2012-10-31
Banks loan portfolio grew for a second consecutive quarter, with credit granted mainly for business
The loan portfolio of the domestic banking system grew, the volume of deposits increased, and profitability indicators improved in the third quarter. Banks assets grew by LTL 0.4 billion (0.5%) in the third quarter after declining during the first two quarters, and amounted to LTL 76.9 billion on 1 October 2012. Banks assets grew mainly exactly on account of new loans granted.
“The total loan portfolio of banks has been growing for a second consecutive quarter. Just in line with our predictions, in the third quarter of this year banks were more active in lending for business again – more loans were issued both for larger- and smaller-sized, private businesses. An increase in banks credit liabilities for business clients of LTL 300 million is also a good sign. This provides preconditions for this segment’s loan portfolio to increase into the last quarter as well,” Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, commented on banks operating performance.
The loan portfolio of banks operating in the country amounted to LTL 54.3 billion towards the end of the third quarter of 2012 – in January-September this year, it expanded by LTL 0.3 billion or 0.6 %. The portfolio of loans granted for private businesses picked up – by as much as LTL 0.7 billion or 2.8 %. The portfolio of loans for individuals contracted slightly over the quarter – by LTL 0.1 billion or 0.4 %.
The sum of deposits with banks increased by LTL 0.8 billion in July-September with the most pronounced growth recorded in corporate funds – LTL 0.6 billion. The major source of self-financing for banks – deposits of individuals – contracted by 0.4% or LTL 113 million in the third quarter after previously observed dominant growth trends. This is also due to the popularity of saving notes that the Government of the Republic of Lithuania began placing via banks in May (by 1 October, the placement of these notes had been more than LTL 350 million). With particularly low interest rates prevailing in the banking system, residents are looking for other investment alternatives. The third quarter of this year was the most profitable for banks – they earned a profit of LTL 186 million. Over nine months of this year, banks earned a profit of LTL 483.9 million, which means a one-third decline year on year. The decline in profits was mainly driven by specific provisions for loans.
This year, the operations of six banks and six foreign bank branches were profitable, two banks and two foreign bank branches operated at a loss.
In 2012, all banks operating in Lithuania complied with the established prudential requirements.