Bank of Lithuania
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In Q3 2021, the strongest growth was recorded in the business loan portfolio, which overtook even housing loans. The banking sector operated profitably, thus ensuring solid capital adequacy and liquidity.

“In the third quarter, the growth was observed in lending to all sectors, including households, businesses and financial institutions, while the annual growth of deposits was slightly slower. The banking sector remains concentrated, however, the new market participants are gradually increasing their share. Considering the current issues, we drew the attention of the banking sector to cyber risks,” says Renata Bagdonienė, Director of the Banking and Insurance Supervision Department.

Lithuania’s banking sector earned the net profit of €247.2 million, a year-on-year increase of €34.1 million (16%). This growth was mainly determined by the recovery of loan impairment expenses.

The total loan portfolio grew by €766 million (3.7%) in Q3, compared to Q2, to €21.2 billion (a year-on-year increase of €1.3 billion or 6.5%).

Business loan portfolio amounted to €8.4 billion at the end of Q3. It grew by €354 million (4.4%) over the quarter and by €103 million (1.2%) over the year.

Household loan portfolio expanded by €294 million (2.6%) over the quarter and by €987 million (9.2%) over the year and totalled €11.7 billion at the end of Q3. Housing loan portfolio increased by €232 million (2.5%) to €9.5 billion. Its annual growth comprised €883 million or 10.2%.

Total deposits went up by €910 million (2.8%) over the quarter, to €33.4 billion. Their annual growth rate was 16.3%.

Household deposits, which comprise the largest share of deposits, increased by €552 million (2.9%) over the quarter to €19.6 billion, accounting for almost 59% of total deposits. Over the year, household deposits expanded by €3.4 billion (21.1%).

Banking sector assets grew by 3.5% in Q3 2021, to €40.6 billion. Although the market remains concentrated, the 7 banks that started their operations in recent years continued to increase their market share in Q3 and currently hold 2.3% of the market in terms of assets (their market share comprised just 0.6% a year ago).

Bank capital adequacy level remains high. All banks complied with their individual capital adequacy requirements. Liquidity situation in the banking system remains very good, while the largest banks even have excess liquidity.

Loan portfolio quality indicators continued to improve: the share of non-performing loans to households and non-financial institutions declined by 0.1 percentage point and 0.4 percentage point respectively, to 1.2% and 2.0%, whereas bank expectations concerning loan portfolio quality prospects remained positive.

At the end of Q3 2021, 12 banks held a banking or a specialised bank licence in Lithuania, while 6 banks operated as a foreign bank branch. Currently, the Bank of Lithuania, together with the European Central Bank, is examining 10 applications for a specialised bank licence.

Considering the importance of cyber risks, the Bank of Lithuania assessed how 8 banks and 2 central credit unions manage ICT and security risks. The results demonstrated that credit institutions should pay more attention to three areas: security and monitoring of operations, incident response and the management of access rights.

Quarterly information about each bank’s key performance indicators and compliance with prudential requirements is available on the Bank of Lithuania website.

Banking sector: strong growth of business loans