Šiaulių Bankas Group results for Q3 2023
- Šiaulių bankas Group earned an unaudited net profit of EUR 24.2
million in Q3 and EUR 65.7 million in the first three quarters of
this year
- Maximum amount of dividends for the year 2023 will not exceed
43% of the annual profit of the Group
- The loan portfolio increased by 10% since the beginning of the
year to almost EUR 2.9 billion
- SB Modernizavimo Fondas will finance the modernisation of 395
multi-apartment buildings for EUR 275 million
- Deposits from individuals and businesses are growing rapidly,
with the deposit portfolio growing by 8% since the beginning of the
year to over EUR 3 billion
- The merger of the retail businesses of the Bank and Invalda
INVL is expected to be completed on 1 December
“Another quarter dictated by economic volatility
and rising interest rates. We have continued our strategy of
maintaining the highest deposit rates among the major banks and are
now able to offer customers interest rates of up to 4.25% p.a. on
irrevocable fixed-term deposits. Rising interest rates have also
led to the popularity of an alternative form of financing – bonds.
The Bank’s originated bonds are an opportunity for local businesses
to combine financing methods to borrow more and for investors to
invest.
At the end of the year, we are likely to
maintain the same momentum and successfully complete the
transaction with Invalda INVL on the merger of retail businesses,
after which Šiaulių bankas Group will manage second and third tier
pension and investment funds in Lithuania and will expand its life
insurance business in the Baltic states. In parallel with the
transaction and the Bank’s growth, the strategy is being reviewed
and we expect to present it early next year,” said Vytautas Sinius,
CEO of Šiaulių bankas.
Šiaulių bankas Group earned an unaudited net
profit of EUR 65.7 million in the first three quarters of this year
(32% more than a year ago, when the profit amounted to EUR 49.9
million). Profit for the third quarter was EUR 24.2 million, up 33%
from EUR 18.1 million last year.
Operating income growth in the first nine months
of the year compared to the same period in 2022: net interest
income grew by 55% to EUR 116.1 million, while net income from
service and commission grew by 4% to EUR 14.6 million.
With the economic situation remaining uncertain,
the Bank made additional provisions for loans and other assets of
EUR 3.1 million during the quarter, mainly due to the risk
assessment of individual exposures. Provisions for the first nine
months of the year amount to EUR 8.5 million, compared to EUR 2.4
million year-on-year. At the end of September, the cost of risk
(CoR) stood at 0.4% (0.2% in the same period last year).
The Bank Group’s return on equity was 18.9%
(16.3% last year), while the cost/income ratio (excluding the
impact of SB Draudimas’ customer portfolio) fell to 34.4% at the
end of September (40.0% in the same period last year). The capital
and liquidity position remains sustainable and prudential ratios
are being met by a wide margin, with a liquidity coverage ratio
(LCR) of 183%* and a capital adequacy ratio (CAR) of 21.3%*.
To include part of the interim profit for the
first half of 2023 in the own funds, it was necessary for the
Bank’s Management Board to take a decision on the maximum dividend
payment ratio for 2023. Accordingly, the Management Board,
assessing the operating environment, the Bank's results for the
first three quarters of 2023 decided that the amount of dividends
for the year 2023, which will be submitted to the AGM of
shareholders of the Bank by the Management Board for the approval,
will not exceed 43% of the annual profit of the Group for year
2023.
The final dividend payment ratio for 2023,
considering the factual and forecast circumstances, will be
decided, and submitted to the AGM of shareholders of the Bank by
the Management Board in March 2024.
Overview of Business Segments
Corporate and Private Customer Financing
Portfolios of all financing segments grew in 9
months, while the Bank Group’s total loan and leasing portfolio
grew by 4% (EUR 104 million) during the quarter and by 10% (EUR 261
million) since the beginning of the year to reach EUR 2.9 billion.
However, against the backdrop of a turbulent outlook for the
overall economy and the high cost of borrowing, new contract
signings fell, reaching EUR 0.3 billion in the quarter and EUR 1
billion since the beginning of the year, down 7% year-on-year.
With the demand for business finance falling and
expectations remaining cautious, the number of business loans
signed this year is almost 5% lower than in the same period last
year, at EUR 587 million. The corporate finance portfolio grew by
2% (EUR 24 million) during the quarter and by 6% (EUR 87 million)
since the beginning of the year to EUR 1.47 billion.
The European Central Bank’s monetary policy is
leading to a slowing property market and falling demand for
mortgages. Contracts worth EUR 38 million were signed in the third
quarter and EUR 134 million since the beginning of the year, 32%
less than in the same period last year. The housing loan portfolio
grew by 3% (EUR 22 million) during the quarter and by 14% (EUR 90
million) since the beginning of the year to EUR 0.75 billion.
Despite the extremely competitive consumer
finance market, new sales volumes managed to grow both in the third
quarter and throughout the year. The number of consumer credit
agreements signed this year is 17% higher than in the same period
last year, amounting to EUR 170 million. The consumer finance
portfolio grew by 7% in the third quarter and by 26% from the
beginning of the year, reaching EUR 288 million.
The volume of applications and contracts for
financing energy efficiency projects remained high: in the third
quarter, SB Modernizavimo Fondas concluded contracts for the
modernisation of multi-apartment buildings for EUR 56 million, and
since the start of its operations, the Fund has signed contracts
for the full amount of EUR 275 million raised by Lithuanian and
foreign investors. The Fund will improve the living conditions of
residents of 395 multi-apartment buildings. As the Bank continues
to focus on the rapid renovation of Lithuania’s multi-apartment
buildings, work has already started on the establishment of a new
multi-apartment building modernisation fund.
Daily Banking
During the third quarter, 7.4 thousand new
private and corporate customers started using the Bank’s services,
and more than 23.5 thousand since the beginning of the year. As the
number of new customers grows, so does the number of people using
the service plans, which exceeded 190 thousand. The growth rate of
credit cards increased by 6% during the quarter and by 34% during
the year (to 35 thousand), while the total number of payment cards
issued fell to 172 thousand.
A major focus is on improving the Bank’s
internet bank and mobile app. During the third quarter of the year,
important changes were introduced (e.g. login with a national
identification number instead of a password) and the app was
updated for customers using iOS and Android.
Savings and Investments
With the Bank paying attractive interest rates
for savings solutions, both individuals and companies are actively
choosing the Bank’s fixed-term deposit products. Currently, almost
47% of customers’ funds with the Bank are in fixed-term deposits
(EUR 1.4 billion, up more than 50% from the beginning of the year).
The total customer deposit portfolio has grown by 8% since the
beginning of the year to over EUR 3 billion.
The high inflationary environment continues to
encourage customers to direct their savings into the Bank’s
investment products, mainly Lithuanian corporate bonds. During the
quarter, the Bank arranged 11 corporate bond placements in amount
of more than EUR 40 million. The value of customer investments held
with the Bank has been growing steadily, reaching EUR 1.8 billion,
double the amount at the beginning of the year.
Merger of retail business with Invalda
INVL
The merger of the retail businesses of the Bank
and Invalda INVL is progressing smoothly and is expected to be
completed on 1 December.
The Bank’s asset management company SB Asset
Management obtained a management company licence in the third
quarter. After the closing date, the company would take over the
pension fund and retail investment fund management business for
further development. SB Draudimas, the Bank’s insurance company,
has set up branches in Latvia and Estonia to properly prepare for
the transfer of INVL Life insurance business to Latvia and
Estonia.
During the quarter, the Bank also implemented
organisational structural changes to ensure the smoothest possible
merger, business continuity and preparation for the post-closing
organisation of work. The new structure will allow for a clearer
division of functions and responsibilities between corporate
customer, private customer, and investment management business
lines. This transformation is aimed as well at enhancing efficiency
and improving overall performance.
* - forecast data
Šiaulių bankas invites shareholders,
investors, analysts, and other stakeholders to join its investor
conference webinar scheduled on 31 October 2023 at 4:00 PM (EET).
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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