Šiaulių Bankas Group results for Q3 2021

• In the Q3, Šiaulių Bankas Group earned the most this year - EUR 16.3 million of unaudited net profit and EUR 44.2 million during the first three quarters of 2021
• Due to the increase in the volume of financing for business and private clients, the loan portfolio has grown by 7% during the Q3 and exceeded EUR 2 billion
• As the number of services available on the Internet bank and Mobile app is increasing, the number of digital channel users is constantly growing
• The long-term funding structure was strengthened with the issuance of EUR 75 million in bonds and the borrowing of almost EUR 500 million from the ECB

“As the country’s economy remains active, the gained financing momentum is also reflected in the results of this quarter - the business financing portfolio is growing, private customers remain highly interested in the housing loans and demand for the financing modernization of multi-apartment buildings is constantly increasing. This quarter was exceptional for the Bank because by issuing the bonds we took the first step into the international bond market, which helped to strengthen the structure of long-term liabilities and increased the investor base,” said Vytautas Sinius, CEO of Šiaulių Bankas.

Šiaulių Bankas Group earned EUR 44.2 million of unaudited net profit during the first three quarters of this year (29% more than a year ago, when the profit amounted to EUR 34.2 million). The profit of the Q3 was EUR 16.3 million and was 22% higher than a year ago (EUR 13.4 million).

In the first nine months of this year, operating revenue increased compared to the corresponding period of 2020 - net interest income increased by 4% and reached EUR 58.7 million and net fee and commission income grew by 6% and reached EUR 12.8 million.

Provisions for possible impairment losses on loans and other assets amounted to EUR 1.5 million in the first nine months of this year and is mainly a result of estimated credit loss model parameters changes. Due to possible impact of the COVID-19, provisions for the same period of the last year amounted to EUR 9.1 million. At the end of September, the cost of risk ratio was 0.1% (0.7% during Q1-3 2020).

At the end of Q3, the cost-to-income ratio of the Group (after excluding the impact from the investment result of the SB Draudimas assets under unit-linked contracts) was 40.4% (39.9% during Q1-3 2020), and the return on equity amounted to 15.8% (14.0% during Q1-3 2020). The capital and liquidity positions remain sound and prudential requirements are met with the solid buffers - the liquidity coverage ratio (LCR) is 229%* and the capital adequacy ratio (CAR) is 18.5%*.

Overview of Business Segments

Financing of Business and Private Customers

As the economic certainty continued to rise, both private and business clients were actively financed. New contracts worth EUR 884 million were signed over the course of 9 months. i.e., twice as much as during the corresponding period last year. The Group’s total loan and leasing portfolio grew by 7% (EUR 125 million) during the Q3 and by 16% (EUR 274 million) since the beginning of the year and exceeded EUR 2.0 billion.

High volume of business loan agreements signed is being maintained, which is almost three times higher than in the first 9 months of the previous year, and their value reaches EUR 488 million. The business financing portfolio grew by 4% (EUR 49 million) during the Q3 and by 11% (EUR 115 million) since the beginning of the year and reached EUR 1.17 billion. The non-performing business loan portfolio continues to decrease and at the end of September amounted to EUR 74 million (decreased by EUR 39 million or by 34% since the beginning of the year).

During the Q3, the Bank managed to maintain similar results of new residential mortgage sales as during the second quarter – agreements in amount of EUR 53 million were signed (EUR 54 million during the Q2). After very active Q1 and Q2, a decreased number of primary market offers in the larger cities is observed, and new construction projects are often not started or postponed due to rising prices of building materials and their supply chain disruptions. For this reason, even the customers who are ready to buy new houses have nothing to choose from and, after assessing their ability to borrow, continue to search and wait for suitable projects. In nine months, new mortgage loan agreements worth EUR 148 million were signed (132% more than in the corresponding period of 2020). The housing loan portfolio grew by 13% (EUR 47 million) during the Q3 and by 40% (EUR 117 million) since the beginning of the year and reached EUR 414.5 million.

This year, consumer financing agreements were signed for the same amount as in the corresponding period last year, i.e., for EUR 91 million. The consumer loan portfolio grew by 2% during the Q3 and by 3% since the beginning of the year and reached EUR 165 million.

Financing for energy-efficient projects also remains high – multi-apartment building modernization agreements worth EUR 37 million were signed in the Q3 and their total value amounts to EUR 96 million since the beginning of the year (71% more than in the corresponding period last year). By having an option and following the higher-than-expected interest of investors wishing to participate in the multi-apartment house modernisation fund, the size of the fund was increased to EUR 275 million (from EUR 200 million). 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

Net fee and commission income increased by 6% compared to the first nine months of last year and reached EUR 12.8 million. The increasing number of clients use card payments and shop online. Revenue from payments services grew by 9% over the last year. Although the total number of payment cards increased only slightly, the number of credit cards increased by 25% during last 12 months. In the Q3, 4.5 thousand new customers started using the Bank’s services, and the number of customers subscribed to the service plans grew steadily and exceeded 170 thousand.

By taking into the account clients’ needs, the Bank is constantly developing digital channels. The number of services on the Internet bank and in the Mobile application was increased in the Q3. It is becoming common practice to serve customers remotely - the number of calls and remote requests has remained high since the beginning of the pandemic, and the number of customers who are identified remotely is increasing.

Saving and Investing

The deposit portfolio has increased by 9% (EUR 202 million) over the first three quarters and amounted to EUR 2.5 billion at the end of September. The demand deposits accounting for most of the portfolio increased by 17% or EUR 245 million, while the term deposit portfolio decreased by 5% or EUR 43 million. Customers continue to use the Bank’s investment services more actively - fee and commission income from investment-related services reached EUR 2.3 million in three quarters (157% more than in the corresponding period of 2020).

In Q3, the Bank has successfully completed an issue of EUR 75 million of senior preferred bonds. The bonds were issued with four years maturity, with the Bank’s optional redemption date after three years. The new bonds issue is the first time that the Bank has tapped international debt markets. It is an important step to meet the Bank’s future regulatory MREL requirements, while also strengthening liability structure and increasing the investor base.

At the end of the Q3, the Bank borrowed via the ECB's latest TLTRO III operation EUR 478.81 million for the 3-year term. The Bank aims to receive an interest rate of -1.0% until 23 June 2022 for the loans received under the TLTRO operations after achieving adequate net lending during the special reporting period.

* – forecast data

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