• The Group's net income percentage grew by 14%, reaching 75.4 million Euro
• The net credit portfolio grew by 7% in 2017 to 1.33 billion Euro
• The capital adequacy ratio continued to grow, reaching 18.4%

In 2017, the Citadele group worked with a high capital position, while the Group’s capital adequacy ratio (CAR) in 2017 continued to rise, reaching 18.4%, up from 16.5% at the end of December 2016.

The Citadele group continued working with stable profitability: the Group achieved an adjusted RoE of 11.9% and an adjusted RoA of 0.94%. These profitability indicators are some of the most stable in the market.

AS “Citadele banka” Group’s net profit (before exceptional items) in 2017 was EUR 31.5 million. This net profit result was impacted by a EUR 23.2 million deferred tax asset write-off, which occurred as a result of changes in Latvian tax legislation. These expenses were purely fiscal and did not affect the amount of the Group’s capital. As a result of this activity, the Group’s net profit was EUR 16.0 million. Citadele anticipates that, starting from 2018, the tax reform implemented in this country will have a positive impact and the group’s net profit will again increase.

In 2017 the Citadele Group continued working with a large liquidity reserve. Client deposits at the end of 2017 were EUR 2.88 billion. The increase in total deposits was visible in the private customer service sector - 5%, but was especially swift in the small and medium business sector, where deposits grew by 21%, and in the corporate client service sector, where the growth was 32%.

The net loan portfolio for Citadele Group grew by 7% to EUR 1.33 billion in 2017, predominantly driven by the Group’s strategy to promote lending to Baltic retail and SME clients. At the same time, asset quality also improved: the Group’s non-performing loan (NPL) ratio decreased to 8.3%, down from 9.9% at the end of 2016.

Over the course of 2017, Citadele Group banking entities granted a total of EUR 469 million in new lending to clients, which is a 10% increase on 2016. In Latvia, the Bank granted EUR 266 million in new loans, whereas in Lithuania and Estonia, newly granted loans amounted to EUR 142 million and EUR 64 million respectively.

Citadele’s Chairman of the Management Board Guntis Beļavskis said:

“In 2017 Citadele reached its highest capital adequacy ratio since the bank’s founding. I am thankful to the wonderful bank team who forged this result by investing their time, energy and resources in the bank’s long-term development.

We want to become the Baltic leader in digital banking services and e-payments. Therefore, in 2017, Citadele Group invested more than EUR 3 million in innovative solutions and digitalization of products and services. These improvements included mobile payments, new functionalities in the bank’s mobile banking application, improvements to the internet bank, and an automated credit scoring process for lending.

In the last twelve months, we were the first bank in the Baltics to introduce payments by smartphone, bracelets and stickers as well as being the first bank to introduce touchscreen ATMs. We also completed 11 updates to the Citadele mobile banking app and 8 updates to the internet bank. Citadele was also the first bank in Latvia to join the Bank of Latvia instant-payment system and we continue to see the development of digital channels as the future of banking services.

Thanks in large part to our innovative efforts and enhanced customer service, we continue to build on our active client base throughout the Baltics. Furthermore, in 2017, one of the leading customer service evaluation firms in Central and Eastern Europe, Dive, acknowledged Citadele as the bank with the best customer service in Latvia and Lithuania.

I remain excited by Citadele’s development potential. The Group has made further investments in several areas of the bank’s operations so that Citadele’s development in the Baltics continues to be even stronger and more stable in the coming years.”

Furthermore, since the beginning of 2017, Citadele began issuing contactless payment cards in order to create a suitable infrastructure for mobile payments in Latvia. In cooperation with global payments company Visa, Citadele has also launched a new X credit card for clients in Latvia.

In other developments, Moody’s Investors Service increased Citadele’s long-term credit rating by two notches (from B1 to Ba2) during 2017, and has maintained its positive outlook. Meanwhile, in November 2017, the bank completed its EUR 20 million subordinated debt issuance as part of its second subordinated bonds program. This will allow the Group to refinance the existing subordinated liabilities with European Bank for Reconstruction and Development (EBRD) and to continue to improve the Group’s capital adequacy ratio (CAR).

Statement of corporate governance is publicly available on the website www.cblgroup.com in Section ‘For investors’, Subsection ‘Financial statements’.

Further information:

Ieva Prauliņa

Head of Corporate Communications

Telephone: +371 67010172; +371 29373305

Email: Ieva.Praulina@citadele.lv

Mihails Golevs

Head of Financial Institutions

Telephone: +371 67778585

E-mail: mihails.golevs@citadele.lv

Santa Daniela Kanaška

Investor relations specialist

Telephone: +371 67010991

E-mail: IR@citadele.lv