Lithuanian banks hit hard

  • 2009-05-07
  • By TBT staff

Swedbank saw the largest losses in the region due to bad credit.

VILNIUS - Lithuanian banks posted combined net losses in the first quarter of this year of 20.1 million litas (5.83 million euros), the country's Central Bank reported. The report followed news that the country is suffering from the worst recession in the European Union.
In the first quarter of 2008, the net income of the banks was 337.2 million litas, the Central Bank said. Seven of Lithuania's 16 banks reported a loss.

Two of the country's biggest banks, SEB and Swedbank, which are both Swedish-owned, have been hit badly by souring credit in the Baltics.
Swedish Financial Markets Minister Mats Odell moved to tone down the threat of the Baltics to the Swedish banking system.
"As long as the biggest problems remain in the Baltics, Swedish banks will be able to deal with them."
"As it looks currently, they will be able to cope on their own with the credit losses that can come from there," he said.

Swedbank reported the largest first-quarter net loss, missing analysts' expectations for a profit, due to large provisions for loan losses in its hard-hit Baltic operations.
"According to the management accounting results the financial group in Lithuania during the first quarter incurred a loss of 164 million litas," Swedbank reported.
Swedish bank SEB, meanwhile, said on May 1 that it would sign up to a Swedish government-backed guarantee program after it reported a 44 percent drop in net profit in the first quarter, largely due to its exposure to the Baltics.

"The board has decided to apply for SEB's participation in the Swedish funding guarantee program. The application will be filed within the next few days," SEB said a statement.
SEB's Lithuanian arm posted a large reduction in profits at 16.2 million litas, down from 93.9 million litas a year earlier.
Danske Bank reported pre-tax losses of 37 million, influenced by 35 million litas allocated for provisions over the period, ELTA reported.

In the first quarter of 2009, the revenues of the Danske Bank in Lithuania amounted to 16 million litas 's a fall of almost 50 percent compared to the same period of 2008.
Locally owned banks Ukio Bankas and Snoras Bankas both had their Moody ratings downgraded at the turn of the quarter.
Ukio Bankas' rating went down to B2 from Ba3, and its bank financial strength rating (BFSR) to E+ from D-.
Snoras' rating slid to B3 from Ba3 and its BFSR to E+ from D-.

Over the year the two banks saw losses in revenues of 40 and 70 percent, respectively.
The Lithuanian economy slipped into the worst recession in the European Union in the first quarter, contracting 12.6 percent from the same period last year. Rising unemployment and falling wages are increasing the rate of overdue loans as households and businesses run out of funds to repay their debt.

Loan provisions totaled 329.1 million litas, or 1.71 percent of total loans, in the first quarter, increasing 0.51 percentage points from the previous three months, the Central Bank said.
Impaired loans as a share of total credit rose in the first quarter to 5.32 percent, while loans overdue for more than 60 days more than doubled to 2.91 percent, the bank said.
Credit shrank by 3.5 percent in the first quarter from the previous three months, the bank said.