Bank of Lithuania
2012-08-02

In the first half of this year, the banking sector expanded in a sustainable manner. The main share of bank assets, the loan portfolio, increased after a break of almost one year.

The loan portfolio grew by LTL 0.52 billion in the second quarter of 2012 and this largely offset the fall in the first quarter. Over the six months of this year, the loan portfolio expanded by LTL 201 million in total (0.4%) to LTL 54.21 billion. This was basically determined by the loans granted to private enterprises.

“Lending recovered in the recent months. We are delighted by the fact that not only large businesses are credited more actively, but also smaller enterprises. Moreover, bank commitments to lend in the future are growing, which allows us to presume that we can expect the growth of loans to businesses in the third quarter as well; certainly, if this will not be hindered by poorer expectations and investment opportunities due to the European debt crisis”, said Mr. Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania.

After some banks repaid a part of subordinated loans, the banking system’s assets declined in the first half of this year by 3.1 per cent and comprised LTL 76.53 billion.

In the first half of this year, deposits with banks continued to grow constantly: from the beginning of the year to 1 July their amount increased by LTL 921 million (2.1%) to LTL 44.10 billion. In the second quarter of 2012 alone, the amount of deposits in banks jumped by LTL 834 million (1.9%). The main reason behind this growth was a rapid increase in household deposits.

“In the second quarter of this year, the amount of deposits of individuals and private enterprises exceeded for this first time the amount of deposits before the suspension of activity of AB bankas SNORAS. This is an evidence of strong and growing confidence in the country's financial system and higher saving capabilities of the private sector”, told Mr. Vasiliauskas.

Bank profit declined by 42 per cent to LTL 298 million in the first half of 2012, compared to the same period last year. This was largely determined by expenses related to lower value of loans and smaller interest income.

In the first half of the year, domestic banks complied with prudential liquidity and capital adequacy requirements, however, the strengthening of capital remains important, especially for banks that do not have parent banks.