The Estonian arm of Swedish bank SEB said its first-quarter result was a loss of 52 million kroons. A year earlier the bank lost 92 million kroons. While a year ago the bank made 332 million kroons in bad loan provisions, the figure was 237 million kroons in the first quarter 2010, reported aripaev.ee.
SEB's main competitor in Estonia, Swedbank, said this week its first-quarter loss was 272 million kroons. Nordea Eesti said today it made a profit of 39 million kroons in the first quarter.
Riho Unt, acting general manager of SEB Pank, said that a positive sign of recovery was that the bank's loan loss provisions were almost half of what they were in the final quarter of 2009.
The bank's operating costs increased from 289 million kroons a year ago to 309 million kroons. Operating income fell from 529 million kroons to 495 million.
Unt said that while the mortgage loan market was slowly recovering, there are positive signs in the export industry. Still, loan volume fell 8% in a year. The bank held 6% less deposits during the quarter than a year ago.
According to Unt, the number of customers with payment problems has stabilized. While there are encouraging news coming from the labour market, the situation is still very fragile and will be restricting growth of domestic demand for years, he said.
"On the upside, the figures on foreign direct investments from the fourth quarter 2009 show an inflow of 500 million euros which the best quarterly result in the last four years," he said
Group remains positive
The group as a whole posted a much better-than-expected first-quarter operating profit due to lower loan losses and remained confident about asset quality in the hard-hit Baltics.
Operating earnings were 1.1 billion crowns ($153.4 million), well above the 462 million forecast in a Reuters poll.
Credit loss provisions were 1.9 billion crowns, much lower than an average forecast of 2.6 billion and narrowing from 3.2 billion in the fourth quarter.
Like its rival Swedbank, which reported its first profit in a more than year on Tuesday, SEB has focused on improving its asset quality and cutting risk in the recession-hit Baltic region.
"Following the in-depth review of all credits in 2009, we remain confident in our Baltic asset quality and work-out strategy," SEB Chief Executive Annika Falkengren said in a statement.
She highlighted lower provisions for Baltic credit losses at 1.4 billion crowns compared with 2.6 billion in the previous quarter, which she said mirrored stabilisation in the region.
"However, the Baltic economic development is still feeble and we maintain our conservative stance in line with our actions throughout the crisis," she added.
She forecast provisions for credit losses in the Baltic states would not exceed 5 billion crowns this year. This would well down from the 12.5 billion crowns needed for 2009.