OREANDA-NEWS. November 01, 2011. Swedbank Lithuania earned a profit of LTL 131m in Q3 2011, compared to LTL 49m the previous year. Profit before credit impairments increased by 22.9 per cent year-on-year. Income improved by 14.8 per cent and was driven by higher net interest income, reported the press-centre of Swedbank.

In financially challenging time recovery in the Lithuanian economy was faster than expected. In Q2 2011 GDP grew by 6.3 per cent in Lithuania year on year. Recovery progressed hand in hand with improved investment and some growth in private consumption. However, growth was still very dependent on exports and was sensitive to external factors. Domestic demand still remained far below the pre-crisis level.

“Challenges in the global macro environment remain an external risk, especially when it comes to the small and open Lithuanian economy, said Antanas Danys, Head of Swedbank Lithuania. Bearing in mind external risks the bank will continue to focus on increasing levels of efficiency. Furthermore, the bank is targeting sustainable business projects and as such, contributing to stable growth in country’s economy”.

Loans and deposits
Lending volumes decreased by 4.5 per cent from the end of Q4 2010 (LTL 679m) and by the end of Q3 the loan portfolio amounted to LTL 14 368m. This was mainly due to amortisation of the loan portfolio and weak demand for new lending. Companies were more cautious about the future and therefore increasingly relied on their own resources to satisfy their borrowing needs rather than using banks. Moreover, private consumption has not yet recovered enough to make a mark on bank lending.

Deposits increased 2.7 per cent from Q4 2010 and by 3.1 per cent in the third quarter (LTL 384m) and by the end of Q3 deposits amounted to LTL 12 852m. The loan-to-deposit ratio was 112 per cent (120 per cent at the end of Q4 2010).

Credit Quality
Net recoveries in Q3 amounted to LTL 33m compared to LTL 4m the previous year. Impaired loans amounted to LTL 2 172m by the end of Q3. Net recoveries were driven by the corporate portfolio while the private portfolio generated additional credit impairment as the situation in the labour market improved only slightly. Recoveries in the corporate portfolio were driven by decreasing default probabilities, rating upgrades and on-going work-out processes. In the near future, net recoveries are expected to progress though there are uncertainties from increased external risks.

Revenues and costs
Net interest income increased by 19.3 per cent year on year (LTL 17.5m) and amounted to LTL 107m in total. Payment processing-related commissions increased by 13 per cent (LTL 4m) year on year. This was driven mainly by an increasing number of payment cards operations. Expenses increased by 5.5 per cent year on year. The number of full-time employees was reduced by 45 over the year and by the end of Q3 the total number of employees was 2639. The cost income ratio was 0.43 (Q3 2010 ratio was 0.47).

Customer focus
Swedbank continued to implement measures for increased customer focus in Q3 and received positive initial customer feedback on its efforts to develop stronger partnerships with them. In Q3 international magazine Global Finance named Swedbank the best consumer internet bank in the Baltic States in 2011.

Q4 2011 results will be released on 14 February 2012.