Best bank: SEB Banka
Despite the Latvian economy dipping into recession last year, the banking sector delivered impressive bottom-line growth, with total profits almost doubling year on year to €622 million.
Leading the sector with record results was SEB Banka, Latvia’s best bank.
To the end of December 2023, the bank, led by Ieva Tetere, president and chair of the management board, reported a 100% year-on-year rise in profit before credit losses and imposed levies of €186 million, supported by operating income of €249 million, up 64% from 2022.
Higher rates and loan growth across key segments underpinned the rise in profits. Loans to the public hit a total of €3.3 billion – up €120 million on 2022 – with €31 million in new consumer lending, a 27% increase on the previous year.
Lending to large corporates and small and medium-sized enterprises was also up, rising 4% to €267 million and 17% to €584 million, respectively.
Growth was also recorded on the other side of the balance sheet, with the volume of business savings accounts and term deposits growing 180% year on year to around €340 million. The volume of retail term deposits and savings accounts also increased, rising 60% to €710 million.
The bank increased its retail customer base by 12,000 – group wide it banks 430,000 customers – made a series of digital enhancements to its internet banking and e-commerce platforms, and launched a green renovation loan, expanding its sustainable finance solutions.
The bank’s profitability – like that of many other banks in the country – has been impressive in recent years and it has also become a political issue.
Last year the Latvian parliament passed two pieces of legislation to tackle bank profits and high mortgage rates: a new corporate income tax and a mortgage borrower protection fee – used to finance a reduction in mortgage rates – both of which came into force from January 1 this year.
Combined these two new measures could cost Latvian banks up to €230 million this year, according to Finance Latvia Association, the country’s banking sector trade body.
