SEB: there are practically no grace period requests and the quality of the loan portfolio of the bank remains good
Today, the SEB Group published its financial results for the first quarter of 2023, which can be found here: www.sebgroup.com/ir.
Allan Parik, Chairman of the Board of SEB Pank, commented on the quarterly results of SEB’s Estonian unit as follows:
The beginning of the year has been characterised by a low sense of security of the consumers – it is about the same as it was during the 2009 recession. However, there are practically no grace period requests and the quality of the loan portfolio of the bank remains good, which is a sign that the financial situation of companies and private persons continues to be stable.
Companies are focused on stability
In March, SEB carried out a survey among its business customers, asking nearly 800 entrepreneurs their opinion on the current situation and future perspectives. According to the survey, the three most important priorities for entrepreneurs in 2023 are: managing and optimising expenses, improving the stability of the company and strengthening cash flows. And so, in the first quarter, the deposits of companies at SEB grew by 14.4 per cent in comparison with the previous year, while the loan portfolio of business customers grew by 5.5 per cent. Companies are careful when taking loans, weighing two options – to maintain liquidity or invest to strengthen their position for the next economic cycle. SEB advises companies on which solution could suit them. In the first quarter, SEB financed new business projects of nearly 1,650 companies, in the total amount of more than 630 million euros.
Employment rates in Estonia were the highest ever at the end of the year
A strong labour market gives hope that the Estonian economy will successfully overcome this recession. As at the end of last year, the employment rates were the highest ever – never before have so many people been employed in Estonia. Even though demand has decreased, companies do not want to lay off employees prematurely. The survey carried out by SEB among entrepreneurs in March also showed that 81 per cent of companies do not plan to change the number of employees this year, 14 per cent plan to hire more people, and only 5 percent plan to reduce the number of employees.
The market for home loans has become more active in March
Regardless of a strong labour market, we can see that the saving power of private persons is decreasing. In the first quarter, the deposits of private persons grew only 0.6 per cent when compared to the previous year, while loans of private persons grew by 6.6 per cent. As of the middle of the previous year, the demand for home loans has decreased. The home loan market has been more active again for the last month and a half. In the first quarter, SEB financed nearly 840 home loans. The demand for consumer loans continues to be strong, even higher than at the same time last year. Among private persons, the challenge is that financial buffers are not distributed equally – a fifth of our customers have less than 100 euros on their bank accounts a week before payday.
SEB’s profit of the first quarter was 50.9 million euros, 14.9 million euros were paid as state taxes
The Estonian branch of SEB ended the first quarter of 2023 with a profit of 50.9 million euros. In 2022, SEB ended the first quarter with a profit of 27.2 million euros. In the first quarter, the operating profit of SEB was 78.7 million euros (46.1 million euros in the first quarter of 2022) and the operating expenses amounted to 18.3 million euros (15.4 million euros in the first quarter of 2022). In the first quarter of 2023, the bank reduced provisions for loan losses in the extent of 0.2 million euros (during the same period in 2022, the bank reduced provisions in the extent of 0.7 million euros). During the first quarter, SEB paid 14.9 million euros as different taxes to the Estonian state.
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