Bigbank Unaudited Financial Results for 2022 Q3 and 9 Months
In the third quarter of 2022, Bigbank earned 14.3 million euros in net profit, which is 17.7% more than in the same period last year. The profit for the nine months of 2022 was 28.4 million euros, representing a year-over-year growth of 5.3 million euros (23.0%). Profit before loss allowances and income tax for the third quarter was 20.4 million euros. Expenses on credit loss allowances amounted to 4.2 million euros. Interest income amounted to 32.7 million euros, an increase of 12.2 million euros (59.8%) compared with the same period last year.
The Bigbank loan portfolio grew, expanding in nine months by 39.0% and in the third quarter by 12.2%. 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 accounted for 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.
The housing loan portfolio grew by 27.7% to 186.9 million euros in the third quarter. Compared with the end of 2021, the portfolio has increased by more than 1.5 times.
In nine months, the deposits increased by 38.6% and in the third quarter by 6.5%. The fastest growth was again shown by savings deposits, which increased by 10.7% to 542.5 million euros in the third quarter, accounting for 43.6% of the deposit portfolio at the end of the quarter. 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.
| Income statement, in thousands of euros | Q3 2022 | Q3 2021 | 9M 2022 | 9M 2021 |
| Net interest income | 28,627 | 18,493 | 68,364 | 51,161 |
| Net fee and commission income | 1,891 | 1,676 | 5,511 | 4,652 |
| Net income (loss) on financial assets | -161 | -57 | -464 | -168 |
| Net other operating income | 170 | -426 | 243 | -1,302 |
| Total net operating income | 30,527 | 19,686 | 73,654 | 54,343 |
| Salaries and associated charges | -5,279 | -4,308 | -15,787 | -12,616 |
| Administrative expenses | -4,586 | -3,780 | -12,723 | -10,221 |
| Depreciation, amortisation and impairment | -1,034 | -842 | -3,003 | -2,531 |
| Other gains (losses) | 804 | 3,873 | 673 | 4,234 |
| Total expenses | -10,095 | -5,057 | -30,840 | -21,134 |
| Profit before loss allowances | 20,432 | 14,629 | 42,814 | 33,209 |
| Net loss allowances on loans and financial investments | -4,186 | -1,488 | -10,744 | -7,988 |
| Profit before income tax | 16,246 | 13,141 | 32,070 | 25,221 |
| Income tax expense | -1,946 | -989 | -3,708 | -2,168 |
| Profit for the period | 14,300 | 12,152 | 28,362 | 23,053 |
| Statement of financial position, in thousands of euros | 30 Sep 2022 | 30 June 2022 | 30 Sep 2021 |
| Cash and cash equivalents | 141,163 | 173,611 | 109,535 |
| Debt instruments at FVOCI | 45,171 | 46,065 | 47,066 |
| Loans to customers | 1,258,177 | 1,114,146 | 760,725 |
| Other assets | 103,356 | 101,584 | 101,999 |
| Total assets | 1,547,867 | 1,435,406 | 1,019,325 |
| Customer deposits and loans received | 1,281,161 | 1,204,918 | 826,064 |
| Subordinated notes | 40,049 | 20,023 | 5,055 |
| Other liabilities | 17,521 | 17,449 | 14,990 |
| Total liabilities | 1,338,731 | 1,242,390 | 846,109 |
| Equity | 209,136 | 193,016 | 173,216 |
| Total liabilities and equity | 1,547,867 | 1,435,406 | 1,019,325 |
In addition to regular activities, several circumstances had an impact on the third quarter results and the Group’s future business in general:
The most important event of the period was the listing of Bigbank unsecured subordinated bonds on the Nasdaq Tallinn Stock Exchange on 22 September. The base amount of 10 million euros was oversubscribed by more than twice. The size of the issue was 20 million euros. 20 thousand bonds were issued with a nominal value of 1,000 euros each, a fixed annual coupon rate of 8%, and a maturity of 10 years. 20 million euros of additional capital helps the bank sustain growth in the corporate banking and housing loan segments.
This year the beginning of the new business strategy period of 2022–2026 started for Bigbank. In order to support the new business strategy and achieve the expected return on capital, the management board of Bigbank AS has made decisions concerning future operations of the Swedish and Bulgarian branches. In August it was decided to suspend the issue of new loans at the Swedish branch from 1 September 2022, in October it was decided to suspend the issue of new loans at the Bulgarian branch from 1 November 2022. The Group will continue raising deposits and servicing its existing loan portfolio in both Sweden and Bulgaria.
Comment by the Bigbank Chairman of the Management Board Martin Länts:
„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.
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.
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 us, as disclosed on 1 July 2022, is assurance to our current depositors and partners about Bigbank’s operating model and the quality of our portfolio as well as supports our further international expansion.
The base volume of the issue of unsecured subordinated bonds in September was oversubscribed by more than twice. This was a landmark achievement for Bigbank, indicating that the investors have faith in our business strategy and ability to successfully implement the strategy. I thank all the investors for placing their trust with Bigbank”.
The Bigbank financial statements can be found here: https://investor.bigbank.eu/reporting/
Bigbank AS (www.bigbank.eu) is an Estonian capital-based bank specialised on loans and deposits for private and business clients. In addition to operations in Estonia, the bank has branches in Finland, Sweden, Latvia, Lithuania, and Bulgaria and offers its products in the form of cross-border services also in Austria, Germany, and the Netherlands. The Bigbank balance sheet total is more than 1.5 billion euros.
Argo Kiltsmann
Member of the Management Board
Phone: +372 5393 0833
E-mail: [email protected]
www.bigbank.ee
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