Bigbank AS Results for July 2024

Bigbank's loan portfolio also grew significantly in July, with a monthly increase of 71 million, which is a record for this year. The largest monthly growth was seen separately in the business loan and home loan portfolios. The strong growth figures in both business lines indicate that despite the still weak general economic situation in Estonia, Bigbank's loan offerings are very attractive to both private home buyers and business clients. The consumer loan portfolio also showed solid growth, falling just short of the strong May result in the monthly comparison.

In July, the pace of Euribor's decline accelerated – by the end of the month, the 6-month Euribor fell below 3.6%, which is the lowest interest rate since May 2023. For most business and home loan clients, this means continued relief in interest payments, while for Bigbank, it results in reduced interest income. On the deposit side, this means a reduction in deposit interest rates for clients, especially noticeable in the decline of interest rates on 1-year and longer-term deposits. In Bigbank's deposit portfolio, the trend that started in the second quarter continues, where an increasing number of deposit clients prefer short-term fixed deposits in a declining interest rate environment over long-term fixed deposits and savings deposits. Overall, this resulted in growth in the fixed deposit portfolio and a decrease in the savings deposit portfolio. The total deposit portfolio decreased by 18 million euros in July.

The credit quality of the loan portfolio did not deteriorate in July. The volume of impairments and provisions for loans and financial investments amounted to 1.7 million euros, which is a significant decrease compared to the average level of the first half of the year. The proportion of non-performing loans in the total loan portfolio remains low.

July's net profit of 3.4 million euros is a satisfactory result. Compared to the cumulative results of the first seven months of last year, Bigbank's net profit has decreased by 1.5 million euros. The main factors contributing to this decline have been the increase in net loss allowances for loans and financial investments and provision expenses, but the rise in salary and income tax expenses has also had a significant impact. The latter is primarily due to the income tax obligation imposed on credit institutions in Latvia, which has affected financial results since December 2023.