2016-09-13
This year banks were granting loans more actively — the value of the loan portfolio rose at an annual rate of 8.8 per cent (to EUR 17.6 billion). Loan quality continued improving. Active crediting boosted the banking system assets, which, having increased by 1.8 per cent in the second quarter of this year, stood at EUR 23.9 billion as of July 1.
‘The credit market saw an upsurge in activity. The rise in the net value of the loan portfolio in the first half of 2016 was nearly three times larger year on year. We are closely monitoring the situation and, even though the growth is rather strong, we see it as adequate, adding to sustainable economic development,’ said Vytautas Valvonis, Director of the Supervision Service at the Bank of Lithuania.
In the first half of 2016, banks saw the value of the loan portfolio rise by EUR 1.3 billion (in the respective period in 2015 this change amounted to EUR 449 million). According to V. Valvonis, in recent years banks focused more attention on small and medium-sized enterprises. Another major part of the bank loan portfolio consisted of loans to households, 79 per cent of which were made up of housing loans. Several factors added to the upswing in lending for house purchase, most prominent of which are particularly low interest rate environment and rising household income.
The quality of borrowers continued to improve. As of 1 July this year, the share of non-performing debt instruments accounted for 4.7 per cent, a year-on-year decrease of 1.7 p.p.
As of 1 July 2016, customers held with banks EUR 16.8 billion of deposits — a hike of EUR 5.3 per cent on a year-on-year basis. Growth in deposits was mostly driven by 6.1 per cent higher household deposits (amounting up to EUR 10.4 billion).
‘Despite moderate return on such savings, households held approximately a third of this amount as time deposits, the remaining share — in current accounts,’ said V. Valvonis.
Profits of banks and foreign bank branches stood at EUR 106.2 million in the first half of 2016, a decrease of 2.8 per cent year on year. 10 banks and foreign bank branches operated at a profit and only 3 market participants incurred a loss.
Consolidation in the sector has been intensifying. In June 2016, the sale of the retail customer portfolio among Swedbank, AB and Danske Bank A/S Lithuania branch was completed; at the end of August DNB ASA and Nordea Bank AB announced their potential merger ata trans-Baltic level. The Bank of Lithuania will assess the transaction carefully and provide its conclusions only upon having thorough answers to all possible questions.
Even though banks operating in Lithuania comply with set capital requirements, the Bank of Lithuania draws attention to the fact that capital strengthening is relevant to some banks.
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 authority supervising the bank which has established a branch. For more information on banking activities in the second quarter of 2016 and disputes between consumers and banks settled by the Bank of Lithuania, go to the Banking Activity Review (348.4 KB download icon), the summary of bank indicators (40.4 KB download icon) and the summary of consolidated indicators (40.7 KB download icon).