OREANDA-NEWS. In Q1 2015, Swedbank Latvia earned a net profit of 23 million euros, compared to 32 million euros for Q1 2014.Income decreased due to low interest rates, while a reduction in expenses was achieved through our sustained focus on increasing operational efficiency. Net recoveries continued in Q1 2015, albeit at a more subdued rate.

Loans and deposits

New lending volumes increased, reaching 176 million euros in Q1 2015, against 100 million euros in Q1 2014. Corporate new lending grew by 87 per cent and reached 135 million euros. Mortgage new lending, in turn, increased by 25 per cent, while consumer financing new deals doubled. The bulk of corporate lending was in agriculture and forestry, water supply, retail, transport and IT&T industries. Amortisation of the credit portfolio slowed in Q1, with the total credit portfolio decreasing by 1 per cent on Q4 2014.

The volume of deposits increased by 12 per cent YoY and by 2 per cent over the quarter.

Credit quality

Swedbank Latvia made recoveries of earlier loan provisions of 1 million euros, compared to 7 million euros in Q1 2014. The level of impaired loans, in turn, continued to decline and at the end of Q1 2015 stood at 147 million euros (215 million euros - Q1 2014). The credit quality has improved to such a level that impaired loans are now decreasing at a moderate pace. Swedbank continues working on preventive measures to help customers that could be affected by the situation in Russia.

Revenue and costs

Total revenue decreased by 10 per cent YoY. As a result of a low rate environment, net interest income shrank by 14 per cent which was partially offset by increased customer activity in card payments, lending and insurance. Home insurance sales increased by 79 per cent, whereas demand for life insurance experienced almost four-fold increase. Total expenses in Q1 decreased by 9 per cent YoY reaching a cost/income ratio of 0.42. Q1 2015 saw continued investment in customer service, including the branches reopening after renovation in Rumbula and Imanta, as well as staffing of 24/7 availability of banking services by phone increasing to 170 employees.