Statistics compiled by Finance Latvia show that the public is making increasing use of the benefits provided by digital services. In the second quarter of 2021, the percentage of contactless card payments compared with overall card usage was 72.6%. Compared with the previous quarter, this figure has increased by 2.7 percentage points. The public also views instant payments — when a payment is made within a few seconds — favourably, and the proportion of these payments among European (SEPA) inter-bank transfers is 46.7% (among banks which offer instant payments).
The number of contactless card transactions made in the second quarter of 2021 grew by 12.5% compared with the second quarter of 2020, reaching 1,905,482. The number of POS terminals has also increased by 5.7%, from 39,625 to 41,866.
Consumer spending became more active in the second quarter of 2021. In this period, compared with the first quarter of the year, bank customers have not only made more card payments (the number of transactions has increased by 22.6%, and the amount has increased by 26.4%) but also withdrawn more cash (the number of transactions increased by 17.4%, and the amount has increased by 16.3%). If you compare the pre-pandemic second quarter of 2019, card payments are increasing, while cash withdrawals are decreasing, and in general the public is withdrawing cash and paying by card slightly more (4.6%) than in 2019. This trend can be seen every year, but this year the trend is more significant.
Finance Latvia Chairperson Sanita Bajāre:
“Banks’ current credit portfolios are of a very good quality; people’s expenses decreased due to the restrictions, meaning people are repaying their obligations even more strongly than in 2019. In the private customer segment, demand for and the volume of mortgage loans both for purchasing and renovating homes has increased, as lockdown promoted an increase in household savings while people also wish to increase their quality of life. We are also seeing a swift increase in repaying mortgages before the end of the loan term, which has been promoted by the increase in savings during the pandemic. Of course, this impacts the number of loans issued, as the number of new mortgages does not significantly compensate for the number of repaid loans. Meanwhile, demand for business loans is not very strong. For example, there has been a significant increase in e-commerce, but there are sectors which are waiting before investing in order to understand how the economy may develop in the future. However, by carefully evaluating the sustainability of projects, banks are continuing to issue loans, and a range of significant loan transactions have recently been signed.”
In total, the amount issued in loans reached 13.86 billion Euro in the second quarter of 2021. This increase was mainly seen in the business segment, which made up 8.16 billion Euro. Meanwhile, the amount issued in personal loans has not increased significantly over the past year: 5.44 billion Euro. The banks with the largest amounts issued in loans in the second quarter of 2021 were Swedbank (3.5 billion Euro), SEB (3 billion), Luminor (2.9 billion), Citadele (2.4 billion Euro) and the OP Corporate Bank Latvia branch (0.4 billion).
Compared with the first quarter of 2021, the amount deposited in Latvian banks did not change significantly during the second quarter, and this now stands at 19.58 billion Euro. By the end of this quarter, the largest amounts deposited were with Swedbank (6.4 billion Euro), SEB (3.8 billion), Citadele (3.6 billion), Luminor (2.8 billion) and BlueOrange Bank (0.6 billion).
Demand during the second quarter of 2021 for other business development financing, including bond emissions, also increased. For example, Signet Bank was one of the most active participants in this market during this quarter, organising one bond emission of 10 million Euro, and organising a total of 3 bond emissions in the first half of this year, attracting financing for Baltic businesses of a total of 60 million Euro.
In this quarter, compared with the previous year and despite the uncertainty in the economy, the situation has stabilised, and the banking sector continues to be stable and profitable, meaning they can also be a reliable partner to their customers. The unaudited profit of Latvias banks reached 129 million Euro. The highest-earning Finance Latvia member banks in the second quarter of 2021 were SEB (42.6 million Euro), Swedbank (39.2 million), Citadele (15.9 million), LPB Bank (2.5 million) and RIB (1.2 million Euro).
*Source: Bank of Latvia summary: Republic of Latvia monetary financial institution monthly balance report / https://financelatvia.323.lv/nozares-dati/
Head of Communications