Understand the Latvian Commercial Banking Sector in This Q308 ...

Tag : Industry raw materials
Research and Markets(http://www.researchandmarkets.com/research/9bda65/latvia_commercial)has announced the addition of the "Latvia Commercial Banking ReportQ3 2008" report to their offering.

The Latvia Commercial Banking Report provides independent forecastsand competitive intelligence on Latvia's commercial bankingindustry.

Over the last year the crisis in the inter-bank market and thesoaring prices of oil and other raw materials tended to obscureseveral other important trends. In most of the developing world,lending has been growing quickly. In many emerging marketsinflationary pressures have been boosted by a rapid increase incredit, and in a number of emerging markets macro-economicimbalances are evident.

The figures on the tables above provide a snapshot of the bankingsector in Greece and the changes that have taken place within itover the last year. To place the figures in context, it may beuseful to bear in mind certain aspects of the 59 countries whosebanking sectors we currently survey. Across this sample the mediangrowth in assets in local currency terms was 21.3% (in Colombia),the median loan growth was 21.6% (in India), and the median growthin deposits was 17.9% (in Brazil).

On their own, the ratios of loans to deposits, assets, and GDP meanlittle; however, they can provide useful hints when combined withother data. Across the 59 countries the median loan/deposit ratiowas 92.3% (in Greece), the median loan/asset ratio was 56.0% (inPoland), and the median loan/GDP ratio was 63.9% (in India).

From 3Q08, we have included a new section that examines the risksassociated with each country's banking sector in a new way. We haveessentially sought to ask to what extent the banking sector willlikely need source funding from banks in the rest of the world overthe course of 2008. Given that the answer is not necessarilymeaningful on its own, we have looked at other key issues such asthe size and recent movement in the loan/deposit ratio,macro-economic developments, and recent movements in financialmarkets.

In general, the first half of 2008 has been kind to fixed-incomeinvestors and money market participants in Central and EasternEurope. Inter-bank lending rates have come down thanks to theactions of the European Central Bank and the Federal Reserve, amongothers. Benchmark bond yields have generally fallen in absoluteterms and, in some cases, relative to yields in developedcountries. This is in spite of the fact that in many of thecountries in the region, the statistics from the banking sector areworrying given the economic imbalances that persist.

As in previous reports, we include a SWOT analysis for Latvia. Amajor theme of this report is that, overall, the weaknesses of thebanking system predominate. Major and well-capitalised foreignbanks are far less dominant in Latvia than they are in the rest ofCentral and Eastern Europe. We assess that the Latvian banks willbe substantially dependent on funding from banks outside thecountry if they are going to increase lending in absolute terms byanything like the amount that we envisage for 2008. This is at atime when the macro-economic imbalances are alarming and that somekind of hard landing appears inevitable.

Since Q108 we have calculated on a consistent basis a CommercialBank Business Environment Rating (CBBER) for each of the 59countries surveyed. The CBBER includes an assessment of the limitsof potential returns: it does this by taking into account the size,growth potential, and bancassurance potential of the bankingsector, as well as aspects of the economy in 2007. The CBBER alsodepends on an assessment of the risks to the realisation ofpotential returns. This reflects our assessments of overall countryrisk, together with the regulatory and competitive environment.

Latvia's overall CBBER of 56.2 is towards the middle of thecountries in the Central and Eastern Europe region that we survey.This score is particularly held back by a weak score of 42.5 on theheavily weighted banking market structure element of the limits topotential returns. This reflects the small scale of the Latvianeconomy and of the domestic deposit base available to the bankingsystem.

Key Topics Covered:

- Key Issues

- Changes To The Commercial Banking Report

- Latvia Commercial Banking SWOT

- Commercial Banking Business Environment Rating

- Anticipated Development in 2008

- Lending Overview

- Macroeconomic Trends And Developments

- Industry Forecast Scenario

- Comment On Developments Over Last Year

- Comment On Forecasts

- Comment On Trends and Ratios

- Banks' Bond Portfolios

- Table: Bond Portfolios, Late 2007

- Competitive Landscape And Protagonists

For more information visithttp://www.researchandmarkets.com/research/9bda65/latvia_commercial