Šiaulių Bankas results for 9M 2024

    Šiaulių Bankas results for 9M 2024

• Profit. Šiaulių Bankas earned a net profit of €63.6 million
• Return on capital. Achieved a return on equity (RoE) of 15.4%
• Loan portfolio. New loan financing contract volumes grew by 8%, with the loan portfolio exceeding €3.4 billion
• Asset quality. The quality of the loan portfolio remains strong – the cost of risk (CoR) of the loan portfolio was 0.31%
• Net fee and commission income. Net fee and commission income amounted to €21.0 million, an increase of 44% compared to the same period last year
• Capital and liquidity. Two successful bond issues of €300 million and €50 million in the international capital markets strengthened the bank's capital and liquidity position
• New dividend policy. Šiaulių Bankas commits to pay out at least 50% of the previous year's net profit

"Šiaulių Bankas continues to maintain stable growth. We expanded our market share across all financing segments: the corporate financing portfolio grew, more new contracts were signed, and growth in the mortgage segment gained even stronger momentum. Net fee and commission income also increased, and we made a significant contribution to capital markets by issuing more bonds in the first three quarters than initially planned for the entire year.

We are focusing on another key area – capital efficiency. Šiaulių Bankas made its international debut with substantial bond issues, strengthening our capital and liquidity position. We have introduced a new dividend policy and are continuing our share buyback program, committed to increasing returns to shareholders while meeting the capital requirements outlined in our strategy," says Vytautas Sinius, CEO of Šiaulių Bankas.

Šiaulių Bankas Group earned an unaudited net profit of €63.6 million in in the first three quarters of 2024, which is 3% less than in the corresponding period of 2023. Operating profit before impairment and income tax amounted to €85.4 million, an 8% decrease compared to operating profit of €93.1 million in the first three quarters of 2023.

Net interest income in the first three quarters of 2024 grew by 4% compared to the corresponding period of 2023 to €121.1 million, while net fee and commission income grew by 44% to €21.0 million.

All loan book segments grew in the first three quarters of the year, with the total loan portfolio increasing by 17% (€498 million) to €3.43 billion (growth of 8% or €241 million in Q3 alone). New credit agreements worth €1.3 billion were signed during the three quarters of the year, 29% more than in the corresponding period of 2023 (€1.0 billion).

The quality of the loan portfolio remains strong with provisions of €7.3 million made in the first three quarters of the year due to the strong portfolio growth and model adjustment, compared to provisions of €8.4 million in corresponding period of 2023. The cost of risk (CoR) of the loan portfolio for three quarters of 2024 was 0.31% (0.41% in corresponding period of 2023).

The deposit portfolio grew by 8% (€240 million) over the three quarter period and exceeded €3.4 billion at the end of September (growth of 2% or €78 million in Q3 alone). The bank's funding structure was reinforced by a €300 million bond issue on the international market. After the quarter, in October, the bank issued an additional Tier 1 bond of €50 million, which strengthened its funding structure as well as capital structure. This will allow the bank to continue its rapid and sustainable growth and to implement its new dividend policy.

Šiaulių Bankas maintained a high level of operational efficiency – the group's cost-to-income ratio in the three quarters of this year reaching 45.6%¹ (34.4%¹ in the corresponding period of 2023) and the return on equity of 15.4% achieved (18.9% in the three quarters of 2023). The capital and liquidity position remained strong and prudential ratios were met by a wide margin. The capital adequacy ratio (CAR) stood at 21.22%² and the liquidity coverage ratio (LCR) at 156.0%².

Income Statement (€'m)	2024 9M YTD		2023 9M YTD	% ∆
Net Interest Income	121.1	116.1		4%
Net Fee and Commission Income	21.0	14.6		44%
Other Income	24.9	13.6		84%
Total Revenue	167.0	144.3		16%
Salaries and Related Expenses	(35.4)	(25.5)		39%
Other Operating Expenses	(46.2)	(25.6)		80%
Total Operating Expenses	(81.6)	(51.1)		59%
Operating Profit	85.4	93.1		(8%)
Provisions	(6.9)	(8.5)		(18%)
Income Tax Expense	(14.9)	(19.0)		(22%)
Net Profit	63.6	65.7		(3%)
Balance Sheet Metrics (€'m)	2024-09-30	2023-12-31		% ∆
Loan Portfolio	3,429	2,932		17%
Total Assets	4,944	4,809		3%
Deposits	3,419	3,178		8%
Equity	577	543		6%
Assets under Management3	1,870	1,556		20%
Assets under Custody	1,862	1,943		-4%
KPIs	2024 9M YTD	2023 9M YTD		∆
Net Interest Margin (NIM)	3.6%	4.3%		-73bps
Cost-to-Income Ratio (C/I)1	45.6%	34.4%		+1125bps
Return on Equity (RoE)	15.4%	18.9%		-357bps
Cost of Risk (CoR)	0.3%	0.4%		-10bps
Capital Adequacy Ratio (CAR)2	21.22%	21.34%		-12bps

Overview of Business Segments

Corporate Client Segment

The business loan portfolio grew by 24% year-on-year, driven by an increase in new lending volumes in the first 9 months of the year to €854 million, or 45% compared to the corresponding period last year. In the Q3 alone, the total amounted to €393 million. Since the beginning of the year, the portfolio has grown by €0.3 billion to over €1.8 billion.

This underlines the favourable business environment in key strategic sectors including energy, manufacturing and retail. Šiaulių Bankas also further strengthens its commitment to green projects by financing a 29.5 MWh wind farm in western Lithuania, boosting the region's economic growth and further diversifying its loan portfolio.

Private Client Segment

Lending activity in the retail segment increased significantly. New mortgage loans signed in the first nine months of 2024 amounted to €187 million and increased by 39% compared to the same period last year. Since the beginning of the year, the total portfolio of housing loans has grown by 16% (€127 million) to over €0.9 billion.

New consumer loans totaling €191 million were issued in the first nine months of the year, up 12% compared to the same period last year. Since the beginning of the year, the consumer loan portfolio has grown by 21% (€61 million), reaching €0.35 billion.

Šiaulių Bankas continues to prepare for a growth phase in retail banking segment. Along with implementing new core banking platform, preparations are being made for an active sales promotion phase: the number of direct marketing consents is growing, a new CRM system is being implemented, sales processes are being optimised and the competences of employees are being strengthened.

Investment Client Segment

In the first nine months of 2024, the volume of new bond issues reached €185 million, up 16% year-on-year, reflecting consistent investor interest and growing confidence in the bank's financial products. In the third quarter of the year alone, due to the seasonality of the capital markets, new bond issues amounted to € 31 million.

In Q3, the Bank also introduced a new option for investors to buy bonds through the Bank's securities platform. This is an opportunity for customers to acquire bonds conveniently and quickly on their own online.

Assets managed by SB Asset Management, the asset management company of Šiaulių Bankas Group, reached €1.38 billion at the end of Q3 2024 and increased by almost €200 million this year. Most of this increase was driven by the return on investment of the funds under management, which generated a profit of €142 million for clients.

Pension funds managed by SB Asset Management maintain competitive performance in both the short and long term. In the Q3 of the year alone, the returns of Tier II pension funds were the highest in 7 out of 8 life cycle funds, and the 4-year performance of the funds was the best in 6 out of 8 life cycle funds, compared to other managers' funds in the same age group.

¹ eliminating the impact of the client portfolio if 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 and highlights for the second quarter of 2024. The webinar will start on 31 October 2024 at 8.30 am (EET). The webinar will be held in English. Please register here. Please find attached the information that will be presented at the webinar.

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Additional information:
Tomas Varenbergas
Head of Investment Management Division
[e-mail]

Attachments

• 2024-3Q EN
• Siauliu Bankas Q3`24 earnings results presentation