AS "Akciju komercbanka "Baltikums"" Consolidated and Bank Financial Statements for the Year Ended 31 December 2008

AS „Akciju komercbanka „Baltikums”” Continued Growth

Baltikums Bank continued growth through tough 2008:
 
•	ROE - 19.9%;
•	ROA - 3.0%;
•	Efficiency ratio - 45.0%;
•	The Bank's assets reached the amount of EUR 156 million (growth of 11.9%);
•	Deposits with the Bank amounted to EUR 113 million (growth of 9.6%).

In 2008, despite the complex economic situation both in Latvia and in the
world, performance indicators of AS “Akciju komercbanka “Baltikums”” continued
to grow successfully, and the Bank consolidated its position in the chosen
niches. In 2009, Baltikums Bank plans to continue its development within its
chosen strategy, offering dynamic, modern and, what is most important,
high-quality exclusive service to its customers, with special focus on caution
and on the basis of moderation and balance in its development. 

‘Such results became possible in the fiscal year of 2008, when the world and
Latvia were shaken by an unprecedented crisis, due to the Bank's
well-thought-out and precise strategy and its professional team. Baltikums Bank
is one of the few Latvian banks that operate consistently in the chosen niche
that was chosen even when the Bank was founded in 2001. Conservative approach
to risk management ensured good profit indicators for the Bank and gave a
feeling of safety in these hard times. In 2008, the Bank started more than one
project for improvement of effectiveness of its operations. It is worth
mentioning in particular that we managed not only to retain our growth rates,
but to significantly expand our business too,' said Aldis Reims, Chairman of
the Board of AS “Akciju komercbanka “Baltikums””. 

As well as in previous year, most of the loans advanced were assigned for
projects related to lending to ship-owners and international trade companies.
The Bank has never aimed at attraction of large amounts of deposits from
individuals and then advancing them as mortgage and consumer loans. Such
approach of the Bank is proved by the fact that Baltikums Bank ranks steadily
as the last among all banks that are active in Latvia in the areas of both
mortgage and consumer lending. In its turn, very high liquidity has always been
one of the Bank's priorities, which was justified especially in 2008. 

Baltikums Bank has never held structured products or other real estate market
instruments in its balance. The conservative risk strategy of many years proved
correct when the financial crisis broke out. 

In 2008, Baltikums Bank succeeded in acquiring new customers and increasing its
deposits. ‘This shows that we as private bankers. Baltikums Holding, with
Baltikums Bank as its part, was founded in 1994 and was able to show over
almost fifteen years of its history that its business model, geared towards
continuity and service for our customers was functioning effectively. Given our
experience and liability, we consider things with a sense of proportion and
common sense and tend to question things twice before decision-making,' said
Chairman of the Council Aleksandrs Peskovs. 

Baltikums Bank increased the number of employees from 85 to 123, rather than
cut its personnel, despite the current trends in banking industry. The growth
(45%) was due to higher volume of our operations and expansion of our business. 

Our well thought-out and planned work both in attracting new customers and
servicing current ones resulted in higher key performance indicators. 

The Bank's last year profit amounted to LVL 3.36 million against LVL 2 million
profit a year before. At the close of the year, its assets volume was LVL
109.319 million, i.e. by 11.9% more than in late 2007. In 2008, the Bank
advanced LVL 34.21 million in loans (a rise of 39.2% against 2007) and
attracted LVL 79.2 million in deposits (a rise of 9.6% against 2007).
Increasing its equity (up to LVL 15.178 million) and growing its customer
deposits allowed the Bank to strengthen its position in its chosen market
niche. 

Similarly to previous years, Baltikums Bank worked along two clearly defined
directions: trade and shipping finance, as well as financial markets investment
products and wealth management. In 2008, the Bank focused in particular on its
current and potential customers, offering them private banking, which is in
growing demand nowadays, and working on extension of the range of such
services. 

‘We see ourselves as a high-quality service provider for our customers. Besides
the special proximity to its clients, our bank also stands out thanks to the
continuity in its business policy and intends to continue on this track. We
appreciate the fact that many of the Bank's employees have already been with us
for almost 8 years,' says Aldis Reims. 

Corporate Banking

The main line of the Bank's Corporate Banking business is providing services to
companies engaged in shipping and trade. Customers are offered professional
bank service that is specifically aimed at this customer category and their
business. Its experience in shipping and international trade enables the Bank
to offer competitive and professional bank products and services in this area. 

Our customers - ship-owners can receive professional bank services meant for
this particular customer category and their business. Its experience in such
business areas as shipping and transit business financing makes enables the
Bank to prepare competitive and professional offers under the projects for ship
purchase or repair and modernisation of the current fleet, as well as full
service for the ship purchase process. 

Baltikums Bank is justifiably proud of ranking among the leaders in the field
in Latvia. 

Private Banking

In 2008, the Bank focused in particular on its current and potential customers,
offering them private banking, which is in growing demand nowadays, and working
on extension of the range of such services. We in Baltikums Bank understand
very well that the traditional values of a private bank are sought after in
difficult times, when an individual and personal consulting service aimed at
value retention are especially important. 

‘In developing our products and services, we focus on the most promising
investments in terms of return, on the needs and wishes of our customers. From
financial planning on, Baltikums Bank forms private investment portfolios and
private capital of its customers as pat of their wealth. In co-operation with
other units of our Bank and Baltikums Holding, as well as external service
providers, we work out and structure tailored solutions both for private direct
investors and business owners who require project financing or access to
capital,' said Aldis Reims. 

Investment Banking

Baltikums Bank adhered to conservative investment policy and performed thorough
analysis of risk, and managed not only to avoid losses related to investments
in financial instruments. The Bank's analyst team makes regular research of
potential investments. 

Taking into account the peculiarities of the current situation on financial
markets, we work continuously on expansion of the products offered in the
investment area and on offering tailor-made financing solutions. 

Institutional Asset Management

In 2008, the Bank increased considerably the number of institutional investors
it provides services to. Due to the vast experience and high competence of our
portfolio managers, we are able to offer our customers products and services
that are aimed, first of all, at value retention with the acceptable return
level in these volatile times. 

Baltikums Network

In 2008, Baltikums Bank opened its representative offices in Almaty
(Kazakhstan) and Kyiv (Ukraine). Further extension of the network of
international regional branches and representative offices is one of the Bank's
strategic tasks in the nearest future. 

Operation of Baltikums Bank Cyprus Branch that was established in 2008 will
ensure provision of bank services to its customers and further development of
the Bank in the European Union. Cyprus is one of the leading countries for ship
registration; hence the Bank intends to become a service centre for our
customers - ship-owners in Cyprus. 
Activities of the Bank's Cyprus Branch will contribute to further development
of the Bank's activities in the European Union. In its strategy, AS “Akciju
komercbanka “Baltikums”” focuses on European and international customers
offered Corporate Banking and Private Banking services. 
Outlook

In 2008, our customers appreciated the Bank's strategic and balanced approach,
as both increase of our deposit volumes and substantial growth of the scope of
the Bank's services used indicate. We are grateful to all our customers for
co-operation and confidence in these complicated times, and hope to continue
our joint and successful business in the future. 

Uldis Zandars
AS „Akciju komercbanka „Baltikums””
Deputy of Head of the Product Development and Marketing Department
Tel.: +371 67 704 672, +371 29 206 536
E-mail: uldis.zandars@baltikums.eu