Šiaulių Bankas Group results for 1H 2021


“While facing high economic activity and consumer consumption, we continue to work actively on the Bank’s strategic goals and directions - financing is provided to more and more business and private customers, with mortgage loan financing reaching record high sales volumes in Q2. The sustainability of the activities carried out by the Bank is further confirmed by the outcome of the ECB's comprehensive assessment - even in the particularly severe scenarios, the capital base of Šiaulių Bankas was sufficient and exceeded the set thresholds. Although pandemic challenges are still in place, we managed to adapt to the changing environment and serve our clients as promised - being closer to them and their needs” said Vytautas Sinius, CEO of Šiaulių Bankas.

In the first half of this year, Šiaulių Bankas Group earned EUR 27.9 million of unaudited net profit (34% more than a year ago, when the profit amounted to EUR 20.9 million). Profit for the second quarter was EUR 15.5 million and increased by 24% compared to the profit of EUR 12.5 million for the same period last year.

The operating revenue grew in the H1 of the year compared to the same period of 2020 - net interest income increased by 1% and reached EUR 38.0 million, net fee and commission income increased by 10% and reached EUR 8.4 million.

Provisions for possible impairment losses amounted to EUR 8.3 million in the H1 of last year. As the adverse economic forecast scenario did not materialise, the ECB’s comprehensive assessment process has been successfully completed, the majority of loans deferred due to COVID-19 reached deferral period expiration and no signs of significant deterioration of the loan portfolio were observed, provisions for possible impairment losses of EUR 0.9 million were made in the H1 of this year. At the end of the H1, the cost of risk ratio (CoR) was 0.2% (1.0% in the H1 of 2020).

At the end of the H1, the cost-to-income ratio of the Group (excluding the impact from the investment result of the SB Draudimas assets under unit-linked contracts) was 40.4% (39.0% in the corresponding period of the previous year) and the return on equity was 15.4% (13.2% in H1 2020). Capital and liquidity positions remain sound and prudential regulations are met with the solid buffers – the liquidity coverage ratio (LCR) is 234%* and the capital adequacy ratio (CAR) is 18.6%*.

Overview of Business Segments

Financing of Business and Private Customers

With the further increase in economic certainty and the ease of quarantine restrictions, both private and business clients were actively financed. New credit agreements worth over EUR 600 million were signed in the first half of the year, i.e. 140% more than in the same period last year. The total loan and leasing portfolio of the Group increased by 5% (EUR 93 million) during the quarter and grew by 8% (EUR 149 million) since the beginning of the year (up to EUR 1.91 billion).

Almost three times more business financing loans (worth EUR 351 million) were signed compared to the first half of the previous year. The strong growth in the volume of new agreements observed for several quarters in a row will contribute to higher interest income in the upcoming quarters. The business financing portfolio grew by 3% (EUR 36 million) during the quarter and 6% (EUR 66 million) since the beginning of the year and reached EUR 1.12 billion.

In terms of sales volumes, both the second quarter and the entire half-year were again at a record high in the residential mortgage loan sector. New credit agreements worth EUR 96 million (132% more than in H1 2020) were signed. The number of applications continues to grow (35% more compared to Q1), which gives reasonable hope that sales volumes will remain stable. The mortgage loan portfolio increased by 12% (EUR 40 million) and by 24% (EUR 70 million) since the beginning of the year and reached EUR 367 million.

Fewer restrictions on customer service in the physical places and increased volumes of consumer credits issued have contributed to the growth of the consumer financing portfolio; over the quarter, the portfolio grew by 3% and reached EUR 161 million. In the first half of the year, consumer financing agreements worth EUR 59 million were signed.

The demand for the financing of energy-efficient projects remains high – in the first half of the year, multi-apartment modernisation agreements worth EUR 60 million (113% more than last year) were signed; in total, the Bank has already signed renovation agreements for EUR 640 million. The Bank has received more interest than expected from investors wishing to contribute funds to the new EUR 200 million multi-apartment house renovation fund. It is planned to complete negotiations with investors and establish the fund at the end of 2021 or the beginning of next year.

Daily Banking

Fewer quarantine restrictions have also led to higher consumption and increased customer activity with net fee and commission income growing up to EUR 8.4 million or by 10% compared to H1 2020. Over the quarter, the number and turnover of payments by card grew by more than 20%; the number and turnover of cash payments - by more than 10%. The number of payment cards and customers remained similar; however, the number of customers who subscribed to service plans and, therefore, generate stable commission income grew steadily (+2%) over the quarter and exceeded 167 thousand.

More and more customers are using the updated digital channels of the Bank, the total number of users of which increased by 5% during the H1 and reached 200 thousand. The volume of incoming calls and remote requests remains steadily higher since the beginning of the pandemic, and the number of customers identified by remote means continues to grow.

Almost all customer service units that were temporarily closed have been gradually re-opened (57 at the end of the half-year). The volume of customer visits and the number of transactions they perform remain at a similar level as a year ago. One of the main obstacles to provide services in the customer service units is the limitation of area per customer, which makes it impossible to increase the number of customers served.

Saving and Investing

The deposit portfolio has increased by 6% (EUR 142 million) over the half-year and amounted to EUR 2.5 billion at the end of June. Demand deposits, which make up most of the portfolio, increased by 11% or EUR 164 million, while the term deposit portfolio decreased by EUR 22 million (-2%).

Interest in the Bank’s investment services is growing - fee and commission income from investment-related services reached EUR 1.6 million in the first half of the year (76% more compared to the first half of 2020). This year already, a new long-term savings product will be offered to the customers of the Bank in cooperation with SB Draudimas.

* - forecast data

Šiaulių bankas invites shareholders, investors, analysts and other stakeholders to join its investor conference webinar scheduled on 4th August 2021 at 4:00 PM (GMT + 3). The presentation will be held in English. For more information click here.