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AS Citadele banka
The Group at a glance
Key figures and events of the Group
Citadele’s Baltic operations net profit for the 12 months ended 31 December 2023 reached EUR 110.4 million, representing a 23.6% return on equity and cost to income ratio (CIR) of 44.7%.
In the 12 months ended 31 December 2023, Citadele issued EUR 897 million in new financing to support Baltic private, SME and corporate customers, compared to EUR 1.2 billion in the 12 months ended 31 December 2022.
Citadele’s deposit base totaled EUR 3,830 million as of 31 December 2023, reflecting a slight increase of EUR 5 million quarter-over-quarter.
Citadele’s active customers remained steady year-over-year and constituted 378 thousand active clients as of 31 December 2023. The number of active mobile app users reached all time high of 257 thousand, growing by 9% year-over-year. Active digital channel users reached 96% of total customers.
Asset quality continued to improve with NPL of 2.1% as of 31 December 2023, on the back of recoveries.
Citadele continues to operate with more than adequate capital and liquidity ratios. The Group’s CAR (including adjusted net result for the period) was 22.0%, CET1 19.6% and LCR of 206% as of 31 December 2023.
As of 31 December 2023, Citadele had 1,329 full time employees, of which 28 were with discontinued operations.
There has been a significant amount of economic and geopolitical uncertainty lately, but despite the volatility, the bank continues the path of evaluating strategic options, including a potential IPO.
EUR millions
Continuous operations*
12m 2023
12m 2022
Q4
2023
Q3
2023
Net interest income
187.9
119.4
49.2
50.8
Net fee and commission income
37.8
37.8
8.8
8.1
Net financial and other income
8.2
5.4
1.6
1.8
Operating income
233.9
162.6
59.6
60.6
Operating expense
(104.5)
(91.6)
(31.0)
(24.6)
Net credit losses and impairments
4.5
(23.8)
(1.9)
2.8
Net profit from continuous operations (after tax)
110.4
45.2
10.2
35.7
Return on average assets (ROA)
2.2%
0.9%
0.9%
3.0%
Return on average equity (ROE)
23.6%
11.1%
8.0%
29.6%
Cost to income ratio (CIR)
44.7%
56.3%
52.0%
40.6%
Cost of risk ratio (COR)
0.2%
(0.8%)
(0.3%)
0.4%
Loans to and deposits from the public
EURm
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Common equity Tier 1 (CET1) capital ratio and Total capital adequacy ratio (CAR), (including net result for the period, less EUR 50.6 million expected dividends)
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*Only continuous operations shown. Comparatives are restated for discontinued operations of Kaleido Privatbank AG (Swiss subsidiary bank of the Group) which is committed for sale and thus excluded from the presented key figures. Comparative figures for 2022 have been restated due to the adoption of IFRS 17, earlier comparative figures are not restated for IFRS 17.
**For definitions of Alternative Performance Ratios refer to Definitions and Abbreviations section of these financial statements.
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AS „Citadele banka”
Contents
CONTENTS
Management report
4
Letter from the Management
12
Corporate governance
18
Statement of Management’s Responsibility
Financial statements
19
Statement of income
20
Statement of comprehensive income
21
Balance sheet
22
Statement of changes in equity
23
Statement of Cash Flows
24
Notes to the financial statements
110
Auditors’ Report
Other
119
Other regulatory disclosures
123
Quarterly statements of income and balance sheets of the Group
124
Definitions and abbreviations
Rounding and Percentages
Some numerical figures included in these financial statements have been subject to rounding adjustments. Accordingly, numerical figures shown for the same category presented in different tables may vary slightly, and numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
In these financial statements, certain percentage figures have been included for convenience purposes in comparing changes in financial and other data over time. However, certain percentages may not sum to 100% due to rounding.
For definitions of Alternative Performance Ratios used throughout these financial statements refer to Definitions and Abbreviations section of this report.
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AS Citadele banka
Management report | Letter from the Management
Letter from the management report
'Please unpack the Result.zip and reopen this file.'Economic sentiment is starting to improve in the Baltics
In 2023, global economic growth remained resilient despite the ongoing war in Ukraine, the emergence of new geopolitical shocks, high interest rates, and distress in China’s housing market. In the Baltics, high inflation, rising interest rates, and weak external demand have been challenges, and economic growth has been negative for most of the year. Inflation has declined faster than expected, energy prices have normalized, growth in the US remained strong, and the euro area avoided a recession. Growth projections for the global economy in 2024 have been revised up, and although growth prospects for the euro area remain modest, signs of stabilization are evident. Particularly in the manufacturing sector, inventory levels have begun to shrink, signalling demand recovery in manufacturing and transportation industries. In recent months, economic sentiment in the Baltics has stabilized and is showing signs of improvement. Inflation in the Baltics fell rapidly in 2023, and financial markets are now anticipating interest rate reductions in 2024, which, together with low unemployment and rising wages, will support consumption.
Strong financial result
Citadele has continued to support the business community with financing for growth and expansion. New financing to our private, SME and corporate customers reached EUR 897 million in the 12 months ended 31 December 2023, compared to EUR 1.2 billion in the 12 months ended 31 December 2022. Customer activity resumed during the last quarter, with EUR 276 million issued in new financing in Q4 2023, indicating a 44% increase quarter-over-quarter. Citadele's total loan book as of 31 December 2023, stood at EUR 2,862 million, marking a EUR 9 million increase compared to 30 September 2023.
The financial standing of our customers is reassuring, and the quality of our portfolio remains strong. The non-performing loan (NPL) ratio was 2.1% as of 31 December 2023, compared to 2.7% as of year-end 2022.
In the 12 months ended 31 December 2023, Citadele’s operating income from continuous operations reached EUR 234 million, representing a 44% year-over-year growth.
Net profit from continuous operations reached EUR 110 million in the same period, with a return on equity of 23.6%. For Q4 2023, operating income from continuous operations was EUR 59.6 million, reflecting a 32% year-over-year growth. Q4 2023 net profit from continuous operations reached EUR 10.2 million, with an annualised return on equity of 8.0% mainly affected by a retrospective full year tax expense due to recently introduced changes in the Latvia tax legislation.
Citadele’s deposit base totaled EUR 3,830 million as of 31 December 2023, reflecting a slight increase of EUR 5 million quarter-over-quarter. Loan-to-deposit ratio stood at 75% as of 31 December 2023.
Citadele continues to operate with more than adequate capital and liquidity ratios: CAR (including net result for the period and EUR 50.6 million expected dividends) was 22.0%, Tier 1 ratio was 19.6% and LCR was 206% as of 31 December 2023.
There has been a significant amount of economic and geopolitical uncertainty lately, but despite the volatility, the bank continues the path of evaluating strategic options, including a potential IPO.
Bank withthe best customer service in the Baltics
Our commitment of providing the best customer service has enabled Citadele to maintain the top position among banks in the Baltics in 2023, as revealed by the annual mystery shopper survey conducted by international customer service evaluation company DIVE. The banking sector in the Baltics was evaluated across two channels – remote and face-to-face service. Citadele achieved the highest rankings in both categories, for servicing clients remotely and in-person. In Latvia, Citadele has been ranked as the best for the 9th year in a row, and it has consistently been in the top 3 in all the Baltic countries for the past 3 years. Citadele's performance surpassed the industry average in all countries.
Stable client base
Citadele continues to attract new clients, and we are proud of our strong customer base who trust us with their financial service needs. As of 31 December 2023, Citadele's total customers reached 494 thousand clients. Active customer base reached 378 thousand clients, representing an increase of 1% year-over-year. Active digital channel users reached 96% of total customers, representing clients who use Citadele digital channels, majority of which giving preference to mobile app, the rest using i-Bank. The number of active mobile app users as of 31 December 2023 reached 257 thousand, marking a 9% year-over-year growth.
Innovations and development
In 2023, Citadele continued its commitment to providing a seamless digital banking experience by enriching its mobile app with new features. As part of our 'bank in your pocket' offering, customers can now easily access five insurance products with just a few clicks in the mobile app, payable through a monthly subscription.
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AS Citadele banka
Management report | Letter from the Management
Klix, Citadele’s e-commerce checkout solution, exceeded 1,300 merchants, its registered user base surpassed 280 thousand and active users reached 45 thousand as of 31 December 2023. In the 12 months ended 31 December 2023, 16 million transactions were processed via Klix, with a total value of EUR 560 million. Klix continues to expand Buy Now, Pay Later solution, launching several strategic partnerships in 2023, such as Varle in Lithuania and RD Electronics in Latvia and Lithuania.
Sustainability
In line with our commitment to support our customers in the transition to a low-carbon economy and seeing that sustainability initiatives are becoming more important for our clients, Citadele continued to develop and launch new offering supporting transition to the green economy.
In Q3 2023, Citadele introduced the first green savings account in the Baltic market. Deposited funds are used to finance projects aimed at reducing carbon emissions. As of 31 December 2023, funds in the green savings account reached EUR 36 million. Additionally, in Q4 2023, we launched green mortgage loan, aimed to finance homes complying with the highest energy efficiency standards. New lending to businesses and private sector facilitating the transition to a green economy amounted to EUR 115 million in 2023, constituting 13% of total new lending.
To promote a positive workplace culture and make a meaningful impact on the community, Citadele has launched volunteer days giving opportunity to its employees contribute three working days each year for social volunteering.
Events after the reporting period
Moody’s has affirmed Citadele ratings and changed the outlook to positive
On 25 January 2024, the international credit rating agency Moody’s affirmed Citadele’s Baa2 credit rating and changed the outlook to positive.
The outlooks on the long-term deposit and senior unsecured debt ratings were changed to positive from stable, reflecting Moody’s view that Citadele’s capital will continue to strengthen during the next 12 to 18 months, supported by higher sustained profitability and stable credit quality. Upon affirmation of Citadele’s long-term Baa2 deposit rating and Baa3 senior unsecured debt rating, Moody’s has considered Citadele’s strong improvement in earnings during 2023 and forecast of continued strong earnings in coming quarters, increased capitalization and good credit quality.
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AS Citadele banka
Management report | Financial review of the Group
Financial review of the Group
Results and profitability in 12M 2023 – Baltics
Strong financial performance with operating income for the 12 months ending 31 December 2023 reaching EUR 233.9 million, representing 44% growth year-over-year.
Performance driven by strong net interest income, which reached EUR 187.9 million in the 12 months ended 31 December 2023, a 57% increase year-over-year, mainly impacted by rising interest rates.
The Group’s net fee and commission income reached EUR 37.8 million in the 12 months ended 31 December 2023, remaining flat year-over-year, mainly due to fee and commission expense increase by EUR 2.9 million for securitization, representing an expense on a multi-year financial guarantee contract issued by the EIB Group to Citadele in December 2022. The EIB Group deal will provide capital relief for Citadele and enable it to grant at least EUR 460 million in additional loans and leases to businesses in the Baltics over the next three years, of which at least 20% will go towards Climate Action projects, helping to reduce overall greenhouse gas emissions.
Operating expenses in the 12 months ended 31 December 2023 were EUR 104.5 million, representing a 14% increase year-over-year. Staff costs increased by 11% to EUR 65.4 million. The number of full-time employees was 1,329, compared to 1,355 as of year-end 2022, of which 28 (2022: 26) were with discontinued operations. Other costs were EUR 30.1 million, representing a 26% increase year-over-year, mainly impacted by investments in IT and communications (9% increase year-over-year) and consulting expenses (66% increase year-over-year). Increase in consulting expenses were mainly driven by strategic initiative review and implementation of multi-year Internal Ratings Based (IRB) project, that will allow tailored risk assessment to bank’s specific portfolios and risk profiles, potentially leading to more efficient allocation of regulatory capital. Depreciation and amortization expenses stood at EUR 9.0 million (a 3% increase year-over-year).
Citadele’s cost to income ratio in the 12 months ended 31 December 2023 was 44.7%, compared to 56.3% in the 12 months ended 31 December 2022.
Net credit losses and impairmentsreversal recognized in the amount of EUR 4.6 million in the 12 months ended 31 December 2023. The overall credit quality of the loan book was good. Stage 3 loans to public gross ratio decreased to its historically lowest level of 2.1% compared to 2.7% as of 31 December 2022.
Net profit from continuous operations reached EUR 110.4 million in the 12 months ended 31 December 2023. Return on equity reached 23.6% in the 12 months ended 31 December 2023. Kaleido Privatbank AG (Swiss subsidiary committed for sale) has been presented as discontinued operations since December 31, 2022.
The Group’s net profit was EUR 103.8 million in the 12 months ended 31 December 2023 (EUR 8.7 million in Q4 2023, mainly affected by a retrospective full year tax expense due to recently introduced changes in the Latvia tax legislation). Return on equity reached 22.2%.
Operating income, EURm
Continuing operations
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Operating expense, EURm
Continuing operations
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AS Citadele banka
Management report | Financial review of the Group
Balance sheet overview
The Group’s assets stood at EUR 4,863 million as of 31 December 2023, decreasing by 10% since year-end 2022 (EUR 5,405 million). The decrease was mainly driven by repayment of the ECB TLRTO loan of EUR 441 million. As of 31 December 2023, Kaleido Privatbank AG (Swiss subsidiary committed for sale) is presented as discontinued operations. Continuing operations assets were EUR 4,731 million as of 31 December 2023 (compared to EUR 5,239 million as of 31 December 2022).
The net loan portfolio of continuing operations was EUR 2,862 million as of 31 December 2023, decreasing by EUR 105 million (4%) from year-end 2022.
New financing in the 12 months ended 31 December 2023 constituted EUR 897.1 million, representing a 25% decrease year-over-year. EUR 285.3 million was issued to private customers, EUR 308.9 million to SMEs and EUR 302.9 million to corporate customers.
In terms of products, EUR 326.4 million was disbursed in regular or mortgage loans (38% decrease year-over-year), EUR 499.2 million leasing and factoring (18% decrease year-over-year), and EUR 73.2 million consumer and micro loans (2% decrease year-over-year).
In terms of the loanportfolio’s geographical profile, as of 31 December 2023, Latvia accounted for 44.9% of the portfolio, with EUR 1,285 million (45.6% as of year-end 2022), followed by Lithuania at 36.3% with EUR 1,039 million (vs. 37.8% as of year-end 2022), Estonia at 18.3% with EUR 524 million (vs. 16.1% as of the year-end 2022) and EU and other countries at 0.5% with EUR 13 million.
As of 31 December 2023, loans to Households represented 46% of the loan portfolio (44% as of year-end 2022). Mortgages have slightly decreased compared to year-end 2022 (2% decrease), and constituted EUR 815 million. Finance leases remained flat at EUR 348 million (vs. 350 million as of year-end 2022). Consumer lending increased by 18% vs. year-end 2022 (EUR 92 million) and reached EUR 109 million. Card lending has slightly increased by 4% and was EUR 60.0 million. Overall, the main industry concentrations were Real estate purchase and management (12% of total gross loans), Transport and communications (7%), Manufacturing (7%) and Trade (6%).
The Group’s securities portfolio forms a part of its liquidity resources and in the 12 months ended 31 December 2023 decreased by 23% vs. year-end 2022 in line with portfolio maturity profile. 93% of the securities portfolio consist of securities with a rating of A and higher. The largest decreases for the securities portfolio occurred in AAA/Aaa and A rated bonds, which decreased by EUR 77.5 million and EUR 328.4 million, respectively, for the period.
The main source of Citadele’s funding, customer deposits of continuing operations, decreased by 5% to EUR 3,830 million in the 12 months ended 31 December 2023, compared to year-end 2022. Baltic domestic customer deposits formed 98% of total deposits or EUR 3,767 million (compared to 98% as of year-end 2022).
Loans and Deposits, EURm
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New financing, EURm
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Balance sheet structure, EURm
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Ratings
International credit rating agency Moody's Investors Service has affirmed Baa2 rating changing outlook to positive (January 2024).
The main credit strengths are:
Sound funding and liquidity, underpinned by a domestic-based deposit funding model
Strong capital generation, underpinned by organic and non-organic growth
Improving asset quality with unwinding of problem loans.
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AS Citadele banka
Management report | Segment Highlights
Segment Highlights
Retail Private and Affluent segment
We are pleased to see that our continued strong customer focus and quality of service are recognized by our customers and allowed us to maintain the top position among banks in 2023 in the Baltics, as revealed by the annual mystery shopper survey conducted by international customer service evaluation company DIVE. The banking sector in the Baltics was evaluated across two channels – remote and face-to-face service. Citadele achieved the highest rankings in both categories – for servicing clients remotely (1st place in Latvia and Lithuania, 2nd place in Estonia) and in-person (1st place in Latvia and 2nd place in Lithuania and Estonia).
The number of active Retail customers reached a new all-time high level for Citadele, and primary customers continued to grow reaching 205 thousand clients as of 31 December 2023, a 3% increase year-over-year.
In 2023, the Retail private segment's operating income reached EUR 89 million, reflecting a 49% year-over-year growth.
High inflation and interest rates in 2023 have increased overall customer interest in savings and investment products, while decreasing demand for new financing, especially in housing market and leasing sectors. New lending to private individuals reached EUR 285 million (compared to 362 million in 2022).
Recognizing the importance of sustainability initiatives to our clients, Citadele expanded its sustainability-related product offering in 2023 by launching the Green Savings Account, where deposited funds are used to finance projects aimed at reducing carbon emissions, and Green Mortgage Loan, tailored to finance homes complying with the highest energy efficiency standards. Insurance products available in mobile app, comprising five offerings, have commenced initial sales, educating society about the importance of protecting oneself across various life stages.
Total loans to Private individuals reached EUR 1,254 million as of 31 December 2023, increasing by EUR 10 million as compared to 30 September 2023 with good loan quality. Deposits from Private individuals constituted EUR 1,912 million, slightly decreasing by EUR 3 million as compared to 30 September 2023.
SME segment
In the 12 months ending on 31 December 2023, the SME segment's operating income reached EUR 58 million, reflecting a 38% year-over-year growth. Performance driven by strong net interest income, which reached EUR 46 million in the 12 months ended 31 December 2023, a 57% increase year-over-year, mainly impacted by rising interest rates.
SME new financing reached EUR 309 million in 2023, as compared to EUR 331 million in 2022. SME lending volumes rebounded in Q4 2024, reaching EUR 83 million. The total SME loan portfolio was EUR 637 million, representing a slight increase by 1% compared to the year-end 2022. Credit portfolio quality remained strong. The deposit portfolio decreased by 6% vs. the year end 2022 and was EUR 691 million as of 31 December 2023
Loans, EURm
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Deposits, EURm
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New lending, EURm
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AS Citadele banka
Management report | Segment Highlights
Segment Highlights
Corporate segment
In the 12 months ending on 31 December 2023, the corporate segment's operating income reached EUR 57 million, reflecting a 12% year-over-year growth. Performance driven by strong net interest income, which reached EUR 51 million in the 12 months ended 31 December 2023, a 19% increase year-over-year, mainly impacted by rising interest rates.
Corporate new financing totaled EUR 303 million in 2023, down from EUR 511 million in 2022. Corporate lending volumes rebounded in Q4 2024, reaching EUR 110 million. Demand for green transition loans remained high, with numerous large renewable energy and energy-efficient projects financed throughout 2023.
The total corporate loan portfolio was EUR 961 million, representing a decreased by 9% compared to the year-end 2022. Credit portfolio quality remained strong. The deposit portfolio increased by 5% vs. the year end 2022 and was EUR 1,105 million as of 31 December 2023
Asset Management
In the 12 months ending on 31 December 2023, the Asset Management segment's operating income reached EUR 7.3 million, reflecting a 47% year-over-year growth. The total customers’ assets under management reached EUR 1,080 million, up from EUR 962 million in 2022.
Operating income, EURm
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AS Citadele banka
Management report | Business environment
Business Environment
Global economic growth remains resilient
In 2023, global economic growth remained resilient despite the ongoing war in Ukraine, the emergence of new geopolitical shocks, high interest rates, and distress in China’s housing market. However, inflation declined faster than expected, energy prices normalized, growth in the US remained strong, and the euro area avoided recession. According to the International Monetary Fund's January 2024 forecast, the global economy in 2024 is expected to grow by 3.1%, which is 0.2% higher than forecasted in October 2023. However, growth in the euro area remains weak and is forecasted to grow by only 0.9% in 2024, up from 0.5% in 2023.
Signs of stabilization are visible in the euro area. Business surveys show that inventory levels in euro area manufacturing have started to shrink, which is a positive sign for the manufacturing and transportation sectors. At the same time, low unemployment, rising wages, and falling inflation are set to benefit consumption. However, demand in the construction sector remains weak due to high interest rates.
Economic sentiment is starting to improve in the Baltics
In 2023, growth in the Baltic region was negatively affected by high inflation, rising interest rates, and weak external demand in manufacturing, resulting in moderate recessions across all three Baltic countries. According to preliminary estimates, in 2023 GDP in Lithuania declined by 0.3%, in Latvia by 0.6%, and in Estonia by 3.5%. At the same time, economic sentiment in the Baltics has stabilized and is starting to improve.
The manufacturing and transport sectors were the hardest hit in 2023, largely due to weak external demand and a cyclical downturn in global manufacturing. Agriculture also suffered due to unfavorable weather conditions, while the retail trade sector struggled with falling real incomes caused by high inflation and a high share of variable rate loans. However, service sectors such as IT, professional services, and tourism continued to experience growth.
In 2023, GDP growth in Estonia was lagging Latvia and Lithuania, primarily due to Estonia’s higher trade exposure to Sweden and Finland. Additionally, rising interest rates had a significant impact on consumption and investment, particularly due to the larger private sector debt and a substantial IT startup sector where higher interest rates led to reduced availability of funding.
Inflation has declined and interest rates have peaked
Inflation in the Baltics fell rapidly in 2023, and by the end of the year, inflation in Latvia and Lithuania had fallen below 2%, while remaining above 4% in Estonia and close to 3% in the euro area. As a result of lower inflation, interest rates in the euro area appear to have peaked, and financial markets have begun to anticipate rapid interest rate decreases in 2024. At the same time wage growth in the Baltics exceeded 10% in Q3 2023 and new geopolitical shocks could lead to new price pressures.
Economic sentiment indicator
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GDP (constant prices, % year-on year)
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Inflation (%, year-on-year)
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ECB un EURIBOR interest rates, %
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AS „Citadele banka”
Management report | Other regulatory information
OTHER REGULATORY INFORMATION
Name
AS Citadele banka
Address
Republikas laukums 2A, Riga,
LV-1010, Latvia
Web page
www.citadele.lv
www.cblgroup.com
Phone
(+371) 67010 000
LEI code
2138009Y59EAR7H1UO97
Registration number
40103303559
License number
06.01.05.405/280
License issue date
30/06/2010
Branches
AS Citadele banka has 11 branches and client service units in Latvia, 1 branch in Estonia and 1 branch in Lithuania as of the period end. The Lithuanian branch has 6 customer service units in Lithuania.
Information about branches, client service units and ATMs of Citadele is available in the Citadele web page's section “Branches and ATMs”.
Dividends
Refer to Note 27 (Share Capital) of the annual report. As at issuance of the annual report the Bank’s Management proposes to distribute EUR 50.6 million in dividends (EUR 0.32 per share) and to transfer the rest to the retained earnings account to strengthen the capital position.
Future development
Citadele aims to become the primary bank of choice for aspiring retail and small business customers across the Baltics and will continue to relentlessly improve products and services. Citadele will continue to provide high quality financial services to clients and their businesses with an objective to foster further growth across the whole Baltic region. A complete portfolio of banking, leasing, financial and wealth management services is to be offered for both private individuals and companies. The core market of Citadele remains unchanged: Latvia, Lithuania and Estonia.
Risk Management
The main risks to which the Group is exposed are credit risk, market risk, interest rate risk, liquidity risk, currency risk and operational risk. For each of these risks the Group has approved risk management policies and other internal regulations defining key risk management principles and processes, functions and responsibilities of units, risk concentration limits, as well as control and reporting system. The Group’s risk management policies for each of the above-mentioned risks and certain other risks are briefly summarised in the Note 35 (Risk Management) of these financial statements.
Domicile of entity
Latvia
Country of incorporation
Latvia
Legal form
Stock company (in Latvian “Akciju sabiedrība”)
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AS Citadele banka
Management report | Corporate governance
CORPORATE GOVERNANCE
AS Citadele banka is the parent company of Citadele Group. AS Citadele banka is a joint stock company. Citadele’s shareholders are an international group of investors with global experience in the banking sector. As of period end 74.2% shares in AS Citadele banka are owned by a consortium of international investors represented by Ripplewood Advisors LLC, 24.7% shares are owned by the European Bank for Reconstruction and Development (EBRD), and 1.1% shares are owned by the management, employees, and other investors.
The Statement of Corporate Governance is published on the Bank’s website www.cblgroup.com.
Audit and Governance Committee’s report to the shareholders
In 2023 Audit and Governance Committee of AS Citadele banka (hereinafter – the Committee) acted in the role of audit committee as required by the Financial Instruments Market Law.
The Committee performed tasks in line with the requirements of the law:
Supervised the preparation of the annual report for the year ended 31 December 2023;
Supervised the process of audit of the annual report for the year ended 31 December 2023;
Supervised the effectiveness of internal controls, risk management and internal audit systems as applicable to the process of the preparation of financial statements;
Supervised the approval of the external auditor for audit of the annual report for the year ended 31 December 2023;
Supervised the compliance of the auditor of the annual report for the year ended 31 December 2023 with independence and objectivity requirements set forth in the Law of the Provision of Audit Services;
Communicated to the Supervisory Board the conclusions made by the auditor of the annual report for the year ended 31 December 2023.
In 2023 the Committee was not hindered in any way, and full access to any information required by the Committee was ensured. The Committee throughout the year kept the Management Board and the Supervisory Board informed about the conclusions and recommendations made by it. In the course of discharging its duties as related to the preparation of the annual report for the year ended 31 December 2023 the Committee did not encounter any evidence that would suggest that these financial statements would not be true and fair.
A detailed report on the activities of the Committee in 2023 has been submitted to the Supervisory Board of the Bank.
Supervisory Board of the Bank as of 31/12/2023:
Name
Current Position
Date of
first appointment
Timothy Clark Collins
Chairman of the Supervisory Board
20 April 2015
Elizabeth Critchley
Deputy Chairperson of the Supervisory Board
20 April 2015
Dhananjaya Dvivedi
Member of the Supervisory Board
20 April 2015
Lawrence Neal Lavine
Member of the Supervisory Board
20 April 2015
Nicholas Dominic Haag
Member of the Supervisory Board
19 December 2016
Karina Saroukhanian
Member of the Supervisory Board
19 December 2016
Sylvia Yumi Gansser Potts
Member of the Supervisory Board
29 October 2018
Stephen Young
Member of the Supervisory Board
4 October 2023
Daiga Auzina-Melalksne
Member of the Supervisory Board
1 November 2023
Klāvs Vasks, former member of AS Citadele banka Supervisory Board, has resigned from his duties and left Citadele Supervisory board and respective supervisory board committees effective from 1 July 2023. James Laurence Balsillie, former member of AS Citadele banka Supervisory Board, has resigned from his duties and left Citadele Supervisory board and respective supervisory board committees in August 2023.
Stephen Young became Member of the Supervisory Board effective from 4 October 2023. Daiga Auzina-Melalksne became Member of the Supervisory Board effective from 1 November 2023.

Timothy Clark Collins, Chairman of the Supervisory Board
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Mr. Collins is the Chief Executive Officer of Ripplewood. Mr. Collins has led the Ripplewood team in investing around the globe, including in the U.S., Europe, the Middle East and Asia. Mr. Collins and Ripplewood have delivered outsized returns, deploying over USD 6 billion in equity, representing over USD 40 billion of total enterprise value, and played an instrumental role in transforming and strengthening two prominent institutions, Commercial International Bank of Egypt and Shinsei Bank of Japan. Before founding Ripplewood in 1995, Mr. Collins worked for Cummins Engine Company, Booz, Allen & Hamilton, Lazard Frères & Company and Onex Corporation. Mr. Collins is involved in several not-for-profit and public sector activities, including the Trilateral Commission, the Council on Foreign Relations, Neom Advisory Board and is a member of the Investment Advisory Committee to the New York State Common Retirement Fund. Mr. Collins has served on a number of public company boards, including Asbury Automotive, Shinsei Bank of Japan, Advanced Auto, Rental Services Corp., Commercial International Bank of Egypt, Gogo and Citigroup (after it accepted public funds). Mr. Collins also served as an independent director at Weather Holdings, a large private emerging markets telecom operator. Mr. Collins currently represents Ripplewood on the Boards of Citadele (Latvia) and RA Special Acquisition Corporation. Mr. Collins has a BA in Philosophy from DePauw University and a MBA in Public and Private Management from Yale University's School of Management. Mr. Collins received an honorary Doctorate of Humane Letters from DePauw University in 2004 and has been Visiting Fellow at New York University.
Elizabeth Critchley, Deputy Chairperson of the Supervisory Board
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Ms. Critchley is the Managing Partner of Ripplewood Advisors I LLP. Ms. Critchley has been leading Ripplewood's investment efforts, including most recently into Eastern Europe and the Middle East. Ms. Critchley serves as a Director on the Board of Citadele (Latvia) and RA Special Acquisition Corporation. Before joining Ripplewood, Ms. Critchley was a Founding Partner of Resolution Operations, which raised GBP 660 million through a listed vehicle at the end of 2008, and went on to make three acquisitions in financial services (Friends Provident plc for USD 2.7 billion, most of Axa's UK life businesses for USD 4 billion and Bupa for USD 0.3 billion). This consolidation strategy was financed through a combination of debt and equity raisings, as well as structured vendor financing. Until forming Resolution Operations, Ms. Critchley was a Managing Director at Goldman Sachs International where she ran the European FIG Financing business. Ms. Critchley has structured, advised, or invested in transactions with more than fifty global financials and corporates. Ms. Critchley holds a First Class Honours Degree in Mathematics from University College London.
Dhananjaya Dvivedi, Member of the Supervisory Board
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Mr. Dhananjaya Dvivedi headed the Banking Infrastructure Group and was the Corporate Executive Officer of Shinsei Bank from 2000 to 2010. Mr. Dvivedi was instrumental in transforming Shinsei's IT platform as part of its strategy to improve customer service with conveniences such as internet banking, 24-hr ATMs, managed and monitored remotely, and real-time data, while maintaining cost control. Mr. Dvivedi has also served as the External Director of SIGMAXYZ Inc. from 2008 until 2011 and has since been involved in various research and advisory capacities for the development of new technologies to benefit society. Mr. Dvivedi holds an engineering degree from the Madhav College of Engineering in India and an MBA from the Indian Institute of Management.
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AS Citadele banka
Management report | Corporate governance

Lawrence Neal Lavine, Member of the Supervisory Board
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Mr. Lavine is a Senior Managing Director of Ripplewood Advisors LLC, following a 28 year career in investment banking. At Ripplewood Advisors LLC, Mr. Lavine has focused primarily on companies in the financial services and telecommunications industries. Mr. Lavine was previously a Managing Director of Credit Suisse First Boston in its Mergers and Acquisitions Group. He joined Credit Suisse First Boston in 2000 as part of the acquisition of Donaldson, Lufkin & Jenrette where he had been a Managing Director in Mergers and Acquisitions since 1987. He started his career on Wall Street at Kidder Peabody & Co. in 1976. Mr. Lavine holds a BS from Northeastern University and an MBA from Harvard Business School.
Nicholas Haag, Member of the Supervisory Board
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Mr. Haag until June 2021 was senior independent non-executive director (INED) and chairman of the audit committee of TBC Bank Group PLC, the largest Georgian bank and the premium listed FTSE 250 company. He is chairman of the Board, an INED and chairs the audit, risk and compliance committee of Bayport Management Ltd., the holding company for a leading African and Latin American financial solutions provider Prior to that, he was a Member of the Supervisory Board of Credit Bank of Moscow PJSC. Mr. Haag has a 30 year banking career, half at Managing Director level, with various financial institutions including Barclays, Banque Paribas, ABN AMRO and Royal Bank of Scotland, specialising in technology finance and equity capital markets. Mr. Haag holds a First Class Honours Degree from the University of Oxford.
Karina Saroukhanian, Member of the Supervisory Board
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Ms. Saroukhanian is a Managing Director of Ripplewood Advisors Limited. Before joining the company, from 2008, she worked as senior banker in the Financial Institutions team of EBRD. At EBRD, she specialized in complex equity transactions, working with financial sponsors in multiple jurisdictions. Prior to joining the EBRD, Karina was an Associate Director in the M&A group at Nomura International in London and a Vice President at Sindicatum, a specialist financial advisory and asset management firm. Karina holds an MSc in Economics from the London School of Economics and a degree in mathematical economics from the Moscow State University.
Sylvia Gansser-Potts, Member of the Supervisory Board
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Ms. Sylvia Gansser-Potts is a Director and member of the audit and risk committee of the European Fund for Southeast Europe (EFSE) which provides development finance to micro and small enterprises and private households via selected financial institutions. In 2023, Sylvia was appointed by the Cabinet of Ministers of Ukraine as an independent director of Ukreximbank JSC, the third largest bank in Ukraine, where she chairs the Nomination and Remuneration Committee and is a member of the Risk Committee. Until 2017, Sylvia was a Managing Director at the EBRD with the overall responsibility for EBRD's investments and operations in Central and Southeastern Europe. Over her 25 year career at the EBRD, Sylvia run a succession of banking teams including the financial institutions operations in Central Europe, in MENA/Turkey as well as the property and tourism team. Sylvia started her career at Swiss Bank Corporation (which later merged to become UBS) in Switzerland and Japan. She holds a master's in business from the Université Paris Dauphine -PSL, a bachelor's degree in Japanese language from the University of Paris and an MBA from INSEAD.
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AS Citadele banka
Management report | Corporate governance

Stephen Young, Member of the Supervisory Board
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Mr. Stephen Young is the International Chief Executive Officer of Mission Without Borders, a group of “not for profit” organizations working among the poor and marginalized in several countries in Eastern Europe, ranging from Albania to Ukraine. He has been a member of the Audit and Governance Committee of Citadele since 2017, joining the Supervisory Board in 2023. Prior to this Stephen was the senior partner of KPMG in the Baltics and Belarus from 2004 until his retirement in 2015. Stephen worked with KPMG in Central and Eastern Europe from 1992 to 2015 and was a member of the KPMG CEE Board. With KPMG, Stephen served a number of clients in the banking and finance sectors across the Baltics and other CEE countries, providing audit, transaction and forensic services. Stephen holds a BA Honors degree in Economics from the University of Durham in the United Kingdom and is a Fellow of the Institute of Chartered Accountants in England and Wales and also a Fellow of the Chartered Accountants of Australia and New Zealand.
Daiga Auzina-Melalksne, Member of the Supervisory Board