Šiaulių Bankas Group results for Q1 2021

“We’ve started this year with a new three-year strategy of Šiaulių Bankas Group which defines our goals both at the Bank and Group level. As before, we will keep focusing on business and private clients financing, moreover, mortgage loans and modernization of multi-apartment buildings have been included into our main strategic goals. We believe that we are strong and competitive in each of these areas. We will also continue to keep our promise to be closer to our customers - we have recently introduced the updated digital channels and plan to develop them further; the Bank will not close, but adapt the customer service network to the new clients’ habits formed by the pandemic, together with constantly improving remote customer service”, - said Vytautas Sinius, CEO of Šiaulių Bankas.

The Šiaulių Bankas Group earned EUR 12.4 million of the unaudited net profit in the Q1 of this year (which is 48% more than a year ago, when net profit amounted to 8.4 million euros). Operating profit before impairment losses and income tax amounted to EUR 15.6 million, which is by 3% more than in the corresponding period of the previous year.

Operating income remained almost unchanged compared to Q1 2020: net interest income amounted to EUR 18.4 million (EUR 18.5 million last year), net fee and commission income remained the same as last year - EUR 4.1 million.

In response to the quarantine restrictions tightening, the Bank signed the moratoriums on temporary loan repayment deferral in January, however, only EUR 3 million of loans were restructured under their terms by the end of the moratoriums (31^st March). There were no signs of significant deterioration in the remaining loan portfolio, therefore provisions for possible impairment losses of EUR 0.1 million were formed in the first quarter of this year.

The cost-to-income ratio was 42.4% at the end of the Q1 (44.0% in the corresponding period of the last year), and the return-on-equity (ROE) was 14.2% (11.0% in Q1 2020). The capital and liquidity positions remain sound and the prudential requirements are met with a large reserve - with a liquidity coverage ratio (LCR) of 294%* and a capital adequacy ratio (CAR) of 19.6%*.

Business and Private Clients Financing

In the first quarter, with increasing economic certainty, in anticipation of the relaxation of quarantine measures and a rapid vaccination process, not only the private clients were actively financed, but the demand for the business financing also returned. The new credit agreements were signed for EUR 250 million, which is 56% more than during corresponding period of the last year (EUR 160 million). The loan and finance lease portfolio of the Group increased by 3% (EUR 56 million) and reached EUR 1.82 billion.

The amount of business financing loans signed were twice as high as in the first quarter of last year - amounted to EUR 148 million. The increased volumes of the new agreements signed in recent quarters will contribute to the higher interest income in the future.

The first quarter of the year was a record high in terms of residential mortgage loan sales. EUR 42.4 million of the new credit agreements were signed (+57% compared to Q1 2020). The number of applications submitted by customers continues to grow (twice as many as last year), which allows to expect that high sales volumes will remain in the coming months. The mortgage loan portfolio increased by 10% (EUR 30 million), to EUR 327 million.

Active consumer financing was influenced by declined consumption needs due to the pandemic. Consumer financing agreements were signed for EUR 26 million (EUR 32 million last year), the portfolio decreased by 3%, to EUR 156 million during Q1. In order to provide high-quality and fast financing to customers remotely, SB Lizingas has successfully refocused to the fully automated process of issuing consumer loans on-line.

The demand for financing energy-efficient projects continues to grow, with multi-apartment modernization agreements for EUR 28 million signed during the quarter (+231% annual change); the Bank has already signed agreements for more than EUR 600 million. Changes that will facilitate the process of administering modernization loans were introduced in Q1. It was also required while launching the new EUR 200 million multi-apartment modernization fund, scheduled for the second half of 2021.

During Q1, a deferral period applied to EUR 24 million of corporate loans deferred due to COVID-19 had expired and only 1% of them have applied for additional restructuring. EUR 17 million of corporate loans, deferred due to COVID-19, had not reached the end of deferral period.

Daily banking

Net fee and commission income increased by 2% to EUR 4.1 million compared to Q4 last year. The activity of customers using the Bank services was influenced by the declined economic activity related to restrictions in the trade and service sectors as well as the restrictions of moving within the country.

Due to decreased physical customer visits and increased capacities of the Bank to provide remote service, 7 out of 59 customer service units were closed and the employees were assigned to perform remote customer service functions. As quarantine conditions ease, the Bank gradually opening units that were temporarily closed. Incoming calls and remote requests remain steadily increasing since the beginning of the pandemic. A remote identification service has been introduced to customers since January. Digital channels are being further developed, with the number of electronic channel users increasing by 4% over the quarter to more than 194,000 and with the number of logins growing by 6%. Accordingly, the constantly growing number of transactions stipulates to look for ways to streamline processes, therefore, the Bank is automating more and more processes in its daily activities.

The number of customers subscribed for service plans with monthly commissions fees exceeded 164 thousand and the number of payment cards increased to 174 thousand. Compared to the end of the year, the number and turnover of card payments decreased by 6% and 10%, respectively. The demand for cash decreased - the number of cash operations decreased by 14% and the turnover by 15%.

Saving and Investing

The deposit portfolio has increased by 7% (EUR 155 million) over the quarter and amounted to EUR 2.5 billion. The demand deposits accounting for most of the portfolio increased by 12% or EUR 174 million, while the term deposits decreased by EUR 19 million (-2%). With high liquidity ratios, the Bank focuses on the more efficient cost of funding management. Access to new sources of funding is also being expanded, with a deposit service will be offered in the Austrian, Spanish, Dutch and French markets. With the Bank maintaining a strong capital position, ensuring sustainable profitability, and successfully managing asset risk and risk appetite, Moody’s affirmed its long-term credit rating at Baa2 in March, changing its outlook from stable to positive.

*- preliminary data

Šiaulių bankas invites shareholders, investors, analysts and other stakeholders to join its investor conference webinar scheduled on May 5th, 2021 at 4:00 PM (GMT + 3). The presentation will be held in English. For more information click here.