2014-09-09
In the second quarter of this year banks gradually increased their loan and deposit portfolios, restructured their operations and increased their operating performance indicators. All of the banks operating in Lithuania comply with the stricter European prudential requirements for banking activities that have come into effect.
On 1 July 2014 the assets managed by the banking sector amounted to LTL 78.5 billion; over the half-year it increased by 1.2 per cent. The loan portfolio also grew and made up the largest share of the bank assets, amounting to LTL 51 billion. Although interest on deposits remains at a record low, the commercial bank deposit portfolio increased by 2.7 per cent — to LTL 48.9 billion.
“This year, for the banking sector, was significant both in the preparations for the euro adoption and in the sense of European requirements. The newest data shows that all banks comply with the prudential requirements,” says Vytautas Valvonis, Director of the Supervision Service of the Bank of Lithuania.
The banking performance this year will be affected by the euro adoption: it is projected that in 2014 banks will have to experience about LTL 100 million in euro adoption-related expenses, while in the future they will not receive almost LTL 110 million in income from currency exchange services.
In the first half year of 2014 banks earned around LTL 454.6 million — 17.1 per cent more than in the first half year of 2013. The growth of profits was driven by increased net interest income and net income of services and commission fees.
In the first half year of 2014, the activities of seven banks operating in Lithuania and six foreign bank branches were profitable, while two foreign bank branches operated at a loss.
Banks are optimising their activities: customer service divisions are being replaced by self-service centres, while bank staff costs in the first half year of 2014, year on year, decreased by 1.9 per cent.
However, banks have to perform cost-cutting policy cautiously and devote sufficient resources and attention to risk management, control and IT security.
The Bank of Lithuania publishes 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 (81.4 KB download icon) and the Q2 2014 summary (46.4 KB download icon) of bank indicators and the summary (46.3 KB download icon) of consolidated indicators, published on the Bank of Lithuania website.