A substantial increase in interest in term deposits observed during the second quarter among retail and corporate customers

In the second quarter of this year, SEB banka recorded an increase in interest rates on term deposits and savings accounts for both retail and corporate customers. According to SEB banka's performance for the second quarter of 2023, the total amount of money deposited by retail and corporate customers increased by 60% compared to June last year.

 The greatest interest in deposit opportunities can be observed among SEB banka’s corporate customers. In the two weeks following the launch of SEB banka’s corporate savings accounts, corporate customers - both large companies and small and medium-sized enterprises - have shown near-record activity, depositing almost EUR 14 million into their savings accounts.

Private individuals’ interest in deposits has also increased as over 23% of their excess cash is in term deposits and savings accounts. In recent months, 12-month and 3-month term deposits have been the most sought-after deposit types. Notwithstanding the holiday and travel season, the number of savings accounts continues to increase, most likely due to customers’ desire to accumulate money in time for the upcoming heating season, while other customers take advantage of the positive interest rates to make a profit. 

“The era of rising interest rates has undoubtedly brought challenges, but we see our customers being responsible with their obligations. It is also encouraging that since the sharp rise in interest rates, more and more customers are exploring the option of investing their surplus money in term deposits and various financial instruments. Now is a good time to invest your money where the profit is and you should not miss this opportunity. You can always start small, even if you do not seem to have the money. However, as a first-time investor, you should make sure that you use a safe and reputable investment service provider so that you do not fall victim to a scam,” says SEB banka’s CEO Ieva Tetere.   

In the second quarter, we observed that clients were actively interested in the prospects of interest rate stabilisation and possible interest rate cuts, and also provided additional funds for loan repayments. People have also become more cautious about making new commitments due to the sharp rise in interest rates, taking into account the potential impact of market supply as well as utility bills on their monthly expenses. As part of SEB banka’s policy, all home loan fees have been abolished. This ensures that home loans are available to new customers and also gives existing customers the opportunity to amend their loan agreements free of charge.

Total loan portfolio continues to grow

At the end of June 2023, SEB banka’s total loan portfolio totalled EUR 3.2 billion, an increase of 6% over June 2022. Compared to the first six months of last year, lending to small and medium-sized enterprises increased by 22% in the second quarter, reaching EUR 143 million. Nearly half of the loans issued are leases while the amount of the issued working capital loans has also increased. There has been a marked increase in leasing finance demand in the agriculture and transportation sectors, both of which show positive quarter-on-quarter growth in comparison to 2022. Several real estate projects related to customers’ desire to relocate their existing businesses have also stimulated activity in the real estate market.

The segment serving large companies is also performing well, with new funding reaching EUR 382 million in the first half of 2023, almost three times more than last year. During the second quarter, companies from different industries were equally active in raising financing, including those from the telecommunications, energy, services, manufacturing, transportation, and real estate sectors. As we watch the new funding unfold, it is clear that much of it will be spent on increasing production capacity and improving efficiency. As compared to the first half of 2022, the loan portfolio of large corporations increased by 7% in the first half of 2023. A positive trend can also be observed in the liquidity of large companies, with account balances up 17% compared to the first quarter of 2022.

“While Latvia and Europe have seen growth and positive financial indicators in the first half of this year, inflation remains high and the European Central Bank intends to raise interest rates further. Moreover, the economic slowdown in Europe - especially in Scandinavia - has made us very cautious about the growth outlook for the second half of this year,” adds Ieva Tetere. 

SEB Group’s financial performance in Latvian in the first 6 months of 2023

•    SEB Group’s revenue in Latvia reached EUR 115.5 million.
•    Profit before provisions amounted to EUR 86.5 million.
•    Operating after-tax profit and provisions for the first 6 months of 2023 reached EUR 82.4 million.
•    The 6-month expenses amounted to EUR 29.0 million.
•    Provisions for expected credit losses for the period 1 January-30 June increased by EUR 3.3 million.
•  Deposits with SEB banka on 30 June 2023 totalled EUR 4.4 billion.
•  The loan portfolio at the end of June 2023 totalled EUR 3.2 billion.
•  At the end of June 2023, SEB Group’s had assets of EUR 5.5 billion and capital of EUR 541 million in Latvia.