2013-11-06
Over nine months in 2013 banks increased both their loan and deposit portfolios, but their major — net interest — income this year is lower than last year.
In the third quarter, the assets managed by the banking system grew by LTL 0.5 billion and amounted to 76.1 billion on 1 October 2013. Banks increased lending moderately: the portfolio of loans granted to clients expanded by 0.5 per cent (LTL 0.3 billion) in the third quarter and stood at LTL 54.2 billion on 1 October.
"One can project that lending volumes will increase gradually in the future, moreover that new European requirements for banks, to come into effect as of the next year, will provide more favourable conditions for financing the activities of small and medium enterprises," says Vitas Vasiliauskas, the Chairman of the Board of the Bank of Lithuania.
Housing loans grew for the second consecutive quarter after declining since early 2009. In the third quarter, the portfolio of these loans increased by LTL 59.7 million, or 0.3 per cent.
The amount of deposits with banks grew 1.5 per cent and amounted to LTL 46.1 billion on 1 October. Deposits of private undertakings grew most in the reference period (LTL 0.7 billion), whereas the deposits of individuals contracted by LTL 84 million. With banks not raising interest rates payable on time deposits, the share of time deposits, which accounted for approximately half the funds of individuals held with banks, kept decreasing.
Over three quarters of 2013 banks and foreign bank branches earned LTL 731.3 million income. To eliminate, however, the one-off income of Swedbank, AB earned in the first quarter after selling the shares of its life insurance company and the profits of other banks earned from their subsidiaries, the entire sector's profit before tax, excluding impairment and specific provisions, is 6.1 per cent lower year on year.
The net interest income for three quarters of 2013 (banks' major source of income) amounted to LTL 824.2 million, a year-on-year decrease of LTL 35.8 million, or 4.2 per cent.
All banks complied with the established prudential requirements. The banking sector was characterised by a high capital adequacy level, which remained unchanged over the quarter and was 15.6 per cent on 1 October. The liquidity ratio was 38.3 per cent on 1 October 2013 — 8 percentage points above the requirement.
The Bank of Lithuania started publishing this year information about each bank's major performance indicators and compliance with prudential requirements. Information about foreign bank branches is only revealed on a consolidated basis, since their supervision is the responsibility of a competent institution supervising the bank which has established a branch. Detailed information about banking activities can be found in the review and Q3 2013 bank indicator summary on the Bank of Lithuania website.