2005 was a year of rapid growth for Balti Investeeringute Grupi Pank AS. Over the year the volume of loans issued to the group’s clients increased by 102% and the group’s balance sheet total enjoyed the same growth percentage, comprising 561.3 million kroons as of the end of the year. The growth rate further accelerated in Q4 when record-breaking loan amounts were issued both in Estonia and Latvia.

The rapid growth had a positive influence on the financial results. In 2005 the group’s interest income rose by 71% year-on-year and the group’s profit rose by 89% compared to the year 2004, amounting to 63 million kroons by the end of 2005, based on the unaudited results, of which 20.7 million kroons of net profit was earned in Q4. The group’s equity capital reached 144.8 million kroons by the end of 2005, the annual increase being 71%.

The most essential event in 2005 was when the group received its credit institution licence on 28.09.2005. The licence acquisition process was accompanied by intense intra-company development of reporting and information systems in accordance with the current requirements. The credit institution licence allows for opening fixed-term deposits for the general public and this has definitely improved the group’s reliability as it is now a credit institution operating under regulated supervision.

In Q4 the most important balance sheet structure change was the accrual of the legal reserve kept in the Bank of Estonia. At the end of 2005 the legal reserve sum was 52.8 million kroons – 12.7% of all liabilities.

In September of 2005 the share capital of Balti Investeeringute Grupi Pank AS was increased by 72.816 million kroons to 80 million kroons to ensure its compliance with the capital requirements for credit institutions. The share capital was increased by way of a bonus issue based on the retained profit and the profit for the financial year.

The bank has been an active issuer of bonds in the Estonian financial market. In Q4 bonds were issued in large emissions totalling 102 million kroons, 72 million of which were bonds with a 3-year maturity. From 29.11.2005 the Tallinn Stock Exchange bonds listing includes 450,000 bonds of Balti Investeeringute Grupi Pank AS with a nominal value of 100 kroons (ISIN EE3300077015).

In December 2005 the financing base was also extended regarding bank loans when during refinancing the sum of 93 million kroons was involved with a 3-year return term. In view of the lack of call deposits and the evolved temporal structure of receivables and liabilities, the Q4 saw a substantial decrease of risks related to cash flow management (liquidity risk, financing risk).

In 2006 Balti Investeeringute Grupi Pank AS plans to continue its expansion in the small and consumer loans sector but it cannot yet be assumed that the growth rate of the previous year will continue. Faster development in 2006 is expected in the Latvian consumer loans market, which is why during this year the proportion of the Latvian subsidiary enterprise in the group’s business activities will increase. In 2006 the process of optimising and updating the bank’s structure and procedures will continue in order to keep up with the changing market conditions and growth.