Banking - Latvia

Latvia

In 2024, it is projected that the Net Interest Income in the Banking market of Latvia will reach US$191.30m.
The market segment is dominated by Traditional Banks, which are expected to achieve a market volume of US$149.00m in 2024.
Looking ahead, the Net Interest Income is expected to grow at an annual rate of -20.37% from 2024 to 2029, resulting in a market volume of US$61.26m by 2029.
In a global comparison, China will generate the highest Net Interest Income, reaching US$4,332.0bn in 2024.
Latvia's banking sector is experiencing a shift towards digital banking solutions, as customers increasingly prefer online and mobile banking services.

Key regions: United States, China, Japan, Brazil, United Kingdom

Definition:

The Banking market refers to the financial services sector providing financial products and services to individuals and businesses. Retail banking focuses on offering financial services to individual consumers, such as personal loans, savings and checking accounts, credit cards, and mortgages. Commercial banking, on the other hand, provides financial services to small and large businesses, including loans, lines of credit, and other financial products designed specifically for businesses.

Structure:

The market consists of two segments:
- The Traditional Banking market refers to the financial services sector that provides a range of financial products and services to individuals and businesses through store-based branches and other traditional channels.
- The Digital Banking market refers to the emerging market for digital-only banks that offer financial services through online and mobile platforms.

The market data comprises Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Additional information:

The Banking market is highly competitive and characterized by the presence of large global players as well as regional and local banks. Banks are continually seeking ways to improve their offerings and remain competitive by leveraging technology and offering innovative financial products and services. Additionally, changes in regulations and the growing trend toward digitalization are shaping the Retail & Commercial banking market, creating opportunities for new entrants, and forcing existing players to adapt.
Key players in this market are companies such as the Industrial and Commercial Bank of China Ltd., JPMorgan Chase & Co., and HSBC Holdings.

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Analyst Opinion

Over the past few years, the Banking market in Latvia has been experiencing significant growth and development.

Customer preferences: Latvian customers in the Banking market have shown a strong inclination towards digital banking services. The convenience of online and mobile banking platforms has been a major factor driving customer preferences in the country. With the increasing adoption of smartphones and internet penetration, customers are opting for digital solutions for their banking needs.

Trends in the market: One notable trend in the Latvian Banking market is the rise of fintech companies offering innovative financial solutions. These fintech firms are disrupting traditional banking models by providing agile and customer-centric services. Additionally, there has been a growing trend of banks focusing on sustainable and socially responsible banking practices to meet the evolving demands of customers in Latvia.

Local special circumstances: Latvia's geographic location as a gateway between East and West has positioned the country as a financial hub in the Baltic region. This unique position has attracted foreign investments and fostered a competitive banking market in the country. Moreover, the regulatory environment in Latvia has been conducive to the growth of the Banking sector, promoting transparency and stability.

Underlying macroeconomic factors: The overall economic stability and growth in Latvia have played a crucial role in the development of the Banking market. As the country continues to attract foreign investments and improve its business environment, the banking sector is poised to further expand. Additionally, Latvia's integration into the European Union has opened up opportunities for banks to access a larger market and offer a wider range of financial services to customers.

Methodology

Data coverage:

Data encompasses B2B and B2C enterprises. Figures are based on Net Interest Income, Bank Account Penetration rate, the value of Deposits, the number of depositors, the value of Loans, the number of borrowers, Credit Card Interest Income, the number of ATMs as well as the number of Bank Branches.

Modeling approach / Market size:

Market sizes are determined by a combined Top-Down and Bottom-Up approach, based on a specific rationale for each market segment. As a basis for evaluating markets, we use data provided by the IMF, World Bank and the annual reports of the top 1000 Banks by asset size. Next we use relevant key market indicators and data from country-specific associations such as GDP, deposit interest rates, lending interest rates or bank account penetration rates. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. For example, the S-curve function and exponential trend smoothing are well suited to forecast financial services for digital as well as traditional products and services.

Additional Notes:

The market is updated twice per year in case market dynamics change.