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Commercial banks operating in Lithuania recorded aggregate profits of 59.1 million litas (17.1 million euros) for the first quarter of 2003, an 83 percent increase over the same period in 2002, the central bank announced on April 25.
Aggregate profits of banks reached an all-time high of 146.8 million litas in 2002.
Nine banks and one foreign bank branch operated profitably in the first quarter of this year, posting 61.8 million litas in combined profits. One bank - Sampo - and three foreign bank branches - Kredyt Bank S.A., Nordea Bank Finland and Vereins-und Westbank - ended the quarter in the red, registering aggregate losses of 2.7 million litas.
The central bank said the improved quarterly results were due primarily to cost-cutting measures. Whereas the banks' revenues for the first quarter remained close to last year's level, their expenses dropped by 27 million litas, or 9.5 percent.
Falling interest rates pushed the banks' interest expenses down by 16 million litas, or 20 percent. Their operating expenses declined by 4 million litas, or 3.8 percent, while expenses for specific provisions shrank by 4 million litas, or 36 percent.
Most of the banks operating in Lithuania improved their performance in the first quarter of this year. The central bank, however, predicted that profit growth potential would be limited by the continuing fall of real interest margins amid increasing competition in the market.
The real interest margin went down by 0.5 percentage points to 3.61 percent over the first quarter.
As of April 1, total assets of the domestic commercial banks and foreign bank branches reached 17 billion litas, a 1.3 percent decline compared with the start of this year. The central bank attributed the drop to the depreciation of the U.S. dollar against the litas, as well as to the decreased volume of deposits from private companies and individuals.
The combined share of assets held by the country's three leading banks amounted to 73 percent, down from last year.