OREANDA-NEWS. October 27, 2009.
The growth of overdues in Swedbank Lithuania is slower and expenses reduced by 30%
Although the initial signs of macroeconomic stabilisation have appeared, influence of recession on the bank's result is still present. Operational profit of Swedbank in Lithuania before taxes and provisions during 9 months of this year amounts to LTL 381.7m. Due to provisions for possible loan losses the bank incurred losses of LTL 592.3m in 2009. Revenues decreased by 23 per cent to LIT 628m, while operating expenses reduced by 30 per cent to LTL 246.3m, compared with the same period of 2008. Client deposits decreased by 2%, while the loan portfolio declined by 3% during the quarter, reported the press-centre of Swedbank.

Deposit and loan volumes
In 2009 the bank succeeded in maintaining its share at 31.5% in the market of deposits private individuals.

The previous tendency of growth of lending volumes in the market was replaced by decrease of loan market. The decrease is in line with post-growth trend of deleveraging taking place in Lithuania. Therefore lending volume of the bank has decreased by 3 per cent during the period. The bank's actions to increase provisions for impaired loans and low amount of viable new lending projects have contributed as well. Baltic economies are still considered a region with higher risk as a consequence of regional down-turn paired with global financial crisis and the cost of funding remains considerably higher than few years ago. Risk-adjusted re-pricing of loans continued during 3rd quarter similar to the previous period and review of pricing principles continues in coming months. 

Credit portfolio quality
Even though there are first signals of slower growth of overdues, credit quality and net loan losses continue to be the main drivers for results in the present operating environment.

Swedbank Lithuania net loan losses during the 3rd quarter were LTL 323m. The losses relate mainly to the commercial real estate and transport sectors.

The bank has strong attention on reducing risks. The bank has up-graded its overdue management competences and processes. "The bank?s intention is to find solutions with customers at earliest possible time in order mitigate the negative consequences of distressed debts", - emphasises Antanas Danys, Head of Swedbank in Lithuania.

Revenues
Revenues were impacted during of the first nine months of 2009 by a combination of higher provisions, low money market rates and lower lending volumes. As the bank has more Euribor-linked assets than liabilities, a reduction in Euribor affected net interest income adversely.

Expenses
Expenses fell by 30 per cent and measures to adapt the bank's activities to slower economic activity resulted in a healthy cost/income ratio of 39%. The measures include specific targets in response to current economic developments: increase operational efficiency, maximise procurement efficiencies, strict control of operating expenditures and limit of employee benefits.

To adapt to smaller business volumes the number of employees during the first nine months was reduced by 11% or 353, and the number of branches was reduced by 14% from 120 to 103.

Outlook for the rest of 2009
The de-leveraging will continue in the country in coming months. The bank analysts expect slower growth in impaired loans closer to the year-end and leave 2009 behind as the most challenging year in terms of credit losses.

The bank focuses on long-term relationship with its clients, providing tools and knowledge for money matters necessary in the current economic context. "One of the examples is the financial literacy initiative "My finances" launched by Swedbank in Lithuania in this quarter. It is the internet website providing all necessary information about management of private finances and tools necessary for their handling", says A. Danys.

The bank strategy remains the same in regards to the commitment to the Lithuanian market and it is Swedbank?s intention to stay in long-term in the Baltics.

Message for local clients: security of funds and income is most important for clients
Under current market conditions guaranteeing security of funds and income held by clients is of the utmost importance for them. "During the last quarter we offered to our clients particularly beneficial conditions of time deposits, invited them to use other secure investment and saving services - savings bonds and investment deposits. We also introduced a new service - family income protection insurance, which protects family members from unexpected loss of income in case of accident", reminds A. Danys about services guaranteeing security of funds and income.

Furthermore, Swedbank will continue to promote e-banking services which are more convenient, cheaper and also help to manage reliably private finances reducing the number of cash operations and manage private finances through safe e-channels. Promoting the use of financial management tools the bank invests in the development of cash accepting ATMs - as of 31 September 2009 Swedbank Lithuania had installed 57 cash accepting ATMs, compared to 38 at the beginning of 2009. 

Year-end results 2009 of Swedbank will be published on 9 February 2010.