SEB third quarter results 2016

Today, SEB Grupp published the economic results for Q3 2016. Information about the results is available here: www.sebgroup.com/ir

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

The growth of Estonia’s economy remains slow; however, there are an increasing number of signs pointing to a turnaround in the economic environment. For example, whereas in Q1 this year investments increased 1.2%, in Q2 they increased by as much as 5.4%. This change is noteworthy because the last time investment growth was positive was in early 2014. Also, Estonian exports have fared better than last year: whereas in Q1 2016, exports increased by a mere 0.2%, in Q2 they increased by as much as 4.1%. The export of goods largely rests on solid demand in Scandinavia, especially in Sweden.

Private consumption boosting the economy

In Q3, private individuals were more active than during the same period last year. Private individuals’ increased financial buffers and an advantageous situation on the labour market enable people to make major purchases. Activity on the home loan market has reached levels where home loans worth EUR 100 million are being issued monthly in Estonia. Clients are mainly focusing on new development projects. In addition to home loans, the small loan market has also been growing steadily since 2015.

Levels of growth in private consumption remain good; however, its pace has slowed somewhat compared to last year. Several factors that accelerated consumption last year –such as a reduction in income tax, increased social benefits or a steep drop in fuel prices – have ceased this year. In the near future, household consumption is going to be limited increasingly by the return of inflation. The consumer price index rose in August for the first time this year, with inflation set to accelerate over the next few months. Whereas the increase in prices for the entire year is marginal, it is projected to top 2% next year.

Business short of labour

For businesses, the labour shortage is the biggest source of concern, and high demand for labour is pressuring employers into raising wages. In Q2, average wages rose 7.6% compared to last year. Under the conditions of slow growth, this means that an increasing share of the added value created in the economy is being paid out in wages, reducing price based competitiveness and reducing financial buffers for businesses.

Investments by businesses are mainly aimed at increasing automation in order to reduce the impact of a tight labour market on their competitiveness. In a positive change, growth has taken place in the sales revenue of businesses, which had been in decline in 2015. In terms of sectors, sellers of prefabricated houses and timber products are doing well, in particular due to the rapid development of the construction market in Sweden.

SEB earns EUR 19.5 million in profit in Q3

Since client activity has increased, Q3 has been the most successful one for SEB this year. In addition to client activity, SEB’s client base has also been growing apace.

Units of SEB Estonia finished Q3 2016 with a profit of EUR 19.5 million. SEB finished Q3 2015 with a profit of EUR 17.6 million. In the third quarter, the operating profit of SEB Estonia amounted to EUR 33.2 million (EUR 32.6 million in the third quarter of 2015) and operating costs amounted to EUR 13.8 million (EUR 13.9 million in the third quarter of 2015). In Q3 2016, the bank decreased loan loss provisions by EUR 100,000 (in the same period of 2015, the bank increased provisions by EUR 1.1 million).

For more information:

Evelin Allas
Communications Manager
Marketing and Communications Division
SEB

Phone +372 665 5649
Mobile +372 511 1718
Address Tornimäe 2, 15010 Tallinn
E-mail evelin.allas@seb.ee
www.seb.ee

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