Šiaulių Bankas results for Q1 2024
-
Profit. Šiaulių Bankas earned a net profit of
€22.5 million
-
Return on equity. Achieved a return on equity
(RoE) of 17.6%, reflecting effective capital management and the
continued shareholder value creation
-
Asset quality. Asset quality remains good and
stable, cost of risk (CoR) of the loan portfolio was 0.36%
-
Share buyback. Application submitted to the ECB
for the new buyback program of up to €11.5 million
-
Core banking platform. Core banking platform
upgrade begins, which will lay the basis for better customer
experience and long-term growth
-
Governance. The Board of Directors and Management
Board were elected for a new four-year term (2024 – 2028)
"We concluded the first quarter with a new
strategy and the successful integration of INVL's asset management
and life insurance business, significantly contributing to the
growth of net fee and commission income and the bank's overall
operating results. As part of our strategy, we have initiated a new
core banking platform upgrade project that will enhance the
customer experience in the future.
At the beginning of the year, the Board of
Directors and Management Board were elected for a new term, with
the addition of professionals from the retail banking business and
investment services, who will contribute to the implementation of
the bank's ambitious strategy," says Vytautas Sinius, CEO.
Šiaulių Bankas earned a net profit of €22.5
million in Q1 2024, which is 17% more compared to the corresponding
period of 2023. Operating profit before impairment and income tax
amounted to €30.0 million, a 10% increase compared to Q1 2023.
Net interest income grew by 12% to €39.6
million, while net fee and commission income grew by 40% to €6.5
million.
The first quarter was marked by growth in all
key loan book segments, with the total loan portfolio increasing by
4% (up by €113 million) to €3.1 billion. During the quarter, new
credit agreements worth €373 million were signed, 5% more than in
Q1 2023.
The quality of the loan portfolio remains good,
with provisions of €2.2 million in Q1 (€2.8 million in Q1 2023) due
to the revision of the parameters in line with updated
macroeconomic forecasts. The cost of risk (CoR) of the loan
portfolio for Q1 was 0.36% (0.38% in Q1 2023).
The customer deposit portfolio grew by 3% over
the quarter (up by €83 million) and exceeded €3.26 billion at the
end of March. The share of term deposits in the total portfolio
continued to increase, exceeding 50% at the end of March.
The bank plans to place two bond issues in 2024
to raise funds in the capital markets. One of them, a new
subordinated bond issue of €25 million, will be issued in the near
future.
Šiaulių Bankas maintains a high level of
operational efficiency - the cost-to-income ratio was
42.1%1 (Q1 2023 – 39.6%1), and RoE was 17.6%
(Q1 2023 – 17.8%). The capital and liquidity positions remain
strong and regulatory requirements are being met by a wide margin.
The capital adequacy ratio (CAR) at 21.1%2 and the
liquidity coverage ratio (LCR) stood at 212%.2
The bank's strong and sustainable capital base
has enabled it not only to pay a record dividend for 2023 (43% of
2023 net profit, i.e. a dividend of €0.0485 per share), but also to
apply for a new buyback program with ECB (up to €11.5 million).
Income Statement (€'m) |
2024 Q1 |
2023 Q1 |
% ∆ |
|
|
|
|
Net Interest
Income |
39.6 |
35.4 |
12% |
Net Fees and
Commission Income |
6.5 |
4.6 |
40% |
Other |
11.4 |
6.5 |
76% |
Total Revenue |
57.4 |
46.5 |
24% |
|
|
|
|
Salaries and
Related Expenses |
(11.3) |
(8.8) |
28% |
Other Operating
Expenses |
(16.1) |
(10.3) |
56% |
Total Operating Expenses |
(27.4) |
(19.2) |
43% |
|
|
|
|
Operating
profit |
30.0 |
27.3 |
10% |
Impairment
Losses |
(2.2) |
(2.8) |
(21%) |
Income Tax
Expense |
(5.4) |
(5.4) |
(1%) |
|
|
|
|
Net Profit |
22.5 |
19.2 |
17% |
|
|
|
|
Select Balance Sheet Metrics (€'m) |
2024-03-31 |
2023-12-31 |
% ∆ |
|
|
|
|
Loans |
3,045 |
2,932 |
4% |
Total Assets |
4,923 |
4,809 |
2% |
Deposits |
3,261 |
3,178 |
3% |
Equity |
533 |
543 |
(2%) |
|
|
|
|
Assets under
Management3 |
1,667 |
1,556 |
7% |
Assets under
Custody |
1,785 |
1,943 |
(8%) |
|
|
|
|
KPIs |
2024 Q1 |
2023 Q1 |
∆ |
|
|
|
|
Net Interest Margin
(NIM) |
3.9% |
3.7% |
+18bps |
Cost-to-Income
Ratio (C/I)1 |
42.1% |
39.6% |
+244bps |
Return on Equity
(RoE) |
17.6% |
17.8% |
-17bps |
Cost of Risk
(CoR) |
0.4% |
0.4% |
+2bps |
Capital Adequacy
Ratio (CAR)2 |
21.1% |
18.1% |
+298bps |
|
|
|
|
|
Overview of Business
Segments
Corporate Client Segment
Demand for business finance is showing positive
trends, with new contract volumes rising by 33% to €208 million in
Q1, almost on a par with the same period last year. The business
loan portfolio grew by 5% (up by €80 million) to over €1.6
billion.
The €200 million SB Modernisation Fund 2, set up
to finance the renovation of multi-apartment buildings, has been
launched. The multi-apartment renovation fund will finance the
modernization of up to 300 multi-apartment buildings in Lithuania.
Around 10,000 households will benefit from the changes. The first
such fund, the €275 million SB Modernisation Fund, was established
in 2022, has been successfully disbursed, and has already financed
the renovation of 394 multi-apartment buildings.
Private Client Segment
In order to increase its competitiveness,
Šiaulių Bankas is initiating an operational transformation process,
during which the branch network will transition into a
sales-oriented organisation. This transformation will encompass not
only the development of sales staff competencies and motivation but
also the reduction of administrative burden by centralising
administrative functions, thereby freeing up valuable branch staff
time for sales expansion. Streamlined operations will drive future
growth, elevating sales per FTE and better serving our
customers.
Šiaulių Bankas has successfully launched Apple
Pay, which has been enthusiastically received by customers. This
initiative continues to contribute successfully to the bank's
digitalisation, increasing customer satisfaction, engagement, and
loyalty.
Investment Client Segment
The main priority for Q1 of this year was the
development of the bond issuance and distribution service for both
investing clients and issuers. We have started working with a new
segment, institutional investors, which will further consolidate
the bank's leadership in capital markets. All customers who wish to
receive up-to-date information on the bonds distributed by the bank
can now subscribe to the Bond Newsletter. During the period under
review, customers have invested more than €60 million in 13
corporate bond placements organised by the bank. The assets under
custody held by the bank at the end of March amounted to €1.8
billion.
At the end of Q1 2024, assets under management
by SB Asset Management, the asset management company of Šiaulių
Bankas Group, exceeded €1.26 billion, growing by €90 million in the
first three months of the year. Most of this increase was driven by
the return on investments of the assets under management,
generating profits for clients of over €76 million. Pillar II
pension funds alone returned 6.9% in Q1 of the year and have
maintained a very high average annual return of 9.8% since the
pension reform in 2019.
The documents for the establishment of the third
Alternative Investment Fund are being finalised, with the aim of
making the fund available to clients later this quarter. This fund
will differ from the first two alternative investment funds by
offering the possibility to both increase and decrease investments
during the life of the fund.
1 after eliminating the impact of
the client portfolio of SB Draudimas
2 preliminary data
3 includes Asset Management and
Modernisation Funds AuM
Šiaulių Bankas invites shareholders,
investors, analysts and all interested parties to a webinar
presentation of the financial results for Q1 of 2024. The webinar
will start on 29 April 2024 at 16.00 (EEST). The webinar will be
held in English. Please register
here.
If you would like to receive Šiaulių
Bankas news for investors directly to your inbox, subscribe to
our
newsletter.
Additional information:
Donatas Savickas, CFO
donatas.savickas@sb.lt
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