Best bank: Swedbank
Despite the Estonian economy experiencing a severe recession last year, the country’s banking sector remained robust and continued to generate stellar growth, supported by the resilience of companies and households facing higher interest rates.
The bank that navigated the economic conditions the best, delivering outsized profit and income growth while launching a range of new services and solutions, is Swedbank – Estonia’s best bank this year.
In the year to the end of December 2023, Swedbank generated a net profit of €480 million, up 211% year on year, with total income rising 106% to €747 million.
Key drivers included increased net interest income, net insurance income, lower credit impairment and 7% growth in the bank’s lending book to €632 million, mostly from mortgage loans, corporate loans and leasing.
This contributed to the bank generating a return on average equity of 26% – up from 9% in 2022 – and a return on assets of 3.25%.
Alongside this strong financial performance was the launch of new services, including a new mobile terminal payment solution for corporate clients, enabling entrepreneurs to accept card payments.
Other key developments had a sustainability focus. For example, the bank launched an educational environmental, social and governance (ESG) self-assessment tool for businesses to help them identify their main ESG risks. Swedbank also launched a specialized green afforestation loan, issued the first agro loan with a sustainable farming certificate in Estonia and started issuing cards made from 100% recycled plastic.
Highlighting the extent of its commitment to sustainability in its own operations, last year the bank also collected some 4,000kg of biowaste from its Liivalaia office building and, with its partner Nutriloop, turned it into 1,200kg of compost to be used to fertilize its office plants.
Best digital bank: LHV Pank
LHV Pank made progress in mobile banking, card security, payment systems and open banking last year.
The bank integrated pension services into its app, allowing clients to join pension pillars II and III and manage their shares directly. LHV also simplified its bank card unlocking procedure on its app, allowing customers to unlock their cards immediately after entering an incorrect PIN, thus eliminating the need to contact customer support.
In the payments space, the introduction of Apple Pay for e-commerce resulted in an almost one-third of card payments being made using digital wallets. The lender also launched a smart point-of-sale terminal, a two-in-one solution that combines payment processing and order management in a single device, which has been well received in the hotel and catering sector.
The bank has extended digital wallet functionality to all retailers and introduced an open banking solution for bill payments, leading to an increase in the number of timely invoice payments.
