In 2010, Latvia’s economic growth exceeded the most optimistic forecasts. The ability of the Latvian businesses to cut their expenses and faster-than-expected recovery in foreign markets encouraged growth of exports and promoted industry as the main driving force of the Latvian economy. The domestic market has started to gradually recover as well. Consequently, in the 3rd quarter of 2010, the GDP growth was observed also in year-on-year terms — for the first time after a decline lasting more than two years.
There is a high demand for credit resources outside the banks’ traditional field of activity, e. g. in the sector of new businesses. As the economy gains strength, the banks are lending more actively.
On 12 October 2011, the Bank of Latvia hosted its annual conference on economic development. This year it was titled
Global Challenges and Local Opportunities: Achievements and Prospects in the Baltic States.
The part I
Economic developments in Europe and their implications for the Baltic States: academic and policy perspective was dedicated to the analysis of the introduction of the euro — the recently implemented changeover to the single EU currency in Estonia and the prospective changeover in Latvia.
The part II
Latvia's exports: potential, challenges and future prospects included presentations by representatives of a company, an industrial association, a bank and a public institution promoting exports which allowed us to judge about the long-term sustainability of the pronounced export growth achieved to date.
Currently, there are 26 active credit institutions in Latvia.
As of 1 January, Latvia uses the euro as its sole legal tender.
Introduction of the euro
Completing the period of parallel circulation of lats and euro, i. e. the first two weeks of the year, the changeover to the euro in cash and in payment systems has taken place smoothly and without interruptions or other incidents.
As of 15 January, the euro is the only official tender in Latvia, yet the exchange of cash lats is continuing and is taking place as planned and stated:
- in 302 post offices, mostly in the countryside — until the end of March,
- in commercial banks — until the end of June,
- at cash offices of the Bank of Latvia in Liepāja, Daugavpils, and Riga — for unlimited time.
The TNS survey data indicate that the overall level of information regarding the appearance of the banknotes was high even shortly before the changeover and probably has increased since, yet it will have to be improved even further: with the help of the media, the Bank of Latvia continued to educate people about the safety features of the new currency throughout January and February — first of all, by showing
infomercials in all major TV channels.
National Currency - EUR (Euro) since 1 January 2014.
Nominal GDP (2013) - 23.4 bln EUR
Real GDP Growth (2013) - 4.1% (above the Euro Area average - 0.5%, above the European Union average - 0,1%)
Real GDP per Capita (2012) - 6800.00 EUR
Government Bond Yield
Government Bond Yield (December 2013) - 3.62% (above the Euro Area average - 3.0%, above the European Union average - 3.0%)
For credit ratings see
The banking sector in figures
The new data shows that the Latvian banking sector earned a total of 246.2 million euros in 2013.
Figures from the Financial and Capital Market Commission show how the banking sector's return on equity increased from five to eight percent in 2012.
In 2013, fifteen Latvian banks and five branches of foreign banks, which account for almost 95 percent of the banking sector's total assets, operated with profit.
The Financial and Capital Market Commission says that the bank's cost and income structure has stabilized.
The increase in banks' profit is mostly attributable to 10.4 percent rise in net interest income, 13.6 percent increase in net commissions, whereas net provisions for impaired loans decreased by 10.9 percent.
After three years of losses, the banking sector returned to profit in 2012 when Latvian banks earned a total of 174 million euros.
The Financial and Capital Market Commission's Chairman Kristaps Zakulis believes that bank's profitability in 2014 will be similar to that of 2013, adding that banks will continue to look for more efficient solutions.
The year 2013 was a balanced year for the banking sector in Latvia.
Three credit institutions halted operations in Latvia last year: GE Money Bank, UniCredit Bank and Latvian Mortgage and Land Bank (Latvijas Hipotēku un zemes banka), therefore there were 26 credit institutions in Latvia at the beginning of this year — seventeen banks and nine branches of foreign banks.
The total number of financial institutions in the European Union decreased by 3.6 percent last year; at the beginning of 2014, there were 8,476 financial institutions in the EU.
|Number of banks incl.:||23||23||23||23||23||24||25||27||29||31||31|
|branches of foreign banks||1||1||1||1||1||3||4||6||8||10||9||9||9|
|Number of bank branches||193||199||206||202||215||224||235||247||231||223||212||209||164|
|Number of customer accounts, '000||1651||2041||2207||2403||2912||3316||4341||4545||4462||4525||4707||4568||4581|
|Number of internet-linked accounts, '000||-||-||-||-||-||-||2538||2859||3015||3163||3415||3444||3643|
|Number of payment cards, '000||893||1022||1176||1365||1711||2107||2389||2518||2478||2424||2325||2381||2385|
|Number of ATM's||791||842||868||875||878||957||1143||1274||1320||1359||1207||1270||1154|
|Number of POS terminals||6908||8326||10268||15170||18495||17571||20367||23350||24381||24366||25430||26259||29066|