Bigbank annual profit increased 25% to 41 million euros in 2023
In 2023 the unaudited net profit of Bigbank, which offers digital banking services in nine European countries, amounted to 40.8 million euros, which represents a 25% increase compared to the year before.
"I am glad that we were able to continue stable growth in such challenging economic climate and offer our customers banking services at good terms. Growth in the loan portfolio of both private and business clients was the result of implementing our well-planned strategy," said Martin Länts, Chairman of the Management Board of Bigbank, commenting the results for 2023. He added that unlike big universal banks which can use a lot of money in customers' current accounts to issue loans with minimal interest costs, Bigbank has attracted all its deposits by paying competitive interest rates to customers in different markets. "For this reason, the monetary policy of the European Central Bank did not generate extraordinary and large-scale profits for us in 2023. Our result has come from day-to-day efforts and consistent growth of business volumes, for which I thank the entire Bigbank team as well as the customers, investors and partners who trusted us," Länts added.
Martin Länts added that 2023 was another tough year for the world economy. The war in Ukraine has been going on for a second year, and the armed conflict between Israel and Hamas became a new factor in geopolitics. The base interest rates elevated by the European Central Bank a year earlier have managed to slow down inflation, but the target set for 2023 is not yet reached. Euribor is no longer rising and started a downward trend, but it did not lead to significant changes in the interest rate environment as a whole.
According to Martin Länts, a key to such good financial results was also the continued trust of customers in Bigbank cross-border markets in Germany, Austria and the Netherlands, as well as the introduction of the savings deposits in Estonia, Finland and Lithuania. In the fourth quarter, the Group portfolio of savings deposits exceeded 1 billion euros for the first time.
Bigbank's gross loan portfolio grew to record 1.67 billion euros by the end of 2023, increasing by 58 million euros (+4%) in the quarter on quarter and by 306 million euros (+23%) year on year. In the fourth quarter, the portfolio of home loans grew by 44 million euros (+14%) to 351 million euros, and the portfolio of consumer loans by 15 million euros (+2%) to 736 million euros. In the fourth quarter, the loan portfolio of corporate banking essentially remained at the level of the end of the third quarter (-0.2%).
The total deposit portfolio of the Bigbank Group increased by 154 million euros (+9%) in the fourth quarter and by 570 million euros (+42%) to 1.94 billion euros for the year 2023. The portfolio of term deposits fell by 3 million euros (-0.4%) to 916 million euros from the third quarter. The portfolio of savings deposits grew by 158 million euros (+18%) to 1.02 billion euros quarter on quarter.
Corporate banking delivered another strong result in the fourth quarter. Good quality of the loan portfolio and the net profit from the revaluation of the underlying assets of investment loans with special terms contributed to this. The segment's fourth-quarter pre-tax profit reached 6.9 million euros, of which 3.9 million euros was profit from financial assets measured at fair value with changes in the income statement.
Fourth-quarter net interest income increased by 3.9 million euros (+18%) compared to the same period a year earlier and amounted to 25.2 million euros. Net interest income for the 12 months of 2023 increased by 15.6 million euros (+19%) compared to the previous year and amounted to 98.0 million euros.
As to the quality of the Bigbank loan portfolio, it is becoming clear that the weak external environment has started to affect loan customers to a certain degree, and both the proportion of loans in default and the loss allowance for loan receivables have increased. During the first three quarters of 2023, the bank's loan portfolio did not weaken, but in the last quarter of the year, there was a slight decline in the quality of the consumer loan portfolio. The loss allowance for loan receivables increased by 2.2 million euros (+47%) in the fourth quarter compared to the fourth quarter of 2022 and was up by 5.4 million euros (+35%) year on year. Compared to the end of 2022, the volume of Stage 3 loan receivables increased by 21.1 million euros by the end of 2023 and reached 2.8% of loan receivables (+1.0 percentage points).
In the segment of corporate loans and home loans, there were no signs of deterioration of credit quality. Overall, the quality of the loan portfolio remains good, and the weakening of the consumer loan portfolio was moderate as of the end of the fourth quarter.
To finance its growth, the Group raised additional capital in 2023, successfully completing the bond program started a year earlier and launching a new EUR 30 million bond program in the autumn 2023. The first round of the new program was again oversubscribed, this time particularly impressively by as much as sevenfold. In 2023, Bigbank also organised three targeted issues for bonds which qualify as Tier 1 (AT1) capital, all of which also proved to be successful.