Mortgage and land bank of Latvia interim finansial statements for the 6 months period

In the first half of the year 2010, Hipoteku banka continued active lending
within the framework of state aid programmes. 
 
In the first half of the year 2010, Latvijas Hipoteku un zemes banka continued
active lending within the framework of state aid programmes, made a repayment
of 49.1 million lats of syndicated and other loans and has accrued funds for
repayments scheduled for the second half of the year. 
 
The range of Hipoteku banka's promotional programmes was expanded by
Agricultural working capital lending programme in May 2010, and 77 loans of the
total of 2 million lats were granted under the programme by the end of June. 
Loans of 126.5 million lats were granted under the Programme for Improvement of
the Competitiveness of Businesses by the end of June 2010, including 41.26
million lats from the Loan fund, constituted by funds of the bank and the ERDF.
Hipoteku banka has granted microloans of the total amount of 602 thousand lats
under the Microlending programme. Within the European Social Fund programme
“Support to Self-employment and Business Start-ups”, financial aid was granted
to 130 projects for the total amount of 2 million LVL. By the end of June, 56
loans for the total of 3.65 million lats had been granted under the SME growth
lending programme, which was launched in February 2010 for development of
micro, small and medium-sized enterprises and co-operative unions providing
agricultural services. 
The promotional loans portfolio, at the end of the first six months of 2010,
makes up already 40% of Hipoteku banka's total loan portfolio. 
 
Says the Chairman of the Board of Hipoteku banka Rolands Paņko, “By means of
these promotional programmes, Hipoteku banka provides aid in areas that the
Government regards as top priority, supporting which is essential to
development of the national economy of Latvia and improvement of
competitiveness. We are pleased that the interest in opportunities of receiving
loans to start and expand businesses under the programmes implemented by the
bank, despite the adverse economic environment, has been rather high, therefore
we may hope that when the economic situation in the country becomes stable,
this interest in options of receiving aid would grow larger.” 
 
The volume of gross assets of Hipoteku banka decreased by 28.9 million lats or
by 3%, reaching 937.8 million lats in the 1st half of the year 2010. Within the
first 6 months of 2010, the gross loan portfolio of Hipoteku banka has
decreased by 7%, reaching 663 million lats, constituted by the portfolio of
development loans of 264 million lats (40% of the portfolio) and the portfolio
of commercial loans of 399 million lats. The volume of deposits in the
respective timeframe has grown by 1% reaching 329 million lats. In the first
six months, the Bank made provisions of 41 million lats for doubtful assets, as
a result of which, the audited losses were 39.3 million lats. The ratio of
provisions built by the Bank and the loan portfolio was 14.3% on 30 June of
this year. 
 
In April 2010, the equity capital of the Bank was increased by 70.28 million
lats. The equity capital was increased by means of the state taking over the
liabilities of Hipoteku banka towards the Nordic Investment Bank and investing
the respective amount into the equity capital of the bank. The funds of the
Nordic Investment Bank are being used for lending under the Programme for
Improvement of the Competitiveness of Businesses. The capital adequacy ratio
was 20.0% at the end of June, which considerably exceeds the statutory minimum
of 8% as directed by the Law on Credit Institutions. 
 
Hipoteku banka was established in 1993. In November of 2009, the Government
approved the concept of establishment of Development bank on the fundaments of
Hipoteku banka within the period of time until 2013. The priority of the Bank
is providing aid to small and medium businesses and enabling economic activity
in all regions of Latvia. 
 
Please see attached Mortgage and land bank of Latvia Interim Condensed
Consolidated and Bank Financial Statements for the 6 months period ended 30
June 2010 in accordance with International Accounting Standard 34 as adopted by
European Union. 
 
 
For further information:
 
Ms. Signe Eisaka
Public Relations Specialist, Hipoteku banka
signe.eisaka@hipo.lv
phone: +371 6777 4159
www.hipo.lv