Citadele Group generated EUR 2.6 million of net profit during the first nine months of 2017. The net profit result was impacted by EUR 23.2 million expense due to deferred tax asset write-off, which occurred due to changes in Latvian tax legislation.
The Group’s net profit before tax asset write-off was EUR 25.9 million for the first nine months of 2017 as compared to EUR 25.2 million in September 2016 as adjusted for one-time gain from sale of Visa Europe shares to Visa Inc. Changes in Latvian tax legislation and a subsequent write-off will not adversely impact Group's planned capital position and tax assets in other Citadele Group’s jurisdictions.
Citadele Group’s net loan portfolio continued to grow, reaching EUR 1. 34 billion, which was a 7% increase compared to September 2016. In line with the Group’s strategy, the growth in the loan portfolio was mostly driven by Baltic private individual and SME segments.
During the first nine months of 2017, a total of EUR 362 million new loans were granted by Citadele Group banking entities, constituting EUR 200 million in Latvia, EUR 107 million in Lithuania and EUR 54 million in Estonia. The total amount of loans granted by Citadele Group during the first nine months of 2017 was 13% higher compared to the respective period in 2016.
The amount of newly granted loans for MSMEs and Corporates in Latvia grew by 12% to 132 million in the first nine months of this year. The amount of loans granted to MSMEs and Corporates in Lithuania reached EUR 93 million, a 4% increase compared to year ago; whereas, in Estonia a growth of 90% was observed, reaching EUR 34 million.
Over the last year Citadele Group increased its total customer deposits. At the end of the 3rd quarter of 2017 the total amount of deposits in Citadele Group reached EUR 2.8 billion, growing by 2% as compared to the last year. The deposit portfolio in Latvia reached EUR 1.9 billion, in Lithuania – EUR 426 million, and in Estonia – EUR 229 million.
Citadele’s net interest income increased by 16% to EUR 55.8 million year-over-year as a result of the growth in the size and yield of the Group’s Baltic loan portfolios. In addition, the Group’s net commission income slightly decreased by 3% to EUR 27.1 million due to the Bank’s de-risking activities related to foreign payment transfers.
The Group reached ROE of 13.5% and ROA of 1.05% before tax asset write-off in the first nine months of 2017. Excluding one-time gain on sale of Visa shares Group’s ROE was 14.4%; whereas, adjusted ROA was 1.10% in the respective period in 2016.
Asset quality continued to improve with the NPL ratio decreasing to 9.0% as compared to 9.2% in September 2016. Group’s capital adequacy ratio (CAR) reached 17.0% versus 13.8% in September 2016.
Subsequent to the reporting period Citadele launched Second Subordinated Loans program and issued EUR 20 million Tier2 capital at coupon rate of 5.5% to strengthen Bank’s capital position and to refinance current subordinated debt outstanding to the European Bank for Reconstruction and Development.
Citadele Group is managed from Latvia, and its subsidiaries and branches operate in Latvia, Lithuania, Estonia and Switzerland. Citadele provides transactions and card payments, loans, deposits, investments, asset management and leasing services, as well as a range of exclusive and unique products. Citadele’s shareholders are an international and multinational group of investors with experience in the banking sector worldwide. 75% plus one share belongs to a group of international investors led Ripplewood Advisors LLC, while the remaining shares belong to the European Bank for Reconstruction and Development (EBRD).
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Santa Daniela Kanaška
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