Šiaulių Bankas Group results for Q1 2023

• Šiaulių Bankas Group earned EUR 19.2 million of unaudited net profit in Q1
• New credit agreements worth more than EUR 350 million were signed, bringing the loan portfolio to EUR 2.7 billion
• As interest rates rise, the volume of term deposits is increasing rapidly, and the total client deposit portfolio exceeded EUR 2.8 billion
• With the growing demand for sustainable housing solutions, clients are more actively choosing the Bank’s energy-efficient financing offers
• Šiaulių Bankas continues to keep its promise to be closer to its clients and has maintained the most extensive network of 56 customer service outlets in Lithuania, while also developing its digital channels by expanding its online banking services and the functions of its mobile application
• The prestigious business and finance magazine Global Finance has named Šiaulių Bankas as the best bank in Lithuania – this is the third time the Bank has won this award

“Our year has started on an intense note – the pace is dictated by the needs of our clients, which we are trying to meet as much as possible, as well as changing market with rapid interest rates increase. We also devote a lot of resources to the implementation of the INVL transaction to ensure the smoothest possible experience for our clients and employees. We are confident that the merger of retail businesses will increase the value for customers, employees, and institutional and private investors”, says Vytautas Sinius, CEO of Šiaulių Bankas.

Overview of Key Performance Indicators

In Q1, Šiaulių Bankas Group earned EUR 19.2 million of unaudited net profit (67% more than a year ago, when the profit amounted to EUR 11.5 million). Operating profit before impairment and corporate tax amounted to EUR 27.3 million, an increase of 60% compared to the same period last year.

Due to the strong growth in lending volumes in recent years, constant increase in client activity and rising interest rates, net interest income grew by 61% year-on-year to EUR 35.4 million, while net fee and commission income remained similar at EUR 4.55 million.

The Group made provisions of EUR 2.8 million in Q1. This was mainly impacted by an updated risk assessment of individual exposures and revised provisioning parameters in line with updated macroeconomic forecasts. At the end of the quarter, the cost of risk (CoR) of the loan portfolio stood at 0.4% (0.5% in the corresponding period of the previous year).

The Group’s cost to income ratio (excluding the impact of client portfolio of SB Draudimas) decreased and at the end of Q1 stood at 39.7% (45.4% last year). In Q1, the return on equity was 17.8% (11.6% in the same period last year). The capital and liquidity position continues to remain strong and prudential ratios are being met by a wide margin, with a liquidity coverage ratio (LCR) increased to 270%* and a capital adequacy ratio (CAR) to 18.1%*.

Overview of Business Segments

Corporate and Private Client Financing

While lending volumes have been trending positively, the pace of loan portfolio growth is moderating slightly due to continued uncertainty, the economic outlook and the rising cost of borrowing. The value of the loan portfolio increasing by 2% in Q1 and by 22% year-on-year to almost EUR 2.7 billion. EUR 354 million worth of new credit agreements were signed, an increase of 15% compared to Q1 2022.

The business finance portfolio grew by 2% in the quarter and by 15% in the year (to EUR 1.4 billion). The number of new loans signed was 23% higher than in Q1 of last year and amounted to EUR 212 million. The share of non-performing loans remained stable, with 19% fewer such business loans compared to the same period last year.

In the first months of the year, mortgage financing continued to show a decline in sales volumes, which started in the second half of 2022. However, sales volumes returned to an upward trend already in March, with a total of EUR 49 million worth of contracts signed in Q1 (7% less than in Q1 2022). The mortgage loan portfolio grew by 5% in Q1 and by 40% year-on-year to almost EUR 700 million.

Due to active and visible advertising and the availability and attractiveness of the financing services offered, consumer credit was granted for EUR 50 million in Q1, 33% more than in Q1 2022. The consumer loan portfolio grew by 6% in the first quarter and by 36% year-on-year to EUR 244 million.

By offering better terms of financing for sustainable solutions, we continue to encourage our clients to improve home energy efficiency and contribute to a better environment. Additionally, higher heating costs during the winter season have encouraged residents to seek energy efficient solutions, which resulted with EUR 79 million worth of contracts signed in Q1 alone, 3 times more than in Q1 2022. The Bank’s multi-apartment modernization fund has already financed 244 projects worth EUR 160 million.

Daily Banking

More than 7.6 thousand new private and business clients started using the Bank’s services in the first months of the year, while the total number of clients subscribing to service plans that generate stable commission income grew by 2.3% to almost 190 thousand.

The number of clients using credit cards is growing rapidly. The annual growth rate remains above 30% and in the last quarter alone this number grew by 9% to over 30 thousand.

To meet everyone’s needs and enable clients to choose how they want to be served, the Bank maintained the most extensive network of customer service outlets in Lithuania (56 outlets in 37 Lithuanian cities), while developing convenient smart solutions – during the quarter, the Bank introduced new, expanded online banking services, as well as upgraded its mobile application, adding new features such as push notification management.

Saving and Investing

The client deposit portfolio grew by 1% during the quarter and exceeded EUR 2.8 billion at the end of March. Due to attractive interest rates on term deposits, which were steadily increased during the quarter, the portfolio grew by EUR 51 million, while the volume of demand deposits decreased by EUR 37 million. The share of term deposits in the total portfolio rose to 35%. With inflation at a high level and growing need to invest, clients are not only choosing a simple and convenient savings instrument, i.e., term deposit, but are also choosing the Bank’s other investment products. The value of client securities held by the Bank at the end of the quarter exceeded EUR 1.6 billion.

Merger of Retail Businesses

The shareholder approval received in the first quarter marks an important milestone in the implementation of the transaction to merge the Bank’s and Invalda INVL’s retail businesses to create a strong next-generation financial service provider. The transaction is progressing smoothly and is expected to be completed by the end of the year. Preparations are underway to ensure the best experience for employees, clients, and investors. The Bank’s asset management company needed for the transaction was already established this year and is currently seeking a licence from the Bank of Lithuania.

* – forecast data

Šiaulių Bankas invites shareholders, investors, analysts and other stakeholders to join the presentation of financial results and current events for the three months of 2023 at a webinar scheduled on 3 May 2023 at 4:00 PM (EEST). The presentation will be held in English. For more information click here.