OREANDA-NEWS. July 26, 2011. Swedbank Lithuania reported a profit of LTL 299m over the first half of 2011, compared to a loss of LTL 142m a year ago. The result is mainly due to credit impairment relief in the first half of the year and stronger operating results, reported the press-centre of Swedbank.

Economic recovery in Lithuania continues. In Q1 2011 Lithuania’s GDP rose by 6.9 per cent on last year and is supported by manufacturing exports, as well as increased investment activity and gradually recovering household consumption. Swedbank’s outlook for the growth for Q2 2011 is over 7 per cent.

"Continuing recovery of Lithuanian economy signifies that expectations both by business and private households are improving. As the bank is starting witnessing a renewed interest in borrowing, it is of vital importance to stress that a new approach to lending is needed, says Antanas Danys, Head of Swedbank Lithuania. We see it as our responsibility to build and to promote a sustainable business model. It will contribute to sustainable growth of all stakeholders – customers, the bank and the economy”.

Loans and deposits
Lending volumes decreased by 6.5 per cent compared with the same period last year, the loan portfolio amounts to LTL 14,553m. This is mainly due to amortization and limited new sales resulting from continued weak demand for lending. A slight increase in requests has been noted, in particular from corporate customers. Lending volumes are expected to improve when the Lithuanian economy shows signs of long term, growth patterns. At the end of May 2011 Swedbank’s market share in lending reached 22.6 per cent.

Deposits increased by 1.0 per cent during the first half of 2011, the deposit portfolio amounts to LTL 12,468m. At the end of May 2011 Swedbank’s deposit market share was 27.5 per cent. The loan-to-deposit ratio decreased to 117 per cent.

Credit Quality
Net recoveries amounted to LTL 136m during the first half of 2011 compared to LTL -349m last year. Impaired loans amounted to LTL 2,410m as of 30 June 2011 compared to 2,510 million LTL in Q4, 2010. Impaired loans decreased due to write-offs and as a result of analyses done with our customers to find better, workable financial and business solutions.

Due to improved risk levels and slowly recovering customer demand in the form of both investor and customer confidence, a focus on the quality of new lending together with credit portfolio management activities seeks to ensure well-balanced and sustainable growth.

Revenues and costs
Compared to the first two quarters of last year net interest income increased by 36.8 per cent (LTL 56.5m) and reached LTL 210m during the first half of 2011.

Payment processing-related commissions increased by 11.3 per cent (LTL 9.9m) on last year, and reached LTL 97.7m during the first half of 2011; this was mainly due to increased client activity.

According to A. Danys, during the first half of 2011 the use of bank’s e-channels increased. ”We are glad seeing that bank’s clients prefer more and more banking without using cash, since it’s an easier, safer and more convenient way of daily banking. During the first two quarters the turnover by bank cards increased by 18 per cent and payments via POS terminals increased by 27 per cent”, says A. Danys.

Expenses decreased by 2.4 per cent (LTL 3.8m) on last year. The cost income ratio was 0.46, compare with the same period last year 0.57.

Socially responsible organization
Swedbank’s Lithuania is actively implementing different measures in the fields of volunteering, social responsibility and sponsorship. Bank’s focus on environment, communities and society in general brought the National Award for Socially Responsible Business. The award is granted to companies that take into account the interests of stakeholders and demonstrate leadership and sincere commitment to transparent and ethical behaviour.

Swedbank's Q3 2011 financial results will be released on 25 October 2011.