AS “Citadele banka” 1st Quarter 2020 Financial Results

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  • The Group’s daily operations have been successfully adjusted to ensure business continuity and safety under Covid-19 conditions. Extensive measures have been implemented to protect the Bank’s employees, clients and partners, while new solutions have been introduced to ensure uninterrupted client services
  • The number of active customers reached 317 thousand clients as of 31 March 2020, growing 16% y-o-y and 1% q-o-q
  • The Group’s operating income in Q1 2020 was EUR 27.4 million, down by 9% y-o-y 
  • Credit loss provisions were increased to reflect revised macroeconomic expectations. The underlying credit quality remains sound with minor changes during the quarter
  • The Bank issued EUR 119 million of new loans to Baltic private, SME and corporate customers
  • Domestic deposits increased by EUR 79 million growing 3% year-to-date, with liquidity remaining strong

The first quarter of 2020 saw the outbreak of the global coronavirus pandemic, which resulted in adverse social and economic effects. Citadele has taken extensive precautionary measures to protect the Bank’s employees, clients and partners, and implemented a series of actions to minimize disruption to the Group’s operations during this period.

The Bank is currently focused on ensuring uninterrupted access to financial services and necessary support to its clients and partners across all Baltic states. All main financial services are available to customers remotely, while branches continue to offer appointment-only meetings to customers who need or prefer to be serviced in person.

Support to customers

Citadele has been actively offering its support to affected businesses and private individuals, enabling such clients to postpone repayment of loan principal. As of April, Citadele has joined sector-wide moratoriums in Latvia and Lithuania that simplify the grace period request process for customers.

The banking sector’s ability to transfer capital plays a critical function in society, and this importance is reinforced in difficult times such as now. In Q1 2020, Citadele continued to enable capital to flow to where it is needed the most, as EUR 119 million of new loans were issued to Baltic private, SME and corporate customers.

Strong progress was also continued in deposit gathering, where the Group increased Baltic deposits by EUR 79 million during Q1 2020. The total customer deposits increased by 6% since year-end 2019 and reached EUR 3,485 million.

New product development

The development of new products and services continued in Q1 2020. Citadele was among the first banks to launch Apple Pay in the Baltics; the Bank has also developed and launched Klix, an e-commerce solution enabling streamlined e-commerce customer experience. Responding to market needs, the contactless card transactions limit was increased from EUR 25 to EUR 50.

Strong client base

The demand for remote services has seen a marked increase in Q1 2020. The number of clients opening accounts remotely has tripled in March. Compared to the same time a year ago, the number of Mobile App and Internet bank customers has increased by 59% and 12%, respectively, reaching 140 thousand active Mobile App users and 196 thousand active Internet Bank customers. In Q1 2020, the number of active clients increased by 9 thousand Mobile App users and 3 thousand Internet Bank customers.

The number of active customers increased by 43 thousand y-o-y (16% growth) and reached a record high 317 thousand clients as of 31 March 2020. In Q1 2020, the number of active clients increased by 4 thousand.

Impact of Covid-19 on financial results

While the consequences of the Covid-19 pandemic have had a negative impact on Q1 2020 financial results, the underlying business remained strong with operating income reaching EUR 27.4 million. Accounting for additional impairments of EUR 15.4 million due to expected deterioration in the economic environment, the Bank experienced a net loss of EUR 7.5 million in Q1 2020.

As of today, Citadele continues to operate from a position of strength with capital and liquidity ratios well above regulatory requirements: CAR of 22.5%, Tier 1 of 19.0% and LCR of 460% as of 31 March 2020. The Bank’s management team continues to proactively assess and evaluate potential business impacts from the current environment, while most importantly ensuring the safety of its customers and staff.