Latvijas Hipoteku un zemes banka
6-month operating results of Hipotēku banka in 2011 – the Bank has operated with profit of 3.1 million lats

Latvijas Hipoteku un zemes banka 

22.07.2011 07:55
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Riga, 2011-07-22 07:55 CEST (GLOBE NEWSWIRE) -- The start of 2011 has brought a
positive evaluation of Latvian economic development potential, bearing a
positive influence onto the economic recovery processes and triggering faster
business activity. During this period, the VAS 'Latvijas Hipotēku un zemes
banka' (the Mortgage and Land Bank of Latvia - Hipotēku banka) has constantly
moved towards becoming a development institution and attained sound operating
results - Hipotēku banka has obtained profit of 3.1 million lats in the first
six months of 2011. 

Rolands Paņko, Hipotēku banka Chairman of the Board, comments, 'By keeping to a
balanced financial policy and focused implementation of state aid programmes,
Hipotēku banka has returned to a steady growth in the first half of 2011.
Hipotēku banka is active in lending under the state aid programmes, thus
confirming the need for a specialized state aid institution. An agreement under
the transitional process towards a development institution was signed in June
with SIA IBS 'SEB Enskilda' on development and implementation of the strategy
of detachment of Hipotēku banka's commercial assets. 

The transformation process of Hipotēku banka into a state institution to aid
business will further facilitate the implementation of effective programmes
that respond to the needs of business. We are planning to launch a new state
aid lending programme in the third quarter of this year, issuing microloans and
grants to micro, small and medium businesses. During the first half of this
year we have completely implemented the funds of the working capital programme
to farmers of 10 million lats, and the government has increased the amount of
this programme to 18 million lats. In this period, we have also expanded the
accessibility of the Business start-ups programme and now the programme is
available also to current entrepreneurs, who are willing to start on a new of
field business operation and establish a new company for this purpose. In order
to help the entrepreneurs finding best ways with the state aid programmes, we
have made an online calculator for state aid programmes. 

Recognizing the essential role of Hipotēku banka in channelling the lending
resources to the small and medium business sector, the international rating
agency Moody's has retained the bank's long-term deposit rating on the previous
level. During the first half of this year, Hipotēku banka has completely
settled all its commitments towards its international syndicated lenders from
its own funds before maturity, maintaining a high liquidity ratio at the same
time.' 

Operating results

The profit before provisions and taxes of Hipotēku banka was 4.6 million lats,
that was doubled compared with the respective period in the previous year.  The
income of the first six months of this year reached 11.9 million lats, which is
30% more than during this period in 2010. Hipotēku banka has operated with
profit of 3.1 million lats during the first six months of this year. 

Assets

The volume of gross assets during the first six months of 2011 has shrunk by
59.3 million lats or 7%, reaching 748.9 million lats at the end of June. The
gross loan portfolio has shrunk by 5% to 565.6 million lats, constituted by the
promotional loan portfolio of 235.3 million lats (42% of the portfolio) and
commercial loans portfolio of 330.3 million lats (58% the portfolio). 

Deposits

The total volume of deposits during the first six months has grown by 5%,
reaching 376.7 million lats. 

Catchment

The number of customers of Hipotēku banka in the corporate sector is still on
the rise, this is due to the active operations of the bank in the realm of
implementing state aid programmes. Year on year, the number of new corporate
customers has grown by 26%. 

Capital adequacy and liquidity

Hipotēku banka maintains its capital adequacy and liquidity ratios steadily
high, which considerably exceed the minimum requirements specified in the Law
on Credit Institutions. The capital adequacy ratio was 16.3% on June 30 (8%
being the minimum requirement), the liquidity ratio on June 30 was 66.4% (the
minimum requirement being 30%). 

Progress of state aid programme implementation

Hipotēku banka continues to fund business start-up and development projects and
is working on developing new programmes. The total loans granted under the
Competiveness improvement programme for businesses amount to 151.3 million
lats. Under the European Social fund programme 'Support to starting
self-employment and business', there were 465 projects of business start-ups
supported by 5.8 million lats, and 996 new entrepreneurs trained. Under the SME
growth programme, 14.7 million lats have been granted, the lending is also
active under the working capital loans to farmers, where 399 loans have been
granted by June 30 for the total amount of 12 million lats. 11 farming
long-term investment projects of 6.3 million lats were funded from the funds of
the Credit fund. 

Hipotēku banka was established in 1993. The priority of the bank is supporting
the small and medium businesses and facilitating the economic activity in all
regions of Latvia. Hipotēku banka offers lending under targeted state aid
programmes to tend various business needs: loans for investment in business,
working capital loans, as well as loans for starting business. 


         Sandra Eglīte
         Public Relations Specialist of Hipotēku banka
         sandra.eglite@hipo.lv
         tālr.67774244, 26577810
         www.hipo.lv


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Language:     English
Company:      Latvijas Hipoteku un zemes banka
              
               
              Latvia
Phone:        
Fax:          
E-mail:       
Internet:     
ISIN:         LV0000800092
WKN:          
 
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