Šiaulių Bankas Group results for the year 2020
Šiaulių Bankas AB, company code 112025254, domicile address Tilžės st. 149, LT-76348 Šiauliai, Lithuania.
- Šiaulių Bankas Group earned EUR 43.0 million of unaudited net profit in year 2020
- The assets grew by 21% and exceeded EUR 3 billion
- The loan portfolio increased by 5% and reached EUR 1.76 billion
- The Bank became an active and significant participant of mortgage market - the portfolio increased almost 3 times and reached EUR 297 million
- The deposit portfolio grew by 15% and reached EUR 2.35 billion
- While overcoming the pandemic challenges, the Group managed to provide all services to customers, offered support solutions to residents and businesses impacted by COVID-19
Overview of the key performance indicators
The Šiaulių Bankas Group earned EUR 43.0 million of the unaudited net profit in year 2020 (EUR 51.5 million in 2019). Operating profit before impairment losses and income tax amounted to EUR 64.8 million, which is by 5% less than in 2019. The net profit for Q4 was EUR 8.8 million, and the operating profit before impairment losses and income tax amounted to EUR 13.5 million.
Net interest income increased by 5% compared to year 2019 and amounted to EUR 75.7 million. Net fee and commission decreased moderately to EUR 16.0 million, which is by 4% less than in year 2019.
There are no signs of significant decrease of credit quality or increase of loan repayment delays noticed, however, taking into account the findings of ECB asset quality review process, the Bank has changed the clients’ credit quality evaluation criteria, which lead to the increase of non-performing exposures in the portfolio to 6.9%. The total amount of impairment losses for Q4 was EUR 2.9 million, and the total provisions for year 2020 amounts to EUR 12.0 million (EUR 8.4 million in 2019). The loans portfolio cost-of-risk (CoR) in year 2020 was 0.6% (0.5% in year 2019).
The cost-to-income ratio was 42.7% at the end of the year (42.5% in year 2019), and the return-on-equity (ROE) was 12.7% (17.6% in year 2019).
The capital and liquidity positions remain sound and the prudential requirements are met with a large reserve – with a liquidity coverage ratio (LCR) of 283%* and a capital adequacy ratio (CAR), not including net profit for the year 2020, of 17.2%*.
Overview of Business Segments
Business and Private Clients Financing
The loan and finance lease portfolio increased by 5% and exceeded EUR 1.76 billion (+1% quarter-on-quarter) at the end of 2020. The new credit agreements signed in 2020 amount to EUR 700 million, which is 22% less than during year 2019.
Due to the uncertainty and government support, the business financing demand continued to decrease - during the Q4 business financing portfolio has decreased by 2% to EUR 1.06 billion (-9% year-on-year).
On the other hand, despite the restrictions of second quarantine, we have recorded a strong demand for household lending. Mortgage loan portfolio during Q4 has increased by 11%, to EUR 297 million (+192% year-on-year). Consumer financing portfolio during Q4 decreased by 2%, to EUR 160 million and remained unchanged throughout the year.
The Bank remains active in financing energy efficiency projects, the loan agreements for modernisation of multi-apartment buildings signed amounted to EUR 26 million during the Q4 (+258% year-on-year) and to EUR 81 million during the whole year (+176% year-on-year). In Q4, the Bank continued intensively working to set up a EUR 200 million renovation fund with the European Investment Bank (EIB) with the purpose of attract private and international investors, and thus encourage them to invest in multi-apartment building modernisation projects through the fund. The fund’s launch date is moved to Q3, 2021.
During Q4, a deferral period applied to EUR 161 million of corporate loans deferred due to COVID-19 had expired. As of 31 December, only 8% of them have applied for additional restructuring. EUR 41 million of corporate loans, deferred due to COVID-19, had not reached the end of deferral period by the end of year 2020. An increase of loans payment delays, affected by COVID-19, is not expected, however, there is still uncertainty due to the pandemic, so it is difficult to predict future tendencies.
The customer activity in using the Bank’s services have been affected by the second quarantine that took place during major part of Q4. Net fee and commission income decreased by 7% to EUR 4.0 million, compared to Q3.
Over 21 thousand of new private customers and over 2 thousand of new business customers have started using the Bank’s services in 2020. The service plans portfolio increased by 14% for private customers, and by 2% for business customers (49% of private and 55% of business customers, respectively, have already subscribed to service plans).
The updated digital services for customers during the third quarter - on-line banking and mobile application - have allowed to improve customer experience in the Bank’s digital channels. The number of users in e-channels exceeded 190 thousand, number of logins to the e-channels increased by 26% during the year, and, in December 2020, for the first time, there were over 1 million logins to the e-channels. All in all, the customer stream for the remote service has increased twice.
The number of payment cards increased by 9% (up to 174 thousand), compared to the end of year 2019. The number of operations and turnover increased by 23% and 21%, respectively, compared to year 2019. The demand for cash has also increased - although the number of operations did not change, the turnover of cash operations increased by 10%, compared to year 2019.
Customer service units are subject to early registration of clients for the visit. Customers wishing to keep their distance are served remotely. Only 7 out of 59 customer service units, which locate in the biggest Lithuanian cities, were closed during second quarantine. Considering the restrictions of moving between the municipalities, the Bank aims to ensure an access to the Bank’s services for the customers.
Saving and Investing
The deposit portfolio has increased by 15% during the year and amounted to EUR 2.35 billion at the end of 2020. The demand deposits increased by 32%, or EUR 353 million, during the year, while the term deposits decreased by EUR 40 million (- 4% year-on-year). The loan-to-deposit ratio stood at 75% at the end of Q4 (82% at the end of year 2019). While having high liquidity buffers and in order to lower funding costs, interest rates on term deposits have been reduced again from January 2021.
*- forecast data
Šiaulių bankas invites shareholders, investors, analysts and other stakeholders to join its investor conference webinar scheduled on March 9th, 2021 at 4:00 PM (GMT + 2). The presentation will be held in English. For more information click here.
Head of Finance and Risk Management Division
Donatas Savickas +370 41 595 602, firstname.lastname@example.org