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Lithuania’s banking sector: Facts & Figures

Updated September 2019 – For earlier editions of Facts & Figures click here

The Lithuanian economy maintained growth momentum: real GDP grew by 3.6% in 2018 (3.9% in 2017).  Investment activities of enterprises at the beginning of 2017 were the main factor that stimulated stable growth in banks’ credit portfolios. Energy, transport and industrial companies were most pro-active in implementing investment projects.

Growth is expected to slow down. The Lithuanian Ministry of Finance predicts 2.6% growth in GDP in 2019.

Four banks and ten foreign bank branches are operating in Lithuania. Three specialised bank licences were issued at the end of 2018. The Lithuanian banking sector is dominated by the subsidiaries of large Scandinavian banks. The two largest banks – SEB, Swedbank – are owned by their parent banks in Sweden. The other three banks, AB Šiaulių bankas, UAB Medicinos bankas, and AB “Citadele“ bankas, are considerably smaller and are owned by groups of local and foreign investors. Among the foreign banks’ branches, Scandinavian capital also dominates. There are 65 credit unions united by the Lithuanian Central Credit Union. The Lithuanian government has no ownership stake in the banking sector.

Digital banking gathers pace. New or improved digital services were introduced for consumers in 2018 to save their time and make it easier to manage their finances. Instant payments became available for the majority of bank customers in 2018.

The banking sector is increasing its efficiency. The number of bank employees decreased by 22% in 2018.

Funding conditions remain very supportive, as final interest rates on loans for both non-financial enterprises and households remain among the lowest in the euro area. The favourable economic situation contributed to a growing credit portfolio. The annual increase in the loan portfolio was 6.6% in 2018. The household loan portfolio grew by 8% and consists predominantly of housing credits. The rise in housing affordability also supports the private sector’s lending. Corporate loan portfolio grew by 8%.

Moreover, loan quality keeps improving, with the non-performing debt ratio dropping to 2.4% in 2018 (3.1% in 2017) of the overall loan portfolio. Despite the low interest rate, the value of customer deposits in banks increased by almost 3% in 2018. The capital adequacy ratios of Lithuanian banks exceeded the established standards, and now they are one of the highest in the EU. The profitability indicators have also remained sustainable, enabling banks to function stably and fulfil their natural function – to finance the economy and stimulate economic growth.

Contributor: Violeta Radzevičiūtė v.radzeviciute@lba.lt