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Lithuania’s banking sector: Facts & Figures

Updated September 2018 – For earlier editions of Facts & Figures click here

The Lithuanian economy has gathered momentum: real GDP grew 3.9% in 2017. Over several recent years, private investments of businesses were hampered by geopolitical tensions and caution on the businesses’ side. However, a pick-up in investment activities of enterprises in the beginning of 2017 was the main factor that stimulated stable growth in banks’ credit portfolio. Energy, transport and industrial companies were most pro-active in implementing investment projects.

Overall, the Lithuanian Statistics Department predicts 2.9% growth in GDP in 2018.

Six banks and eight foreign bank branches are operating in Lithuania. The Lithuanian banking sector is dominated by the subsidiaries of large Scandinavian banks. The three largest banks – SEB, Swedbank and Luminor – are fully owned by their parent legal structures in Sweden and Norway. 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 68 credit unions united by the Lithuanian Central Credit Union. The Lithuanian government has no ownership stake in the banking sector.

Digital banking gathers pace. The year 2017 was when new or improved digital services were introduced for consumers to save their time and make it easier to manage their finances. The number of cashless payments rose by 11% in 2017.

The number of banks employees decreased by 11% in 2017.

Credit growth in Lithuania is picking up. 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 rising credit portfolio. The annual increase in the loan portfolio was 3.2% in December 2017. The household loan portfolio consists predominantly of housing credits. The rise in housing affordability also supports the private sector’s lending.

Moreover, loan quality keeps improving, with non-performing debt dropping to 3.1% of the overall loan portfolio. Despite the low interest rate, the amount of customer deposits in banks increased by almost 7% in 2017. The capital adequacy ratios of Lithuanian banks exceeded the established rates 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

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