AS “Citadele banka” 2nd Quarter 2017 Public Financial Information and audited 6 month Interim report of 2017

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During the first six months of 2017, Citadele Group generated EUR 15.0 million of net profit, compared to EUR 25.4 million of net profit in June 2016, which included a EUR 11.3 million gain from the disposal of Citadele’s shares in “Visa Europe” to “Visa Inc.” The adjusted net profit of Citadele Group showed 7% growth year-over-year, driven by solid growth in net interest income and net commission income lines.

The net loan portfolio of Citadele group increased by 7% to EUR 1,323 million as compared to year end 2016. For private individuals, the amount of new loans granted by the Group’s banking entities in the first half of 2017 was EUR 68 million, a 7% increase compared to the same period in 2016. For MSMEs and Corporates the amount of new loans granted in the first half of 2017 was EUR 185 million, a 37% increase compared to the same period in 2016.

Client deposits in the Group reached EUR 2,874 million, showing an increase of 5% in comparison to June 2016.

“Our latest financial data, which we are disclosing today, demonstrate that we are on the right track to become the Baltic champion in banking. Providing financing for growth to aspiring Baltic businesses and individuals is central to Citadele’s strategy, and we are doing this very well. Over the last 12 months, Citadele Group’s net loan portfolio increased by an impressive 8%. This growth rate in a highly competitive market is a testimony to our ability to introduce a new approach to lending in the Baltics and deliver the offering to customers both in the MSME and private segments. By automating credit scoring, we are now able to make individuals and small businesses highly personalized offers with incredible speed, and customers seem to greatly appreciate this,” says Guntis Beļavskis, CEO of Citadele Group.

Net interest income increased by 16% to EUR 36.2 million year-over-year as a result of the growth in the size and yield of the loan portfolio. In addition, the Group’s net commission increased by 5%, reaching EUR 19.3 million in the first half of 2017 versus the prior year.

The net profit ratios for the first half of 2017 demonstrated ROE of 11.5% and ROA of 0.90% as compared to 12.2% ROE and 0.92% ROA in the first half of 2016, as adjusted by the one-off gain relating to Visa shares.

Asset quality continued to improve with the NPL ratio decreasing to 9.3%, as compared to 9.6% in June 2016. Group’s capital position showed a 20 basis point growth, with CAR reaching 16.7% versus 16.5% in June 2016.

Citadele in Latvia

In Latvia, the net loan portfolio continued to grow, reaching EUR 960 million, which is a growth of 4% compared to June 2016. The amount of new loans granted by the Bank in the first half of 2017 was EUR 139.6 million, which was a 30% increase compared to the same period in 2016.

For private individuals, the amount of newly granted loans in the first half of 2017 was EUR 48.3 million, which was a 3% decrease compared to the same period in 2016. For MSMEs and Corporates the amount of newly granted loans in the first half of 2017 was EUR 91.3 million, which was a 58% increase compared to the same period in 2016.

Client deposits in Latvia have remained stable at EUR 1,870 million in comparison to June 2016.

Citadele in Lithuania

In Lithuania, the net loan portfolio continued to grow, reaching EUR 298 million, which was a growth of 12% compared to June 2016. The amount of new loans granted by the bank in the first half of 2017 was EUR 71.8 million, which was a 5% increase compared to the same period in 2016.

For private individuals the amount of newly granted loans in the first half of 2017 was EUR 5.6 million, which was a 60% increase compared to the same period in 2016. For MSMEs and Corporates the amount of newly granted loans in the first half of 2017 was EUR 66.2 million which was a 2% increase compared to the same period in 2016.

Client deposits in Lithuania reached EUR 406 million, which was an increase of 17% compared to June 2016.

Citadele in Estonia

In Estonia, the net loan portfolio continued to grow, reaching EUR 111 million, which was a growth of 24% compared to June 2016. The amount of new loans granted by the bank in the first half of 2017 was EUR 41.2 million, which was an 80% increase compared with the same period in 2016.

For private individuals the amount of newly granted loans in the first half of 2017 was EUR 14.1 million, which was a 33% increase compared with the same period in 2016. For MSMEs and Corporates the amount of newly granted loans in the first half of 2017 was EUR 27.1 million, which was a 122% increase compared with the same period in 2016.

Client deposits in Estonia reached EUR 222 million, which was an increase of 17% compared to June 2016.

Other events

In the first half of 2017, Citadele Bank signed an agreement for a long-term partnership with global payment company Visa. The first joint product developed by Visa and Citadele is a new brand of credit card with three card types: X Card, X Platinum and X Infinite, for different client segments.

From April 2017, Citadele’s mobile payment services were available for beta testing by Citadele employees and selected customer groups. Citadele Bank was the first bank in the Baltics to introduce mobile payments using NFC.

On April 2017, Moody’s Investors Service (Moody’s) increased Citadele’s long-term credit rating by two notches (from B1 to Ba2), and maintained positive outlook. This upgrade reflected the Group’s implemented strategy to develop and grow its business across the Baltic States, as well as the Group’s improved capital levels and asset quality. Moody’s also positively valued the Group’s rapid development over the last year.

In April of 2017, AS “Citadele banka” signed an agreement to sell its subsidiary “CBL Cash Logistics” to Lithuanian company Eurocash1. After receiving all the necessary approvals, the deal was closed in August 1.

Citadele is the third largest bank in Latvia by number of clients. The Citadele Group is managed from Latvia, and its subsidiaries and branches operate in Latvia, Lithuania, Estonia and Switzerland. Citadele ensures transactions and card payments, loans, deposits, investments, asset management and leasing services, as well as a range of exclusive and unique products. Citadele’s vision is to become the best financial services provider in the Baltics for private customers and small and medium businesses.