2013-03-01
Over the past year, the assets of banks operating in the country and branches of foreign banks decreased, the portfolio of granted loans and the sum of deposits increased, but profits went down a little more than by a third.
“The drop in profits was determined by two factors. With the prevalence of a low interest rate, the interest income received by banks decreased, while the deterioration of the standing of some borrowers and loan evaluation had the banks forming additional reserves to cover possible losses,” says Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania.
According to the Bank of Lithuania data, in 2012 the banks operating in Lithuania and branches of foreign banks earned LTL 721.5 million in profits—35.6 per cent less than in 2011. Last year, the operations of six banks and six foreign bank branches were profitable, while two banks and two foreign bank branches operated at a loss.
The yearly result of the banking sector was decreased also by the fines, for breaching the Republic of Lithuania’s Law on Competition, on three banks; the fine sum amounted to LTL 47.7 million. According to the International Financial Accountability Standards, the banks included the fines in their 2012 expenditure.
On 1 of January 2013, the assets of the banking system amounted to LTL 74.3 billion and were 0.7 per cent last than last year. The annual deposit growth rate was 9.6 per cent, while the sum of deposits at the beginning of this year was LTL 43.6 billion. The deposit increase last year was most affected by the deposits of individuals, which over the year had increased by LTL 1.6 billion.
In 2012 the banks’ loans portfolio, as compared to 2011, increased by 2 per cent, and at the end of 2012 was LTL 52.9 billion.
“The decrease of the loans portfolio to natural persons was redeemed, more than sufficiently, by more active lending by banks to businesses, the government sector, and financial institutions. We hope that the combined loans portfolio will grow in 2013 as well. Conditions for this are made by the growing domestic economy,” claims V. Vasiliauskas.
Last year individuals and corporations began to actively borrow in litas, not euros, as was usual before. Such crediting was encouraged by the banks; also, interest rates for loans in litas or in euros are practically the same.
Seeking to maintain the comparability of data, the banking sector’s key indicators were not influenced by the results of AB Ūkio bankas, since the results of the Ūkio bankas inspection performed in December 2012–January 2013 showed that the financial reports provided by this bank do not reflect the reality of the bank’s situation.