OREANDA-NEWS.  July 28, 2014. “In H1 2014 Swedbank delivered a good financial performance thus demonstrating a smooth adaptation to a dynamic business environment and changes in clients’ behavior.

Stable economic growth in the country has also left its mark on results on the back of stronger household consumption and more active business investment, especially in Q2. We expect this healthy investment growth to continue. Household expectations remain relatively good, thus declining unemployment and increasing wages will further boost domestic demand”, – said Dovile Grigiene, Head of Swedbank Lithuania.

Swedbank Lithuania’s profit for H1 2014 amounted to LTL 195m against LTL 188m for the same period last year (up 3 per cent). The increase was mainly due to higher income which compensated for a slight growth in expenses. Events in Russia and Ukraine have had no real impact on results.

Loans and deposits
Net lending volumes for Swedbank Lithuania decreased by 2 per cent YoY for H1 2014. This was mainly due to a slow-down in the growth of new sales at the beginning of the year and portfolio amortization. The decrease came from corporate lending while private lending increased by 3 per cent YoY. The loan portfolio amounted to LTL 13.8bn at the end of Q2 2014.
Total H1 2014 deposit volumes increased by 5 per cent YoY. Private deposits grew YoY whilst corporate deposits remained unchanged. The deposit portfolio amounted to LTL 14.8bn at the end of Q2 2014. The loan-to-deposit (net) ratio decreased to 93 per cent (100 per cent – Q2 2013).

Credit quality
H1 2014 net recoveries amounted to LTL 24m (LTL 17m - H1 2013). Impaired loans continued to decrease during the first half-year and amounted to LTL 0.5bn at the end of Q2 2014 (LTL 0.7bn - Q2 2013).

Revenues and costs
Swedbank Lithuania’s total H1 2014 income reached LTL 359m – a YoY increase of 16 per cent.

Net interest income rose by 15 per cent YoY. Total H1 2014 net interest income amounted to LTL 187m.

Net commission income increased by 10 per cent YoY and amounted to LTL 122m in total at the end of Q2 2014.

Expenses grew by 2 per cent (LTL 3m) YoY and reached LTL 159m in H1 2014.The cost/income ratio stood at 44.3 per cent (50.4 per cent in H1 2013).

In Q2 2014 reimbursement, of a fine previously imposed by the competition authority, had a positive effect as Swedbank Lithuania recorded a one-off inflow of LTL 14m.

Swedbank Lithuania will pay LTL 51m in taxes to the state budget for H1 2014.

Lithuania is preparing to adopt the euro on 1 January 2015 and the final decision will be made in the second half of July 2014. The likelihood for the euro adoption is considered very high as the European Commission has already recommended this and the Council of the European Union has allowed Lithuania to adopt the euro on January 1, 2015. The bank’s expenses related to the euro transition are estimated at LTL 26m in 2014.

Customer focus
In H2 2014, our focus is firmly set on preparing for the euro adoption. Swedbank Lithuania is actively providing all information necessary for both corporate and private clients as to assure a smooth move to the new currency from 1 January 2015.