Šiaulių Bankas Group results for H1 2022

• In H1, Šiaulių Bankas Group earned EUR 29.5 million of unaudited net profit
• Financing needs of both corporate and private clients were growing – the loan portfolio has grown by 23% over the year and exceeded EUR 2.35 billion
• The quality of the loan portfolio remains stably good, with provisions for possible impairment losses reversals in Q2
• The first loan agreements for the modernisation of multi-apartment buildings have been signed by the newly established SB Modernizavimo Fondas
• The ongoing environment of very high inflation encourages clients to direct their savings to the Bank’s investment products

Overview of Key Performance Indicators

“Not only the Bank, but also clients are getting used to the reality of the economic challenges. This is reflected in the increased financing volumes in business, consumer, and housing lending, while demand for renovation loans has remained stable. The growing demand for daily financial services underpins our promise to be closer to our clients and to provide quality services and the highest level of customer service in the most convenient way for the clients. In May, we introduced the possibility to become a client by remote means and open Šiaulių Bankas accounts independently," said Vytautas Sinius, CEO of Šiaulių Bankas.

In H1, Group earned EUR 29.5 million of unaudited net profit (6% more than a year ago, when the profit amounted to EUR 27.9 million). Net profit for Q2 was EUR 18.1 million and increased by 16% compared to the profit of EUR 15.5 million for the same period last year.

The operating revenue grew rapidly in H1 - net interest income increased by 24% and reached EUR 47.2 million, net fee and commission income increased by 8% to EUR 9.1 million, compared to the same period of 2021.

After a conservative provisioning for possible impairment losses in Q1 due to the war in Ukraine, reversals of EUR 0.8 million were made in Q2. Provisions for H1 of the year amount to EUR 1.9 million, compared to EUR 0.9 million in the corresponding period last year. At the end of the half-year, the cost of risk (CoR) of the loan portfolio is at the same level as in H1 of 2021 – 0.2%.

At the end of H1, the Group’s cost-to-income ratio (excluding the impact of client portfolio of SB Draudimas) stood at 43.4% (40.4% in the corresponding period of the previous year) and the return on equity was 14.7% (15.4% last year). The capital and liquidity position continues to remain sustainable and prudential ratios are being met with a large reserve, with a liquidity coverage ratio (LCR) of 152%* and a capital adequacy ratio (CAR) of 18.1%*.

Overview of Business Segments

Corporate and Private Client Financing

Despite the prevailing uncertain environment, the financing needs of both corporate and private clients grew. Over EUR 670 million worth of new credit agreements were signed in H1, almost 12% more than in the corresponding period last year. The Bank Group’s total loan and leasing portfolio grew by 6% (EUR 142 million) during the quarter and by 12% (EUR 249 million) since the beginning of the year and exceeded EUR 2.35 billion.

Almost 9% more business financing loans (worth EUR 382 million) were signed compared to H1 of the previous year. The business financing portfolio grew by 5% (EUR 59 million) during the quarter and by 9% (EUR 107 million) since the beginning of the year to EUR 1.28 billion.

The half-year was a record-breaking one in terms of sales volumes in the housing loans. New credit agreements worth EUR 122 million (27% more than in H1 2021) were signed. The mortgage loan portfolio grew by 11% (EUR 55 million) in the quarter and by 21% (EUR 97 million) since the beginning of the year, reaching EUR 552 million.

Rising inflation has encouraged clients not to postpone planned purchases and take out more consumer loans than in the same period a year ago, when the impact of quarantine was still being felt. Active advertising and the availability of financing services have contributed to this as well. Almost 53% more consumer loans (worth EUR 90 million) were signed compared to H1 of the previous year. The consumer financing portfolio grew by 11% (EUR 20 million) during the quarter and by 16% (EUR 28 million) since the beginning of the year to EUR 198 million.

In Q2, the first loans for the modernisation of multi-apartment buildings were signed by the newly established SB Modernizavimo Fondas, and the total volume of financing for the quarter amounted to EUR 32.3 million, the same as a year ago. The number of enquiries from residents for financing energy efficiency projects remains high, and it is expected the demand for financing to remain high in the coming quarters.

Daily Banking

Client activity remained high throughout H1 of the year, with net fee and commission income increasing by 8% to EUR 9.1 million compared to H1 of last year. During Q2, the number of clients increased by 7,000 (total number of clients - 333 thousand), of whom almost 2,000 are war refugees from Ukraine. For these clients, the Bank offers free account opening and a special daily banking package. In addition, payment transfers to Ukraine are free of charge.

With consumption remaining at a high level, demand for credit cards has been strong, with an 8% quarter-on-quarter and 25% year-on-year increase in the number of credit cards issued, and the total number of payment cards issued has risen to 178 thousand cards.

The number of clients subscribing to service plans and thus generating stable commission income has been steadily growing, reaching 179 thousand at the end of the quarter (+7% YoY).

To provide customers with greater accessibility of the Bank’s services, in May, the Bank introduced the possibility to become its client remotely.

Savings and Investments

The deposit portfolio declined by 1% (- EUR 34 million) over the half-year to EUR 2.65 billion at the end of June, while all liquidity ratios remained within target ranges. Demand deposits, which make up most of the portfolio, increased by 2% or EUR 32 million, while the term deposit portfolio decreased by EUR 66 million (-8%) over the half-year. The continued high inflationary environment encourages clients to direct their savings into the Bank’s investment products, with fee income from securities-related services amounting to EUR 2.0 million in H1 of the year (an increase of 28% compared to the corresponding period of 2021). The value of client securities held by the Bank, as a custodian, exceeded EUR 760 million.

* - forecast data

Šiaulių bankas invites shareholders, investors, analysts, and other stakeholders to join its investor conference webinar scheduled on 3 August 2022 at 4:00 PM (GMT+3). The presentation will be held in English. For more information click .

Additional information:

Donatas Savickas, CFO

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