Banks, Estonia, Financial Services
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Wednesday, 05.02.2025, 05:47
Estonian banks earned a total loss of 1.9 bln kroons in Q2
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The profitability of branches of foreign banks has decreased – their loss formed 30% of the total loss in the banking sector in the second quarter.
According to the central bank, the banks’ financial results were most affected by devaluing of loans that amounted to nearly 2.3 billion kroons. The devaluations of loans in the first half of this year form 1.6% of the banks’ loans portfolios.
According to the baseline scenario in the Bank of Estonia’s economic outlook drafted this spring, the losses on loans might this year grow to up to 4% of the loans portfolio.
In addition to the growing losses on loans, the banks’ profitability was also adversely affected by the smaller net interest rate revenues that were by nearly 25% smaller than last quarter.
The capitalisation of the banking sector stays high, estimated the Bank of Estonia.
The capital adequacy indicator fell by 0.5 percentage points in June due to growing losses earned by banks, amounting to 21.8%. This is, however, sufficiently higher than the 10-per-cent minimum standard for capital adequacy.
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