Pre-tax profits up 15pc at Latvian bank backed by Desmond
Pre-tax profits at Rietumu Banka, the Latvian bank in which businessman Dermot Desmond has a one-third stake, rose 15pc in the first half of the year to LVL3.3m (€4.65m) as the Baltic nation experienced a resurgent economy after being bailed out three years ago.
The bank described the performance in the first six months of the year as "very successful" and pointed out that Latvia -- which was rescued by the International Monetary Fund and the European Union in 2008 -- was on its way to reintegrating its banking system into global financial markets.
Latvia raised $500m in June in its first eurobond issuance since its economy entered freefall in 2008. The issue was seven times oversubscribed.
"Investors were impressed by Latvia's turnaround and successful reforms made in the Latvian economy since the crises," according to Rietumu.
"Latvia's success in the capital markets, despite turmoil in the global markets, marks a significant event and proves that Latvia and its banking system are well on its way to reintegrate in the global financial system."
Rietumu's total operating income in the first six months of the year fell 15pc to LVL19.6m. That included LVL9.6m in net interest income, net commission income of LVL6m and net foreign exchange income of LVL4.88m.
Total assets at the bank rose by LVL130m to LVL1.12bn at the end of June, while its capital adequacy ratio stood at almost 19pc.
Loans and advances to customers dipped to LVL510m at the end of June from LVL532m a year earlier.
Almost all of Rietumu's loans have been advanced to corporate clients and nearly 40pc are related to commercial buildings.
A further 14pc are for traded securities and just 6.1pc have been advanced for residential mortgages.
In the last six months, the bank recorded impairment losses of LVL5.2m. That was a steep decline on the LVL11.2 in such losses it notched up in the first half of 2010.
Rietumu has been slowly branching out to target clients in Russia and other former Soviet states and pitches itself as a bridge between western and eastern economies.
Latvia introduced sweeping pay cuts in the public sector when its economy tanked, with its gross domestic product sliding 18pc in 2009.
But its severe austerity measures paid off. Recent data showed the economy grew 5.6pc in the second quarter of this year, driven by exports.
Total GDP growth for 2011 is expected to be 4.2pc, according to Swedbank.