2024-10-31
The bank loan portfolio grew by 4% (€1.1 billion) in the second quarter of 2024, its quality remained broadly unchanged. A large-scale cyber resilience stress test showed that banks would properly manage the consequences of a cyber incident but need to strengthen their capabilities in this area.
“Bank lending remained robust in the second quarter, with lending to households and businesses growing at a similar pace. Time deposits showed a marginal increase, dominated by current deposits on which no interest is paid. We are continuously inspecting various fields to ensure that banks are prepared for unforeseen events, and this time we tested their preparedness to cope with cyberattacks. Such exercises help to strengthen the financial system as a whole and manage risks more efficiently,” says Simonas Krėpšta, Member of the Board of Lietuvos bankas.
The loan portfolio grew by €1.1 billion (4.0%) during the period under review to stand at €29.3 billion. Loans to households accounted for the bulk of the portfolio (43%), rising by €531 million (3.5%) to €15.8 billion.
The housing and consumer loan portfolios grew at almost the same pace over the quarter. The housing loan portfolio increased by €256 million (2.2%) to €12.1 billion, while consumer loans went up by €238 million (10.8%) to stand at €2.4 billion. In the housing loan segment, the share of the three major lenders continued to slightly shrink (down by 0.4 percentage points over the quarter), while lending for consumption continued to be dominated by banks specialising in this segment.
Corporate loans (31.7% of the portfolio) rose by €265.8 million (2.3%) quarter on quarter to €11.7 billion. Lending to companies in real estate (€143 million) and energy (€60 million) sectors expanded the most, whereas lending to companies engaged in trade activities contracted by €67 million.
The share of non-performing (bad) loans decreased by 0.02 percentage points to 1.04% of total loans. The volume of non-performing corporate loans increased by €0.5 million to €166.9 million (1.4% of corporate loans), while non-performing household loans grew by €9.6 million to €204.2 million (1.3% of household loans).
Lithuania’s banking sector earned €260 million in the second quarter, the same as in the first quarter. In the first half of the year, the profit amounted to €521 million, representing an increase of €5.4 million (or 1.1%) compared to the same period in 2023 (€515 million). 14 market participants operated profitably and four operated at a loss. The latter incurred a total loss of nearly €6.4 million.
According to provisional data, banks paid around €154 million in solidarity contributions for the first half of 2024. Since the entry into force of the Republic of Lithuania Law on Temporary Solidarity Contribution, credit institutions operating in Lithuania have already transferred around €400 million in temporary solidarity contributions to the State budget. According to Lietuvos bankas’ estimates, the total solidarity contribution for 2023–2025 may amount to around €586 million.
In the first half of 2024, interest income of banks rose by €491 million (nearly 47%) compared to the first half of 2023 and amounted to €1.55 billion. Net fee and commission income, after eliminating the Revolut Group’s contribution, grew by €9.7 million or 6.7%.
In the second quarter, all deposits increased by €1.3 billion (2.6%) to €52.7 billion, but, after eliminating the Revolut Group’s (mainly active in other European countries) contribution, they remained basically unchanged, falling by €0.1 billion (0.3%).
Household deposits (the impact of the Revolut Group eliminated) went up by €650 million (2.9%) to stand at €23.2 billion. Household time deposits grew by €289 million (3.5%) to nearly €8.5 billion. Current deposits totalled €14.8 billion.
During the period under review, the European Central Bank (ECB) conducted cyber exercises involving a total of 109 banks operating in Europe. Lietuvos bankas, together with the ECB, conducted a cyber resilience stress test of the largest banks operating in Lithuania. It assessed how banks would respond to a complex cybersecurity incident. The test showed that the challenge was properly addressed, but there is also room for improvement.
At present, there are 19 commercial banks, including 6 foreign bank branches operating in Lithuania. At the end of the second quarter of 2024, Swedbank, AB, accounting for 28.5% of the market, was the largest bank operating in Lithuania. Revolut Holdings Europe UAB rose to the second position (23.2%). Bank assets at the highest level of consolidation increased by nearly €1.7 billion over the quarter. AB SEB bankas is the third largest bank (20.8%) and AB Šiaulių bankas is the fourth (7.5%). These four banks are directly supervised by the ECB together with Lietuvos bankas. Banks operating in Lithuania remained well capitalised, and the sector’s liquidity was tremendously high.
Quarterly information about each bank’s key performance indicators and compliance with prudential requirements is available on Lietuvos bankas’ website.