EESTI ÜHISPANK 

ANNOUNCEMENT

31.05.1999         

 

EESTI ÜHISPANK GROUP IN FIRST QUARTER 1999

 

The total assets of Eesti Ühispank Group amounted to EEK 17.5  billion

and the profit of the Group was  EEK 14.7 million at the end of  first

quarter. The Group's  assets grew by  more than billion  kroons or 6.3

%.  The  balance  sheet  growth  came  mainly  from the 9.4% growth of

banking assets in the Bank.

 

Group's liquid assets  - cash and  claims to other  banks increased by

EEK 1.2 billion  or 46%, at  the same time  Group's claims to  clients

decreased.  Loans  to  clients  decreased  by  EEK  0.5  billion, loan

provisions remained on the same level as at the end of 1998. Ratio  of

provisions to  loans increased  to 4.3  %. Net  loan portfolio made up

55.5% of  total assets  and the  weighted interest  rated of loans was

11.9% as at the end of March.

 

The liabilities  of the  Group amounted  to EEK  15.6 billion,  having

increased by 7% or more than billion kroons from the beginning of  the

year. Liabilities to  clients increased by  9.4%.  Additionally  there

was  a  bond  issue  of  EEK  0.7  billion  in  the  first quarter, to

refinance the  liabilities of  bonds issued  by the  bank maturing  in

May.

 

The balance sheet of the subsidiary Saules Banka decreased by EEK  100

million due to the decline in non-resident deposits. During the  first

quarter, a new strategy was  developed for Saules Banka that  foresees

independent development  for the  bank and  active service  selling in

Latvian market.

 

The total balance sheet of Group's leasing companies decreased by  EEK

0.3 billion. Due to the  significant increase of funding price  at the

end of last year,  leasing interest rates had  increased substantially

and client interest towards  leasing products had declined.  The total

liabilities of leasing companies to  clients had decreased by EEK  280

million or 11.3% in the first quarter.

 

The decrease  of leasing  portfolio was  affected also  by the Group's

strategic  decision  to  reduce  liabilities  due  to  the   potential

economic risk.  The consolidation  of Ühisliising  with Tallinna  Pank

leasing was completed during  the first quarter. Restructuring  of the

company  continued  with  the  intention  to  reduce general expenses:

smaller branches were  closed in Tallinn  and Tartu, at  the same time

new branch was opened in Johvi  to serve clients in Eastern and  North

Eastern  Estonia.  Overcoming  the  problems  arising from the company

restructuring  as  well  as  the  decline  of  funding price will help

activate the leasing service in the second quarter.

 

Ühispank Group's activity in the life insurance market started in  the

first quarter. Ühispanga Elukindlustusselts (Ühispank Life  Insurance)

was registered in  the Business Register  in January 1999.  During the

first  quarter,  negotiations  with  Leks  insurance group to purchase

Leks  Elukindlustus  commenced.  As  of  today,  the  transaction  has

received  acceptance  of  the  shareholders.  Reinsurance contract was

signed with Swiss Re. Under the co-operation project between  Ühispank

Life Insurance and Ühispank  loan division life insurance  is provided

for the loan agreements.

 

For the other companies belonging to the Group (the ones managing  the

Group's real estate and bank's  as well as clients' assets)  there was

no significant changes in assets.

 

Income Statement

 

The first quarter profit for Ühispank Group was EEK 14.7 million.  The

banking sector  of the  Group earned  EEK 29.9  million, including the

profit of Saules Banka of EEK 2.5 million.

 

Of the  loss of  the Group's  leasing companies  in the first quarter,

EEK 1.2 million  was related to  the additional provisions  as well as

to the costs of intra  company restructuring.  Additionally there  was

the unrealised loss of EEK 7.9  million to leasing that came from  the

consolidations of previous years.

 

Loss  in  the  amoount  of  EEK  5.2  million  was  received  from two

subsidiaries that manage the Group's  real estate (AS Tornimäe and  AS

PF  Koda).  The  loss  was  planned  and  tied  to the new head office

building costs.

 

EEK  0.9  million  loss  was  received  from asset management and fund

management. Brokerage service  in the Baltics  and Russia brought  EEK

0.3 million  profit. All  the other  companies belonging  to the Group

did not affect the Group's  profit. In the first quarter,  the Group's

ROE was 3.4% and ROA 0.4%. The capital adequacy of Ühispank Group  was

12.6%.

 

As of  the end  of first  quarter, Ühispank  Group had 1,888 employees

(at the end  of 1998 there  were 1,942 employees),  including 1,453 in

Ühispank,  333  in  Saules  Banka,  65  in leasing companies and 37 in

other subsidiaries.

 

New Products

 

The U-Pank project was started  in the first quarter, during  which 23

electronic  bank  offices  were  opened  in  several shopping centres.

Parallel to this the optimisation  of the branch network started  last

year after the merger of Ühispank and Tallinna Pank continued.  During

the first three  months, the first  of ten branch  offices were closed

that are due to be closed during the year.

 

Availability  of  alternative  electronic  channels  has decreased the

workload of bank  branches and closing  of branch offices  at the same

time has  not decreased  the possibilities  of clients  to use banking

services. Electronic services  are offered significantly  cheaper than

the branch  services. Clients  have been  given an  opportunity to use

several  new  direct  payments  to  pay  standing  payment orders like

telephone and communal payments.

 

In  the  first  quarter,  Ühispank  applied  the  new server for U-Net

internet  banking.  The  server  uses  the  highest  encryption  level

currently available. Maximum  security of clients  and the quality  of

the new  U-Net internet  bank increased  the number  of U-Net  clients

more than 1,5 times in the first quarter.

 

With  the  starting  of  Ühispank  Life  Insurance in beginning of the

year,  the  bank  is  now  capable  of  offering  different  insurance

products  via  its   distribution  channels  like   the  travel   life

insurance,  loan  insurance,  children's  insurance, pension insurance

and endowment insurance.

 

For additional Information, please contact:

 

Ülo Suurkask

Vice President

Phone: + 372 66 55 350