Bigbank's gross loan portfolio grew to a record 1.67 billion euros by the end of the fourth quarter, increasing by 58 million euros (+4%) over the quarter and by 306 million euros (+23%) over the year. The housing loan portfolio grew by 44 million euros (+14%) over the quarter to 351 million euros, and the consumer loan portfolio increased by 15 million euros (+2%) to 736 million euros. The corporate banking loan portfolio in the fourth quarter was essentially unchanged from the end of the third quarter (-0.2%).
The most important developments in the deposit portfolio in the fourth quarter were the continued strong growth in savings deposits and the fact that term deposits remained unchanged from the end of the third quarter. The launch of the savings deposit product in Lithuania was also a significant milestone. The Group's total deposit portfolio increased by 154 million euros (+9%) during the quarter and by 570 million euros (+42%) over the year, expanding to 1.94 billion euros. The term deposit portfolio decreased by 3 million euros (-0.4%) to 916 million euros and the savings deposit portfolio increased by 158 million euros (+18%) to 1.02 billion euros during the quarter.
Bigbank earned a net profit of 11.4 million euros in the fourth quarter and a net profit of 40.8 million euros in the twelve months of 2023. Compared to the restated 2022 results, net profit remained stable in the fourth quarter and grew by 25% in the full year comparison.
Corporate banking again performed strongly in the fourth quarter, driven by the strong loan portfolio and the net revaluation gain on the underlying assets of investment loans with special conditions. The segment's profit before tax for the fourth quarter amounted to 6.9 million euros, including a gain of 3.9 million euros on financial assets at fair value through profit or loss.
Q4 net interest income grew by 3.9 million euros (+18%) year on year, amounting to 25.2 million euros. 12-month net interest income grew by 15.6 million euros (+19%) to 98.0 million euros.
While there were no signs of a fall in the quality of the loan portfolio during the first three quarters of 2023, some deterioration in the consumer loan portfolio was visible in the last quarter of the year. The weak external environment has started to have a certain negative impact on borrowers, leading to an increase in the share of past due loans, as well as in expenses on credit loss allowances. Expenses on credit loss allowances grew by 2.2 million euros (+47%) compared with the fourth quarter of 2022, and by 5.4 million euros (+35%) during 2023. Relative to the end of 2022, stage 3 loans increased by 21.1 million euros by the end of 2023, accounting for 2.8% of the total loan portfolio (+1.0 percentage points).
There has been no deterioration in the credit quality of commercial and housing loans. Overall, however, the quality of the loan portfolio is still good and the fall in the quality of the consumer loan portfolio was moderate as at the end of the fourth quarter.
At the end of 2023, Latvia imposed advance income tax on credit institutions similar to Estonia. The tax is to be paid for the first time in 2024 and it is to be calculated on profit before tax for 2023. The Group recognised a tax expense in the amount of 2.0 million euros in fourth quarter of 2023.
The Group's investment property portfolio, which includes both agricultural land and commercial real estate, stood at 49.1 million euros at the end of the quarter. The Group did not conduct any transactions with investment properties during the quarter but there was a gain of 4.4 million euros on the change in fair value.
| Income statement, in thousands of euros | Q4 2023 | Q4 2022 (restated) | 12 months 2023 | 12 months 2022 (restated) |
| Net interest income | 25,191 | 21,282 | 97,981 | 82,335 |
| Net fee and commission income | 2,168 | 1,900 | 8,284 | 7,411 |
| Net income (loss) on financial assets | 4,246 | 985 | 9,222 | 800 |
| Net other operating income | -1,940 | -186 | -3,626 | -708 |
| Total net operating income | 29,665 | 23,981 | 111,861 | 89,838 |
| Salaries and associated charges | -6,345 | -6,022 | -24,032 | -21,304 |
| Administrative expenses | -4,091 | -4,372 | -15,249 | -16,997 |
| Depreciation, amortisation and impairment | -2,039 | -908 | -6,400 | -3,648 |
| Other gains | 4,662 | 3,704 | 3,780 | 4,377 |
| Total expenses | -7,813 | -7,598 | -41,901 | -37,572 |
| Profit before loss allowances | 21,852 | 16,383 | 69,960 | 52,266 |
| Net loss allowances on loans and financial investments | -6,908 | -4,707 | -20,893 | -15,451 |
| Profit before income tax | 14,944 | 11,676 | 49,067 | 36,815 |
| Income tax expense | -3,519 | 176 | -7,688 | -3,532 |
| Profit for the period from continuing operations | 11,425 | 11,852 | 41,379 | 33,283 |
| Loss from discontinued operations | -18 | -415 | -575 | -590 |
| Profit for the period | 11,407 | 11,437 | 40,804 | 32,693 |
| Statement of financial position, in thousands of euros | 31.12.2023 | 31 Sept 2023 | 31 Dec 2022 (restated) |
| Cash and cash equivalents | 518,672 | 406,837 | 173,447 |
| Debt securities at FVOCI | 15,400 | 14,942 | 19,213 |
| Loans to customers | 1,665,683 | 1,608,720 | 1,359,383 |
| Other assets | 91,324 | 88,709 | 92,936 |
| Total assets | 2,291,079 | 2,119,208 | 1,644,979 |
| Customer deposits and loans received | 1,946,315 | 1,791,581 | 1,376,934 |
| Subordinated notes | 76,109 | 71,490 | 40,113 |
| Other liabilities | 20,679 | 18,909 | 15,912 |
| Total liabilities | 2,043,103 | 1,881,980 | 1,432,959 |
| Equity | 247,976 | 237,228 | 212,020 |
| Total liabilities and equity | 2,291,079 | 2,119,208 | 1,644,979 |
Commentary by Martin Länts, chairman of the management board of Bigbank AS:
"The year 2023 continued to be challenging for the world economy. The Ukrainian war has been ongoing for two years, and a new factor has emerged in geopolitics - the Israel-Hamas conflict. The base interest rates raised by the European Central Bank the year before did slow down inflation, but the desired results were not achieved by 2023. The growth of Euribor halted and returned to a downward trend, but this did not bring significant changes to the interest rate environment as a whole.
I am pleased that we were able to continue stable growth in challenging economic conditions and offer our clients banking services on favorable terms. Thanks to a well-thought-out strategy, we increased both our private and corporate loan portfolios. The Group's net profit reached 40.8 million euros in 2023, which is 25% more compared to the previous year.
The changed interest rate environment allowed us to offer better conditions for money growth to clients in 2023 - as a result, the Group's deposit portfolio grew significantly. The continued trust of cross-border market clients in Bigbank in Germany, Austria, and the Netherlands, as well as the introduction of savings deposit products in Estonia, Finland, and Lithuania, played a major role in achieving excellent results. In the fourth quarter, the Group's savings deposit portfolio exceeded the 1-billion-euro mark for the first time.
At the beginning of 2023, we continued to raise additional capital, successfully completing the bond program initiated the previous year and launching a new 30-million-euro bond program in the autumn of 2023. The first series of the new program was oversubscribed again, this time impressively, up to 7 times. In 2023, we also conducted three Additional Tier 1 (AT1) Temporary Write-Down Notes targeted offerings to professional investors, all of which proved successful.
In addition to strong financial results, I am proud of the significant progress we have made in our customer service. In 2023, our Net Promoter Score (NPS) rose from the previous 52 points to a record 58 points.
I would like to express sincere thanks to the entire Bigbank team for their dedication, determination, and hard work. I would also like to thank all our clients, investors, and partners for their unwavering support!"
Bigbank AS (www.bigbank.eu) is an Estonian capital-based bank specialising in loans and deposits for private and business customers. In addition to operations in Estonia, the bank has branches in Finland, Sweden, Latvia, Lithuania, and Bulgaria and offers its products on a cross-border basis in Austria, Germany, and the Netherlands. Bigbank's total assets exceed 2 billion euros.
Argo Kiltsmann
Member of the Management Board
Telephone: +372 5393 0833
Email: argo.kiltsmann@bigbank.ee
www.bigbank.ee
