Bigbank's Unaudited Financial Results for Q2 2024

Bigbank’s total gross loan portfolio grew to a record 1.9 billion euros by the end of the quarter, increasing by 154 million euros (+9%) quarter on quarter and by 390 million euros (+26%) year on year. All three main product lines posted solid quarter-on-quarter growth. The corporate loan portfolio grew by 57 million euros (+10%) to 657 million euros, the housing loan portfolio by 62 million euros (+16%) to 456 million euros and the consumer loan portfolio by 40 million euros (+5%) to 802 million euros.

On the deposit side, the term deposit portfolio grew significantly, increasing by 145 million euros to 1.16 billion euros (+14%) in the second quarter. The savings deposit portfolio decreased by 43 million euros over the quarter to 1.09 billion euros, mainly because many of our customers switched their short-term savings products to 1- to 6-month term deposits to lock in an attractive interest rate for the chosen period. The Group's total deposit portfolio grew by 103 million euros (+5%) over the quarter and by 658 million euros (+41%) over the year to 2.26 billion euros.

Bigbank ended the first half of 2024 with a net profit of 15.8 million euros, compared with 17.0 million euros in the first half of 2023. In the second quarter, Bigbank earned a net profit of 9.4 million euros. Compared to the second quarter of 2023, net profit increased by 2.1 million euros (+28%).

Group’s net interest income increased: net interest income for the second quarter of 2024 was 25.0 million euros (Q2 2023: 24.2 million euros), 0.8 million euros (+3%) higher than a year earlier. Net interest income for the first half of 2024 was 51.4 million euros, an increase of 4.7 million euros (+10%) year on year.

The decline in the quality of the consumer and corporate loan portfolios observed in the first quarter slowed in the second quarter. However, compared with 2023, the quality of these portfolios is weaker and the proportion of non-performing loans has increased slightly. The housing loan portfolio maintains excellent quality.

Compared to the end of the first quarter, stage 3 (non-performing) loans increased by 9.9 million euros, reaching 4.8% of total loan receivables by the end of the second quarter (end of Q1: 4.7%). Compared to the end of 2023, stage 3 loans increased by 42.1 million euros. However, based on historical data, the share of stage 3 loans is still low at 5% and Bigbank aims to keep the non-performing portfolio below this limit.

Net loss allowances for loans and provision expenses totalled 6.3 million euros. This is a significant decrease (-2.7 million euros) compared to the first quarter (9.0 million euros). In the second quarter of 2023, total net loss allowances for loans and provision expenses amounted to 5.0 million euros, an increase of 1.2 million euros compared to the prior year.

The Group’s income tax expense increased by 0.7 million euros to 1.8 million euros compared to the second quarter of 2023. The increase was mainly driven by the introduction of advance income tax in Latvia at the end of 2023, which was only reflected in the figures for the fourth quarter in 2023, but affects all quarters in 2024.

Bigbank updated its product range with the launch of a new credit card in Latvia. This is a further step in the introduction of everyday banking products, which is one of the Group's key strategic focus areas in 2024.

The Group’s investment property portfolio, which includes both agricultural land and commercial real estate, stood at 49 million euros at the end of the second quarter. The Group did not conduct any significant transactions with investment properties during the quarter.


Income statement, in thousands of euros Q2 2024 Q2 2023 6M 2024 6M 2023
Net interest income 24,981 24,181 51,373 46,700
Net fee and commission income 2,245 2,046 4,409 4,019
Net income (loss) on financial assets 2,007 439 3,078 1,011
Net other operating income -977 -536 -1,826 -653
Total net operating income 28,256 26,130 57,034 51,077
Salaries and associated charges -6,351 -5,963 -12,763 -11,615
Administrative expenses -2,285 -3,790 -5,954 -7,313
Depreciation, amortisation and impairment -2,100 -1,347 -4,152 -2,360
Total expenses -10,736 -11,100 -22,869 -21,288
Provision income (expense) 1,090 56 -1,329 61
Gain on change in the fair value of investment properties 0 -1,022 0 -1,022
Profit before loss allowances 18,610 14,064 32,836 28,828
Net loss allowances on loans and financial investments -7,328 -5,053 -13,883 -8,962
Profit before income tax 11,282 9,011 18,953 19,866
Income tax expense -1,857 -1,169 -3,132 -2,282
Profit for the period from continuing operations 9,425 7,842 15,821 17,584
Income (loss) from discontinued operations 8 -497 29 -618
Profit for the period 9,433 7,345 15,850 16,966


Statement of financial position, in thousands of euros 30 June 2024 31 March 2024 31 Dec 2023 (restated) 30 June 2023
Cash and cash equivalents 626,081 652,065 518,672 297,194
Debt securities at FVOCI 9,907 13,586 15,400 14,877
Loans to customers 1,902,001 1,747,606 1,662,002 1,512,110
Other assets 89,255 89,823 91,324 91,116
Total assets 2,627,244 2,503,080 2,287,398 1,915,297
Customer deposits and loans received 2,264,137 2,161,463 1,946,314 1,607,328
Subordinated notes 88,148 76,476 76,109 66,014
Other liabilities 22,113 21,688 20,182 17,066
Total liabilities 2,374,398 2,259,627 2,042,605 1,690,408
Equity 252,846 243,453 244,793 224,889
Total liabilities and equity 2,627,244 2,503,080 2,287,398 1,915,297


Commentary by Martin Länts, chairman of the management board of Bigbank AS:

For Bigbank, the second quarter and the first half of 2024 have been a period of stable profitable growth. As a bank specialising in loans, we are pleased that the loan portfolio grew by 9% in the last quarter and by as much as 26% on the yearly bases. All three main product lines - business loans, home loans and consumer loans - have grown. We are pleased with the good sales performance of home loans across the Baltics. As an innovation, we were the first in Estonia to launch a flipping loan designed specifically for legal entity real estate investors, which can be used to buy and renovate apartments in Tallinn, Tartu or Pärnu for resale on a cycle of up to one year.

In the field of bank deposits, Bigbank offers clearly the best interest rates on the Estonian market for both personal savings deposits (3.3% on an annual basis) and 3-month and 6-month term deposits (both 4% on an annual basis). This trend is also reflected in the growth of the group's deposit portfolio - 5% quarter-on-quarter and 41% year-on-year. In terms of deposit rates, it is likely that the peaks of this economic cycle have now been reached and, in the light of the policy of interest rate cuts initiated by the European Central Bank, it is now prudent for depositors to fix higher rates for as long as possible in order to achieve a monetary gain.

As a further step on the road to everyday banking services, we launched a credit card product in Latvia. In the second quarter, we also launched a large-scale recruitment campaign to prepare both the software development and the organisation support for the launch of the next everyday banking products, first in Estonia and then in the Group's other operating markets.

To finance growth, we raised capital in the second quarter through the issuance of EUR 4.96 million of AT1 bonds and a second series of EUR 7 million of unsecured subordinated bonds. I would like to thank all the investors who participated in the fundraising for their confidence in the Bank's strategy and growth prospects.

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 2,5 billion euros.

Argo Kiltsmann
Member of the Management Board
Telephone: +372 5393 0833
Email: argo.kiltsmann@bigbank.ee
www.bigbank.ee


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