-time  expenses because of  branch closures and  employee

redundancy  compensation   related to the  active  implementation   of

electronic  banking  and the optimization  of branch   network.  These

changes will have  a positive impact  on the future  profitability  of

the Bank.

 

Ülo Suurkask

Vice President

Eesti Ühispank

Telephone: +372 66 57 200

 

 

Urmas Neetar

head of reporting department

+372 66 56 390