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Šiaulių Bankas Group results for 3Q 2020

Siauliu Bankas
·6-min read

Šiaulių Bankas AB, company code 112025254, domicile address Tilžės st. 149, LT-76348 Šiauliai, Lithuania.

  • Šiaulių Bankas Group earned EUR 34.2 million of unaudited net profit during three quarters of 2020

  • Due to active household lending activities, housing and consumer finance portfolio grew by 6% in 3Q and amounted to EUR 431 million

  • In the first 9 months of this year, more than EUR 200 million of new business loan agreements were signed

  • Updated digital services - on-line banking and mobile application - were introduced to clients

Šiaulių Bankas Group earned EUR 34.2 million of unaudited net profit during three quarters of this year (EUR 40.6 million at the same time last year). Operating profit before impairment losses and income tax for the nine months of this year amounted to EUR 51.3 million, which is by 2% less than in the corresponding period last year.

Net interest income increased by 8% compared to the same period in 2019 and amounted to EUR 56.6 million. Net fee and commission income for the three quarters of this year was EUR 12 million, which is by 8% less than in the first three quarters of last year.

Mainly due to negative country’s macroeconomic outlook for this year, additional provisions of EUR 0.8 million were recognised for possible impairment losses. Provisions for the three quarters amount to EUR 9.1 million, compared to EUR 4.9 million for the first nine months of last year. At the end of 3Q, the cost of risk ratio (CoR) stood at 0.7% (compared to 0.4% at the end of 3Q last year).

The operating efficiency of the Group remains high - the cost / income ratio at the end of 3Q was less than 38.8% (39.9% in the corresponding period of the previous year) and the return on equity (ROE) was 13.9% (19.1% at the end of 3Q last year).

The capital and liquidity positions remain sound and prudential requirements are met with a large reserve - the liquidation coverage ratio (LCR) increased from 223% to 309%* during the third quarter and the capital adequacy ratio (CAR) is at 18.7%*.

Overview of Business Segments

Business and Private Clients Financing

As household expectations and consumption continued increasing, we recorded a strong demand for household lending - the mortgage and consumer financing portfolio grew by 6% to EUR 431 million over the quarter (increased by 86% compared to the end of 3Q last year). The mortgage portfolio alone grew by 8% to EUR 267 million during the quarter.

Even though economic uncertainty hampered corporate investment and development projects, the Bank was active in the corporate financing market - more than EUR 200 million of new credit agreements were signed in 9 months of this year. Corporate loan portfolio stood at EUR 1.08 billion at the end of the 3Q (2% less than at the end of the 2Q).

The Bank's total loan and leasing portfolio decreased by 1% during the 3Q to EUR 1.74 billion.

In 3Q, the Bank continued intensively working to set up a EUR 200 million renovation fund with the European Investment Bank (EIB). The terms of the operational agreement between the Bank and the EIB are being finalized, and active negotiations are under way with the potential creditors and investors in the fund's equity. The Bank plans to launch the renovation fund from the beginning of 2021.

As of end of 3Q, due to COVID-19 deferrals for loan repayments amounted to EUR 228 million (13% of the total loan portfolio). The largest part of loan deferrals is made for legal entities - EUR 217 million, the remaining part of EUR 11 million - for individuals. Most clients plan to return to the usual loan repayment schedules, and only a small number are likely to apply for additional restructuring.

Daily Banking

After the end of nationwide lockdown, clients kept actively using banking services again - in the 3Q of this year, net fee and commission income increased by 22% compared to the second quarter to EUR 4.3 million.

In 3Q, more than 7 thousand new private customers and more than 500 business customers started using the Bank's services. Over the year, the portfolio of service plans used by private clients increased by 16% and the yearly change of corporate clients stands at 7% (48% of private and 55% of business clients have already subscribed to service plans).

The number of payment cards increased by 11% (to 172 thousand) compared to the same period last year (the number of card payments increased by 25% YoY). The demand for cash also increased slightly, with the number of cash withdrawal transactions increasing by 6% compared to the same period last year.

Customer service units located in the most affected cities by COVID-19 are subject to early registration of customers for the visit. If necessary, the Bank is ready to expand the network of book in advance for visit service units. However, for the convenience of customers, the Bank maintains all the service units operating at their normal business hours with all protective measures.

During the 3Q, the new BETA version of the on-line banking was introduced to customers, and at the end of October, customers started using the new mobile app.

Saving and Investing

The deposit portfolio increased by 12% since the beginning of the year and stood at EUR 2.27 billion at the end of 3Q. Demand deposits increased by 24% or EUR 269 million, while the term deposit portfolio decreased by EUR 30 million. The loan-to-deposit ratio at the end of 3Q stood at 76% (81% for 3Q 2019). While having high liquidity buffers and in order to lower funding costs, interest rates on term deposits have been reduced from 4Q.

Updated key performance indicators for 2020

In relation to the milder than estimated impact of the COVID-19 pandemic on the business environment and development of Lithuania's economy, the Bank updated financial forecasts for this year in September. According to the updated forecasts, the Group’s cost of risk ratio (CoR) will not exceed 0.8%, and the annual return on equity (ROE) will be around 12%. The cost to income ratio (C/I), non-performing exposure ratio (NPE), risk management, market share and customer satisfaction goals remain the same as set in the beginning of the 2020.

Šiaulių bankas invites shareholders, investors, analysts and other stakeholders to join its investor conference webinar scheduled on November 10th, 2020 at 4:00 PM (GMT + 2). The presentation will be held in English. For more information click here.

* - forecasts

Additional information:
Head of Finance and Risk Management Division
Donatas Savickas +370 41 595 602,