In 2019, proving its ability to be stronger than the market forces, AS PrivatBank (Bank) proactively continued its development, comprehensively strengthening potential for future growth and responding to the expectations of its customers and partners, thus laying the foundations for growth in service demand and, consequently, in income and financial performance indicators in the near future.
The year 2019 is clear evidence that the Bank is able to and successfully provides lending services in the domestic market – 86% of the Bank’s total loan portfolio comprise of loans issued to residents of the Republic of Latvia, of which 53% is a commercial loan portfolio and 47% are loans issued to individual customers.
As at 31 December 2019, the Bank’s total assets were EUR 197.1 million; the Bank’s operating income reached EUR 8.6 million, which represents an increase of 13% from the previous year. Net interest income has increased by 32% compared to the same period of 2018.
In 2019, the Bank continued to maintain high liquidity coverage and capital adequacy ratios. At the end of 2019, liquidity coverage ratio of the Bank reached 737,44%, which is much higher than the minimum required level of liquidity coverage ratio (minimum regulatory liquidity coverage ratio is 90%), whereas the Bank’s capital adequacy ratio of 22.29% is amongst the highest in the Latvian banking sector, which allows the Bank to accumulate significant losses and successfully continue to develop in strategically important areas.
In 2019, the Bank managed to reduce total administrative expenses by 2.4% compared to the same period in 2018.
The Bank ended the year 2019 at a loss of EUR 6.9 million. It should be noted that the Bank incurred impairment losses of 2.35 million EUR, which is 73% more than at the end of 2018.
The Bank’s dynamic development and orientation towards new horizons is best confirmed by the most significant achievements of 2019:
- In March 2019, the Bank has implemented the new internet bank. The primary objective of the Bank was to create user‑friendly internet bank using modern web technologies and new ergonomics and design trends;
- In May 2019, the Bank has concluded a cooperation contract with the Altero loan comparison platform. The cooperation with Altero is a strategic step of the Bank, through which the Bank’s consumer loan has become available to a wider customer base;
- Within the framework of continuation of the business development initiatives, in the second quarter of 2019, the Bank has established a successful cooperation with Longo – the largest trader of used cars in Latvia;
- In the middle of 2019, the Bank has initiated cooperation with Nordigen – the enterprise engaged in account statement analytics, which has significantly improved process efficiency in the risk assessment area;
- In September 2019, within the framework of its digitalization strategy, the Bank implemented Deloitte Latvia artificial intelligence solution, which helps to precisely and timely identify customers’ lending needs and secures employees with required information to ease communication with customers.
- In December 2019, supporting the vital and promising growth of the air freight sector, the Bank financed the purchase of ATR72-212A (500) cargo aircraft by AS RAF-AVIA in amount of to 3.560 million euros.
It should of course be noted that the economic recession caused by the COVID-19 virus will undoubtedly make adjustments to the ambitious lending plans in the coming years, however, the Board of the Bank is determined to use this time for full implementation of the remaining auditors’ recommendations and for continuation of the ongoing change of business model, which is based on strengthening competitiveness of the lending services and ensuring remote access to services.