Latvia's bank profits 47.1% smaller than last year

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Latvian monetary financial institutions, mainly banks, have been working on profits of €93 million in first eight months of 2020, according to information published by the Bank of Latvia September 28.

This is 47.1% less than in the corresponding period of 2019.

Santa Purgaile, head of the Financial and Capital Market Commission (FKTK), said that the decline in financial institutions' profits was not a surprise, given the fact that it was difficult to predict how deep the economic crisis would be at the beginning of the COVID-19 pandemic.

In her opinion, the banks have overcome these economic turmoil quite well.

At the start of the pandemic, banks were cautious and in the first and second quarter made a variety of provisions for potentially unsafe loans, but now the stability of financial institutions is good. The resilience of banks to the resulting shock in the economy is stable, according to the head of the FKTK.

"We asked the banks not to withdraw last year's dividends at the onset of the crisis, and mostly banks and insurers have responded to our call, capitalized last year's profits, resulting in a much stronger capital, which will also help banks potentially cope with the consequences if, in case, some kind of shock in the economy still follows," Purgaile said.

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