Restrictions imposed under the influence of the Covid-19 pandemic have been a serious challenge for the business sector for two years. But, despite the still existing difficulties in many industries, in 2021 there was already a stabilization of business and adjustment to changing circumstances. In the 20th year of its activity, the Bank successfully carried out its activities in a semi-remote mode, having also succeeded in implementing its business strategy and developing defined priorities.
According to audited data, the Bank ended 2021 with a profit of EUR 9.8 million. The Bank’s total operating income amounted to EUR 27 million during the reporting period. The Bank’s equity amounted to EUR 79.4 million. The Bank’s total assets have increased by 22.9 % or EUR 166 million, reaching EUR 893 million at the end of 2021.
At the end of 2021, the Bank’s liquidity reached 90%. Other key financial performance indicators of the Bank were successful as well – return on equity (ROE) 13.6 % and return on assets (ROA) 1.2 %.
In 2021, the Bank purposefully continued to work in its strategic priority business line — servicing and financing of businesses, which was also demonstrated by the increase in lending: at the end of the year, the total loan portfolio was EUR 344 million, which represents a 14% increase compared to the previous year. Out of that, new loans issued in 2021 amounted to EUR 134 million, which resulted in a 30% increase of lending income compared to the previous year. 90% of loans issued during the reporting period were granted to Latvian and Baltic companies. Thus, the Bank has contributed to both the development of individual industries and the acquisition of new export markets, as well as the use of new business opportunities during this difficult period for the economy of Latvia. It should be noted that the Bank’s loan portfolio already contains several sustainable projects aimed at protecting the environment and climate.
Appreciating the role of small and medium-sized enterprises in the recovery and growth of the Latvian economy, the Bank continued to develop its SME lending program for this business segment, ensuring the availability of financial resources. SME lending accounted for 86% of the Bank’s total lending in 2021. Of these, several projects were implemented in successful cooperation with the state-owned development finance institution ALTUM.
The Bank focused on improving financial services for legal entities, which resulted in an 33% increase of the number of domestic clients – legal entities. At the end of the reporting period, the share of clients based in Latvia, Baltic States and Europe in the total client portfolio accounted for 98%.
The provision of digital services under various restrictions over the past year has proved to be an important factor in serving clients. Targeted introduction of new technologies with an emphasis on offering online services gave the Bank certain advantages. Since July 2021, the Bank ensures opening of business accounts remotely for both domestic entrepreneurs and companies registered in the countries of the European Economic Area, as well as in Switzerland and the UK. Thus, BlueOrange is the first bank in Latvia to provide businesses with an opportunity to open a current account with improved identification options and on such a wide geographical scale. Remote deposits are also available, making the Bank’s financial services even more accessible and convenient.
In this regard, we can say that the Bank continues to strengthen its position in the market, increase the number of corporate clients and strengthen its potential as a financial institution.
Last year, the Bank continued to cooperate with a number of European fintech companies and payment institutions, expanding the range of partners and sources of deposits. Thanks to effective cooperation with deposit platforms and diversification of funding sources, the Bank reduced interest costs on deposits by 15%, while increasing the amount of term deposits.
In 2021, the Bank started actively offering corporate clients hedging services using derivatives. Since the Bank has long-term successful cooperation with companies in various industries, whose activities are subject to adverse fluctuations in the prices of the company’s manufactured or marketed products or raw materials, the Bank offers a solution, helping to develop an appropriate strategy for limiting price risks. This helps to reduce the company’s dependence on the global market conditions, maintain the level of margins and more successful development of the company.
During the reporting period, significant investments were made in improving e-commerce processes. With the development of the new payment system, the Bank considerably increased its competition in acquiring payment cards online, which contributed to a 46% increase in the number of e-commerce clients.
To increase the quality of customer service and the efficiency of the Bank’s operation, a new incoming call center system was introduced last year, while legal entities now have their own online cabinet.
In 2021, the Bank continued to prioritize all risk management and compliance issues. The Bank continued improving its internal processes and information systems in the area of risk management for the prevention of money laundering and terrorism and proliferation financing and sanctions risk management, meanwhile improving its client transaction monitoring and due diligence procedures. During the reporting period, substantial resources were allocated to the improvement and control of internal processes, such as credit risk management and asset quality assessment, as well as the introduction of the latest versions of AML/CFTP systems is continuously ongoing.
At the end of last year, the FCMC, in accordance with the Law on Credit Institutions, named institutions that correspond to the status of “other systemically important financial institutions” in the area of finance in Latvia, including BlueOrange Bank in this list. This means that the Bank has achieved a significant level in its growth through its targeted work and investment in the Latvian financial market. At the same time, this high rating also imposes additional requirements on the Bank, introduction of stricter norms and criteria, which is a necessary factor for the future growth of the Bank.
Considering the fact that maintaining lending rates is an essential instrument for warming up the national economy, the Bank, in line with its business strategy, will retain funding for domestic companies as a priority also in 2022, with a particular focus on projects aimed at reducing environmental impacts, green energy, development of environmentally friendly materials, recycling and other solutions, following the common objective in the context of European climate change and energy efficiency.