Šiaulių Bankas results for Q1 2024
- Profit. Šiaulių Bankas earned a net profit of €22.5 million
- Return on equity. Achieved a return on equity (RoE) of 17.6%, reflecting effective capital management and the continued shareholder value creation
- Asset quality. Asset quality remains good and stable, cost of risk (CoR) of the loan portfolio was 0.36%
- Share buyback. Application submitted to the ECB for the new buyback program of up to €11.5 million
- Core banking platform. Core banking platform upgrade begins, which will lay the basis for better customer experience and long-term growth
- Governance. The Board of Directors and Management Board were elected for a new four-year term (2024 – 2028)
"We concluded the first quarter with a new strategy and the successful integration of INVL's asset management and life insurance business, significantly contributing to the growth of net fee and commission income and the bank's overall operating results. As part of our strategy, we have initiated a new core banking platform upgrade project that will enhance the customer experience in the future.
At the beginning of the year, the Board of Directors and Management Board were elected for a new term, with the addition of professionals from the retail banking business and investment services, who will contribute to the implementation of the bank's ambitious strategy," says Vytautas Sinius, CEO.
Šiaulių Bankas earned a net profit of €22.5 million in Q1 2024, which is 17% more compared to the corresponding period of 2023. Operating profit before impairment and income tax amounted to €30.0 million, a 10% increase compared to Q1 2023.
Net interest income grew by 12% to €39.6 million, while net fee and commission income grew by 40% to €6.5 million.
The first quarter was marked by growth in all key loan book segments, with the total loan portfolio increasing by 4% (up by €113 million) to €3.1 billion. During the quarter, new credit agreements worth €373 million were signed, 5% more than in Q1 2023.
The quality of the loan portfolio remains good, with provisions of €2.2 million in Q1 (€2.8 million in Q1 2023) due to the revision of the parameters in line with updated macroeconomic forecasts. The cost of risk (CoR) of the loan portfolio for Q1 was 0.36% (0.38% in Q1 2023).
The customer deposit portfolio grew by 3% over the quarter (up by €83 million) and exceeded €3.26 billion at the end of March. The share of term deposits in the total portfolio continued to increase, exceeding 50% at the end of March.
The bank plans to place two bond issues in 2024 to raise funds in the capital markets. One of them, a new subordinated bond issue of €25 million, will be issued in the near future.
Šiaulių Bankas maintains a high level of operational efficiency - the cost-to-income ratio was 42.1%1 (Q1 2023 – 39.6%1), and RoE was 17.6% (Q1 2023 – 17.8%). The capital and liquidity positions remain strong and regulatory requirements are being met by a wide margin. The capital adequacy ratio (CAR) at 21.1%2 and the liquidity coverage ratio (LCR) stood at 212%.2
The bank's strong and sustainable capital base has enabled it not only to pay a record dividend for 2023 (43% of 2023 net profit, i.e. a dividend of €0.0485 per share), but also to apply for a new buyback program with ECB (up to €11.5 million).
| Income Statement (€'m) | 2024 Q1 | 2023 Q1 | % ∆ | |
| Net Interest Income | 39.6 | 35.4 | 12% | |
| Net Fees and Commission Income | 6.5 | 4.6 | 40% | |
| Other | 11.4 | 6.5 | 76% | |
| Total Revenue | 57.4 | 46.5 | 24% | |
| Salaries and Related Expenses | (11.3) | (8.8) | 28% | |
| Other Operating Expenses | (16.1) | (10.3) | 56% | |
| Total Operating Expenses | (27.4) | (19.2) | 43% | |
| Operating profit | 30.0 | 27.3 | 10% | |
| Impairment Losses | (2.2) | (2.8) | (21%) | |
| Income Tax Expense | (5.4) | (5.4) | (1%) | |
| Net Profit | 22.5 | 19.2 | 17% | |
| Select Balance Sheet Metrics (€'m) | 2024-03-31 | 2023-12-31 | % ∆ | |
| Loans | 3,045 | 2,932 | 4% | |
| Total Assets | 4,923 | 4,809 | 2% | |
| Deposits | 3,261 | 3,178 | 3% | |
| Equity | 533 | 543 | (2%) | |
| Assets under Management3 | 1,667 | 1,556 | 7% | |
| Assets under Custody | 1,785 | 1,943 | (8%) | |
| KPIs | 2024 Q1 | 2023 Q1 | ∆ | |
| Net Interest Margin (NIM) | 3.9% | 3.7% | +18bps | |
| Cost-to-Income Ratio (C/I)1 | 42.1% | 39.6% | +244bps | |
| Return on Equity (RoE) | 17.6% | 17.8% | -17bps | |
| Cost of Risk (CoR) | 0.4% | 0.4% | +2bps | |
| Capital Adequacy Ratio (CAR)2 | 21.1% | 18.1% | +298bps | |
Overview of Business Segments
Corporate Client Segment
Demand for business finance is showing positive trends, with new contract volumes rising by 33% to €208 million in Q1, almost on a par with the same period last year. The business loan portfolio grew by 5% (up by €80 million) to over €1.6 billion.
The €200 million SB Modernisation Fund 2, set up to finance the renovation of multi-apartment buildings, has been launched. The multi-apartment renovation fund will finance the modernization of up to 300 multi-apartment buildings in Lithuania. Around 10,000 households will benefit from the changes. The first such fund, the €275 million SB Modernisation Fund, was established in 2022, has been successfully disbursed, and has already financed the renovation of 394 multi-apartment buildings.
Private Client Segment
In order to increase its competitiveness, Šiaulių Bankas is initiating an operational transformation process, during which the branch network will transition into a sales-oriented organisation. This transformation will encompass not only the development of sales staff competencies and motivation but also the reduction of administrative burden by centralising administrative functions, thereby freeing up valuable branch staff time for sales expansion. Streamlined operations will drive future growth, elevating sales per FTE and better serving our customers.
Šiaulių Bankas has successfully launched Apple Pay, which has been enthusiastically received by customers. This initiative continues to contribute successfully to the bank's digitalisation, increasing customer satisfaction, engagement, and loyalty.
Investment Client Segment
The main priority for Q1 of this year was the development of the bond issuance and distribution service for both investing clients and issuers. We have started working with a new segment, institutional investors, which will further consolidate the bank's leadership in capital markets. All customers who wish to receive up-to-date information on the bonds distributed by the bank can now subscribe to the Bond Newsletter. During the period under review, customers have invested more than €60 million in 13 corporate bond placements organised by the bank. The assets under custody held by the bank at the end of March amounted to €1.8 billion.
At the end of Q1 2024, assets under management by SB Asset Management, the asset management company of Šiaulių Bankas Group, exceeded €1.26 billion, growing by €90 million in the first three months of the year. Most of this increase was driven by the return on investments of the assets under management, generating profits for clients of over €76 million. Pillar II pension funds alone returned 6.9% in Q1 of the year and have maintained a very high average annual return of 9.8% since the pension reform in 2019.
The documents for the establishment of the third Alternative Investment Fund are being finalised, with the aim of making the fund available to clients later this quarter. This fund will differ from the first two alternative investment funds by offering the possibility to both increase and decrease investments during the life of the fund.
1 after eliminating the impact of the client portfolio of SB Draudimas
2 preliminary data
3 includes Asset Management and Modernisation Funds AuM
Šiaulių Bankas invites shareholders, investors, analysts and all interested parties to a webinar presentation of the financial results for Q1 of 2024. The webinar will start on 29 April 2024 at 16.00 (EEST). The webinar will be held in English. Please register .
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Additional information:
Donatas Savickas, CFO
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