The loan origination volume in July performed robustly across our key markets. Estonia accounted for €5.0M, Latvia contributed €1.4M, and Lithuania added €1.9M, resulting in a total origination volume of €8.9M.
To ensure the continued stability and growth of our loan portfolio, we have implemented an updated credit policy with several crucial enhancements:
- Concentration Limits: We have established new borrower group credit exposure limits. For new borrower groups, including related parties and loans, the maximum credit exposure is set at €2.0M in Latvia and €3.0M in other countries. Existing borrower groups have a maximum exposure limit of €4.0M. Exposure beyond this limit mandates the implementation of an exit strategy, with exceptions subject to approval by the risk committee.
- Probability of Default: To maintain a healthy risk profile, projects with a maximum probability of default, as per Moody’s assessment, are capped at 5%.
- Project Scope: Going forward, we will no longer engage in large-scale development projects, ensuring a prudent and focused approach to project selection.
- Related Party Loans: We have discontinued the provision of related party loans, aligning with our commitment to transparent and responsible lending practices.
- Valuation Guidelines: For new credit evaluations, the valuation of collateral must not be older than 6 months, allowing us to maintain an accurate assessment of project value.
- Collateral Ownership: As part of our strategy to enhance loan security, privately owned collateral will no longer be accepted.
We will publish these changes on our blog soon.
Thank you for your ongoing trust and partnership.
We will keep you informed about the credit portfolio quality monthly.