Estonia's Banking System Overview

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[...] Estonia's Banking System Overview Banking in Estonia Team 11 Agenda 1 Macro Situation 2 Estonia's Banking Sector 3 News and Events About Estonia's Banking System 4 Conclusion Estonia's Banking System Overview Macro Situation BEstonia's Banking System Overview Key Figures of Estonia's Economy 2020(p ) Growth of GDP Inflation (annual average) Government Balance /GDP Current Account Balance / GDP Public Debt / GDP Estonia's Banking System Overview GDP Growth Source: data.worldbank.org Estonia's Banking System Overview Interest Rate Source: Tradingeconomics.com European Central Bank Estonia's Banking System Overview Stock Market Source: Tradingeconomics.com Estonia's Banking System Overview Strengths and Weaknesses of Estonia's Economy W S ✔ Membership of the euro area (2011) and the OECD (2010) ✔ Close commercial, financial and cultural ties with Scandinavia ✔ Near energy self-sufficiency through oil shale ✔ Development of high value-added sectors (electronics, computer services) ✔ Flexibility of economic policy ✔ Excess external accounts and low debt ✔ Very favorable business environment Digitization of administrative procedures ✔ Small open economy sensitive to external shocks ✔ Working population decline and skilled workforce shortage ✔ Lack of land links with the rest of the European UnionIncome inequality and persistence of poverty, especially in Eastern Russian-speaking regions Estonia's Banking System Overview Estonia's Banking Sector Banking in Estonia Team 11 Banks in Estonia 17 Number Number of of Banks Banks Major Major Banks Banks Estonia's Banking System Overview Bank Assets Name Total Assets Country of Origin Net income Swedbank AS Sweden AS SEB Pank Sweden Luminor Bank AS Sweden AS LVH Pank Estonia Danske Bank In Mn's EUR Consolidated Banking Assets (2019): mln EUR Estonia's Banking System Overview Denmark Deposit Guarantee Deposit Guarantee in Estonia: 100,000 € Estonia's Banking System Overview Net Interest Margin Banking in Estonia Team 11 Return on Equity Estonia's Banking System Overview Bank Concentration Estonia's Banking System Overview Non-Performing Loans Source: Theglobaleconomy.com Estonia's Banking System Overview Banking Events Perspective Conclusion Danske Bank – Money Laundering • It has been described as one of the largest money laundering scandal in Europe (20072015) • Estonia Branch – takeover of Finland's SAMPO branch • 2015, the non-resident portfolio was shut down • Half of Danske's 15,000 customers were suspicious • In 2019, Estonia ordered Danske bank to close its branch in Tallin before the end of 2019. Estonia's Banking System Overview Macro Perspective: COVID-19 • Structural budget deficit is expected to remain low • The IMF predicts a further decline in the Estonian economy in 2020, with an expected growth rate of - • Estonians quite easily turn to consumer loans to finance their purchases, especially for durable goods. [...]

[...] Estonia's Banking System Overview Conclusion: ▪ Macro has good indicators but may be affected by the Covid ▪ Banking sector is concentrated and profitable as evidenced by high ROE ▪ NPL is low but may surge due to Covid ▪ Regulations (AML) can be improved. End of Presentation Any questions? [...]

[...] • The real estate market is healthy and demand for home loans remains high. This will help boost the economy • Estonian financial markets have already recovered more than 27% of the 40% lost at the low point reached during the crisis. [...]