EESTI ÜHISPANK

ANNOUNCEMENT

15.02.99

 

 

COMMENTS ON EESTI ÜHISPANK FINANCIAL RESULTS IN JANUARY, 1999

 

The balance sheet  of Eesti Ühispank  as at the  end of January,  1999

amounted to EEK 13.7  Billion as the result  of 0.9 per cent  (EEK 118

Million)  growth  during  the  month.   During January, Eesti Ühispank

earned a  net profit  of EEK  1.8 thousand.  In the  structure of  the

income earned, the net interest income accounted for 79 per cent,  the

net income from commissions and fees for 13 per cent and other  income

for 8 per cent of the income.

 

Compared  to  the  figures  as  at  the  end  of 1998, customers' term

deposits decreased mainly due  to the decrease of  corporate deposits.

At the same time,  private individuals' and corporate  demand deposits

grew  and  the  amount  of  state  funds  on  state  demand   accounts

decreased.  Private  individuals'  deposits  grew  by EEK 33.3 Million

(1.8 per cent).

 

On  the  assets  side,  liquid  assets  grew  by  2.2 per cent (EEK 49

Million) during the month. The amount of the loan portfolio  decreased

by 1 per cent (EEK 76 Million).   As the amount of provisions did  not

change during  the month,  the provisioning  level as  a percentage of

loan portfolio increased. The net loan portfolio constituted 54.6  per

cent of total  assets by the  end of the  month. The weighted  average

interest rate of the gross loan portfolio was 12 per cent.

 

The financial results of January have been presented in comparison  to

the  issued  preliminary  un-audited  balance  sheet  for the year-end

1998.  By  the  present  day,  the  external auditors of the bank have

issued the first  preliminary opinions on  the audit carried  out. The

statement has  been made  in relation  to the  up-coming bond issue of

Eesti  Ühispank.  The  preliminary  results  of  the audit confirm the

auditing of the  material aspects of  the bank's results  and of their

accordance with  actual condition  of the  bank. The  further possible

corrections will not have material effect.

 

Derived  from  the  auditors'  recommendations  and  in order to avoid

rolling the  possible losses  of 1998  over to  the next  periods, the

following major changes will be made to the balance sheet as  compared

to the issued preliminary balance sheet:  overdue loans in the  amount

of EEK 44 Million will be  written off and the loan provisioning  will

be increased by  EEK 60 Million.  Provisions in the  amount of EEK  70

Million will be made to cover  the unsecured part of the fixed  income

securities.  In  the  balance  sheet  of  Eesti  Ühispank's subsidiary

Saules Banka, investments  into bonds (GKO's)  were down-valued to  10

per cent of their nominal  value which generated additional losses  in

the  amount  of  EEK  10  Million  according  to  the  equity  method.

Additional general  provisions in  the amount  of EEK  20 Million were

generated on the leasing portfolios of the Group's subsidiaries. As  a

result, the  present consolidated  provisioning level  amounts to  4.5

per cent.

 

In accordance to the  above-mentioned transactions, the volume  of the

balance sheet of the bank will decrease and the operating loss of  the

group  will  increase  by  approximately  EEK  90  Million  to EEK 383

Million.  Further  corrections  will  relate  to the accrual method of

accounting  for  income  and  expense  and  will  not  have a material

effect. The final audited financial statements for the year 1998  will

be completed by the beginning of March and will be published  together

with all corrections made by the 15th of March.

 

Previous real and  potential losses generated  by the bank  during the

previous periods will be written  off in the audited results.   Bank's

audited owners equity will remain on the level of EEK 1,9 Billion  and

net owners  equity excluding  goodwill will  be EEK  1,4 Billion.  The

capital adequacy  ratio of  Eesti Ühispank  as at  the end  of January

stood at 14.1  per cent. Management  Board of Eesti  Ühispank does not

see  the  need  to  increase  share  capital this year and besides the

announced  capital  increase  by  IFC,  no  new  share  issue  will be

planned.  The present  capitalisation of Eesti Ühispank  is sufficient

to develop the bank's successful activities during the present year.

 

 

Ülo Suurkask

vice president

Tel. +372 6 110 350