Today, SEB Group published the economic results for the second quarter of 2017

Today, SEB Group published the economic results for the second quarter of 2017. Information about the results is available here: www.sebgroup.com/ir

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

Economy has considerably enlivened

The first half of 2017 has clearly been successful for the Estonian economy. Economic growth, smouldering for so long, enlivened in the first quarter significantly, reaching the highest level in five years with 4.4 per cent. The mainstay of the Estonian economy, export, strengthened thanks to external demand by a two-digit figure in the first months of the year. It seems that after ten years both Estonian and European economies are finally overcoming the prolonged legacy of the economic crisis.

Estonia’s employment rate is one of the highest in Europe

Although it was predicted that due to the ongoing reform of the capacity for work the ranks of unemployed would increase on the back of people that used to be inactive on the labour market, this has not happened and the unemployment rate has continued to drop. With 66.3%, the employment of Estonians is one of the highest in Europe. Working people have cause to continue to enjoy a rapid increase of wages, reaching 5.7% in the first quarter. The tense situation on the labour market is currently one of the biggest challenges the economy is facing.

Profitability of companies has improved

While in previous quarters deterioration of the profitability of companies caused concerns, there are some positive signs now: in the first quarter of the year, companies outside the financial sector earned EUR 612.3 million in profit, which is 18% more than at the same time last year. As a reminder, in the previous eight quarters, companies managed to grow profit in just one quarter.

Private persons are expecting broader opportunities to invest money

While today several economic indicators already exceed the pre-crisis level, there is one where no recovery can be seen - the value of listed Estonian companies relative to the gross domestic product. In the good years this indicator has been as high as 50 per cent in Estonia, it has been as low as 10 per cent in recent years. In comparison, the value of US listed companies is running at 150% of GDP and is around 65% in the euro zone.

The small size of the market and lack of investor interest to participate in it has become a dead end. Extremely low liquidity is repelling professional investors; low expected yields from stock issues coupled with high demands drive companies to seek alternative sources of financing. Low level of activity on the capital market on the one hand limits the financing options of companies, while on the other hand individuals that wish to grow their money on the securities market are forced to mainly invest abroad.

Thus, the State’s plan to attract new companies on the stock exchange is welcome as it allows broader options to be provided to invest and contribute to Estonia’s economic growth.

Soon SEB’s video meetings will replace the need to come to a bank office

Services made available in December 2016 and May 2017 to SEB’s corporate and private customers, respectively, brought considerable changes both in customer relations as well as in the day-to-day operations of the bank. This new service channel has allowed the development of customer relations with Estonians living in Estonia and abroad. In the past two months we have served customers from the United Arab Emirates, the Netherlands, England, Norway, Finland, Sweden, Germany, Belgium and several other countries. When we launched bank appointments via video calls we expected this to become a service for customers living far from bank branches and to those whose pace of life leaves no time to come to a branch, however, the need has proven to be much wider. When we look at the trend, it can be expected that in only two years, one-half of private person consultations will be conducted via video, and even more so with dealings with corporate customers.

Economic results of SEB continue to be strong

In the first quarter, SEB Estonia paid EUR 30 million in dividends on its 2016 profit, from which corporation tax was paid in the sum of EUR 7.5 million. The units of SEB Estonia finished Q2 of 2017 with a profit of EUR 21.4 million. In Q2, the operating income of SEB Estonia amounted to EUR 35.9 million (EUR 48.6 million in Q2 of 2016, including one-off income of about EUR 16.3 million)) and operating costs to EUR 14.4 million (EUR 17.5 million in Q2 of 2016). In Q2 of 2017, the bank increased loan loss provisions by EUR 0.1 million (in the same period of 2016, the bank decreased provisions by EUR 1.1 million).

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