SEB Group published the economic results for the second quarter of 2015

Today, SEB Group published the economic results for the second quarter of 2015. Information about the results is available here: http://sebgroup.com/ir.

Riho Unt, Chairman of the Management Board of SEB Pank, commented on the results of SEB units in Estonia, as follows:

“The second quarter of the year did not bring along significant changes for the Estonian economy. Increased internal consumption continues to be the key source of growth, driven by higher salaries and low inflation. Although the world economy is overshadowed by rather grim news about the potential bankruptcy of Greece, slowdown of American economic growth and continuation of the Russian-Ukrainian crisis, Estonian employers seem to enjoy somewhat better times. Real salaries, which have grown in recent years, allow once again betterment of living conditions as well as saving to create cash reserves. In a situation where unemployment is rather low, employees too feel more secure about the near future.

Consumer purchasing power has been steadily improving
I am glad to say that besides more active consumption, Estonians have also started to grow their savings. Positive growth trends in savings have been obvious since the end of 2010 and, compared to the second quarter of last year, private customer deposits were growing again in SEB, by 6.2 per cent. Low deposit and interest rates have encouraged households to improve their living conditions and so 35% more home loans were granted by SEB in the second quarter than in the same period last year. Families are assuming financial obligations for real estate with a high degree of responsibility – today 70% of home loans are covered by loan protection insurance that guard the borrower against possible payment difficulties. The loan portfolio of private persons grew by four per cent during the year, so there is no cause to speak about excessively rapid loan growth.

Likewise, banking habits are changing rapidly, reflected in the upsurge of mobile banking use and less visits to bank branches. In the past year, mobile phone use among SEB clientele has increased by 58% and thus, in June, we were the first bank in Estonia to introduce a mobile application offering full Internet bank functionality. This should make the summer vacation more hassle-free for our customers.

Business is affected by rapid salary increases and low external demand
While private customers can enjoy times rather devoid of problems, there are no cloudless skies for the business community. Higher salaries have mainly come at the expense of the profits of companies. ROEs are on a downward trend, which signals that increasing salaries without added value is not sustainable. Nevertheless, wage pressures may have a positive impact in the long term, forcing entrepreneurs to organise business more effectively and seek new markets and niches.

It can be seen that companies are shy of investing their resources to increase incomes in a situation where demand from other countries is low and the geopolitical prognosis remains insecure. Furthermore, it can be felt that geopolitical tensions have dampened the attractiveness of the Baltic economies as an investment target for foreign investors. New and large long-term foreign investments in the Baltics have been scarce and, if any, they derive from local capital or existing foreign investors.

Negative impacts of the Russian-Ukrainian conflict can be seen to have materialised for Estonian companies, especially in the areas of transportation, hospitality services and agriculture. Based on the information that we have, normal trade relations cannot be expected to be restored in the near future, which is why companies are actively searching for customers in other countries or reorganising their business in the affected areas. The downturn of the Finnish economy is also halting the growth of a lot of companies. Despite the complicated economic situation, the financial indicators of Estonian companies continue to remian strong.

The economic results of SEB remain stably good
SEB Estonia’s economic results were affected by low interest rates and modest investment activity, as well as by regulatory actions concerning the financial market. The quality of SEB-granted loans continues to be excellent, supported by our active offer of consultation to customers so that important financial decisions are made with all risks taken into account.

This August, my five years as the head of SEB Estonia will end and I shall transfer to the headquarters of SEB where I shall ensure that the corporate banking of SEB continues to thrive in the Baltics.  The past five years have been successful for the bank, and SEB has come out strongly from the economic crisis. I wish to thank the customers, partners and staff of SEB for cooperation. Allan Parik, current Head of SEB Baltic Corporate Banking, will take over the position of Chairman of the Management Board of SEB Eesti as from 1 August.”

The units of SEB Estonia finished Q2 2015 with a profit of EUR 18.9 million. SEB finished Q2 2014 with a profit of EUR 18.4 million. In the second quarter, the operating income of SEB Estonia amounted to EUR 34.1 million (EUR 33.6 million in Q2 2014) and operating costs to EUR 15.1 million (EUR 15.1 million in Q2 2014). In Q2 2015, the bank increased loan loss provisions by EUR 0.1 million (in the same period of 2014, the bank decreased provisions by EUR 0.2 million).

For more information, contact:

Kristi Jänes
Project Manager for Communication
Marketing and Communications Division
SEB
Tornimäe 2, 15010 Tallinn
Phone +372 665 5399
Mobile +372 5569 0616
E-mail kristi.janes@seb.ee
www.seb.ee