Acquisition Intl. magazine has named Šiaulių Bankas 2016 Bank of the Year – Lithuania, and figures for last year show the bank had its best performance yet. In 2017, Šiaulių Bankas plans to continue its expansion and deliver a double-digit return on capital for the fourth year in a row reveals the CEO, Vytautas Sinius in this interview.
n the history of Šiaulių Bankas, 2016 will go down as a year of records. In the first three quarters of the year, the bank’s net profit jumped 115% from the same period a year before to €37 million, and its return on capital (ROAE) hit a record 31.5%. The bank’s loan and financial lease portfolio, meanwhile, crossed the billion-euro threshold for the first time ever.
“The last several years have been exceptional for Šiaulių Bankas,” CEO Vytautas Sinius remarked. “We’ve expanded both by acquiring other market players and also organically – by attracting more customers and boosting the scale of lending along with revenue from other activities. Within a few short years we’ve developed into a significant Lithuanian financial institution,” he explained.
Šiaulių Bankas has managed to increase profit even in unfavourable circumstances. Since Lithuania joined the euro zone in 2015, the country’s commercial banks have faced the challenges of low interest rates. At the same time, geopolitical factors and global macroeconomic developments have negatively impacted the country’s export-oriented economy.
In a quarter of a century, Šiaulių Bankas has grown from being a small regional lender to become Lithuania’s fourth-largest bank. It made a qualitative leap when in 2005 the European Bank for Reconstruction and Development (EBRD) became its largest shareholder. According to Vytautas Sinius, the EBRD strengthened Šiaulių Bankas’s capital base, brought superior new corporate governance standards, and increased the bank’s reliability.
Acquisitions have also provided impetus. In 2013 Šiaulių Bankas took over part of the assets and liabilities of the bankrupt Ūkio Bankas, and in 2015 it acquired Bankas Finasta. These important undertakings broadened Šiaulių Bankas’s sphere of operations and gave it solid footing in business areas where it previously lacked any real presence.
The successful completion of these transactions gave the bank valuable experience in mergers and acquisitions, its CEO noted. While the bank’s strategy takes an organic approach to growth, it is watching the market and does not rule out further purchases of institutions or asset portfolios, he said.
Key growth driver – SMEs Šiaulių Bankas concentrates its operations in three main areas: consumer finance services, saving and investment solutions, and financing for small and medium-sized enterprises (SMEs).
The focus on SME financing goes back to the very origins of Šiaulių Bankas and has proved a very effective strategic direction. Financing for the SME segment is the bank’s biggest source of revenue and loans to SMEs make up nearly 70% of its credit portfolio.
“The larger part of all business in Lithuania is done by small companies, so by financing SMEs we contribute quite heavily to the country’s economic development. This is an area that demands specific know-how and experience, and over the years we’ve earned the trust of the business community. SME financing is a strategic focus for the bank,” Vytautas Sinius commented.
In recent times, Lithuania’s other main banks have also sought to establish themselves as providers of SME financing, but Šiaulių Bankas stands out for its expertise and experience, according to its CEO. Also, “since our capital is Lithuanian, Šiaulių Bankas makes decisions fast and locally,” he added. “We’re constantly expanding our range of services for individuals and for business.”
Work with international partners
Direct collaboration with international institutions is another of Šiaulių Bankas’s strengths. Having built up such relationships, it is able to provide businesses with financing on advantageous terms. Working together with the European Investment Fund, Šiaulių Bankas ensures good terms of credit for SMEs and mid-cap companies. In 2016 the bank offered Lithuanian SMEs access to the ‘InnovFin’ facility, thanks to which financing opportunities for innovative companies have been expanded.
Participation in Lithuania’s multi-apartment building renovation programme has been a big success for Šiaulių Bankas. The goal of the ambitious programme is to renovate Soviet-era apartment buildings all over the country and improve their energy efficiency. Partnering with the European Investment Bank, Šiaulių Bankas is the leading provider of finance for the programme, with a 60% share of this market.
Ever better customer care
Šiaulių Bankas has begun implementing a customer-focused strategy. In 2015 it introduced general standards for customer service, and a unified customer service culture is being developed to boost customer satisfaction and loyalty. To help employees take customer care to a new level, training sessions were held and tracking of indicators for service quality was started. All these measures did in fact result in customer care improvements – for 2015 the bank’s overall customer satisfaction rating was 90.3% and exceeded the average for banks in Lithuania.
“We want it to be convenient and simple to use Šiaulių Bankas’s services – our banking outlets cover all of Lithuania and we’re investing in electronic channels. Plus, we’re constantly expanding our range of services for individuals and for business,” the bank’s CEO noted.
A favourite among investors
Šiaulių Bankas is the only Lithuanian bank whose shares trade on the Nasdaq Baltic exchange. The bank’s free float is 61% and its shares are among the most popular and liquid in the Baltic region.
Strong operating results have encouraged growth in valuations of Šiaulių Bankas shares. In 2016 alone the share price rose by more than 80%. “We’re pleased that investors appreciate Šiaulių Bankas’s rising performance indicators. Our forecast is for return on capital to stay in the double digits in 2017, and we expect the bank’s shares will remain attractive for investors,” Vytautas Sinius said.