Comment on the economic results of the units of SEB Estonia in 2014

Today, SEB Group published the economic results of 2014. Relevant information is available here: www.sebgroup.com/ir

Infographics with the main data about year 2014: http://www.seb.ee/eng/2014-numbers

Riho Unt, Chairman of the Management Board of SEB Pank commented the results of SEB units in Estonia as follows:

Companies will take a more cautious position

The previous year’s business environment was influenced by critical events in Russia and Ukraine. It is estimated that every fifth large company in Estonia gets at least 20% of their business profit from business related to Russia – therefore, the impact of Russian crisis on our companies is not small. I am happy that we played out the potential crisis scenarios with several companies depending on Russian market already in last February. However, back then, the customers were convinced that this practice has a theoretical importance, but as we see, early planning paid off.

On an average, a change in policies of the Baltic and Estonian companies takes six months. This is rather fast on the global scale. Our advantage is the relatively small size of large Estonian companies on the global scale – to change course, it is enough for them to find 2–3 major substitute customers in Europe or elsewhere. Due to early reaction in the first half of the year, several companies have today been able to start dispersing their risks related to Russia. Agricultural sector, transit and companies exporting to Russia are facing major challenges.

Considering the changed business environment, the companies are naturally cautious, major development projects and investments are being postponed. Presently, implementation of financial management competences is essential for the companies to avoid a situation, where the volatility of financial markets would damage the companies’ substantial business activity. Thus, it is now the time of strong financial managers and SEB is also helping its customers in this field, providing active financial consultation to the companies. Over the few past months, we have provided consultation and assistance in playing out risk scenarios to almost 500 Estonian companies. In spite of increased risks of the business environment, SEB finished 2014 with excellent loan quality – the percentage of non-performing loans decreased to almost 1% in the previous year.

Increasing purchasing power characterises the behaviour of private customers

Contrarily to all expectations, Estonian retail consumption is still showing a growth trend. Low inflation, salary increase and election promises encourage consumption. Some are of a cautious stand instead, and focus their attention at generating a cash buffer. In 2014, the deposits of private persons in SEB increased by 8%, which indicates the distinguishable insecurity of people, as well as their wish to prevent possible problems in the future.

The housing market slowed down in the second half of 2014; the increase remained low compared to 2013; and on the real estate market, the sellers passed the baton to the purchasers. 75% of home loans are taken together with insurance against possible solvency problems, which is also indicating people’s need to create additional sense of security for themselves. Pension funds performed extremely well last year; their assets increased up to 18%.

2014 was characterised by continuous change in consumption habits. In SEB, the mobile bank visits increased twice, exceeding significantly the office visits, which decreased by 15%, following the trend of previous years. Popularity of card payments also continued to increase. While in 2013, a customer of SEB Pank performed an average of 150 card payments in a year, in 2014, the relevant figure was 180, approaching the level of Scandinavian countries, where an average of 200 card payments are performed annually.

Paperless office service, which can now be tested in almost every SEB bank office, is gaining much popularity. The new service method helps to keep the entire financial history in a single place and offers convenience and security, as well as additional control over financial matters, because all documents of bank transactions are located in a single place – the customer’s Internet Bank. Just in one week in December, almost 1,000 SEB customers used paperless service all over Estonia, saving 5,000 sheets of paper in total.

Economic results of SEB in 2014

For SEB, 2014 proved very successful. In addition to strong economic results, we also received various international recognitions. International economic journals The Banker and Euromoney chose SEB the best bank in Estonia in 2014. The Banker assessed SEB private banking as the best in Estonia and Global Finance provided similar assessment to the internet bank of SEB’s private customers. Baltic stock exchanges selected us the stock exchange member of the year and the Responsible Business Forum awarded the efforts of SEB in the development of sustainable banking with the silver stamp.

SEB Estonian units finished 2014 with a profit of 75.5 million euros. In 2013, the profit of SEB Estonia amounted to 73.9 million euros. Annual operating income of SEB Estonia amounted to 134.8 million euros (132.1 million euros in 2013) and operating expenses to 59.2 million euros (62.1 million euros in 2013). In 2014, the bank increased loan loss provisions by 0.04 million euros (in 2013, the bank decreased provisions by 3.9 million euros).

Further information:
Silver Vohu
Head of Communications
SEB
Phone: +372 665 5393
Mobile: + 372 521 1170
E-mail: silver.vohu@seb.ee
www.seb.ee

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