LPB Bank closes 2022 with a profit of EUR 1,31 million and publishes an audited annual report
28.03.2023.

Thanks to an accurately defined strategy for LPB Bank (the Bank) – i.e. an orientation towards businesses that provide e-commerce services, alongside successful cooperation with fintech and start-up companies – the Bank is growing stronger each year. We are happy to have had many new companies choose the e-commerce services the Bank offers and pivot to the online environment. Despite the challenges – the war in Ukraine, unprecedented inflation and massive uncertainties for the business going forward – key financial indicators continue to reflect the Bank’s stable, effective operation. In 2022, substantial capital expenditures were allocated to technological projects to increase online service availability, automate processes for enhanced efficiency, and attract new clients.

Financial performance

As of the end of 2022, the assets of the Bank totalled EUR 165.0 M. The Bank maintained high liquidity coverage and capital adequacy ratios at 142,53% and 20.96%, respectively. Liquid assets continued to constitute a major share of the Bank’s asset structure, emphasising debt securities. The proportion of bonds and notes held in the portfolio grew to 54%, of which 91% are investment-grade. 12% of Bank assets were claims on banks, including the Bank of Latvia. The volume of loans to clients did not change significantly, comprising close to 26% of Bank assets.

The Bank closed out 2022 with EUR 1.31 M in profits. Return on assets (ROA) totalled 0,66%, with return on equity (ROE) of 3,91%.

The digital transformation that the Bank undertook five years ago is positively affecting its performance. Operational profits from e-commerce totalled EUR 5.07 M at the end of 2022.

The Bank’s loan portfolio was EUR 52.6 M at the end of 2022, with EUR 15.6 M in newly issued loans. As a result of a sharp EURIBOR increase, average interest rates within the Bank’s loan portfolio increased from 5.0% at the end of 2021 to 6.5% at the end of 2022, which increased loan portfolio revenues. The Bank diligently analyses any changes in the credit risk of its clients and makes adequate decisions to minimise any ensuing risk exposures.

Accomplishments

The events of the external environment marked the year 2022 with challenges in the field of sanctions risk management, and it is expected that the next year will not allow relaxation in this matter either. In other words, the management of sanctions risks becomes more and more elaborate and complicated by increasing the burden on effective sanctions risk management. It is clear that the decisions adopted by the Bank, the restrictions and limitations it introduced as part of sanctions implementation have been effective, and they will continue to bear fruit in subsequent years.

The year 2022 brought proof of how vital risk management is – not just from a pure risk standpoint but as a matter of the Bank’s profitability and competitive potential. Enhancements to our efforts in monitoring clients and their transactions by implementing technology-based solutions, and with a risk-based approach have brought not only practical gains to clients of the Bank but also positively affected the Bank’s internal control system overall. Namely, the Bank’s resources are being allocated with greater benefit and efficiency.

The Bank’s sustainability, growth and efficiency focus was implemented in 2022 as many crucial investments in information system and solution development, staff knowledge building and upskilling for consistent AML/CTPF and sanctions risk management, which is why the Bank also continues to allocate funding to developing staff competencies through both in-depth and general training for the management of ML/TF and sanctions risk, involving recognised professionals from Latvia and abroad in its training activities.

Throughout 2022, the Bank proactively improved its internal regulatory documentation and compliance procedures to align with applicable laws and industry standards.

In February 2022, the Bank expanded its e-commerce servicing to offer payment module connections for clients that conduct or plan to conduct sales online, integrating online store platforms such as OpenCart, Prestashop, WordPress (WooCommerce) and Magento.

In March 2022, as part of its digital development strategy, the Bank developed the Key2LPB mobile app, which made clients’ everyday banking more secure, convenient, fast and simple. After studying and analysing the needs of its clients, the Bank simplified the authentication procedure with its Internet Bank and overhauled the design of its website.

In April 2022, the Bank joined SEPA Instant Credit Transfer, the European instant payments infrastructure, expanding and enhancing its digital services for fintech and e-commerce clients. The Bank has developed the necessary ecosystem to provide a full range of services to fintech for hassle-free operations that are fully compliant with all applicable legal and financial regulations.

In July 2022, the Bank completed the implementation of remote identification. Now, becoming a client of the Bank and opening an account remotely is available to anyone, anywhere in the world. The remote identification procedure is available to both individuals and legal entities.

Throughout 2022, the Bank has made conceptual changes in the operation of the internal control system for the prevention of ML/TF, strengthening technology support and providing specialists with automated tools for obtaining and analyzing information, ensuring the flow of information and decisions, thus achieving an increasingly high level of monitoring of customer transactions and research quality.

In August 2022, participated in the assignment of claims from the PrivatBank retail loans portfolio for EUR 743 K, spanning consumer loans issued to students of the airBaltic Pilot Academy. The Loan Department accomplished all the targets specified in the Bank’s strategy.

Representatives of the Bank attended and participated in numerous conferences and fairs throughout Europe in the year 2022, networking with entrepreneurs from the entertainment industry, digital businesses, start-ups and professionals in e-commerce, finance, games and other areas – the list of events includes Tes Affiliate, Money2020, iFX EXPO, iGB Live, Webmaster Acсess, Affiliate Meet Markt and SiGMA Europe.

The Bank increased the share of investments in debt securities oriented on sustainable business activities (green, social or sustainability bonds). By the end of 2022, such investments made up 11% of the debt securities portfolio.

The Bank is highly cognisant of its corporate responsibility to the public. It has devoted effort to integrating international standards and sustainable development principles across all its major business processes and operational aspects. LPB Bank partnered with Mastercard to support local charitable campaigns committed to improving the welfare of our planet.

In continuation of a tradition it established seven years ago, the Bank cooperated with the Children’s Hospital Fund to improve the quality of services provided at the Children’s Clinical University Hospital, allocating a donation of funds for this purpose.

The Board of the Bank saw changes in 2022 as well – with the election of Alda Odiņa as a member of the Board. Baiba Preise was appointed to the Chief Risk Officer position, and Antons Kononovs has been the deputy member of the Board since September. Changes concerned the Council of the Bank as well, with the departure of long-standing Council member Aleksandrs Plotkins. Jefims Gasels was elected to the Council for the first time.

Another happy tradition for the Bank is supporting the involvement of its staff in sports activities: LPB Bank teams successfully started in the Rimi Riga Marathon running event and in the Toyota Riga Cycling Marathon. We are glad to see Bank employees bond and strive towards success in sports and the workplace.

The Bank paid EUR 3,36 M in taxes in 2022 and employed over 230 people.

Priorities in 2023

The Bank’s primary goal in 2023 is to continue developing technological solutions to automate internal processes and boost efficiencies while also focusing on client attraction and service, discovering new avenues for business and improving the standard of service existing clients should expect from us. The Bank will continue to adapt to changes in financial markets and throughout the banking sector, convinced that we can solidify our standing in the domestic market and develop client relationships. Bank management has defined the following priorities for growth:

  • development of services for fintech and start-ups on the European market that will benefit Latvia’s financial services export sector;
  • e-commerce development and access to innovative services;
  • providing financing to entrepreneurs with development potential, as well as investment opportunities.

Throughout 2023, the Bank will consistently work on maintaining compliance with its internal control system with legislative requirements and best practices, ensuring the highest degrees of AML/CTPF compliance and sanctions risk management across the board.

At the level of business strategies, the Bank has committed to reducing the negative environmental impact of its products and services in line with global priorities, cooperating with clients to promote sustainable engagement methods in economic activities.

The Bank is willing to extend more favourable lending conditions to green businesses implementing environmental impact management and audit systems. The Bank intends to focus on those sectors of the national economy that facilitate Latvia’s progress towards high-added value production with environmentally friendly, stable and predictable development.

The Bank will continue to increase the share of investments in debt securities oriented on sustainable business activities. Sustainability, development and efficiency have always been our values, driving LPB Bank to be more than an ordinary bank going forward.

We are thankful to the Bank’s shareholders and clients for their unwavering support and trust. We are also grateful to our employees for their flexibility and enthusiasm – each of you has contributed to the Bank’s growth and development!

You are welcome to read the Financial statement of LPB Bank here.