OPTIVA PANK

REPORT

 

OPTIVA PANK "PUBLIC REPORT 1999"

 

AS Optiva Pank Public Report 1999

 

The 1999 Public Report of Optiva Pank is available in the bank's 

headquarters (Narva Rd.11, Tallinn) and all branch offices as of 

29.02.2000.

 

The report is available on Optiva Pank Internet homepage 

(www.optiva.ee) as of 29.02.2000.

 

 

Important business events

 

At the end of 1999, group total assets amounted to EEK 3.50 

billion, featuring an increase of EEK 389.1 million, or 12.5 per 

cent, over September. Growth in total assets is explained by an 

increase of EEK 411.8 million, or 39.7 per cent, in client 

deposits. Group total assets and client deposits rose by EEK 298.4 

million, or 9.3 per cent, and EEK 590.2 million, or 68.7 per cent, 

respectively over the year. Group fourth quarter operating profit 

before provisions amounted to EEK 27.5 million, featuring an 

increase of 4.7 per cent over the previous quarter. In 1999, Optiva 

Group incurred a loss of EEK 20.4 million, caused by an 

extraordinary loss from additional provisions made in the fourth 

quarter.

 

 

Funding

 

In the fourth quarter of 1999, group interest bearing liabilities 

rose by EEK 472.7 million, or 18.6 per cent, with client funds 

achieving a record growth. In the fourth quarter, client deposits 

total with the bank jumped by EEK 467.3 million, or 43.0 per cent, 

with the biggest share of the rise contributed by private company 

deposits which increased by EEK 432.3 million, or 62.1 per cent. 

Private company demand deposits accounted for the highest increase 

of EEK 369.8 million, or 71.9 per cent, explained by a growth in 

clients' business volumes and new clients. An upswing in Estonian 

economic environment and stability prevalent in foreign markets 

also favoured growth in deposits. At the end of December, demand 

deposits and time deposits with the bank amounted to EEK 1.06 

billion (67.9 per cent of deposits total) and EEK 0.5 billion (32.1 

per cent of deposits total), respectively. Client deposits total 

increased by EEK 677.9 million, or 77.3 per cent, over the year, 

with demand deposits and time deposits rising by EEK 505.0 million, 

or 91.7 per cent, and EEK 173.0 million, or 53.0 per cent, 

respectively. In deposits private company current accounts 

increased by EEK 432.6 million, or 95.8 per cent, and time deposits 

grew by EEK 179.9 million, or 4.2 times, over the twelve months. 

The share of private company deposits in deposits total rose to 

72.6 per cent by the end of 1999 from 59.1 per cent at the end of 

1998. Private person deposits represented another big deposit 

group, accounting for 21.4 per cent of deposits total in 1998 and 

17.6 per cent of deposits total in 1999. The share of private 

person deposits in the deposits structure fell over the year, for 

the 45.8 per cent growth in such deposits was lower than in private 

company deposits.

 

In the last quarter of 1999, group loans from other banks increased 

by 94.9 million, or 14.2 per cent, owing to funds lent from Nordic 

Investment Bank. Borrowings from other banks increased by EEK 60.5 

million, or 8.6 per cent, over the twelve months.

 

The share of client deposits in group interest bearing liabilities 

increased due to a quick rise in such deposits from 40.8 per cent 

at the end of the third quarter to 48.1 per cent by the end of 

1999.

 

The share of debts with credit institutions, issued debt securities 

and subordinated liabilities in interest bearing liabilities 

decreased, representing 48.6 per cent thereof at the end of 1999 

(54.8 per cent at the end of the third quarter). In 1999, the total 

volume of such funds declined by EEK 250.7 million, or 14.6 per 

cent. Which is primarily explained by a decrease in debt 

securities, caused by their expiry and prior repurchase in the 

second quarter.

 

In other group liabilities client clearing accounts declined due to 

the year end holiday season. Other liabilities decreased by EEK 

70.0 million, or 44.1 per cent, compared with the end of the third 

quarter.

At the end of December, group equity represented EEK 317.4 million, 

or 9.1 per cent, of group total assets (10.5 per cent as of Dec, 

1998). Capital adequacy was 10.3 per cent.

 

 

Investments

 

Interest earning assets increased by EEK 256.8 million, or 10.3 per 

cent, in the fourth quarter and by EEK 244.7 million, or 9.8 per 

cent, over the year.

 

In interest earning assets, short term and, hence, liquid 

investments boasted an increase in the fourth quarter, with claims 

on the central bank and other credit institutions rising by EEK 

369.5 million, or 97.2 per cent (and by EEK 403.5 million, or 116.6 

per cent, over the year).

 

In the fourth quarter group gross loan portfolio declined by EEK 

63.2 million, or 3.0 per cent, for the volume of loans collected 

exceeded the volume of loans granted. Gross loan portfolio fell by 

EEK 166.2 million, or 7.5 per cent, over the twelve months. The 

decline is explained by lack of credit worthy projects owing to 

structural changes which took place in the economy and led to an 

economic recession. Which also entailed a substantial interest 

rates fall in the market. At the end of 1999, group gross loan 

portfolio total was EEK 2 049.9 million, with the leasing portfolio 

share representing 12.4 per cent thereof. Allowances for loan 

losses represented 12.8 per cent of the gross loan portfolio at the 

end of December.

 

Group liquidity buffer increased by EEK 412.5 million, or 63.7 per 

cent, over the last quarter, amounting to EEK  1 060.4 million at 

the end of December.

 

 

Net interest income

 

In the fourth quarter, net interest income before loan provisions 

represented EEK 22.3 million (with group net interest income for 

the year totalling EEK 92.2 million). Net interest income declined 

by EEK 3.0 million, or 11.7 per cent, compared with the third 

quarter. In the fourth quarter, group made provisions for possible 

loan losses at EEK 44.3 million. In several group sectors 

non-strategic assets have been inherited from the pre-merger 

period. Following a conservative policy, bank has adjusted the 

collateral value of several assets not yet sold. Group net interest 

margin was 3.3 per cent in the fourth quarter.

 

 

Non interest income

 

Group non-interest income represented EEK 48.5 million, featuring 

an increase of EEK 14.0 million, or 40.5 per cent, compared with 

the third quarter. In the fourth quarter, income from financial 

transactions represented 44.0 per cent (EEK 21.3 million), income 

from commissions and service fees 35.6 per cent (EEK 17.3 million), 

income from financial investments 2.1 per cent (EEK 1.0 million), 

and other income 18.3 per cent (EEK 8.9 million) of non interest 

income. Income from financial transactions comprises income from 

foreign exchange and stock transactions. 

 

Non interest income for the twelve months amounted to EEK 172.9 

million, with income from financial transactions representing 48.4 

per cent (EEK 83.6 million), income from commissions and service 

fees 33.4 per cent (EEK 57.7 million), income from financial 

investments 3.7 per cent (EEK 6.4 million), and other income 14.5 

per cent (EEK 25.1 million).

 

 

Expenses

 

Group last quarter non interest expenses totalled EEK 43.3 million, 

featuring an increase of EEK 9.8 million, or 29.3 per cent, 

compared with the third quarter. Personnel and administrative 

expenses are the largest non interest expenses. Other 

administrative expenses increased by EEK 6.6 million, or 107.6 per 

cent, compared with the third quarter. In the fourth quarter, 

personnel expenses and other administrative expenses represented 

40.9 per cent (EEK 17.7 million) and 29.5 per cent (EEK 12.8 

million) of non interest expenses respectively. The biggest expense 

items in administrative expenses are communication and data 

processing expenses and room rent and management expenses. Paid 

commissions and service fees represented 12.4 per cent and other 

expenses accounted for 17.2 per cent of non interest expenses.

 

Non interest expenses for twelve months totalled EEK 150.3 million, 

with personnel expenses representing 45.6 per cent (EEK 68.6 

million), other administrative expenses 25.3 per cent (EEK 38.1 

million), paid commissions and service fees 10.1 per cent (EEK 15.1 

million), and other expenses 19.0 per cent (EEK 28.5 million).

 

In the fourth quarter group return on equity was -36.0 per cent 

(6.1 per cent for 1999), return on assets 5.1 per cent (8.2 per 

cent), profit margin -278 per cent (-7.6 per cent), and earnings 

per share EEK -2.9 (EEK -0.5).

 

 

Ruth Laidvee

+372 63 02 181