SEB Pank, Estonia's second largest commercial bank, finished 2023 with a profit of €231.7mn, similarly to Swedbank which more than doubled its profits against last year from €115.9mn, ERR.ee, the website of national Estonian broadcaster ERR, reported on January 25.

SEB's operating income totalled €356mn – up from €206.9mn in 2022 – and operating expenses €78.4mn – up from €69.1mn on year, the bank announced Thursday, 25 January.

Income tax was calculated at €47.1mn in 2023, up from €19.8mn year on year. In 2023, SEB paid a total of €64.5mn in various taxes to the Estonian state.

According to SEB CEO Allan Parik, the bank's 2023 economic results were most impacted by the rapid rise in key interest rates, i.e. the cost of money.

"We used the year 2023 to strengthen SEB's market position," Parik said. "We reduced our fees and loan margins, invested in the modernisation of our IT systems as well as recruited new employees and raised wages. With these investments, we hope to be in the best position as the economy recovers."

Despite the gradual deterioration of the economic environment, SEB's loan quality has remained steadily good.

"We reduced loan loss provisions in the amount of €3.1mn last year, which is an indication of responsible lending; increased base rates and a weak economic environment has not increased our clients' arrears," the CEO highlighted.

Earlier this week, Swedbank Estonia, the country's largest and likewise Swedish-owned commercial bank, similarly reported a doubling of profits in 2023 to €385mn, once again raising the question of whether Estonia should follow Lithuania and several other European countries' suit in specifically taxing banks' extraordinary windfall profits resulting from sharp interest rate hikes, ERR.ee said.