Lithuanian Banks Report Record Profits in 2022 Amid Rising Interest Rates

Lithuanian banks saw a significant surge in profits in 2022, with the banking sector's net profit reaching €986 million, double the amount from the previous year. The sharp rise in interest rates and high excess liquidity were the main drivers behind this record-breaking performance.

According to data from the Bank of Lithuania, 14 banks and branches of foreign banks operated at a profit, while four recently established specialized banks recorded a combined loss of €9.7 million. Banks' assets grew by 11% to €61.7 billion, and their loan portfolio increased by €1.6 billion to €27.5 billion, with most of the growth attributed to lending to households.

Deposits with banks also saw a notable increase of 9.4%, reaching €50.8 billion. Fixed-term deposits grew from 13% to 26% of total customer deposits, indicating a shift in consumer behavior. Despite the challenges posed by a 33% rise in financial fraud cases, banks were able to prevent major losses by stopping suspicious transactions worth over €7 million.

Why this matters: The record profits reported by Lithuanian banks in 2022 demonstrate the sector's resilience and ability to capitalize on favorable economic conditions. This strong performance contributes to the overall stability and growth of the Lithuanian economy.

Swedbank Lithuania, SEB Bankas, and Luminor Bank were the most profitable banks, accounting for the majority of the sector's profits. Analysts expect banks to maintain their profitability in 2023, albeit at a slower pace, as the economic outlook becomes more uncertain. The Lithuanian banking sector's stability and profitability have been supported by the country's robust economic growth and the banks' prudent risk management practices.

Key Takeaways

• Lithuanian banks' profits doubled in 2022, reaching €986 million.
• Banks' assets grew by 11% to €61.7 billion, with loan portfolio up €1.6 billion.
• Deposits increased by 9.4% to €50.8 billion, with more fixed-term deposits.
• Swedbank, SEB, and Luminor were the most profitable banks in Lithuania.
• Analysts expect banks to maintain profitability in 2023, though at a slower pace.