Profits in Desmond's Latvian bank plummet by 66pc
Pre-tax profit at Rietumu Banka, the Latvian bank in which financier Dermot Desmond has a one-third stake, slumped 66pc to Lat2.85m (€4.02m) in the six months to the end of June, according to the institution's accounts.
The dramatic slide in profitability comes as the Baltic nation attempts to claw its way out of an economic quagmire that saw the country's GDP contract by a spectacular 18pc last year, on top of a 4.6pc decline recorded in 2008.
Rietumu Banka's after-tax profit for the six months to the end of June fell 72pc to just over Lat2m (€2.8m). In 2009, the bank posted a pre-tax profit of Lat8.13m (€11.5m), down almost 60pc on 2008.
Rietumu Banka said it had maintained a "leading position" in Latvia's banking sector during the first half of the year despite the "continuing crisis influence" on the country's economy. The country had to be bailed out by the International Monetary Fund and the EU.
It shouldered an impairment charge of Lat14.7m (€20.7m) during the first half, with Lat10.3m (€14.5m) of that related to loans and advances made to customers. The total impairment charge in 2009 was almost Lat9.8m (€13.8m).
Net impairment losses during the first half of 2010 were Lat11.27m (€15.9m), after the bank recorded a reversal of some prior impairment losses.
Almost 10pc of the bank's overall loan book of Lat 532.2m (€751m) is classed as impaired.
About 43pc of its loan book has been provided for 'financial services', while 24pc is for 'real estate management'.
During the reporting period the bank continued its strategy of expanding the number of "high-class" services it offered to corporate and high net worth individuals in Russia, Belarus and former Soviet republics.
The accounts note that total assets amounted to just over Lat997m (€1.4bn) at the end of June. That's a 2pc decline on the figure at the end of last December. Mr Desmond acquired his stake in Rietumu in 2005 for an estimated €100m. He bought shares in the institution from its co-founder, US banker Tom Levins, and others investors.
Earlier this year, Hong Kong businessman Balram Chainrai got a 5pc stake in the bank. He also controls Portsmouth football club in the UK.
Swedish bank SEB said it expects Latvia's GDP to contract by 1.5pc this year. That's better than a previous forecast for 2.8pc shrinkage. SEB said a recovery in exports warranted the improved forecast.