Q3 results – Bigbank loan and deposit portfolios continue rapid growth along with profits
In the third quarter of 2022 Bigbank earned 14.3 million euros in net profit, which is 17.7% more than during the same period last year. The profit for the nine months of 2022 was 28.4 million euros, an increase of 5.3 million euros (+23,0%) compared to the year before.
„Despite the turbulent external environment, we have reason to be satisfied with the Bigbank third quarter financial performance – the period was characterised by a strong growth of the loan portfolio, continued improvement of its quality and good profits,“ said Chairman of the Bigbank Management Board Martin Länts. According to him, in the third quarter the loan portfolio grew most in both the corporate loan and housing loan sectors, which is one of the most significant goals of the bank’s business strategy. „An increase in selling Euribor-linked loan products helps us diversify our portfolio and has a positive impact on the profits in a situation where interest rates are increasing and taking deposits is becoming more expensive than before,“ he added.
Profit before loss allowances and income tax was 20.4 million euros in Q3. In the third quarter expenses on credit loss allowances were 4.2 million euros. Interest income amounted to 32.7 million euros, and in comparison with the same period of 2021 interest income grew by 12.2 million euros (+59.8%).
The Bigbank loan portfolio saw a 39.0% increase during nine months and 12.2% in Q3. At the end of the third quarter the Group’s performing loan portfolio amounted to 1.2 billion euros, exceeding the 2021 year-end figure by 354.1 million euros (+39,8%). The share of loans over 90 days past due was 1.3% of the total portfolio, indicating a continued improvement of the quality of the portfolio in the course of the year, as the same indicator was 3.0% for the nine months of 2021.
The third quarter profit of the corporate banking segment amounted to 8.1 million euros, an increase of 6.6 million euros on the previous quarter. In addition to the rapid growth of the loan portfolio and its high quality, the strong quarterly profit of corporate banking segment was also significantly influenced by the gains from the revaluation of the underlying assets of investment loans with special conditions in the amount of 6.9 million euros. Revaluation gains on loans that carry investment risk are calculated annually, based on movements in the market value of customers’ investment property and the agreed pattern of profit sharing. The corporate loan portfolio grew by 68.7 million euros (20.0%) during the quarter.
In Q3 the Bigbank housing loan portfolio was 186.9 million euros (+27.7%). In comparison with the end of 2021 the housing loan portfolio has grown by more than one and a half times.
In nine months, the deposits increased by 38.6% and in Q3 by 6.5%. Saving deposits continue the strongest growth in this portfolio, in Q3 the volume reached 542.5 million euros (+10,7%). As at the end of the quarter the savings deposits made up 43.6% of the total deposit portfolio.
The Group's investment property portfolio, which includes both agricultural land and commercial real estate, grew to 47.4 million euros by the end of the quarter.
In addition to regular activities, several other circumstances had an impact on the Q3 results and the bank’s future business in general. The key event of the period was the listing of Bigbank unsecured subordinated bonds on the Nasdaq Tallinn Stock Exchange on 22 September. The base volume of 10 million euros was oversubscribed by more than twice. Its total volume eventually was 20 million euros. The issue consisted of 20,000 ten-year bonds, with the nominal value of EUR 1,000 each, fixed interest rate of 8% per annum. The additional capital of 20 million euros allows the bank to support its further growth in both the corporate banking and housing loans segments. This summer the rating agency Moody’s Investors Service completed the assessment of Bigbank and assigned the bank Baa3 long-term and Prime-3 short-term foreign and local currency bank deposit ratings. The investment-grade rating that Moody’s assigned to Bigbank, as disclosed on 1 July 2022, is assurance to the current depositors and partners about the bank’s operating model, the quality of the portfolio and is also necessary for its further international expansion.