Today, SEB Grupp published its business results for 2015.

2015 was a challenging year for the global economy. The Estonian economy served up both reasons for delight and trends that should be viewed with caution. Those likeliest to look back at last year through rose-tinted glasses are employees, since low unemployment kept wage growth rates high, making it possible to both save and borrow.

Information about the results is available at: www.sebgroup.com/ir

Allan Parik, Chairman of the Management Board of SEB Pank, commented on the results of SEB units in Estonia, in the following terms:

2015 was a challenging year for the global economy. The Estonian economy served up both reasons for delight and trends that should be viewed with caution. Those likeliest to look back at last year through rose-tinted glasses are employees, since low unemployment kept wage growth rates high, making it possible to both save and borrow. The situation was also good for large enterprises, which were able to grow their return on sales. Last year was tougher for companies with fewer than 50 employees, as they lost some of their return on sales over the course of the year. Despite last year having been a mixed blessing, the activity and business volumes of all of our client segments have grown, and this is also reflected in the strong business performance of SEB Pank.

Private clients’ strong purchasing power

2015 was a good year for people who work. In the third quarter of the year, constant growth in employment culminated in a situation where a record high proportion, 67 per cent, of Estonia’s working-age population were employed. In addition to the improved employment levels, 2015 also featured rapid wage growth, reaching 6 per cent on average for the first three quarters.

What makes 2015 exceptional is the fact that whereas normally a rapid rise in wages and decreased employment are coupled with significant inflation, last year, by contrast, saw the average consumer basket become cheaper. Affordable prices and wage growth encouraged people to invest in improving their living conditions. 2015 saw new sales of home loans by SEB increase 25.2 per cent, with EUR 51.4 million more issued in home loans than in 2014. Altogether, the entire loan portfolio grew 5.7 per cent.

Compared to previous periods, employees also ended up with more cash in hand: the income tax rate was reduced, whereas the tax exempt minimum increased. Certainty with respect to the sustainability of decisions by households is added to by the fact that, on top of consumption and borrowing, private persons’ deposits at SEB grew 6.3 per cent. Accordingly, private persons prefer saving to borrowing, in spite of low interest rates.

A year of many challengers for entrepreneurs

Whereas 2015 was a very successful year for employees, it posed several challenges for entrepreneurs. Companies’ return on sales is decreasing, and this calls into question any further improvement in the employment and wage growth indicators.

Stiff competition on foreign markets and a rapid rise in labour costs are forcing companies to be ever smarter in creating new products and more efficient in their operations. In 2015, it was precisely larger enterprises that managed to better adapt to their circumstances. While companies with more than 50 employees experienced a return on sales increase of 3 per cent in the first three quarters of 2015, companies with fewer than 50 employees were forced to accept a reduction in their return on sales by as much as 8 per cent. The same trend was also reflected among SEB’s clients: whilst deposits by major enterprises grew 9 per cent last year, deposits by small and medium-sized enterprises grew 2.8 per cent. In spite of a challenging environment, our clients have expanded their operations. In total, companies’ loan portfolio increased approximately 2 per cent.

2015 at SEB focused on consultation and digitisation

In order to provide its clients with the best solutions possible, development of consultation services was a keyword for SEB in 2015 when it came to both private and business clients. Comprehensive consultations provide clients with an overview of the entirety of their financial obligations and capabilities. Moreover, in terms of business clients the focus was on supporting them in making investments to expand their operations and grow their production capacities. It is a delight to see that our support has enabled rapid growth in Estonia’s timber and furniture industry, which posted outstanding results last year. The sanctions on Russia, the low price of milk and swine fever have been causing headaches in the agricultural sector. In spite of any temporary difficulties, we firmly support our clients who are farmers, because we believe that agriculture has potential in Estonia in the long term. In terms of global drivers, price erosion for commodities and the entrenchment of negative interest rates also warrant mentioning.

The other keyword for 2015 was the continuation in rapid digitisation. Our clients’ consumption patterns have changed; for example, card payments gained 8.4 in popularity year on year, and their preferences were for every fifth Internet Bank transfer to be effected via Mobile Bank. Our branches across Estonia are evolving into consultation centres. Our paper-free service, too, is commanding positive recognition on an ever broader scale. This solution –d more client-friendly, efficient and environmentally sustainable than anything before – enabled us, together with our clients, to save approximately 400 reams of paper.

SEB’s economic results for 2015

The units of SEB Estonia finished 2015 with a profit of EUR 75.5 million. SEB Estonia finished 2014 with a profit of EUR 75.5 million. The operating revenue of SEB Estonia for the year amounted to EUR 135.1 million (EUR 134.8 million in 2014) and its operating costs to EUR 61.1 million (EUR 59.2 million in 2014). In 2015, the bank decreased loan loss provisions by EUR 3.72 million (in 2014, the bank increased the provisions by EUR 0.04 million).

Infographic with key figures for 2015: http://www.seb.ee/2015-aasta-numbrites

For more information:

Kristi Jänes
Project Manager for Communication
Marketing and Communications Division
SEB

Tornimäe 2, 15010 Tallinn
Phone +372 665 5399
Mobile +372 5569 0616
E-mail kristi.janes@seb.ee
www.seb.ee

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