The financial results of Latvian banks for the first quarter of 2010 have been recently compiled and published. Reports show that most of the banks are still overcoming consequences of the global financial crisis. Only 7 out of 27 local banks and branches of foreign-owned banks delivered strong first quarter results. We are glad to inform that Rietumu remains the industry leader in terms of the profitability for the second year in a row.
As of 31.03.2010,
Rietumu Bank’s profit accounted for EUR 1.4 million, or 40% of cumulative earnings at profit-making Latvian banks. Rietumu also remains the largest locally-owned bank in Latvia by equity and reserves accounting for EUR 190 million.
The majority of Latvian banks are still suffering losses, which amounted to EUR 192 million having decreased slightly as compared to the fourth quarter of 2009, since most of impairment allowances are usually made in the end of a year. Nevertheless, our forecast remains unchanged – this year losses of the Latvian banks will account for 80-100% of the losses in 2009.
Both foreign-owned banks, primarily with Scandinavian and German capital, and local banks which aggressive credit policy in previous years resulted in a severe credit boom, sustained the largest losses.
The economic situation in Latvia starts to stabilise gradually. The country has implemented a number of structural reforms, the Parliament of Latvia and the International Monetary Fund reached an agreement about EUR 400-million new credit tranche (EUR 1 billion estimated initially). The IMF has also given the approval as to the budget deficit at 6% of GDP in 2011. It is forecasted that after the Latvian Parliament elections planned in October economic reforms, including decrease of the government budget expenditures, will carry on, and the Latvian economy will continue to stabilise.
We expect a slight economic growth in Latvia at the year-end, while a more considerable growth (2-4% of GDP) is achievable only in 2011.
Latvia is a small country with open economy, thus it has a potential to recover comparatively quickly, depending on local budget decisions and EU economy.
The Parliament has recently accepted and announced new changes to the Latvia Immigration Law, which allow foreign investors and their family members to receive a 5-year residence permit in Latvia (and to travel freely in the Schengen Area) upon the following conditions – 5-year subordinated deposit placement in a local bank, real estate purchase or start up of a business. A large number of our customers and partners are considerably interested in receiving residence permits, and Rietumu is ready to support all the customers by providing full advisory and legal assistance related to the issue.
Eleonora Gailisha Mass Media and Public Relations
Phone: +371-67020506
Fax: +371-67020563
E-mail:
[email protected]
