BlueOrange Bank boosts business lending by 21% in 2020
February 26, 2021
The worldwide economic challenges due to the pandemic COVID-19 have led to adjustments in the business environment and have affected the development and growth of the economy of Latvia. However, despite the difficulties experienced in many sectors, the Bank was successful in continuing its activities in 2020 in line with its strategy and business priorities.
According to unaudited data, the year 2020 was closed with a profit of EUR 4.9 million, which meets the expected level. The Bank's gross income amounted to EUR 31 million during the reporting period, and net operating income amounted to EUR 21 million. The Bank's equity amounted to EUR 71 million. The Bank's total assets under management have increased by 35 % up to EUR 729 million as at the end of 2020.
At the end of 2020 the Bank's liquidity reached 80 %. Other key financial performance indicators of the Bank were successful as well — return on capital (ROE) 7.3 % and return on assets (ROA) 0.8 %.
In 2020, the Bank continued further development of its strategic priority business line — servicing and financing of businesses, which was also demonstrated by the increase in BlueOrange lending: at the end of the year, the total loan portfolio reached EUR 304 million, which represents a 21% increase compared to the previous year. Out of that, new loans were issued in 2020 for EUR 117 million, which is a 21% increase of lending income compared to the previous year. Of the loans allocated during the reporting period, 92% pertain to financing allocated to domestic companies, thus promoting both the development of individual sectors of economy 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.
The role of small and medium-sized enterprises in the recovery and growth of the economy of Latvia will be particularly important in the wake of the crisis. The Bank has set up a financing programme particularly for the segment of small and medium-sized enterprises. SME lending accounted for nearly 90% of the Bank's total lending in the year 2020.
At the same time, during the last year the Bank focused on improving the financial services for legal entities, which resulted in an 18% increase of the number of domestic clients — legal entities. At the end of the reporting period, the share of clients based in Latvia, Baltic Countries and Europe in the total client portfolio accounted for 98%.
In order to make financial services more accessible and convenient, the Bank plans to introduce remote identification facilities for legal entities in 2021.
Last year, the Bank continued to cooperate with a number of European fintech companies, attracting deposits from countries such as Germany, Austria, the Netherlands, Spain, thereby providing additional funds for lending to local businesses. The Bank participated in the European Central Bank's TLTRO operations (Targeted longer-term refinancing operations) which allowed for the diversification of funding sources and cheaper resources for lending to local businesses. In addition to raising funds, the Bank launched a new issue of uncollateralised subordinate bonds for EUR 10 million in 2020.
During the reporting period, the BlueOrange’s API was upgraded to the NextGenPSD2 (Berlin Group) standard, which corresponds to the format established by the PSD2 Regulation, thus allowing the Bank’s customers to unify their IT systems and reduce maintenance costs. Similarly, the Bank continued its technological development by automating its internal business processes and expanding the functionality of internet banking, with a view to ensuring an increasingly convenient access to banking products and services for clients in remote settings and ensuring the highest security of financial transactions in on-line environment.
In order to provide its clients with the latest payment and business opportunities, while continuing the development of digital services, BlueOrange joined Europe's instant payment system in the end of 2020. BlueOrange is the sixth bank in Latvia, which provides its clients with instant payments 24 hours a day, 7 days a week, 365 days a year, including holidays. To provide its customers with safe on-line purchasing environment meeting the standards of the European Union, the Bank has implemented all the required changes in addition to gradual implementation of safety regulations.
With a view to promoting business-to-business cooperation in order to overcome economic consequences and provide for new development opportunities, the Bank has engaged in active cooperation with representatives of several European trade organisations in Latvia.
In spring 2020, the BlueOrange Bank as a responsible financial institution joined the moratorium of Finance Latvia Association in supporting the Bank's clients in the circumstances of COVID-19. The Bank actively cooperated with various institutions in helping to select the best solutions on a national level for the support of both individuals and entrepreneurs.
In 2020, the Bank continued to prioritise the matters of risk management and operational compliance. The Bank continued improving its internal processes and information systems in the area of risk-management for the prevention of money laundering and terrorism financing and proliferation, meanwhile improving its client transaction monitoring and due diligence procedures.
Considering the fact that maintaining lending rates is an essential instrument for warming up the national economy, BlueOrange Bank, in line with its business strategy, will maintain funding of domestic businesses as a top priority also in 2021, with a particular focus on the sector of small and medium-sized enterprises.