Norvik Banka has prepared and published its 2017 (unaudited) financial results. They are available on the bank's website at “About the Bank / Financial Results”
The auditors' opinion has not been received at the current time because the auditors need additional time to assess the overall situation in the financial sector of the Republic of Latvia and understand the impact of the anticipated AML regulation on the banking sector. As many of our clients and partners already know, the financial sector is currently going through a significant period of uncertainty in relation to the expected regulation in the non-resident business model. The delay in issuing the auditors opinion is not related to AS Norvik Banka per se, but with events in the banking sector as a whole.
Oliver Bramwell, Chairman of the Board of Norvik Banka, said: "The main thing I want to emphasize is that in 2017 we have been working profitably and efficiently in our day-to-day business, and a lot has been achieved. The Bank continues to implement the strategy launched in 2016, namely the reduction of its assets from the Russian Federation.
In 2017, a contract was concluded for the sale of the largest asset located in the Russian Federation - ownership in PAO "Norvik Bank". As a result of the conclusion of this agreement, as of 31.12.2017, a significant impairment loss was recognized (26 810 thousand euros), which is mainly due to the fall of the Russian ruble exchange rate, but the sale led to a significant improvement in the Group's capital adequacy ratio, as the risk weighted assets and capital pressure were significantly reduced.
The other major reason for the incurred losses for 2017 is the recognition of impairment losses for the portfolio of non-profile assets (13 988 thousand euros), i.e. assets that were taken over several years ago through collections on non-performing loans, and were more conservatively revalued in 2017. This is not a realized loss, so there is reason to believe that some of the losses will be reversed after the sale of the assets in the future.
It is important to emphasize that these losses have a one-off effect from which adverse effects are not expected in the coming periods."
Results at a glance -
In 2017, the Bank's net operating income amounted to 44.5 million euros (EUR 50.7 million in 2016). Compared to the previous year, the Bank's net operating income increased by 4.5 million euros (+11.3%), (notwithstanding the one-off revenues received last year of 10.7 million euros from Visa Inc.'s share repurchase transaction).
- The main indicators of the Bank's balance sheet are as follows:
- The total assets at 31 December 2017 were 789 million euros, which is 89 million euro lower than in the period before 31 December 2016, mainly due to the reduction of customer deposits;
- The client's loan portfolio at the end of 2017 was 214 million euros (a decrease of 27.6 million euros compared with the figures for 2016);
- the liquidity ratio at the end of the reporting period was 61.33% (compared to 59.45% on 31 December 2016).
As regards the capital position, the main indicators are:
- The Bank's capital adequacy ratio as at 31 December 2017 was 14.7%, compared to December 2016 - 21.44% and the minimum regulatory requirements of 14.00%;
- The Group's capital adequacy ratio at December 31, 2017 was 10.66%, compared to December 2016 - 14.80% and the minimum regulatory requirements of 13.55%.
Following the sale of PAO Norvik Bank sales, the Bank / Group's capital adequacy ratio as at 23.03.2018 were 16.37%/14.81% respectively.
The loss of the Bank in 2017 amounted to 44 million euros (in 2016 - a profit of 9.4 million euros).