Financial results of SEB Eesti for the first half of 2020

SEB Group announced today the financial results for the first half of 2020, which are available on the homepage.

Allan Parik, the Chairman of the Management Board of SEB Pank commented on the six months result of the SEB Estonia as follows:

Adaptation of households and enterprise to the crisis has been good

As a result of the coronacrisis, the loan growth has decelerated and savings are growing. SEB’s total loan portfolio increased 6% and deposits by 11.1% in the first half of the year – a year ago the same indicators were 11 and 8.5%, respectively.
Corporate loan growth has slowed down to 3.6%, from nearly 13% of the last year, while the growth of corporate deposits has accelerated to 11.4%, from 5.2%. As the environment is unstable, the enterprises are postponing their more longer-term decisions; however, the deposit growth is an indicator of an overall good financial health of companies. We are open to financing new projects and can see that competition for strong loan projects is intense. A sudden slowdown in economy taught us the need for quick adaptation – interest towards the implementation of e-commerce payment solutions is high; besides, everything in connection with innovation and upgrade of business models has become more important for business clients. We advise our business customers to join the newly established Innovation Leaders Club, to together find the ways for fast recovery of the economy. 
Changes in the financial conduct of private persons have been minor. The private loan growth decelerated to 6.5%, from the previous year’s 8.2%, while the deposits increased at the same pace with the last year, being more than 11%. Private consumption has returned to its pre-crisis level. Only with regard to home loans, the clients are still somewhat more cautious than before the crisis. Likewise to enterprises, the private persons are postponing mainly larger prospective investments; yet, savings have remained on a high level throughout the crisis.

Grace period served its purpose

During the emergency situation, nearly 4% of our borrowing private clients needed a grace period to cope with their loan payments. Grace period was requested by 16% of corporate clients. The quick relief offered by the grace period was an efficient measure and the level of debts has remained stably low. Several granted grace periods have already been terminated by the clients, as their income and cash flows have recovered. At the moment, nearly 3% of private persons and 12% of corporate clients in our loan portfolio are enjoying the grace period. The relatively low share of clients in the total loan portfolio, who have taken out a grace period, and the decreased number of new applications for the grace period is a proof to the fact that the financial health of our clients remains good and stable. However, if the clients are facing any setbacks in income or cash flows, we still encourage them to ask for a grace period.

SEB’s income and expenses on the previous year level

SEB’s operating income for the first half-year amounted to EUR 85.3 million (EUR 84.8 million for the first half of 2019) and operating expenses to EUR 30.4 million (EUR 30.0 million in the first half of 2019). SEB entities in Estonia ended the first half of 2020 with a profit of EUR 41.1 million. In 2019, SEB entities in Estonia ended the first six months with a profit of EUR 50.6 million.

Although the bank’s income and expenses were almost the same size as the year before, the profit for the first half-year was nearly 10 million less, as we increased the provisions for loan losses. We placed about one-fifth of the first half-year’s profit into reserves in order to be prepared for an increase in loan losses in the coming quarters, when according to the forecasts, Estonia’s economy is expected to face a nearly 10% recession. The bank increased its provision for loan losses within EUR 8.1 million in the first half of 2020 (in the same period last year, the bank decreased the provisions within EUR 2.4 million).

Further information:

Silver Vohu
Communications Manager
SEB

Phone+372 665 5393
Mobile + 372 521 1170
e-mail: silver.vohu@seb.ee