Šiaulių Bankas Group results for the H1 2023
- In H1, Šiaulių Bankas Group earned EUR 43.3 million of
unaudited net profit
- Corporate and private clients demand for financing remains
high, with the loan portfolio increasing by over EUR 150 million to
EUR 2.8 billion
- Interest in investment and savings products is growing rapidly,
with the term deposit portfolio increasing by more than 30% to EUR
1.22 billion
- Moody’s has upgraded Šiaulių Bankas rating to Baa1, highest in
the Bank’s history
- EUR 50 million subordinated bond issue will support the Group’s
continued sustainable and efficient growth
- In H1, the number of the Bank’s shareholders increased by more
than 1.2 thousand and reached almost 20 thousand
“The markets are still dominated by central
banks and the changing interest rate environment, but demand for
financing remains high in both the corporate and private segments.
Favourable interest rates are also encouraging people to place term
deposits and more actively look for savings and investment
solutions. We aim to maintain the momentum and plan to focus on the
review of the Bank’s strategy and the implementation of the
transaction with INVL in the upcoming quarters. We believe that
together we can create even more value for both investors and
clients,” said Vytautas Sinius, CEO of Šiaulių Bankas.
Overview of Key Performance
Indicators
In H1, Šiaulių Bankas Group earned EUR 43.3
million of unaudited net profit (47% more than a year ago, when the
profit amounted to EUR 29.5 million). Profit for the Q2 was EUR
24.1 million and increased by 34% compared to the profit of EUR
18.1 million for the same period last year.
The operating revenue grew rapidly in H1 -
compared to the same period of 2022, net interest income increased
by 60% and reached EUR 75.5 million, net fee and commission income
increased by 6% and reached EUR 9.6 million.
The Group made provisions of EUR 2.6 million in
the Q2 and EUR 5.3 million since the beginning of the year. The
updated risk assessment of individual exposures had a significant
impact on provisioning. At the end of the half-year, the loan
portfolio’s cost of risk (CoR) reached 0.4% and is in line with the
target (compared to 0.2% in the corresponding period of the
previous year).
The Group’s cost-to-income ratio (excluding the
impact of client portfolio of SB Draudimas) stood at 35.1% at
year-end (43.4% in the corresponding period of the previous year)
and the return on equity was 19.4% (14.7% last year). The capital
and liquidity position continues to remain sustainable and
prudential ratios are being met by a wide margin, with a liquidity
coverage ratio (LCR) of 225%* and a capital adequacy ratio (CAR) of
19.6%*.
Overview of Business Segments
Corporate and Private Client Financing
Despite the continuing uncertainty and
macroeconomic environment still showing no signs of improvement in
Lithuania and key export markets, we continue to see strong demand
for financing from our clients. Over EUR 740 million worth of new
credit agreements were signed in H1, almost 9% more than in the
corresponding period last year. The Bank Group’s total loan and
leasing portfolio grew by 4% (EUR 100 million) in Q2 and by 6% (EUR
157 million) since the beginning of the year, reaching EUR 2.8
billion.
Almost 15% more business financing loans (worth
EUR 438 million) were issued compared to the first half of the
previous year. The corporate finance portfolio grew by 3% (EUR 40
million) in Q2 and 5% (EUR 63 million) since the beginning of the
year and reaches EUR 1.45 billion.
Although the volume of new loan applications
remains high, the first half of the year has been characterised by
a decline in the volume of sales of mortgage financing, which is
also seen in the overall mortgage market. In total, contracts worth
EUR 96 million were signed during the half-year (21% less than in
H1 2022). The mortgage loan portfolio grew by 5% (EUR 36 million)
in Q2 and by 10% (EUR 68 million) since the beginning of the year,
reaching EUR 732 million.
The consumer finance market remains highly
competitive, but active and visible advertising and the
availability and attractiveness of services have led to a
significant increase in business volumes. Almost 24% more consumer
loans (worth EUR 112 million) were issued compared to the first
half of the previous year. The consumer finance portfolio grew by
10% (EUR 25 million) in Q2 and by 17% (EUR 40 million) since the
beginning of the year, reaching EUR 269 million.
Demand for financing of energy efficiency
projects remains very high. In Q2 alone, SB Modernizavimo Fondas
signed multi-apartment building renovation contracts for EUR 57
million (325 projects worth a total of EUR 218 million were
financed since the company’s inception). Clients continue to take a
keen interest in green mortgage loans, which has led to an increase
in demand for these loans.
Daily Banking
The number of clients and their activity is
steadily increasing. The same trend is with the Bank’s new
solutions offered - the number of clients authenticated or
onboarded for the Bank’s services by remote means continues to
grow, as does the number of users of regularly updated electronic
channels.
In Q2, 8.5 thousand new private and business
clients started using the Bank’s services, and since the beginning
of the year, more than 16 thousand have joined the Bank. The number
of active clients is growing, while the number of subscribers to
stable commission-generating service plans has remained similar at
190 thousand.
With consumption remaining at a high level,
demand for credit cards has been strong, with a 9%
quarter-on-quarter and 35% year-on-year increase in the number of
credit cards issued, while the total number of payment cards issued
has decreased to 175 thousand cards.
Saving and Investing
Demand for both investment and savings products
is growing rapidly, with the term deposit portfolio growing by more
than 30% to EUR 1.22 billion since the beginning of the year.
Interest rates on deposits are one of the main reasons driving the
interest in the Bank's term deposits. The Bank’s total client
deposit portfolio amounts to almost EUR 2.9 billion. In response to
clients’ needs to save on their own, the Bank has offered a new
instrument for saving and investing for the future – 3rd pillar
pension funds.
The high inflationary environment continues to
encourage clients to direct their savings into the Bank’s
investment products - the value of clients’ investments in the Bank
has been growing and exceeded EUR 1.7 billion, which is almost
double the value at the beginning of the year.
Merger of Retail Businesses
The transaction to merge the Bank’s and Invalda
INVL’s retail businesses 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. In
Q2, the review of the Group’s strategy for 2024 - 2026 was launched
to create a strong next-generation financial services provider.
Other Important Milestones
In June, Moody’s upgraded Šiaulių Bankas rating
to Baa1 and affirmed the stable outlook on long-term deposit
ratings. This is the highest rating in the Bank’s history and a
confidence-boosting indicator for both investors and clients
entrusting their funds to the Bank.
In Q2, the Bank successfully placed a 10-year
subordinated bond issue of EUR 50 million in the international
financial markets, which attracted more investor attention than
expected. The funds raised will help the Bank to maintain its
lending volumes to Lithuanian businesses, to achieve an efficient
capital structure, to meet the requirements of the supervisory
authority and to maintain the continuity of its dividend policy. In
the second half of this year, as in the previous year and in 2021,
the Bank plan to issue bonds to meet the Bank’s MREL
requirements.
In May, Lithuanian companies (Invalda INVL,
Tesonet Global and Willgrow) increased their shareholdings in
Šiaulių Bankas, following the implementation of the second series
of the transaction with the European Bank for Reconstruction and
Development (EBRD). There is still a year left to complete the
share acquisition processes, and to this day, out of 18% of the
shares sold by the EBRD, settlement of transactions for 12% have
already taken place. In H1, the total number of the Bank’s
shareholders increased by more than 1.2 thousand and reached almost
20 thousand.
* - forecast data
Šiaulių Bankas invites shareholders,
investors, analysts and other stakeholders to join the presentation
of financial results and current events for the six months of 2023
at a webinar scheduled on 2 August 2023 at 4:00 PM (GMT + 3). The
presentation will be held in English. For more information
click here.
Additional information:Donatas Savickas,
CFO +370 41 595 602, donatas.savickas@sb.lt
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