2017-12-18
In the third quarter of this year, growth in bank assets was modest, with the contribution on that stemming from changes related to preparations by two banks for a merger. This resulted in a decline in bank liabilities. The net value of the portfolio of loans granted to customers increased mainly on account of intensive provision of housing loans. Deposits of bank customers increased.
‘While the annual growth in loan value has been slowing down already for the third consecutive quarter, due to the intensive activity of the domestic real estate market growth in housing loans was stronger. Banks have to assess the situation responsibly. Growing customer deposits show growing money supply which is influenced by economic growth, inflows of foreign capital, and the increasingly strong crediting by banks themselves. With the trends remaining unchanged, the amount of deposits will further tend to increase in spite of particularly low interest rates on deposits,’ says Vytautas Valvonis, Director of the Supervision Service of the Bank of Lithuania.
The portfolio of loans granted to residents in the third quarter of 2017 increased by €214 million in value, and increase of 2.5 per cent. The annual increase in loans granted to them was 8.3 per cent. At the end of the quarter, the value of housing loans amounted to €6.8 billion, rising by 2.4 per cent over the third quarter, while its annual growth accelerated from 8.2 per cent to 8.5 per cent. The value of loans for consumption grew markedly over the third quarter as well (3.3%). The portfolio of loans granted by non-financial undertakings shrank by 0.9 per cent in value.
Customer deposits with banks amounted to €19.1 billion at the end of the third quarter, while over the quarter the amount of these deposits grew by €480, or 2.6 per cent. The amount of deposits held with banks by non-financial undertakings augmented by 6.4 per cent. Resident deposits, which account for more than half of customer deposits, followed an upward trend as well, albeit moderating (0.8%).
The assets of the banking system stood at €26.5 billion at the end of the third quarter, an increase of 0.3 per cent quarter on quarter. In addition to growth in the value of customer loan portfolio, the most significant contribution came from the decision of AB DNB bank to increase its capital as the merger with the Nordea Bank AB Lithuania branch was drawing near. Following a merger on 1 October, the banks continue operating as Luminor Bank, AB.
Over the three quarters of 2017, banks earned €178.1million in profits – nearly the same amount year on year (€177.8 million). A total of 10 banks and foreign bank branches operated profitably, while 3 market participants incurred losses.
In the third quarter of 2017, the state of the banking sector’s capital continued to be sustainable and the ratios complied with.