The financial health of companies is good but the second half of the year is likely to be challenging

18.07.2023 - 20:09

SEB Group announced today the financial results for the first half of 2023, which are available at: www.sebgroup.com/ir.

Allan Parik, the Chairman of the Management Board of SEB Pank commented on the six-month outcome of the SEB Estonia unit as follows:

The financial health of companies is good but the second half of the year is likely to be challenging

The financial health of Estonian companies is generally good – loan arrears are rare and corporate deposits in SEB have increased by 12.8 per cent over the year. At the same time, new investments are made with caution, as the environment remains unclear. Nevertheless, we have managed to increase the corporate loan portfolio by 6 per cent over the year, which means that the bank’s investments in Estonian companies amounted to nearly 2.9 billion euros as of the half-year.

A recent survey conducted by SEB showed that more than half of companies are not planning to invest in 2023 or have not yet decided to invest. Uncertainty is aggravated by the continued cooling of the Swedish economy, which has led to an increase in both arrears and bankruptcies. History has shown that what happens in the Swedish economy reaches Estonia with some delay, so we are rather cautious about the outlook for the second half of the year.

Private deposits have not increased in a year

Unlike corporate customers, private customers’ savings have not increased over the year. Private deposits in SEB amount to 2.7 billion and of these, 77 per cent are in a regular current account. This year we have strongly raised interest rates on term deposits and this has exponentially increased interest in them. The volume of term deposits has increased by 80 per cent this year.

Money has a price again, so the bank is able to offer guaranteed returns to customers. We want to offer customers good depositing options regardless of how long a person is willing to deposit – we have solutions from 3 days to 3 years. Currently, the most popular deposit is annual deposit, which has been taken out by 39 per cent of depositors, but we also want to promote the taking of deposits with shorter maturities in order to offer guaranteed returns also to those who prefer to keep liquidity in turbulent times.

Supporting customers in difficult times is the strength of SEB

SEB is not afraid of the tougher times ahead in the economy, because our strength is to support our customers in difficult times. Our capital- and liquidity base is at a good level and stable, which means that we can support our customers if necessary. We do not see the need to change our current strategy, so we will continue to finance the Estonian economy and support environmentally friendly projects. This year, the focus has been on the full renovation of apartment associations and the financing of energy class A housing for private individuals.

The first half-year profit of SEB was 113.3 million euros

SEB Pank ended the first half of 2023 with a profit of 113.3 million euros (the profit for the first half of 2022 was 49.2 million euros). The Group’s operating income amounted to 169.5 million euros (88.8 million for the first half of 2022) and operating expenses to 37.2 million euros (31.7 million euros in the first half of 2022). The Group increased net expected credit losses by 0.05 million euros (0.4 million euros in the first half of 2022). The established contributions into the resolution fund amounted to 0.9 million euros (1.1 million euros in the first half of 2022). Income tax was calculated at 18.1 million euros (6.5 million euros in the first half of 2022). In total, the bank has paid 27 million euros in various state taxes this year.