AS Citadele Banka Group's profit was EUR 7.7 million during 1Q 2016; the results are similar to 1Q 2015. During the reporting period, Citadele introduced various innovations: it launched loans especially designed to make financing more accessible for small and medium enterprises.
Guntis Beļavskis, CEO of Citadele Banka, "During 1Q 2016, we invested in developing our new mobile app, opened a branch office at Skanstes Street, Riga, that features our new concept, and we developed our "Support Loan" products. These products enable companies to receive financing based on their cash flow, without the need to mortgage their property. Regardless of our notable investments, Citadele presented good profit results due to an increasing number of clients. This year, we plan to continue gathering our development momentum, and invest in implementing our strategy by means of perfecting the range of our products. Our vision is to stimulate our retail and SME clients in the rural regions through opening up opportunities for them, and facilitating economic activity in remote areas."
AS Citadele Banka Group's loan portfolio increased by 3 % during 1Q 2016, thus reaching EUR 1.2 billion. The portfolio increased by EUR 132 million, compared to March 2015; this is an annual increase of 12 %. Active lending to SMEs in all three Baltic States, and retail lending in Latvia and Lithuania, shape the basis of the loan portfolio growth.
In line with Citadele Group's strategy, the amount of loans issued to SMEs in Latvia increased by 16 % during the last 12 months. AS Citadele continued strengthening its business in Lithuania and Estonia, its loan portfolios have increased by 20 % and 45 % accordingly. The quality of the Group's loan portfolio continues improving. The NPL decreased to 10 % in the end of March 2016, compared to 12 % a year ago.
In terms of consumer loans, Citadele Group's companies are speeding up application reviewing periods, and developing new application channels across the Baltics. During 1Q 2016, cooperation with PayPost, a subsidiary of the Lithuanian postal service, was established in Lithuania. As a result, residents of Lithuania can now apply for and receive bank loans at PayPost kiosks. PayPost has approximately 200 kiosks across Lithuania, and the established cooperation will make consumer loans more accessible for clients.
During the last 12 months, customers' deposits at the Group's banks have increased by 5 %, thus reaching EUR 2.57 billion in the end of March 2016. The amount of deposits is more than double the amount of issued loans. This ensures high liquidity indicators.
The Group's operating income was EUR 29.6 million in 1Q 2016, which is an 8 % increase compared to 1Q 2015. Administrative expenses were EUR 19 million during the reporting period, an increase by EUR 1.9 million compared to the same period last year. In accordance with Citadele’s growth strategy, the Group continued investing in its existing employees, creating new jobs, solutions tailored for its clients' everyday convenience, as well as in enhancing the stability and security of its systems.
Net interest margin decreased due to negative interest rate trends in the market; however, thanks to a growing loan portfolio, net interest income reached EUR 15.7 million during 1Q 2016. This is an increase of EUR 0.2 million compared to 1Q 2015.
The Group's net commission income reached EUR 8.7 million during 1Q 2016, a 4 % increase compared to the same period in 2015. This increase was generated mostly by clients of the Group’s Latvian and Swiss banks.
Profit indicators of 1Q 2016 ensured shareholders with a 14 % ROE, and a 1 % ROA. The Group's equity was EUR 229 million as of 31 March 2016.
During 1Q 2016, Citadele received high recognition for its services in Latvia and Lithuania from Dive, a customer satisfaction research company commissioned to carry out Baltic banking service studies annually. In Lithuania, Citadele was recognized the best customer service provider among Lithuanian banks whereas in Latvia it was recognized as the runner-up in terms of customer service.