AS HANSAPANK

ANNOUNCEMENT

26.02.99

 

 

HANSABANK’S 1998 UNAUDITED FINANCIAL STATEMENTS

 

 

Several significant changes took place both in Hansabank’s 

operating environment as well as the organisation during 1998. 

Excluding the results of the banks that were closed during the 

year, Estonian banking sector’s consoldiated loss amounted to 

EEK 600 million and Latvian banking sector’s loss may amount to 

EEK 800 million. During the year the number of bank’s operating 

in Estonia decreased by 6. The past year witnessed also the 

largest mergers in the Baltics to this date when on July 20 

Hansapank and Hoiupank merged and on July 29 Ühispank and 

Tallinna Pank merged, creating thus by far the two largest 

financial groups in the Baltics. During the rights issue in the 

Autumn Hansapank incorporated also a strategic partner in the 

form of FöreningsSparbanken (Swedbank), who currently holds a 

49.98% stake in Hansapank.

 

At the end of 1998 Hansabank’s consolidated assets stood at EEK 

27.7 billion and the operating result of the year was an EEK 

60.5 million loss.

The consolidated assets increased by EEK 13.3 billion during 

the year. A significant part of the growth comes from the 

merger with Hoiupank. The volume of Hoiupank's assets 

transferred to Hansapank as a result of the merger was EEK 9.8 

billion. (Taking into consideration the pro-forma financial 

statements of Hansapank and Hoiupank in the beginning of the 

year, the yearly growth of total assets amounts to EEK 3.5 

billion.)

The largest asset item is the loan portfolio, which increased 

by EEK 9.21 billion during the year (pro-forma growth was EEK 

4.1 billion) and amounted to EEK 16.79 billion at the end of 

December. (At the same time Hansabank Estonia’s loan portfolio 

stood at EEK 12.18 billion, or 98.5% of the bank’s clients’ 

deposits.) Allowance for credit losses increased to EEK 740.1 

million by the end of December, forming 4.4% of the loan 

portfolio.

The group’s securities’ portfolio increased by EEK 1.53 billion 

to EEK 2.36 billion during the year. The liquidity portfolio 

increased by EEK 1.13 billion, the investment portfolio by EEK 

0.59 billion and the trading portfolio decreased by 0.9 

billion.

 

During the merger a goodwill was created amounting to EEK 820 

million. According to the bank’s decision the goodwill will be 

amortised over 4 years, whereby the monthly amortisation 

amounts to EEK 17.1 million. During 1998 the goodwill was 

amortised in the amount of EEK 85.3 million and at the end of 

the year the goodwill totalled EEK 735.2 million. The 

consolidated goodwill amounted to EEK 755.2 million at the end 

of the year.

The group’s liabilities increased by EEK 9.9 billion during the 

year to EEK 23.04 billion. The main growth engines were 

clients' deposits, dues to other credit institutions and debt 

securities issued to the public.

During the year consolidated clients’ deposits increased by EEK 

7.75 billion (pro-forma growth EEK 2.82 billion) to EEK 14.75 

billion. As an important structural change one should highlight 

the continuing increase in the share of time deposits. As at 

December 31 time deposits totalled EEK 4.67 billion, ie. 31.7% 

of total deposits. Demand deposits amounted to EEK 10.08 

billion.

Dues to other credit institutions increased by EEK 0.75 billion 

during the year. In November three loans in the total amount of 

EEK 1.4 billion matured and had to be paid back. At the same 

time in December Hansapank received a DEM 150 million 

syndicated loan, consisting of two tranches. DEM 50 million of 

this loan was taken from EBRD with a 5 year maturity and DEM 

100 million from a syndication of commercial banks with a 3 

year maturity.

The volume of bonds issued by the consolidation companies 

increased by EEK 0.56 billion (pro-forma growth EEK 0.15 

billion) during the year. At the end of December the volume of 

bonds outstanding was EEK 2.05 billion.

 

The total amount of group’s subordinated capital increased to 

EEK 460.7 million. In December the extraordinary shareholders 

meeting approved the conversion of subordinated debt granted to 

the bank by EBRD in the total amount of DEM 35 million into the 

bank’s share cpaital.

These loans are included in the organisation’s own funds, 

thereby improving capitalisation. As at December 31, Hansabank 

group’s total capital adequacy was 18.8% and Hansabank's 

capital adequacy was 19.1%.

 

During the year shareholders equity increased by EEK 3.04 

billion to EEK 4.19 billion. During the year the bank issued 

40.5 million new shares taking the share capital to EEK 787.6 

million.

 

Hansabank Group’s unaudited financial result for the year was 

an EEK 60.5 million loss. The results of the larger 

consolidation companies were the following: Hansa Capital Group 

EEK 151.3 million, Hansabank Latvia and Zemes Banka EEK –77.5 

million, Eesti Kindlustus EEK –51.1 million. Hansapank’s result 

was an EEK 31.1 profit. However by deducting the extraordinary 

income in the form of dividends from subsidiaries (EEK 97.2 

million) and including the result of smaller subsidiaries the 

final result of banking activities in Estonia was an EEK 83.2 

million loss.

 

The group’s revenues increased by EEK 6 million, when compared 

to 1997, and amounted to EEK 1,24 billion. The composition of 

total revenue was the following: 37.5% net interest income 

after provisions, 41.1% fees and commissions, 11.3% trading 

income, 4.8% net income from insurance activities and 5.3% 

other income.

Net interest income for year totalled EEK 1,011.4 million, 

which exceeds the last year’s comparable result by 71.0%. When 

compared to last year, then interest income has risen by 108.6% 

and interest expense by 179.9%.

Loan and guarantee provisions amounted to EEK 594.3 million 

during the year, exceeding last year’s comparable figure by 8.9 

times.

During the year the group wrote off loans worth 224.6 million 

while recoveries totalled EEK 49.0 million.

Trading income for 1998 was EEK 140.1 million. The group 

received a EEK 170.7 million loss from bonds, EEK 20.1 million 

loss from investment and trading portfolio and EEK 42.9 million 

from options. At the same time the group earned EEK 163.5 

million from swaps and forward contracts. Revenue from currency 

exchange totalled EEK 217,0 million.

Fees and commissions received amounted to EEK 511.4 million, 

which exceeds the 1997 result by 40.3%. Within the total 

service fees the share of electronic services has constantly 

increased and forms already 25.1% of total fees. At the same 

time the share of cash services has started to decrease, 

forming currently only 9.3% of total fees.

 

The group’s operating expenses amounted to EEK 1,301.7 million 

in the year. The largest share is contributed by personnel 

expense, which totalled EEK 422.3 million. Administration 

expenses, which also include costs associated with the launch 

of the Lithuanian banking project and the merger with Hoiupank, 

increased by 133.3% when compared to the last year’s 

corresponding figure, to EEK 342.2 million. Depreciation cost 

for year amounted to EEK 143.0 million, which is 76.1% more 

than during the same period last year and goodwill amortisation 

amounted to EEK 104.1 million

 

The audited results will be published on March 10, 1998.

 

 

HANSABANK Ltd.

 

 

Mart Toevere

Economist

Tel. +372 6260 569