The Estonian business unit of Swedish financial services group SEB report a profit of EUR 63.7 million euros for 2018, down from EUR 85.3 million the year before. According to the bank, the drop in profits has to do with income tax payments.
The operating income of SEB Estonia was EUR 155.9 million last year, up by 7%. Operating expenses totaled EUR 57.2 million, down by 1.2%, the bank said.
The bank increased its loan portfolio by EUR 900,000 after shrinking it by EUR 5 million the year before.
Last year’s profit of EUR 63.7 million was affected by income tax paid on an increased dividend payment: in 2018, SEB paid out EUR 34.1 million in income tax, while the bank’s income tax payment a year earlier totaled just EUR 7.5 million.
The bank’s CEO, Allan Parik, said in a press release that 2018 was a successful year for the Estonian economy, but that there were several concerns as well. Although economic growth was fast, reaching 3.6% of Estonia’s gross domestic product (GDP) according to SEB’s own estimate, some 50% of this was added by construction and related fields of activity.
“Estonia’s export growth has essentially stopped, and the industry is led by single fields, like wood and oil shale. On the positive side, we can see a greater contribution to the economy by service businesses with higher added value, like IT. Of the economic growth of the last 10 years, over 40% has come from the IT sector,” Parik said.
He added that the labor market continued to be strong, and that 68.5% of working-age people were employed, with only Sweden’s numbers surpassing those of Estonia inside the EU.
Salary growth is still over 7%, and in the last three years, the average wage has grown by approximately 24%, Parik pointed out. The average gross salary in 2018 is likely to have been more than EUR 1,300, which is approximately 300 more than in Latvia and 400 more than in Lithuania.
The private customer loan portfolio of SEB grew by 9% in 2018, while deposits increased by 9.9%.
“The year 2018 was the end of the era of password cards and the beginning of several new digital solutions. Four updates that private customers started actively using last year were instant payments, video meetings, mobile banking and contactless card transactions,” Parik said. (ERR/Business World Magazine)
