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FINANCIAL STATEMENTS AND
ANNUAL REPORT
31 December 2021
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, fax (8 41) 430 774
E-mail info@sb.lt
www.sb.lt
FINANCIAL STATEMENTS
4
THE GROUP’S AND THE BANK’S INCOME STATEMENTS
5
THE GROUP’S AND THE BANK’S STATEMENTS OF COMPREHENSIVE INCOME
6
THE GROUP’S AND THE BANK’S STATEMENTS OF FINANCIAL POSITION
7
THE GROUP’S STATEMENT OF CHANGES IN EQUITY
8
THE BANK’S STATEMENT OF CHANGES IN EQUITY
9
THE GROUP’S AND THE BANK’S STATEMENTS OF CASH FLOWS
10
GENERAL INFORMATION
11
ACCOUNTING POLICIES
12
FINANCIAL RISK MANAGEMENT
24
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
78
SEGMENT INFORMATION
79
NOTE 1 NET INTEREST INCOME
81
NOTE 2 NET FEE AND COMMISSION INCOME
81
NOTE 3 NET GAIN FROM TRADING ACTIVITIES
82
NOTE 4 OTHER OPERATING EXPENSES
83
NOTE 5 REVENUE AND EXPENSES RELATED TO INSURANCE ACTIVITIES
83
NOTE 6 OTHER INCOME
84
NOTE 7 IMPAIRMENT LOSSES
84
NOTE 8 INCOME TAX
85
NOTE 9 EARNINGS PER SHARE
87
NOTE 10 CASH AND CASH EQUIVALENTS
87
NOTE 11 DUE FROM OTHER BANKS
89
NOTE 12 FINANCIAL ASSETS AND LIABILITIES IN THE TRADING BOOK
89
NOTE 13 LOANS TO CUSTOMERS
92
NOTE 14 FINANCE LEASE RECEIVABLES
106
NOTE 15 INVESTMENT SECURITIES
110
NOTE 16 INVESTMENTS IN SUBSIDIARIES
113
NOTE 17 INTANGIBLE ASSETS
114
NOTE 18 PROPERTY, PLANT AND EQUIPMENT
115
NOTE 19 OTHER ASSETS
118
NOTE 20 DUE TO OTHER BANKS AND FINANCIAL INSTITUTIONS
120
NOTE 21 DUE TO CUSTOMERS
121
NOTE 22 SPECIAL AND LENDING FUNDS
121
NOTE 23 DEBT SECURITIES IN ISSUE
122
NOTE 24 LIABILITIES RELATED TO INSURANCE ACTIVITIES
122
NOTE 25 OTHER LIABILITIES
123
NOTE 26 INVESTMENT PROPERTY
124
NOTE 27 CAPITAL
125
NOTE 28 CONTINGENT LIABILITIES AND COMMITMENTS
126
NOTE 29 DIVIDENDS
127
NOTE 30 RELATED-PARTY TRANSACTIONS
127
NOTE 31 FINANCIAL GROUP INFORMATION
130
NOTE 32 EVENTS AFTER BALANCE SHEET DATE
133
CONTENTS
CONSOLIDATED ANNUAL REPORT FOR 2021
134
ANNUAL ACTIVITY RESULTS
135
COVID-19
137
RATINGS
137
RISK MANAGEMENT, COMPLIANCE WITH PRUDENTIAL REQUIREMENTS
138
ACTIVITY PLANS AND FORECASTS
138
AUTHORIZED CAPITAL, SHAREHOLDERS
138
DIVIDENDS
141
AGREEMENTS WITH SECURITIES PUBLIC TRADING INTERMEDIARIES
141
MANAGEMENT OF THE BANK
141
THE COMMITTEES FORMED WITHIN THE BANK, AREAS OF THEIR ACTIVITIES
144
INTERNAL CONTROL ASSESSMENT
145
EXTERNAL AUDIT
146
EMPLOYEES
146
REMUNERATION POLICY
150
MAIN INVESTMENTS DURING THE REPORTING PERIOD
156
COMPANIES COMPRISING GROUP
157
OTHER INFORMATION, PUBLISHED INFORMATION AND MAJOR EVENTS
158
REPORT ON THE BANK’S CORPORATE GOVERNANCE FOR 2021
159
SOCIAL RESPONSIBILITY REPORT 2021
188
About the Report
189
CEO’s address
190
Strategy and analysis
190
Description of the company
191
Ethics and integrity
193
Governance of the company
194
Employees
198
Stakeholder involvement
199
Reporting parameters
200
Economic efficiency
201
Transparency and prevention of corruption
203
Environment
203
Relations with employees
205
Communities and the general public
209
Compliance
210
REMUNERATION REPORT 2021
211
REMUNERATION OF MEMBERS OF THE SUPERVISORY BODY
213
REMUNERATION OF MEMBERS OF THE MANAGEMENT BODY
214
CHANGES IN BANK’S PERFORMANCE RESULTS AND AVERAGE REMUNERATION
216
CONFIRMATION FROM THE RESPONSIBLE PERSONS
217
CONTENTS
3
FINANCIAL STATEMENTS
31 December 2021
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, fax (8 41) 430 774
E-mail info@sb.lt
www.sb.lt
THE GROUP’S AND THE BANK’S INCOME STATEMENTS
Year ended
31 December 2021
31 December 2020
Notes
Group
Bank
Group
Bank
Continuing operations
Interest revenue calculated using the effective interest method
1
83,035
69,951
78,502
65,067
Other similar income
1
8,861
8,719
7,527
7,435
Interest expense and similar charges
1
(10,979)
(10,972)
(10,321)
(10,071)
Net interest income
80,917
67,698
75,708
62,431
Fee and commission income
2
24,617
25,193
22,613
23,014
Fee and commission expense
2
(7,457)
(7,239)
(6,568)
(6,327)
Net fee and commission income
17,160
17,954
16,045
16,687
Net gain from trading activities
3
11,936
9,188
11,589
12,018
Net gain (loss) from derecognition of financial assets
6
4,363
2,729
1,265
384
Net gain (loss) from disposal of tangible assets
6
3,736
66
376
7
Revenue related to insurance activities
5
8,137
—
7,225
—
Other operating income
6
1,310
1,136
774
452
Salaries and related expenses
(27,105)
(23,640)
(23,470)
(20,506)
Depreciation and amortization expenses
(4,440)
(3,972)
(4,106)
(3,569)
Expenses related to insurance activities
5
(8,032)
—
(5,448)
—
Other operating expenses
4
(16,643)
(12,268)
(15,177)
(11,681)
Operating profit before impairment losses
71,339
58,891
64,781
56,223
Allowance for impairment losses
on loans and finance lease receivables
7
(4,354)
(973)
(10,475)
(10,255)
(Allowance for)/ reversal of allowance for impairment losses on other assets
7
277
(1)
(1,498)
305
Allowance for impairment losses on investments in subsidiaries
7, 16
—
—
—
(114)
Share of the profit or loss of investments in subsidiaries accounted for using the equity method
16
—
8,830
—
5,470
Profit from continuing operations before income tax
67,262
66,747
52,808
51,629
Income tax expense
8
(12,039)
(10,742)
(9,887)
(8,534)
Net profit from continuing operations for the year
55,223
56,005
42,921
43,095
Profit (loss) from discontinued operations, net of tax
19
—
—
121
—
Net profit for the year
55,223
56,005
43,042
43,095
Net profit attributable to:
Owners of the Bank
55,223
56,005
43,042
43,095
From continuing operations
55,223
56,005
42,921
43,095
From discontinued operations
—
—
121
—
Non-controlling interest
—
—
—
—
Basic earnings per share (in EUR per share) attributable to owners of the Bank
9
0.09
—
0.07
—
From continuing operations
0.09
—
0.07
—
From discontinued operations
—
—
—
—
Diluted earnings per share (in EUR per share) attributable to owners of the Bank
9
0.09
—
0.07
—
From continuing operations
0.09
—
0.07
—
From discontinued operations
—
—
—
—
Chief Executive Officer
Vytautas Sinius
Chief Financial Officer
Donatas Savickas
7 March 2022
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
5
THE GROUP’S AND THE BANK’S STATEMENTS OF COMPREHENSIVE INCOME
Year ended
31 December 2021
31 December 2020
Notes
Group
Bank
Group
Bank
Net profit for the year
55,223
56,005
43,042
43,095
Other comprehensive income (loss):
Items that may be subsequently reclassified to profit or loss:
Financial assets valuation gains (losses) taken to other comprehensive
income
15
(1,026)
(1,027)
839
839
Financial assets valuation result transferred to profit or loss
15
(185)
(185)
(393)
(393)
Deferred income tax on gain (loss) from revaluation of financial assets
8, 15
240
240
(49)
(49)
Items that may not be subsequently reclassified to profit or loss:
Fair value changes of financial liabilities at fair value through profit or
loss attributable to changes in their credit risk
—
—
—
—
Other comprehensive income (loss), net of deferred tax
(971)
(972)
397
397
Total comprehensive income for the year
54,252
55,033
43,439
43,492
Total comprehensive income attributable to:
Owners of the Bank
54,252
55,033
43,439
43,492
Non-controlling interest
—
—
—
—
54,252
55,033
43,439
43,492
Chief Executive Officer
Vytautas Sinius
Chief Financial Officer
Donatas Savickas
7 March 2022
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
6
THE GROUP’S AND THE BANK’S STATEMENTS OF FINANCIAL POSITION
31 December 2021
31 December 2020
Notes
Group
Bank
Group
Bank
ASSETS
Cash and cash equivalents
10
965,723
964,849
432,584
431,649
Securities in the trading book
12
48,181
15,099
37,068
9,582
Due from other banks
11
1,196
1,196
1,598
1,598
Derivative financial instruments
12
2,121
2,121
445
445
Loans to customers
13
1,908,681
1,889,629
1,605,663
1,592,363
Finance lease receivables
14
195,174
194,909
155,457
155,290
Investment securities at fair value
15
82,988
82,951
34,342
34,215
Investment securities at amortized cost
15
705,398
692,226
709,454
697,136
Investments in subsidiaries and associates
16
—
31,668
—
29,135
Intangible assets
17
4,834
3,114
5,729
4,230
Property, plant and equipment
18
14,760
14,118
16,484
15,852
Investment property
26
2,229
344
5,552
362
Current income tax prepayment
847
820
48
8
Deferred income tax asset
8
1,593
1,250
2,078
1,690
Inventories
19
538
—
1,391
—
Other financial assets
19
16,398
16,271
4,695
4,278
Other non-financial assets
19
11,201
8,289
8,710
5,263
Assets classified as held for sale
19
620
620
7,547
4,573
Total assets
3,962,482
3,919,474
3,028,845
2,987,669
LIABILITIES
Due to other banks and financial institutions
20
697,738
703,271
227,823
231,270
Derivative financial instruments
12
96
96
3,840
3,840
Due to customers
21
2,679,183
2,681,586
2,347,427
2,349,021
Special and lending funds
22
6,667
6,667
5,749
5,749
Debt securities in issue
23
95,212
95,212
20,027
20,027
Current income tax liabilities
1,084
962
1,092
737
Deferred income tax liabilities
8
1,452
—
1,251
—
Liabilities related to insurance activities
24
41,409
—
36,275
—
Other financial liabilities
25
25,053
21,775
24,231
20,337
Other non-financial liabilities
25
7,251
1,414
5,966
1,124
Grants
20
910
910
—
—
Liabilities related to assets classified as held for sale
25
—
—
98
—
Total liabilities
3,556,055
3,511,893
2,673,779
2,632,105
EQUITY
Share capital
27
174,211
174,211
174,211
174,211
Share premium
27
3,428
3,428
3,428
3,428
Treasury shares (-)
27
(516)
(516)
—
—
Reserve capital
27
756
756
756
756
Statutory reserve
27
21,893
21,770
14,427
14,246
Financial instruments revaluation reserve
(583)
(597)
388
375
Reserve for acquisition of own shares
27
10,000
10,000
10,000
10,000
Other equity
27
3,288
2,870
2,359
2,066
Retained earnings
193,950
195,659
149,497
150,482
Non-controlling interest
—
—
—
—
Total equity
406,427
407,581
355,066
355,564
Total liabilities and equity
3,962,482
3,919,474
3,028,845
2,987,669
Chief Executive Officer
Vytautas Sinius
Chief Financial Officer
Donatas Savickas
7 March 2022
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
7
THE GROUP’S STATEMENT OF CHANGES IN EQUITY
Notes
Share capital
Share premium
Treasury shares (-)
Reserve capital
Financial instruments
revaluation reserve
Statutory reserve
Reserve for acquisition of
own shares
Other equity
Retained earnings
Total
Non-controlling interest
Total equity
Attributable to the owners of the Bank
1 January 2020
174,211
3,428
—
756
(9)
14,468
10,000
1,536
106,414
310,804
—
310,804
—
Transfer to statutory reserve
—
—
—
—
—
(41)
—
—
41
—
—
—
Acquisition of own shares
27
—
—
—
—
—
—
(320)
—
—
(320)
—
(320)
Share-based payment
27
—
—
—
—
—
—
320
823
—
1,143
—
1,143
Total comprehensive
income:
—
—
—
—
397
—
—
—
43,042
43,439
—
43,439
Net profit
—
—
—
—
—
—
—
—
43,042
43,042
—
43,042
Other comprehensive
income
—
—
—
—
397
—
—
—
397
—
397
31 December 2020
174,211
3,428
—
756
388
14,427
10,000
2,359
149,497
355,066
—
355,066
Transfer to statutory reserve
—
—
—
—
—
7,466
—
—
(7,466)
—
—
—
Acquisition of own shares
27
—
—
(516)
—
—
—
(234)
—
—
(750)
—
(750)
Share-based payment
27
—
—
—
—
—
—
234
929
—
1,163
—
1,163
Payment of dividends
29
—
—
—
—
—
—
—
—
(3,304)
(3,304)
—
(3,304)
Total comprehensive
income:
—
—
—
—
(971)
—
—
—
55,223
54,252
—
54,252
Net profit
—
—
—
—
—
—
—
—
55,223
55,223
—
55,223
Other comprehensive
income
—
—
—
—
(971)
—
—
—
—
(971)
—
(971)
31 December 2021
174,211
3,428
(516)
756
(583)
21,893
10,000
3,288
193,950
406,427
—
406,427
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
8
THE BANK’S STATEMENT OF CHANGES IN EQUITY
Notes
Share
capital
Share premium
Treasury shares (-)
Reserve capital
Financial instruments
revaluation reserve
Statutory reserve
Reserve for acquisition of
own shares
Other equity
Retained earnings
Total
1 January 2020
174,211
3,428
—
756
(22)
14,246
10,000
1,345
107,387
311,351
Acquisition of own shares
27
—
—
—
—
—
—
(320)
—
—
(320)
Share-based payment
27
—
—
—
—
—
—
320
721
—
1,041
Total comprehensive income:
—
—
—
397
—
—
—
43,095
43,492
Net profit
—
—
—
—
—
—
—
—
43,095
43,095
Other comprehensive
income
—
—
—
—
397
—
—
—
—
397
31 December 2020
174,211
3,428
—
756
375
14,246
10,000
2,066
150,482
355,564
Transfer to statutory reserve
—
—
—
—
—
7,524
—
—
(7,524)
—
Acquisition of own shares
27
—
—
(516)
—
—
—
(234)
—
—
(750)
Share-based payment
27
—
—
—
—
—
—
234
804
—
1,038
Payment of dividends
29
—
—
—
—
—
—
—
—
(3,304)
(3,304)
Total comprehensive income:
—
—
—
—
(972)
—
—
—
56,005
55,033
Net profit
—
—
—
—
—
—
—
—
56,005
56,005
Other comprehensive
income
—
—
—
—
(972)
—
—
—
—
(972)
31 December 2021
174,211
3,428
(516)
756
(597)
21,770
10,000
2,870
195,659
407,581
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
9
THE GROUP’S AND THE BANK’S STATEMENTS OF CASH FLOWS
Year ended
31 December 2021
31 December 2020
Notes
Group
Bank
Group
Bank
Operating activities
(restated)
(restated)
Interest received on loans and advances
81,902
68,699
81,714
67,625
Interest received on finance leases
8,218
8,195
7,137
7,123
Interest received on debt securities in the trading book
496
372
463
463
Interest paid
(11,498)
(11,498)
(9,704)
(9,445)
Fees and commissions received
24,582
25,193
22,578
23,014
Fees and commissions paid
(7,457)
(7,239)
(6,379)
(6,327)
Net cash inflows from trade in securities in the trading book
(1,527)
(7,040)
1,555
3,273
Net inflows from foreign exchange trading
4,512
4,439
13,619
11,843
Net inflows from derecognition of financial assets
4,363
2,729
1,265
384
Net inflows from derecognition of non-financial assets
3,736
66
376
7
Cash inflows related to other activities of Group companies
10,757
1,136
7,942
452
Cash outflows related to other activities of Group companies
(8,032)
—
(5,448)
—
Recoveries on loans previously written off
1,126
541
2,868
694
Salaries and related payments to and on behalf of employees
(26,396)
(22,931)
(23,470)
(20,874)
Payments related to operating and other expenses
(22,223)
(17,678)
(16,408)
(26,754)
Income tax paid
8
(11,914)
(10,625)
(9,046)
(8,502)
Net cash flow from operating activities before change in operating assets and
liabilities
50,645
34,359
69,062
42,976
Change in operating assets and liabilities:
(Increase) decrease in due from other banks
402
402
(1,318)
(1,318)
Increase in loans to customers
(314,018)
(300,088)
(99,161)
(94,789)
Decrease (increase) in finance lease receivable
(36,149)
(39,380)
175
1,571
Decrease (increase) in other financial assets
(11,703)
(11,993)
3,095
2,951
(Increase) decrease in other non-financial assets
6,177
5,207
(3,308)
(7,832)
Increase in due to banks and financial institutions
469,915
472,001
153,432
154,600
Increase in due to customers
332,301
333,110
313,164
311,733
Increase (decrease) in special and lending funds
918
918
(1,311)
(1,311)
Increase (decrease) in other financial liabilities
1,878
2,494
(859)
7,175
Increase (decrease) in other non-financial liabilities
(9,283)
(4,607)
(3,345)
14,717
Change
440,438
458,064
360,564
387,497
Net cash flow from operating activities
491,083
492,423
429,626
430,473
Investing activities
Acquisition of property, plant and equipment, investment property and intangible assets
(1,014)
(866)
(4,396)
(4,335)
Disposal of property, plant and equipment, investment property and intangible assets
8,028
378
2,347
2,292
Acquisition of debt securities at amortized cost
15
(100,202)
(99,382)
(389,552)
(387,599)
Proceeds from redemption or sale of debt securities at amortized cost
15
100,755
100,039
225,013
225,008
Interest received on debt securities at amortized cost
15
9,473
9,323
6,644
6,381
Dividends received
29
—
5,000
2
4,002
Acquisition of investment securities at fair value
(100,447)
(89,161)
(24,605)
(28,640)
Sale or redemption of investment securities at fair value
50,297
40,425
4,847
4,551
Interest received on investment securities at fair value
649
403
551
551
Disposal of subsidiaries
5,478
5,428
—
—
Net cash flow from (used in) investing activities
(26,983)
(28,413)
(179,149)
(177,789)
Financing activities
Payment of dividends
29
(3,299)
(3,299)
(11)
(11)
Interest on debt securities in issue
23
(1,230)
(1,230)
(1,230)
(1,230)
Issue of debt securities
23
75,000
75,000
—
—
Redemption of debt securities issued
—
—
—
—
Principal elements of lease payments
10
(1,432)
(1,281)
(1,569)
(1,376)
Net cash flow (used in) from financing activities
10
69,039
69,190
(2,810)
(2,617)
Net increase (decrease) in cash and cash equivalents
533,139
533,200
247,667
250,067
Cash and cash equivalents at 1 January
432,584
431,649
184,917
181,582
Cash and cash equivalents at 31 December
10
965,723
964,849
432,584
431,649
The accounting policies and notes on pages 11 to 133 constitute an integral part of these financial statements.
FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
10
GENERAL INFORMATION
Šiaulių Bankas AB was registered as a public company in the Enterprise Register of the Republic of Lithuania on 4 February 1992. The
Bank is licensed by the Bank of Lithuania to perform all banking operations provided for in the Law on Banks of the Republic of
Lithuania and the Charter of the Bank. In this document Šiaulių Bankas AB is referred to as the Bank, Šiaulių Bankas AB and its
subsidiaries - the Group.
The Head Office of the Bank is located in Šiauliai, Tilžės str. 149, LT-76348. At the end of the reporting period the Bank had 56
customer service outlets (2020: 59 outlets). As at 31 December 2021 the Bank had 789 employees (31 December 2020: 756). As at 31
December 2021 the Group had 882 employees (31 December 2020: 849 employees).
The Bank accepts deposits, issues loans, makes money transfers and documentary settlements, exchanges currencies for its clients,
issues and processes debit and credit cards, is engaged in trade finance and is investing and trading in securities, as well as performs
other activities set forth in the Law on Banks of the Republic of Lithuania and the Charter of the Bank. Subsidiary companies of the
Group perform consumer financing, life insurance and real estate management activities.
The Bank’s shares are listed on the Baltic Main List of the NASDAQ Stock Exchange.
As of 31 December 2021 the Bank owned the following
directly controlled subsidiaries:
As of 31 December 2020 the Bank owned the following
directly controlled subsidiaries:
1.SB Draudimas UAB (name changed Bonum Publicum
GD UAB; life insurance activities),
2.SB Lizingas UAB (consumer financing activities),
3.Šiaulių Banko Lizingas UAB (lease activities),
4.SB Turto Fondas UAB (name changed from Šiaulių
Banko Turto Fondas UAB; real estate management
activities)
1.SB Draudimas UAB (name changed from Bonum
Publicum GD UAB; life insurance activities),
2.SB Lizingas UAB (consumer financing activities),
3.Šiaulių Banko Lizingas UAB (lease activities),
4.Šiaulių Banko Turto Fondas UAB (real estate
management activities)
As of 31 December 2021 the Bank owned the following
indirectly controlled subsidiaries:
As of 31 December 2020 the Bank owned the following
indirectly controlled subsidiaries:
1.Šiaulių Banko Investicijų Valdymas UAB (investment
management activities),
2.Sandworks UAB (real estate management activities),
5.Apželdinimas UAB (real estate management activities),
6.Sandworks UAB (real estate management activities),
As of 31 December 2020 the Bank owned directly controlled
subsidiaries held for sale:
1.Minera UAB (real estate management activities),
2.Šiaulių Banko Investicijų Valdymas UAB (investment
management activities)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
11
ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out below.
Basis of preparation
The financial statements of the Group and the Bank have been prepared in accordance with International Financial Reporting
Standards as adopted by the EU. The financial statements have been prepared under the historical cost convention as modified for the
fair value of financial assets and liabilities at fair value through profit or loss and investment securities at fair value through other
comprehensive income.
The preparation of financial statements in conformity with International Financial Reporting Standards require the use of estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are
based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates.
These financial statements combine the consolidated financial statements for the Group and separate financial statements of the Bank.
Such format of reporting was adopted to ensure consistency of presentation with the format prescribed by the Bank of Lithuania and
applied for statutory reporting.
Neither the Bank’s shareholders, nor any other party have power to amend the financial statements after issue. According to local
legislation, the financial statements are subject to approval in the general meeting of shareholders, but the approval/disapproval cannot
result in amendment of the financial statements.
Amounts shown in these financial statements are presented in the national currency the euro (EUR), which is the Bank’s and Group‘s
functional and presentation currency.
Amendments to existing standards and interpretations effective in 2021
A number of new standards are effective from 1 January 2021 but they do not have a material effect on the Group’s financial
statements:
•COVID-19-Related Rent Concessions (Amendment to IFRS 16);
•Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
Interest Rate Benchmark Reform mentioned above has no material effect to Group’s financial statements as Group does not hold
significant amounts of assets or liabilities associated with other interest rates than EURIBOR.
Standards and amendments to existing standards that are not yet effective and have not been early adopted by the Group
A number of new standards are effective for annual periods beginning after 1 January 2021 and earlier application is permitted;
however, the Group has not early adopted the new or amended standards in preparing these consolidated financial statements.
IFRS 17, Insurance Contracts (effective for annual periods beginning on or after 1 January 2023, including IFRS 17 amendments,
issued on 9 December 2021 and not yet adopted by EU): IFRS 17 replaces IFRS 4, which has given companies dispensation to carry
on accounting for insurance contracts using existing practices. As a consequence, it was difficult for investors to compare the financial
performance of similar insurance companies. IFRS 17 is a single principle-based standard to account for all types of insurance
contracts, including reinsurance contracts that an insurer holds. The standard requires recognition and measurement of groups of
insurance contracts at: (i) a risk-adjusted present value of the future cash flows (the fulfilment cash flows) that incorporates all of the
available information about the fulfilment cash flows in a way that is consistent with observable market information; plus (if this value is
a liability) or minus (if this value is an asset) (ii) an amount representing the unearned profit in the group of contracts (the contractual
service margin). Insurers will be recognising the profit from a group of insurance contracts over the period they provide insurance
coverage, and as they are released from risk. If a group of contracts is or becomes loss-making, an entity will be recognising the loss
immediately. The Group is currently assessing the impact of the amendments on its financial statements.
The following new and amended standards are not expected to have a significant impact on the Group’s and Bank's financial
statements:
•Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
•Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
•Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41);
•Reference to Conceptual Framework (Amendments to IFRS 3);
•Classification of Liabilities as Current or Non-current (Amendments to IAS 1; not adopted by EU);
•Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2; not adopted by EU);
•Definition of Accounting Estimates (Amendments to IAS 8; not adopted by EU);
•Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12; not adopted by EU).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
12
ACCOUNTING POLICIES (CONTINUED)
Consolidation of subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the
group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as
transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling
interests are also recorded in equity.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of
acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised
in profit or loss.
The excess of the consideration transferred the amount of any non-controlling interest in the acquiree and the acquisition-date fair value
of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the
portion of the cash-generating unit retained.
If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair
value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income
statement.
Inter-company transactions, balances and unrealised gains on transactions between the Group companies (including subsidiaries
classified as held for sale) are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the Bank.
Subsidiaries in the stand-alone financial statements are accounted for using equity method. Investment is initially recognized at cost,
and adjusted thereafter for the post-acquisition change in the Bank’s share of net assets of the subsidiary. the share of the profit or loss
is included in the value of investments in subsidiaries and Bank’s income statement, dividends paid by the subsidiary to the Bank are
subtracted from the value of investment in subsidiary and not included in Bank’s income statement.
The Group’s share of post-acquisition profit or loss is recognised in the income statement, and its share of post acquisition movements
in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount
of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other
unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made
payments on behalf of the associate.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
13
ACCOUNTING POLICIES (CONTINUED)
Foreign currency translation
(a)Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in the
euro, which is the Bank’s functional and presentation currency. Euro also is functional and presentation currency of all the
subsidiaries of the Bank included in the consolidated financial statements.
(b)Transactions and balances
All monetary assets and liabilities denominated in foreign currencies are translated into the euro (EUR) at the official daily euro
foreign exchange reference rates (published by the European Central Bank) prevailing at the end of the reporting period. Gains
and losses arising from this translation are included in the income statement for the reporting period. All non-monetary liabilities
and assets are translated using the exchange rate prevailing on the date of acquisition.
Foreign currency transactions are recorded in the euro using the exchange rate ruling on the date of the transaction. Exchange
differences arising from the settlement of transactions denominated in foreign currency are charged to the income statement at the time
of transaction using the exchange rate ruling at that date.
Off-setting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability
simultaneously.
Recognition of income and expenses
Interest income and expense are recognised in the income statement on debt instruments at amortized cost or at fair value through
other comprehensive income on an accrual basis using the effective interest method based on the actual purchase price. The effective
interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest
income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying
amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows
considering all contractual terms of the financial instrument (for example, prepayment options). The calculation includes all fees and
points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all
other premiums or discounts.
Loan origination fees are accounted for as an adjustment to the effective interest rate calculation for each issued loan separately. Other
commission fees and other similar income and expenses are recognised as gained or incurred.
For financial assets interest income is calculated by applying the effective interest rate to the gross carrying amount, except for financial
assets that are credit-impaired (Stage 3), for which interest income is calculated by applying the effective interest rate to the net
carrying amount (i.e. gross carrying amount reduced by the allowance for impairment), and purchased or originated credit-impaired
(POCI) assets, for which the credit-adjusted effective interest rate is applied to the amortized cost of the financial asset.
Revenues from contracts with customers consist primarily of service-related fees and are reported as Commission income, including
fees for settlement services, service plans, cash operations, cards, account servicing fees, services related to securities, collection of
utility and similar payments and others. The revenues reflect the consideration which is expected to be received in exchange for those
services or transactions. The recognition in Income statement depends on whether the Group's obligations are provided. Revenue from
such services is recognised over time on a straight-line basis when the services are provided to the customer. Revenue related to
transactions is recognised at a point in time when the transaction takes place. Fee income for settlement services, cash operations,
documentary collection, collection of utility and similar payments, services related to securities and other is recognised at a point in time
when the Group satisfies its performance obligation upon execution of the specified transaction.
Insurance income and expense recognition is disclosed under Technical provisions section.
Revenue from other activities of the Group comprise sale of apartments or other developed real estate projects. This revenue is
recognized at a point of time upon transfer of completed property to client.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
14
ACCOUNTING POLICIES (CONTINUED)
Dividend income
Dividends are recognised in the income statement when the Bank’s or Group’s right to receive payments is established.
Share-based payment
Employees whose professional activities and/or decisions might have a significant impact on the risk accepted by the Group, receive
deferred variable remuneration. The grant-date fair value of equity-settled shares-based payment arrangements granted to these
employees is recognised as salaries and related expenses in income statement with a corresponding increase in other equity line in the
statement of financial position, over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the
number of awards for which the service and conditions (not directly based on market performance of shares) are expected to be met,
such that the amount ultimately recognised is based on the number of awards that meet the related service and conditions at vesting
date. Any deviation from the original approval due to modifications of original terms and conditions are recognised in Income statement
and a corresponding adjustment is recognised in other equity.
Taxation
a)Income tax
In accordance with the Lithuanian Law on Corporate Profit Tax, taxable profit for 2019 period is subject to income tax at a rate of
15%. Expenses related to taxation charges and included in these financial statements are based on calculations made by the
management in accordance with the Lithuanian regulatory legislation on taxes. From year 2020 commercial banks operating in
Lithuania are be subject to income tax of 20%.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability is settled (20% for deferred income tax assets and liabilities
recognized at 31 December 2021 and at 31 December 2020).
The principal temporary differences arise from carry forward of unused tax losses, revaluation of securities, difference between net
book value and tax base of tangible fixed assets and accrued charges. The rates enacted or substantively enacted at the balance
sheet date are used to determine deferred income tax. However, the deferred income tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
b)Other taxes
Real estate tax rate is up to 1% on the tax value of tangible fixed assets and foreclosed assets. The Bank is also obliged to pay
land and land lease taxes, make payments to guarantee fund and social security contributions. These taxes are included in other
expenses in the income statement.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise balances with less than three months’ maturity from
the date of acquisition, including cash and non-restricted balances with the Bank of Lithuania, treasury bills and other eligible bills,
amounts due from banks and financial institutions and short-term government securities.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
15
ACCOUNTING POLICIES (CONTINUED)
Financial assets
Financial assets are classified into 3 categories:
•financial assets at fair value through profit and loss (the Group and the Bank have debt and equity securities which are
included to trading book, and equity securities which are included to investment securities portfolio),
•financial assets at fair value through other comprehensive income (the Group and the Bank have only debt securities of this
category, these are included to Investment securities portfolio) and
•financial assets at amortized cost.
Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. The classification is based on the cash flow characteristics of the asset and the Group’s business model for managing the
asset.
Financial assets at fair value through profit or loss
Trading book (trading sub-portfolio) includes debt securities which were acquired either for generating a profit from short-term
fluctuations in price or dealer’s margin.
Trading book (other assets sub-portfolio) includes debt and equity assets of the subsidiary involved in life insurance activities. These
assets are managed on behalf of customers and were designated at fair value through profit or loss in order to significantly reduce the
accounting mismatch between these securities and unit-linked provisions.
Investment portfolio includes non-trading (investment) equities that were acquired for generating a profit in longer term fluctuations or in
line with other purposes with the Group (e.g. to have participation in entities that provide services to the group, or other).
Securities at fair value through profit or loss are initially recognised at fair value, which is based on transaction price and are
subsequently measured at fair value based on quoted bid prices or derived from a discounted cash flow model if market price is
unreliable measure. All related realised and unrealised gains and losses are included in net trading income. Interest earned is reported
as interest income. Dividends received are included in dividend income. The instruments are derecognised when the rights to receive
cash flows have expired or the Group has transferred substantially all the risks and rewards of ownership and the transfer qualifies for
derecognising.
All purchases and sales of securities at fair value through profit or loss that require delivery within the time frame established by
regulation or market convention (‘regular way’ purchases and sales) are recognised at settlement date, which is the date when payment
is made for assets purchased or sold. All other purchases and sales are recognised as derivative forward transactions until settlement.
Changes in the asset's fair value between the trade date and the settlement date are recognized as trading gains/losses in the income
statement.
Financial assets at fair value through other comprehensive income
Debt securities that are held for collection of contractual cash flows and for selling them, where the assets’ cash flows represent solely
payments of principal and interest, and that are not designated at fair value through profit or loss, are measured at fair value through
other comprehensive income. Movements in the carrying amount are taken through other comprehensive income, except for
recognition of impairment gains or losses, interest income and foreign exchange gains or losses on the financial instrument’s amortised
cost which are recognized in profit or loss. When the debt asset is derecognized, the cumulative gain or loss previously recognized in
other comprehensive income is reclassified from equity to profit or loss and recognized in Net gain (loss) in operations from securities.
Interest income from these financial assets is included in Interest income using the effective interest rate method.
The Group did not designate any equities at fair value through other comprehensive income.
Financial assets at amortized cost
Loans to customers and finance lease receivables that are the main strategic direction of Group's business and debt securities that are
held for collecting cash flows in line with prescribed business model to generate long-term yield and to serve as secondary liquidity
reserves constitute the major part of Group's assets and are attributable to financial assets at amortized cost (as well as other qualifying
assets such as cash equivalents, due from banks, other financial assets). These assets may be sold, but sales (other than sales low in
volume or sales as part of problem debt recovery activities) are rare and infrequent. Financial assets at amortized cost are non-
derivative financial assets that pass the “Solely payments of principal and interest” (SPPI) test other than: (a) those that the bank
classifies as fair value through profit or loss due to intention for short-term sale or reduction of accounting mismatch; (b) those that the
bank upon initial recognition designates at fair value through other comprehensive income; or (c) those for which the holder may not
recover substantially all of its initial investment, other than because of credit deterioration. In the case of impairment, the impairment
loss is reported as a deduction from the carrying value of the asset and recognised in the income statement as ‘Allowance for
impairment losses’. Financial assets at amortized cost are derecognized when the contractual rights to receive the cash flow from the
assets expire, or the assets are written-off, or the Group has transferred substantially all the risks and rewards of ownership and the
transfer qualifies for derecognising.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
16
ACCOUNTING POLICIES (CONTINUED)
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses (ECL) associated with its debt instrument assets carried at
amortized cost and fair value through other comprehensive income and with exposure arising from loan commitments and financial
guarantee contracts. The Group recognizes a loss allowance for such losses at each reporting date. The measurement of ECL reflects
an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes, the time value of money
and reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic condition. Section 1.3 of the Financial risk management disclosure provides more
details on the ECL measurement.
Derecognition of financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers
the rights to receive the contractual cash flows in a transaction in which substantially all risks and rewards of ownership of the financial
asset are transferred or in which the Group neither transfers nor retains substantially all of risks and rewards of ownership and it does
not retain control of the financial asset. On derecognition of a financial asset the difference between the carrying amount (measured at
the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) and any
cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss.
Write-offs of financial assets
Loans and receivables are regularly reviewed and written-off from the balance sheet when the total loan balance or a part of it is
considered as uncollectible under the most optimistic scenario using expert judgement on each exposure. Typically, the judgement that
there is no reasonable expectation for recovery is applied for the exposures where there are no clear indications of possible cash flows
from the borrower and to the extent that the collateral is deemed insufficient. 100% impairment provision against the carrying amount of
the exposure must be recognized before an uncollectible exposure (or part of it that is considered to be uncollectible) can be written-off.
Written-off exposures are accounted for as off-balance sheet claims (“accumulated write-offs”) until the legal right to claim the amounts
from the borrower expires.
Modifications of financial assets
The Bank sometimes modifies the payment terms of loans to customers due to commercial renegotiations, or for distressed loans, with
a view to maximising recovery. Modification practices are based on criteria which, in the judgement of management, indicate that
payment will most likely continue. Legal treatment for loan contract amendments is followed, i.e. amended loan contracts are accounted
for as modifications - i.e. date of signing the original contract remains the point for loan parameters at origination used to assess
significant increase of credit risk. On modification, the gross carrying amount of the loan is recalculated as the present value of the
modified contractual cash flows that are discounted at the loan’s original effective interest rate. The resulting modification gain or loss is
included in other income line in the income statement. The modification of loan contract does not automatically impact its credit stage
assignment if it done on a commercial negotiations basis or according to public or sectoral moratoria, but the loans subject to
modification are checked if it is done because of borrower's inability to serve the loan by its original schedule. If this is the case,
significant increase credit risk (Stage 2) is recognized. Additional scenarios for moving the loans the loans that were modified due to
customers problems to Stage 3 are in place, and additional observation periods are in place for recognizing improvement in staging for
such loans.
Impairment of non-financial assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. Goodwill is tested for impairment at least annually. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows (cash-generating units). The impairment test also can be performed on a single asset when the fair value less
cost to sell or the value in use can be determined reliably. Non-financial assets other than goodwill that suffered impairment are
reviewed for possible reversal of the impairment at each reporting date.
Reverse repurchase transactions
Securities purchased under agreements to resell (“reverse repos”) are recorded as loans and advances to other banks or customers, as
appropriate. The difference between purchase and repurchase price is treated as interest and accrued over the life of agreement using
the effective interest method. Securities borrowed are not recognised in the financial statements, unless these are sold to third parties,
in which case the purchase and sale are recorded with the gain or loss included in trading income.
Reverse repurchase agreements are classified as loans and receivables and are accounted for using the amortised cost method.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
17
ACCOUNTING POLICIES (CONTINUED)
Intangible assets
Intangible assets are stated at cost less accumulated amortisation. Intangible assets are amortised using the straight-line method over
their estimated useful life (see note 17).
Property, plant and equipment
Tangible fixed assets are stated at historical cost less accumulated depreciation. Depreciation is provided on a straight-line basis to
write off proportionally the cost of each asset over its estimated useful life.
Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is the higher of the asset’s fair value
less costs to sell and value in use.
Gains and losses on disposals of fixed assets are determined by reference to their carrying amount and are charged to the Income
statement.
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Asset maintenance
costs are charged to the income statement when they are incurred. Significant improvements of assets are capitalised and depreciated
over the remaining useful life period of the improved asset. Useful lives of property, plant and equipment are disclosed in note 18.
Leases
a)Group company is the lessee
Right-of-use assets and liabilities arising from lease are initially measured on present value basis, discounted using the interest
rate implicit in the lease (the weighted average lessee's incremental borrowing rates: 31 December 2021: Group 0.60%, Bank
0.26%; 31 December 2020: Group 0.40%, Bank 0.29%;). Lease liabilities include fixed and variable payments (based on an
consumer index or infliation rate). Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability. The discount influence is recognised in finance cost as interest expense in income statement. Right-
of-use assets are measured at cost comprising the amount of the initial measurement of lease liability, any initial direct costs,
adjusted by advance payments. Right-of-use assets are depreciated using the straight-line method over rent period. The
depreciation charge is recognised as depreciation expenses in income statement. The duration of rent agreements are adjusted by
the group‘s management assumptions on contract extensions. The expenses related to short-term leases or to leases of low-value
assets are included in other operating expenses in income statement. Right-of-use assets are included in Property, plant and
equipment, lease liabilities are included in Other financial liabilities.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options are only included in the lease term if the lease is
reasonably certain to be extended (or not terminated). If any leasehold improvements are expected to have a significant remaining
value, the Group is typically reasonably certain to extend (or not terminate). Otherwise, the Group considers other factors including
the plans to continue an activity. Contracts may contain both lease and non-lease components. The Group allocates the
consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However, for
leases of real estate for which the Group is a lessee, it has elected not to separate lease and non-lease components and instead
accounts for these as a single lease component.
b)Group company is the lessor
Operating leases
Assets leased out under operating leases are included in tangible fixed assets in the statement of financial position. They are
depreciated over their expected useful lives on a basis consistent with similar owned fixed assets. Rental income is recognised on
a straight-line basis over the lease term.
Finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. Title may or may not
eventually be transferred. When assets are held subject to a finance lease, the present value of the lease payments is recognised as a
receivable. The difference between the gross receivable and the present value of the receivable is recognised as unearned finance
income. Lease income is recognised over the term of the lease using the net investment method (before tax), which reflects a constant
periodic rate of return.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
18
ACCOUNTING POLICIES (CONTINUED)
Inventories
Inventories of the Group consist mainly of apartments held for sale and property for development. They are stated at the lower of cost
and net realizable value. Net realizable value for apartments held for sale are calculated as based on market value of apartments less
costs to sell. Net realizable value of property for development are calculated as discounted cash inflows to be received from developed
property less discounted cash outflows related to the development and selling of a property.
Financial liabilities
The Group’s financial liabilities consist of those designated at fair value and those carried at amortised cost. Financial liabilities are
derecognised when extinguished.
Financial liabilities at fair value through profit or loss
The group can designate certain liabilities upon initial recognition as at fair value through profit or loss (fair value option); this
designation cannot be changed subsequently.
Other liabilities measured at amortised cost
Financial liabilities that are not classified as at fair value through profit or loss fall into this category and are measured at amortised
cost. Financial liabilities measured at amortised cost are deposits from banks or customers, debt securities in issue, liabilities to
special and lending funds as well as other various financial liabilities. Initially they are recognised at fair value, and subsequently
stated at amortised cost, with any difference between net proceeds and the redemption value recognised in the Income statement
over their period using the effective interest method.
Provisions
Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that
an outflow of resources will be required to settle the obligation; and the amount of the obligation can be reliably estimated.
Technical provisions
Technical provisions are computed in accordance with Lithuanian insurance supervisory authority (Bank of Lithuania) requirements and
are based on assumptions and estimates, the adequacy of which is evaluated based on observations of historical and current data and
the use of projection methods that consider developing trends in experience and that adjust for changes in circumstances.
a)Unearned premiums reserve
Unearned premiums reserve represents the part of premiums written which relates to the period of risk subsequent to the
accounting period. Unearned premiums reserve is calculated for every contract separately by proportionate distribution of the
written premium throughout the risk period. The part of unearned premiums reserve attributable to the reinsurers is calculated by
the same method.
b)Outstanding claims reserve
Outstanding claims reserve represents amounts payable for claims outstanding. Provision covers all anticipatory payments for
claims reported but not settled, claims incurred but not reported, claims reported, settled but not paid, including amounts required
for claims settlement according to all above mentioned claims as of the financial statement date.
Base for calculation of provision for claims reported but not settled is an individual evaluation of every reported claim, according to
the information available at the moment of calculation of this technical provision.
The part of provision for claims incurred, not reported is calculated using “Chain-ladder”, Bornhuetter – Ferguson or Loss-ratio
methods for insurance products separately.
The part of outstanding claims reserve attributable to the reinsurers is calculated under reinsurance contracts.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
19
ACCOUNTING POLICIES (CONTINUED)
c)Life insurance mathematical provision
Life insurance mathematical provision is calculated individually for every policy applying an actuarial conservative perspective
assessment. Life insurance mathematical provision is a difference of the actuarially discounted value of the future policy benefits
less the discounted value of the future premium payments.
The method of assessment can be described as prospective net premium method. For the calculations Zillmer adjustment method
is applied. Thus deferred acquisition costs reduce life insurance mathematical technical reserve.
When computing the life insurance mathematical technical provision mortality tables of general population of Lithuania for the years
1993 – 1996, that were modified in year 2007 according the situation of the population of Lithuania are applied. Guaranteed
interest rate is applied according to agreements but no more than 3.5%.
According to the profit (surplus) sharing rules, contracts of the endowment, pure endowment, pension and scholarship insurance,
pension annuities insurance participates in the profit (surplus) sharing of the insurer. The insurers profit share calculated for the
insurance agreement is not paid at once but increases the claims in case of death or/and survival till the end of insurance period,
also the surrender values are increased respectively. The profit (surplus) calculated for insurance product, is ascribed to the
mathematical technical provision. For endowment contract with guaranteed interest insurer’s profit part generated from investing
capital accrued under these insurance contracts, can be distributed. Accrued capital of insurance contract is increased by insurer’s
profit part attributable to the insurance contract.
d)Technical provision for unit-linked life insurance policies
Technical provision for unit-linked life insurance policies is calculated using retrospective method. Technical provision is calculated
by adding invested premiums less charges applied to the policy holder to cover expenses and the risk assumed. The technical
provision is expressed in investment units which are reprised in accordance with changes in market values of related investments.
Insurance contracts
Bank’s subsidiary SB Draudimas (the company) is engaged in life insurance activities and offers various insurance contracts, main
categories of which include:
a)Long-term insurance contracts with fixed and guaranteed terms
These contracts insure events associated with human life (for example death or survival) over a long period. Premiums are
recognized as revenue when they become payable by the contract holder. Premiums are presented before deduction of
commission.
Benefits are recorded as expenses when they are incurred. Expenses related to the Insurance activities for claims incurred are
recognized as an expense in the period in which they are paid.
A liability for contractual benefits that are expected to be incurred in the future is recorded when the premiums are recognized. Life
insurance mathematical provision for these insurance contracts is calculated as described in accounting policies above.
The liabilities are recalculated at each balance sheet date using the assumptions established at inception of the contract.
Acquisition costs include costs incurred in concluding insurance contracts. These costs include the salaries of employees working
directly on insurance contracts, related fees, commissions, advertising and other related costs.
b)Long-term insurance contracts without fixed terms – unit-linked
These contracts insure human life events (for example death or survival) over a long duration. The company does not unbundle
deposit component separately from insurance component as:
•deposit element is not clearly identifiable from the terms of the contract;
•contracts of this kind are a single product, regulated as insurance business by insurance supervisory authority and should
be treated in a similar way for financial reporting;
•the information about gross premium inflows is considered to be important as an aid to economic decisions.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
20
ACCOUNTING POLICIES (CONTINUED)
Expenses related to Long-term insurance contract without fixed terms – unit linked such as death benefits, injuries are recognized
in the period in which they are paid.
Commission fees for Long-term insurance contract without fixed terms are accounted for as deferred acquisition costs. These
deferred acquisition costs are recognized as an expense during the first three years from the effective date of the insurance
contract in the following proportions: 1 year - 34%, 2 years - 33%, 3 years - 33%.
c)Liability adequacy test
At each balance sheet date, liability adequacy tests are performed to ensure the adequacy of the contract liabilities net of related
deferred acquisition costs. In performing these tests, current best estimates of future contractual cash flows and claims handling
expenses, as well as investment income from the assets backing such liabilities, are used. Any deficiency is immediately charged
to profit or loss initially by writing off deferred acquisition costs and by subsequently establishing a provision for losses arising from
liability adequacy tests (the unexpired risk provision).
As mentioned above, long-term insurance contracts with fixed terms are measured based on assumptions set out at the inception
of the contract. When the liability adequacy test requires the adoption of new best estimate assumptions, such assumptions
(without margin for adverse deviation) are used for the subsequent measurement of these liabilities.
Any deferred acquisition costs written off as a result of this test cannot subsequently be reinstated.
For the years ended 31 December 2021 and 2020 the liability adequacy test and the changes were as follows:
Technical
provisions
Deferred acquisition
cost
Best estimate of future c ash flows
Excess of technical
provisions
At 31 December 2020
36,275
1,244
28,092
6,939
Change for the period
5,134
444
2,757
1,933
At 31 December 2021
41,409
1,688
30,849
8,872
Dividends
Dividends on the Bank’s shares are recorded in equity in the period in which they are declared.
Employee benefits
a)Social security contributions
The Group companies pay social security contributions to the state Social Security Fund (the Fund) on behalf of their employees
based on the defined contribution plan in accordance with the local legal requirements. A defined contribution plan is a plan under
which the Group pays fixed contributions into the Fund and will have no legal or constructive obligations to pay further contributions
if the Fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior period.
The social security contributions are recognised as an expense on an accrual basis and are included within salaries and related
expenses. Social security contributions each year are allocated by the Fund for pension, health, sickness, maternity and
unemployment payments.
b)Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits
when it can no longer withdraw the offer of those benefits; or when recognises costs for a restructuring that involves the payment of
termination benefits. Benefits falling due more than 12 months after balance sheet date are discounted to present value.
Termination benefits are included within salaries and related expenses in the income statement and within other liabilities in the
statement of financial position.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
21
ACCOUNTING POLICIES (CONTINUED)
Segment information
Operating segments are reported in accordance with the information analysed by the Executive Board (the chief operating decision-
maker) of the Group, which is responsible for allocating resources to the reportable segments and assesses its performance.
The Group has four main business segments:
•Traditional banking operations and lending – includes traditional retail and corporate banking operations such as issuing loans
and providing banking services to the customers and finance, lease and consumer financing services provided to customers of
the Group (includes financial information of the Bank allocated to this segment and financial information of Šiaulių Banko
Lizingas UAB and SB Lizingas UAB);
•Treasury – includes banking treasury operations such as managing securities and liquidity portfolio, currency exchange etc.
(includes financial information of the Bank allocated to this segment);
•Non-core banking activities - includes other banking operations not included in traditional lending and treasury segments such
as lending to subsidiaries (except for lending to leasing and consumer financing subsidiaries), revenues/expenses related to
investment in subsidiaries (dividends, impairment of investment in subsidiaries), engagement in one-off projects, managing
problem loans (includes financial information of the Bank allocated to this segment);
•Other activities – includes other activities performed by Group companies not included in previous segments – i.e. real estate
operations, life insurance, investment management (includes financial information of the subsiaries not mentioned above).
As the Group’s segment operations, except for real estate development are all financial with a majority of revenues deriving from
interest and the Group Executive Board relies primarily on net interest revenue to assess the performance of the segment, the total
interest income and expense for all reportable segments is presented on a net basis. Also all other main items of the income statement
are analysed by the management of the Group on segment basis therefore they are presented in the segment reporting.
Transactions between the business segments are carried out at arm’s length. The revenue from external parties reported to the Group
Executive Board is measured in a manner consistent with that in the consolidated income statement. Funds are ordinarily allocated
between segments, resulting in funding cost transfers disclosed in inter-segment net interest income. Interest charged for these funds is
based on the Group’s cost of capital. There are no other material items of income or expense between the business segments.
The Group’s management reporting is based on a measure of profit before taxes comprising net interest income, net fee and
commission income, loan impairment charges, operating expenses, amortization and depreciation expenses and other net income.
As the Group focuses on domestic activities, no geographical concentration is observed in Group‘s decision making. Due to the nature
of Group‘s activities (financial services), capital expenditures are not important in the decision making process therefore not used in the
segment reporting and total assets is more relevant indicator than the fixed asset amount.
Fiduciary activities
Assets and income arising thereon together with related undertakings to return such assets to customers are excluded from these
financial statements where the Group acts in a fiduciary capacity such as nominee, trustee or agent.
Fair value of assets and liabilities
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Financial guarantee contracts, letters of credit and undrawn loan commitments
Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial
guarantees are given to banks, financial institutions and other bodies on behalf of customers to secure loans, overdrafts and other
banking facilities.
Financial guarantees are initially recognised in the financial statements at fair value on the date the guarantee was given. Subsequent
to initial recognition, the Bank’s liabilities under such guarantees are measured at the higher of the amount of loss allowance and the
premium received on initial recognition less income recognized in accordance with principles of IFRS 15.
Undrawn loan commitments and letters of credits are commitments under which, over the duration of the commitment, the Bank is
required to provide a loan with pre-specified terms to the customer.
These contracts are in the scope of the ECL impairment recognition requirements.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
22
ACCOUNTING POLICIES (CONTINUED)
Share issue costs
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally
through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less
costs to sell.
Investment properties
Properties that are held for long-term rental yields or for capital appreciation or both, and that are not occupied by the entities in the
consolidated group, are classified as investment properties. Investment properties comprise buildings for commercial activities and land
plots for undetermined future use.
Some properties may be partially occupied by the Group, with the remainder being held for rental income or capital appreciation. If that
part of the property occupied by the Group can be sold separately, the Group accounts for the portions separately. The portion that is
owner-occupied is accounted for under IAS 16, and the portion that is held for rental income or capital appreciation or both is treated as
investment property under IAS 40. When the portions cannot be sold separately, the whole property is treated as investment property
only if an insignificant portion is owner-occupied. The Group considers the owner-occupied portion as insignificant when the property is
more than 95% held to earn rental income or capital appreciation. In order to determine the percentage of the portions, the Group uses
the size of the property measured in square meters.
Recognition of investment properties takes place only when it is probable that the future economic benefits that are associated with the
investment property will flow to the entity and the cost can be measured reliably. This is usually the day when all risks are transferred.
Investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing
parts of an existing investment property at the time the cost has incurred if the recognition criteria are met; and excludes the costs of
day-to-day servicing of an investment property. Subsequent to initial recognition, investment properties are measured at cost less less
accumulated depreciation. Depreciation is provided on a straight-line basis to write off proportionally the cost of each asset over its
estimated useful life . All other repairs and maintenance costs are charged to the income statement during the financial period in which
they are incurred.
In addition, investment properties are tested for impairment. These valuations are performed annually by external or internal appraisers.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently
remeasured at their fair value. Fair values are obtained from quoted market prices in active markets (for example, for exchange-traded
options), including recent market transactions, and valuation techniques (for example for non-traded options), including discounted cash
flow models and options pricing models, as appropriate. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative. All derivative financial instruments are classified as held for trading.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
23
FINANCIAL RISK MANAGEMENT
Strategy in using financial instruments
The Bank’s and the Group’s activities are principally related to the use of financial instruments. The Group accepts deposits from
customers and borrows from other financial institutions at both fixed and floating rates and for various periods and seeks to earn above
average interest margins by investing these funds in high quality assets. The Group seeks to increase these margins by consolidating
short-term funds and lending for longer periods at higher rates whilst maintaining sufficient liquidity to meet all claims that might fall due.
Strategic decisions related to financing and investing activities of the Bank and the Group is made by the Board of the Bank. Operating
financing and investment decisions are made on division level. Divisions of the Group are presented in Segment information. Decisions
on risk management are made by the Risk Management Committee of the Bank.
The Bank and the Group also seeks to raise its interest margins by obtaining above average margins, net of provisions, through lending
to commercial and retail borrowers with a range of credit standings. Such exposures involve not just on-balance sheet loans and
advances but the Group also enters into guarantees and other commitments such as letters of credit and other guarantees.
The Group analyses, evaluates, accepts and manages the risk or combination of risks it is exposed to. Risk management at the Group
aims at ensuring a sufficient return on equity following the conservative risk management policy. While implementing an advanced risk
management policy the Group focuses not only on minimising potential risk but also on improving pricing and achieving efficient capital
allocation.
The Risk Management Policy approved by the Council of the Bank as well as by the procedures to manage different types of risks
prepared on its basis ensures the integrity of the risk management process in the Group.
The purpose of risk management policy is to define the risks as well as their management principles in the Group’s activities. Due to the
fact that various risks experienced by the Group are interdependent their management is centralized. Organization and coordination of
the experienced risk management system is one of the main goals of the Bank’s Risk Management Committee.
The Group reviews its risk management procedures and systems to reflect changes in markets, products and emerging best practice
on regular basis, at least annually.
The Group performs self assessment each year. This process analyses types of risks that could potentially arise from banking activities
and have material impact to the Group. The most important types of risk the Group is exposed to are credit risk, market risk, liquidity
risk, concentration risk, operational risk, IT risk, model risk, compliance risk and ESG risk. Market risk includes currency risk, interest
rate and securities price risk. Other types of risk are considered immaterial by the Group and, therefore, are not assessed.
In order to avoid a conflict of interest the Bank’s subdivisions that implement risk management functions are separated from those
subdivisions the direct activities of which are connected with the up rise of various types of banking risks.
1. Credit risk
Credit risk is defined as the risk for the Group to incur losses due to the Group’s customers’ failure to fulfil their financial obligations
towards the Group. Credit exposures arise principally in lending activities and it is the most significant risk in the Group’s banking
activities.
There is also credit risk in investment activities that arise from debt securities and in the Group’s asset portfolio as well as in the off-
balance sheet financial instruments, such as loan commitments, guarantees and letters of credit.
The Bank regularly reviews its credit risk management policies which include lending policies, credit risk limit control, other credit risk
mitigation measures as well as the internal control and internal audit of credit risk management.
The Bank’s Board has approved the credit risk management policies and procedures which lay down the principles for credit risk
management, establish an acceptable level of credit risk and credit risk’s structure and determine credit risk mitigation measures and
their interaction. This ensures a uniform understanding of the principles for taking on exposure to credit risk and allows achieving
consistency with the nature and complexity of the Bank’s lending policy and the prudential requirements.
The Bank takes risks only in the fields, which are well known to it and where it has long-term experience, trying to avoid excessive risk
in transactions that can have negative influence to the big portion of shareholders’ equity but seeks the sufficient profitability which, in
terms of increasing competition, would ensure the stable Bank’s position in the market and would increase the Bank’s value. In
assessing exposure to credit risk, the Bank adheres to the principle of prudence.
The Bank’s lending policy is focused on small and medium-size business clients, seeking to provide them with the better funding terms
and long-term support, at the same time paying attention to Bank’s potential to grow.
Large entities are defined as entities employing more than 250 employees. Small and medium size entities are defined as entities
employing less than 250 employees and the balance sheet total does not exceed EUR 43 million or annual turnover does not exceed
EUR 50 million.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
24
New types of activities or products are launched only after the assessment of the arising risk. All lending products and processes at the
Bank are regulated and documented pursuant to the requirements of risk assessment and internal control policy. Special procedures
are established with respect to each lending product.
The aim of the Bank’s credit risk management policy is to ensure that the conflict between interests of staff or structural units is
avoided. With respect to provision of credits to clients, the principle stating that profit should not be earned at the expense of excessive
credit risk is observed.
The Bank’s credit risk management policy is based on the best practice in risk management of other banks. Therefore, the Bank’s
employees continuously enhance their knowledge of credit risk management systems of Lithuanian and foreign banks and the results
of their application.
1.1. Credit risk measurement
(a) Loans and receivables
The Bank applies credit risk management measures, which could be divided into two types:
1)Measures that help to avoid decisions to grant unsecured loans;
2)Measures ensuring the effective monitoring system of the Bank’s asset quality.
Measures that help to avoid decisions to grant unwarrantably risky credits include:
1)Multi-stage decision-making and its approval system;
2)Risk allocation among structural levels – limit establishment;
3)Security measures for credit repayment (collateral).
Multi-stage decision-making and its approval system has an aim not to make one-man decisions regarding credit granting by authorized
persons but to make them be discussed by the collegial bodies of the Bank and, as the case may be, by the Bank’s Loan Committee,
the Bank’s Board or Council. There are certain limits to authorized persons established regarding credit granting implementation as well
as approval limits to collegial bodies. Limit establishment depends on the authorized persons’ qualification, experience and the
effectiveness of their managed branches; while in the Branch Committees and the Bank Loan Committee the attention is paid to the
Committee members’ qualification, experience and economic activity of the region, where the branch is located, the quality of loan
portfolio and other factors.
It is very important to precisely analyse all the information about the customer before granting the credit. The goal of credit analysis is to
do the best in evaluating the customer’s status and prospects in the field where he/she provides his/her goods or services. The
repayment of credits granted by the Bank must be enough secure in order to minimize possible credit repayment risks. A security
measure has to be chosen in accordance with the credit type. Providing credit first of all the Bank analyses the borrower’s financial
capacity and credit repayment possibilities from the borrower’s cash flows.
Credit administration and constant credit monitoring is the main principle in the Bank’s security and reliability maintenance. The proper
credit administration includes the timely updating of the borrower’s credit file, providing with the latest financial information, the timely
introduction of latest financial information to the database and preparation of the various documents and their amendments.
The Bank’s Credit Risk Department collects and, if necessary, provides to responsible managerial personnel information on external
conditions, the growth of the credit portfolio and fulfilment of targeted profit, expenses associated with risks, the largest amounts due
from clients, distribution of credits by the type of economic activity, repayment terms past due, the largest clients with default
possibilities, analysis of the credit portfolio by risk groups, changes in risk groups over a certain time period.
The Bank establishes and implements the procedures, improves information systems for monitoring separate credits as well as loan
portfolio. These procedures include the criteria for early indication of potentially impaired loans and other transactions.
(b) Debt securities
Credit risk exposures with respect to debt securities are managed by carrying out counterparty analysis when decision for acquisition of
securities is made. The concentration risk together with lending exposure arising from debt securities portfolio is analysed and
monitored on a regular basis by the Risk Management Committee of the Bank.
(c) Credit-related commitments
Other credit-related commitments assumed by the Group include guarantees, letters of documentary credit, commitments to grant a
credit which expose the Group to the same credit risk as the loans do. The key aim of these instruments is to ensure that funds are
available to a customer as required. The above guarantees and letters of documentary credit are usually collateralised by clients’ funds
in the Bank accounts. With regards to commitments to grant credit the Bank is exposed to loss equal to the unused commitment
amount.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
25
FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Concentrations
The Group manages, limits and controls concentration of credit risk – in particular, to individual counterparties and groups of the
associated counterparties as well as to economic sectors.
In addition to the supervisory requirements to limit the exposures to a single borrower and large exposures, the Group also sets
exposure requirement, which to a single borrower may not exceed 15 percent of the Bank’s capital. The Bank’s Council must approve
the higher limits. Prudential maximum exposure requirement to a single borrower is 25 percent. Concentration of credit risk of the Bank
is disclosed in Section 1.8. of Financial Risk Management disclosure.
The Group also sets limits to industry segments, i.e. a possible concentration in certain industries at the Group’s level is restricted by
the internal lending limits. The percentage and volume of lending limits are set for individual industries to ensure that the Group is not
overly exposed to any particular economic sector in the country.
The geographical concentration risk is not recognised in the Group’s business since the principle of focusing on domestic customers is
followed.
Some other specific control and mitigation measures are outlined below.
b) Collateral
The Group mitigates credit risk by taking security for loans granted. The types of collateral considered by the Group as the most
acceptable for loans and advances are the following:
•Real estate (mainly residential properties, commercial and industrial real estate);
•Business assets (equipment, inventory, transport vehicles);
•Property rights over financial instruments (debt securities, equities);
•Third party guarantees.
Long-term financing and lending to corporate entities are generally secured; revolving facilities and consumer loans to private
individuals are generally unsecured. In order to minimize the credit loss as the impairment indicators for the relevant individual loans
and advances are noticed the Group seeks for additional collateral from the counterparty.
While calculating a decrease in value for the loan the repayment of which is secured by the collateral, a cash flow from the security
measure is also taken into consideration when determining the LGD factor. If several loans are insured with the same security measure
(collateral), such security measure (collateral) is allocated according to rank of the pledge.
Debt securities, treasury and other eligible bills are generally unsecured.
For finance lease receivables the lender remains the owner of the leased object. Therefore, in case of customer’s default the lender is
able to gain control on the risk mitigation measures and realize them in rather short period.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
26
FINANCIAL RISK MANAGEMENT (CONTINUED)
1.3. Impairment and provisioning policies
a) ECL model used by the Group
Upon assessing impairment losses on loans, due to banks, debt securities at amortized cost and at fair value through other
comprehensive income and other assets the Group follows the requirements expected credit loss (ECL) model prescribed in IFRS 9
Financial Instruments. The Group and the Bank carries out valuation of assets on a monthly basis, based on valuation policies
approved by the Board of the Bank.
The ECL is measured by the formula:
PD x LGD x EAD = ECL
Where:
PD – probability of default. It represents the likelihood of a borrower on defaulting on its financial obligation;
LGD – loss given default. It represents the extent of loss the Group is likely to incur in case the borrower defaults;
EAD – exposure at default. It represents expected exposure at the time of the default.
The financial assets are grouped into 3 stages:
1)Stage 1 financial assets – no significant increase in credit risk is observed since initial recognition. The Group uses low credit
risk exemption and assigns all of the exposures with external investment grade credit rating or exposures with Standard
internal credit rating to Stage 1. 12 month PDs apply to Stage 1 exposures;
2)Stage 2 financial assets – significant increase in credit risk is observed since initial recognition. The Group uses multiple
criteria to assess whether the credit risk has increased. Main criteria include: credit rating decrease (external credit rating
decrease by >=3 notches; internal credit rating decrease by 1 notch), payment delays (>30 days past due financial assets are
classified to Stage 2 unless there is observable evidence indicating otherwise), other observable criteria (restructuring,
forbearance, inclusion in Watch List, other qualititative factors showing increased credit risk). Lifetime PDs apply to Stage 2
exposures;
3)Stage 3 financial assets – credit-impaired financial assets. Main criteria for inclusion the asset in Stage 3 include: bankruptcy
of the customer; termination of the contract; payment delay >90 days; non-performing exposure status by regulatory rules (i.e.
the exposure is unlikely to be repaid in full without collateral realisation (irrespective of any past-due amount or of the number
of days past-due)); other observable criteria. For Stage 3 exposures, the PD ratio is always equal to 1.
In case observable evidence is available, Group’s employees responsible for impairment calculations can rank certain exposures to
better or worse stage.
The exposure ceases to be Stage 3 when it no longer meets the criteria for the consecutive period of at least 3 months. It should be
noted that some of the regulatory non-performing exposure criteria have their own exit periods, therefore the period for an exposure to
be classified out of Stage 3 may actually be longer.
The Group calculates its own PDs for loans to customers, finance lease receivables and other assets and uses PDs published by the
rating agencies for debt securities and due to banks.
PDs for loans to customers and finance lease receivables are calculated using the historical data of Group’s own lending portfolio. Full
approach is applied for finance lease receivables as financial leases are part of Group’s main activities. For this purpose, the Group
uses migration matrices for the exposures grouped by the economic sector. The Group uses PDs published by rating agencies for debt
securities and due from banks. For other financial assets, a simplified model derived from Group’s lending data is used.
For loans to customers and finance lease receivables, LGDs are estimated by the Group using the value of collateral available for each
exposure individually and discounting by certain ratios over certain period of time. Ratios and recovery periods depend on the type of
collateral and are derived from Group’s own recovery experience. For consumer financing exposures, the LGDs are estimated on a
exposure group level using the ultimate recovery rate historical data. For debt securities and due from banks, LGDs from rating
agencies are used.
For lending portfolio, Stage 1 EAD represents the expected exposure value over 12 month period and assumptions on the expected
use of the off-balance sheet credit commitments; Stage 2 EAD represents the expected exposure value over the term of the loan and
assumptions on the expected use of the off-balance sheet credit commitments. Stage 3 EAD is estimated as the total balance and off-
balance sheet exposure. For debt securities, due from banks and other assets, gross exposure value is used as EAD estimate.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
27
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group’s PD estimates incorporate forward-looking information. The Group transfers its historical (“through the cycle”) data to economic-
situation specific (“point-in-time”) data by using models based on the expected economic development scenarios. The economic
variables and their associated impact on the PD vary by financial instrument. The impact of economic variables on PD has been
determined by performing statistical regression analysis. Expert judgement is also applied in the process.
To include the impact of economic variables, the Group uses 3 economic scenarios (base case, optimistic, pessimistic) that are based
on the forecasts published by the institutions that publish economic forecasts (i.e. Bank of Lithuania, Ministry of Finance of Lithuania,
etc.) and derives a single scenario based on the probabilities assigned to these scenarios. These probabilities are calibrated by expert
judgement of Group’s employees.
The approach to scenario calibration was changed during 2021 – previously, the derivative scenario was composed out of 4 scenarios
(base case, optimistic, pessimistic and stressed) and was calibrated aiming so that the derivative scenario would align to the base case
forecasts published by the institutions. In approach used in 2021, base case scenario for GDP, inflation, unemployment rate and wage
changes are align to the base case forecasts published by the institutions and optimistic and pessimistic scenarios as well as scenario
probabilities are calibrated by expert judgement of Group’s employees.
The most significant assumptions used for the ECL estimates as at 31 December 2021 are presented in the tables below:
GDP
growth
Change in
agricultural
production
Unemployment
Inflation
Change in
manufactur
ing output
Change in
housing
prices
Change in
freight
Change in
salaries
At 31 December 2021:
Base scenario
3.60 %
-1.80 %
6.7 %
5.10 %
17.40 %
2.12 %
7.55 %
8.20 %
Pessimistic scenario
1.10 %
-5.98 %
8.00 %
2.60 %
-1.80 %
-15.20 %
-3.30 %
4.00 %
Optimistic scenario
3.80 %
9.10 %
6.40 %
7.60 %
17.40 %
9.60 %
12.20 %
8.20 %
Scenario probabilities and weighted average GDP growth:
2022
2023
2024
2025
2026
At 31 December 2021:
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
Base scenario
3.60 %
50 %
3.50 %
50 %
3.50 %
50 %
2.40 %
50 %
2.40 %
50 %
Pessimistic scenario
1.10 %
45 %
1.10 %
45 %
1.10 %
45 %
1.10 %
45 %
1.10 %
45 %
Optimistic scenario
3.80 %
5 %
3.80 %
5 %
3.80 %
5 %
3.80 %
5 %
3.80 %
5 %
Weighted average GDP
growth
2.49%
2.44%
2.44%
1.89%
1.89%
The most significant assumptions used for the ECL estimates as at 31 December 2020 are presented in the tables below:
GDP
growth
Change in
agricultural
production
Unemployment
Inflation
Change in
manufactur
ing output
Change in
housing
prices
Change in
freight
Change in
salaries
At 31 December 2020:
Base scenario
-4.00%
1.20%
8.5%-9.3%
-0.06%-0.10%
0.60%
7.00%
-4.12%
4.00%
Pessimistic scenario
-6.60%
-5.98%
17.40%-17.83%
-0.28%-0.96%
-2.80%
-15.20%
-8.34%
0.05%
Optimistic scenario
5.88%
9.10%
6.18%-6.20%
-0.08%-1.18%
10.90%
9.60%
12.20%
4.70%
Stressed scenario
-15.30%
-16.30%
18.20%
-0.90%-3.00%
-10.30%
-31.10%
-13.10%
-3.90%
Scenario probabilities and weighted average GDP growth:
2021
2022
2023
2024
2025
At 31 December 2020:
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
BVP
Tikimybė
Base scenario
-4.00%
21%
-4.00%
19%
-4.00%
-4.00 %
-4.00 %
21 %
-4.00 %
22 %
Pessimistic scenario
-6.60%
10%
-6.60%
5%
-6.60%
-6.60 %
-6.60 %
5 %
-6.60 %
5 %
Optimistic scenario
5.88%
66%
5.88%
75%
5.88%
5.88 %
5.88 %
73 %
5.88 %
72 %
Stressed scenario
-15.30%
3%
-15.30%
1%
-15.30%
-15.30 %
-15.30 %
1 %
-15.30 %
1 %
Weighted average GDP
growth
1.9%
3.2%
3.1%
3.0%
2.9%
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
28
FINANCIAL RISK MANAGEMENT (CONTINUED)
The assumptions underlying ECL calculations are subject to frequent review, the models used in ECL calculation are back tested
against the actual performance data. In case of need, changes are made to the models. In 2021, the scenario composition approach
was changed (previously, probabilities were assigned to 4 scenarios in a way that the resulting scenario would match the dominant
base case forecast by the institutions; currently, scenarios based on those published by the institutions are assigned probabilities by
Group’s employees judgement). EAD calculation models were revised in 2021 (likely usage off-balance sheet commitments was added
to Stage 1 EAD calculation, Stage 2 EAD calculation was modified to include the average gross value of the loan through its lifetime
instead of gross value at the moment of calculation; forward looking information inclusion in PD calculation models principles were
revised; LGD models were revised to include forward looking information on the recovery prices, estimated recovery costs and a
possibility of unsuccessful recovery. In 2020, as a response to the rapidly changing situation, the frequency of model parameters review
was changed from annual to quarterly. In 2020, changes were made to the staging criteria (aligning with the supervisory guidelines,
additional scenarios for assignment of loans to Stage 2 and Stage 3 were introduced: for Stage 2, additional scenarios including the
inclusion in Watch List and loan modifications due to financial difficulties of the borrower were included; for Stage 3, additional
scenarios for assessment of unlikeliness to pay were introduced).
b) Impairment loss sensitivity
The most significant assumptions affected the estimated ECL allowance are GDP, given the significant impact on the borrowers
performance; real estate price level, given the significant impact on the collateral values and consumer financing portfolio recovery
rates, given the significant impact on the ultimate recoveries of the unsecured borrowings. The table below provides an sensitivity
analysis of the above factors.
2021
2020
Group
Bank
Group
Bank
Scenario 1: GDP growth
increases by 0.5 p.p.
ECL decreases by EUR 323
thousand, equity increases
by EUR 258 thousand
ECL decreases by EUR 323
thousand, equity increases
by EUR 258 thousand
ECL decreases by EUR 396
thousand, equity increases
by EUR 317 thousand
ECL decreases by EUR 349
thousand, equity increases
by EUR 279 thousand
Scenario 2: GDP growth
decreases by 0.5 p.p.
ECL increases by EUR 323
thousand, equity decreases
by 258 thousand
ECL increases by EUR 323
thousand, equity decreases
by EUR 258 thousand
ECL increases by EUR 552
thousand, equity decreases
by 442 thousand
ECL increases by EUR 520
thousand, equity decreases
by EUR 416 thousand
Scenario 3: real estate prices
increase by 5%
ECL decreases by EUR 776
thousand, equity increases
by EUR 621 thousand
ECL decreases by EUR 776
thousand, equity increases
by EUR 621 thousand
ECL decreases by EUR
2,312 thousand, equity
increases by EUR 1,850
thousand
ECL decreases by EUR
2,312 thousand, equity
increases by EUR 1,850
thousand
Scenario 4: real estate prices
decrease by 5%
ECL increases by EUR 679
thousand, equity decreases
by EUR 543 thousand
ECL increases by EUR 679
thousand, equity decreases
by EUR 543 thousand
ECL increases by EUR
2,579 thousand, equity
decreases by EUR 2,063
thousand
ECL increases by EUR
2,579 thousand, equity
decreases by EUR 2,063
thousand
Scenario 5: consumer
financing portfolio recoveries
increase by 5 p.p.
ECL decreases by EUR 776
thousand, equity increases
by EUR 621 thousand
ECL decreases by EUR 14
thousand, equity increases
by EUR 11 thousand
ECL decreases by EUR 834
thousand, equity increases
by EUR 667 thousand
ECL decreases by EUR 49
thousand, equity increases
by EUR 39 thousand
Scenario 6: consumer
financing portfolio recoveries
decrease by 5 p.p.
ECL increases by EUR 776
thousand, equity decreases
by EUR 621 thousand
ECL increases by EUR 14
thousand, equity decreases
by EUR 11 thousand
ECL increases by EUR 740
thousand, equity decreases
by EUR 592 thousand
ECL increases by EUR 42
thousand, equity decreases
by EUR 34 thousand
c) write-offs
The accumulated write-offs, including any amount constituting legal claims to the borrowers even if those amounts were never
recognized on the balance sheet (the most common example of such cases is the difference between gross value and acquisition value
of credit-impaired loans acquired by the Group) is presented in the table below:
2021
2020
Group
Bank
Group
Bank
Total accumulated write-offs subject to enforcement
81,589
81,111
99,798
98,697
of which: amounts written-off during the year subject to enforcement
3,426
3,220
825
642
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
29
FINANCIAL RISK MANAGEMENT (CONTINUED)
1.4. Maximum exposure to credit risk before collateral held or other credit enhancements
2021
2020
Group
Bank
Group
Bank
Cash equivalents:
898,862
897,988
363,088
362,251
Balances in bank correspondent accounts
31,068
30,194
13,107
12,270
Placements with Central Bank
867,794
867,794
349,981
349,981
Loans and advances to banks
1,196
1,196
1,598
1,598
Loans and advances to customers:
1,908,681
1,889,629
1,605,663
1,592,363
Loans and advances to financial institutions
6,947
124,816
4,747
107,442
Loans to individuals (Retail):
690,008
553,087
545,188
424,419
Consumer loans
143,462
6,541
133,517
12,748
Mortgages
455,126
455,126
297,140
297,140
Other (reverse repurchase agreements, other loans backed by
securities, other)
91,420
91,420
114,531
114,531
Loans to business customers:
1,211,726
1,211,726
1,055,728
1,060,502
Large corporates
127,772
127,772
109,695
109,695
SME
947,985
947,985
829,759
834,533
Central and local authorities, administrative bodies and other
135,969
135,969
116,274
116,274
Finance lease receivables
195,174
194,909
155,457
155,290
Individuals
26,630
26,630
26,308
26,308
Business customers
168,544
168,279
129,149
128,982
Securities in the trading book:
Debt securities in the trading book
20,454
14,622
14,540
8,844
Derivative financial instruments
2,121
2,121
445
445
Investment securities at fair value
Debt securities at fair value through other comprehensive income
78,126
78,126
30,429
30,429
Investment securities at amortized cost
Debt securities at amortized cost
705,398
692,226
709,454
697,136
Other financial assets
16,398
16,271
4,695
4,278
Credit risk exposures relating to off –balance sheet items are as follows:
Financial guarantees
52,931
52,992
48,790
48,851
Letters of credit
1,308
1,308
3,522
3,522
Loan commitments and other credit related liabilities
397,225
407,440
281,765
300,768
At 31 December
4,277,874
4,248,828
3,219,446
3,205,775
The table above represents a worst case scenario of credit risk exposure at 31 December 2021 and 2020, without taking into account
any collateral held or other credit enhancements attached. For on-balance sheet assets, the exposures presented above are net
carrying amount as reported in the balance sheet.
1.5. Loans to customers
Loans to customers are summarised as follows:
2021
2020
Group
Bank
Group
Bank
Gross loans to customers
1,944,377
1,917,766
1,648,446
1,630,184
Allowance for loan impairment
(35,696)
(28,137)
(42,783)
(37,821)
Net loans to customers
1,908,681
1,889,629
1,605,663
1,592,363
During the year ended 31 December 2021, the Group’s gross loans and advances increased by 18%. The Group’s total impairment
provision for loans and advances amounts to EUR 35.696 thousand (2020: EUR 42.783 thousand) and it accounts for 1.84% of the
respective portfolio (2020: 2.60%).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
30
FINANCIAL RISK MANAGEMENT (CONTINUED)
a) Credit grades
The Group and the Bank examines the potential borrower’s financial performance before issuing a loan and monitors any development
in financial performance during the whole loan service period. The Group and the Bank evaluates the borrower’s financial performance
at least annually. Consumer loans to individuals are assessed based on application scorings when decision is made. After they are
granted they are monitored based on their past due status.
The Bank uses internal grade system that has 11 internal grades (1 – best, 11 – worst). During the first quarter of 2021, internal credit
rating procedures were enhanced: an updated legal customer financial status methodology was implemented. Main change in the
methodology – increased number of grades: there were 5 internal grades under previous methodology, updated methodology has 11
grades. This allows for more granular assessment of borrowers. Clear links between internal credit grades and credit stages have been
established – exposures assigned to internal credit rating grades 7 – 9 are in credit stage 2, exposures assigned internal grades 10 –
11 are in credit stage 3.
Group loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
1,367,332
42,311
1,118
1,410,761
921,688
86,434
4,455
1,012,577
Watch
173,164
74,411
476
248,051
284,083
142,037
50,774
476,894
Substandard
101,949
118,552
5,088
225,589
76,797
23,379
17,230
117,406
Problem
6
335
59,636
59,977
14
-
41,555
41,569
Gross
1,642,451
235,609
66,318
1,944,378
1,282,582
251,850
114,014
1,648,446
Less: allowance for impairment
(12,468)
(3,911)
(19,318)
(35,697)
(7,574)
(6,989)
(28,220)
(42,783)
Net
1,629,983
231,698
47,000
1,908,681
1,275,008
244,861
85,794
1,605,663
Bank loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
1,354,300
159,981
1,034
1,515,315
1,007,658
86,057
4,328
1,098,043
Watch
148,178
73,902
177
222,257
259,774
141,358
55,205
456,337
Substandard
3,190
115,762
1,286
120,238
526
20,155
13,577
34,258
Problem
6
335
59,615
59,956
14
-
41,532
41,546
Gross
1,505,674
349,980
62,112
1,917,766
1,267,972
247,570
114,642
1,630,184
Less: allowance for impairment
(8,275)
(2,659)
(17,204)
(28,138)
(3,826)
(5,435)
(28,560)
(37,821)
Net
1,497,399
347,321
44,908
1,889,628
1,264,146
242,135
86,082
1,592,363
Group loans to individuals (retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
550,733
6,044
1,118
557,895
426,232
5,562
1,037
432,831
Watch
28,711
2,355
476
31,542
28,799
4,414
450
33,663
Substandard
99,364
4,721
5,088
109,173
76,537
4,466
6,908
87,911
Problem
-
-
1,217
1,217
-
-
1,842
1,842
Gross
678,808
13,120
7,899
699,827
531,568
14,442
10,237
556,247
Less: allowance for impairment
(5,575)
(1,357)
(2,887)
(9,819)
(5,690)
(1,847)
(3,522)
(11,059)
Net
673,233
11,763
5,012
690,008
525,878
12,595
6,715
545,188
Bank loans to individuals (retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
537,700
5,846
1,034
544,580
409,463
5,185
909
415,557
Watch
3,725
1,846
177
5,748
2,284
3,735
171
6,190
Substandard
605
1,931
1,286
3,822
266
1,242
2,790
4,298
Problem
-
-
1,196
1,196
-
-
1,820
1,820
Gross
542,030
9,623
3,693
555,346
412,013
10,162
5,690
427,865
Less: allowance for impairment
(1,382)
(105)
(773)
(2,260)
(1,961)
(294)
(1,191)
(3,446)
Net
540,648
9,518
2,920
553,086
410,052
9,868
4,499
424,419
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
31
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to individuals (retail): Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
19,525
375
125
20,025
29,514
654
256
30,424
Watch
24,996
513
299
25,808
26,542
687
279
27,508
Substandard
98,764
2,790
3,809
105,363
76,272
3,224
4,128
83,624
Problem
-
-
71
71
-
-
53
53
Gross
143,285
3,678
4,304
151,267
132,328
4,565
4,716
141,609
Less: allowance for impairment
(4,336)
(1,288)
(2,181)
(7,805)
(4,047)
(1,621)
(2,424)
(8,092)
Net
138,949
2,390
2,123
143,462
128,281
2,944
2,292
133,517
Bank loans to individuals (retail): Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
6,494
176
40
6,710
12,745
277
128
13,150
Watch
10
4
-
14
27
8
-
35
Substandard
6
-
6
12
1
-
10
11
Problem
-
-
71
71
-
-
52
52
Gross
6,510
180
117
6,807
12,773
285
190
13,248
Less: allowance for impairment
(143)
(36)
(88)
(267)
(318)
(68)
(114)
(500)
Net
6,367
144
29
6,540
12,455
217
76
12,748
Group loans to individuals (retail): Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
443,015
5,016
819
448,850
286,074
4,518
641
291,233
Watch
1,550
1,449
163
3,162
1,457
1,165
129
2,751
Substandard
527
1,760
781
3,068
218
1,240
1,882
3,340
Problem
-
-
996
996
-
-
1,240
1,240
Gross
445,092
8,225
2,759
456,076
287,749
6,923
3,892
298,564
Less: allowance for impairment
(448)
(59)
(443)
(950)
(578)
(181)
(665)
(1,424)
Net
444,644
8,166
2,316
455,126
287,171
6,742
3,227
297,140
Bank loans to individuals (retail): Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
443,013
5,017
820
448,850
286,074
4,518
641
291,233
Watch
1,550
1,449
163
3,162
1,457
1,165
129
2,751
Substandard
527
1,760
781
3,068
218
1,240
1,882
3,340
Problem
-
-
996
996
-
-
1,240
1,240
Gross
445,090
8,226
2,760
456,076
287,749
6,923
3,892
298,564
Less: allowance for impairment
(448)
(59)
(443)
(950)
(578)
(181)
(665)
(1,424)
Net
444,642
8,167
2,317
455,126
287,171
6,742
3,227
297,140
Group loans to individuals (retail): Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
88,193
653
174
89,020
110,644
390
140
111,174
Watch
2,165
393
14
2,572
800
2,562
42
3,404
Substandard
73
171
498
742
47
2
898
947
Problem
-
-
150
150
-
-
549
549
Gross
90,431
1,217
836
92,484
111,491
2,954
1,629
116,074
Less: allowance for impairment
(791)
(10)
(263)
(1,064)
(1,065)
(45)
(433)
(1,543)
Net
89,640
1,207
573
91,420
110,426
2,909
1,196
114,531
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
32
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank loans to individuals (retail): Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
88,193
653
174
89,020
110,644
390
140
111,174
Watch
2,165
393
14
2,572
800
2,562
42
3,404
Substandard
72
171
499
742
47
2
898
947
Problem
-
-
129
129
-
-
528
528
Gross
90,430
1,217
816
92,463
111,491
2,954
1,608
116,053
Less: allowance for impairment
(791)
(10)
(242)
(1,043)
(1,065)
(45)
(412)
(1,522)
Net
89,639
1,207
574
91,420
110,426
2,909
1,196
114,531
Group loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
3,210
3,819
-
7,029
14
4,827
-
4,841
Watch
-
-
-
-
-
-
-
-
Substandard
-
-
-
-
-
-
-
-
Problem
-
-
-
-
-
-
-
-
Gross
3,210
3,819
-
7,029
14
4,827
-
4,841
Less: allowance for impairment
(64)
(18)
-
(82)
-
(94)
-
(94)
Net
3,146
3,801
-
6,947
14
4,733
-
4,747
Bank loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
3,211
121,687
-
124,898
102,709
4,827
-
107,536
Watch
-
-
-
-
-
-
-
-
Substandard
-
-
-
-
-
-
-
-
Problem
-
-
-
-
-
-
-
-
Gross
3,211
121,687
-
124,898
102,709
4,827
-
107,536
Less: allowance for impairment
(64)
(18)
-
(82)
-
(94)
-
(94)
Net
3,147
121,669
-
124,816
102,709
4,733
-
107,442
Group loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
813,389
32,448
-
845,837
495,442
76,045
3,418
574,905
Watch
144,453
72,056
-
216,509
255,284
137,623
50,324
443,231
Substandard
2,585
113,831
-
116,416
260
18,913
10,322
29,495
Problem
6
335
58,419
58,760
14
-
39,713
39,727
Gross
960,433
218,670
58,419
1,237,522
751,000
232,581
103,777
1,087,358
Less: allowance for impairment
(6,829)
(2,536)
(16,431)
(25,796)
(1,884)
(5,048)
(24,698)
(31,630)
Net
953,604
216,134
41,988
1,211,726
749,116
227,533
79,079
1,055,728
Bank loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
813,389
32,448
-
845,837
495,486
76,045
3,419
574,950
Watch
144,453
72,056
-
216,509
257,490
137,623
55,034
450,147
Substandard
2,585
113,831
-
116,416
260
18,913
10,787
29,960
Problem
6
335
58,419
58,760
14
-
39,712
39,726
Gross
960,433
218,670
58,419
1,237,522
753,250
232,581
108,952
1,094,783
Less: allowance for impairment
(6,829)
(2,536)
(16,431)
(25,796)
(1,865)
(5,047)
(27,369)
(34,281)
Net
953,604
216,134
41,988
1,211,726
751,385
227,534
81,583
1,060,502
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
33
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to business customers: Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
89,073
4,392
-
93,465
55,787
40,158
-
95,945
Watch
(1)
16,987
-
16,986
11,432
2,265
327
14,024
Substandard
2,586
14,365
-
16,951
-
-
1,529
1,529
Problem
-
-
1,925
1,925
-
-
-
-
Gross
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
Less: allowance for impairment
(537)
(140)
(878)
(1,555)
(627)
(885)
(291)
(1,803)
Net
91,121
35,604
1,047
127,772
66,592
41,538
1,565
109,695
Bank loans to business customers: Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
89,073
4,392
-
93,465
55,787
40,158
-
95,945
Watch
(1)
16,987
-
16,986
11,432
2,265
327
14,024
Substandard
2,586
14,365
-
16,951
-
-
1,529
1,529
Problem
-
-
1,925
1,925
-
-
-
-
Gross
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
Less: allowance for impairment
(537)
(140)
(878)
(1,555)
(627)
(885)
(291)
(1,803)
Net
91,121
35,604
1,047
127,772
66,592
41,538
1,565
109,695
Group loans to business customers: SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
592,410
26,465
-
618,875
328,644
35,905
3,418
367,967
Watch
144,359
55,052
-
199,411
240,917
133,798
49,997
424,712
Substandard
(1)
97,371
-
97,370
260
18,838
7,336
26,434
Problem
6
335
55,029
55,370
14
-
39,662
39,676
Gross
736,774
179,223
55,029
971,026
569,835
188,541
100,413
858,789
Less: allowance for impairment
(5,866)
(2,321)
(14,854)
(23,041)
(1,155)
(4,136)
(23,739)
(29,030)
Net
730,908
176,902
40,175
947,985
568,680
184,405
76,674
829,759
Bank loans to business customers: SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
592,410
26,465
-
618,875
328,688
35,905
3,419
368,012
Watch
144,359
55,052
-
199,411
243,123
133,798
54,707
431,628
Substandard
(1)
97,371
-
97,370
260
18,838
7,801
26,899
Problem
6
335
55,029
55,370
14
-
39,661
39,675
Gross
736,774
179,223
55,029
971,026
572,085
188,541
105,588
866,214
Less: allowance for impairment
(5,866)
(2,321)
(14,854)
(23,041)
(1,136)
(4,135)
(26,410)
(31,681)
Net
730,908
176,902
40,175
947,985
570,949
184,406
79,178
834,533
Group loans to business customers: Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
131,906
1,591
-
133,497
111,011
(18)
-
110,993
Watch
95
17
-
112
2,935
1,560
-
4,495
Substandard
-
2,095
-
2,095
-
75
1,457
1,532
Problem
-
-
1,465
1,465
-
-
51
51
Gross
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
Less: allowance for impairment
(426)
(75)
(699)
(1,200)
(102)
(27)
(668)
(797)
Net
131,575
3,628
766
135,969
113,844
1,590
840
116,274
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
34
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank loans to business customers: Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
131,906
1,591
-
133,497
111,011
(18)
-
110,993
Watch
95
17
-
112
2,935
1,560
-
4,495
Substandard
-
2,095
-
2,095
-
75
1,457
1,532
Problem
-
-
1,465
1,465
-
-
51
51
Gross
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
Less: allowance for impairment
(426)
(75)
(699)
(1,200)
(102)
(27)
(668)
(797)
Net
131,575
3,628
766
135,969
113,844
1,590
840
116,274
For analysis of debt securities according to the credit quality see Notes 12 and 15.
b) Payment delays
The tables below provide an analysis of loans and advances to customers by payment delays. The Group considers a loan to be past
due when the following criteria are met: for loans to individuals – overdue amount is higher than the lower of EUR 100 or 1% of total
exposure; for loans to business customers – overdue amount is higher than the lower of EUR 500 or 1% of total exposure.
Group loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
1,598,066
220,436
28,330
1,846,832
1,258,359
241,212
61,509
1,561,080
Past due up to 30 days
43,495
8,966
17,334
69,795
23,914
5,152
6,798
35,864
Past due 31-90 days
888
6,208
2,936
10,032
309
5,486
3,206
9,001
Past due more than 90 days
-
-
17,718
17,718
-
-
42,501
42,501
Gross
1,642,449
235,610
66,318
1,944,377
1,282,582
251,850
114,014
1,648,446
Less: allowance for impairment
(12,467)
(3,911)
(19,318)
(35,696)
(7,574)
(6,989)
(28,220)
(42,783)
Net
1,629,982
231,699
47,000
1,908,681
1,275,008
244,861
85,794
1,605,663
Bank loans to customers
2021
2020
1 stadija
2 stadija
3 stadija
Iš viso
1 stadija
2 stadija
3 stadija
Iš viso
Not past due
1,474,265
338,305
27,006
1,839,576
1,256,602
241,212
65,493
1,563,307
Past due up to 30 days
30,785
8,966
16,557
56,308
11,356
5,152
6,020
22,528
Past due 31-90 days
623
2,710
1,471
4,804
14
1,206
1,732
2,952
Past due more than 90 days
-
-
17,078
17,078
-
-
41,397
41,397
Gross
1,505,673
349,981
62,112
1,917,766
1,267,972
247,570
114,642
1,630,184
Less: allowance for impairment
(8,274)
(2,659)
(17,204)
(28,137)
(3,826)
(5,435)
(28,560)
(37,821)
Net
1,497,399
347,322
44,908
1,889,629
1,264,146
242,135
86,082
1,592,363
Group loans to individuals (retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
650,343
6,797
2,719
659,859
515,928
9,472
4,169
529,569
Past due up to 30 days
27,891
804
1,282
29,977
15,331
123
1,262
16,716
Past due 31-90 days
571
5,521
2,139
8,231
309
4,847
2,014
7,170
Past due more than 90 days
-
-
1,759
1,759
-
-
2,792
2,792
Gross
678,805
13,122
7,899
699,826
531,568
14,442
10,237
556,247
Less: allowance for impairment
(5,574)
(1,357)
(2,887)
(9,818)
(5,690)
(1,847)
(3,522)
(11,059)
Net
673,231
11,765
5,012
690,008
525,878
12,595
6,715
545,188
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
35
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank loans to individuals (retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
526,542
6,797
1,395
534,734
409,226
9,472
2,978
421,676
Past due up to 30 days
15,181
804
505
16,490
2,773
123
484
3,380
Past due 31-90 days
306
2,023
674
3,003
14
567
540
1,121
Past due more than 90 days
-
-
1,119
1,119
-
-
1,688
1,688
Gross
542,029
9,624
3,693
555,346
412,013
10,162
5,690
427,865
Less: allowance for impairment
(1,381)
(105)
(773)
(2,259)
(1,961)
(294)
(1,191)
(3,446)
Net
540,648
9,519
2,920
553,087
410,052
9,868
4,499
424,419
Group loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
3,211
3,818
-
7,029
14
4,827
-
4,841
Past due up to 30 days
-
-
-
-
-
-
-
-
Past due 31-90 days
-
-
-
-
-
-
-
-
Past due more than 90 days
-
-
-
-
-
-
-
-
Gross
3,211
3,818
-
7,029
14
4,827
-
4,841
Less: allowance for impairment
(64)
(18)
-
(82)
-
(94)
-
(94)
Net
3,147
3,800
-
6,947
14
4,733
-
4,747
Bank loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
3,211
121,687
-
124,898
102,709
4,827
-
107,536
Past due up to 30 days
-
-
-
-
-
-
-
-
Past due 31-90 days
-
-
-
-
-
-
-
-
Past due more than 90 days
-
-
-
-
-
-
-
-
Gross
3,211
121,687
-
124,898
102,709
4,827
-
107,536
Less: allowance for impairment
(64)
(18)
-
(82)
-
(94)
-
(94)
Net
3,147
121,669
-
124,816
102,709
4,733
-
107,442
Group loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
944,512
209,821
25,611
1,179,944
742,417
226,913
57,340
1,026,670
Past due up to 30 days
15,604
8,162
16,052
39,818
8,583
5,029
5,536
19,148
Past due 31-90 days
317
687
797
1,801
-
639
1,192
1,831
Past due more than 90 days
-
-
15,959
15,959
-
-
39,709
39,709
Gross
960,433
218,670
58,419
1,237,522
751,000
232,581
103,777
1,087,358
Less: allowance for impairment
(6,829)
(2,536)
(16,431)
(25,796)
(1,884)
(5,048)
(24,698)
(31,630)
Net
953,604
216,134
41,988
1,211,726
749,116
227,533
79,079
1,055,728
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
36
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
944,512
209,821
25,611
1,179,944
744,667
226,913
62,515
1,034,095
Past due up to 30 days
15,604
8,162
16,052
39,818
8,583
5,029
5,536
19,148
Past due 31-90 days
317
687
797
1,801
-
639
1,192
1,831
Past due more than 90 days
-
-
15,959
15,959
-
-
39,709
39,709
Gross
960,433
218,670
58,419
1,237,522
753,250
232,581
108,952
1,094,783
Less: allowance for impairment
(6,829)
(2,536)
(16,431)
(25,796)
(1,865)
(5,047)
(27,369)
(34,281)
Net
953,604
216,134
41,988
1,211,726
751,385
227,534
81,583
1,060,502
c) Stage 3 loans and advances to customers
The breakdown of the gross amount of Stage 3 loans and advances by class, along with the fair value of related collateral held by the
Group and the Bank as security is as follows:
31 December 2021
Group
Bank
Gross
value
Allowance for
impairment
Net value
Fair value
of
collateral
Gross
value
Allowance for
impairment
Net value
Fair value
of
collateral
Loans and advances to financial
institutions
-
-
-
-
-
-
-
-
Loans to individuals (Retail):
7,899
(2,887)
5,012
3,497
3,693
(773)
2,920
3,497
Consumer loans
4,304
(2,181)
2,123
14
117
(88)
29
14
Mortgages
2,759
(443)
2,316
2,687
2,760
(443)
2,317
2,687
Other
836
(263)
573
796
816
(242)
574
796
Loans to business customers:
58,419
(16,431)
41,988
55,130
58,419
(16,431)
41,988
55,130
Large corporates
1,925
(878)
1,047
1,925
1,925
(878)
1,047
1,925
SME
55,029
(14,854)
40,175
51,740
55,029
(14,854)
40,175
51,740
Central and local authorities,
administrative bodies and other
1,465
(699)
766
1,465
1,465
(699)
766
1,465
Total loans to customers
66,318
(19,318)
47,000
58,627
62,112
(17,204)
44,908
58,627
31 December 2020
Group
Bank
Gross
value
Allowance for
impairment
Net value
Fair value
of
collateral
Gross
value
Allowance for
impairment
Net value
Fair value
of
collateral
Loans and advances to financial
institutions
-
-
-
-
-
-
-
-
Loans to individuals (Retail):
10,237
(3,522)
6,715
5,254
5,690
(1,191)
4,499
5,254
Consumer loans
4,716
(2,424)
2,292
32
190
(114)
76
32
Mortgages
3,892
(665)
3,227
3,742
3,892
(665)
3,227
3,742
Other
1,629
(433)
1,196
1,480
1,608
(412)
1,196
1,480
Loans to business customers:
103,777
(24,698)
79,079
103,455
108,952
(27,369)
81,583
103,455
Large corporates
1,856
(291)
1,565
1,856
1,856
(291)
1,565
1,856
SME
100,413
(23,739)
76,674
100,142
105,588
(26,410)
79,178
100,142
Central and local authorities,
administrative bodies and other
1,508
(668)
840
1,457
1,508
(668)
840
1,457
Total loans to customers
114,014
(28,220)
85,794
108,709
114,642
(28,560)
86,082
108,709
Impairment loss by class of financial assets for loans is disclosed in Note 13.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
37
FINANCIAL RISK MANAGEMENT (CONTINUED)
d) Information about loan collateral
The method for collateral valuation is selected by the Group and the Bank based on specifics of collateral and existing market
conditions on the day of valuation. Based on collateral characteristics and the purpose of its valuation the following valuation methods
are used: comparable sales price method or income capitalisation method. Fair values of the collateral are updated regularly in line with
the Bank’s procedures.
If loan is secured by several different types of collateral, priority in their recognition is based on their liquidity. Cash deposits are treated
as having the highest liquidity followed by guarantees, residential real estate and then other real estate. Securities that have no active
market and other assets are treated as having the lowest liquidity.
Unsecured loans also include loans secured by other types of collateral (e.g. future inflow of funds into the borrowers’ Bank accounts
(controlled by the Bank), third party warrantees, bills of exchange, etc.). The total amount of loans to individuals and business
customers secured by the above security measure, but disclosed as unsecured as at 31 December 2021 amounted to EUR 41 million
(2020: EUR 39 million). Totally unsecured loans comprise only consumer loans and loans issued by the Bank to its subsidiaries.
31 December 2021
Group loans to individuals (retail)
Consumer loans
Mortgages
Other
Total
Unsecured loans
151,267
972
81,840
234,079
Loans collateralised by:
-
455,104
10,644
465,748
residential real estate -
-
431,102
6,341
437,443
other real estate -
-
19,128
2,493
21,621
securities -
-
4
-
4
guarantees -
-
4,768
1,773
6,541
cash deposits -
-
102
32
134
other assets -
-
-
5
5
Total
151,267
456,076
92,484
699,827
Group loans to business customers
SME
Large corporates
Financial
institutions
Central and local authorities and
other
Total
Unsecured loans
46,150
5,264
7,029
105,541
163,984
Loans collateralised by:
924,876
124,063
-
31,628
1,080,567
residential real estate -
48,060
248
-
307
48,615
other real estate -
676,807
99,085
-
5,665
781,557
securities -
1,509
-
-
-
1,509
guarantees -
177,744
9,082
-
25,656
212,482
cash deposits -
2,503
-
-
-
2,503
other assets -
18,253
15,648
-
-
33,901
Total
971,026
129,327
7,029
137,169
1,244,551
Bank loans to individuals (retail)
Consumer loans
Mortgages
Other
Total
Unsecured loans
6,807
972
81,818
89,597
Loans collateralised by:
-
455,104
10,645
465,749
residential real estate -
-
431,102
6,341
437,443
other real estate -
-
19,128
2,493
21,621
securities -
-
4
-
4
guarantees -
-
4,768
1,773
6,541
cash deposits -
-
102
33
135
other assets -
-
-
5
5
Total
6,807
456,076
92,463
555,346
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
38
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank loans to business customers
SME
Large corporates
Financial
institutions
Central and local authorities and other
Total
Unsecured loans
46,149
5,264
124,898
105,541
281,852
Loans collateralised by:
924,877
124,063
-
31,628
1,080,568
residential real estate -
48,060
248
-
307
48,615
other real estate -
676,807
99,085
-
5,665
781,557
securities -
1,509
-
-
-
1,509
guarantees -
177,745
9,082
-
25,656
212,483
cash deposits -
2,503
-
-
-
2,503
other assets -
18,253
15,648
-
-
33,901
Total
971,026
129,327
124,898
137,169
1,362,420
31 December 2020
Group loans to individuals (retail)
Consumer loans
Mortgages
Other
Total
Unsecured loans
141,594
23,940
108,045
273,579
Loans collateralised by:
15
274,624
8,029
282,668
residential real estate -
-
260,656
3,821
264,477
other real estate -
-
9,955
3,124
13,079
securities -
-
-
1
1
guarantees -
-
3945
1,028
4,973
cash deposits -
-
67
-
67
other assets -
15
1
55
71
Total
141,609
298,564
116,074
556,247
Group loans to business customers
SME
Large corporates
Financial
institutions
Central and local authorities and other
Total
Unsecured loans
177,601
25,719
4,841
106,575
314,736
Loans collateralised by:
681,188
85,779
-
10,496
777,463
residential real estate -
54,795
79
-
144
55,018
other real estate -
487,984
61,480
-
2,289
551,753
securities -
1580
162
-
-
1,742
guarantees -
113,740
6,191
-
8063
127,994
cash deposits -
1,612
-
-
-
1,612
other assets -
21,477
17,867
-
-
39,344
Total
858,789
111,498
4,841
117,071
1,092,199
Bank loans to individuals (retail)
Consumer loans
Mortgages
Other
Total
Unsecured loans
13,233
23,940
108,024
145,197
Loans collateralised by:
15
274,624
8,029
282,668
residential real estate -
-
260,656
3,821
264,477
other real estate -
-
9,955
3,124
13,079
securities -
-
-
1
1
guarantees -
-
3945
1,028
4,973
cash deposits -
-
67
-
67
other assets -
15
1
55
71
Total
13,248
298,564
116,053
427,865
Bank loans to business customers
SME
Large corporates
Financial
institutions
Central and local authorities and other
Total
Unsecured loans
180,316
25,719
107,536
106,575
420,146
Loans collateralised by:
685,898
85,779
-
10,496
782,173
residential real estate -
54,795
79
-
144
55,018
other real estate -
492,694
61,480
-
2,289
556,463
securities -
1,580
162
-
-
1,742
guarantees -
113,740
6,191
-
8,063
127,994
cash deposits -
1,612
-
-
-
1,612
other assets -
21,477
17,867
-
-
39,344
Total
866,214
111,498
107,536
117,071
1,202,319
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
39
FINANCIAL RISK MANAGEMENT (CONTINUED)
Following tables show the distribution of LTV (loan to collateral value) ratios for the Group’s loan portfolio:
Group loans to customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
510,681
147,653
39,690
698,024
445,472
130,175
53,200
628,847
50% to 60%
233,293
54,457
3,838
291,588
150,314
70,268
18,289
238,871
60% to 70%
174,198
8,951
1,636
184,785
131,262
9,826
8,689
149,777
70% to 80%
103,670
10,926
1,279
115,875
52,381
12,506
3,348
68,235
80% to 90%
87,644
2,210
3,646
93,500
49,074
5,093
6,261
60,428
90% to 100%
20,162
1,881
618
22,661
34,129
1,037
5,046
40,212
higher than 100%
179,515
3,169
10,968
193,652
68,304
12,478
13,340
94,122
no collateral
333,286
6,363
4,643
344,292
351,646
10,467
5,841
367,954
Total gross loans
1,642,449
235,610
66,318
1,944,377
1,282,582
251,850
114,014
1,648,446
Bank loans to customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
510,681
147,653
39,690
698,024
445,472
130,174
53,200
628,846
50% to 60%
233,293
54,457
3,838
291,588
150,313
70,267
18,290
238,870
60% to 70%
174,198
8,951
1,636
184,785
131,263
9,826
8,687
149,776
70% to 80%
103,670
10,926
1,279
115,875
52,381
12,506
3,348
68,235
80% to 90%
87,644
2,210
3,646
93,500
49,074
5,093
6,261
60,428
90% to 100%
20,163
1,881
618
22,662
34,129
1,037
9,757
44,923
higher than 100%
179,515
3,168
10,970
193,653
68,303
12,479
13,805
94,587
no collateral
196,509
120,735
435
317,679
337,037
6,188
1,294
344,519
Total gross loans
1,505,673
349,981
62,112
1,917,766
1,267,972
247,570
114,642
1,630,184
Group loans to individuals (Retail) – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
170,879
6,698
1,344
178,921
116,106
6,137
1,936
124,179
50% to 60%
48,992
1,111
674
50,777
44,414
1,098
1,067
46,579
60% to 70%
69,661
980
406
71,047
63,143
1,380
490
65,013
70% to 80%
80,405
220
338
80,963
32,121
477
594
33,192
80% to 90%
79,272
89
70
79,431
30,305
76
217
30,598
90% to 100%
2,606
25
145
2,776
4,694
198
214
5,106
higher than 100%
2,188
370
593
3,151
2,419
442
959
3,820
no collateral
224,802
3,629
4,329
232,760
238,366
4,634
4,760
247,760
Total gross loans
678,805
13,122
7,899
699,826
531,568
14,442
10,237
556,247
Bank loans to individuals (Retail) – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
170,879
6,698
1,344
178,921
116,106
6,137
1,936
124,179
50% to 60%
48,992
1,111
674
50,777
44,414
1,098
1,067
46,579
60% to 70%
69,661
980
406
71,047
63,143
1,380
490
65,013
70% to 80%
80,405
220
338
80,963
32,121
477
594
33,192
80% to 90%
79,272
89
70
79,431
30,305
76
217
30,598
90% to 100%
2,607
25
145
2,777
4,694
198
214
5,106
higher than 100%
2,188
369
595
3,152
2,419
442
959
3,820
no collateral
88,025
132
121
88,278
118,811
354
213
119,378
Total gross loans
542,029
9,624
3,693
555,346
412,013
10,162
5,690
427,865
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
40
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to individuals (Retail) : Consumer loans – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
-
-
-
-
-
-
-
-
50% to 60%
-
-
-
-
-
-
-
-
60% to 70%
-
-
-
-
-
-
-
-
70% to 80%
-
-
-
-
-
-
-
-
80% to 90%
-
-
-
-
-
-
-
-
90% to 100%
2,001
24
6
2,031
3,745
68
18
3,831
higher than 100%
146
41
9
196
454
27
15
496
no collateral
141,138
3,613
4,289
149,040
128,129
4,470
4,683
137,282
Total gross loans
143,285
3,678
4,304
151,267
132,328
4,565
4,716
141,609
Bank loans to individuals (Retail) : Consumer loans – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
-
-
-
-
-
-
-
-
50% to 60%
-
-
-
-
-
-
-
-
60% to 70%
-
-
-
-
-
-
-
-
70% to 80%
-
-
-
-
-
-
-
-
80% to 90%
-
-
-
-
-
-
-
-
90% to 100%
2,001
24
6
2,031
3,745
68
18
3,831
higher than 100%
145
41
9
195
454
27
15
496
no collateral
4,364
115
102
4,581
8,574
190
157
8,921
Total gross loans
6,510
180
117
6,807
12,773
285
190
13,248
Group loans to individuals (Retail) : Mortgages – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
165,172
6,420
1,220
172,812
111,029
3,638
1,726
116,393
50% to 60%
48,304
920
615
49,839
43,254
994
814
45,062
60% to 70%
69,239
536
302
70,077
62,574
1,376
294
64,244
70% to 80%
80,351
218
9
80,578
31,945
475
126
32,546
80% to 90%
79,261
89
68
79,418
30,277
74
132
30,483
90% to 100%
571
-
-
571
912
130
182
1,224
higher than 100%
1,233
31
545
1,809
1,904
79
597
2,580
no collateral
961
11
-
972
5,854
157
21
6,032
Total gross loans
445,092
8,225
2,759
456,076
287,749
6,923
3,892
298,564
Bank loans to individuals (Retail) : Mortgages – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
165,172
6,420
1,220
172,812
111,029
3,638
1,726
116,393
50% to 60%
48,304
920
615
49,839
43,254
994
814
45,062
60% to 70%
69,239
536
302
70,077
62,574
1,376
294
64,244
70% to 80%
80,351
218
9
80,578
31,945
475
126
32,546
80% to 90%
79,261
89
68
79,418
30,277
74
132
30,483
90% to 100%
571
-
-
571
912
130
182
1,224
higher than 100%
1,233
31
546
1,810
1,904
79
597
2,580
no collateral
959
12
-
971
5,854
157
21
6,032
Total gross loans
445,090
8,226
2,760
456,076
287,749
6,923
3,892
298,564
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
41
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to individuals (Retail) : Other – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
5,707
278
124
6,109
5,077
2,499
210
7,786
50% to 60%
688
191
59
938
1,160
104
253
1,517
60% to 70%
422
444
104
970
569
4
196
769
70% to 80%
54
2
329
385
176
2
468
646
80% to 90%
11
-
2
13
28
2
85
115
90% to 100%
35
1
139
175
37
-
14
51
higher than 100%
810
297
39
1,146
61
336
347
744
no collateral
82,704
4
40
82,748
104,383
7
56
104,446
Total gross loans
90,431
1,217
836
92,484
111,491
2,954
1,629
116,074
Bank loans to individuals (Retail) : Other – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
5,707
278
124
6,109
5,077
2,499
210
7,786
50% to 60%
688
191
59
938
1,160
104
253
1,517
60% to 70%
422
444
104
970
569
4
196
769
70% to 80%
54
2
329
385
176
2
468
646
80% to 90%
11
-
2
13
28
2
85
115
90% to 100%
35
1
139
175
37
-
14
51
higher than 100%
810
297
40
1,147
61
336
347
744
no collateral
82,703
4
19
82,726
104,383
7
35
104,425
Total gross loans
90,430
1,217
816
92,463
111,491
2,954
1,608
116,053
Group loans to financial institutions – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
1,553
3,432
-
4,985
-
2,970
-
2,970
50% to 60%
-
-
-
-
-
-
-
-
60% to 70%
-
-
-
-
-
-
-
-
70% to 80%
-
-
-
-
-
-
-
-
80% to 90%
-
-
-
-
-
-
-
-
90% to 100%
-
-
-
-
-
-
-
-
higher than 100%
-
-
-
-
-
-
-
-
no collateral
1,657
387
-
2,044
14
1,857
-
1,871
Total gross loans
3,210
3,819
-
7,029
14
4,827
-
4,841
Bank loans to financial institutions – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
1,553
3,432
-
4,985
-
2,970
-
2,970
50% to 60%
-
-
-
-
-
-
-
-
60% to 70%
-
-
-
-
-
-
-
-
70% to 80%
-
-
-
-
-
-
-
-
80% to 90%
-
-
-
-
-
-
-
-
90% to 100%
-
-
-
-
-
-
-
-
higher than 100%
-
-
-
-
-
-
-
-
no collateral
1,658
118,255
-
119,913
102,709
1,857
-
104,566
Total gross loans
3,211
121,687
-
124,898
102,709
4,827
-
107,536
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
42
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to business customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
338,249
137,523
38,346
514,118
329,366
121,068
51,264
501,698
50% to 60%
184,301
53,346
3,164
240,811
105,900
69,170
17,222
192,292
60% to 70%
104,537
7,971
1,230
113,738
68,119
8,446
8,199
84,764
70% to 80%
23,265
10,706
941
34,912
20,260
12,029
2,754
35,043
80% to 90%
8,372
2,121
3,576
14,069
18,769
5,017
6,044
29,830
90% to 100%
17,556
1,856
473
19,885
29,435
839
4,832
35,106
higher than 100%
177,327
2,799
10,375
190,501
65,885
12,036
12,381
90,302
no collateral
106,826
2,348
314
109,488
113,266
3,976
1,081
118,323
Total gross loans
960,433
218,670
58,419
1,237,522
751,000
232,581
103,777
1,087,358
Bank loans to business customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
338,249
137,523
38,346
514,118
329,366
121,068
51,264
501,698
50% to 60%
184,301
53,346
3,164
240,811
105,900
69,170
17,223
192,293
60% to 70%
104,537
7,971
1,230
113,738
68,119
8,446
8,197
84,762
70% to 80%
23,265
10,706
941
34,912
20,260
12,029
2,754
35,043
80% to 90%
8,372
2,121
3,576
14,069
18,769
5,017
6,044
29,830
90% to 100%
17,556
1,856
473
19,885
29,435
839
9,543
39,817
higher than 100%
177,327
2,799
10,375
190,501
65,884
12,036
12,846
90,766
no collateral
106,826
2,348
314
109,488
115,517
3,976
1,081
120,574
Total gross loans
960,433
218,670
58,419
1,237,522
753,250
232,581
108,952
1,094,783
Group loans to business customers: Large corporates – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
38,505
20,065
347
58,917
18,622
23,384
327
42,333
50% to 60%
16,541
9,367
1,578
27,486
4,870
13,289
1,529
19,688
60% to 70%
3,340
1,588
-
4,928
1,749
-
-
1,749
70% to 80%
91
4,724
-
4,815
6,850
-
-
6,850
80% to 90%
-
-
-
-
9,643
-
-
9,643
90% to 100%
10,275
-
-
10,275
4,245
-
-
4,245
higher than 100%
21,590
-
-
21,590
18,275
5,750
-
24,025
no collateral
1,316
-
-
1,316
2,965
-
-
2,965
Total gross loans
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
Bank loans to business customers: Large corporates – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
38,505
20,065
347
58,917
18,622
23,384
327
42,333
50% to 60%
16,541
9,367
1,578
27,486
4,870
13,289
1,529
19,688
60% to 70%
3,340
1,588
-
4,928
1,749
-
-
1,749
70% to 80%
91
4,724
-
4,815
6,850
-
-
6,850
80% to 90%
-
-
-
-
9,643
-
-
9,643
90% to 100%
10,275
-
-
10,275
4,245
-
-
4,245
higher than 100%
21,590
-
-
21,590
18,275
5,750
-
24,025
no collateral
1,316
-
-
1,316
2,965
-
-
2,965
Total gross loans
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
43
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group loans to business customers: SME – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
296,683
117,350
37,999
452,032
310,060
97,566
50,937
458,563
50% to 60%
167,713
43,403
1,586
212,702
101,030
55,240
15,693
171,963
60% to 70%
101,153
6,383
1,230
108,766
66,318
8,446
8,199
82,963
70% to 80%
23,174
5,982
941
30,097
13,398
11,153
2,754
27,305
80% to 90%
8,372
1,254
2,111
11,737
9,057
5,017
4,587
18,661
90% to 100%
7,281
1,856
473
9,610
25,136
839
4,832
30,807
higher than 100%
123,316
2,741
10,375
136,432
37,052
6,286
12,381
55,719
no collateral
9,082
254
314
9,650
7,784
3,994
1,030
12,808
Total gross loans
736,774
179,223
55,029
971,026
569,835
188,541
100,413
858,789
Bank loans to business customers: SME – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
296,683
117,350
37,999
452,032
310,060
97,565
50,937
458,562
50% to 60%
167,713
43,403
1,586
212,702
101,029
55,239
15,694
171,962
60% to 70%
101,153
6,383
1,230
108,766
66,319
8,446
8,197
82,962
70% to 80%
23,174
5,982
941
30,097
13,398
11,153
2,754
27,305
80% to 90%
8,372
1,254
2,111
11,737
9,057
5,017
4,587
18,661
90% to 100%
7,281
1,856
473
9,610
25,136
839
9,543
35,518
higher than 100%
123,316
2,741
10,375
136,432
37,051
6,287
12,846
56,184
no collateral
9,082
254
314
9,650
10,035
3,995
1,030
15,060
Total gross loans
736,774
179,223
55,029
971,026
572,085
188,541
105,588
866,214
Group loans to business customers: Central and local authorities, administrative bodies and other – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
3,061
108
-
3,169
684
118
-
802
50% to 60%
47
576
-
623
-
641
-
641
60% to 70%
44
-
-
44
52
-
-
52
70% to 80%
-
-
-
-
12
876
-
888
80% to 90%
-
867
1,465
2,332
69
-
1,457
1,526
90% to 100%
-
-
-
-
54
-
-
54
higher than 100%
32,421
58
-
32,479
10,558
-
-
10,558
no collateral
96,428
2,094
-
98,522
102,517
(18)
51
102,550
Total gross loans
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
Bank loans to business customers: Central and local authorities, administrative bodies and other – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
3,061
108
-
3,169
684
118
-
802
50% to 60%
47
576
-
623
-
641
-
641
60% to 70%
44
-
-
44
52
-
-
52
70% to 80%
-
-
-
-
12
876
-
888
80% to 90%
-
867
1,465
2,332
69
-
1,457
1,526
90% to 100%
-
-
-
-
54
-
-
54
higher than 100%
32,421
58
-
32,479
10,558
-
-
10,558
no collateral
96,428
2,094
-
98,522
102,517
(18)
51
102,550
Total gross loans
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
44
FINANCIAL RISK MANAGEMENT (CONTINUED)
e) Loans to customers against which no impairment loss allowance is recognized
Loans to customers contain loans against which no loss impairment loss allowance was recognized because of sufficiency of collateral.
Such loans are summarized in the following table:
Group, as at 31 December 2021
Gross value
Stage 1
Stage 2
Stage 3
Total
LTV
Loans to financial institutions
15
-
-
15
0%
Loans to individuals:
2,154
467
1
2,622
0%
Mortgages -
6
-
-
6
0%
Other-
2,148
467
1
2,616
6%
Loans to business customers:
16,761
12,241
7
29,009
0%
Central and local authorities, administrative bodies and
other -
65
-
-
65
107%
Large corporates -
16,696
-
-
16,696
23%
SME -
-
12,241
7
12,248
3%
Total
18,930
12,708
8
31,646
19%
Group, as at 31 December 2020
Gross value
Stage 1
Stage 2
Stage 3
Total
LTV
Loans to financial institutions
15
-
-
15
0 %
Loans to individuals:
182,261
7,408
2,855
192,506
26 %
Mortgages -
178,149
5,084
2,276
185,510
44 %
Other-
4,112
2,324
579
6,996
20 %
Loans to business customers:
399,203
79,346
47,694
526,243
30 %
Central and local authorities, administrative bodies and
other -
676
126
-
802
29 %
Large corporates -
21,573
3,131
327
25,031
24 %
SME -
376,954
76,089
47,367
502,680
30 %
Total
581,479
86,754
50,549
718,782
30 %
f) Purchased or originated credit-impaired (POCI) loans to customers
Loans to customers contain POCI loans to customers. Major part of these loans were acquired under the transaction transfer of assets,
rights, transactions and liabilities of Ūkio Bankas under a discount over their nominal value due to their non-performing status at the
time of transfer. Details on POCI loans are summarized in the following table:
As at 31 December 2021
As at 31 December 2020
Gross value
Impairment
Carrying
value
Gross value
Impairment
Carrying
value
Loans to financial institutions
-
-
-
-
-
-
Loans to individuals:
112
(3)
108
183
(58)
125
Consumer loans -
-
-
-
-
-
-
Mortgages -
99
(1)
98
170
(55)
115
Other-
13
(3)
10
13
(3)
10
Loans to business customers:
1,790
(84)
1,705
2,633
(933)
1,700
Central and local authorities, administrative bodies and
other -
-
-
-
-
-
-
Large corporates -
-
-
-
-
-
-
SME -
1,790
(84)
1,705
2,633
(933)
1,700
Total
1,902
(88)
1,814
2,816
(991)
1,825
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
45
FINANCIAL RISK MANAGEMENT (CONTINUED)
g) Modifications of loans to customers
Group follows legal treatment for loan contract amendments, i.e. amended loan contracts are accounted for as modifications.
The amortized cost before modification of loans with lifetime ECL whose cash flows were modified during 2021 as part of Group‘s
restructuring activities was EUR 91,824 thousand, these modifications resulted in a net loss of EUR 12 thousand. The amortized cost
before modification of loans with lifetime ECL whose cash flows were modified during 2020 as part of Group‘s restructuring activities
was EUR 134,468 thousand, these modifications resulted in a net loss of EUR 59 thousand.
In April 2020 the Bank joined the moratoria initiated by the Association of Lithuanian Banks (ALB) that offer principal repayment deferral
solutions for individual and business customers. Moratoria ended on 30 September 2020, but, taking into account Covid-19
developments in Lithuania, they were renewed in January 2021 until 31 March 2021. As interest rate is not modified as a condition for
moratoria, no material result from contract modifications was recorded. Renewed moratoria did not reach significant volumes –
extensions according to the renewed moratoria were applied for loans and finance lease receivables with carrying amount of EUR
2,831 thousand. Major part of the loans that had extensions according to moratoria have returned to their original payment schedules –
as of 31 December 2021 there were no loans and finance lease receivables with unexpired payment deferrals according to moratoria
(including renewed moratoria). Also, loans and finance lease receivables with carrying amount of EUR 7,791 thousand had other
extension measures that were not under moratoria and had not returned to the original payment schedules.
At 31 December 2021, most of the loans and finance lease receivables with payment extension measures have returned to their full
payment schedule. The following table present the gross values of the loans and finance lease receivables for which payment deferrals
have not yet ended.
2021
ALB compliant moratoria
Other relief measures
Total
Business customers
-
7,616
7,616
Individuals
-
174
175
Gross
-
7,791
7,791
1.6. Finance lease receivables
Finance lease receivables are summarised as follows:
2021
2020
Group
Bank
Group
Bank
Business customers
172,215
171,202
133,358
132,448
Individuals
26,746
26,746
26,684
26,684
Gross
198,961
197,948
160,042
159,132
Subtract: Allowance for impairment
(3,787)
(3,039)
(4,585)
(3,842)
Net
195,174
194,909
155,457
155,290
During the year ended 31 December 2021, finance lease receivables portfolio of the Group increased by 25.5% (2020: decreased by
1.4%). Total impairment provisions for finance lease receivables of the Group amount to EUR 3,787 thousand (2020: EUR 4,585
thousand) and account for 1.90% of the respective portfolio (2020: 2.86%).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
46
FINANCIAL RISK MANAGEMENT (CONTINUED)
a) Credit grades of finance lease receivables
The Bank uses internal grade system that has 11 internal grades (1 – best, 11 – worst). During the first quarter of 2021, internal credit
rating procedures were enhanced: an updated legal customer financial status methodology was implemented. Main change in the
methodology – increased number of grades: there were 5 internal grades under previous methodology, updated methodology has 11
grades. This allows for more granular assessment of borrowers. Clear links between internal credit grades and credit stages have been
established – exposures assigned to internal credit rating grades 7 – 9 are in credit stage 2, exposures assigned internal grades 10 –
11 are in credit stage 3.
Group finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
138,756
2,323
154
141,233
76,939
3,020
319
80,278
Watch
31,880
10,580
-
42,460
41,317
25,723
1,316
68,356
Substandard
267
7,613
134
8,014
384
2,645
6,299
9,328
Problem
57
29
7,167
7,253
-
-
2,080
2,080
Gross
170,960
20,545
7,455
198,960
118,640
31,388
10,014
160,042
Less: allowance for impairment
(966)
(239)
(2,581)
(3,786)
(800)
(931)
(2,854)
(4,585)
Net
169,994
20,306
4,874
195,174
117,840
30,457
7,160
155,457
Bank finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
138,544
2,323
154
141,021
76,826
3,020
319
80,165
Watch
31,880
10,580
-
42,460
41,317
25,723
1,316
68,356
Substandard
267
7,613
134
8,014
384
2,645
6,299
9,328
Problem
57
29
6,366
6,452
-
-
1,283
1,283
Gross
170,748
20,545
6,654
197,947
118,527
31,388
9,217
159,132
Less: allowance for
impairment
(965)
(239)
(1,834)
(3,038)
(799)
(931)
(2,112)
(3,842)
Net
169,783
20,306
4,820
194,909
117,728
30,457
7,105
155,290
Group finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
114,404
1,074
-
115,478
52,302
2,292
294
54,888
Watch
31,492
10,432
-
41,924
40,781
25,577
1,316
67,674
Substandard
-
7,595
-
7,595
154
2,464
6,149
8,767
Problem
57
29
7,132
7,218
-
-
2,029
2,029
Gross
145,953
19,130
7,132
172,215
93,237
30,333
9,788
133,358
Less: allowance for impairment
(911)
(225)
(2,535)
(3,671)
(591)
(899)
(2,720)
(4,210)
Net
145,042
18,905
4,597
168,544
92,646
29,434
7,068
129,148
Bank finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
114,192
1,074
-
115,266
52,189
2,292
294
54,775
Watch
31,492
10,432
-
41,924
40,781
25,577
1,316
67,674
Substandard
-
7,595
-
7,595
154
2,464
6,149
8,767
Problem
57
29
6,331
6,417
-
-
1,232
1,232
Gross
145,741
19,130
6,331
171,202
93,124
30,333
8,991
132,448
Less: allowance for impairment
(910)
(225)
(1,788)
(2,923)
(590)
(899)
(1,978)
(3,467)
Net
144,831
18,905
4,543
168,279
92,534
29,434
7,013
128,981
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
47
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group finance lease receivables – individuals
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
24,352
1,249
154
25,755
24,637
728
25
25,390
Watch
388
148
-
536
536
146
-
682
Substandard
267
18
134
419
230
181
150
561
Problem
-
-
35
35
-
-
50
50
Gross
25,007
1,415
323
26,745
25,403
1,055
225
26,683
Less: allowance for impairment
(55)
(14)
(46)
(115)
(209)
(32)
(134)
(375)
Net
24,952
1,401
277
26,630
25,194
1,023
91
26,308
Bank finance lease receivables – individuals
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Standard
24,352
1,249
154
25,755
24,637
728
25
25,390
Watch
388
148
-
536
536
146
-
682
Substandard
267
18
134
419
230
181
150
561
Problem
-
-
35
35
-
-
50
50
Gross
25,007
1,415
323
26,745
25,403
1,055
225
26,683
Less: allowance for impairment
(55)
(14)
(46)
(115)
(209)
(32)
(134)
(375)
Net
24,952
1,401
277
26,630
25,194
1,023
91
26,308
b) Payment delays of finance lease receivables
Group finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
163,802
18,890
5,590
188,282
112,105
29,253
6,657
148,015
Past due up to 30 days
7,159
1,044
336
8,539
6,535
1,522
1,093
9,150
Past due 31-90 days
-
609
111
720
-
613
199
812
Past due more than 90 days
-
-
1,419
1,419
-
-
2,065
2,065
Gross
170,961
20,543
7,456
198,960
118,640
31,388
10,014
160,042
Less: allowance for impairment
(966)
(239)
(2,581)
(3,786)
(800)
(931)
(2,854)
(4,585)
Net
169,995
20,304
4,875
195,174
117,840
30,457
7,160
155,457
Bank finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
163,590
18,890
5,590
188,070
111,992
29,253
6,659
147,904
Past due up to 30 days
7,159
1,044
336
8,539
6,535
1,522
1,092
9,149
Past due 31-90 days
-
609
111
720
-
613
199
812
Past due more than 90 days
-
-
618
618
-
-
1,267
1,267
Gross
170,749
20,543
6,655
197,947
118,527
31,388
9,217
159,132
Less: allowance for impairment
(965)
(239)
(1,834)
(3,038)
(799)
(931)
(2,112)
(3,842)
Net
169,784
20,304
4,821
194,909
117,728
30,457
7,105
155,290
Group finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
140,831
17,783
5,328
163,942
88,880
28,602
6,515
123,997
Past due up to 30 days
5,123
998
321
6,442
4,357
1,483
1,075
6,915
Past due 31-90 days
-
348
99
447
-
248
185
433
Past due more than 90 days
-
-
1,384
1,384
-
-
2,013
2,013
Gross
145,954
19,129
7,132
172,215
93,237
30,333
9,788
133,358
Less: allowance for impairment
(911)
(225)
(2,535)
(3,671)
(591)
(899)
(2,720)
(4,210)
Net
145,043
18,904
4,597
168,544
92,646
29,434
7,068
129,148
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
48
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
140,619
17,783
5,328
163,730
88,767
28,602
6,517
123,886
Past due up to 30 days
5,123
998
321
6,442
4,357
1,483
1,074
6,914
Past due 31-90 days
-
348
99
447
-
248
185
433
Past due more than 90 days
-
-
583
583
-
-
1,215
1,215
Gross
145,742
19,129
6,331
171,202
93,124
30,333
8,991
132,448
Less: allowance for impairment
(910)
(225)
(1,788)
(2,923)
(590)
(899)
(1,978)
(3,467)
Net
144,832
18,904
4,543
168,279
92,534
29,434
7,013
128,981
Group finance lease receivables – individuals
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
22,971
1,107
262
24,340
23,225
651
142
24,018
Past due up to 30 days
2,036
46
15
2,097
2,178
39
18
2,235
Past due 31-90 days
-
261
12
273
-
365
14
379
Past due more than 90 days
-
-
35
35
-
-
52
52
Gross
25,007
1,414
324
26,745
25,403
1,055
226
26,684
Less: allowance for impairment
(55)
(14)
(46)
(115)
(209)
(32)
(134)
(375)
Net
24,952
1,400
278
26,630
25,194
1,023
92
26,309
Bank finance lease receivables – individuals
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Not past due
22,971
1,107
262
24,340
23,225
651
142
24,018
Past due up to 30 days
2,036
46
15
2,097
2,178
39
18
2,235
Past due 31-90 days
-
261
12
273
-
365
14
379
Past due more than 90 days
-
-
35
35
-
-
52
52
Gross
25,007
1,414
324
26,745
25,403
1,055
226
26,684
Less: allowance for impairment
(55)
(14)
(46)
(115)
(209)
(32)
(134)
(375)
Net
24,952
1,400
278
26,630
25,194
1,023
92
26,309
c) Stage 3 Finance lease receivables
31 December 2021
Group
Bank
Gross value
Allowance for
impairment
Net value
Fair value of
collateral
Gross value
Allowance for
impairment
Net value
Fair value of
collateral
31 December 2021:
Business customers
7,132
(2,535)
4,597
308
6,331
(1,788)
4,543
308
Individuals
323
(46)
277
6,306
323
(46)
277
6,306
Total finance lease receivables
7,455
(2,581)
4,874
6,614
6,654
(1,834)
4,820
6,614
31 December 2020
Group
Bank
Gross value
Allowance for
impairment
Net value
Fair value of
collateral
Gross value
Allowance for
impairment
Net value
Fair value of
collateral
31 December 2020:
Business customers
9,788
(2,720)
7,068
8,724
8,991
(1,978)
7,013
8,724
Individuals
226
(134)
92
199
226
(134)
92
199
Total finance lease receivables
10,014
(2,854)
7,160
8,923
9,217
(2,112)
7,105
8,923
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
49
FINANCIAL RISK MANAGEMENT (CONTINUED)
d) Information about risk mitigation measures for finance lease receivables
Upon initial recognition of financial lease receivables, the fair value of risk mitigation measures is based on valuation approaches
commonly used for the corresponding types of assets. Market values are used for real estate and movable assets serving as risk
mitigation measures. In subsequent periods, the fair value of risk mitigation measures is updated based on their depreciation rates.
If exposure is secured by several different types of risk mitigation measures, priority in their recognition is based on their liquidity.
Transport vehicles are treated as having highest liquidity followed by residential real estate and then other real estate. Equipment and
other assets are treated as having lowest liquidity.
The lender remains the owner of the leased object. Therefore, in case of customer default it is able to gain control on the risk mitigation
measures and realize them in rather short period.
Following tables present the lower of lease receivable and collateral amount per agreement.
The Group
2021
2020
Individuals
Business
customers
Total
Individuals
Business
customers
Total
Unsecured finance lease receivables
440
3,116
3,556
628
2,679
3,307
Finance lease receivables secured by:
transport vehicles -
25,849
122,970
148,819
25,343
86,915
112,258
real estate -
398
18,073
18,471
602
20,759
21,361
equipment and other -
59
28,056
28,115
111
23,005
23,116
Total
26,746
172,215
198,961
26,684
133,358
160,042
The Bank
2021
2020
Individuals
Business
customers
Total
Individuals
Business
customers
Total
Unsecured finance lease receivables
440
3,116
3,556
628
2,679
3,307
Finance lease receivables secured by:
transport vehicles -
25,849
122,970
148,819
25,343
86,915
112,258
real estate -
398
18,073
18,471
602
20,759
21,361
equipment and other -
59
27,043
27,102
111
22,095
22,206
Total
26,746
171,202
197,948
26,684
132,448
159,132
The following tables present the LTV distributions of finance lease receivables:
Group finance lease receivables – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
86,169
15,874
6,026
108,069
59,025
23,145
6,914
89,084
50% to 60%
30,655
1,312
209
32,176
20,299
1,335
314
21,948
60% to 70%
20,594
1,425
56
22,075
15,312
2,062
716
18,090
70% to 80%
17,768
1,070
17
18,855
10,417
2,260
189
12,866
80% to 90%
9,395
432
83
9,910
7,241
1,027
210
8,478
90% to 100%
3,156
354
88
3,598
3,477
657
202
4,336
higher than 100%
2,749
43
957
3,749
2,523
694
1,241
4,458
no collateral
475
33
20
528
346
208
228
782
Total gross loans
170,961
20,543
7,456
198,960
118,640
31,388
10,014
160,042
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
50
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank finance lease receivables – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
86,169
15,874
6,026
108,069
59,025
23,145
6,914
89,084
50% to 60%
30,655
1,313
209
32,177
20,299
1,335
314
21,948
60% to 70%
20,594
1,425
56
22,075
15,312
2,062
716
18,090
70% to 80%
17,768
1,069
17
18,854
10,417
2,260
189
12,866
80% to 90%
9,395
432
83
9,910
7,241
1,027
210
8,478
90% to 100%
3,156
354
88
3,598
3,477
657
202
4,336
higher than 100%
2,749
43
157
2,949
2,523
694
444
3,661
no collateral
263
33
19
315
233
208
228
669
Total gross loans
170,749
20,543
6,655
197,947
118,527
31,388
9,217
159,132
Group finance lease receivables: Individuals – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
17,515
905
274
18,694
17,450
841
152
18,443
50% to 60%
1,701
243
14
1,958
2,010
26
15
2,051
60% to 70%
1,965
114
-
2,079
1,783
36
-
1,819
70% to 80%
1,810
79
-
1,889
1,429
82
9
1,520
80% to 90%
859
51
9
919
1,067
25
9
1,101
90% to 100%
523
13
-
536
561
3
-
564
higher than 100%
525
9
19
553
923
36
20
979
no collateral
109
-
8
117
180
6
21
207
Total gross loans
25,007
1,414
324
26,745
25,403
1,055
226
26,684
Bank finance lease receivables: Individuals – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
17,515
905
274
18,694
17,450
841
152
18,443
50% to 60%
1,701
243
14
1,958
2,010
26
15
2,051
60% to 70%
1,965
114
-
2,079
1,783
36
-
1,819
70% to 80%
1,810
79
-
1,889
1,429
82
9
1,520
80% to 90%
859
51
9
919
1,067
25
9
1,101
90% to 100%
523
13
-
536
561
3
-
564
higher than 100%
525
9
20
554
923
36
20
979
no collateral
109
-
7
116
180
6
21
207
Total gross loans
25,007
1,414
324
26,745
25,403
1,055
226
26,684
Group finance lease receivables: Business customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
68,654
14,969
5,752
89,375
41,575
22,304
6,762
70,641
50% to 60%
28,954
1,069
195
30,218
18,289
1,309
299
19,897
60% to 70%
18,629
1,311
56
19,996
13,529
2,026
716
16,271
70% to 80%
15,958
991
17
16,966
8,988
2,178
180
11,346
80% to 90%
8,536
381
74
8,991
6,174
1,002
201
7,377
90% to 100%
2,633
341
88
3,062
2,916
654
202
3,772
higher than 100%
2,224
34
938
3,196
1,600
658
1,221
3,479
no collateral
366
33
12
411
166
202
207
575
Total gross loans
145,954
19,129
7,132
172,215
93,237
30,333
9,788
133,358
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
51
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank finance lease receivables: Business customers – LTV distribution
2021
2020
LTV ratio:
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
lower than 50%
68,654
14,969
5,752
89,375
41,575
22,304
6,762
70,641
50% to 60%
28,954
1,070
195
30,219
18,289
1,309
299
19,897
60% to 70%
18,629
1,311
56
19,996
13,529
2,026
716
16,271
70% to 80%
15,958
990
17
16,965
8,988
2,178
180
11,346
80% to 90%
8,536
381
74
8,991
6,174
1,002
201
7,377
90% to 100%
2,633
341
88
3,062
2,916
654
202
3,772
higher than 100%
2,224
34
137
2,395
1,600
658
424
2,682
no collateral
154
33
12
199
53
202
207
462
Total gross loans
145,742
19,129
6,331
171,202
93,124
30,333
8,991
132,448
e) Finance lease receivables against which no impairment loss allowance is recognized
Finance lease receivables contain receivables against which no loss impairment loss allowance was recognized because of sufficiency
of collateral. Such receivables are summarized in the following table:
At 31 December 2021:
Gross value
Stage 1
Stage 2
Stage 3
Total
LTV
Business customers
1,063
7
-
1,070
46%
Individuals
163
-
-
163
18%
Total
1,226
7
-
1,233
41%
At 31 December 2020:
Gross value
Stage 1
Stage 2
Stage 3
Total
LTV
Business customers
21,523
11,060
2,619
35,202
26 %
Individuals
3,592
463
23
4,078
23 %
Total
25,115
11,523
2,642
39,280
25 %
1.7. Other financial assets
Other financial assets consist of amounts receivable. Their performance is monitored based on the past due status.
The Group
2021
2020
Individuals
Business
customers
Total
Individuals
Business
customers
Total
Stage 1
400
16,219
16,619
292
4,498
4,790
Stage 2
-
-
-
-
16
16
Stage 3
5
34
39
5
45
50
Gross
405
16,253
16,658
297
4,559
4,856
Less: allowance for impairment
(5)
(255)
(260)
(5)
(156)
(161)
Net
400
15,998
16,398
292
4,403
4,695
The Bank
2021
2020
Individuals
Business
customers
Total
Individuals
Business
customers
Total
Stage 1
400
16,065
16,465
292
4,079
4,371
Stage 2
-
-
-
-
16
16
Stage 3
-
34
34
-
43
43
Gross
400
16,099
16,499
292
4,138
4,430
Less: allowance for impairment
-
(228)
(228)
-
(153)
(153)
Net
400
15,871
16,271
292
3,985
4,277
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
52
FINANCIAL RISK MANAGEMENT (CONTINUED)
1.8. Concentration of risks of financial assets with credit risk exposure
Industry sectors
The following table breaks down the main credit exposures at their carrying amounts, as categorized by the industry sectors of our
counterparties.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
53
Group
Financial intermediation
Wholesale and retail
Manufacturing
Real estate and rent
Construction
Agriculture, hunting
and forestry
Public administration
and defence,
compulsory social
security
Transport, storage and
communication
Health and social work
Loans to individuals
Other
Total
At 31 December 2021:
Cash equivalents
31,068
-
-
-
-
-
867,794
-
-
-
-
898,862
Loans and advances to banks
1,196
-
-
-
-
-
-
-
-
-
-
1,196
Loans and advances to customers:
23,378
136,813
177,686
288,946
58,148
97,323
81,814
57,388
31,027
688,525
267,633
1,908,681
Loans and advances to financial
institutions
6,947
-
-
-
-
-
-
-
-
-
-
6,947
Loans to individuals (Retail):
-
54
85
-
32
483
-
-
-
688,525
829
690,008
Consumer loans -
-
-
-
-
-
-
-
-
-
143,459
3
143,462
Mortgages -
-
-
-
-
-
-
-
-
-
455,126
-
455,126
Other -
-
54
85
-
32
483
-
-
-
89,940
826
91,420
Loans to business customers:
16,431
136,759
177,601
288,946
58,116
96,840
81,814
57,388
31,027
-
266,804
1,211,726
Large corporates -
-
-
87,358
-
13,783
-
-
3,491
12,571
-
10,569
127,772
SME -
16,431
136,740
90,240
288,917
44,321
96,839
(13,426)
53,897
14,813
-
219,213
947,985
Central and local authorities,
administrative bodies and other -
-
19
3
29
12
1
95,240
-
3,643
-
37,022
135,969
Finance lease receivables:
1,641
16,479
12,923
7,811
11,054
10,226
15
36,404
2,440
26,630
69,551
195,174
Individuals -
-
-
-
-
-
-
-
-
-
26,630
-
26,630
Business customers -
1,641
16,479
12,923
7,811
11,054
10,226
15
36,404
2,440
-
69,551
168,544
Securities in the trading book:
29,938
829
27
1,659
-
-
4,062
16
25
-
11,625
48,181
Debt securities -
2,597
829
-
1,622
-
-
4,062
-
-
-
11,343
20,453
Equity securities -
27,341
-
27
37
-
-
-
16
25
-
282
27,728
Derivative financial instruments
1,111
42
-
-
-
-
-
-
-
-
968
2,121
Investment securities at fair value:
11,978
585
-
-
-
-
53,991
-
-
-
16,434
82,988
Equity securities -
4,530
-
-
-
-
-
-
-
-
-
332
4,862
Debt securities -
7,448
585
-
-
-
-
53,991
-
-
-
16,102
78,126
Investment securities at amortized
cost:
58,260
1,614
36,290
1,010
-
-
535,006
3,012
3,006
-
67,200
705,398
Debt securities -
58,260
1,614
36,290
1,010
-
-
535,006
3,012
3,006
-
67,200
705,398
Other financial assets
2,755
51
79
13
17
13
77
13
17
539
12,824
16,398
Credit risk exposures relating to off –
balance sheet items are as follows:
-
Financial guarantees -
8,215
8,281
5,881
853
18,968
236
236
1,474
34
70
8,683
52,931
Letters of credit -
-
98
1,210
-
-
-
-
-
-
-
-
1,308
Loan commitments and other credit
related liabilities -
8
34,435
50,764
48,567
67,124
10,765
5,075
30,159
4,928
32,261
113,139
397,225
Total at 31 December2021
169,548
199,227
284,860
348,859
155,311
118,563
1,548,070
128,466
41,477
748,025
568,057
4,310,463
At 31 December 2020:
Cash equivalents
13,107
-
-
-
-
-
349,981
-
-
-
-
363,088
Loans and advances to banks
1,598
-
-
-
-
-
-
-
-
-
-
1,598
Loans and advances to customers:
11,587
133,003
171,164
204,425
67,926
107,598
89,294
69,225
30,618
545,188
175,635
1,605,663
Loans and advances to financial
institutions
4,747
-
-
-
-
-
-
-
-
-
-
4,747
Loans to individuals (Retail):
-
-
-
-
-
-
-
-
-
545,188
-
545,188
Consumer loans -
-
-
-
-
-
-
-
-
-
133,517
-
133,517
Mortgages -
-
-
-
-
-
-
-
-
-
297,140
-
297,140
Other -
-
-
-
-
-
-
-
-
-
114,531
-
114,531
Loans to business customers:
6,840
133,003
171,164
204,425
67,926
107,598
89,294
69,225
30,618
-
175,635
1,055,728
Large corporates -
-
-
68,935
-
13,414
-
-
3,571
13,928
-
9,847
109,695
SME -
6,840
132,977
102,211
204,393
54,486
107,598
(10,784)
65,645
14,283
-
152,110
829,759
Central and local authorities,
administrative bodies and other -
-
26
18
32
26
-
100,078
9
2,407
-
13,678
116,274
Finance lease receivables:
1,223
16,672
11,949
7,352
7,914
8,830
213
24,451
2,157
26,308
48,388
155,457
Individuals -
-
-
-
-
-
-
-
-
-
26,308
-
26,308
Business customers -
1,223
16,672
11,949
7,352
7,914
8,830
213
24,451
2,157
-
48,388
129,149
Securities in the trading book:
24,638
478
500
23
734
518
6,509
58
113
-
3,497
37,068
Debt securities -
3,527
478
499
-
734
518
6,509
-
100
-
2,175
14,540
Equity securities -
21,111
-
1
23
-
-
-
58
13
-
1,322
22,528
Derivative financial instruments
289
28
26
-
-
-
-
-
-
80
22
445
Investment securities at fair value:
15,528
-
-
-
-
-
17,709
-
938
-
167
34,342
Equity securities -
3,746
-
-
-
-
-
-
-
-
-
167
3,913
Debt securities -
11,782
-
-
-
-
-
17,709
-
938
-
-
30,429
Investment securities at amortized
cost:
57,085
1,610
45,496
1,416
-
-
532,500
3,013
3,218
-
65,116
709,454
Debt securities -
57,085
1,610
45,496
1,416
-
-
532,500
3,013
3,218
-
65,116
709,454
Other financial assets
444
18
87
24
10
12
54
10
4
292
3,740
4,695
Credit risk exposures relating to off –
balance sheet items are as follows:
Financial guarantees -
9,126
9,750
2,941
761
16,572
229
150
1,109
34
42
8,076
48,790
Letters of credit -
-
116
2,464
-
319
-
-
-
-
-
623
3,522
Loan commitments and other credit
related liabilities -
70
28,468
29,116
32,077
44,308
5,520
5,299
16,392
3,214
27,681
89,620
281,765
Total at 31 December2020
134,695
190,143
263,743
246,078
137,783
122,707
1,001,709
114,258
40,296
599,591
394,884
3,245,887
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
54
FINANCIAL RISK MANAGEMENT (CONTINUED)
Bank
Financial
intermediation
Wholesale and retail
Manufacturing
Real estate and rent
Construction
Agriculture, hunting
and forestry
Public administration
and defence,
compulsory social
security
Transport, storage and
communication
Health and social work
Loans to individuals
Other
Total
At 31 December 2021:
Cash equivalents
30,194
-
-
-
-
-
867,794
-
-
-
-
897,988
Loans and advances to banks
1,196
-
-
-
-
-
-
-
-
-
-
1,196
Loans and advances to customers:
141,247
136,813
177,686
288,946
58,148
97,323
81,814
57,388
31,027
551,604
267,633
1,889,629
Loans and advances to financial
institutions
124,816
-
-
-
-
-
-
-
-
-
-
124,816
Loans to individuals (Retail):
-
54
85
-
32
483
-
-
-
551,604
829
553,087
Consumer loans -
-
-
-
-
-
-
-
-
-
6,538
3
6,541
Mortgages -
-
-
-
-
-
-
-
-
-
455,126
-
455,126
Other -
-
54
85
-
32
483
-
-
-
89,940
826
91,420
Loans to business customers:
16,431
136,759
177,601
288,946
58,116
96,840
81,814
57,388
31,027
-
266,804
1,211,726
Large corporates -
-
-
87,358
-
13,783
-
-
3,491
12,571
-
10,569
127,772
SME -
16,431
136,740
90,240
288,917
44,321
96,839
(13,426)
53,897
14,813
-
219,213
947,985
Central and local authorities,
administrative bodies and other -
-
19
3
29
12
1
95,240
-
3,643
-
37,022
135,969
Finance lease receivables:
1,641
16,479
12,868
7,811
11,054
10,226
15
36,404
2,440
26,630
69,341
194,909
Individuals -
-
-
-
-
-
-
-
-
-
26,630
-
26,630
Business customers -
1,641
16,479
12,868
7,811
11,054
10,226
15
36,404
2,440
-
69,341
168,279
Securities in the trading book:
1,869
-
27
1,659
-
-
4,062
16
25
-
7,441
15,099
Debt securities -
1,778
-
-
1,622
-
-
4,062
-
-
-
7,160
14,622
Equity securities -
91
-
27
37
-
-
-
16
25
-
281
477
Derivative financial instruments
1,111
42
-
-
-
-
-
-
-
-
968
2,121
Investment securities at fair value:
11,941
585
-
-
-
-
53,991
-
-
-
16,434
82,951
Equity securities -
4,493
-
-
-
-
-
-
-
-
-
332
4,825
Debt securities -
7,448
585
-
-
-
-
53,991
-
-
-
16,102
78,126
Investment securities at amortized
cost:
55,675
1,003
34,797
1,010
-
-
535,006
3,012
3,006
-
58,717
692,226
debt securities -
55,675
1,003
34,797
1,010
-
-
535,006
3,012
3,006
-
58,717
692,226
Other financial assets
2,755
51
79
13
17
13
77
13
17
400
12,836
16,271
Credit risk exposures relating to off –
balance sheet items are as follows:
Financial guarantees -
8,279
8,281
5,881
853
18,968
236
236
1,474
34
70
8,680
52,992
Letters of credit -
-
98
1,210
-
-
-
-
-
-
-
-
1,308
Loan commitments and other credit
related liabilities -
18,369
34,435
50,764
48,567
67,124
10,765
5,075
30,159
4,928
32,261
104,993
407,440
Total at 31 December 2021:
274,277
197,787
283,312
348,859
155,311
118,563
1,548,070
128,466
41,477
610,965
547,043
4,254,130
At 31 December 2020:
Cash equivalents
12,270
-
-
-
-
-
349,981
-
-
-
-
362,251
Loans and advances to banks
1,598
-
-
-
-
-
-
-
-
-
-
1,598
Loans and advances to customers:
114,347
133,003
171,164
209,134
67,926
107,598
89,294
69,225
30,618
424,419
175,635
1,592,363
Loans and advances to financial
institutions
107,442
-
-
-
-
-
-
-
-
-
-
107,442
Loans to individuals (Retail):
-
-
-
-
-
-
-
-
-
424,419
-
424,419
Consumer loans -
-
-
-
-
-
-
-
-
-
12,748
-
12,748
Mortgages -
-
-
-
-
-
-
-
-
-
297,140
-
297,140
Other -
-
-
-
-
-
-
-
-
-
114,531
-
114,531
Loans to business customers:
6,905
133,003
171,164
209,134
67,926
107,598
89,294
69,225
30,618
-
175,635
1,060,502
Large corporates -
-
-
68,935
-
13,414
-
-
3,571
13,928
-
9,847
109,695
SME -
6,905
132,977
102,211
209,102
54,486
107,598
(10,784)
65,645
14,283
-
152,110
834,533
Central and local authorities,
administrative bodies and other -
-
26
18
32
26
-
100,078
9
2,407
-
13,678
116,274
Finance lease receivables:
1,223
16,672
11,894
7,352
7,914
8,830
213
24,451
2,157
26,308
48,276
155,290
Individuals -
-
-
-
-
-
-
-
-
-
26,308
-
26,308
Business customers -
1,223
16,672
11,894
7,352
7,914
8,830
213
24,451
2,157
-
48,276
128,982
Securities in the trading book:
2,273
-
500
23
281
-
4,182
58
13
-
2,252
9,582
Debt securities -
2,223
-
499
-
281
-
4,182
-
-
-
1,659
8,844
Equity securities -
50
-
1
23
-
-
-
58
13
-
593
738
Derivative financial instruments
289
28
26
-
-
-
-
-
-
80
22
445
Investment securities at fair value:
15,528
-
-
-
-
-
17,709
-
938
-
40
34,215
Equity securities -
3,746
-
-
-
-
-
-
-
-
-
40
3,786
Debt securities -
11,782
-
-
-
-
-
17,709
-
938
-
-
30,429
Investment securities at amortized
cost:
55,360
1,003
43,993
1,010
-
-
526,700
3,013
3,008
-
63,049
697,136
debt securities -
55,360
1,003
43,993
1,010
-
-
526,700
3,013
3,008
-
63,049
697,136
Other financial assets
444
18
87
24
10
12
54
10
4
292
3,323
4,278
Credit risk exposures relating to off –
balance sheet items are as follows:
Financial guarantees -
9,187
9,750
2,941
761
16,572
229
150
1,109
34
42
8,076
48,851
Letters of credit -
-
116
2,464
-
319
-
-
-
-
-
623
3,522
Loan commitments and other credit
related liabilities -
25,343
28,468
29,116
34,236
44,308
5,520
5,299
16,392
3,214
27,681
81,191
300,768
Total at 31 December 2020:
237,862
189,058
262,185
252,540
137,330
122,189
993,582
114,258
39,986
478,822
382,487
3,210,299
As at 31 December 2021 and 31 December 2020 the Group and the Bank were compliant with the internal limits.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
55
FINANCIAL RISK MANAGEMENT (CONTINUED)
Concentration exposure
As at 31 December 2021, the largest single exposure comprising loans to several related borrowers treated as a single borrower not
secured by the Lithuanian Government guarantees, amounted to EUR 43 million, i.e. 12.3% of the Bank’s calculated capital (2020:
EUR 32.6 million or 9.9% of the Bank’s calculated capital).
2. Market risk
The Group takes on exposure to market risk, which means the risk for the Group to incur losses due to the adverse fluctuations in the
market parameters such as currency exchange rates (foreign currency risk), interest rates (interest rate risk) or securities prices
(securities risk). Securities and interest rate risks are the most significant market risks for the Group while other market risks are of
lower significance.
2.1. Foreign exchange risk
The management of the currency exchange risk is regulated by the “Currency Exchange Risk Management Procedures” which specify
the principles allowing the Group to reduce the incurred foreign currency fluctuation risk to minimum. The Group is not engaged in any
speculative transactions through which it could expect to earn profit from the open currency positions after changes in currency rate.
The limits are imposed by the Risk Management Committee and subject to annual or more frequent review.
The Group and the Bank monitors the foreign currency risk by calculating open currency position. Open currency position (OCP) is
equal to assets in the balance sheet and off-balance sheet less balance sheet and off-balance sheet liabilities in a single currency.
There are two types of OCP, i.e. long and short. Long position means that Group’s assets exceed liabilities in given currency, whereas
short position means that liabilities exceed assets. The Group also calculates Overall net open position (ONOP), which is the higher of
the total short or total long positions. As at 31 December 2021 the Group’s ONOP to capital ratio was 0.08% (2020: 0.08%), the Bank’s
ONOP to capital ratio was 0.10% (2020: 0.08%).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
56
FINANCIAL RISK MANAGEMENT (CONTINUED)
Open positions
The Group’s open positions of prevailing currencies were as follows:
USD
Other currencies
Total currencies
EUR
Total
At 31 December 2021:
Assets
Cash and cash equivalents
18,959
11,235
30,194
935,529
965,723
Due from other banks
1,218
158
1,376
46,805
48,181
Securities in the trading book
595
-
595
601
1,196
Derivative financial instruments
-
-
-
2,121
2,121
Loans granted to customers, finance lease receivables
10,194
34
10,228
2,093,627
2,103,855
Investment securities at fair value
412
-
412
82,576
82,988
Investment securities at amortized cost
1,333
-
1,333
704,065
705,398
Intangible assets
-
-
-
4,834
4,834
Property, plant and equipment and investment property
-
-
-
16,989
16,989
Other assets
278
14
292
30,905
31,197
Total assets
32,989
11,441
44,430
3,918,052
3,962,482
Liabilities and shareholders’ equity
Due to other banks and financial institutions
2,941
-
2,941
694,797
697,738
Derivative financial instruments
-
-
-
96
96
Due to customers
123,479
15,701
139,180
2,540,003
2,679,183
Debt securities in issue
-
-
-
95,212
95,212
Special and lending funds
-
-
-
6,667
6,667
Liabilities related to insurance activities
1,405
158
1,563
39,846
41,409
Other liabilities
2,866
244
3,110
32,640
35,750
Shareholders’ equity
-
-
-
406,427
406,427
Total liabilities and shareholders’ equity
130,691
16,103
146,794
3,815,688
3,962,482
Net balance sheet position
(97,702)
(4,662)
(102,364)
102,364
-
Open currency exchange transactions
97,608
4,888
102,496
(100,312)
2,184
Net open position
(94)
226
132
2,052
2,184
At 31 December 2020:
Assets
Cash and cash equivalents
6,524
13,806
20,330
412,254
432,584
Due from other banks
132
111
243
36,825
37,068
Securities in the trading book
689
-
689
909
1,598
Derivative financial instruments
-
-
-
445
445
Loans granted to customers, finance lease receivables
13,259
272
13,531
1,747,589
1,761,120
Investment securities at fair value
358
-
358
33,984
34,342
Investment securities at amortized cost
1,230
-
1,230
708,224
709,454
Intangible assets
-
-
-
5,729
5,729
Property, plant and equipment and investment property
-
-
-
22,036
22,036
Other assets
6
9
15
24,454
24,469
Total assets
22,198
14,198
36,396
2,992,449
3,028,845
Liabilities and shareholders’ equity
Due to other banks and financial institutions
9,023
133
9,156
218,667
227,823
Derivative financial instruments
-
-
-
3,840
3,840
Due to customers
106,619
14,821
121,440
2,225,987
2,347,427
Debt securities in issue
-
-
-
20,027
20,027
Special and lending funds
-
-
-
5,749
5,749
Liabilities related to insurance activities
311
111
422
35,853
36,275
Other liabilities
782
115
897
31,741
32,638
Shareholders’ equity
-
-
-
355,066
355,066
Total liabilities and shareholders’ equity
116,735
15,180
131,915
2,896,930
3,028,845
Net balance sheet position
(94,537)
(982)
(95,519)
95,519
-
Open currency exchange transactions
94,536
1,150
95,686
(98,940)
(3,254)
Net open position
(1)
168
167
(3,421)
(3,254)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
57
FINANCIAL RISK MANAGEMENT (CONTINUED)
The Bank’s open positions of prevailing currencies were as follows:
USD
Other currencies
Total currencies
EUR
Total
At 31 December 2021:
Assets
Cash and cash equivalents
18,959
11,235
30,194
934,655
964,849
Due from other banks
-
-
-
15,099
15,099
Securities in the trading book
595
-
595
601
1,196
Derivative financial instruments
-
-
-
2,121
2,121
Loans granted to customers, finance lease receivables
10,194
34
10,228
2,074,310
2,084,538
Investment securities at fair value
412
-
412
82,539
82,951
Investment securities at amortized cost
1,333
-
1,333
690,893
692,226
Investments in subsidiaries
-
-
-
31,668
31,668
Intangible assets
-
-
-
3,114
3,114
Property, plant and equipment and investment property
-
-
-
14,462
14,462
Other assets
278
14
292
26,958
27,250
Total assets
31,771
11,283
43,054
3,876,420
3,919,474
Liabilities and shareholders’ equity
Due to other banks and financial institutions
2,941
-
2,941
700,330
703,271
Derivative financial instruments
-
-
-
96
96
Due to customers
123,479
15,701
139,180
2,542,406
2,681,586
Debt securities in issue
-
-
-
95,212
95,212
Special and lending funds
-
-
-
6,667
6,667
Other liabilities
2,866
244
3,110
21,951
25,061
Shareholders’ equity
-
-
-
407,581
407,581
Total liabilities and shareholders’ equity
129,286
15,945
145,231
3,774,243
3,919,474
Net balance sheet position
(97,515)
(4,662)
(102,177)
102,177
-
Open currency exchange transactions
97,608
4,888
102,496
(100,312)
2,184
Net open position
93
226
319
1,865
2,184
At 31 December 2020:
Assets
Cash and cash equivalents
6,217
13,806
20,023
411,626
431,649
Due from other banks
132
-
132
9,450
9,582
Securities in the trading book
689
-
689
909
1,598
Derivative financial instruments
-
-
-
445
445
Loans granted to customers, finance lease receivables
13,259
272
13,531
1,734,122
1,747,653
Investment securities at fair value
358
-
358
33,857
34,215
Investment securities at amortized cost
1,230
-
1,230
695,906
697,136
Investments in subsidiaries
-
-
-
29,135
29,135
Intangible assets
-
-
-
4,230
4,230
Property, plant and equipment and investment property
-
-
-
16,214
16,214
Other assets
6
9
15
15,797
15,812
Total assets
21,891
14,087
35,978
2,951,691
2,987,669
Liabilities and shareholders’ equity
Due to other banks and financial institutions
9,023
133
9,156
222,114
231,270
Derivative financial instruments
-
-
-
3,840
3,840
Due to customers
106,619
14,821
121,440
2,227,581
2,349,021
Debt securities in issue
-
-
-
20,027
20,027
Special and lending funds
-
-
-
5,749
5,749
Other liabilities
781
115
896
21,302
22,198
Shareholders’ equity
-
-
-
355,564
355,564
Total liabilities and shareholders’ equity
116,423
15,069
131,492
2,856,177
2,987,669
Net balance sheet position
(94,532)
(982)
(95,514)
95,514
-
Open currency exchange transactions
94,536
1,150
95,686
(98,940)
(3,254)
Net open position
4
168
172
(3,426)
(3,254)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
58
FINANCIAL RISK MANAGEMENT (CONTINUED)
The Bank has also granted loans in foreign currency. Although they are usually financed in the same currency, depending on the main
currency of the debtor’s cash flows, the strengthening of foreign currency against the local currency may adversely affect the debtors’
ability to repay the loans, which increases the probability of future losses from loans.
Sensitivity of foreign exchange risk
Foreign exchange (FX) risk is limited by amounts of open FX positions. For calculation of sensitivity to FX risk all exposures shall be
converted into possible loss, i.e. open FX position is multiplied by possible FX rate change. The FX risk parameters for the Group
(Bank) have been established in view of the maximum fluctuations of currency exchange rate in 2017 - 2021 and forecast that
exchange rate fluctuations will have the same trends in 2022.
Currency
Annual reasonable shift, 2022
Annual reasonable shift, 2021
GBP
5.5%
6 %
USD
5.5%
6 %
Other currencies
4.5%
6 %
CIS countries currencies
8.5%
10 %
The following table presents Group (Bank) sensitivities of profit and loss and equity to reasonably possible changes in exchange rates
applied at the balance sheet date, with all other variables held constant:
31 December 2021
31 December 2020
Impact on profit or loss and
equity
Group
Bank
Group
Bank
USD
5
5
2
2
GBP
-
-
-
-
Other currencies
11
11
19
19
CIS countries currencies
7
7
2
2
Pre-tax impact
23
23
24
24
Total
23
23
19
19
2.2. Interest rate risk in the banking book
An interest rate risk is a risk to incur losses because of the mismatch of re-evaluation possibility between the Bank’s and the Group’s
assets and liabilities.
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market
interest rates. The Bank and the Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates
on both its fair value and cash flow risks.
The risk management is regulated by the Interest Rate Risk Management Procedure, which was updated in 2019 to introduce a system
of internal risk limits and indicators, which establish methods of risk measurement and set up measures for risk management. This
procedure is approved by the Board of the Bank and defines that:
•the Bank observes the principle to avoid the speculation with future interest rates;
•the risk is evaluated using a system of internal key risk indicators;
•Risk Management and Reporting Department provides the information on regular basis to Risk Management Committee about
compliance with internal risk limits.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
59
FINANCIAL RISK MANAGEMENT (CONTINUED)
Sensitivity of interest rate risk
The table below summarises Group’s interest rates sensitive assets and liabilities in the banking book based on repricing dates
adjusted by Group's expected behavioral movement from demand deposits to term deposits.
Group
Up to 1
month
From 1 to
3 months
From 3 to
6 months
From 6 to
12 months
More than
1 year
Non interest
bearing or
maturity
undefined
Total
31 December 2021
Total interest rate sensitive assets
210,832
461,299
1,304,350
131,474
1,427,677
376,548
3,912,180
Total interest rate sensitive liabilities
86,626
121,728
789,186
278,913
1,588,831
690,675
3,555,959
Net interest sensitivity gap at 31 December 2021
124,206
339,571
515,164
(147,439)
(161,154)
(314,127)
356,221
31 December 2020
Total interest rate sensitive assets
242,522
494,518
507,509
131,783
1,134,569
480,579
2,991,480
Total interest rate sensitive liabilities
85,046
123,942
157,390
287,013
1,001,351
1,015,345
2,670,087
Net interest sensitivity gap at 31 December 2020
157,476
370,576
350,119
(155,230)
133,218
(534,766)
321,393
Assessing the sensitivity of the Group's profit and other components of equity towards the change of interest rates, it has been
assumed that interest is to change by 1 percentage point.
The table below summarizes the effect on the Group's profit and other components of equity of interest rate risk in the banking book as
at 31 December 2021 and 31 December 2020.
31 December 2021
31 December 2020
Pre-tax increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Pre-tax
increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Interest rate increase by 1 p.p.
6,872
(3,170)
2,962
6,398
(970)
4,342
Interest rate decrease by 1 p.p.
(6,872)
3,380
(2,794)
(6,398)
1,026
(4,298)
The table below summarises the Bank’s interest rates sensitive assets and liabilities in the banking book based on repricing dates
adjusted by Groups's expected behavioral movement from demand deposits to term deposits.
Bank
Up to 1
month
From 1 to
3 months
From 3 to
6 months
From 6 to
12 months
More than
1 year
Non interest
bearing or
maturity
undefined
Total
31 December 2021
Total interest rate sensitive assets
204,946
564,388
1,289,635
112,420
1,341,072
389,793
3,902,254
Total interest rate sensitive liabilities
86,626
121,728
789,226
279,313
1,589,352
645,552
3,511,797
Net interest sensitivity gap at 31 December 2021
118,320
442,660
500,409
(166,893)
(248,280)
(255,759)
390,457
31 December 2020
Total interest rate sensitive assets
235,733
483,069
593,983
114,378
1,065,715
484,764
2,977,642
Total interest rate sensitive liabilities
85,046
123,942
157,430
287,013
1,002,272
972,562
2,628,265
Net interest sensitivity gap at 31 December 2020
150,687
359,127
436,553
(172,635)
63,443
(487,798)
349,377
Assessing the sensitivity of the Bank's profit and other components of equity towards the change of interest rates, it has been assumed
that interest is to change by 1 percentage point.
The table below summarises the effect on the Bank's profit and other components of equity of interest rate risk in the banking book as
at 31 December 2021 and 31 December 2020.
31 December 2021
31 December 2020
Pre-tax increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Pre-tax
increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Interest rate increase by 1 p.p.
7,534
(3,170)
3,491
6,735
(968)
4,614
Interest rate decrease by 1 p.p.
(7,534)
3,380
(3,323)
(6,735)
1,024
(4,569)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
60
FINANCIAL RISK MANAGEMENT (CONTINUED)
2.3. Securities risk
Securities risk is the risk to incur losses from the investment in securities.
The management of the securities risk is regulated by the Investment in Securities Limits Procedure. In order to properly manage the
debt securities portfolio risk, the Bank uses an internal limit system that combines maturity/rating limits, geographical region limits
imposed on total debt securities portfolio, VaR ratio limits imposed on debt securities at amortized cost portfolio, and VaR and capital
requirements amount limits imposed on other debt securities portfolios. For the equity portfolio risk management, a limit system that
combines decision taking limits, issuer limits, portfolio limits is used. The compliance with limits must be checked before taking the
investment decisions, monthly reports on the compliance with the limits set are submitted to the Bank’s Risk Management Committee.
Securities concentrations
Sector concentration of the securities portfolio is disclosed in Financial Risk Management disclosure, section 1.8. Maturities
concentration of securities portfolio is disclosed in Financial Risk Management disclosure, section 3.2. Credit quality of the securities
portfolio is disclosed in Notes 12 and Note 15. Geographical concentration of the debt securities portfolio is presented in tables below,
which contain Top 20 countries in which the Group and the Bank have exposures:
Top 20 countries in which the Group has debt security exposures:
2021
2020
Name of the country
Sovereign
Corporate
Total
Name of the country
Sovereign
Corporate
Total
1.
Lithuania
537,372
22,390
559,762
Lithuania
469,934
5,489
475,423
2.
Netherlands
-
32,828
32,828
USA
-
35,441
35,441
3.
Germany
-
28,435
28,435
Netherlands
-
34,643
34,643
4.
USA
-
27,462
27,462
Germany
-
27,112
27,112
5.
Latvia
14,680
8,002
22,682
France
-
20,279
20,279
6.
Great Britain
215
14,717
14,932
Italy
13,480
4,228
17,708
7.
Estonia
-
13,136
13,136
Latvia
14,691
709
15,400
8.
France
-
11,921
11,921
Poland
14,939
206
15,145
9.
Italy
8,014
3,723
11,737
Mexico
5,338
8,297
13,635
10.
Poland
9,695
207
9,902
Estonia
-
11,987
11,987
11.
Bulgaria
9,325
296
9,621
Bulgaria
11,364
457
11,821
12.
Sweden
3,240
4,430
7,670
Great Britain
-
11,111
11,111
13.
Ireland
-
7,335
7,335
Sweden
-
10,661
10,661
14.
Spain
5,170
1,512
6,682
Spain
8,130
1,991
10,121
15.
Czech Republic
214
5,534
5,748
Ireland
3,316
4,230
7,546
16.
Luxembourg
-
5,443
5,443
Czech Republic
-
5,831
5,831
17.
Finland
-
5,053
5,053
Slovenia
5,543
205
5,748
18.
Austria
-
4,435
4,435
Romania
5,638
-
5,638
19.
Mexico
4,001
-
4,001
Finland
-
5,074
5,074
20.
Slovenia
166
3,354
3,520
Austria
-
4,434
4,434
Other countries
9,603
2,069
11,672
Other countries
4,239
5,426
9,665
Total
601,695
202,282
803,977
Total
556,612
197,811
754,423
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
61
FINANCIAL RISK MANAGEMENT (CONTINUED)
Top 20 countries in which the Bank has debt security exposures:
2021
2020
Name of the country
Sovereign
Corporate
Total
Name of the country
Sovereign
Corporate
Total
1.
Lithuania
534,030
18,580
552,610
Lithuania
466,789
2,441
469,230
2.
Netherlands
-
32,424
32,424
USA
-
34,590
34,590
3.
Germany
-
27,917
27,917
Netherlands
-
34,240
34,240
4.
USA
-
26,612
26,612
Germany
-
26,593
26,593
5.
Latvia
14,680
8,002
22,682
France
-
19,432
19,432
6.
Great Britain
-
14,516
14,516
Italy
13,190
3,721
16,911
7.
Estonia
-
12,830
12,830
Latvia
14,691
709
15,400
8.
France
-
11,082
11,082
Poland
14,939
-
14,939
9.
Italy
7,733
3,217
10,950
Mexico
4,909
8,297
13,206
10.
Poland
9,695
-
9,695
Estonia
-
11,680
11,680
11.
Bulgaria
9,128
296
9,424
Bulgaria
11,163
457
11,620
12.
Ireland
3,240
4,027
7,267
Great Britain
-
10,490
10,490
13.
Sweden
-
7,134
7,134
Sweden
-
10,262
10,262
14.
Spain
4,507
1,512
6,019
Spain
7,604
1,991
9,595
15.
Czech Republic
-
5,329
5,329
Ireland
3,316
4,029
7,345
16.
Luxembourg
-
4,991
4,991
Slovenia
5,471
-
5,471
17.
Finland
-
4,844
4,844
Czech Republic
-
5,409
5,409
18.
Austria
-
4,008
4,008
Finland
-
4,864
4,864
19.
Slovenia
3,322
-
3,322
Romania
4,553
-
4,553
20.
Mexico
-
3,149
3,149
Austria
-
4,004
4,004
Other countries
6,724
1,445
8,169
Other countries
1,966
4,609
6,575
Total
593,059
191,915
784,974
Total
548,591
187,818
736,409
Sensitivity of securities risk
The sensitivity of debt securities portfolio (at fair value through profit or loss – i.e. trading book is included in profit and at fair value
through other comprehensive income is included in other components of equity) to parallel shift of the interest rate curve by 1
percentage point is presented in the table below:
31 December 2021
31 December 2020
Pre-tax increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Pre-tax
increase
(decrease) in
profit
Pre-tax increase
(decrease) in other
components of equity
Total impact on
equity (post-tax)
Group:
Interest rate increase by 1 p.p.
(411)
(3,170)
(2,865)
(356)
(970)
(1,061)
Interest rate decrease by 1 p.p.
428
3,380
3,046
375
1,026
1,121
Bank:
Interest rate increase by 1 p.p.
(365)
(3,170)
(2,828)
(295)
(968)
(1,010)
Interest rate decrease by 1 p.p.
379
3,380
3,007
309
1,024
1,066
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
62
FINANCIAL RISK MANAGEMENT (CONTINUED)
3. Liquidity risk
Liquidity risk means the risk that the Bank is unable to meet its financial obligations in time or that it will not manage to receive financial
resources during a short time by borrowing or selling the assets.
3.1. Liquidity risk management process
The liquidity risk management depends on the Bank’s ability to cover the cash shortage by borrowing from the market; and the liquidity
of the market itself. The Bank seeks not to depend on the ability to borrow in the market in case of liquidity problems and constructs its
liquidity strategy based on hypothetical scenario it does not have access to market funding. Due to that fact the Bank possesses a
significant debt securities portfolio, which is highly liquid and can be used either as collateral for borrowing by repos, or sold.
Liquidity risk management is regulated by the Procedures for Liquidity Risk Management approved by the Bank’s Board. Liquidity risk is
evaluated by analysing the dynamics of various liquidity ratios. A list of these ratios as well as recommended limits to their change are
defined in the above-mentioned procedures. Decisions regarding liquidity management issues are made by the Bank’s Risk
Management Committee with reference to the information submitted by the Bank’s Risk Management and Reporting Department or by
the Bank’s Board with reference to the information submitted by the Risk Management Committee. Current liquidity (up to 7 days) risk
management is based on short-term cash flow analysis and projections. The Market and Treasury Department is responsible for this.
The Group controls short-term and long-term liquidity risk through established ratios and limits.
Starting from 2015, the Bank is subject to regulatory Liquidity coverage ratio (LCR). The Bank complied with this ratio with a substantial
cushion (requirement for the LCR is set at 100%). As of 31 December 2021, Bank’s LCR ratio (aggregate for all currencies) stood at
242% (31 December 2020: 278%).
Internal liquidity limit system was updated in 2019. It includes normative, prospective, quality and concentration ratios.
3.2. Structure of assets and liabilities by maturity
The structure of the Group’s assets and liabilities by maturity is presented in the table below. Maturity bands used in the table represent
maturities of assets and liabilities under most likely scenario, which is contractual maturities scenario adjusted for expectations. For
liabilities and assets with no payment breaches, contractual terms are used as the representation of most likely scenario unless
information indicating otherwise is available.
Past due part of the assets with payment breaches over 30 days and total amount of assets past due over 90 days are included in
“Maturity undefined” band.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
63
FINANCIAL RISK MANAGEMENT (CONTINUED)
On demand
Less than 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3 years
More than
3 years
Maturity
undefined
Total
At 31 December 2021:
Assets
Cash and cash equivalents
965,723
-
-
-
-
-
-
-
965,723
Due from other banks
-
997
99
-
-
9
91
-
1,196
Securities in the trading book
-
36
125
299
1,167
13,128
5,699
27,727
48,181
Derivative financial instruments
-
769
1,039
313
-
-
-
-
2,121
Loans to customers, finance lease
receivables
-
46,496
70,009
136,232
220,457
606,574
1,014,486
9,601
2,103,855
Investment securities at fair value
-
3
5,986
66
3,111
29,164
39,796
4,862
82,988
Investment securities at amortized cost
-
1,355
16,433
19,802
35,512
522,564
109,732
-
705,398
Intangible assets
-
-
-
-
-
-
-
4,834
4,834
Property, plant and equipment and
investment property
-
-
-
-
-
-
-
16,989
16,989
Other assets
12,327
5,860
66
53
374
505
3
12,009
31,197
Total assets
978,050
55,516
93,757
156,765
260,621
1,171,944
1,169,807
76,022
3,962,482
Due to other banks and financial institutions
40,425
6,779
1,893
(30)
2,771
632,270
13,630
-
697,738
Due to customers
1,853,292
80,074
119,604
159,379
278,378
155,198
33,258
-
2,679,183
Special and lending funds
6,667
6,667
Debt securities in issue
-
-
-
-
-
-
95,212
-
95,212
Liabilities related to insurance activities
74
374
349
288
1,307
2,168
36,849
41,409
Other liabilities
16,074
6,905
1,076
1,039
2,608
4,378
3,766
-
35,846
Shareholders’ equity
-
-
-
-
-
-
-
406,427
406,427
Total liabilities and shareholders’ equity
1,916,532
94,132
122,922
160,676
285,064
794,014
182,715
406,427
3,962,482
Net liquidity gap
(938,482)
(38,616)
(29,165)
(3,911)
(24,443)
377,930
987,092
(330,405)
-
At 31 December 2020:
Assets
Cash and cash equivalents
432,584
-
-
-
-
-
-
-
432,584
Due from other banks
-
-
144
467
269
540
99
79
1,598
Securities in the trading book
-
27
19
395
1,246
5,443
7,410
22,528
37,068
Derivative financial instruments
-
206
121
118
-
-
-
-
445
Loans to customers, finance lease
receivables
-
39,342
64,745
108,340
180,313
585,913
758,244
24,223
1,761,120
Investment securities at fair value
-
-
22
-
6,862
5,070
18,475
3,913
34,342
Investment securities at amortized cost
-
11,984
5,996
5,674
47,194
406,516
232,090
-
709,454
Intangible assets
-
-
-
-
-
-
-
5,729
5,729
Property, plant and equipment and
investment property
-
-
-
-
-
-
-
16,484
16,484
Other assets
2,329
4,608
1,540
865
7,141
618
12
12,908
30,021
Total assets
434,913
56,167
72,587
115,859
243,025
1,004,100
1,016,330
85,864
3,028,845
Due to other banks and financial institutions
50,866
8,334
991
(208)
152,442
6,043
10,763
-
229,231
Due to customers
1,459,771
78,243
122,991
155,618
285,647
194,266
50,145
-
2,346,681
Special and lending funds
5,749
-
-
-
-
-
-
-
5,749
Debt securities in issue
-
-
-
-
-
-
20,027
-
20,027
Liabilities related to insurance activities
85
416
116
145
555
2,915
32,043
-
36,275
Other liabilities
10,116
8,794
2,563
3,117
1,865
3,375
5,986
-
35,816
Shareholders’ equity
-
-
-
-
-
-
-
355,066
355,066
Total liabilities and shareholders’ equity
1,526,587
95,787
126,661
158,672
440,509
206,599
118,964
355,066
3,028,845
Net liquidity gap
(1,091,674)
(39,620)
(54,074)
(42,813)
(197,484)
797,501
897,366
(269,202)
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
64
FINANCIAL RISK MANAGEMENT (CONTINUED)
The Structure of the Bank's assets and liabilities by maturity was as follows:
On demand
Less than 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3 years
More than
3 years
Maturity
undefined
Total
At 31 December 2021:
Assets
Cash and cash equivalents
964,849
-
-
-
-
-
-
-
964,849
Due from other banks
-
997
99
-
-
9
91
-
1,196
Securities in the trading book
-
28
16
284
93
10,225
3,976
477
15,099
Derivative financial instruments
-
769
1,039
313
-
-
-
-
2,121
Loans to customers, finance lease
receivables
-
40,465
173,185
121,519
201,381
558,542
988,501
945
2,084,538
Investment securities at fair value
-
3
5,986
66
3,111
29,164
39,796
4,825
82,951
Investment securities at amortized cost
-
1,349
16,204
19,730
35,483
520,865
98,595
-
692,226
Investments in subsidiaries
-
-
-
-
-
-
-
31,668
31,668
Intangible assets
-
-
-
-
-
-
-
3,114
3,114
Property, plant and equipment and
investment property
-
-
-
-
-
-
-
14,462
14,462
Other assets
12,327
5,804
2
-
-
42
-
9,075
27,250
Total assets
977,176
49,415
196,531
141,912
240,068
1,118,847
1,130,959
64,566
3,919,474
Due to other banks and financial institutions
45,018
6,779
1,893
10
3,171
632,770
13,630
-
703,271
Due to customers
1,855,674
80,074
119,604
159,379
278,378
155,219
33,258
-
2,681,586
Special and lending funds
6,667
-
-
-
-
-
-
-
6,667
Debt securities in issue
-
-
-
-
-
-
95,212
-
95,212
Other liabilities
15,615
773
953
501
845
3,404
3,066
-
25,157
Shareholders’ equity
-
-
-
-
-
-
-
407,581
407,581
Total liabilities and shareholders’ equity
1,922,974
87,626
122,450
159,890
282,394
791,393
145,166
407,581
3,919,474
Net liquidity gap
(945,798)
(38,211)
74,081
(17,978)
(42,326)
327,454
985,793
(343,015)
-
At 31 December 2020:
Assets
Cash and cash equivalents
431,649
-
-
-
-
-
-
-
431,649
Due from other banks
-
-
144
467
269
540
99
79
1,598
Securities in the trading book
-
16
6
80
535
3,605
4,602
738
9,582
Derivative financial instruments
-
206
121
118
-
-
-
-
445
Loans to customers, finance lease
receivables
-
32,833
151,874
96,215
162,932
547,178
740,219
16,402
1,747,653
Investment securities at fair value
-
-
22
-
6,862
5,070
18,475
3,786
34,215
Investment securities at amortized cost
-
11,975
5,986
5,610
47,166
405,209
221,190
697,136
Investments in subsidiaries
-
-
-
-
-
-
-
29,135
29,135
Intangible assets
-
-
-
-
-
-
-
4,230
4,230
Property, plant and equipment and
investment property
-
-
-
-
-
-
-
15,852
15,852
Other assets
2,329
4,250
1,493
484
429
79
-
7,110
16,174
Total assets
433,978
49,280
159,646
102,974
218,193
961,681
984,585
77,332
2,987,669
Due to other banks and financial institutions
52,865
8,334
991
(168)
152,442
6,043
10,763
-
231,270
Due to customers
1,461,190
78,243
122,991
155,618
285,647
194,687
50,645
-
2,349,021
Special and lending funds
5,749
-
-
-
-
-
-
-
5,749
Debt securities in issue
-
-
-
-
-
-
20,027
-
20,027
Other liabilities
8,605
3,015
2,343
3,027
1,207
2,514
5,327
-
26,038
Shareholders’ equity
-
-
-
-
-
-
-
355,564
355,564
Total liabilities and shareholders’ equity
1,528,409
89,592
126,325
158,477
439,296
203,244
86,762
355,564
2,987,669
Net liquidity gap
(1,094,431)
(40,312)
33,321
(55,503)
(221,103)
758,437
897,823
(278,232)
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
65
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.3. Non - derivative cash flows
Undiscounted cash flows in the table below describe contractual liability side outflows which are stated including nominal contract
amounts together with interest till the end of the contract.
Group
31 December 2021
Maturity
undefined
Up to 1 month
1-3 months
3-12 months
1-5 years
Over 5 years
Total
Liabilities
Due to banks
-
46,971
1,771
632,325
9,547
9,644
700,258
Due to customers
-
1,940,074
119,710
438,788
186,393
7,170
2,692,135
Debt securities in issue
-
-
-
2,015
82,095
23,690
107,800
Special and lending funds
-
6,667
-
-
-
-
6,667
Liabilities related to insurance
activities
-
448
349
1,595
5,822
33,195
41,409
Total liabilities (contractual
maturity dates)
-
1,994,160
121,830
1,074,723
283,857
73,699
3,548,269
Group
31 December 2020
Maturity
undefined
Up to 1 month
1-3 months
3-12 months
1-5 years
Over 5 years
Total
Liabilities
Due to banks
-
58,540
982
152,652
11,044
5,027
228,245
Due to customers
-
1,543,811
123,143
442,954
249,202
4,141
2,363,251
Debt securities in issue
-
-
-
1,230
4,920
24,920
31,070
Special and lending funds
-
5,749
-
-
-
-
5,749
Liabilities related to insurance
activities
-
414
87
549
4,757
27,690
33,497
Total liabilities (contractual
maturity dates)
-
1,608,514
124,212
597,385
269,923
61,778
2,661,812
Bank
31 December 2021
Maturity
undefined
Up to 1 month
1-3 months
3-12 months
1-5 years
Over 5 years
Total
Liabilities
Due to banks
-
51,564
1,771
632,765
10,047
9,644
705,791
Due to customers
-
1,942,456
119,710
438,788
186,414
7,170
2,694,538
Debt securities in issue
-
-
-
2,015
82,095
23,690
107,800
Special and lending funds
-
6,667
-
-
-
-
6,667
Total liabilities (contractual
maturity dates)
-
2,000,687
121,481
1,073,568
278,556
40,504
3,514,796
Bank
31 December 2020
Maturity
undefined
Up to 1 month
1-3 months
3-12 months
1-5 years
Over 5 years
Total
Liabilities
Due to banks
-
61,201
982
152,713
11,944
5,027
231,867
Due to customers
-
1,545,230
123,143
442,954
249,202
4,141
2,364,670
Debt securities in issue
-
-
-
1,230
4,920
24,920
31,070
Special and lending funds
-
5,749
-
-
-
-
5,749
Total liabilities (contractual
maturity dates)
-
1,612,180
124,125
596,897
266,066
34,088
2,633,356
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
66
FINANCIAL RISK MANAGEMENT (CONTINUED)
3.4. Remaining contractual maturity off - balance sheet items
Analysis of off-balance sheet items by the remaining maturity is as follows:
Group
At 31 December 2021
Up to one
month
From 1 to 3
months
From 3 to 6
months
From 6 to 12
months
From 1
to 5 years
Over 5
years
Total
Loan commitments
394,173
-
-
-
-
-
394,173
Guarantees
52,931
-
-
-
-
-
52,931
Other commitments
1,183
961
2,106
102
8
-
4,360
Total
448,287
961
2,106
102
8
-
451,464
Group
At 31 December 2020
Up to one
month
From 1 to 3
months
From 3 to 6
months
From 6 to 12
months
From 1
to 5 years
Over 5
years
Total
Loan commitments
278,825
-
-
-
-
-
278,825
Guarantees
48,790
-
-
-
-
-
48,790
Other commitments
469
5,363
156
469
5
-
6,462
Total
328,084
5,363
156
469
5
-
334,077
Bank
At 31 December 2021
Up to one
month
From 1 to 3
months
From 3 to 6
months
From 6 to 12
months
From 1
to 5 years
Over 5
years
Total
Loan commitments
404,388
-
-
-
-
-
404,388
Guarantees
52,992
-
-
-
-
-
52,992
Other commitments
1,183
961
2,106
102
8
-
4,360
Total
458,563
961
2,106
102
8
-
461,740
Bank
At 31 December 2020
Up to one
month
From 1 to 3
months
From 3 to 6
months
From 6 to 12
months
From 1
to 5 years
Over 5
years
Total
Loan commitments
297,828
-
-
-
-
-
297,828
Guarantees
48,851
-
-
-
-
-
48,851
Other commitments
469
5,363
156
469
5
-
6,462
Total
347,148
5,363
156
469
5
-
353,141
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
67
FINANCIAL RISK MANAGEMENT (CONTINUED)
4. Fair value of financial assets and liabilities
4.1. Financial assets and liabilities not measured at fair value
The table below summarizes the carrying amounts and fair values of those financial assets and liabilities not presented on the Bank’s
and Group’s balance sheets at their fair value. The valuation methods for the assets and liabilities are summarized below.
a) Loans and advances to banks
The carrying amount of floating rate placements and overnight deposits is a reasonable approximation of fair value.
The fair value of fixed interest bearing deposits is estimated using valuation technique attributable to Level 3 in the fair value hierarchy,
based on discounted cash flows using prevailing money-market interest rates for debts with similar credit risk and remaining maturity.
b) Loans and advances to customers and finance lease receivables
Loans and advances and finance lease receivables are net of charges for impairment. The fair value of loans and advances to
customers and finance lease receivables is estimated using valuation technique attributable to Level 3 in the fair value hierarchy. The
estimated fair value of loans, advances and finance lease receivables represents the discounted amount of estimated future cash flows
expected to be received. Expected cash flows are discounted at current market rates (average interest rates on outstanding loans
published by the Bank of Lithuania) to determine fair value.
c) Investment securities
The fair value for held-to-collect assets is based on market prices or broker/dealer price quotations – i.e. it is estimated using valuation
technique attributable to Level 1 in the fair value hierarchy.
d) Deposits from banks, due to customers, debt securities in issue and special lending funds
The estimated fair value of deposits with no stated maturity, which includes non-interest bearing deposits, is the amount repayable on
demand.
The fair value of fixed interest-bearing deposits, debt securities in issue and special and lending funds not quoted in an active market is
estimated using valuation technique attributable to Level 3 in the fair value hierarchy based on discounted cash flows using interest
rates for new debts with similar remaining maturity. Interest rates for new deposits of Šiaulių bankas are used for calculation purposes
as discount rates.
e) Other financial assets and other financial liabilities
The fair value of lease liabilities is estimated using valuation technique attributable to Level 3 in the fair value hierarchy based on
discounted cash flows using interest rates for new leases with similar remaining maturity. The estimated fair value of other financial
assets and liabilities is similar to the carrying value due to short maturities of these assets and liabilities.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
68
FINANCIAL RISK MANAGEMENT (CONTINUED)
Group
As of 31 December 2021
As of 31 December 2020
Carrying amount
Fair value
Carrying amount
Fair value
Assets
Due from other banks
1,196
1,196
1,598
1,598
Loans
1,908,681
1,931,722
1,605,663
1,628,174
Loans to individuals:
690,008
711,833
545,188
564,367
Consumer loans -
143,462
154,630
133,517
145,464
Mortgages -
455,126
466,770
297,140
304,449
Other -
91,420
90,433
114,531
114,454
Loans to business customers
1,211,726
1,212,983
1,055,728
1,059,071
Central and other authorities -
135,969
131,994
116,274
112,863
Large corporates -
127,772
127,381
109,695
109,884
SME -
947,985
953,608
829,759
836,324
Loans and advances to financial institutions
6,947
6,906
4,747
4,736
Finance lease receivables
195,174
194,999
155,457
154,407
Investment securities at amortized cost
705,398
698,867
709,454
725,022
Government bonds -
541,026
539,611
532,501
543,609
Corporate bonds -
164,372
159,256
176,953
181,413
Other financial assets
16,398
16,398
4,695
4,695
Liabilities
Due to other banks and financial institutions
697,738
697,736
227,823
227,784
Due to customers
2,679,183
2,683,626
2,347,427
2,353,571
Due to individuals
1,531,867
1,536,206
1,477,127
1,483,119
Due to private companies
860,965
861,003
682,960
683,027
Due to other enterprises
286,351
286,417
187,340
187,425
Debt securities in issue
95,212
95,201
20,027
20,225
Special and lending funds
6,667
6,667
5,749
5,749
Other financial liabilities
25,053
25,023
24,231
24,194
Bank
As of 31 December 2021
As of 31 December 2020
Carrying amount
Fair value
Carrying amount
Fair value
Assets
Due from other banks
1,196
1,196
1,598
1,598
Loans
1,889,629
1,901,449
1,592,363
1,603,328
Loans to individuals:
553,087
563,912
424,419
432,274
Consumer loans -
6,541
6,709
12,748
13,372
Mortgages -
455,126
466,770
297,140
304,449
Other -
91,420
90,433
114,531
114,453
Loans to business customers
1,211,726
1,212,978
1,060,502
1,063,839
Central and other authorities -
135,969
131,994
116,274
112,863
Large corporates -
127,772
127,381
109,695
109,884
SME -
947,985
953,603
834,533
841,092
Loans and advances to financial institutions
124,816
124,559
107,442
107,215
Finance lease receivables
194,909
194,727
155,290
154,234
Investment securities at amortized cost
692,226
698,408
697,136
712,000
Government bonds -
535,006
539,374
526,700
537,450
Corporate bonds -
157,220
159,034
170,436
174,550
Other financial assets
16,271
16,271
4,278
4,278
Liabilities
Due to other banks and financial institutions
703,271
703,269
231,270
231,231
Due to customers
2,681,586
2,686,029
2,349,021
2,355,165
Due to individuals
1,531,867
1,536,206
1,477,127
1,483,119
Due to private companies
863,347
863,385
684,533
684,600
Other
286,372
286,438
187,361
187,446
Debt securities in issue
95,212
95,201
20,027
20,225
Special and lending funds
6,667
6,667
5,749
5,749
Other financial liabilities
21,775
21,748
20,337
20,309
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
69
FINANCIAL RISK MANAGEMENT (CONTINUED)
4.2. Financial assets and liabilities measured at fair value
a) Fair value hierarchy
The table below analyses financial instruments carried at fair value, by a hierarchy of valuation techniques based on whether the inputs
to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent
sources; unobservable inputs reflect the Group’s market assumptions. These two types of inputs have created the following fair value
hierarchy:
•Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity
securities and debt instruments on exchanges (for example, NASDAQ Stock Exchange, London Stock Exchange, Frankfurt
Stock Exchange) or public price quotations (for example, for Lithuanian government bonds, average price quotations from the
most active banks that participate in the primary placement auctions of the Lithuanian Government securities are used).
•Level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices). The Group uses fair value calculated based on Level 2 inputs for
accounting of currency derivatives and derivatives related to prices of equity instruments.
•Level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level
includes Group’s investments into unlisted equity securities, derivatives related to interest rate floor in variable rate loan
contracts and liabilities designated at fair value through profit or loss. Details on fair value measurement of these instruments
are described in subsection “Details on the main models used in valuation of Level III instruments” (Financial Risk
Management disclosure, section 4.2.b), below.
b) Measurement of financial assets and liabilities according to the fair value hierarchy
2021
2020
Group
Bank
Group
Bank
LEVEL I
Financial assets in the trading book
Listed equity securities
449
449
732
732
Units of investment funds
27,250
-
21,790
-
Government bonds
6,071
4,062
6,404
4,183
Corporate bonds
7,465
3,642
4,533
2,412
Investment securities at fair value
-
-
-
-
Government bonds
53,991
53,991
17,709
17,709
Corporate bonds
24,425
24,425
12,720
12,720
Investment fund units
-
-
459
459
Total Level I financial assets
119,651
86,569
64,347
38,215
LEVEL II
Financial assets in the trading book
Derivative financial instruments
2,121
2,121
445
445
Total Level II financial assets
2,121
2,121
445
445
Financial liabilities at fair value through profit or loss
Derivative financial instruments
96
96
(3,840)
(3,840)
Total Level II financial liabilities
96
96
(3,840)
(3,840)
LEVEL III
Financial assets in the trading book
Corporate bonds
6,918
6,918
3,603
2,249
Unlisted equity securities
28
28
6
6
Investment securities at fair value
-
-
-
-
Corporate bonds
-
-
-
-
Unlisted equity securities
455
455
525
398
Investment fund units
4,117
4,080
2,929
2,929
Total Level III financial assets
11,518
11,481
7,063
5,582
There were no transfers between fair value hierarchy levels during 2021 and 2020.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
70
FINANCIAL RISK MANAGEMENT (CONTINUED)
The following table presents the changes in Level III instruments during 2021 and 2020:
The Group
Financial assets in the trading book
Investment securities at fair value
Corporate bonds
Unlisted equities
Corporate bonds
Unlisted equities
Investment fund units
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Value as of 1 January
3,603
1,516
6
3
-
395
525
741
2,929
4,054
Additions / Recognition
20,288
6,165
46
312
-
-
-
8
1,148
3,025
Disposals
(15,157)
(4,075)
(23)
(309)
-
(395)
(127)
-
(378)
(3,605)
Conversion to shares
-
-
-
-
-
-
-
-
-
-
Derecognition
(1,892)
-
-
-
-
-
-
-
-
-
Changes due to interest accrued/
paid
73
1
-
-
-
-
-
-
-
-
Revaluations through profit or loss
3
(4)
(1)
-
-
-
57
(224)
418
(545)
Value as of 31 December
6,918
3,603
28
6
-
-
455
525
4,117
2,929
The Bank
Financial assets in the trading book
Investment securities at fair value
Corporate bonds
Unlisted equities
Corporate bonds
Unlisted equities
Investment fund units
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Value as of 1 January
2,249
1,516
6
3
-
-
398
622
2,929
-
Additions / Recognition
20,288
4,807
46
315
-
-
-
-
1,111
3,025
Disposals
(13,803)
(4,072)
(23)
(312)
-
-
-
-
(378)
-
Conversion to shares
-
-
-
-
-
-
-
-
-
-
Derecognition
(1,892)
-
-
-
-
-
-
-
-
-
Changes due to interest accrued/
paid
73
1
-
-
-
-
-
-
-
-
Revaluations through profit or loss
3
(3)
(1)
-
-
-
57
(224)
418
(96)
Value as of 31 December
6,918
2,249
28
6
-
-
455
398
4,080
2,929
2021
2020
Group
Bank
Group
Bank
Total result from revaluation of Level III instruments included in the income statement
476
476
(773)
(322)
from trading securities (corporate bonds)
2
2
(4)
(2)
from investment securities at fair value (unlisted equities)
56
56
(224)
(224)
from investment securities at fair value (investment fund units)
418
418
(545)
(96)
Details on the main models used in valuation of Level III instruments:
Unlisted debt securities. Most commonly used fair value measures in the Group are assessment of discounted cash flows from the
security carried out by employees of the Group. The principles for the assessment of fair value of unlisted equity securities are
stipulated in the Instruction for Accounting of Securities.
Unlisted equity securities. Most commonly used fair value measures in the Group are: valuations from external independent certified
appraisers or assessment of discounted cash flows from the security carried out by employees of the Group. The principles for the
assessment of fair value of unlisted equity securities are stipulated in the Instruction for Accounting of Securities.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
71
FINANCIAL RISK MANAGEMENT (CONTINUED)
4.3. Offsetting financial assets and financial liabilities
As of 31 December 2021 and 31 December 2020, only currency derivative instruments were subject to master netting arrangements
and similar arrangements. As of 31 December 2021, derivative financial instruments classified as assets in amount of EUR 2,121
thousand and derivative financial instruments classified as liabilities in amount of EUR 96 thousand were subject to those agreements.
As of 31 December 2020, derivative financial instruments classified as assets in amount of EUR 444 thousand and derivative financial
instruments classified as liabilities in amount of EUR 3,840 thousand were subject to those agreements.
The Group receives collateral in the form of marketable securities in respect of reverse repurchase agreements, which are included in
loans to customers. Gross amount of reverse repurchase agreements: 31 December 2021: EUR 10,308 thousand; 31 December 2020:
EUR 5,857 thousand. Securities received as a collateral for reverse repurchase agreements can be pledged or sold during the term of
transaction but have to be returned on maturity of the transaction. The Group did not pledge or sell any collateral received for reverse
repurchase agreements during 2021 and 2020.
4.4. Classes of financial instruments
A table below provides reconciliation of items of financial assets and liabilities as presented in Statement of Financial Position to
classes of financial instruments:
31 December 2021
31 December 2020
Group
Bank
Group
Bank
FINANCIAL ASSETS
Financial assets mandatorily measured at fair value through profit or loss:
55,164
22,045
41,426
13,813
Trading securities
18,198
15,099
12,544
9,582
trading debt securities: government bonds -
2,020
11
3,669
4,182
trading debt securities: corporate bonds -
15,701
14,611
8,137
4,662
trading equities -
477
477
738
738
Other trading book securities
29,983
-
24,524
-
other trading book debt securities: government bonds -
2,733
-
2,734
-
other trading book equities -
27,250
-
21,790
-
Investment securities at fair value
4,862
4,825
3,913
3,786
non-trading equities -
4,862
4,825
3,913
3,786
Derivative financial instruments
2,121
2,121
445
445
Financial assets measured at fair value through other comprehensive income:
78,126
78,126
30,429
30,429
Debt securities at fair value through other comprehensive income
78,126
78,126
30,429
30,429
government bonds -
53,991
53,991
17,709
17,709
corporate bonds -
24,135
24,135
12,720
12,720
Financial assets measured at amortized cost:
3,597,396
3,564,171
2,753,994
2,727,024
Cash and cash equivalents
965,723
964,849
432,584
431,649
Due from other banks
1,196
1,196
1,598
1,598
Loans to customers
1,908,681
1,889,629
1,605,663
1,592,363
loans to financial institutions -
6,947
124,816
4,747
107,442
loans to individuals (retail): consumer loans -
143,462
6,541
133,517
12,748
loans to individuals (retail): mortgages -
455,126
455,126
297,140
297,140
loans to individuals (retail): other -
91,420
91,420
114,531
114,531
loans to business customers: SME -
947,985
947,985
829,759
834,533
loans to business customers: large corporates -
127,772
127,772
109,695
109,695
loans to business customers: central and local authorities and other -
135,969
135,969
116,274
116,274
Investment securities at amortized cost
705,398
692,226
709,454
697,136
government bonds -
541,026
535,006
532,501
526,700
corporate bonds -
164,372
157,220
176,953
170,436
Other financial assets
16,398
16,271
4,695
4,278
Finance lease receivables:
195,174
194,909
155,457
155,290
Finance lease receivables
195,174
194,909
155,457
155,290
individuals -
26,630
26,630
26,308
26,308
business customers -
168,544
168,279
129,149
128,982
TOTAL FINANCIAL ASSETS
3,925,860
3,859,251
2,981,306
2,926,556
FINANCIAL LIABILITIES
Financial liabilities mandatorily measured at fair value through profit or loss:
96
96
3,840
3,840
Derivative financial instruments
96
96
3,840
3,840
Financial liabilities measured at amortised cost:
3,503,853
3,508,511
2,625,257
2,626,404
Due to banks and financial institutions
697,738
703,271
227,823
231,270
Due to customers
2,679,183
2,681,586
2,347,427
2,349,021
due to individuals -
1,531,867
1,531,867
1,477,127
1,477,127
due to private companies -
860,965
863,347
682,960
684,533
other -
286,351
286,372
187,340
187,361
Special and lending funds
6,667
6,667
5,749
5,749
Debt securities in issue
95,212
95,212
20,027
20,027
Other financial liabilities
25,053
21,775
24,231
20,337
TOTAL FINANCIAL LIABILITIES
3,503,949
3,508,607
2,629,097
2,630,244
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
72
FINANCIAL RISK MANAGEMENT (CONTINUED)
5. The risk inherent in insurance activities
The Bank’s subsidiary SB Draudimas (hereinafter - the company) is engaged in life insurance business.
Insurance risk
The insurance risk occurs from the uncertainty in estimation of the probability and timing of the insurance events used for the
calculation of the insurance premium. This risk is random and therefore unpredictable.
For the portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the
company faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the
insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance
events are random and the actual number and amount of claims and benefits will vary from year to year from the estimate established
using statistical techniques.
The company issues the contracts with mortality, morbidity, survival, casualty risks.
The company manages acceptable insurance risk by valuating the health of the insured person, habits of living, and the history of the
health of his family. The company uses a system of several levels of risk to ensure that the payable premium would conform to the state
of health of the insured person.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected
outcome will be. In addition, a more diversified portfolio is less likely to be affected by a change in any subset of the portfolio. The
company has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of these
categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.
At present, these risks do not vary significantly in relation to the location of the risk insured by the company. However, undue
concentration by amounts could have an impact on the severity of benefit payments on a portfolio basis.
Concentration of risk is measured by the insurance amount of the accepted risks:
2021
2020
Maturity
2.56 %
3.07 %
Death
32.88 %
32.44 %
Critical illness
10.09 %
10.50 %
Death in case of accident
14.75 %
14.68 %
Trauma
39.71 %
39.30 %
The company manages these risks through its underwriting strategy and reinsurance arrangements.
The underwriting strategy is intended to ensure that the risks underwritten are well diversified in terms of type of risk and the level of
insured benefits.
The company follows the principles of conservatism and prudence to settle the price for insurance risk therefore the increase in loss
rate of any insurance risk would not impact the result of the Group significantly.
Mortality, survival, casualty and morbidity risks
Mortality, morbidity, survival, casualty risks occur because the frequency or severity of claims and benefits are greater than estimated,
that will cause that future premiums will not be sufficient to cover the future claims in case of death, illnesses or trauma. For contracts
where death is the insured risk, the most significant factors that could increase the overall frequency of claims are epidemics (such as
AIDS or SARS) or wide spread changes in lifestyle, such as eating, smoking and exercise habits, resulting in earlier or more claims
than expected.
The survival insurance risk appears due to the longer life time than planned. For contracts where survival is the insured risk, the most
significant factor is continued improvement in medical science and social conditions that would increase longevity.
The most significant factor that could increase the casualty insurance risk is the departure from occupational safety, use of obsolete
equipment, increasing rate of accidents.
As portfolio of the company has not significant number of events of death, trauma and casualty, for valuation of the mortality and
casualty insurance risks the company uses statistics on mortality and casualty of the population of Lithuania. For valuation of the
morbidity insurance risk the company uses morbidity tables of the reinsurance company that has a broad experience of similar
activities.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
73
FINANCIAL RISK MANAGEMENT (CONTINUED)
Profit or loss and insurance liabilities are mainly sensitive to changes in mortality, disability/morbidity, lapse rates, expense rates,
discount rates which are estimated for calculating adequate value of insurance liabilities during the liability adequacy test.
Changes in variables represent reasonably possible changes in variables mentioned which could have occurred and would have led to
significant changes in insurance liabilities as at the end of the reporting period. These reasonably possible changes represent neither
expected changes in variables nor worst-case scenarios.
The analysis was prepared for a change in variables with all other assumptions remaining constant and ignores changes in the values
of the related assets.
Sensitivity was calculated for the worse direction in movement; therefore, sensitivity to changes was calculated for a 10% increase in
mortality, longevity, disability and morbidity, lapse rates and expense rates. Hence changes in discount rates are stated in 100 basis
points for both directions.
The company’s sensitivity to the changes in key variables that have a material impact, as of 31 December 2021:
Variable
Change in variable
Change in profit/loss
Change in insurance
liability
Mortality
10%
(433)
433
Longevity
10%
(12)
12
Disability/Morbidity
10%
(432)
432
Lapse rate
10%
(314)
314
Expense rate
10%
(1.175)
1.175
Discount rate
100bp
1.311
(1.311)
(100bp)
(1.566)
1.566
The Company’s sensitivity to the changes in key variables that have a material impact, as of 31 December 2020:
Variable
Change in variable
Change in profit/loss
Change in insurance
liability
Mortality
10%
(569)
569
Longevity
10%
(13)
13
Disability/Morbidity
10%
(351)
351
Lapse rate
10%
(138)
(138)
Expense rate
10%
(868)
868
Discount rate
100bp
1,363
(1,363)
(100bp)
(1,626)
1,626
Loss rate according to insurance groups:
2021 (%)
2020 (%)
Life insurance
Investment life insurance
13.5
11.9
Term life insurance
12.0
12.3
Endowment insurance
17.5
17.9
Annuities
60.5
37.2
Overall loss rate
15.7
14.1
Loss rates by insurance groups were calculated by dividing total claims costs (including change in outstanding claims reserve) per
insurance group by gross earned premiums.
Claims lag risk
Claims lag risk occurs when the event is incurred but not yet reported to the Company. If the part of incurred but not reported claims
would increase or decrease by 10% during the reporting year, the profit and the equity of the Company would decrease or increase by
EUR 7 thousand (2020 – EUR 7 thousand).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
74
FINANCIAL RISK MANAGEMENT (CONTINUED)
Cancellation risk
Cancellation risk is a risk, when the insurance contract is terminated on the initiative of the policyholder earlier than the contract expires.
The surrender value, paid to the policyholder, in case of the contract cancellation, consisted of share from the total mathematical
technical provision (2021: 4.9%, 2020: 5.3%), except unearned premium technical provision for the end of the reporting year. Due to the
fact that technical provision for every contract is not less than the surrender amount in case of the contract cancellation, therefore,
increased number of cancellations shall not affect the results of the Company in the long run. Immediate profits in the current year are
netted by decrease in the future income of the Company.
The company manages such risk through the prevention of the cancellation, by notifying the policyholder of possible cancellation due
payment delay of a periodical insurance premium, by proposing to change the terms of the contract according to the present situation.
Technical provisions inadequacy risk
Technical provisions inadequacy risk is a risk that calculated insurance technical provisions will be insufficient to reflect (cover)
company‘s underwriting insurance liabilities. In order to reduce the technical provisions inadequacy risk the company periodically tests
technical provisions adequacy and ensures compliance with set limits.
6. Operational risk
Operational risk is the risk to incur losses due to inadequate internal control processes or incorrect process implementation, errors
and(or) illegal actions of employees, malfunctioning of information systems or external incidents. Unlike other risks (credit, market,
liquidity), which are not being taken on purposefully, with anticipation of benefits, operational risk occurs naturally in the course of
Bank’s business.
The principles for management operational risk in the Bank: proper identification and assessment of operational risk; preventing larger
operational risk and losses by implementation of efficient internal control; proper organisation and supervision of internal control
environment by continuous revision of applicable control methods; concentration of resources and time towards identification and
management of main sources of operational risk in all the areas of Bank’s activity.
The Bank has prepared and continuously improves the operational risk management principles and tools applicable to the Bank and its
subsidiaries, which are defined in the documents regulating the operational risk management of the Bank and subsidiaries of the Bank.
Operational event recording system. The operation of the system is described in the Instructions for the Administration of Operational
Risk Events and the Registration of Operational Risk Events. From September 2021, all employees of SB Lizingas UAB and GD SB
Draudimas UAB can independently record and analyse operational risk events in the AIS.
Business Continuity Management. A Covid-19 working group was formed, in 2021 it continued its work, i.e. it constantly monitored the
situation in Lithuania and provided recommendations on the organization of work in the Bank to the relevant decision-making
executives and / or bodies. In 2021, the documents regulating the Bank's Business Continuity were updated, and tests of the Business
Continuity Plans were performed. The Bank has improved the Bank's operational and reputation risk management systems to address
climate change and environmental risks. Important outsourcing agreements with suppliers have been revised, and annexes to
Important Outsourcing have been signed in accordance with external legislation.
In 2022, the operational and reputation risk management and event registration system of the Bank and the Bank's subsidiaries will be
further improved, and a review of the indicator system is planned. It is planned to update the Procurement Procedure for Outsourcing
Services. Significant attention will be paid to the review of the Bank's business continuity plan documentation and the comprehensive
preparation and testing of testing scenarios for business continuity plans.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
75
FINANCIAL RISK MANAGEMENT (CONTINUED)
7. IT risk
Information technology (IT) risk – is a probability of loss due to breach of confidentiality, failure of integrity of systems and data,
inappropriateness or unavailability of systems and data or inability to change information technology (IT) within a reasonable time and
with reasonable costs when the environment or business requirements change. Main goal of Bank’s IT risk management – avoid or
minimize losses caused by IT related factors.
Bank’s IT risk is regulated by IT risk management procedure. System of key IT risk indicators (KRIs) helps in measurement and
management of IT risk level, this system is constantly improved.
In 2021 Bank continued implementing IT risk decreasing measures. Updated Bank IT risk management procedure was prepared. IT
continuity plan was updated, critical IT systems recovery plans was tested. All IT systems moved out from in house to external data
center. Risky outdated and end-of-life technologies were removed from Bank’s IT systems. Privileged access management system was
implemented, significantly elevating level of Bank’s IT security, IT systems user access management procedure was updated.
8. Compliance risk
Compliance risk is the risk that the Bank's activities do not comply with the financial institution regulatory requirements set forth in the
national legal acts, the EBA (European Banking Authority), the ESMA (European Security and Markets Authority), Financial Crime
Investigation Service (FNTT) and Bank of Lithuania guidelines, positions and requirements. The Bank ensures compliance control and
puts efforts to avoid breaches of legal acts which could impair interests of the Bank or its clients, damage reputation of the Bank, cause
fines or other sanctions, generate financial or other losses to the Bank.The compliance function areas were established by the Bank
taking into consideration the volume of operations, the complexity of the activities, transactions executed and their risk level. The
compliance function performs compliance risk self assessment using risk-based approach on a regular basis and informs Bank‘s
management about the identified risks and their mitigation measures. During 2021 changes to compliance function continued by
relocating compliance function to structure of Risk management service. Nevertheless, compliance function was continuously active in
area of anti-money laundering (AML) and terrorist financing prevention, sanctions screening, data privacy, financial instruments market,
anti-corruption, anti-market abuse related activities and other areas.
9. Model risk
The Bank defines model risk as the risk to incur a financial loss or to make incorrect business decisions, publish false reporting
disclosures because of the usage of models. Setup of models risk management was reviewed and enhanced in 2021. Models risk is
managed within the Bank using risk based approach - the Bank maintains a list of its models and performs assessment of models
importance based on which independent validation of the selected models is prioritized.
10. ESG risk
ESG (Environmental, social and governance) risks are the risks of any negative financial impact on the Bank stemming from the current
or prospective impacts of ESG factors on its counterparties or invested assets. The Environmental risk is further defined as Climate-
related and environmental risk, consisting of physical and transition risk:
•Physical risk, which is the risks of any negative financial impact on the institution stemming from the current or prospective
impacts of the physical effects of environmental factors on its counterparties or invested assets.
•Transition risk , which is the risks of any negative financial impact on the institution stemming from the current or prospective
impacts of the transition to an environmentally sustainable economy on its counterparties or invested assets.
11. Stress tests
Besides the regular assessment of the risks and the capital requirement calculation, the Group also performs stress tests which are a
part of Internal Capital Adequacy Assessment Process (ICAAP). During this process it is determined if the Bank’s capital is sufficient to
cover the possible losses which may occur because of the financial status deterioration. Stress testing for all of the risks is performed at
least once a year in accordance with the prudential requirements. Ad hoc stress tests for separate risks are performed in case there is a
need to understand the possible impacts of underlying factors.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
76
FINANCIAL RISK MANAGEMENT (CONTINUED)
12. Capital management
The capital of the Bank and its subsidiaries in the prudential scope of calculation (Financial Group, please see Note 31) is calculated
and allocated for the risk coverage following the Capital requirements regulation and directive – CRR/CRD IV. The Bank’s objectives
when managing own funds are as follows:
•to comply with the own funds requirements set by the European Parliament and the Council of the European Union as well as
the internal target capital requirements;
•to safeguard the Bank’s and the Financial Group’s ability to continue as a going concern so that it can provide returns for
shareholders and benefits for other stakeholders;
•to support the development of the Group’s business with the help of the strong capital base.
Information regarding capital adequacy is submitted to the supervising authority quarterly in accordance with the CRR/CRD IV
requirements.
During the years ended 31 December 2021 and 31 December 2020, the Bank and the Financial Group complied with capital
requirements to which it was subject.
According to Solvency II directive Bank’s subsidiary SB Draudimas GD UAB has to ensure that all the time its own funds must be
higher than Solvency Capital Requirement and Minimum Capital Requirement, which enables the company to cover potential losses
and reasonably assure policyholders that payables will be paid out. Solvency II ratio is being calculated and reported quarterly to
supervisory authority, the Bank of Lithuania. During the years ended 31 December 2021 and 31 December 2020, Company complied
with the Solvency II ratio requirements to which it was subject.
Other companies comprising the Group are not subject to supervisory requirements on a company level. General principles stipulated
in the Republic of Lithuania Law on Limited Liability Companies apply – i.e. share capital of the company cannot be less than EUR 2.5
thousand, it the company’s shareholders’ equity becomes less than ½ of the share capital in the charter of the company, the company
has to remediate the situation over the prescribed period of time.
During the years ended 31 December 2021 and 31 December 2020, the Group and the Bank complied with prudential requirements to
which it was subject.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
77
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Impairment losses on loans and finance lease receivables. The Bank and the Group review their loan and finance lease portfolios to
assess impairment at least on a quarterly basis. In determining the impairment loss amount, the Group makes multiple judgements and
estimates, including forward looking assumptions. When making expected credit loss estimate, the Bank and the Group analyse
financial information received from a client and client’s performance in servicing its loans. The methodology and assumptions used (the
credit rating of the client; usage of low credit risk exemption for the loans that have 'standard' internal ratings; the recoverability ratio
applied; discounted market value of pledged assets) for assessment of client’s ability to service debt and estimating both the amount
and timing of future cash flows are reviewed regularly to reduce any difference between loss estimates and actual loss experience.
However due to inherent limitations of the methodology, the calculated impairment loss as at 31 December 2021 may be inadequate to
reflect the losses of the loan portfolio. Please see section 1.3.b of Financial risk management dislosure for the impairment loss
sensitivity analysis.
Impairment losses on investments in subsidiaries. The Bank tests investments in its subsidiaries for impairment when impairment
indicators are identified. The Bank establishes recoverable amount of investments in subsidiary companies based on discounted future
estimated net cash flows to be earned by a subsidiary. Future net cash flows to be earned by investment management and real estate
development subsidiaries are based on estimated inflow from sales of financial and other assets held by these subsidiaries less
estimated cash outflow related to management and development costs. Future net cash flows from subsidiary involved in leasing
operations are estimated based on future expected interest income to be earned on lease portfolio less cash outflows related to
financing activities and administration costs. Discount rates are based on current cost of capital used for investments in these
subsidiaries. The Group’s management applies judgement in estimating cash flows and discount rates used in impairment testing.
Impairment of goodwill. Goodwill is tested for impairment annually. In order to determine if the value of goodwill has been impaired, the
cash-generating unit to which goodwill has been allocated is valued using present value techniques, which are further described in Note
17. The Group’s management applies judgement in estimating cash flows and discount rates used in impairment testing, changes in
these judgements and estimates can significantly affect the assessed value of goodwill. Increase of discount rate used in impairment
testing by 2% (other factors held constant) would decrease the net present value of cash generating unit by EUR 826 thousand and
would not result in additional impairment of goodwill (2020: decrease the value by EUR 900 thousand and would not result in additional
impairment of goodwill).
TLTRO-III borrowings. Based on the terms of the third series of the targeted longer-term refinancing operations (TLTRO-III) program of
the European Central Bank in comparison to market pricing for other similar collateralized borrowings available, the Group's
management concluded that TLTRO-III borrowing (please see Note 20 for more details on the liability) contain a significant benefit
relative to market pricing and accounts for part of financial liabilities relating to TLTRO-III as grants under IAS 20. The effective interest
rate of these borrowings recognized in Group's income statement include the bonus on the special interest period and reflects the
Group's expectation to not meet the lending targets over the operation's life. If there was a subsequent change in the Group's estimate
regarding its lending targets, the Group would apply IFRS 9 revision of estimates guidance.
Liabilities related to insurance activities. The value of liabilities related to insurance activities (technical insurance provisions) is
determined by making assumptions and estimates that have impact on the reported amounts. These estimates and assumptions are
regularly reviewed and based on historic experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Please see section 5. of Financial risk management disclosure for the liabilities related to
insurance activities sensitivity analysis.
Fair value measurements for Level 3 assets or liabilities. Measurement of the fair value of assets or liabilities assigned to Level 3
requires usage of inputs that are not based on observable market data (unobservable inputs). The Group’s management applies
judgement in choosing appropriate methodology, estimating cash flows, discount rates and other parameters used in such valuations.
Please see section 4. of Financial risk management disclosure for the fair value approaches used.
Taxes. The tax authorities have carried out a full-scope tax audit at the Bank for the years 1998 to 2001 (income tax audit was done for
the period from 1998 to 2000). There were no significant remarks or disputes. The tax authorities may at any time inspect the books
and records within 5 years subsequent to the reported tax year, and may impose additional tax assessments and penalties. The Bank's
management is not aware of any circumstances which may give rise to a potential material liability in this respect. The deferred tax
assets recognised at 31 December 2021 have been based on future profitability assumptions of the Bank over a five year horizon. In
the event of changes to these profitability assumptions, the tax assets recognised may be adjusted.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
78
SEGMENT INFORMATION
Summary of major indicators for the main business segments of the Group included in the statement of financial position as at 31
December 2021 and in the income statement for the year then ended is presented in the table below.
Traditional banking
operations and lending
Treasury
Non-core banking
activities
Other activities
Eliminations
Total
Continuing operations
Internal
(529)
-
26
(33)
536
-
External
83,803
7,228
484
357
-
91,872
Interest income
83,274
7,228
510
324
536
91,872
Internal
-
-
-
-
-
-
External
(6,844)
(4,086)
(25)
-
(10,955)
Interest expenses
(6,844)
(4,086)
(25)
-
-
(10,955)
Internal
(529)
-
26
(33)
536
-
External
76,959
3,142
459
357
-
80,917
Net interest income
76,430
3,142
485
324
536
80,917
Internal
429
-
-
28
(457)
-
External
17,382
-
-
(222)
-
17,160
Net fee and commission income
17,811
-
-
(194)
(457)
17,160
Internal
(100)
-
26
(5)
79
-
External
94,341
3,142
459
135
-
98,077
Net interest, fee and commissions income
94,241
3,142
485
130
79
98,077
Internal
(150)
-
-
(127)
277
-
External
(37,425)
(3,591)
-
(10,764)
-
(51,780)
Operating expenses
(37,575)
(3,591)
-
(10,891)
277
(51,780)
Amortisation charges
(1,160)
(129)
-
(57)
-
(1,346)
Depreciation charges
(2,544)
(268)
-
(282)
-
(3,094)
Internal
-
-
1,998
(821)
(1,177)
-
External
(4,211)
-
(140)
274
-
(4,077)
Impairment expenses
(4,211)
-
1,858
(547)
(1,177)
(4,077)
Internal
5,082
-
4,470
(809)
(8,743)
-
External
11,585
1,908
(539)
16,528
-
29,482
Net other income
16,667
1,908
3,931
15,719
(8,743)
29,482
Profit (loss) before tax from continuing
operations
65,418
1,062
6,274
4,072
(9,564)
67,262
Income tax
(10,758)
(1,074)
-
(207)
-
(12,039)
Profit (loss) per segment after tax from
continuing operations
54,660
(12)
6,274
3,865
(9,564)
55,223
Profit or (loss) per segment after tax from
discontinued operations
-
-
-
-
-
-
Profit (loss) per segment
54,660
(12)
6,274
3,865
(9,564)
55,223
Non-controlling interest
-
-
-
-
-
-
Profit (loss) for the year attributable to the
owners of the Bank
54,660
(12)
6,274
3,865
(9,564)
55,223
Total segment assets
2,288,855
1,766,700
5,582
61,010
(159,665)
3,962,482
Total segment liabilities
2,051,148
1,582,983
5,002
43,482
(126,560)
3,556,055
Net segment assets (shareholders’ equity)
237,707
183,717
580
17,528
(33,105)
406,427
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
79
SEGMENT INFORMATION (CONTINUED)
A summary of major indicators for the main business segments of the Group included in the statement of financial position as at 31
December 2020 and in the income statement for the year then ended is presented below:
Traditional banking
operations and lending
Treasury
Non-core banking
activities
Other activities
Eliminations
Total
Continuing operations
Internal
(174)
-
223
(134)
85
-
External
76,121
7,354
2,246
308
-
86,029
Interest income
75,947
7,354
2,469
174
85
86,029
Internal
-
-
-
-
-
-
External
(6,894)
(3,377)
(50)
-
-
(10,321)
Interest expenses
(6,894)
(3,377)
(50)
-
-
(10,321)
Internal
(174)
-
223
(134)
85
-
External
69,227
3,977
2,196
308
-
75,708
Net interest income
69,053
3,977
2,419
174
85
75,708
Internal
325
-
-
51
(376)
-
External
16,270
-
-
(225)
-
16,045
Net fee and commission income
16,595
-
-
(174)
(376)
16,045
Internal
151
-
223
(83)
(291)
-
External
85,497
3,977
2,196
83
-
91,753
Net interest, fee and commissions income
85,648
3,977
2,419
-
(291)
91,753
Internal
(113)
-
(1)
(60)
174
-
External
(33,352)
(3,219)
-
(7,524)
-
(44,095)
Operating expenses
(33,465)
(3,219)
(1)
(7,584)
174
(44,095)
Amortisation charges
(959)
(106)
-
(45)
-
(1,110)
Depreciation charges
(2,401)
(250)
-
(345)
-
(2,996)
Internal
-
-
(2,262)
2,002
260
-
External
(10,470)
-
298
(1,801)
-
(11,973)
Impairment expenses
(10,470)
-
(1,964)
201
260
(11,973)
Internal
5,766
-
38
(46)
(5,758)
-
External
7,865
4,841
805
7,718
-
21,229
Net other income
13,631
4,841
843
7,672
(5,758)
21,229
Profit (loss) before tax from continuing
operations
51,984
5,243
1,297
(101)
(5,615)
52,808
Income tax
(8,989)
(853)
-
(45)
-
(9,887)
Profit (loss) per segment after tax from
continuing operations
42,995
4,390
1,297
(146)
(5,615)
42,921
Profit or (loss) per segment after tax from
discontinued operations
-
-
121
-
-
121
Profit (loss) per segment
42,995
4,390
1,418
(146)
(5,615)
43,042
Non-controlling interest
-
-
-
-
-
-
Profit (loss) for the year attributable to the
owners of the Bank
42,995
4,390
1,418
(146)
(5,615)
43,042
Total segment assets
1,921,559
1,179,967
12,969
61,613
(147,263)
3,028,845
Total segment liabilities
1,693,496
1,039,539
11,425
44,878
(115,559)
2,673,779
Net segment assets (shareholders’ equity)
228,063
140,428
1,544
16,735
(31,704)
355,066
Distribution of the Group’s assets and revenue according to geographical segmentation
All Bank’s and Group’s non-current assets other than financial instruments are located in Lithuania. No material revenue is earned by
the Group in foreign countries.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
80
NOTE 1
NET INTEREST INCOME
2021
2020
Group
Bank
Group
Bank
Interest revenue calculated using the effective interest method (on financial assets at
amortized cost and fair value through other comprehensive income):
83,035
69,951
78,502
65,067
on loans to other banks and financial institutions and placements with credit
institutions
2,135
4,922
921
3,762
on loans to customers
75,590
59,972
70,725
54,688
on debt securities at amortized cost
5,023
4,831
6,559
6,381
on debt securities at fair value through other comprehensive income
287
226
297
236
Other similar income:
8,861
8,719
7,527
7,435
on debt securities at fair value through profit or loss
498
372
292
214
on finance leases
7,656
7,633
7,111
7,097
other interest income
707
714
124
124
Total interest income
91,896
78,670
86,029
72,502
Interest expense:
on financial liabilities designated at fair value through profit or loss
-
-
-
-
on financial liabilities measured at amortised cost
(8,682)
(8,682)
(9,659)
(9,653)
on other liabilities
(2,297)
(2,290)
(662)
(418)
Total interest expense
(10,979)
(10,972)
(10,321)
(10,071)
Net interest income
80,917
67,698
75,708
62,431
NOTE 2
NET FEE AND COMMISSION INCOME
2021
2020
Group
Bank
Group
Bank
Fee and commission income:
for administration of loans of third parties
4,474
4,474
4,598
4,598
for settlement services
5,625
5,636
5,106
5,110
for cash operations
4,964
4,965
5,037
5,037
for account administration
4,276
4,276
4,011
4,011
for guarantees, letters of credit, documentary collection
909
909
763
763
for collection of utility and similar payments
290
290
272
276
for services related to securities
3,284
3,403
1,977
2,119
other fee and commission income
795
1,240
849
1,100
Total fee and commission income
24,617
25,193
22,613
23,014
Fee and commission expense:
for payment cards
(4,229)
(4,229)
(3,459)
(3,459)
for cash operations
(1,168)
(1,168)
(1,203)
(1,203)
for correspondent bank and payment system fees
(653)
(468)
(671)
(452)
for services of financial data vendors
(226)
(226)
(190)
(190)
for services related to securities
(791)
(791)
(678)
(678)
other fee and commission expenses
(390)
(357)
(367)
(345)
Total fee and commission expense
(7,457)
(7,239)
(6,568)
(6,327)
Net fee and commission income
17,160
17,954
16,045
16,687
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
81
NOTE 3
NET GAIN FROM TRADING ACTIVITIES
2021
2020
Group
Bank
Group
Bank
Net gain from operations with securities
4,583
1,908
4,407
4,841
Net gain from foreign exchange and related derivatives
(2,718)
(2,791)
7,161
7,156
Net gain (loss) from other derivatives
10,071
10,071
21
21
Total net gain from trading activities
11,936
9,188
11,589
12,018
NET GAIN FROM OPERATIONS WITH SECURITIES
2021
2020
Group
Bank
Group
Bank
Securities in the trading book:
Realised gain (loss) on equity securities
287
36
40
(164)
Unrealised gain (loss) on equity securities
2,635
106
(492)
78
Realised gain on debt securities
71
78
27
25
Unrealised gain (loss) on debt securities
(157)
(56)
(132)
(62)
Dividend and other income from equity securities in the trading book
24
24
23
23
Net gain (loss) on securities in the trading book
2,860
188
(534)
(100)
Investment securities:
Realised gain (loss) on investment equities at fair value through profit or loss
(102)
(102)
657
657
Unrealised gain on investment equities at fair value through profit or loss
224
224
(264)
(264)
Realised gain on debt securities at fair value through other comprehensive income
283
280
393
393
Realised gain on debt securities at amortized cost
1,315
1,315
4,149
4,149
Dividend and other income from investment equities
3
3
6
6
Net gain on investment securities
1,723
1,720
4,941
4,941
Total
4,583
1,908
4,407
4,841
Group‘s net gain on operations with securities in the trading book includes investment result of the insurance company assets under
unit-linked contracts (see Note 5): net gain of EUR 2,835 thousand in 2021 and net loss of EUR 421 thousand in 2020.
Bank's internal policy allows frequent, but strictly limited in scale and infrequent but larger scale sales of debt securities at amortized
cost. In 2020, a case of larger scale securities at amortized cost sales occurred as in the second quarter, in the light of major
uncertainties resulting from Covid-19 pandemic that may have resulted in a potential market strain, Bank's management confirmed a
program to sell the securities at amortized cost with potentially risky characteristics with an aim to reduce the overall debt security at
amortized cost portfolio credit risk and avoid potential impairments (amounts sold are disclosed in Note 15).
NET GAIN FROM FOREIGN EXCHANGE AND RELATED DERIVATIVES
2021
2020
Group
Bank
Group
Bank
Net gain from foreign exchange
(2,718)
(2,791)
13,590
13,585
Net gain (loss) from derivatives related with foreign exchange
10,071
10,071
(6,429)
(6,429)
Total
7,353
7,280
7,161
7,156
Group‘s net gain from foreign exchange includes investment result of the insurance company assets under unit-linked contracts (see
Note 5): a net gain of EUR 4 thousand in 2021 and a net gain of EUR 5 thousand in 2020.
NET GAIN (LOSS) FROM OTHER DERIVATIVES
2021
2020
Group
Bank
Group
Bank
Net gain (loss) from derivatives related to prices of financial instruments
-
-
21
21
Total
-
-
21
21
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
82
NOTE 4
OTHER OPERATING EXPENSES
2021
2020
Group
Bank
Group
Bank
Rent of buildings and premises
(262)
(268)
(295)
(240)
Utility services for buildings and premises
(895)
(813)
(748)
(680)
Other expenses related to buildings and premises
(856)
(856)
(1,315)
(1,313)
Transportation expenses
(321)
(243)
(307)
(242)
Legal costs
(494)
(494)
(290)
(290)
Personnel and training expenses
(485)
(442)
(305)
(280)
IT and communication expenses
(6,660)
(5,976)
(5,188)
(4,595)
Marketing and charity expenses
(3,112)
(1,283)
(2,716)
(1,211)
Service organisation expenses
(1,934)
(1,812)
(2,058)
(1,943)
Non-income taxes, fines
(10)
667
(250)
204
Costs incurred due to debt recovery
(275)
(89)
(384)
(116)
Other expenses
(1,338)
(658)
(1,321)
(975)
Total
(16,643)
(12,268)
(15,177)
(11,681)
NOTE 5
REVENUE AND EXPENSES RELATED TO INSURANCE ACTIVITIES
Bank’s subsidiary SB Draudimas GD UAB (hereinafter - insurance company) is engaged in life insurance business. Revenue and
expenses from main activities of this company are presented in the tables below.
REVENUE RELATED TO INSURANCE ACTIVITIES
2021
2020
Group
Bank
Group
Bank
Revenue related to insurance activities
8,137
-
7,225
-
Total
8,137
-
7,225
-
EXPENSES RELATED TO INSURANCE ACTIVITIES
2021
2020
Group
Bank
Group
Bank
Expenses related to insurance activities:
change of the technical insurance provisions that covers the result of investment
of assets under unit-linked contracts*
(2,969)
-
400
-
other changes of the technical insurance provisions
(956)
-
(2,351)
-
insurance benefits paid
(3,035)
-
(2,827)
-
commission expenses incurred and other
(1,072)
-
(670)
-
Total
(8,032)
-
(5,448)
-
* The investment result of the insurance company assets under unit-linked contracts is included in the following income statement lines:
2021
2020
Group
Bank
Group
Bank
Interest and similar income
61
-
61
-
Net gain (loss) from operations with securities
2,835
-
(421)
-
Net gain from foreign exchange
73
-
(3)
-
Total
2,969
-
(363)
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
83
NOTE 6
OTHER INCOME
NET GAIN FROM DISPOSAL OF TANGIBLE ASSETS
In 2021 net gain on disposal of tangible assets (mostly real estate, accounted for as Property, plant and equipment, Investment property
or Inventories in the statement of financial position) at the Group amounted to EUR 3,736 thousand (Bank: net gain of EUR 66
thousand). In 2020 net gain on disposal of tangible assets (mostly real estate, accounted for as Property, plant and equipment,
Investment property or Inventories in the statement of financial position) at the Group amounted to EUR 376 thousand (Bank: net gain
of EUR 7 thousand).
NET GAIN FROM DERECOGNITION OF FINANCIAL ASSETS
Net gain from derecognition of financial assets (for the year ended 31 December 2021: Group EUR 4,363 thousand, Bank EUR 2,729
thousand; for the year ended 31 December 2020: Group EUR 1,265 thousand, Bank EUR 384 thousand) is based on the difference of
the carrying value of loans to customers (accounted at amortized cost) at the moment of sale and the proceeds from sale. Loans to
customers facing credit difficulties sold as part of the Group's problem loan recovery activities comprise the major part of loans sold.
Net gain from sale of debt securities at amortized cost as well as from other securities in included in trading income (Note 3).
OTHER OPERATING INCOME
2021
2020
Group
Bank
Group
Bank
Income from rent of investment property and other income from investment property
181
69
330
42
Income from rent of other assets
121
178
225
144
Net gain (loss) from modification of financial assets
(35)
(31)
(47)
(32)
Portion of TLTRO III negative interest attributable to grant
587
587
-
-
Other income
456
333
266
298
Total
1,310
1,136
774
452
NOTE 7
IMPAIRMENT LOSSES
2021
2020
Group
Bank
Group
Bank
Impairment losses on loans:
Impairment charge for the year, net (see Note 13)
5,832
2,176
11,270
10,294
Recoveries of loans previously written off
(849)
(542)
(1,309)
(694)
Total impairment losses (reversals) on loans
4,983
1,634
9,961
9,600
Impairment losses on finance lease receivables:
Impairment charge for the year, net (see Note 14)
(797)
(802)
656
655
Recovered previously written-off finance lease receivables
-
-
(142)
-
Total impairment losses (reversals) on finance lease receivables
(797)
(802)
514
655
Total impairment losses (reversals) on loans and finance lease receivables
4,186
832
10,475
10,255
Impairment losses on financial assets other than loans and finance lease receivables:
Due from other banks: impairment charge, net (see Note 10)
64
64
20
20
Debt securities: impairment charge, net (see Note 15)
(10)
(11)
56
52
Other financial assets: impairment charge, net (see Note 19)
114
88
(352)
(350)
Total impairment losses on financial assets other than loans and finance lease receivables:
168
141
(276)
(278)
Non-financial assets:
Goodwill: impairment charge
-
-
-
-
Non-financial assets other than goodwill: impairment charge
7
7
2,007
7
Non-financial assets other than goodwill: reversal of impairment charge
(828)
(6)
(34)
(34)
Total impairment losses on non-financial assets:
(821)
1
1,973
(27)
Provisions (see Note 25):
Provisions for pending legal issues: charge
-
-
-
-
Provisions for commitments and guarantees given: charge / (reversal)
544
-
(199)
-
Total provisions:
544
-
(199)
-
Total impairment losses on other assets
(109)
142
1,498
(305)
Impairment losses on subsidiaries (see Note 16):
Investments in subsidiaries: impairment charge
-
-
-
114
Investments in subsidiaries: reversal of impairment charge
-
-
-
-
Total impairment losses on subsidiaries
-
-
-
114
Total
4,077
974
11,973
10,064
Impairment losses on other non-financial assets other than goodwill include impairment of investment properties (Note 26), investments
classified as held for sale and other non-financial assets (Note 19).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
84
NOTE 8
INCOME TAX
2021
2020
Group
Bank
Group
Bank
Current tax
11,032
9,981
10,081
9,125
Deferred taxes
930
684
(511)
(908)
Deferred tax adjustment due to change in tax rate
-
-
-
-
Adjustment of previous year income tax
77
77
317
317
Total
12,039
10,742
9,887
8,534
The tax on the Bank’s and the Group’s profit before tax differs from the theoretical amount that would arise using the basic tax rate as
follows:
2021
2020
Group
Bank
Group
Bank
Profit before income tax from continuing operations
67,262
66,747
52,808
51,629
Tax calculated at a tax rate of 15%
10,089
10,012
7,921
7,744
Tax calculated at a tax rate of 5%
2,427
2,427
2,481
2,481
Income not subject to tax
(4,144)
(2,687)
(5,645)
(3,127)
Expenses not deductible for tax purposes
3,618
941
5,070
1,488
Additional deduction of film, charity expenses
(28)
(28)
(369)
(369)
Adjustments of previous year income tax
77
77
317
317
Unrecognized deferred tax assets for recognized tax losses
-
-
112
-
Income tax charge
12,039
10,742
9,887
8,534
Deferred tax assets
Group
Bank
Revaluation of
financial
instruments
and other
assets
Impairment of
investment
property and
inventories
Accruals
Right of
use
Carryfor
ward of
unused
tax
losses
Total
Accruals
Revaluation of
financial
instruments and
other assets
Total
At 1 January 2020
(395)
(562)
(445)
9
(26)
(1,419)
(445)
(395)
(831)
To be credited/(charged) to net
profit
(778)
154
(114)
(16)
(106)
(860)
(114)
(778)
(908)
To be credited/ (charged) to other
comprehensive income
49
-
-
-
-
49
-
49
49
Reclassification to discontinued
activity
-
152
-
-
-
152
-
-
-
At 31 December 2020
(1,124)
(256)
(559)
(7)
(132)
(2,078)
(559)
(1,124)
(1,690)
To be credited/(charged) to net
profit
740
46
(59)
-
2
729
(56)
740
684
To be credited/ (charged) to other
comprehensive income
(244)
-
-
-
-
(244)
-
(244)
(244)
Reclassification to discontinued
activity
-
-
-
-
-
-
-
-
-
At 31 December 2021
(628)
(210)
(618)
(7)
(130)
(1,593)
(615)
(628)
(1,250)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
85
NOTE 8
INCOME TAX (CONTINUED)
Deferred tax liabilities
Group
Right of use assets
Revaluation of financial
instruments and other
assets
Total
At 1 January 2020
(1)
918
917
To be credited/(charged) to net profit
1
333
334
To be credited/ (charged) to other comprehensive income
-
-
-
At 31 December 2020
-
1,251
1,251
To be credited/(charged) to net profit
-
201
201
To be credited/ (charged) to other comprehensive income
-
-
-
At 31 December 2021
-
1,452
1,452
Taxable losses of the Group and the Bank are carried forward for indefinite term through the use of future taxable profits. Management
of the Bank has estimated that future taxable profits of the Bank and the Group will be sufficient to realize the accumulated tax losses.
Therefore deferred tax asset from the accumulated tax losses was recognized.
Projected terms of expected utilization of deferred tax assets, netted with projected payment of deferred tax liabilities, are presented in
the table below:
2021
2020
Group
Bank
Group
Bank
Up to 1 year
(1,730)
(404)
711
679
2-5 years
1,871
1,654
116
1,011
Total
141
1,250
827
1,690
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities. The following amounts, determined after appropriate offsetting, are shown in the balance sheet:
2021
2020
Group
Bank
Group
Bank
Deferred tax assets
1,593
1,250
2,078
1,690
Deferred tax liabilities
(1,452)
-
(1,251)
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
86
NOTE 9
EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit for the period by the weighted average number of ordinary shares in
issue during the period. There were no potential ordinary shares at 31 December 2021 and 31 December 2020, therefore the Group
had no dilutive potential ordinary shares and diluted earnings per share are equal to basic earnings per share.
The number of shares in issue for the year ended 31 December 2021 and 31 December 2020 was 600,726 thousand. Weighted
average number of shares in issue for the year ended 31 December 2021 was 600,462 thousand (2020: 600,717 thousand).
Basic earnings per share
Group
2021
2020
Net profit from continuing operations attributable to equity holders
55,223
42,921
Net profit (loss) from discontinued operations attributable to equity holders
-
121
Net profit attributable to equity holders
55,223
43,042
Weighted average number of shares in issue during the period (thousand units)
600,462
600,717
Basic earnings per share (EUR)
0.09
0.07
Basic earnings per share (EUR) from continuing operations
0.09
0.07
Basic earnings per share (EUR) from discontinued operations
-
0.00
NOTE 10
CASH AND CASH EQUIVALENTS
2021
2020
Group
Bank
Group
Bank
Cash and other valuables
66,861
66,861
69,496
69,398
Balances in bank correspondent accounts:
Gross value
31,089
30,215
13,115
12,278
Allowance for impairment
(21)
(21)
(8)
(8)
Total balances in bank correspondent accounts, net value
31,068
30,194
13,107
12,270
Placements with Central Bank:
Correspondent account with Central Bank
582,788
582,788
120,407
120,407
Mandatory reserves in local currency, gross value
285,091
285,091
229,608
229,608
Mandatory reserves in local currency, allowance for impairment
(85)
(85)
(34)
(34)
Total placements with Central Bank, net value
867,794
867,794
349,981
349,981
Total
965,723
964,849
432,584
431,649
The compulsory reserves held in the Bank of Lithuania are estimated on a monthly basis based on the value of indicated liabilities using
the established compulsory reserve rate. With effect from 1 January 2015, the compulsory reserve rate was set at 1%. The mandatory
reserves are held with the Bank of Lithuania in the form of current deposits. The Bank is free to use the funds held in the current
account with the Bank of Lithuania, the average monthly amount of which may be not less than the estimated compulsory reserves.
The balances in bank correspondent accounts and placements with Central Bank are classified as Stage 1 financial assets. Breakdown
of balances in bank correspondent accounts by credit rating is presented in the table below:
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
87
NOTE 10
CASH AND CASH EQUIVALENTS (CONTINUED)
Rating *
2021
2020
Group
Bank
Group
Bank
From AA- to AA+
3,410
3,242
1,889
1,721
From A- to A+
6,755
6,484
4,797
4,526
From BBB- to BBB+
14,390
14,036
2,484
2,130
Lower than BBB-
2,433
2,433
787
787
No external credit rating (Standard internal rating)
321
321
2,803
2,759
No external rating (Substandard internal rating)
3,780
3,699
355
355
Total
31,089
30,215
13,115
12,278
* for local banks that are subsidiaries of foreign banks, credit rating of the parent institution is used in case no credit rating of the local
institution is available.
Reconciliation of allowance for impairment of cash and cash equivalents (including due from banks presented in Note 11) is presented
in the table below:
Group
Bank
Allowance for impairment of cash equivalents and due from banks as of 1 January 2020:
23
23
Change in allowance for impairment
20
20
FX and other movements
(1)
(1)
Allowance for impairment of cash equivalents and due from banks as of 31 December 2020:
42
42
Change in allowance for impairment
64
64
FX and other movements
-
-
Allowance for impairment of cash equivalents and due from banks as of 31 December 2021:
106
106
As of 31 December 2021, balances in correspondent accounts in amount of EUR 3,778 thousand (as of 31 December 2020 - EUR
2,574 thousand) were pledged for derivatives contracts.
Liabilities from financing activities
The table below sets out movements in the Group’s liabilities from financing activities for each of the periods presented. The items of
these liabilities are those that are reported as financing activities in the statement of cash flows.
2021
2020
Dividends
payable
Debt securities
in issue
Lease liabilities
Total
Dividends
payable
Debt
securities in
issue
Lease
liabilities
Total
As at 1 January
45
20,027
7,314
27,386
55
20,044
2,780
22,879
Dividends declared
3,304
-
-
3,304
-
-
-
-
Issuance in cash
-
75,000
-
75,000
-
-
-
-
Contract additions / terminations
-
-
185
185
-
-
6,074
6,074
Payment in cash
(3,299)
-
(1,432)
(4,731)
(10)
-
(1,569)
(1,579)
Redemption in cash
-
-
-
-
-
-
-
-
Accrued interest
-
1,415
26
1,441
-
1,213
29
1,242
Coupon payments in cash
-
(1,230)
-
(1,230)
-
(1,230)
-
(1,230)
As at of 31 December
50
95,212
6,093
101,355
45
20,027
7,314
27,386
The table below sets out movements in the Bank’s liabilities from financing activities for each of the periods presented. The items of
these liabilities are those that are reported as financing activities in the statement of cash flows.
2021
2020
Dividends
payable
Debt securities
in issue
Lease liabilities
Total
Dividends
payable
Debt
securities in
issue
Lease
liabilities
Total
As at 1 January
45
20,027
6,944
27,016
55
20,044
2,532
22,631
Dividends declared
3,304
-
-
3,304
-
-
-
-
Issuance in cash
-
75,000
-
75,000
-
-
-
-
Contract additions / terminations
-
-
136
136
-
-
5,766
5,766
Payment in cash
(3,299)
-
(1,281)
(4,580)
(10)
-
(1,376)
(1,386)
Redemption in cash
-
-
-
-
-
-
-
-
Accrued interest
-
1,415
19
1,434
-
1,213
22
1,235
Coupon payments in cash
-
(1,230)
-
(1,230)
-
(1,230)
-
(1,230)
As at of 31 December
50
95,212
5,818
101,080
45
20,027
6,944
27,016
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
88
NOTE 11
DUE FROM OTHER BANKS
2021
2020
Group
Bank
Group
Bank
Pledged deposits
-
-
540
540
Term deposits
101
101
370
370
Loans
1,095
1,095
688
688
Gross value
1,196
1,196
1,598
1,598
Allowance for impairment
-
-
-
-
Net value
1,196
1,196
1,598
1,598
Breakdown due from other banks by the maturity:
Short-term (up to 1 year)
1,096
1,096
1,420
1,420
Long-term (over 1 year)
100
100
178
178
Total
1,196
1,196
1,598
1,598
As of 31 December 2020, pledged deposits consisted of funds pledged for derivatives contracts. As of 31 December 2021, term
deposits amounting to EUR 101 thousand were pledged for the guarantees or letters of credit issued for the Bank’s clients. As of 31
December 2020, term deposits amounting to EUR 100 thousand were pledged for the guarantees or letters of credit issued for the
Bank’s clients, EUR 270 thousand – for derivatives contracts.
All amounts due from banks are classified as Stage 1 financial assets. Breakdown of balances due from banks by credit rating is
presented in the table below:
Rating *
2021
2020
Group
Bank
Group
Bank
From AA- to AA+
514
514
100
100
From A- to A+
680
680
688
688
From BBB- to BBB+
2
2
810
810
Total
1,196
1,196
1,598
1,598
* for local banks that are subsidiaries of foreign banks, credit rating of the parent institution is used in case no credit rating of the local
institution.
NOTE 12
FINANCIAL ASSETS AND LIABILITIES IN THE TRADING BOOK
Total balances of financial assets and liabilities in the trading book are presented in the table below:
2021
2020
Group
Bank
Group
Bank
Assets:
Derivatives:
2,121
2,121
445
445
currency derivatives
2,121
2,121
445
445
derivatives related to prices of financial instruments
-
-
-
-
Securities in the trading book
48,181
15,099
37,068
9,582
Liabilities:
Derivatives:
(96)
(96)
(3,840)
(3,840)
currency derivatives
(96)
(96)
(3,840)
(3,840)
derivatives related to prices of financial instruments
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
89
NOTE 12
FINANCIAL ASSETS AND LIABILITIES IN THE TRADING BOOK (CONTINUED)
Derivative Financial Instruments – Currency Derivatives
As of 31 December 2021 and 31 December 2020, the Group and the Bank had exposure to currency forwards, which represent
commitments to purchase and/or sell foreign and local currency in the future at a fixed price.
2021
2020
Group
Bank
Group
Bank
Currency forwards:
Assets
2,121
2,121
445
445
Liabilities
(96)
(96)
(3,840)
(3,840)
Notional amount
151,452
151,452
161,262
161,262
Net gain (loss) from currency derivatives in profit or loss
10,071
10,071
(6,429)
(6,429)
Derivative Financial Instruments – Derivatives Related to Prices of Financial Instruments
The Bank had issued fixed term deposits with additional interest that may be paid for the entire deposit term, if the value of the
underlying assets (a group of equity or other financial instruments) linked with the deposit reaches the barrier. Deposit additional
interest condition is a call option sold to the customer therefore it is treated as a derivative embedded in the host contract (deposit). The
Bank used call options bought from other counterparties to close the position resulting from embedded options in the deposit contracts.
Details on gain from options related to prices of financial instruments are presented below:
2021
2020
Group
Bank
Group
Bank
Net gain (loss) from derivatives related to prices of financial instruments in profit or
loss
-
-
21
21
Securities in the Trading Book
2021
2020
Group
Bank
Group
Bank
Trading debt securities:
(restated)
Government bonds
2,020
11
3,669
4,182
Corporate bonds
15,701
14,611
8,137
4,662
Other trading book debt securities:
Government bonds
2,733
-
2,734
-
Total debt securities
20,454
14,622
14,540
8,844
Trading equity securities
477
477
738
738
Other trading book equity securities
27,250
-
21,790
-
Total equity securities
27,727
477
22,528
738
Total securities in the trading book
48,181
15,099
37,068
9,582
Breakdown of debt securities by time remaining to maturity:
Short-term (up to 1 year)
421
421
1,687
637
Long-term (over 1 year)
20,033
14,201
12,853
8,207
Total
20,454
14,622
14,540
8,844
Securities in the trading book are comprised of trading securities and other securities that cover technical insurance provisions under
unit-linked insurance contracts of life insurance subsidiary. These securities are measured at fair value through profit or loss.
Securities in the trading book have not been pledged as at 31 December 2021 and 2020.
All of the securities in the trading book, except for unlisted securities, are accounted at fair value that is determined using level 1
requirements as described in fair value hierarchy in Section 4.2 of Financial Risk Management, i.e. fair value is based on quoted prices
in active markets for identical assets and liabilities. Unlisted securities are accounted at fair value that is determined using level 3
requirements.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
90
NOTE 12
FINANCIAL ASSETS AND LIABILITIES IN THE TRADING BOOK (CONTINUED)
Breakdown of securities in the trading book as at 31 December 2021 and 2020:
2021
2020
Group
Bank
Group
Bank
Trading securities:
Debt securities
17,721
14,622
11,806
8,844
AAA
-
-
-
-
from AA- to AA+
-
-
-
-
from A- to A+
4,235
4,046
3,968
3,771
from BBB- to BBB+
830
207
1,665
1,035
from BB- to BB+
514
-
973
610
lower than BB-
-
-
270
270
no rating
12,142
10,369
4,930
3,158
Equities
477
477
738
738
listed
449
449
732
732
unlisted
28
28
6
6
units of investment funds
-
-
-
-
Total trading securities
18,198
15,099
12,544
9,582
Other trading book securities:
Debt securities
2,733
-
2,734
-
AAA
-
-
-
-
from AA- to AA+
-
-
-
-
from A- to A+
199
-
216
-
from BBB- to BBB+
1,726
-
1,614
-
from BB- to BB+
-
-
97
-
lower than BB-
-
-
-
-
no rating
808
-
807
-
Equities
27,250
-
21,790
-
listed
-
-
-
-
unlisted
-
-
-
-
units of investment funds
27,250
-
21,790
-
Total other trading book securities
29,983
-
24,524
-
TOTAL
48,181
15,099
37,068
9,582
Amount of change in its fair value that is attributable to changes in the credit risk of the asset of Group's other trading book debt
securities:
2021
2020
During the year
Cumulative
During the year
Cumulative
Change in fair value attributable to credit risk
33
(4)
(30)
(37)
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
91
NOTE 13
LOANS TO CUSTOMERS
2021
2020
Group
Bank
Group
Bank
Gross loans to customers
1,944,377
1,917,766
1,648,446
1,630,184
Allowance for loan impairment
(35,696)
(28,137)
(42,783)
(37,821)
NET LOANS TO CUSTOMERS
1,908,681
1,889,629
1,605,663
1,592,363
Breakdown of loans to customers according to maturity
Short-term (up to 1 year)
396,728
460,294
340,229
391,407
Long-term (over 1 year)
1,511,953
1,429,335
1,265,434
1,200,956
Total
1,908,681
1,889,629
1,605,663
1,592,363
In 2021, despite the pandemic did not end, the demand for loans was back at normal levels as economic certainty increased, therefore
the loan portfolio growth was at intended levels. As general economic situation improved, concerns over adverse pandemic effects did
not materialize and Group took active measures towards problem loans, loan portfolio quality improved significantly – loan migration to
Stage 2 and Stage 3 has decreased while outflows from these stages increased. The Bank further reviewed its impairment calculation
models – see section 1.3 of the Financial Risk Management disclosure. Overall allowance for impairment to loans ratio has decreased,
but this was driven by the improved staging composition of the portfolio (decreased shares of Stage 3 and Stage 2 loans), allowance for
impairment to loans for Stage 3 has increased over the year.
Reconciliation of the gross loan amount is presented in the following tables.
Group gross loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
1,282,582
251,850
114,014
1,648,446
1,343,181
131,631
78,275
1,553,087
Transfer between stages:
from Stage 1 to Stage 2
(133,971)
133,971
-
-
(176,400)
176,400
-
-
from Stage 1 to Stage 3
(3,936)
-
3,936
-
(48,037)
-
48,037
-
from Stage 2 to Stage 1
98,469
(98,469)
-
-
15,804
(15,804)
-
-
from Stage 2 to Stage 3
-
(4,403)
4,403
-
-
(8,957)
8,957
-
from Stage 3 to Stage 1
3,214
-
(3,214)
-
374
-
(374)
-
from Stage 3 to Stage 2
-
5,472
(5,472)
-
-
1,506
(1,506)
-
New loans originated or loan amounts increased
736,637
43,692
1,855
782,184
520,506
36,201
7,998
564,705
Loans derecognized during the period (other than
write-offs)
(340,542)
(96,396)
(36,390)
(473,328)
(371,731)
(68,494)
(22,152)
(462,377)
Loans written-off during the period
(2)
(106)
(12,818)
(12,926)
(1,124)
(629)
(5,219)
(6,972)
FX and other movements
-
(2)
4
2
8
(8)
2
2
Gross carrying amount as at 31 December
1,642,451
235,609
66,318
1,944,378
1,282,582
251,850
114,014
1,648,446
Bank gross loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
1,267,972
247,570
114,642
1,630,184
1,338,335
128,344
75,438
1,542,117
Transfer between stages:
from Stage 1 to Stage 2
(234,322)
234,322
-
-
(173,564)
173,564
-
-
from Stage 1 to Stage 3
(2,364)
-
2,364
-
(50,184)
-
50,184
-
from Stage 2 to Stage 1
97,089
(97,089)
-
-
14,558
(14,558)
-
-
from Stage 2 to Stage 3
-
(3,744)
3,744
-
-
(8,014)
8,014
-
from Stage 3 to Stage 1
3,190
-
(3,190)
-
325
-
(325)
-
from Stage 3 to Stage 2
-
5,462
(5,462)
-
-
1,503
(1,503)
-
New loans originated or loan amounts increased
653,643
57,857
1,358
712,858
458,183
34,249
7,409
499,841
Loans derecognized during the period (other than
write-offs)
(279,533)
(94,395)
(39,482)
(413,410)
(319,686)
(67,518)
(20,057)
(407,261)
Loans written-off during the period
-
(1)
(11,867)
(11,868)
(3)
-
(4,511)
(4,514)
FX and other movements
(1)
(2)
5
2
8
-
(7)
1
Gross carrying amount as at 31 December
1,505,674
349,980
62,112
1,917,766
1,267,972
247,570
114,642
1,630,184
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
92
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank gross loans to individuals (retail)
2021
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
412,013
10,162
5,690
427,865
235,709
6,422
5,835
247,966
Transfer between stages:
from Stage 1 to Stage 2
(4,364)
4,364
-
-
(3,364)
3,364
-
-
from Stage 1 to Stage 3
(329)
-
329
-
(1,303)
-
1,303
-
from Stage 2 to Stage 1
4,359
(4,359)
-
-
1,415
(1,415)
-
-
from Stage 2 to Stage 3
-
(742)
742
-
-
(987)
987
-
from Stage 3 to Stage 1
582
-
(582)
-
279
-
(279)
-
from Stage 3 to Stage 2
-
1,260
(1,260)
-
-
81
(81)
-
New loans originated or loan amounts increased
189,356
839
132
190,327
209,736
4,028
1,304
215,068
Loans derecognized during the period (other than write-
offs)
(59,586)
(1,900)
(1,032)
(62,518)
(30,464)
(1,329)
(3,054)
(34,847)
Loans written-off during the period
-
(1)
(326)
(3)
-
(324)
(327)
FX and other movements
(1)
-
(2)
8
(2)
(1)
5
Gross carrying amount as at 31 December
542,030
9,623
555,346
412,013
10,162
5,690
427,865
Group gross loans to individuals (retail): Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
132,328
4,565
4,716
141,609
133,936
5,000
3,442
142,378
Transfer between stages:
from Stage 1 to Stage 2
(2,473)
2,473
-
-
(3,161)
3,161
-
-
from Stage 1 to Stage 3
(1,597)
-
1,597
-
(2,725)
-
2,725
-
from Stage 2 to Stage 1
1,484
(1,484)
-
-
1,400
(1,400)
-
-
from Stage 2 to Stage 3
-
(683)
683
-
-
(983)
983
-
from Stage 3 to Stage 1
49
-
(49)
-
74
-
(74)
-
from Stage 3 to Stage 2
-
44
(44)
-
-
9
(9)
-
New loans originated or loan amounts increased
83,633
1,402
552
85,587
69,867
1,965
638
72,470
Loans derecognized during the period (other than
write-offs)
(70,135)
(2,533)
(1,495)
(74,163)
(65,946)
(2,555)
(2,031)
(70,532)
Loans written-off during the period
(2)
(106)
(1,657)
(1,765)
(1,124)
(629)
(958)
(2,711)
FX and other movements
(2)
-
1
(1)
7
(3)
-
4
Gross carrying amount as at 31 December
143,285
3,678
4,304
151,267
132,328
4,565
4,716
141,609
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
93
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank gross loans to individuals (retail): Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
12,773
285
190
13,248
22,386
316
278
22,980
Transfer between stages:
from Stage 1 to Stage 2
(130)
130
-
-
(326)
326
-
-
from Stage 1 to Stage 3
(25)
-
25
-
(163)
-
163
-
from Stage 2 to Stage 1
104
(104)
-
-
153
(153)
-
-
from Stage 2 to Stage 3
-
(24)
24
-
-
(40)
40
-
from Stage 3 to Stage 1
25
-
(25)
-
26
-
(26)
-
from Stage 3 to Stage 2
-
34
(34)
-
-
7
(7)
-
New loans originated or loan amounts increased
639
3
55
697
485
13
4
502
Loans derecognized during the period (other than
write-offs)
(6,873)
(143)
(68)
(7,084)
(9,791)
(181)
(10)
(9,982)
Loans written-off during the period
-
(1)
(52)
(53)
(3)
-
(250)
(253)
FX and other movements
(3)
-
2
(1)
6
(3)
(2)
1
Gross carrying amount as at 31 December
6,510
180
117
6,807
12,773
285
190
13,248
Group gross loans to individuals (retail): Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
287,749
6,923
3,892
298,564
96,764
4,643
1,453
102,860
Transfer between stages:
from Stage 1 to Stage 2
(4,083)
4,083
-
-
(784)
784
-
-
from Stage 1 to Stage 3
(296)
-
296
-
(963)
-
963
-
from Stage 2 to Stage 1
2,125
(2,125)
-
-
1,181
(1,181)
-
-
from Stage 2 to Stage 3
-
(679)
679
-
-
(648)
648
-
from Stage 3 to Stage 1
482
-
(482)
-
235
-
(235)
-
from Stage 3 to Stage 2
-
1,010
(1,010)
-
-
60
(60)
-
New loans originated or loan amounts increased
187,213
378
61
187,652
200,488
3,747
1,300
205,535
Loans derecognized during the period (other than
write-offs)
(28,099)
(1,365)
(637)
(30,101)
(9,170)
(482)
(179)
(9,831)
Loans written-off during the period
-
-
(37)
(37)
-
-
-
-
FX and other movements
1
-
(3)
(2)
(2)
-
2
-
Gross carrying amount as at 31 December
445,092
8,225
2,759
456,076
287,749
6,923
3,892
298,564
Bank gross loans to individuals (retail): Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
287,749
6,923
3,892
298,564
96,764
4,643
1,453
102,860
Transfer between stages:
from Stage 1 to Stage 2
(4,083)
4,083
-
-
(784)
784
-
-
from Stage 1 to Stage 3
(296)
-
296
-
(963)
-
963
-
from Stage 2 to Stage 1
2,125
(2,125)
-
-
1,181
(1,181)
-
-
from Stage 2 to Stage 3
-
(679)
679
-
-
(648)
648
-
from Stage 3 to Stage 1
482
-
(482)
-
235
-
(235)
-
from Stage 3 to Stage 2
-
1,010
(1,010)
-
-
60
(60)
-
New loans originated or loan amounts increased
187,212
379
61
187,652
200,488
3,747
1,300
205,535
Loans derecognized during the period (other than
write-offs)
(28,100)
(1,365)
(636)
(30,101)
(9,170)
(482)
(179)
(9,831)
Loans written-off during the period
-
-
(37)
(37)
-
-
-
-
FX and other movements
1
-
(3)
(2)
(2)
-
2
-
Gross carrying amount as at 31 December
445,090
8,226
2,760
456,076
287,749
6,923
3,892
298,564
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
94
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Group gross loans to individuals (retail): Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
111,491
2,954
1,629
116,074
116,559
1,463
4,125
122,147
Transfer between stages:
from Stage 1 to Stage 2
(151)
151
-
-
(2,254)
2,254
-
-
from Stage 1 to Stage 3
(8)
-
8
-
(177)
-
177
-
from Stage 2 to Stage 1
2,130
(2,130)
-
-
81
(81)
-
-
from Stage 2 to Stage 3
-
(39)
39
-
-
(299)
299
-
from Stage 3 to Stage 1
75
-
(75)
-
18
-
(18)
-
from Stage 3 to Stage 2
-
216
(216)
-
-
14
(14)
-
New loans originated or loan amounts increased
1,505
457
16
1,978
8,763
268
-
9,031
Loans derecognized during the period (other than
write-offs)
(24,612)
(392)
(329)
(25,333)
(11,503)
(666)
(2,865)
(15,034)
Loans written-off during the period
-
-
(236)
(236)
-
-
(74)
(74)
FX and other movements
1
-
-
1
4
1
(1)
4
Gross carrying amount as at 31 December
90,431
1,217
836
92,484
111,491
2,954
1,629
116,074
Bank gross loans to individuals (retail): Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
111,491
2,954
1,608
116,053
116,559
1,463
4,104
122,126
Transfer between stages:
from Stage 1 to Stage 2
(151)
151
-
-
(2,254)
2,254
-
-
from Stage 1 to Stage 3
(8)
-
8
-
(177)
-
177
-
from Stage 2 to Stage 1
2,130
(2,130)
-
-
81
(81)
-
-
from Stage 2 to Stage 3
-
(39)
39
-
-
(299)
299
-
from Stage 3 to Stage 1
75
-
(75)
-
18
-
(18)
-
from Stage 3 to Stage 2
-
216
(216)
-
-
14
(14)
-
New loans originated or loan amounts increased
1,505
457
16
1,978
8,763
268
-
9,031
Loans derecognized during the period (other than
write-offs)
(24,613)
(392)
(328)
(25,333)
(11,503)
(666)
(2,865)
(15,034)
Loans written-off during the period
-
-
(236)
(236)
-
-
(74)
(74)
FX and other movements
1
-
-
1
4
1
(1)
4
Gross carrying amount as at 31 December
90,430
1,217
816
92,463
111,491
2,954
1,608
116,053
Group gross loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
14
4,827
-
4,841
15
3,623
-
3,638
Transfer between stages:
from Stage 1 to Stage 2
-
-
-
-
-
-
-
-
from Stage 1 to Stage 3
-
-
-
-
-
-
-
-
from Stage 2 to Stage 1
-
-
-
-
-
-
-
-
from Stage 2 to Stage 3
-
-
-
-
-
-
-
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
-
-
-
New loans originated or loan amounts increased
3,195
3,819
-
7,014
37,154
4,827
-
41,981
Loans derecognized during the period (other than
write-offs)
-
(4,827)
-
(4,827)
(37,155)
(3,623)
-
(40,778)
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
1
-
-
1
-
-
-
-
Gross carrying amount as at 31 December
3,210
3,819
-
7,029
14
4,827
-
4,841
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
95
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank gross loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
102,709
4,827
-
107,536
96,500
3,623
-
100,123
Transfer between stages:
from Stage 1 to Stage 2
(102,694)
102,694
-
-
-
-
-
-
from Stage 1 to Stage 3
-
-
-
-
-
-
-
-
from Stage 2 to Stage 1
-
-
-
-
-
-
-
-
from Stage 2 to Stage 3
-
-
-
-
-
-
-
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
-
-
-
New loans originated or loan amounts increased
3,195
19,382
-
22,577
44,213
4,827
-
49,040
Loans derecognized during the period (other than
write-offs)
-
(5,216)
-
(5,216)
(38,004)
(3,623)
-
(41,627)
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
1
-
-
1
-
-
-
-
Gross carrying amount as at 31 December
3,211
121,687
-
124,898
102,709
4,827
-
107,536
Group gross loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
751,000
232,581
103,777
1,087,358
995,907
116,902
69,255
1,182,064
Transfer between stages:
from Stage 1 to Stage 2
(127,264)
127,264
-
-
(170,201)
170,201
-
-
from Stage 1 to Stage 3
(2,035)
-
2,035
-
(44,172)
-
44,172
-
from Stage 2 to Stage 1
92,730
(92,730)
-
-
13,142
(13,142)
-
-
from Stage 2 to Stage 3
-
(3,002)
3,002
-
-
(7,027)
7,027
-
from Stage 3 to Stage 1
2,608
-
(2,608)
-
47
-
(47)
-
from Stage 3 to Stage 2
-
4,202
(4,202)
-
-
1,423
(1,423)
-
New loans originated or loan amounts increased
461,091
37,636
1,226
499,953
204,234
25,394
6,039
235,667
Loans derecognized during the period (other than
write-offs)
(217,696)
(87,279)
(33,929)
(338,904)
(247,957)
(61,168)
(17,077)
(326,202)
Loans written-off during the period
-
-
(10,888)
(10,888)
-
-
(4,187)
(4,187)
FX and other movements
(1)
(2)
6
3
-
(2)
18
16
Gross carrying amount as at 31 December
960,433
218,670
58,419
1,237,522
751,000
232,581
103,777
1,087,358
Bank gross loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
753,250
232,581
108,952
1,094,783
1,006,126
118,299
69,603
1,194,028
Transfer between stages:
from Stage 1 to Stage 2
(127,264)
127,264
-
-
(170,200)
170,200
-
-
from Stage 1 to Stage 3
(2,035)
-
2,035
-
(48,881)
-
48,881
-
from Stage 2 to Stage 1
92,730
(92,730)
-
-
13,143
(13,143)
-
-
from Stage 2 to Stage 3
-
(3,002)
3,002
-
-
(7,027)
7,027
-
from Stage 3 to Stage 1
2,608
-
(2,608)
-
46
-
(46)
-
from Stage 3 to Stage 2
-
4,202
(4,202)
-
-
1,422
(1,422)
-
New loans originated or loan amounts increased
461,092
37,636
1,226
499,954
204,234
25,394
6,105
235,733
Loans derecognized during the period (other than
write-offs)
(219,947)
(87,279)
(38,450)
(345,676)
(251,218)
(62,566)
(17,003)
(330,787)
Loans written-off during the period
-
-
(11,542)
(11,542)
-
-
(4,187)
(4,187)
FX and other movements
(1)
(2)
6
3
-
2
(6)
(4)
Gross carrying amount as at 31 December
960,433
218,670
58,419
1,237,522
753,250
232,581
108,952
1,094,783
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
96
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Group gross loans to business customers: Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
67,219
42,423
1,856
111,498
115,860
1,900
1,895
119,655
Transfer between stages:
from Stage 1 to Stage 2
(18,739)
18,739
-
-
(32,079)
32,079
-
-
from Stage 1 to Stage 3
-
-
-
-
(485)
-
485
-
from Stage 2 to Stage 1
23,108
(23,108)
-
-
105
(105)
-
-
from Stage 2 to Stage 3
-
-
-
-
-
(271)
271
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
119
(119)
-
New loans originated or loan amounts increased
30,823
7,117
396
38,336
6,348
10,737
52
17,137
Loans derecognized during the period (other than
write-offs)
(10,755)
(9,425)
(327)
(20,507)
(22,530)
(2,036)
(728)
(25,294)
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
2
(2)
-
-
-
-
-
-
Gross carrying amount as at 31 December
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
Bank gross loans to business customers: Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
67,219
42,423
1,856
111,498
115,860
1,900
1,895
119,655
Transfer between stages:
from Stage 1 to Stage 2
(18,739)
18,739
-
-
(32,079)
32,079
-
-
from Stage 1 to Stage 3
-
-
-
-
(485)
-
485
-
from Stage 2 to Stage 1
23,108
(23,108)
-
-
105
(105)
-
-
from Stage 2 to Stage 3
-
-
-
-
-
(271)
271
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
119
(119)
-
New loans originated or loan amounts increased
30,823
7,117
396
38,336
6,348
10,737
52
17,137
Loans derecognized during the period (other than
write-offs)
(10,755)
(9,425)
(327)
(20,507)
(22,530)
(2,036)
(728)
(25,294)
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
2
(2)
-
-
-
-
-
-
Gross carrying amount as at 31 December
91,658
35,744
1,925
129,327
67,219
42,423
1,856
111,498
Group gross loans to business customers: SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
569,835
188,541
100,413
858,789
776,961
114,077
65,872
956,910
Transfer between stages:
from Stage 1 to Stage 2
(106,671)
106,671
-
-
(136,524)
136,524
-
-
from Stage 1 to Stage 3
(2,035)
-
2,035
-
(43,687)
-
43,687
-
from Stage 2 to Stage 1
69,620
(69,620)
-
-
12,354
(12,354)
-
-
from Stage 2 to Stage 3
-
(3,002)
3,002
-
-
(6,756)
6,756
-
from Stage 3 to Stage 1
2,608
-
(2,608)
-
47
-
(47)
-
from Stage 3 to Stage 2
-
4,202
(4,202)
-
-
1,304
(1,304)
-
New loans originated or loan amounts increased
383,532
29,895
822
414,249
167,924
14,665
5,961
188,550
Loans derecognized during the period (other than
write-offs)
(180,111)
(77,464)
(33,602)
(291,177)
(207,240)
(58,917)
(16,343)
(282,500)
Loans written-off during the period
-
-
(10,837)
(10,837)
-
-
(4,187)
(4,187)
FX and other movements
(4)
-
6
2
-
(2)
18
16
Gross carrying amount as at 31 December
736,774
179,223
55,029
971,026
569,835
188,541
100,413
858,789
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
97
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank gross loans to business customers: SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
572,085
188,541
105,588
866,214
787,180
115,474
66,220
968,874
Transfer between stages:
from Stage 1 to Stage 2
(106,671)
106,671
-
-
(136,523)
136,523
-
-
from Stage 1 to Stage 3
(2,035)
-
2,035
-
(48,396)
-
48,396
-
from Stage 2 to Stage 1
69,620
(69,620)
-
-
12,355
(12,355)
-
-
from Stage 2 to Stage 3
-
(3,002)
3,002
-
-
(6,756)
6,756
-
from Stage 3 to Stage 1
2,608
-
(2,608)
-
46
-
(46)
-
from Stage 3 to Stage 2
-
4,202
(4,202)
-
-
1,303
(1,303)
-
New loans originated or loan amounts increased
383,532
29,895
822
414,249
167,924
14,665
6,027
188,616
Loans derecognized during the period (other than
write-offs)
(182,361)
(77,464)
(38,123)
(297,948)
(210,501)
(60,315)
(16,269)
(287,085)
Loans written-off during the period
-
-
(11,491)
(11,491)
-
-
(4,187)
(4,187)
FX and other movements
(4)
-
6
2
-
2
(6)
(4)
Gross carrying amount as at 31 December
736,774
179,223
55,029
971,026
572,085
188,541
105,588
866,214
Group gross loans to business customers: Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
113,946
1,617
1,508
117,071
103,086
925
1,488
105,499
Transfer between stages:
from Stage 1 to Stage 2
(1,854)
1,854
-
-
(1,598)
1,598
-
-
from Stage 1 to Stage 3
-
-
-
-
-
—
-
-
from Stage 2 to Stage 1
2
(2)
-
-
683
(683)
-
-
from Stage 2 to Stage 3
-
-
-
-
-
-
-
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
-
-
-
New loans originated or loan amounts increased
46,737
624
8
47,369
29,962
(8)
26
29,980
Loans derecognized during the period (other than
write-offs)
(26,831)
(390)
-
(27,221)
(18,187)
(215)
(6)
(18,408)
Loans written-off during the period
-
-
(51)
(51)
-
-
-
-
FX and other movements
1
-
-
1
-
-
-
-
Gross carrying amount as at 31 December
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
Bank gross loans to business customers: Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Gross carrying amount as at 1 January
113,946
1,617
1,508
117,071
103,086
925
1,488
105,499
Transfer between stages:
from Stage 1 to Stage 2
(1,854)
1,854
-
-
(1,598)
1,598
-
-
from Stage 1 to Stage 3
-
-
-
-
-
-
-
-
from Stage 2 to Stage 1
2
(2)
-
-
683
(683)
-
-
from Stage 2 to Stage 3
-
-
-
-
-
-
-
-
from Stage 3 to Stage 1
-
-
-
-
-
-
-
-
from Stage 3 to Stage 2
-
-
-
-
-
-
-
-
New loans originated or loan amounts increased
46,736
624
8
47,368
29,962
(8)
26
29,980
Loans derecognized during the period (other than
write-offs)
(26,830)
(390)
-
(27,220)
(18,187)
(215)
(6)
(18,408)
Loans written-off during the period
-
-
(51)
(51)
-
-
-
-
FX and other movements
1
-
-
1
-
-
-
-
Gross carrying amount as at 31 December
132,001
3,703
1,465
137,169
113,946
1,617
1,508
117,071
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
98
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Movements in allowance for loan impairment by separate class are provided below:
Group loss allowance against loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
7,574
6,989
28,220
42,783
8,021
4,003
26,485
38,509
Movements with impact to profit or loss:
New loans originated
6,332
526
191
7,049
3,013
1,250
726
4,989
Loans derecognized during the period (other than write-offs)
(993)
(779)
(5,282)
(7,054)
(867)
(1,222)
(3,342)
(5,431)
Changes due to change in credit risk (net)
36
(3,118)
7,141
4,059
(2,845)
1,785
9,565
8,505
Update in the methodology for loss allowance estimation
(479)
399
1,866
1,786
1,376
1,802
29
3,207
Total movements with impact to profit or loss:
4,896
(2,972)
3,916
5,840
677
3,615
6,978
11,270
Movements without impact to profit or loss:
Loans written-off during the period
(2)
(106)
(12,818)
(12,926)
(1,124)
(629)
(5,219)
(6,972)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
(2)
(106)
(12,818)
(12,926)
(1,124)
(629)
(5,243)
(6,996)
Amount as at 31 December
12,468
3,911
19,318
35,697
7,574
6,989
28,220
42,783
Bank loss allowance against loans to customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
3,826
5,435
28,560
37,821
4,552
2,259
25,254
32,065
Movements with impact to profit or loss:
New loans originated
3,579
382
151
4,112
869
1,005
660
2,534
Loans derecognized during the period (other than write-offs)
(378)
(272)
(3,951)
(4,601)
(388)
(347)
(1,840)
(2,575)
Changes due to change in credit risk (net)
1,367
(3,333)
2,373
407
(2,551)
669
8,836
6,954
Update in the methodology for loss allowance estimation
(119)
448
1,938
2,267
1,347
1,849
185
3,381
Total movements with impact to profit or loss:
4,449
(2,775)
511
2,185
(723)
3,176
7,841
10,294
Movements without impact to profit or loss:
Loans written-off during the period
-
(1)
(11,867)
(11,868)
(3)
-
(4,511)
(4,514)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
-
(1)
(11,867)
(11,868)
(3)
-
(4,535)
(4,538)
Amount as at 31 December
8,275
2,659
17,204
28,138
3,826
5,435
28,560
37,821
Group loss allowance against loans to customers: Loans to individuals (Retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
5,690
1,847
3,522
11,059
5,172
2,135
3,350
10,657
Movements with impact to profit or loss:
New loans originated
3,410
151
96
3,657
2,521
266
133
2,920
Loans derecognized during the period (other than write-offs)
(678)
(541)
(1,904)
(3,123)
(541)
(917)
(2,132)
(3,590)
Changes due to change in credit risk (net)
(2,100)
52
3,122
1,074
(507)
1,046
3,484
4,023
Update in the methodology for loss allowance estimation
(745)
(46)
(19)
(810)
169
(54)
(281)
(166)
Total movements with impact to profit or loss:
(113)
(384)
1,295
798
1,642
341
1,204
3,187
Movements without impact to profit or loss:
Loans written-off during the period
(2)
(106)
(1,930)
(2,038)
(1,124)
(629)
(1,032)
(2,785)
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
(2)
(106)
(1,930)
(2,038)
(1,124)
(629)
(1,032)
(2,785)
Amount as at 31 December
5,575
1,357
2,887
9,819
5,690
1,847
3,522
11,059
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
99
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank loss allowance against loans to customers: Loans to individuals (Retail)
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,961
294
1,191
3,446
1,723
391
1,595
3,709
Movements with impact to profit or loss:
New loans originated
657
7
56
720
377
20
68
465
Loans derecognized during the period (other than write-offs)
(63)
(34)
(573)
(670)
(63)
(41)
(630)
(734)
Changes due to change in credit risk (net)
(789)
(164)
371
(582)
(213)
(69)
607
325
Update in the methodology for loss allowance estimation
(384)
3
53
(328)
140
(7)
(125)
8
Total movements with impact to profit or loss:
(579)
(188)
(93)
(860)
241
(97)
(80)
64
Movements without impact to profit or loss:
Loans written-off during the period
-
(1)
(325)
(326)
(3)
-
(324)
(327)
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
(1)
(325)
(326)
(3)
-
(324)
(327)
Amount as at 31 December
1,382
105
773
2,260
1,961
294
1,191
3,446
Group loss allowance against loans to customers: Loans to individuals (Retail) – Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
4,047
1,621
2,424
8,092
4,064
1,858
1,937
7,859
Movements with impact to profit or loss:
New loans originated
2,988
144
90
3,222
2,146
248
70
2,464
Loans derecognized during the period (other than write-offs)
(648)
(521)
(1,608)
(2,777)
(524)
(891)
(1,648)
(3,063)
Changes due to change in credit risk (net)
(1,658)
196
3,007
1,545
(492)
1,082
3,293
3,883
Update in the methodology for loss allowance estimation
(391)
(46)
(75)
(512)
(23)
(47)
(270)
(340)
Total movements with impact to profit or loss:
291
(227)
1,414
1,478
1,107
392
1,445
2,944
Movements without impact to profit or loss:
Loans written-off during the period
(2)
(106)
(1,657)
(1,765)
(1,124)
(629)
(958)
(2,711)
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
(2)
(106)
(1,657)
(1,765)
(1,124)
(629)
(958)
(2,711)
Amount as at 31 December
4,336
1,288
2,181
7,805
4,047
1,621
2,424
8,092
Bank loss allowance against loans to customers: Loans to individuals (Retail) – Consumer loans
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
318
68
114
500
615
114
203
932
Movements with impact to profit or loss:
New loans originated
235
-
50
285
2
2
5
9
Loans derecognized during the period (other than write-offs)
(33)
(14)
(277)
(324)
(46)
(15)
(146)
(207)
Changes due to change in credit risk (net)
(347)
(20)
256
(111)
(198)
(33)
416
185
Update in the methodology for loss allowance estimation
(30)
3
(3)
(30)
(52)
—
(114)
(166)
Total movements with impact to profit or loss:
(175)
(31)
26
(180)
(294)
(46)
161
(179)
Movements without impact to profit or loss:
Loans written-off during the period
-
(1)
(52)
(53)
(3)
-
(250)
(253)
FX and other movements
-
-
-
-
-
-
—
—
Total movements without impact to profit or loss:
-
(1)
(52)
(53)
(3)
—-
(250)
(253)
Amount as at 31 December
143
36
88
267
318
68
114
500
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
100
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Group loss allowance against loans to customers: Loans to individuals (Retail) – Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
578
181
665
1,424
469
222
442
1,133
Movements with impact to profit or loss:
New loans originated
413
5
6
424
363
-
63
426
Loans derecognized during the period (other than write-offs)
(27)
(20)
(149)
(196)
(15)
(22)
-
(37)
Changes due to change in credit risk (net)
(177)
(115)
(82)
(374)
(114)
(18)
159
27
Update in the methodology for loss allowance estimation
(339)
8
40
(291)
(125)
(1)
1
(125)
Total movements with impact to profit or loss:
(130)
(122)
(185)
(437)
109
(41)
223
291
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(37)
(37)
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
(37)
(37)
-
-
-
-
Amount as at 31 December
448
59
443
950
578
181
665
1,424
Bank loss allowance against loans to customers: Loans to individuals (Retail) – Mortgages
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
578
181
665
1,424
469
222
442
1,133
Movements with impact to profit or loss:
New loans originated
413
5
6
424
363
-
63
426
Loans derecognized during the period (other than write-offs)
(27)
(20)
(149)
(196)
(15)
(22)
-
(37)
Changes due to change in credit risk (net)
(177)
(115)
(82)
(374)
(114)
(18)
159
27
Update in the methodology for loss allowance estimation
(339)
8
40
(291)
(125)
(1)
1
(125)
Total movements with impact to profit or loss:
(130)
(122)
(185)
(437)
109
(41)
223
291
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(37)
(37)
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
(37)
(37)
-
-
-
-
Amount as at 31 December
448
59
443
950
578
181
665
1,424
Group loss allowance against loans to customers: Loans to individuals (Retail) – Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,065
45
433
1,543
639
55
971
1,665
Movements with impact to profit or loss:
New loans originated
9
2
-
11
12
18
-
30
Loans derecognized during the period (other than write-offs)
(3)
-
(147)
(150)
(2)
(4)
(484)
(490)
Changes due to change in credit risk (net)
(265)
(29)
197
(97)
99
(18)
32
113
Update in the methodology for loss allowance estimation
(15)
(8)
16
(7)
317
(6)
(12)
299
Total movements with impact to profit or loss:
(274)
(35)
66
(243)
426
(10)
(464)
(48)
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(236)
(236)
-
-
(74)
(74)
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
(236)
(236)
-
-
(74)
(74)
Amount as at 31 December
791
10
263
1,064
1,065
45
433
1,543
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
101
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank loss allowance against loans to customers: Loans to individuals (Retail) – Other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,065
45
412
1,522
639
55
950
1,644
Movements with impact to profit or loss:
New loans originated
9
2
-
11
12
18
-
30
Loans derecognized during the period (other than write-offs)
(3)
-
(147)
(150)
(2)
(4)
(484)
(490)
Changes due to change in credit risk (net)
(265)
(29)
197
(97)
99
(18)
32
113
Update in the methodology for loss allowance estimation
(15)
(8)
16
(7)
317
(6)
(12)
299
Total movements with impact to profit or loss:
(274)
(35)
66
(243)
426
(10)
(464)
(48)
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(236)
(236)
-
-
(74)
(74)
FX and other movements
-
-
-
-
-
-
—
—
Total movements without impact to profit or loss:
-
-
(236)
(236)
-
-
(74)
(74)
Amount as at 31 December
791
10
242
1,043
1,065
45
412
1,522
Group loss allowance against loans to customers: Loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
-
94
-
94
-
38
-
38
Movements with impact to profit or loss:
New loans originated
1
133
-
134
-
184
-
184
Loans derecognized during the period (other than write-offs)
-
(156)
-
(156)
-
(111)
-
(111)
Changes due to change in credit risk (net)
49
39
-
88
-
42
-
42
Update in the methodology for loss allowance estimation
14
(92)
-
(78)
-
(59)
-
(59)
Total movements with impact to profit or loss:
64
(76)
-
(12)
-
56
-
56
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
-
-
Amount as at 31 December
64
18
-
82
-
94
-
94
Bank loss allowance against loans to customers: Loans to financial institutions
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
-
94
-
94
-
38
-
38
Movements with impact to profit or loss:
New loans originated
1
133
-
134
-
184
-
184
Loans derecognized during the period (other than write-offs)
-
(156)
-
(156)
-
(111)
-
(111)
Changes due to change in credit risk (net)
49
39
-
88
-
42
-
42
Update in the methodology for loss allowance estimation
14
(92)
-
(78)
-
(59)
-
(59)
Total movements with impact to profit or loss:
64
(76)
-
(12)
-
56
-
56
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
-
-
Amount as at 31 December
64
18
-
82
-
94
-
94
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
102
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Group loss allowance against loans to customers: Loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,884
5,048
24,698
31,630
2,849
1,830
23,135
27,814
Movements with impact to profit or loss:
New loans originated
2,921
242
95
3,258
492
800
593
1,885
Loans derecognized during the period (other than write-offs)
(315)
(82)
(3,378)
(3,775)
(326)
(194)
(1,210)
(1,730)
Changes due to change in credit risk (net)
2,087
(3,209)
4,019
2,897
(2,338)
697
6,081
4,440
Update in the methodology for loss allowance estimation
252
537
1,885
2,674
1,207
1,915
310
3,432
Total movements with impact to profit or loss:
4,945
(2,512)
2,621
5,054
(965)
3,218
5,774
8,027
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(10,888)
(10,888)
-
-
(4,187)
(4,187)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
-
-
(10,888)
(10,888)
-
-
(4,211)
(4,211)
Amount as at 31 December
6,829
2,536
16,431
25,796
1,884
5,048
24,698
31,630
Bank loss allowance against loans to customers: Loans to business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,865
5,047
27,369
34,281
2,829
1,830
23,659
28,318
Movements with impact to profit or loss:
New loans originated
2,921
242
95
3,258
492
801
592
1,885
Loans derecognized during the period (other than write-offs)
(315)
(82)
(3,378)
(3,775)
(325)
(195)
(1,210)
(1,730)
Changes due to change in credit risk (net)
2,107
(3,208)
2,002
901
(2,338)
696
8,229
6,587
Update in the methodology for loss allowance estimation
251
537
1,885
2,673
1,207
1,915
310
3,432
Total movements with impact to profit or loss:
4,964
(2,511)
604
3,057
(964)
3,217
7,921
10,174
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(11,542)
(11,542)
-
-
(4,187)
(4,187)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
-
-
(11,542)
(11,542)
-
-
(4,211)
(4,211)
Amount as at 31 December
6,829
2,536
16,431
25,796
1,865
5,047
27,369
34,281
Group loss allowance against loans to customers: Loans to business customers – Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
627
885
291
1,803
1,065
47
117
1,229
Movements with impact to profit or loss:
New loans originated
129
-
19
148
37
14
—
51
Loans derecognized during the period (other than write-offs)
(4)
(33)
-
(37)
(65)
(7)
—
(72)
Changes due to change in credit risk (net)
(295)
(649)
551
(393)
(560)
569
165
174
Update in the methodology for loss allowance estimation
80
(63)
17
34
150
262
9
421
Total movements with impact to profit or loss:
(90)
(745)
587
(248)
(438)
838
174
574
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
-
-
Amount as at 31 December
537
140
878
1,555
627
885
291
1,803
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
103
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Bank loss allowance against loans to customers: Loans to business customers – Large corporates
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
627
885
291
1,803
1,065
47
117
1,229
Movements with impact to profit or loss:
New loans originated
129
-
19
148
37
14
—
51
Loans derecognized during the period (other than write-offs)
(4)
(33)
-
(37)
(65)
(7)
—
(72)
Changes due to change in credit risk (net)
(295)
(649)
551
(393)
(560)
569
165
174
Update in the methodology for loss allowance estimation
80
(63)
17
34
150
262
9
421
Total movements with impact to profit or loss:
(90)
(745)
587
(248)
(438)
838
174
574
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
-
-
Amount as at 31 December
537
140
878
1,555
627
885
291
1,803
Group loss allowance against loans to customers: Loans to business customers – SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,155
4,136
23,739
29,030
1,560
1,777
22,377
25,714
Movements with impact to profit or loss:
New loans originated
2,703
218
76
2,997
425
541
593
1,559
Loans derecognized during the period (other than write-offs)
(297)
(28)
(3,378)
(3,703)
(234)
(181)
(1,204)
(1,619)
Changes due to change in credit risk (net)
2,375
(2,712)
3,470
3,133
(1,437)
328
5,886
4,777
Update in the methodology for loss allowance estimation
(70)
707
1,784
2,421
841
1,671
298
2,810
Total movements with impact to profit or loss:
4,711
(1,815)
1,952
4,848
(405)
2,359
5,573
7,527
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(10,837)
(10,837)
-
-
(4,187)
(4,187)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
-
-
(10,837)
(10,837)
-
-
(4,211)
(4,211)
Amount as at 31 December
5,866
2,321
14,854
23,041
1,155
4,136
23,739
29,030
Bank loss allowance against loans to customers: Loans to business customers – SME
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
1,136
4,135
26,410
31,681
1,540
1,777
22,901
26,218
Movements with impact to profit or loss:
New loans originated
2,703
218
76
2,997
425
542
592
1,559
Loans derecognized during the period (other than write-offs)
(297)
(28)
(3,378)
(3,703)
(233)
(182)
(1,204)
(1,619)
Changes due to change in credit risk (net)
2,395
(2,711)
1,453
1,137
(1,437)
327
8,034
6,924
Update in the methodology for loss allowance estimation
(71)
707
1,784
2,420
841
1,671
298
2,810
Total movements with impact to profit or loss:
4,730
(1,814)
(65)
2,851
(404)
2,358
7,720
9,674
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(11,491)
(11,491)
-
-
(4,187)
(4,187)
FX and other movements
-
-
-
-
-
-
(24)
(24)
Total movements without impact to profit or loss:
-
-
(11,491)
(11,491)
-
-
(4,211)
(4,211)
Amount as at 31 December
5,866
2,321
14,854
23,041
1,136
4,135
26,410
31,681
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
104
NOTE 13
LOANS TO CUSTOMERS (CONTINUED)
Group loss allowance against loans to customers: Loans to business customers – Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
102
27
668
797
224
6
641
871
Movements with impact to profit or loss:
New loans originated
89
24
-
113
30
245
-
275
Loans derecognized during the period (other than write-offs)
(14)
(21)
-
(35)
(27)
(6)
(6)
(39)
Changes due to change in credit risk (net)
7
152
(2)
157
(341)
(200)
30
(511)
Update in the methodology for loss allowance estimation
242
(107)
84
219
216
(18)
3
201
Total movements with impact to profit or loss:
324
48
82
454
(122)
21
27
(74)
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(51)
(51)
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
(51)
(51)
-
-
-
-
Amount as at 31 December
426
75
699
1,200
102
27
668
797
Bank loss allowance against loans to customers: Loans to business customers – Central and local authorities and other
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
102
27
668
797
224
6
641
871
Movements with impact to profit or loss:
New loans originated
89
24
-
113
30
245
-
275
Loans derecognized during the period (other than write-offs)
(14)
(21)
-
(35)
(27)
(6)
(6)
(39)
Changes due to change in credit risk (net)
7
152
(2)
157
(341)
(200)
30
(511)
Update in the methodology for loss allowance estimation
242
(107)
84
219
216
(18)
3
201
Total movements with impact to profit or loss:
324
48
82
454
(122)
21
27
(74)
Movements without impact to profit or loss:
Loans written-off during the period
-
-
(51)
(51)
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
(51)
(51)
-
-
-
-
Amount as at 31 December
426
75
699
1,200
102
27
668
797
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
105
NOTE 14
FINANCE LEASE RECEIVABLES
As part of its lending services, the Bank offers its customers various types of finance lease contracts. Main finance lease model of the
Bank is to finance goods or services sold by vendors to the customers. The Bank acts as a lender, although legally it is the owner of the
assets leased.
No other material income except for the finance income (included in net interest income - see Note 1) is earned by the Bank from the
finance lease. The Bank does not provide any buy-back guarantees or residual value guarantees at its own risk. In some cases when
such guarantees are offered to customers that use Bank‘s finance lease products, the vendor of the assets leased provides such
guarantees. In such cases the Bank additionally assesses the vendor‘s capacities to meet such obligations.
Risk profile of finance lease contracts is described in detail in part 1.6. of the Financial Risk Management disclosure.
The Group
Up to 1 year
1-2 years
2-3 years
3-4 years
4-5 years
Over 5 years
Total
Gross investments in leasing:
Balance at 31 December 2020
58,692
51,365
31,633
17,464
9,964
1,840
170,958
Change during 2021
26,015
(236)
3,951
6,445
5,582
(998)
40,759
Balance at 31 December 2021
84,707
51,129
35,584
23,909
15,546
842
211,717
Unearned finance income on finance
leases:
Balance at 31 December 2020
(5,156)
(3,208)
(1,588)
(714)
(225)
(25)
(10,916)
Change during 2021
(807)
(323)
(421)
(268)
(31)
10
(1,840)
Balance at 31 December 2021
(5,963)
(3,531)
(2,009)
(982)
(256)
(15)
(12,756)
Net investments in leasing before
provisions:
At 31 December 2020
53,536
48,157
30,045
16,750
9,739
1,815
160,042
At 31 December 2021
78,744
47,598
33,575
22,927
15,290
827
198,961
Changes in provisions:
Balance at 31 December 2020
(1,986)
(964)
(602)
(333)
(194)
(506)
(4,585)
Provisions reversed / (additional
provisions charged)
125
291
128
11
(21)
241
775
Provisions for finance lease debts written
off
-
-
-
-
-
23
23
Balance at 31 December 2021
(1,861)
(673)
(474)
(322)
(215)
(242)
(3,787)
Net investments in leasing after
provisions:
At 31 December 2020
51,550
47,193
29,443
16,417
9,545
1,309
155,457
At 31 December 2021
76,883
46,925
33,101
22,605
15,075
585
195,174
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
106
NOTE 14
FINANCE LEASE RECEIVABLES (CONTINUED)
The Bank
Up to 1 year
1-2 years
2-3 years
3-4 years
4-5 years
Over 5 years
Total
Gross investments in leasing:
Balance at 31 December 2020
57,776
51,365
31,633
17,464
9,964
1,840
170,042
Change during 2021
25,912
(236)
3,951
6,445
5,582
(998)
40,656
Balance at 31 December 2021
83,688
51,129
35,584
23,909
15,546
842
210,698
Unearned finance income on finance
leases:
Balance at 31 December 2020
(5,150)
(3,208)
(1,588)
(714)
(225)
(25)
(10,910)
Change during 2021
(807)
(323)
(421)
(268)
(31)
10
(1,840)
Balance at 31 December 2021
(5,957)
(3,531)
(2,009)
(982)
(256)
(15)
(12,750)
Net investments in leasing before
provisions:
At 31 December 2020
52,626
48,157
30,045
16,750
9,739
1,815
159,132
At 31 December 2021
77,731
47,598
33,575
22,927
15,290
827
197,948
Changes in provisions:
Balance at 31 December 2020
(1,239)
(964)
(602)
(333)
(194)
(510)
(3,842)
Provisions reversed / (additional
provisions charged)
130
291
128
11
(21)
241
780
Provisions for finance lease debts written
off
-
-
-
-
-
23
23
Balance at 31 December 2021
(1,109)
(673)
(474)
(322)
(215)
(246)
(3,039)
Net investments in leasing after
provisions:
At 31 December 2020
51,387
47,193
29,443
16,417
9,545
1,305
155,290
At 31 December 2021
76,622
46,925
33,101
22,605
15,075
581
194,909
Movements in provision for impairment of finance lease receivables by class are as follows:
Group loss allowance against finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
800
931
2,854
4,585
693
445
2,823
3,961
Movements with impact to profit or loss:
New loans originated
711
330
64
1,105
357
529
222
1,108
Loans derecognized during the period (other than write-
offs)
(110)
(129)
(763)
(1,002)
(109)
(133)
(281)
(523)
Changes due to change in credit risk (net)
(246)
(343)
122
(467)
(707)
(300)
80
(927)
Update in the methodology for loss allowance estimation
(189)
(550)
305
(434)
566
390
42
998
Total movements with impact to profit or loss:
166
(692)
(272)
(798)
107
486
63
656
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
(32)
(32)
FX and other movements
-
-
(1)
(1)
-
-
-
-
Total movements without impact to profit or loss:
-
-
(1)
(1)
-
-
(32)
(32)
Loss allowance as at 31 December
966
239
2,581
3,786
800
931
2,854
4,585
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
107
NOTE 14
FINANCE LEASE RECEIVABLES (CONTINUED)
Bank loss allowance against finance lease receivables
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
799
931
2,112
3,842
692
445
2,050
3,187
Movements with impact to profit or loss:
New loans originated
710
330
64
1,104
356
529
221
1,106
Loans derecognized during the period (other than write-offs)
(110)
(129)
(763)
(1,002)
(109)
(133)
(281)
(523)
Changes due to change in credit risk (net)
(245)
(343)
117
(471)
(707)
(300)
80
(927)
Update in the methodology for loss allowance estimation
(189)
(550)
305
(434)
567
390
42
999
Total movements with impact to profit or loss:
166
(692)
(277)
(803)
107
486
62
655
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
(1)
(1)
-
-
-
-
Total movements without impact to profit or loss:
-
-
(1)
(1)
-
-
-
-
Loss allowance as at 31 December
965
239
1,834
3,038
799
931
2,112
3,842
Group loss allowance against finance lease receivables - individuals
2021
2020
Stage1
Stage2
Stage3
Total
Stage1
Stage2
Stage3
Total
Loss allowance as at 1 January
209
32
134
375
225
40
126
391
Movements with impact to profit or loss:
New loans originated
52
58
-
110
114
6
-
120
Loans derecognized during the period (other than write-offs)
(15)
(2)
(48)
(65)
(19)
(5)
(1)
(25)
Changes due to change in credit risk (net)
(36)
21
(38)
(53)
(264)
(28)
54
(238)
Update in the methodology for loss allowance estimation
(155)
(95)
(2)
(252)
153
19
(13)
159
Total movements with impact to profit or loss:
(154)
(18)
(88)
(260)
(16)
(8)
40
16
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
(32)
(32)
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
(32)
(32)
Loss allowance as at 31 December
55
14
46
115
209
32
134
375
Bank loss allowance against finance lease receivables – individuals
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
209
32
134
375
224
40
95
359
Movements with impact to profit or loss:
New loans originated
52
58
-
110
114
6
-
120
Loans derecognized during the period (other than write-offs)
(15)
(2)
(48)
(65)
(19)
(5)
(1)
(25)
Changes due to change in credit risk (net)
(36)
21
(38)
(53)
(263)
(28)
53
(238)
Update in the methodology for loss allowance estimation
(155)
(95)
(2)
(252)
153
19
(13)
159
Total movements with impact to profit or loss:
(154)
(18)
(88)
(260)
(15)
(8)
39
16
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
-
-
-
-
-
-
Total movements without impact to profit or loss:
-
-
-
-
-
-
-
-
Loss allowance as at 31 December
55
14
46
115
209
32
134
375
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
108
NOTE 14
FINANCE LEASE RECEIVABLES (CONTINUED)
Group loss allowance against finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
591
899
2,720
4,210
468
405
2,697
3,570
Movements with impact to profit or loss:
New loans originated
659
272
64
995
243
523
222
988
Loans derecognized during the period (other than write-offs)
(95)
(127)
(715)
(937)
(90)
(128)
(280)
(498)
Changes due to change in credit risk (net)
(210)
(364)
160
(414)
(443)
(272)
26
(689)
Update in the methodology for loss allowance estimation
(34)
(455)
307
(182)
413
371
55
839
Total movements with impact to profit or loss:
320
(674)
(184)
(538)
123
494
23
640
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
(1)
(1)
-
-
-
-
Total movements without impact to profit or loss:
-
-
(1)
(1)
-
-
-
-
Loss allowance as at 31 December
911
225
2,535
3,671
591
899
2,720
4,210
Bank loss allowance against finance lease receivables – business customers
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Loss allowance as at 1 January
590
899
1,978
3,467
468
405
1,955
2,828
Movements with impact to profit or loss:
New loans originated
658
272
64
994
242
523
221
986
Loans derecognized during the period (other than write-offs)
(95)
(127)
(715)
(937)
(90)
(128)
(280)
(498)
Changes due to change in credit risk (net)
(209)
(364)
155
(418)
(444)
(272)
27
(689)
Update in the methodology for loss allowance estimation
(34)
(455)
307
(182)
414
371
55
840
Total movements with impact to profit or loss:
320
(674)
(189)
(543)
122
494
23
639
Movements without impact to profit or loss:
Loans written-off during the period
-
-
-
-
-
-
-
-
FX and other movements
-
-
(1)
(1)
-
-
-
-
Total movements without impact to profit or loss:
-
-
(1)
(1)
-
-
-
-
Loss allowance as at 31 December
910
225
1,788
2,923
590
899
1,978
3,467
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
109
NOTE 15
INVESTMENT SECURITIES
Investment securities are comprised of:
•non-trading equities. The Group chose to measure these securities at fair value through profit or loss;
•debt securities at fair value through other comprehensive income;
•debt securities at amortized cost (held to collect cash flows).
2021
2020
Group
Bank
Group
Bank
INVESTMENT SECURITIES AT FAIR VALUE:
Non-trading securities at fair value:
Debt securities at fair value through other comprehensive income:
78,126
78,126
30,429
30,429
Government bonds
53,991
53,991
17,709
17,709
Corporate bonds
24,135
24,135
12,720
12,720
Non-trading equity securities at fair value through profit or loss
4,862
4,825
3,913
3,786
Total non-trading securities at fair value
82,988
82,951
34,342
34,215
TOTAL INVESTMENT SECURITIES AT FAIR VALUE
82,988
82,951
34,342
34,215
INVESTMENT SECURITIES AT AMORTIZED COST:
Securities at amortized cost:
Debt securities:
705,398
692,226
709,454
697,136
Government bonds
541,026
535,006
532,501
526,700
Corporate bonds
164,372
157,220
176,953
170,436
Total securities at amortized cost
705,398
692,226
709,454
697,136
TOTAL INVESTMENT SECURITIES AT AMORTIZED COST
705,398
692,226
709,454
697,136
Breakdown of debt securities by time remaining to maturity:
Debt securities at fair value through other comprehensive income:
Short-term (up to 1 year)
9,166
9,166
6,884
6,884
Long-term (over 1 year)
68,960
68,960
23,545
23,545
Total debt securities at fair value through other comprehensive
income
78,126
78,126
30,429
30,429
Debt securities at amortized cost:
Short-term (up to 1 year)
72,976
72,766
70,848
70,737
Long-term (over 1 year)
632,422
619,460
638,606
626,399
Total debt securities at amortized cost
705,398
692,226
709,454
697,136
As at 31 December 2021, government bonds at amortized cost with a carrying value of EUR 635,885 thousand were pledged for the
borrowing under third series of the targeted longer-term refinancing operations (TLTRO-III) program of the European Central Bank (as
at 31 December 2020 EUR 155,921 thousand; see Note 20).
Staging and impairment of the Group‘s/Bank’s investment debt securities:
Group investment debt securities at fair value through other comprehensive income
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Government bonds, gross
54,013
-
-
54,013
17,720
-
-
17,720
Less: allowance for impairment
(22)
-
-
(22)
(11)
-
-
(11)
Government bonds, net
53,991
-
-
53,991
17,709
-
-
17,709
Corporate bonds, gross
24,169
-
-
24,169
11,791
974
-
12,765
Less: allowance for impairment
(34)
-
-
(34)
(9)
(36)
-
(45)
Corporate bonds, net
24,135
-
-
24,135
11,782
938
-
12,720
Total, gross
78,182
-
-
78,182
29,511
974
-
30,485
Less: allowance for impairment
(56)
-
-
(56)
(20)
(36)
-
(56)
Total, net
78,126
-
-
78,126
29,491
938
-
30,429
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
110
NOTE 15
INVESTMENT SECURITIES (CONTINUED)
Bank investment debt securities at fair value through other comprehensive income
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Government bonds, gross
54,013
-
-
54,013
17,720
-
-
17,720
Less: allowance for impairment
(22)
-
-
(22)
(11)
-
-
(11)
Government bonds, net
53,991
-
-
53,991
17,709
-
-
17,709
Corporate bonds, gross
24,169
-
-
24,169
11,791
974
-
12,765
Less: allowance for impairment
(34)
-
-
(34)
(9)
(36)
-
(45)
Corporate bonds, net
24,135
-
-
24,135
11,782
938
-
12,720
Total, gross
78,182
-
-
78,182
29,511
974
-
30,485
Less: allowance for impairment
(56)
-
-
(56)
(20)
(36)
-
(56)
Total, net
78,126
-
-
78,126
29,491
938
-
30,429
Group investment debt securities at amortized cost
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Government bonds, gross
541,191
-
-
541,191
532,674
-
-
532,674
Less: allowance for impairment
(165)
-
-
(165)
(173)
-
-
(173)
Government bonds, net
541,026
-
-
541,026
532,501
-
-
532,501
Corporate bonds, gross
164,297
199
1,020
165,516
176,880
199
1,016
178,095
Less: allowance for impairment
(121)
(3)
(1,020)
(1,144)
(123)
(3)
(1,016)
(1,142)
Corporate bonds, net
164,176
196
-
164,372
176,757
196
-
176,953
Total, gross
705,488
199
1,020
706,707
709,554
199
1,016
710,769
Less: allowance for impairment
(286)
(3)
(1,020)
(1,309)
(296)
(3)
(1,016)
(1,315)
Total, net
705,202
196
-
705,398
709,258
196
-
709,454
Bank investment debt securities at amortized cost
2021
2020
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
Government bonds, gross
535,167
-
-
535,167
526,869
-
-
526,869
Less: allowance for impairment
(161)
-
-
(161)
(169)
-
-
(169)
Government bonds, net
535,006
-
-
535,006
526,700
-
-
526,700
Corporate bonds, gross
157,334
-
-
157,334
170,553
-
-
170,553
Less: allowance for impairment
(114)
-
-
(114)
(117)
-
-
(117)
Corporate bonds, net
157,220
-
-
157,220
170,436
-
-
170,436
Total, gross
692,501
-
-
692,501
697,422
-
-
697,422
Less: allowance for impairment
(275)
-
-
(275)
(286)
-
-
(286)
Total, net
692,226
-
-
692,226
697,136
-
-
697,136
Reconciliation of allowance for impairment of investment debt securities is presented in the table below:
2021
2020
Group
Bank
Group
Bank
Allowance for impairment of investment debt securities as of 1
January:
1,370
343
1,317
290
Change in allowance for impairment
(11)
(11)
56
52
Update in the methodology for loss allowance estimation
-
-
-
-
Change in FX rates
(7)
-
(3)
1
Allowance for impairment of investment debt securities as of 31
December:
1,352
332
1,370
343
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
111
NOTE 15
INVESTMENT SECURITIES (CONTINUED)
Breakdown of the Group‘s/Bank’s investment securities as at 31 December 2021 and 2020:
2021
2020
Group
Bank
Group
Bank
Investment securities at fair value:
Debt securities
78,126
78,126
30,429
30,429
AAA
-
-
-
-
from AA- to AA+
-
-
-
-
from A- to A+
57,534
57,534
16,971
16,971
from BBB- to BBB+
9,696
9,696
11,837
11,837
from BB- to BB+
10,896
10,896
1,621
1,621
lower than BB-
-
-
-
-
no rating
-
-
-
-
Equities
4,862
4,825
3,913
3,786
listed
290
290
-
-
unlisted
455
455
525
398
units of investment funds
4,117
4,080
3,388
3,388
Total investment securities at fair value
82,988
82,951
34,342
34,215
Investment securities at amortized cost:
Debt securities
705,398
692,226
709,454
697,136
AAA
-
-
-
-
from AA- to AA+
3,101
2,896
6,116
5,910
from A- to A+
551,810
545,789
535,155
529,095
from BBB- to BBB+
148,969
143,541
167,269
162,131
from BB- to BB+
1,518
-
914
-
lower than BB-
-
-
-
-
no rating
-
-
-
-
Total investment securities at amortized cost
705,398
692,226
709,454
697,136
No material reclassifications between securities portfolios were performed during 2021 and 2020.
Movements in the financial instruments revaluation reserve:
The Group
The Bank
Financial
instruments
revaluation
reserve, before
taxes
Deferred income
tax asset
(liabilities)
Financial
instruments
revaluation
reserve, after
taxes
Financial
instruments
revaluation
reserve, before
taxes
Deferred income
tax asset
(liabilities)
Financial
instruments
revaluation
reserve, after
taxes
1 January 2020
33
(42)
(9)
20
(42)
(22)
Revaluation
839
-
839
839
-
839
Sale or redemption of securities
(393)
-
(393)
(393)
-
(393)
Deferred income tax
-
(49)
(49)
-
(49)
(49)
31 December 2020
479
(91)
388
466
(91)
375
Revaluation
(1,026)
-
(1,026)
(1,027)
-
(1,027)
Sale or redemption of securities
(185)
-
(185)
(185)
-
(185)
Deferred income tax
-
240
240
-
240
240
31 December 2021
(732)
149
(583)
(746)
149
(597)
Bank’s cash flows and other movements of investment securities at amortized cost:
2021
2020
Group
Bank
Group
Bank
As at 1 January
709,454
697,136
545,849
535,479
Acquisitions
100,202
99,382
320,243
318,242
Redemptions
(78,862)
(78,862)
(63,648)
(63,648)
Disposals
(21,177)
(21,177)
(88,785)
(88,785)
Accrued interest
5,128
4,951
6,729
6,552
Received coupon payment
(9,473)
(9,323)
(10,785)
(10,559)
Foreign currency exchange rate impact
105
105
(122)
(122)
Impairment
18
11
(9)
(5)
Reclassifications
3
3
(18)
(18)
As at 31 December
705,398
692,226
709,454
697,136
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
112
NOTE 16
INVESTMENTS IN SUBSIDIARIES
The Group consists of the Bank and its subsidiaries listed below in this note. All of the entities comprising the Group operate in
Lithuania.
Carrying amount
Share in equity
31 December 2021
31 December 2020
Bank
Gross amount
Impairment
Net carrying
amount
Gross amount
Impairment
Net carrying
amount
Investments in consolidated directly controlled
subsidiaries:
SB Draudimas GD UAB
100.00
%
11,788
-
11,788
10,513
-
10,513
SB Lizingas UAB
100.00
%
13,224
-
13,224
13,274
-
13,274
Šiaulių Banko Lizingas UAB
100.00
%
1,074
-
1,074
1,074
-
1,074
Šiaulių Banko Turto Fondas UAB
100.00
%
5,582
-
5,582
4,274
-
4,274
Total
31,668
-
31,668
29,135
-
29,135
Reconciliation of Bank’s investment in subsidiary amounts is presented in the table below:
2021
2020
Net book value at 1 January
29,135
31,491
Share of the profit or loss of investments in subsidaries accounted for using the equity method
8,830
5,470
Increase in the investment amount
-
-
Dividends paid by the subsidiaries
(6,305)
(4,000)
Impairment
-
(114)
Transfer to subsidiaries held for sale
-
(3,713)
Other changes (changes due constructive obligation to cover losses and rounding)
8
1
Net book value at 31 December
31,668
29,135
Following strategy to optimize Group's structure, in December 2020, Pavasaris UAB and SBTF UAB were merged with SB turto fondas
UAB (formerly - Šiaulių Banko Turto Fondas UAB).
In addition, at 31 December 2020 the Bank had indirectly controlled subsidiaries with 100% share in equity: Apželdinimas UAB (directly
controlled by SB turto fondas UAB), Sandworks UAB (directly controlled by Šiaulių Banko Investicijų Valdymas UAB).
In 2020, Group's management took a decision to sell its shares in Minera UAB and to liquidate Šiaulių Banko Investicijų Valdymas UAB
in 2021. Therefore these two companies were transferred from consolidated subsidiaries to subsidiaries held for sale (see Note 19). On
repricing to fair value less costs to sell, an impairment of EUR 114 thousand was recognized on investment in Minera UAB (included in
income statement line "Allowance for impairment losses on investments in subsidiaries"). In 2021 management of the Bank has revised
definition of assets held for sale therefore at 31 December 2021 none of subsidiaries are classified as assets held for sale and their
profit (losses) are no longer attributed to results from discontinued operations in income statement. On 31 March 2021 shares in Minera
UAB were sold for EUR 2,828 thousand to purchaser from outside of the Group generating net loss of EUR 348 thousand from disposal
which was presented in Group’s income statement line "Net gain (loss) from derecognition of financial assets" (disposal result in Bank’s
accounts is nil). On date of disposal Minera UAB held cash balances of EUR 171 thousand, its total assets (including cash balances)
and total liabilities amounted to EUR 5,485 thousand and EUR 2,259 thousand, respectively.
On 9 July 2021 shares in Apželdinimas UAB were sold by Bank’s subsidiary SB turto fondas UAB for EUR 1,876 thousand to purchaser
from outside of the Group generating net gain of EUR 1,852 thousand from disposal which was presented in Group’s income statement
line "Net gain (loss) from derecognition of financial assets". On date of disposal Apželdinimas UAB held no cash balances, its total
assets and total liabilities amounted to EUR 1,120 thousand and EUR 776 thousand, respectively. At 31 December 2020 due to major
uncertainties regarding future cash flows Bank’s subsidiary SB turto fondas UAB had recognized an impairment for the whole amount of
investment in Apželdinimas UAB (impairment amount EUR 300 thousand). In 2021 impairment for investment in Apželdinimas UAB was
reversed due to disposal of shares in Apželdinimas UAB and included in disposal result.
On 30 September 2021 shares in Šiaulių Banko Investicijų Valdymas UAB were sold by Bank to subsidiary SB turto fondas UAB
generating net gain of EUR 418 thousand from disposal which was presented in Bank’s income statement line "Net gain (loss) from
derecognition of financial assets". Disposal of shares was performed at price determined by independent business appraiser.
After Group structure changes described above, at 31 December 2021 the Bank had indirectly controlled subsidiaries with 100% share
in equity: Šiaulių Banko Investicijų Valdymas UAB (directly controlled by SB turto fondas UAB), Sandworks UAB (directly controlled by
Šiaulių Banko Investicijų Valdymas UAB). At 31 December 2021 both subsidiaries indirectly controlled by Bank were under liquidation
process.
Bank’s subsidiary SB Draudimas GD UAB (previous name - Bonum Publicum GD UAB) was tested for impairment using embedded
value approach as of 31 December 2021 and 31 December 2020. No impairment was determined at these dates. Embedded value
equals to the value of in-force business plus the value of the free capital. Value of in-force business is calculated using management
estimations of the cash flows from the insurance portfolio and the income from capital-in-lock discounted to net present value using the
discount rate (2021: 7.42%, 2020: 7.37%) that reflects current market assessment of the time value of money and the related risks.
No impairment triggers were identified regarding other subsidiaries.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
113
NOTE 17
INTANGIBLE ASSETS
Software and licences
Goodwill
Total
Group
Bank
Group
Bank
Group
Bank
As at 1 January 2020:
Cost
7,990
7,557
1,352
-
9,342
7,557
Accumulated amortisation
(5,054)
(4,636)
-
-
(5,054)
(4,636)
Net book value
2,936
2,921
1,352
-
4,288
2,921
Year ended 31 December 2020:
Net book value at 1 January
2,936
2,921
1,352
-
4,288
2,921
Acquisitions
2,552
2,373
-
-
2,552
2,373
Write-offs
(1)
-
-
-
(1)
-
Amortisation charge
(1,110)
(1,064)
-
-
(1,110)
(1,064)
Net book value at 31 December
4,377
4,230
1,352
-
5,729
4,230
As at 31 December 2020:
Cost
10,181
9,578
1,352
-
11,533
9,578
Accumulated amortisation
(5,804)
(5,348)
-
-
(5,804)
(5,348)
Net book value
4,377
4,230
1,352
-
5,729
4,230
Year ended 31 December 2021:
Net book value at 1 January
4,377
4,230
1,352
-
5,729
4,230
Acquisitions
451
173
-
-
451
173
Write-offs
-
-
-
-
-
-
Amortisation charge
(1,346)
(1,289)
-
-
(1,346)
(1,289)
Net book value at 31 December
3,482
3,114
1,352
-
4,834
3,114
As at 31 December 2021:
Cost
10,621
9,748
1,352
-
11,973
9,748
Accumulated amortisation
(7,139)
(6,634)
-
-
(7,139)
(6,634)
Net book value
3,482
3,114
1,352
-
4,834
3,114
Economic life (in years)
3–9
3–9
Goodwill impairment test
For the purpose of impairment testing, goodwill is allocated to one cash generating unit - subsidiary of the Bank SB Draudimas (name
changed from Bonum Publicum). The recoverable amount of cash generating unit is determined by applying the embedded value
calculations. Embedded value equals to the value of in-force business plus the value of the free capital. Value of in-force business is
calculated using management estimations of the cash flows from the insurance portfolio and the income from capital-in-lock discounted
to net present value using the discount rate of 7.42% (2020: 7.37%) that reflects current market assessment of the time value of money
and the risks related to cash generating unit.
No impairment loss for goodwill was identified in 2021 and 2020 as a result of the test.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
114
NOTE 18
PROPERTY, PLANT AND EQUIPMENT
Group
Buildings,
premises and
land
Vehicles
Office
equipment
Construction in
progress
Total
As at 1 January 2020:
Cost
7,635
2,904
5,844
278
16,661
Accumulated depreciation
(2,484)
(674)
(4,037)
-
(7,195)
Net book value
5,151
2,230
1,807
278
9,466
Year ended 31 December 2020:
Net book value at 1 January
5,151
2,230
1,807
278
9,466
Acquisitions
-
894
1,112
17
2,023
Reclassifications
(103)
(37)
(2)
(215)
(357)
Disposals and write-offs
(168)
(464)
(22)
(4)
(658)
Depreciation charge
(147)
(448)
(674)
-
(1,269)
Net book value at 31 December
4,733
2,175
2,221
76
9,205
As at 31 December 2020:
Cost
7,040
2,939
6,395
76
16,450
Accumulated depreciation
(2,307)
(764)
(4,174)
-
(7,245)
Net book value
4,733
2,175
2,221
76
9,205
Year ended 31 December 2020:
Net book value at 1 January
4,733
2,175
2,221
76
9,205
Acquisitions
-
152
620
-
772
Reclassifications
168
(179)
11
-
-
Disposals and write-offs
-
(1)
(1)
-
(2)
Depreciation charge
(147)
(438)
(732)
-
(1,317)
Net book value at 31 December
4,754
1,709
2,119
76
8,658
As at 31 December 2021:
Cost
7,208
2,756
6,689
76
16,729
Accumulated depreciation
(2,454)
(1,047)
(4,570)
-
(8,071)
Net book value
4,754
1,709
2,119
76
8,658
Economic life (in years)
15-50
5-12
3-20
-
-
Right-of-use assets and lease liabilities
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group. The Group leases various offices, equipment and vehicles. Lease terms are negotiated on an
individual basis and contain a wide range of different terms and conditions. Rental contracts are typically made for fixed periods of 4
months to 8 years, but may have extension options. The terminations of agreementy by lessee mostly from 3 to 6 months notice. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.
Leased assets may not be used as security for borrowing purposes.
Group: right-of-use assets
Buildings, premises and land
Vehicles
Office equipment
Total
As at 1 January 2021
Cost
14,040
134
14
14,188
Accumulated depreciation
(6,802)
(93)
(14)
(6,909)
Net book value
7,238
41
-
7,279
Year ended 31 December 2021:
Net book value at 1 January
7,238
41
-
7,279
Contract additions
419
132
-
551
Contract terminations
(21)
(62)
-
(83)
Depreciation charge
(1,607)
(38)
-
(1,645)
Net book value at 31 December
6,029
73
-
6,102
As at 31 December 2021:
Cost
11,437
186
-
11,623
Accumulated depreciation
(5,408)
(113)
-
(5,521)
Net book value
6,029
73
-
6,102
Economic life (in years)
2-20
2-7
3
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
115
NOTE 18
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Amounts of lease liabilities recognized in Group’s statement of financial position:
31 December 2021
31 December 2020
Lease liabilities before prepayments
6,169
7,312
Short-term (up to 1 year)
1,433
1,601
Long-term (2-5 years)
3,359
3,905
Long-term (over 5 years)
1,377
1,806
Prepayments paid
(76)
(74)
Lease liabilities, carrying value
6,093
7,238
The Group recognized in its income statement for the year ended 31 December 2021 lease expense for the low value leases
amounting to EUR 3 thousand (for the year ended 31 December 2020 – EUR 8 thousand).
Bank
Buildings and premises
Vehicles
Office equipment
Construction in progress
Total
As at 1 January 2020:
Cost
7,218
2,282
5,498
70
15,068
Accumulated depreciation
(2,163)
(487)
(3,755)
-
(6,405)
Net book value
5,055
1,795
1,743
70
8,663
Year ended 31 December 2020:
Net book value at 1 January
5,055
1,795
1,743
70
8,663
Acquisitions
-
808
1,056
10
1,874
Disposals and write-offs
-
(439)
(15)
(4)
(458)
Depreciation charge
(147)
(356)
(643)
-
(1,146)
Reclassification to assests
held for sale
(7)
-
-
-
(7)
Net book value at 31 December
4,901
1,808
2,141
76
8,926
As at 31 December 2020:
Cost
7,208
2,362
6,120
76
15,766
Accumulated depreciation
(2,307)
(554)
(3,979)
-
(6,840)
Net book value
4,901
1,808
2,141
76
8,926
Year ended 31 December 2021:
Net book value at 1 January
4,901
1,808
2,141
76
8,926
Acquisitions
-
129
564
-
693
Disposals and write-offs
-
(179)
(16)
-
(195)
Depreciation charge
-
-
-
-
-
Reclassifications
(147)
(346)
(682)
-
(1,175)
Net book value at 31 December
4,754
1,412
2,007
76
8,249
As at 31 December 2021:
Cost
7,208
2,180
6,334
76
15,798
Accumulated depreciation
(2,454)
(768)
(4,327)
-
(7,549)
Net book value
4,754
1,412
2,007
76
8,249
Economic life (in years)
15-50
5-12
3-20
-
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
116
NOTE 18
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Bank: right-of-use assets
Buildings, premises and land
Vehicles
Office equipment
Total
As at 1 January 2021:
Cost
13,446
134
-
13,580
Accumulated depreciation
(6,561)
(93)
-
(6,654)
Net book value
6,885
41
-
6,926
Year ended 31 December 2021:
Net book value at 1 January
6,885
41
-
6,926
Contract additions
390
132
-
522
Contract terminations
(21)
(62)
-
(83)
Depreciation charge
(1,458)
(38)
-
(1,496)
Net book value at 31 December
5,796
73
-
5,869
As at 31 December 2021:
Cost
10,945
186
-
11,131
Accumulated depreciation
(5,149)
(113)
-
(5,262)
Net book value
5,796
73
-
5,869
Economic life (in years)
2-20
2-7
-
-
Amounts of lease liabilities recognized in Bank’s statement of financial position:
31 December 2021
31 December 2020
Lease liabilities before prepayments
5,886
6,944
Short-term (up to 1 year)
1,283
1,452
Long-term (2-5 years)
3,226
3,687
Long-term (over 5 years)
1,377
1,805
Prepayments received
(68)
(67)
Lease liabilities, carrying value
5,818
6,877
Please see Note 10 for reconciliation of movements lease liabilities.
As at 31 December 2021 and 31 December 2020, there were no property, plant and equipment pledged to third parties.
Future minimum lease payments to be received under non-cancellable lease agreements for the Bank and the Group were as follows
(this includes investment property disclosed in Note 26):
2021
2020
up to 1 year
1-5 years
over 5 years
up to 1 year
1-5 years
over 5 years
Group
141
365
-
463
998
437
Bank
144
493
307
141
463
437
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
117
NOTE 19
OTHER ASSETS
2021
2020
Group
Bank
Group
Bank
Financial assets:
Amounts receivable
16,398
16,271
4,695
4,278
Breakdown of financial assets according to maturity
Short-term (up to 1 year)
15,188
15,061
4,480
4,063
Long-term (over 1 year)
1,210
1,210
215
215
Non-financial assets:
Breakdown of non-financial assets according to maturity
Short-term (up to 1 year)
7,566
7,097
4,248
3,831
Long-term (over 1 year)
4,173
1,192
5,853
1,432
Inventories
538
-
1,391
-
Deferred charges
1,274
1,243
748
736
Assets under reinsurance and insurance contracts
1,773
-
1,315
-
Prepayments
3,957
2,820
3,477
1,469
Foreclosed assets
103
54
509
431
Other
4,094
4,172
2,661
2,627
TOTAL OTHER ASSETS
28,137
24,560
14,796
9,541
Balances of other financial assets include impairment. Reconciliation of allowance for impairment of other financial assets is presented
in the table below:
Group
Bank
Allowance for impairment of other financial assets as of 1 January 2020:
517
505
Change in allowance for impairment
(352)
(350)
Other financial assets written-off during the period
(2)
(2)
Reclassifications and other movements
(2)
-
Allowance for impairment of other financial assets as of 31 December 2020
161
153
Change in allowance for impairment
114
88
Other financial assets written-off during the period
(15)
(13)
Reclassifications and other movements
-
-
Allowance for impairment of other financial assets as of 31 December 2021:
260
228
Inventories relate to real estate projects under development and real estate held for sale by the Bank’s subsidiary SB turto fondas UAB.
All inventories are accounted at lower of cost and net realisable value. Inventories are not pledged.
Net impairment expense of EUR 1 thousand related to repricing inventories and other non-financial assets down to realisable value was
included in year 2021 income statement for the Group (the Bank – net expense of EUR 1 thousand). In 2020, the Group included net
impairment reversal on inventories and other non-financial assets of EUR 25 thousand in its income statement (the Bank – net expense
reversal of EUR 27 thousand).
Assets held for sale and liabilities related to assets held for sale
Assets held for sale consist of:
2021
2020
Group
Bank
Group
Bank
Assets related to subsidiaries classified as held for sale
-
-
6,687
3,713
Real estate classified as held for sale
620
620
860
860
Total assets classified as held for sale
620
620
7,547
4,573
Liabilities attributable to subsidiaries classified as held for sale
-
-
98
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
118
NOTE 19
OTHER ASSETS (CONTINUED)
Real estate properties that are planned to be sold within one year are included in assets classified as held for sale. They are included in
Traditional banking operations and lending segment. As of 31 December 2021, such real estate assets consisted of four properties with
a fair value of EUR 653 thousand (as of 31 December 2020: six properties with a fair value of EUR 860 thousand). No impairment
expense related to the repricing these properties down to the realisable value was recognized in 2021 (2020: no impairment expense
was recognized). No income or expenses related to these properties were recorded in profit or loss of discontinued operations.
Valuations performed by Group’s employees are used to assess the realizable value of these properties. Comparative price methods,
i.e. valuation techniques attributable to Level 3 are mostly used valuation techniques.
By implementing its strategic plan, the Bank optimizes the structure of its subsidiaries. In 2020 Bank intended to dispose of two
subsidiaries attributable to Other activities segment. The Bank intended to sell its subsidiary Minera UAB through a public tender and to
liquidate Šiaulių Banko Investicijų Valdymas in 2021, therefore in 2020 these subsidiaries were reclassified from consolidated
subsidiaries to subsidiaries held for sale. Impairment expense related to repricing investment Minera UAB of EUR 114 thousand was
recognized in Bank's financial statements for 2020 (income statement line "Allowance for impairment losses on investments in
subsidiaries"), no repricing was recognized in Group's financial statements. In 2021 management of the Bank has revised definition of
assets held for sale therefore at 31 December 2021 none of subsidiaries are classified as assets held for sale and their profit (losses)
are no longer attributed to results from discontinued operations in income statement. Subsidiaries, which were considered as assets
held for sale at the end of 2020 and were not sold during 2021, were reclassified to consolidated subsidiaries from 2021. For more
details on changes in Group structure see Note 16.
Profit (loss), net assets of the subsidiaries held for sale is presented in the tables below.
2020
Profit (loss) attributable to discontinued operacions:
Interest income
56
Net trading income
159
Net gain from disposal of tangible assets
171
Other income
46
Salaries and related expenses
(112)
Other operating expenses
(231)
Depreciation and amortization
(10)
Impairment and provisions
(39)
Profit (loss) before income tax
40
income tax
81
Profit (loss) for the year
121
Major classes of asset and liabilities included in assets held for sale and liabilities attributable to assets held for sale:
Investment securities at fair value
1,394
Property, plant and equipment
127
Deferred tax assets
152
Inventories
4,989
Other financial assets
14
Other non-financial assets
11
Total assets
6,687
Current income tax liabilities
11
Other financial liabilities
30
Other non-financial liabilities
57
Total liabilities
98
Investment in subsidiaries classified as held for sale,as of 31 December 2020
Minera UAB
Šiaulių Banko Investicijų
Valdymas UAB
Total
Assets held for sale attributable to entity
5,294
1,393
6,687
Liabilities attributable to assets held for sale attributable to entity
74
24
98
Profit (loss) of the current year (recorded in Discontinued operations line of the income
statement)
63
58
121
As all of the entities attributed to assets held for sale were 100%-owned in 2020, the whole amount of the profit (loss) from discontinued
operations was attributable to equity owners of the Group in 2020.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
119
NOTE 20
DUE TO OTHER BANKS AND FINANCIAL INSTITUTIONS
2021
2020
Group
Bank
Group
Bank
Correspondent accounts and deposits of other banks and financial institutions:
(restated)
Correspondent accounts and demand deposits
39,133
43,726
49,039
51,546
Time deposits
5,833
6,773
4,172
5,112
Total correspondent accounts and deposits of other banks and financial
institutions
44,966
50,499
53,211
56,658
Due to central bank
625,167
625,167
149,602
149,602
Loans received from:
Other organisations
6,660
6,660
7,593
7,593
International organisations
20,945
20,945
17,417
17,417
Total loans received
27,605
27,605
25,010
25,010
Total
697,738
703,271
227,823
231,270
Breakdown of due to other banks and financial institutions according to maturity
Short-term (up to 1 year)
51,838
56,871
212,425
214,464
Long-term (over 1 year)
645,900
646,400
15,398
16,806
Total
697,738
703,271
227,823
231,270
As at 31 December 2021, the outstanding borrowing on the balance sheet under third series of the targeted longer-term refinancing
operations (TLTRO-III) program of the European Central Bank amounted to EUR 629 million. This amount consist of EUR 150 million
loan obtained in year 2020 with loan maturity date of 28 June 2023 with early repayment option starting on 29 September 2021 and
EUR 479 million loan obtained on 29 September 2021 with maturity date of 25 September 2024 with early repayment option starting on
29 June 2022. The Bank intends to use the early repayment option. Interest rate on TLTRO III is -0.5% from June 2020 to June 2021
and for banks meeting the lending thresholds, the interest rate can be as low as -1%. The Bank concluded that during special interest
period, starting from June 2021, TLTRO III contains significant benefit in comparison to market pricing for other similarly-collateralised
borrowings available to the Bank. Bank concluded that the benefit should be accounted for as government grant under IAS 20 because
ECB is viewed as government agency or similar body and the benefit is conditional on compliance with certain conditions relating to
Bank‘s operating activities. Government grant element recognised under TLTRO-III program in 2021 income statement line "Other
operating income" amounts to EUR 587 thousand. Government grant element of future periods amounting to EUR 910 thousand as of
31 December 2021 is presented in Bank‘s financial position statement in line "Grants". The TLTRO-III negative interest recorded in the
2021 income statement line "Interest income" amounts to EUR 1,795 thousand. In case of subsequent changes in Bank‘s expectations
of meeting lending targets, effect of such changes would be recognised in income statement. Amount of interest income recognised in
income statement in 2021 that is conditional on meeting lending targets is EUR 1,023 thousand. Securities with a carrying value of EUR
635,885 thousand were placed as a collateral for these borrowings.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
120
NOTE 21
DUE TO CUSTOMERS
2021
2020
Group
Bank
Group
Bank
Demand deposits:
National government institutions
53,063
53,063
49,085
49,085
Local government institutions
127,692
127,692
72,992
72,992
Governmental and municipal companies
32,046
32,046
23,135
23,135
Corporate entities
803,905
806,287
636,651
638,224
Non-profit organisations
37,567
37,567
22,791
22,791
Individuals
773,999
773,999
643,878
643,878
Unallocated amounts due to customers
24,968
24,989
11,887
11,908
Total demand deposits
1,853,240
1,855,643
1,460,419
1,462,013
Term deposits:
National government institutions
1,015
1,015
1,059
1,059
Local government institutions
3,077
3,077
761
761
Governmental and municipality companies
3,939
3,939
2,259
2,259
Corporate entities
57,060
57,060
46,309
46,309
Non-profit organisations
2,984
2,984
3,371
3,371
Individuals
757,868
757,868
833,249
833,249
Total term deposits
825,943
825,943
887,008
887,008
Total
2,679,183
2,681,586
2,347,427
2,349,021
Breakdown of due to customers according to maturity
Short-term (up to 1 year)
2,490,727
2,493,109
2,103,016
2,103,689
Long-term (over 1 year)
188,456
188,477
244,411
245,332
Total
2,679,183
2,681,586
2,347,427
2,349,021
NOTE 22
SPECIAL AND LENDING FUNDS
2021
2020
Group
Bank
Group
Bank
Special funds
6,667
6,667
5,749
5,749
Lending funds
-
-
-
-
Total
6,667
6,667
5,749
5,749
Breakdown of special and lending funds according to maturity
Short-term (up to 1 year)
6,667
6,667
5,749
5,749
Long-term (over 1 year)
-
-
-
-
6,667
6,667
5,749
5,749
The special funds consist of the funds from the mandatory social and health insurance funds. The special funds have to be returned to
the institutions which have placed them upon the first requirement of the latter.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
121
NOTE 23
DEBT SECURITIES IN ISSUE
At 31 December 2020 Bank subordinated debt securities issued, which consisted of a 10 year bond issue of EUR 20,000 thousand
(ISIN code LT0000404287). The bonds were issued on 23 December 2019, annual interest rate is 6.15%. The Bank has a right to call
the bonds after 5 years. From 29 April 2020 this issue was listed on Nasdaq Baltic Bond List.
On 29 September 2021 Bank has issued EUR 75,000 thousand subordinated debt securities which consisted subordinated bonds with
maturity term of 4 years and annual interest rate of 1.05% (ISIN code LT0000405771). The Bank has a right to call the bonds after 3
years. From 8 October 2021 these bonds are listed on Nasdaq Baltic Bonds List.
Cash flows and other movements of issued debt securities:
2021
2020
Group
Bank
Group
Bank
As at 1 January
20,027
20,027
20,044
20,044
Issuance
75,000
75,000
-
-
Redemptions
-
-
-
-
Accrued interest
1,415
1,415
1,213
1,213
Coupon payments
(1,230)
(1,230)
(1,230)
(1,230)
As at 31 December
95,212
95,212
20,027
20,027
NOTE 24
LIABILITIES RELATED TO INSURANCE ACTIVITIES
Technical insurance provisions:
Bank’s subsidiary SB Draudimas UAB is engaged in life insurance business. For the years ended 31 December 2021 and 2020 the
technical insurance provisions and their changes were as follows:
Unearned
premiums
Claims
outstanding
Mathematical
Unit-linked
Investment
units
Total
Gross:
At 1 January 2020
15
144
9,291
23,045
1,002
33,497
Change during period
(1)
120
1,242
604
813
2,778
At 31 December 2020
14
264
10,533
23,649
1,815
36,275
Change during period
-
(50)
(224)
4,192
1,215
5,133
At 31 December 2021
14
214
10,309
27,841
3,031
41,409
Reinsurance share:
At 1 January 2020
(25)
-
(5)
-
-
(30)
Change during period
(3)
(16)
-
-
-
(19)
At 31 December 2020
(28)
(16)
(5)
-
-
(49)
Change during period
(7)
15
-
-
-
8
At 31 December 2021
(35)
(1)
(5)
-
-
(41)
Net value
At 31 December 2020
(14)
248
10,528
23,649
1,815
36,227
At 31 December 2021
(21)
214
10,304
27,841
3,031
41,368
Liabilities under unit-linked insurance contracts are fully covered with assets: other securities in the trading book and cash (31
December 2021: securities EUR 29,983 thousand, cash EUR 889 thousand, 31 December 2020: securities EUR 24,525 thousand,
cash EUR 940 thousand).
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
122
NOTE 25
OTHER LIABILITIES
2021
2020
Group
Bank
Group
Bank
Financial liabilities:
(restated)
Trade payables
1,857
-
3,698
2,574
Accrued charges
17,103
15,957
13,294
10,886
Lease liabilities (see Note 18)
6,093
5,818
7,239
6,877
Total financial liabilities
25,053
21,775
24,231
20,337
Breakdown of other financial liabilities according to maturity
Short-term (up to 1 year)
19,678
16,726
16,327
12,433
Long-term (over 1 year)
5,375
5,049
7,904
7,904
Non-financial liabilities:
Advance amounts received from the buyers of assets
4,332
-
4,789
900
Deferred income
1,307
729
1,255
-
Provisions
935
-
390
-
Other liabilities
677
685
(468)
224
Total non-financial liabilities
7,251
1,414
5,966
1,124
Breakdown of other non-financial liabilities according to maturity
Short-term (up to 1 year)
6,221
853
4,382
1,124
Long-term (over 1 year)
1,030
561
1,584
-
Total non-financial liabilities
7,251
1,414
5,966
1,124
Provisions are recognized as the Group‘s subsidiaries involved in the real estate activities grant service commitments for the properties
they develop and sell or for pending legal issues against the Group companies. The movement of provisions is presented in the table
below:
2021
2020
Group
Bank
Group
Bank
Provisions at 1 January
390
-
660
-
Additions/(reversals), including increases (decreases) in existing
provisions
545
-
(199)
-
Amounts used
-
-
(71)
-
Other movements (reclassifications)
-
-
-
-
Provisions at 31 December
935
-
390
-
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
123
NOTE 26
INVESTMENT PROPERTY
Investment property
Group
Bank
Year ended 31 December 2020:
Carrying amount at 1 January
7,570
367
Acquisitions
-
-
Reclassifications
220
7
Impairment
(1,998)
-
Depreciation charge
(192)
(12)
Disposals and write-offs
(48)
-
Carrying amount at 31 December 2020
5,552
362
As at 31 December 2020:
Cost
6,875
553
Accumulated depreciation
(1,323)
(191)
Net carrying amount
5,552
362
Estimated fair value at 31 December 2020
8,869
430
Year ended 31 December 2021:
Carrying amount at 1 January
5,552
362
Acquisitions
-
-
Reclassifications
(6)
(6)
Impairment
-
-
Depreciation charge
(70)
(12)
Disposals and write-offs
(3,247)
-
Carrying amount at 31 December 2021
2,229
344
As at 31 December 2021:
Cost
3,669
532
Accumulated depreciation
(1,440)
(188)
Net carrying amount
2,229
344
Estimated fair value at 31 December 2021
2,738
490
Economic life (in years)
20-50
20-50
Income from rent of investment property is included in the income statement line “Other operating income” (see Note 6 “Other income”).
Maintenance expenses related to investment property (Group: EUR 119 thousand in 2021, EUR 115 thousand in 2020; Bank: EUR 53
thousand in 2021, EUR 40 thousand in 2020) are included in the income statement line “Other operating expenses”. Future minimum
lease payments to be received under non-cancellable lease agreements disclosure in Note 18 includes the payments from the
investment property leases.
The Group tests the investment property for impairment mainly using valuations from external independent certified appraisers or
valuations performed by Group’s employees (as of 31 December 2021, 85% of the carrying value of the investment property was tested
for impairment using valuations from external independent certified appraisers; as of 31 December 2020 – 95%). Income or
comparative price methods, i.e. valuation techniques attributable to Level 3 (income method or comparative price method) are mostly
used valuation techniques to test the investment property for impairment both by external and internal valuators.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
124
NOTE 27
CAPITAL
As of 31 December 2021 and 31 December 2020 the Banks’s share capital amounted to EUR 174,210,616.27, it comprised
600,726,263 ordinary registered shares with par value of EUR 0.29 each.
At 31 December 2020 European Bank for Reconstruction and Development (EBRD) possessed 26.02% of the authorised capital and
votes of the Bank. On 22 December 2021 EBRD announced that it has agreed to sell an 18 % stake in Bank. EBRD has signed 3
separate agreements with Invalda INVL, an asset management group, Nord Security, (part of the Tesonet group of companies and soon
to be renamed Tesonet Global), and ME Investicija, a holding company that owns Girteka Logistics, to sell stakes of 5.87%, 5.87% and
6.29% in Bank, respectively. Acquisitions of shares will take place through a series of transactions until June 2024 and in some cases
might be subject to regulatory approvals. On 29 December 2021 ME Investicija announced about acquisition of 5.71% of Bank’s
shares. After this transaction as of 31 December 2021 EBRD possessed 21.96% of the authorised capital and votes of the Bank.
As at 31 December 2021, the Bank had 16,573 shareholders (as at 31 December 2020: 9,053).
Share premium
The share premium represents the difference between the issue price and nominal value of the shares issued by the Bank. Share
premium can be used to increase the Bank’s authorised share capital. In 2018, the share premium of EUR 3,428 thousand was
recognized in the subordinated loan conversion process.
Reserve capital
The reserve capital is formed from the Bank’s profit and its purpose is to ensure the financial stability of the Bank. The shareholders
may decide to use the reserve capital to cover losses incurred.
Statutory reserve
According to the Law of the Republic of Lithuania on Banks, allocations to the statutory reserve shall be compulsory and shall not be
less than 1/20 of the profit available for appropriation. The statutory reserve may, by a decision of extraordinary general or annual
meeting of the shareholders, be used only to cover losses of the activities.
Reserve for acquisition of own shares
On 28 March 2019 the ordinary general meeting of shareholders made a decision to form a reserve for acquisition of own shares from
retained earnings. The reserve can be used for two purposes – to preserve the market price of Bank‘s shares and to acquire the shares
that will be granted to Group‘s employees as part of variable remuneration.
During the year ended 31 December 2021 the Bank acquired 1,000 thousand own shares for EUR 750 thousand. Part of acquired
shares were granted to the employees of the Bank and its subsidiaries as deferred part of variable remuneration for 2017. As of 31
December 2021 Bank held 687 thousand own shares with carrying value of EUR 516 thousand.
During the year ended 31 December 2020 the Bank acquired 780 thousand own shares for EUR 320 thousand. The acquired shares
were granted to the employees of the Bank and its subsidiaries as a deferred part of variable remuneration for 2016 and 2017. As of 31
December 2020, the Bank did not possess its own shares.
Other equity
Other equity consists of amount that corresponds to the obligation to present Bank‘s shares to Group‘s employees as part of variable
remuneration.
The Group’s remuneration policy prescribes two main elements of remuneration – fixed remuneration and variable remuneration, and
various additional benefits. Employees whose professional activities and/or decisions might have a significant impact on the risk
accepted by the Group, receive deferred variable remuneration. The remuneration amounts are accrued as staff expenses in income
statement. Until 2018, Group’s incentive scheme included deferred payments in shares and cash of not less than 40% of variable
remuneration being paid in equal instalments during three year period. From 2019 under the Group's incentive scheme employees
whose professional activities and/or decisions may have a significant impact on the risk assumed be the Group receive 50% of the
annual long term incentive program in cash and 50% in form of Bank's shares options executable after 3 years. The number of share
options is based on the currency value of the achieved results divided by the weighted average price at which the Bank's shares are
traded on Nasdaq Vilnius during the period of five months prior the approval of renumeration. Each option is convertible into one
ordinary share.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
125
NOTE 27
CAPITAL (CONTINUED)
The Group has assessed fair value of shares option by the Black-Scholes model which is attributable to Level 3 in fair value hierarchy.
The model inputs include:
•For the option granted 31 March 2021: grant date (31 March 2021), expiry day (12 April 2024), share price 0.538 on grant day,
expected price volatility of the bank's shares 25%, risk free interest rate - 0.1%;
•For the option granted 31 March 2020: grant date (31 March 2020), expiry day (15 April 2023), share price 0.510 on grant day,
expected price volatility of the bank's shares 21%, risk free interest rate -0.1%;
•For the option granted 28 March 2019: grant date (28 March 2019), expiry day (15 April 2022), share price EUR 0.456 on grant
day, exercise price 0.393, expected price volatility of the bank's shares 24%, risk free interest rate -0.2%.
The value of the option is included in other equity line in the statement of financial position. Other equity consists of.
2021
2020
Group
Bank
Group
Bank
Options
3,288
2,870
2,233
1,959
Shares distributable to the employees
-
-
126
107
Total
3,288
2,870
2,359
2,066
At 31 December 2020 shares distributable to employees were for year 2017 variable remuneration. No options were forfeited, exercised
or expired during years ended 31 December 2021 and 31 December 2020.
NOTE 28
CONTINGENT LIABILITIES AND COMMITMENTS
Contingent tax liabilities
The Tax Authorities have not carried out a full-scope tax audit of the Bank for the period from 2017 to 2021. The Tax Authorities may at
any time during 5 successive years after the end of the reporting tax year carry out an inspection of the Bank‘s books and accounting
records and impose additional taxes or fines. Management is not aware of any circumstances that might result in a potential material
liability in this respect.
Guarantees issued, letters of credit, commitments to grant loans and other commitments
2021
2020
Group
Bank
Group
Bank
Financial guarantees issued
52,931
52,992
48,790
48,851
Letters of credit
1,308
1,308
3,522
3,522
Commitments to grant loans
394,173
404,388
278,825
297,828
Other commitments
3,052
3,052
2,940
2,940
Total
451,464
461,740
334,077
353,141
Fair value of the guarantees amounts to EUR 638 thousand at 31 December 2021 (31 December 2020: EUR 308 thousand). It is
estimated as the amount of the guarantee fee to be paid by the customers less amortization over the contract period.
Staging of guarantees issued, letters of credit, commitments to grant loans and other commitments:
2021
2020
Group
Bank
Group
Bank
Financial guarantees issued:
52,931
52,992
48,790
48,851
Stage 1
52,931
52,992
48,790
48,851
Letters of credit:
1,308
1,308
3,522
3,522
Stage 1
1,308
1,308
3,522
3,522
Commitments to grant loans:
394,173
404,388
278,825
297,828
Stage 1
347,738
357,953
245,485
264,488
Stage 2
44,685
44,685
32,169
32,169
Stage 3
1,750
1,750
1,171
1,171
Other commitments:
3,052
3,052
2,940
2,940
Stage 1
3,052
3,052
2,940
2,940
Total
451,464
461,740
334,077
353,141
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
126
NOTE 28
CONTINGENT LIABILITIES AND COMMITMENTS (CONTINUED)
As the guarantees and letters of credit are either 100% secured by cash collaterals pledged by the customers to the Bank, or are
issued using the credit line that the Bank has granted to the customer (which has its own collaterals and impairment is calculated for the
credit line), no ECL impairment provisions are formed against these obligations. Commitments to grant loans are included in the EAD
model in loan ECL calculations and the impairment is calculated for the whole instrument that includes both on-balance and off-balance
sheet amounts, therefore the impairment for commitments to grant loans is included in the loan impairment amount.
The Group‘s liabilities include provisions for other contingent liabilities that are recognized using IAS 37 approach. Such provisions are
disclosed in Note 25.
NOTE 29
DIVIDENDS
Dividends are declared during the annual general meeting of shareholders of the Bank when appropriation of profit for the reporting
period is performed.
On 31 March 2021 the ordinary general meeting of shareholders made a decision to pay EUR 0.0055 (i.e. 1.90%) dividends per one
ordinary registered share with EUR 0.29 nominal value each. The dividends were paid to shareholders as per their stakes at the end of
the day of accounting of rights of the Meeting (15 April 2021). Total amount of dividends was EUR 3,304 thousand.
On 31 March 2020 the ordinary general meeting of shareholders did not approve draft profit distribution therefore no dividends were
paid out for year 2019 and all the profit that the Bank has earned for 2019 remains undistributed.
Unpaid dividends are included in other financial liabilities in the statement of financial position. The table below shows the movements
in dividends for the years 2021 and 2020:
2021
2020
Unpaid dividend amount at 1 January:
45
55
Dividends declared
3 304
-
Dividends paid
(3 299)
(10)
Unpaid dividend amount at 31 December:
50
45
NOTE 30
RELATED-PARTY TRANSACTIONS
Related parties with the Bank are classified as follows:
a)members of the Bank’s Supervisory Council and Board (which also are the main decision makers of the Group), their close
family members and companies that are controlled, jointly controlled over by these related parties;
b)subsidiaries of the Bank, includes SB draudimas GD UAB, Sandworks UAB, SB Lizingas UAB, Šiaulių Banko Investicijų
Valdymas UAB, Šiaulių Banko Lizingas UAB, SB turto fondas UAB;
c)the shareholders holding over 20% of the Bank’s share capital or being a part of a voting group acting in concert that holds
over 20% of voting rights therefore presumed to have a significant influence over the Group.
During 2021 and 2020, a certain number of banking transactions were entered into with related parties in the ordinary course of
business. These transactions include settlements, loans, deposits and foreign currency transactions.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
127
NOTE 30
RELATED-PARTY TRANSACTIONS (CONTINUED)
The year-end balances of loans (incl. off-balance sheet commitments) granted to and deposits accepted from the Bank’s related
parties, except for subsidiaries, and ranges of annual interest rates were as follows (data of the Bank):
Deposits, at the
year-end
Range of annual
interest rates, %
Loans, at the
year-end
Range of annual
interest rates, %
Off-balance sheet
commitments, at the
year-end
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Members of the Council
and the Board
1,555
1,606
0.00-0.05
0.00-0.15
53
57
2
2
31
31
Other related parties
(excluding subsidiaries of
the Bank)
6,319
4,306
0.00-0.15
0.00-0.30
16,167
18,161
0.690-2.25
0.690-3.86
5
5
Total
7,874
5,912
-
-
16,220
18,218
-
-
36
36
% of regulatory capital
2.25%
1.80%
-
-
4.64%
5.55%
-
-
0.00%
0.01%
In 2021 EUR 423 thousand interest income were generated from transactions with related parties (except for subsidiaries).
As at 31 December 2021 loans to related parties (except for subsidiaries) with gross value before impairment provisions of EUR 16,220
thousand (31 December 2020: EUR 18,218 thousand) had collaterals.
At 31 December 2021 and 2020 Bank’s subsidiaries had no material transactions with the related parties except for the Bank and its
subsidiaries.
As at 31 December 2021 balance of allowances for impairment losses that are related to balances of loans to related parties, except for
subsidiaries, was equal to EUR 44 thousand. An impairment expense reversal of EUR 7 thousand related to these loans was recorded
profit or loss in 2021. As at 31 December 2020, balance of allowances for impairment losses that are related to balances of loans to
related parties, except for subsidiaries, was equal to EUR 51 thousand. An impairment expense of EUR 15 thousand related to these
loans was recorded profit or loss in 2020.
Transactions with subsidiaries:
Balances of Bank’s transactions with the subsidiaries are given below:
Deposits, at the
year-end
Range of annual
interest rates, %
Loans, at the
year-end
Range of annual
interest rates, %
Off-balance sheet
commitments, at the
year-end
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Non-financial institutions
6,806
2,575
0.00
0.00
-
4,709
2.60
2.60
-
1,058
Financial institutions
1,129
2,466
0.00-1.90
0.00-1.90
117,868
102,760
2.60
2.60
18,361
26,372
No collateral is obtained on loans to subsidiaries.
Bank’s total balances with subsidiaries (see Note 16 for details on investment in subsidiaries):
2021
2020
Assets
Loans
117,868
107,468
Other assets
-
93
Bank’s investment in subsidiaries
31,668
29,135
Liabilities
Term deposits
1,710
-
Demand deposits
6,225
4,866
Other liabilities
-
175
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
128
NOTE 30
RELATED-PARTY TRANSACTIONS (CONTINUED)
Income and expenses arising from transactions with subsidiaries:
2021
2020
Income
Interest
2,697
3,210
Commission income
586
494
Income (losses) from foreign exchange operations
(13)
6
Share of the profit or loss of investments in subsidaries accounted for using the equity method
8,830
5,470
Other income
352
250
Expenses
Interest
(17)
(17)
Operating expenses
-
(1)
Impairment (reversal of impairment) of loans
1,998
(2,158)
Impairment of an investment to subsidiaries
-
114
As at 31 December 2021 balance of allowances for impairment losses that are related to balances of loans to subsidiaries was EUR 13
thousand (as at 31 December 2020: EUR 2,672 thousand).
Remuneration of the management of the Group/Bank
According to the Bank's Remuneration Policy, the members of the management bodies are paid a fixed and annual variable
remuneration. The annual variable remuneration fund is formed based on the Bank's performance, taking into account current and
future risks. During 2021 the total amount of fixed and annual variable renumeration (total of payments in cash and in shares of the
Bank) to the Bank’s Board members amounted to EUR 2,121 thousand (2020: EUR 2,037 thousand).
2021
2020
Fixed renumeration in cash
1,508
1,208
Variable renumeration in cash
560
697
Variable renumeration in shares of Bank
53
132
Total
2,121
2,037
No other post-employment benefit or long term benefit were paid to members of Board (including management).
Liabilities related to long term benefits related to remuneration are presented in the table below:
2021
2020
Short-term (up to 1 year)
511
121
Long-term (over 1 year)
995
992
Total
1,506
1,113
Payment in cash due in:
Payment in shares due in:
Total
up to 1
year
1 to 2 years
2 to 3 years
Total
up to 1
year
1 to 2 years
2 to 3 years
Total
31 December 2020:
for year 2017 salaries and bonuses
68
-
-
68
53
-
-
53
121
for year 2018 salaries and bonuses
-
-
-
-
-
505
-
505
505
for year 2019 salaries and bonuses
-
-
-
-
-
-
487
487
487
Total liability at 31 December 2020
68
-
-
68
53
505
487
1,045
1,113
31 December 2021:
for year 2018 salaries and bonuses
-
-
-
-
511
-
-
511
511
for year 2019 salaries and bonuses
-
-
-
-
-
502
-
502
502
for year 2020 salaries and bonuses
-
-
-
-
-
-
493
493
493
Total liability at 31 December 2021
-
-
-
-
511
502
493
1,506
1,506
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
129
NOTE 31
FINANCIAL GROUP INFORMATION
According to local legislation the Bank is required to disclose certain information for the Financial group. As of 31 December 2021 and
31 December 2020 the Bank owned the following controlled subsidiaries included in the prudential scope of consolidation (the Bank
and four subsidiaries comprised the Financial group, all of the entities attributable to Financial Group operate in Lithuania):
1.Šiaulių Banko Lizingas UAB (lease activities),
2.Šiaulių Banko Investicijų Valdymas UAB (investment management activities),
3.Šiaulių Banko Turto Fondas UAB (real estate management activities),
4.SB Lizingas UAB (consumer financing activities).
In the Financial Group financial statements, the subsidiaries of the Bank that are not included in the Financial Group are not
consolidated in full as would be required by IFRS 10 but presented on the consolidated balance sheet of the Financial Group as
investments in subsidiaries at cost less impairment, in the same way as presented on the balance sheet of the Bank. This presentation
is consistent with the regulatory reporting made by the Bank according to the Regulation (EU) No 575/2013 on prudential requirements
for credit institutions and investment firms (CRR).
STATEMENT OF FINANCIAL POSITION
31 December 2021
31 December 2020
Fin. Group
Bank
Fin. Group
Bank
ASSETS
Cash and cash equivalents
965,160
964,849
432,035
431,649
Securities in the trading book
15,099
15,099
9,582
9,582
Due from other banks
1,196
1,196
1,598
1,598
Derivative financial instruments
2,121
2,121
445
445
Loans to customers
1,908,681
1,889,629
1,610,371
1,592,363
Finance lease receivables
195,174
194,909
155,457
155,290
Investment securities at fair value
82,988
82,951
34,342
34,215
Investment securities at amortized cost
692,226
692,226
697,136
697,136
Investments in subsidiaries
11,788
31,668
11,320
29,135
Intangible assets
3,115
3,114
4,232
4,230
Property, plant and equipment
14,453
14,118
16,233
15,852
Investment property
2,229
344
2,920
362
Current income tax prepayment
820
820
8
8
Deferred income tax asset
1,591
1,250
2,076
1,690
Inventories
538
-
1,311
-
Other financial assets
16,402
16,271
4,672
4,278
Other non-financial assets
9,415
8,289
6,562
5,263
Assets classified as held for sale
620
620
5,116
4,573
Total assets
3,923,616
3,919,474
2,995,416
2,987,669
LIABILITIES
Due to other banks and financial institutions
699,560
703,271
230,143
231,270
Derivative financial instruments
96
96
3,840
3,840
Due to customers
2,679,204
2,681,586
2,347,682
2,349,021
Special and lending funds
6,667
6,667
5,749
5,749
Debt securities in issue
95,212
95,212
20,027
20,027
Current income tax liabilities
1,084
962
1,092
737
Deferred income tax liabilities
1,452
-
1,251
-
Other financial liabilities
24,396
21,775
23,492
20,337
Other non-financial liabilities
7,234
1,414
5,047
1,124
Grants
910
910
-
-
Liabilities related to assets classified as held for sale
-
-
24
-
Total liabilities
3,515,815
3,511,893
2,639,347
2,632,105
EQUITY
Capital and reserves attributable to owners of the Bank
Share capital
174,211
174,211
174,211
174,211
Share premium
3,428
3,428
3,428
3,428
Treasury shares (-)
(516)
(516)
-
-
Reserve capital
756
756
756
756
Statutory reserve
21,770
21,770
14,304
14,246
Financial instruments revaluation reserve
10,000
10,000
10,000
10,000
Reserve for acquisition of own shares
(597)
(597)
375
375
Other equity
3,242
2,870
2,325
2,066
Retained earnings
195,507
195,659
150,670
150,482
Total equity
407,801
407,581
356,069
355,564
Total liabilities and equity
3,923,616
3,919,474
2,995,416
2,987,669
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
130
NOTE 31
FINANCIAL GROUP INFORMATION (CONTINUED)
INCOME STATEMENT
2021
2020
Fin. Group
Bank
Fin. Group
Bank
Continuing operations
Interest revenue calculated using the effective interest method
82,867
69,951
78,481
65,067
Other similar income
8,744
8,719
7,449
7,435
Interest expense and similar charges
(10,975)
(10,972)
(10,329)
(10,071)
Net interest income
80,636
67,698
75,601
62,431
Fee and commission income
24,747
25,193
22,759
23,014
Fee and commission expense
(7,366)
(7,239)
(6,488)
(6,327)
Net fee and commission income
17,381
17,954
16,271
16,687
Net gain from trading activities
10,362
9,188
12,018
12,018
Net gain (loss) from derecognition of financial assets
4,735
2,729
1,265
384
Net gain (loss) from disposal of tangible assets
987
66
266
7
Other operating income
1,289
1,136
718
452
Salaries and related expenses
(25,889)
(23,640)
(22,342)
(20,506)
Depreciation and amortization expenses
(4,179)
(3,972)
(3,794)
(3,569)
Other operating expenses
(16,179)
(12,268)
(14,683)
(11,681)
Operating profit before impairment losses
69,143
58,891
65,320
56,223
Allowance for impairment losses on loans and other assets
(2,355)
(973)
(12,283)
(10,255)
(Allowance for)/ reversal of allowance for impairment losses on other assets
(545)
(1)
-
305
Allowance for impairment losses on investments in subsidiaries
-
-
(114)
(114)
Share of the profit or loss of investments in subsidiaries accounted for using the equity method
1,242
8,830
(108)
5,470
Profit from continuing operations before income tax
67,485
66,747
52,815
51,629
Income tax expense
(11,879)
(10,742)
(9,859)
(8,534)
Net profit from continuing operations for the year
55,606
56,005
42,956
43,095
Profit (loss) from discontinued operations, net of tax
-
-
58
-
Net profit for the year
55,606
56,005
43,014
43,095
Net profit attributable to:
Owners of the Bank
55,606
56,005
43,014
43,095
From continuing operations
55,606
56,005
42,956
43,095
From discontinued operations
-
-
58
-
Non-controlling interest
-
-
-
-
STATEMENT OF COMPREHENSIVE INCOME
2021
2020
Fin. Group
Bank
Fin. Group
Bank
Profit for the year
55,606
56,005
43,014
43,095
Other comprehensive income (loss):
Items that may be subsequently reclassified to profit or loss:
Financial assets valuation gains taken to other comprehensive income
-
-
839
839
Financial assets valuation result transferred to profit or loss
(606)
(606)
(393)
(393)
Deferred income tax on gain (loss) from revaluation of financial asset
121
121
(49)
(49)
Items that may not be subsequently reclassified to profit or loss:
Fair value changes of financial liabilities at fair value through profit or loss attributable to changes in
their credit risk
-
-
-
-
Other comprehensive income (loss), net of deferred tax
(485)
(485)
397
397
Total comprehensive income
55,121
55,520
43,411
43,492
Total comprehensive income (loss) attributable to:
Owners of the Bank
55,121
55,520
43,411
43,492
Non-controlling interest
-
-
-
-
55,121
55,520
43,411
43,492
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
131
NOTE 31
FINANCIAL GROUP INFORMATION (CONTINUED)
STATEMENT OF CASH FLOWS
Year ended
31 December 2021
31 December 2020
Fin. Group
Bank
Fin. Group
Bank
Operating activities
Interest received on loans and advances
80,797
68,699
81,084
67,625
Interest received on finance leases
8,218
8,195
7,139
7,123
Interest received on debt securities in the trading book
372
372
463
463
Interest paid
(11,520)
(11,498)
(9,719)
(9,445)
Fees and commissions received
24,747
25,193
22,668
23,014
Fees and commissions paid
(7,366)
(7,239)
(6,443)
(6,327)
Net cash inflows from trade in securities in the trading book
(7,171)
(7,040)
3,310
3,273
Net inflows from foreign exchange trading
4,439
4,439
11,872
11,843
Net inflows from derecognition of financial assets
4,735
2,729
1,265
384
Net inflows from disposal of tangible assets
987
66
266
7
Cash inflows related to other activities of Group companies
1,289
1,136
-
452
Recoveries on loans previously written off
(545)
541
1,372
694
Salaries and related payments to and on behalf of employees
(25,180)
(22,931)
(22,709)
(20,874)
Payments related to operating and other expenses
(20,213)
(17,678)
(19,569)
(26,754)
Income tax (paid)
(11,909)
(10,625)
(8,327)
(8,502)
Net cash flow from operating activities before change in operating assets
and liabilities
41,680
34,359
62,672
42,976
Change in operating assets and liabilities:
Decrease in due from other banks
402
402
(1,318)
(1,318)
Increase in loans to customers
(302,727)
(300,088)
(87,806)
(94,789)
Increase in finance lease receivable
(36,149)
(39,380)
(631)
1,571
Decrease (increase) in other financial assets
(11,730)
(11,993)
3,106
2,951
Decrease (increase) in other non-financial assets
4,354
5,287
(17,099)
(7,832)
Increase in due to banks and financial institutions
469,417
472,001
154,613
154,600
Increase in due to customers
332,067
333,110
310,394
311,733
Increase (decrease) in special and lending funds
918
918
(1,311)
(1,311)
Increase (decrease) in other financial liabilities
1,960
2,494
662
7,175
Increase (decrease) in other non-financial liabilities
(2,731)
(4,687)
7,801
14,717
Change
455,781
458,064
368,411
387,497
Net cash flow from operating activities
497,461
492,423
431,083
430,473
Investing activities
(Acquisition) of property, plant and equipment, investment property and
intangible assets
(892)
(866)
(4,335)
(4,335)
Disposal of property, plant and equipment, investment property and intangible
assets
1,853
378
1,609
2,292
(Acquisition) of investment securities at amortized cost
(99,382)
(99,382)
(387,599)
(387,599)
Proceeds from redemption or sale of investment securities at amortized cost
100,039
100,039
225,008
225,008
Interest received on investment securities at amortized cost
9,323
9,323
6,381
6,381
Dividends received
1,306
5,000
2
4,002
(Acquisition) of investment securities at fair value
(89,123)
(89,161)
(24,605)
(28,640)
Sale or redemption of investment securities at fair value
40,148
40,425
4,847
4,551
Interest received on investment securities at fair value
403
403
551
551
Disposal of subsidiaries
2,828
5,428
-
-
Net cash flow from (used in) investing activities
(33,497)
(28,413)
(178,141)
(177,789)
Financing activities
Payment of dividends
(3,299)
(3,299)
(11)
(11)
Interest on debt securities in issue
(1,230)
(1,230)
(1,230)
(1,230)
Issue of debt securities
75,000
75,000
-
-
Redemption of debt securities issued
-
-
-
-
Principal elements of lease payments
(1,310)
(1,281)
(1,569)
(1,376)
Net cash flow (used in) from financing activities
69,161
69,190
(2,810)
(2,617)
Net increase (decrease) in cash and cash equivalent
533,125
533,200
250,132
250,067
Cash and cash equivalents at 1 January
432,035
431,649
181,903
181,582
Cash and cash equivalents at 31 December
965,160
964,849
432,035
431,649
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
132
NOTE 31
FINANCIAL GROUP INFORMATION (CONTINUED)
FINANCIAL GROUP‘S STATEMENT OF CHANGES IN EQUITY
Share
capital
Share
premium
Treasyru
shares (-)
Reserve
capital
Financial
instrumen
ts
revaluatio
n reserve
Statutory
reserve
Reserve
for
acquisitio
n of own
shares
Other
equity
Retained
earnings
Total
1 January 2020
174,211
3,428
-
756
(22)
14,292
10,000
1,524
107,610
311,799
Transfer to statutory reserve
-
-
-
-
-
12
-
-
46
58
Acquisition of own shares
-
-
-
-
-
-
(320)
-
-
(320)
Share-based payment
-
-
-
-
-
-
320
801
-
1,121
Total comprehensive income:
-
-
-
-
397
-
-
-
43,014
43,411
Net profit
-
-
-
-
-
-
-
-
43,014
43,014
Other comprehensive income
-
-
-
-
397
-
-
-
-
397
31 December 2020
174,211
3,428
-
756
375
14,304
10,000
2,325
150,670
356,069
Transfer to statutory reserve
-
-
-
-
-
7,466
-
-
(7,466)
-
Acquisition of own shares
-
-
(516)
-
-
-
-
-
-
(516)
Share-based payment
-
-
-
-
-
-
-
917
-
917
Payment of dividends
-
-
-
-
-
-
-
-
(3,304)
(3,304)
Total comprehensive income:
-
-
-
-
(972)
-
-
-
55,606
54,634
Net profit
-
-
-
-
-
-
-
-
55,606
55,606
Other comprehensive income
-
-
-
-
(972)
-
-
-
-
(972)
31 December 2021
174,211
3,428
(516)
756
(597)
21,770
10,000
3,242
195,506
407,800
COMPLIANCE WITH PRUDENTIAL REQUIREMENTS
During the years ended 31 December 2021 and 31 December 2020, the Financial group and the Bank complied with prudential
requirements to which it was subject.
NOTE 32
EVENTS AFTER BALANCE SHEET DATE
On 26 January 2022 Bank has acquired 2,105 thousand units of own shares. Amount paid for the shares is EUR 1,557 thousand.
Purpose of share acquisition - granting shares to the employees of the Bank and the Bank's subsidiaries.
On 24 February 2022 war has started between Russia and Ukraine which could have impact to separate clients of the Group and to
macroeconomic situation in world and Lithuania in general. Due to rapidly changing situation and many uncertainties there were no
possibilities to assess impact of this event to the Group.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2021
(All amounts are in EUR thousand, unless otherwise stated)
133
CONSOLIDATED ANNUAL REPORT
FOR 2021
31 December 2021
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, faks. (8 41) 430 774
El. paštas info@sb.lt
www.sb.lt
The consolidated report of Šiaulių Bankas AB (hereinafter ― the Bank) covers the period 01 January 2021 to 31 December 2021.
The description of alternative performance indicators is available on the Bank's website at:
Homepage › Bank Investors › Financial Information › Alternative Performance Measures.
ANNUAL ACTIVITY RESULTS
•Šiaulių bankas Group earned unaudited net profit of EUR 55.2 million last year, or 28% more than in 2020
•The loan portfolio increased by 19% year-on-year to over EUR 2.1 billion
•The deposit portfolio grew by 14% to EUR 2.6 billion
•The mystery shopper research recognised Šiaulių bankas as the bank with the best customer service in Lithuania
Overview of the key performance indicators
“Compared to 2020, this year has been a successful one, and it seems that the economic situation is getting back on track, despite the
still looming pandemic. Both corporate and private clients were actively interested in financing and looking for ways to invest their
savings. Although the number of live consultations and cash transactions since the pandemic has not yet returned to normal levels, and
the demand for remote servicing is increasing, we are pleased that we have chosen the strategy of staying closer to our clients and
letting them choose how they want to be serviced. This has been recognised not only by international evaluators – after the results of
the 2021 mystery shopper survey conducted by DIVE Lietuva were published, we regained the title of the bank with the best customer
service and scored 100% in the quality score out of a possible 100”, said Vytautas Sinius, CEO of Šiaulių bankas.
Šiaulių bankas Group earned unaudited net profit of EUR 55.2 million in 2021 (28% more than in 2020). Net profit for the Q4 of 2021
was EUR 11.0 million (25% increase compared to Q4 2020).
Due to the strong growth in lending volumes and client activeness, both net interest income and net service and commission income
grew by 7% each and reached EUR 80.9 million and EUR 17.2 million respectively.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
135
With no significant deterioration in credit quality and no upward trend in overdue loans observed throughout 2021, provisions of EUR
4.1 million were made during the year, compared to provisions of EUR 12.0 million in 2020, mainly taking into account the forecasted
impact of COVID-19. The cost of risk (CoR) of the loan portfolio was 0.2% in 2021 (0.6% in 2020).
The Group’s cost/income ratio (excluding the impact of the client portfolio of SB draudimas) remained almost unchanged during the
year and stood at 42.8% at year-end (42.9% in the previous year), while the ROE increased to 14.3% (12.7% in the previous year). The
capital and liquidity position remains strong and prudential ratios are being met by a wide margin.
Overview of Business Segments
Business and Private Clients Financing
With strong growth in both corporate and private client financing, the value of the loan portfolio increased by 3% in Q4 and by 19% to
over EUR 2.1 billion in 2021. More than EUR 1.2 billion worth of new lending contracts were signed last year, 71% more than in 2020.
With business expectations remaining stable and growing investments, new business credit agreements worth almost EUR 0.7 billion
were signed during the year (twice as much as in 2020) and EUR 200 million in the Q4 alone. While the business finance portfolio
remained almost unchanged in Q4, it grew by 11% over the whole of last year to EUR 1.17 billion. The non-performing loan portfolio of
business finance continues its downward trend, amounting to EUR 64 million at the end of the year (down by EUR 48 million, or 42%
year-on-year).
Despite the ongoing pandemic, strong demand for private clients financing continued to be recorded, especially in the area of housing
loans. With a continued high level of new applications, the mortgage portfolio grew by 10% in the fourth quarter and by 53% year-to-
date to over EUR 454 million. The consumer finance portfolio grew by 4% in the Q4 and by 6% for the whole of 2021, reaching over
EUR 170 million.
The Bank continues to focus on financing energy efficiency projects, with more than EUR 30 million of multi-apartment building
modernisation contracts signed in the Q4 and EUR 127 million over the year (+56% year-on-year change). Together with the European
Investment Bank (EIB) and other investors, a new EUR 275 million Multi-Apartment Building Modernisation Fund is nearing completion
of the contracts signing process. The Fund is expected to start operations in the Q2 of this year.
Daily Banking
Last year, net service and commission income grew consistently each quarter to reach EUR 17.2 million, up 7% year-on-year. More
than 15 thousand new private and corporate clients started using the Bank’s services in 2021, bringing the total number of clients to
326 thousand. The number of clients subscribing to service plans grew by 7% to 173 thousand.
The use of non-cash services continues to grow strongly, while cash transactions are decreasing. The population is increasingly using
payment cards - the total number of payment cards issued grew by 25% year-on-year and reached 173 thousand.
Throughout the year, the Bank developed its digital channels in line with customer needs, expanding the number of services in the
internet bank and the mobile application. The total number of e-channel users exceeded 218 thousand (+15% compared to 2020). The
number of clients served remotely is also steadily increasing.
2021 was a year of recognition for the Bank: Šiaulių bankas won the 2021 Best Bank in Lithuania award in The Banker awards
published by The Financial Times; earlier in the year, the Bank was recognised by the business and finance magazine Global Finance
Magazine as the best, and then the safest, bank operating in Lithuania. The most important award was the results of the mystery
shopper survey conducted by Dive Lietuva in December, which showed that the quality of Šiaulių bankas' customer service is of the
highest level, and the aggregated scores of the individual categories amounted to 100% out of 100. Šiaulių bankas has won the
position of the bank with the best customer service for the third time: in 2021, 2019 and 2018.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
136
Saving and Investing
The deposit portfolio grew by 14% over the year (EUR 332 million) and exceeded EUR 2.6 billion. Demand deposits, which account for
the bulk of the portfolio, grew by 27% or EUR 394 million, while the term deposit portfolio decreased by EUR 61 million (-7%). Clients
are increasingly directing their savings towards the Bank’s investment products, with commission income from securities-related
services reaching EUR 3.3 million for the year (66% increase compared to 2020). At the end of last year, in cooperation with SB
draudimas, the Bank’s clients were offered a new long-term savings service - investment life insurance.
COVID-19
The ongoing COVID-19 pandemic in 2021 and the restrictions imposed by local authorities to stop its spread continued to affect all
market participants. At the beginning of the year, in response to the Government's decisions and recommendations, the Bank operated
by reducing the number of operating units, ensuring the conditions for customers to receive services remotely. In the first half of the
year, all temporarily closed units were gradually opened - at the end of the year, we had 56 branches operating in 37 cities. During the
pandemic, it became common to serve customers remotely - call flows and remote requests have grown steadily since the beginning of
the pandemic and the number of remotely identifiable customers has increased.
Aids for customers affected by COVID-19
Šiaulių Bankas continued to support private and business customers to overcome the difficulties of the pandemic. The total of EUR 187
million of loans deferred due to Covid-19 since the start of the pandemic, EUR 180 million have matured and 69 customers (EUR 62
million) re-applied for a deferral in 2021, when 523 Bank customers (EUR 118 million) keep meeting their initial payment obligations.
The portfolio of deferred loans for individuals due to Covid-19 amounts to EUR 9 million (225 customers) at the end of the year, 12
Customers (EUR 1 million) of which requested repeated restructuring and EUR 8 million (213 Customers) returned to payments under
the original payment schedule.
The largest number of repeated deferrals in 2021 was made for legal entities operating in the Real Estate (48%), Accommodation and
Catering (20%), and Art and Entertainment Activities (20%) sectors, the majority (98%) of re-restructurings were made by August, only
2% of all restructurings took place during the last months of 2021.
Only 9 customers (EUR 1 million) out of 369 customers portfolio taking advantage of the conditions of the moratorium, which amounted
to EUR 54 million at the end of the year, re-applied for reorganization in 2021, the rest are making payments under the original payment
schedule.
RATINGS
On February 22, 2021, the international rating agency Moody's Investor Service (Moody's) affirmed Šiaulių Bankas' previous long-term
debt rating Baa2 and changed its outlook to positive from stable. The bank was also affirmed with a short-term rating of P-2:
•a long-term deposit rating – Baa2;
•a short-term deposit rating - P-2;
•rating outlook - Positive.
The rating outlook improvement reflected expectations that Šiaulių Bankas would maintain a strong capital position, ensure resilient
profitability as well as successfully manage asset risk and risk appetite. The rating agency also noted that the rating of Šiaulių Bankas
was also affected by the recently improved long-term debt rating of Lithuanian to A2 from A3. Moody's has improved the country's rating
after six years considering Lithuania's resilience to shock and its ability to manage pandemic threats to the country's economy.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
137
RISK MANAGEMENT, COMPLIANCE WITH PRUDENTIAL REQUIREMENTS AND
PROFITABILITY
A complete disclosure of all significant risks incurred by the Group is provided in the chapter Financial Risk Management of the
explanatory note of the financial statement for 2021.
Income was growing faster than its expenses which led to the high efficiency of the performance. Capital and liquidity position remain
robust - prudential requirements are implemented with adequate reserve. According to the data as of 31 December 2021 the Bank
complied with all the prudential requirements set out by the supervisory authority.
The main financial indicators of the Group:
31/12/2017
31/12/2018
31/12/2019
31/12/2020
31/12/2021
ROAA, %
1.6
2.4
2.1
1.5
1.6
ROAE, %
16.1
22.3
17.6
12.7
14.3
Cost to income ratio, %
52.1
37.3
42.5
42.7
44.1
Loan to deposit ratio, %
72.2
75.1
82.2
75.0
78.6
Data on indicators are also available on the website of Šiaulių Bankas:
- on operating profitability indicators:
Homepage › Bank Investors › Financial Information › Profitability Ratios
- prudential requirements:
Homepage › Bank Investors › Financial Information › Prudential Standards
ACTIVITY PLANS AND FORECASTS
The vision of Šiaulių Bankas: the best financing solutions for business ambitions and people's ideas. Implementing this vision and
having a strategic goal to achieve leadership in financial decisions, the Bank Group intends to strengthen its activities in the following
priority areas:
•In view of changes in internal efficiency, the competitive environment and regulations, the Bank will pay particular attention to
the implementation and strengthening of higher standard governance and risk management practices, with particular
emphasis on the application of environmental, social responsibility and governance (ESG) principles.
•Financing products remain the Bank's strategic product group - priority will continue to be given to the business, consumer,
housing and apartment building modernization project segments. Further product development actions will ensure the
efficiency and competitiveness of financing products
•Taking into account the changes in the competitive environment and the changing needs of customers, the Bank Group will
focus on the digitization of processes in order to improve the customer experience and increase sales of financing products;
•Development of a unified customer base and product integration at the group level. The Bank Group will seek to exploit
the potential for synergies between the Bank's companies by developing existing services and developing new products.
•Maximizing the efficiency of network operations by maintaining network leadership and serving customers not only in
physical network units but also approaching them remotely.
Strengthening the aforementioned priority areas will ensure sustainable and profitable operations of the Bank Group, increase the
market share, meet the expectations of the regulator, investors and other stakeholders.
AUTHORIZED CAPITAL, SHAREHOLDERS
As of 31 December 2021, the authorized capital of the Bank totalled to EUR 174,210,616.27 and is divided into 600,726,263 units of
ordinary registered shares with a nominal value of EUR 0.29 each (ISIN LT0000102253 Nasdaq CSD Lithuanian branch). The Charter
of the Bank were registered in the Register of Legal Entities on 13 December 2018 after the last increase of the authorized capital by
additional contributions. The authorized capital of the bank was not increased during 2021.
The rights granted by the Bank's shares are specified in the Bank's Charter, which is available on the Bank's website at:
Homepage › About Us › Important Documents
Authorized capital:
14/09/2015
26/05/2016
06/06/2017
01/06/2018
13/12/2018
Capital, EUR
91,226,381.99
109,471,658.33
131,365,989.88
157,639,187.74
174,210,616.27
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
138
As of 31 December 2021 the number if the Bank's shareholders was 16,573 (at the end of 2020 – 9,053). All issued shares grant the
shareholders equal rights foreseen by the Law on Companies of the The Republic of Lithuania of Lithuania and the Charter of the Bank:
Homepage › About Us › Important Documents
Shareholders owning more than 5% of the Bank‘s shares and votes as of 31 December 2021:
Share of shares and votes, %
EBRD, LEI code 549300HTGDOVDU60GK19
21.96
Invalda INVL AB, c.c. 121304349*
8.10
ME INVESTICIJA UAB, c.c. 302489393
5.71
Gintaras Kateiva**
5.29
Algirdas Butkus***
5.28
* Pursuant to the Law on Securities of the Republic of Lithuania, the shareholder's votes are counted together with the controlled company INVL Asset Management UAB, c.c. 126263073 - 0.66% of the votes
** Votes are counted together with the votes held by the spouse
*** Votes are counted together with controlled companies: Prekybos namai AIVA UAB, c.c. 144031190 - 2%, Mintaka UAB, c.c. 144725916 - 0.88%
There are no restrictions on the transfer of the Bank's shares.
There are no significant agreements to which the Bank is a party that would enter into force, change or terminate upon a change in
control of the Bank. At the same time, we would like to inform you that the Bank has concluded cooperation agreements with
international financial partners on financing and provision of guarantee instruments to the Bank, which include a change of control
clause, which may affect further cooperation.
Shares are granted to employees whose activities involve significant risk under continuing Employee option agreements.
Information on shares:
2017
2018
2019
2020
2021
Capitalization, m EUR
266.8
240.9
304.0
299.2
457.2
Turnover, m Eur
44.5
34.7
48.3
84.5
134.8
Share price on the last trading session day
0.589
0.401
0.506
0.498
0.761
Lowest share price during the reporting period
0.448
0.391
0.394
0.320
0.493
Highest share price during the reporting period
0.627
0.658
0.534
0.558
0.890
Average share price during the reporting period
0.530
0.521
0.473
0.442
0.663
Share book value
0.448
0.448
0.518
0.592
0.678
P/BV
1.3
0.9
1.0
0.8
1.1
P/E
8.3
4.6
5.9
7.0
8.3
Capital increase from retained earnings, %
20.0
-
-
-
-
* description of indicators is provided on the Bank's website: Homepage › Bank Investors › Financial Information › Alternative Performance Measures
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
139
Turnover and price of the Bank's shares 2019-2021:
As one of the most traded stocks in the Baltic market, the Bank's shares are included in the following Nasdaq indices:
•OMX Baltic Benchmark (OMXBBGI, OMXBBPI, OMXBBCAPGI, OMXBBCAPPI) - the Baltic benchmark index consists of the
largest and most traded stocks on the Nasdaq Baltic Market representing all sectors;
•OMX Baltic 10 (OMXB10) - is a tradable index of the Baltic states consisting of the 10 most actively traded stocks on the Baltic
exchanges;
•OMX Baltic (OMXBGI, OMXBPI) – is an all-share index consisting of all the shares listed on the Main and Secondary lists of
the Baltic exchanges with exception of the shares of the companies where a single shareholder controls at least 90% of the
outstanding shares;
•OMX Vilnius (OMXVGI) – is an all-share index which includes all the shares listed on the Main and Secondary lists on the
Nasdaq Vilnius with exception of the shares of the companies where a single shareholder controls at least 90% of the
outstanding shares;
•OMX Baltic Financials (B30GI, B30PI) – an index of the Baltic financial institutions;
•OMX Baltic Banks (B3010GI, B3010PI) - an index of the Baltic banks.
Return indices (RIs) represent the total return on the shares included in the index and reflect not only stock price movements but also
the dividends paid, making these indices a more complete measure of market performance than price indices. Price indices (PIs) only
reflect changes in the price of shares included in the index, regardless of dividends. There is a cap on the weight of the shares (CAP)
forming indices of a limited number of shares above which the number of shares included in the index is reduced to a cap.
Besides, the Bank's shares are included into such indices as STOXX Eastern Europe TMI, STOXX All Europe Total Market, STOXX
Eastern Europe 300, STOXX EU Enlarged TMI, STOXX Eastern Europe 300 Banks, STOXX Eastern Europe Small 100, STOXX
Eastern Europe TMI Small, STOXX Global Total Market, STOXX Lithuania Total Market, Bloomberg ESB Data Index, S&P Frontier BMI
Index, and in some FTSE Russell Frontier indices.
ACQUISITION OF OWN SHARES
During the period from 11 August 2021 to 12 August 2021, the Bank repurchased its own shares on the Nasdaq Vilnius Tender Offer
Market. 1,000,000 of its own shares were purchased for EUR 750,000 then with the purpose to provide shares to the employees of the
Bank and the Bank's subsidiaries. On 13 August 2021 Šiaulių Bankas AB transferred 312 502 own shares to the employees of the Bank
and the Bank's subsidiaries as a deferred part of variable remuneration for 2017. Following this transfer, the Bank holds 687,498 its
own shares.
The Bank subsidiaries, or persons acting on behalf of the subsidiaries, do not hold any shares in the Bank.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
140
DIVIDENDS
In 2018, the Supervisory Council approved the dividend policy. Carrying out its activities and planning the capital the Bank seeks to
ensure a competitive return on investment through dividends and increasing stock value. The Bank shall pay dividends on two
assumptions - when external and internal capital and liquidity requirements will be sustained, and the level of capital after dividends will
remain sufficient to carry out all approved investment and development plans and other capital-intensive activities. Taking into account
the above-mentioned principles and assumptions, the Bank shall seek to allocate at least 25 per cent of the earned annual profit to
dividends.
The General Meeting of Shareholders held on 31 March 2021 passed a resolution on the allocation of the Bank's profit. The amount
allocated for dividends in this allocation amounts to 7.7 per cent of the net profit for 2020. A dividend of EUR 0.0055 is payable per
ordinary registered share with a nominal value of EUR 0.29.
Information on the dividends paid:
2016
2017
2018
2019
2020
Per cent from nominal value
1.72
1.72
10.00
-
1.90
Dividend amount per share, Eur
0.005
0.005
0.029
-
0.0055
Dividend amount, Eur
1,887,442
2,264,938
17,421,064
-
3,303,994
Yields from dividends, %
1.1
0.8
6.2
-
1.1
Dividends to Group net profit, per cent
4.3
7.1
33.0
-
7.7
The description of alternative performance indicators is available on the Bank's website at:
Homepage › Bank Investors › Financial Information › Alternative Performance Measures.
AGREEMENTS WITH SECURITIES
PUBLIC TRADING INTERMEDIARIES
Agreements with public circulation intermediaries regarding the accounting of securities issued by the Bank are, not concluded, this
accounting is managed by the Bank's Securities Accounting Department. The Bank has not entered into market-making agreements
with respect to securities issued by the Bank.
According to data as of 31 December 2021 the Bank itself, as an intermediary of public trading, under agreements with the companies
issuing securities conducted accounting of 700 companies which totalled to 1000 securities issues (including shares of public and
private companies, debt securities, investment fund units). The Bank also conducts market making on the Nasdaq Baltic under a
market making programme and under agreements with issuers. As of the end of 2021, the Bank was the market maker of 10 securities
issues.
MANAGEMENT OF THE BANK
The Management Board bodies of the Bank are as follows: the General Meeting of the Shareholders of the Bank, Supervisory Council
of the Bank, Management Board of the Bank and Chief Executive Officer (CEO).
The General Meeting of Shareholders shall be convened annually, at the latest within 3 months after the end of the financial year.
The Board of the Bank, the Supervisory Council and the shareholders having at least 1/10 of all votes have the right to convene the
Meeting. The General Meeting of Shareholders is organized, voting is carried out at it, decisions are made in accordance with the
procedure established by the Law on Companies. More information on the rights of the General Meeting of Shareholders is provided in
the annex “Governance Report” to the consolidated annual report for 2021.
The Supervisory Council of the Bank is a collegial body supervising the activities of the Bank. The Supervisory Council is chaired by
the Chairperson. The Bank's Supervisory Council, consisting of seven members, is elected by the General Meeting of Shareholders for
a term of four years. The members of the Supervisory Council are nominated for the meeting by the initiators of the meeting or
shareholders holding 1/20 of the bank's shares. The Charter of the Bank provide that the number of terms of office of a member of the
Supervisory Council is not limited.
The Bank's Supervisory Council (elected on 31 March 2020 and replenished on 10 June 2020, the term of office expires on the day of
the Ordinary General Meeting of Shareholders of the Bank in 2024) currently consists of 8 members, 5 of whom are independent. More
information on the functions of the Supervisory Council is provided in the annex “Governance Report” to the consolidated annual report
for 2021.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
141
Supervisory Council of the Bank
Name, Surname
Duties at the
Supervisory Council
Other current leading positions
Share of capital
under the right of
ownership, %
(31/12/2021)
Share of votes
together with the
related persons, %
(31/12/2021)
Arvydas Salda
Chairman since 1999
Klaipėda free economic zone management company UAB 110707092
Pramonės str. 8, Klaipėda
(Board member)
1.61
1.61
Gintaras Kateiva
Member since 2008
Litagra UAB 304564478 Savanorių pr. 173, Vilnius (Chairman of the
Board)
5.27
5.29*
Ramunė Vilija Zabulienė
Independent members
since 2012
Ars Domina VšĮ 302897128 P. Vileišio str. 9-41, Vilnius (Director);
Lewben Art Foundation VŠĮ 302969378 Antano Tumėno str. 4, Vilnius
(Board member)
-
-
Darius Šulnis
Member since 2016
Invalda INVL AB 121304349 Gynėjų str. 14, Vilnius (President, Board
member);
INVL Asset Management UAB 126263073 Gynėjų str. 14, Vilnius
(Chairman of the Board),
Litagra UAB 304564478 Savanorių pr. 173, Vilnius
(Board member);
INVL Baltic Farmland UAB 303299781 Gynėjų str. 14, Vilnius (Board
member)
-
-
Martynas Česnavičius
Independent member
since 2016
D Investicijų valdymas UAB 302937334 Odminių str. 8, Vilnius
(Directors, Board member);
Board member in other companies: Baltic Mill AB, Malsena Plius UAB ,
AS Rigas Dzirnavnieks (Latvia), Balti Veski (Estonia), Amber Trust
Manageent S.A (Luxembourg), Amber Trust II Manageent S.A
(Luxembourg), KJK Management S.A (Luxembourg), KJK Investment
S.a.r.l (Luxembourg), KJK Capital OY (Finland), KJK Investicije 0-8
(Slovenia), Leader 96 Eood (Bulgaria), KJK Sports (Luxembourg)
-
0.35**
Miha Košak
Independent member
since 2017
-
-
Adriano Arietti
Independent member
since 2020-06-03
-
-
Susan Gail Buyske
Independent members
since 2020-07-31
-
-
* Pursuant to the Law on Securities of the Republic of Lithuania, votes are counted together with the votes held by the spouse
** Votes are counted together with PRO Finance UAB, company code 110886161 - 0.35%
The Board of the Bank is a collegial management body of the Bank consisting of 7 members. It manages the Bank, manages its
affairs and is responsible for the execution of the Bank's financial services in accordance with the law. The rules of procedure of the
Board shall determine the Rules of Procedure of the Board. The Management Board of the Bank is elected for four years. The
members of the Board are elected, recalled and supervised by the Bank's Supervisory Council. The term of office of the Board shall be
four years and the number of terms is not limited. If individual members of the Board are elected, they are elected until the end of the
term of office of the existing Board.
The Board of the Bank was elected on 31 March 2020, the term of office expires on the day of the Ordinary General Meeting of
Shareholders of the Bank in 2024. In the meeting of 6 May 2021, the Supervisory Board of the Bank removed Vita Urbonienė from the
position of a member of the Board of the Bank and elected Algimantas Gaulia as a new member of the Board of the Bank, who was
take up the position of a member of the Board in 30 July 2021 with the permission of the supervisory authority.
More information on the functions of the Board is provided in the annex “Governance Report” to the consolidated annual report for
2021.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
142
Board of the Bank
Name, Surname
Duties at the Board
Other current leading positions at the
Bank
Share of capital under the
right of ownership, %
(31/12/2021)
Share of votes together with
the related persons, %
(31/12/2021)
Algirdas Butkus
Chairman since 1999
Deputy Chief Executive Officer
2.40
5.28*
Vytautas Sinius
Deputy Chairman since 2014
Chief Executive Officer
0.20
0.20
Donatas Savickas
Deputy Chairman since 1995
Deputy Chief Executive Officer,
Head of Finance Division
0.10
0.10
Daiva Šorienė
Members since 2005
Deputy Chief Executive Officer,
Head of Sales and Marketing Division
0.01
0.01
Mindaugas Rudys
Member since 2020
Head of Service Development Division
0.03
0.03
Ilona Baranauskienė
Members since 2014.
Head of Legal and Administration Division
0.01
0.01
Algimantas Gaulia
Member since 30 July 2021
Head of Risk Management Division
<0.01
<0.01
* Pursuant to the Law on Securities of the Republic of Lithuania, votes are counted together with controlled companies: Prekybos namai AIVA UAB, company code
144031190 - 2.00%, Mintaka UAB, company code 144725916 - 0.88%
In 2021, the Nomination Committee set a target for the under-represented gender - a minimum number of 2 of under-represented
gender members in the Bank's supervisory and management bodies. At the same time, after assessing the required experience,
knowledge and skills of the members of the bodies it was decided to seek to increase the minimum number of members of the under-
represented gender in the Bank's supervisory and management bodies, i.e. to increase the gender balance.
The composition of the members of the Bank's supervisory and management bodies in 2021 corresponds to the set goal of the under-
represented gender. The age, education and professional experience of the members of the supervisory and management bodies
ensure diversity and opportunities to share different views and perspectives.
Diversity of members of the Bank's bodies:
MEMBERS OF THE MANAGEMENT BOARD:
Gender
Age range
Education
Professional experience
Geographic diversity
2 women
5 men
Age range 40 – 75
(members fall into
the specified ranges
but do not reach the
cap)
Bachelor's and Master's degrees gained in the
following areas: economics, management and
business administration, business management,
international economics
Experience of the members
of the supervisory /
management bodies 22 - 7
years.
Lithuania: Vilnius, Kaunas,
Šiauliai
MEMBERS OF THE SUPERVISORY COUNCIL:
Gender
Age range
Education:
Professional experience
Geographic diversity
2 women
6 men
Age range 50 – 75
(members fall into
the specified ranges
but do not reach the
cap)
Bachelor's and Master's degrees gained in the
following areas: applied mathematics, economics,
business administration, pedagogy, law, political
science, public relations
Experience of the members
of the supervisory /
management bodies 22 - 6
years.
Lithuania, Bulgaria / USA,
Italy, Slovenia / Great Britain
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
143
THE COMMITTEES FORMED WITHIN THE BANK,
AREAS OF THEIR ACTIVITIES
Functions, procedures of formation and the policy of activities of the bank's committees are defined by the legal acts of the Republic of
Lithuania, legal acts of the Bank of Lithuania as well as provisions of the certain committees approved by the Management Board or
Supervisory Council of the Bank.
COMMITTEES UNDER AUTHORITY OF THE BANK'S SUPERVISORY COUNCIL
Information on the committee members as of 31 December 2021:
The Risk Committee advises the management bodies of the Bank on the overall current and future risk acceptable to the Bank and
strategy and assist in overseeing the implementation of the strategy at the Bank, verifies whether prices of liabilities and assets offered
to clients take fully into account the Bank’s business model and risk strategy and shall also carries out other functions provided for in its
provisions.
Name, surname
Chairman
Miha Košak
Member of the Supervisory Council
Members:
Adriano Arietti
Member of the Supervisory Council
Darius Šulnis
Member of the Supervisory Council
Ramunė Vilija Zabulienė
Member of the Supervisory Council
The Internal Audit Committee monitors and discusses the process of financial statement preparation, the efficiency of the Bank’s
internal control, risk management and internal audit systems, the processes of the audit and internal audit performance on regular basis
and performs other functions foreseen by the legal acts of the supervisory authority and provisions of the Internal Audit Committee.
Following the laws and legal act of the supervisory authority the composition, competences and arrangement of activities of the internal
Audit Committee are formed and controlled by the Bank’s Supervisory Council.
Name, surname
Chairman
Ramunė Vilija Zabulienė
Member of the Supervisory Council
Members:
Martynas Česnavičius
Member of the Supervisory Council
Susan Gail Buyske
Member of the Supervisory Council
The Nomination Committee nominates candidates to fill management body vacancies and recommends, for the approval of the
management bodies of the bank or for approval of the general meeting of shareholders, evaluates the balance of skills, knowledge and
experience of the management body of the Bank, submits comments and findings related to the matter, assesses the structure, size ,
composition, operating results of the Bank’s bodies and carries out other functions provided for in its provisions.
Name, surname
Chairman
Martynas Česnavičius
Member of the Supervisory Council
Members:
Darius Šulnis
Member of the Supervisory Council
Miha Košak
Member of the Supervisory Council
The Remuneration Committee evaluates the variable remuneration policies, practices and incentives developed to manage the risk,
capital and liquidity of the Bank, supervises the variable remuneration of senior executives responsible for risk management and
compliance, drafts variable remuneration decisions and performs other functions set forth in its policies.
Name, surname
Chairman
Martynas Česnavičius
Member of the Supervisory Council
Members:
Gintaras Kateiva
Member of the Supervisory Council
Ramunė Vilija Zabulienė
Member of the Supervisory Council
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
144
COMIMITTEES UNDER AUTHORITY OF THE BANK'S MANAGEMENT BOARD
Information on the committee members as of 31 December 2021:
The Loan Committee evaluates loan granting material / documents and loan risk, approves / rejects lending decisions and / or
amendments to terms and conditions, suggests regarding loan granting, loan interest rates, improvement of loan administration
procedures and performs other functions foreseen by its provisions.
Name, surname
Position
Chairman
Edas Mirijauskas
Director of Credit Department
Deputy
Diana Leonavičienė
Director of Regional Lending Unit
Members:
Vytautas Sinius
Chief Executive Officer
Algimantas Gaulia
Head of Risk Management Division
Daiva Šorienė
Head of Sales and Marketing Division
Ramūnas Dešukas
Director of the Special Assets Department
Aurelija Geležiūnė
Director of the Legal Department
The Risk Management Committee performs functions related to the organization, coordination and control of the Bank's risk
management system, determines and controls risk measurement indicators corresponding to the risk appetite acceptable to the Bank,
as well as performs other functions provided for in its regulations:
Name, surname
Position
Chairman
Algimantas Gaulia
Head of Risk Management Division
Deputy
Dalia Udrienė
Director of Risk Department
Members:
Tomas Dautoras
Director of Non-Financial Risk Department
Edas Mirijauskas
Director of Credit Department
Donatas Savickas
Head of Finance Division
Daiva Šorienė
Head of Sales and Marketing Division
Denis Zubov
Director of Credit Risk Management & Control Department
INTERNAL CONTROL ASSESSMENT
The purpose of internal control is to ensure the legality, cost-effectiveness, efficiency, and transparency of the activities of the Bank,
implementation of its strategic and other operational plans, protection of its property, reliability and completeness of information and
reports, fulfilment of contractual and other obligations to third parties, and management of all related risk factors.
The Bank has a sound and consistent internal control culture that is continuously improved and applied in the Bank’s activities, strategy
and risk management through the Bank’s internal legislation, controls, and staff training.
The internal control system of the Bank is an integral part of its day-to-day activities that is based on the model of three lines of
defence.
It should be noted that in 2021, the Bank paid special attention to improving its risk culture, i.e., strengthening the second line of
defence, which strengthened the Bank’s risk control and compliance management. All employees of the Bank are responsible for the
operation of the Bank’s internal control processes at their respective levels, and each of them participates in and can influence the
internal control system. Risk management responsibilities are delegated not only to the units performing the risk control function, but
also to other structural units of the Bank, taking into account the level of risk acceptable to the Bank and its risk-taking capacity. The
Bank aims to ensure proper separation of functions between the units of the first and second lines of defence and to maintain a
sufficient level of independence of the second line of defence in exercising control functions in the Bank; therefore, the activities of the
first and second lines of defence must be organised in line with the principles, objectives, and scope of activities of the relevant units.
The assessment of the efficiency and adequacy of the Bank’s internal control system as well as comprehensive, independent, and
objective assessment of risk management and compliance are performed by the Internal Audit Service of the Bank, which belongs to
the third line of defence. The Service informs the Internal Audit Committee and the Board of the Bank about the observed deficiencies
or violations.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
145
EXTERNAL AUDIT
In 2021, the Bank was audited by KPMG Baltics UAB (company address: Konstitucijos pr. 29, LT-08105 Vilnius, tel. (8 5) 2102 600, fax
(8 5) 2012 659, the company was registered on June 24, 1994, company code 111494971).
This audit company was selected after the Board of the Bank interviewed other international audit companies and considered their
proposals. When choosing an audit company, reputation risk, price of services, other factors are considered.
The General Meeting of Shareholders of the Bank held on 31 March 2020 adopted a resolution to elect KPMG Baltics UAB for auditing
the consolidated annual financial statements of the Bank for 2020 and 2021 and the consolidated annual report.
EUR thou (excluding VAT costs)
Group
The Bank
2021
2020
2021
2020
Contractual auditing of financial statements
151
121
101
71
Cost for assurance and other related services
62
-
62
-
Costs for tax advice issues
-
-
-
-
Costs for other services
-
3
-
-
Total
213
124
163
71
EMPLOYEES
On 31 December 2021, the Bank had 789 employees and the Group – 882 employees (working under fixed-term and open-ended
employment contracts, including employees on maternity and parental leave). Compared to 31 December 2020, the number of
employees in the Bank increased by 4.4 per cent and in the Group – by 3.9 per cent.
On 31 December 2021, there were 80 per cent women and 20 per cent men working in the Group.
Personnel strategy
The personnel management strategy is focused on the achievement of the Group’s long-term goals in order to attract and retain
efficient employees, develop and raise their level of expertise, motivate and involve them in the Group’s activities, forming a culture of
achieving high results.
Employee relations
The Bank maintains long-term employment relationships with its employees. On 31 December 2021, 24 per cent of the Bank’s
employees had a seniority of 10 and more years. In 2021, the overall employee turnover in the Bank was 11.2 per cent (11 per cent in
2020). Loyalty to the Bank is encouraged every five years by monetary gifts in accordance with a special loyalty program approved by
the Bank.
The Bank has a Labour Council, the members of which are 8 employees of the Bank, elected by secret ballot of the Bank’s employees
holding various positions in the Bank. The Labour Council operates in accordance with the Rules of Procedure of the Labour Council.
The Labour Council cooperates with the Bank’s Personnel, Asset Management and Administration and other departments by submitting
its proposals and seeking the best solutions for the Bank’s employees.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
146
Performance evaluation
Once a year, the Bank conducts a formal discussion and review of the employees’ annual performance. During these interviews,
managers discuss with their employees the results of achieving the annual targets, implemented projects, competencies, identifying
strengths and areas for development, agreeing on specific educational tools, career opportunities. The interviews are held with the aim
of encouraging the sharing of mutual feedback by strengthening open and value-based communication and collaboration. In order for
each employee to feel that their work contributes to and influences the overall results of the Bank and that everyone’s efforts are
directed in one direction, annual targets are set by agreement between the manager and the employee to contribute to the overall goals
and performance of the Bank.
The Bank also organises semi-annual performance reviews to discuss the status of the annual targets and, if necessary, to provide
additional measures and actions to achieve them.
The Bank is constantly developing a performance review IT system in order to meet the expectations of managers and employees,
digitise the process, and ensure timely analysis of performance reviews.
Engagement
In 2021, the Bank conducted an anonymous comprehensive engagement survey for the second time with the help of an external
partner, with the main objectives being:
▪to self-assess the annual change in employee engagement and organisational evaluation;
▪in accordance with the obtained survey results, to refine the priority areas of the organisation to be improved and to update the
action plan for their improvement;
▪to properly allocate human and financial resources;
▪after identifying the strengths, to develop the image of the employer first internally and then externally.
As in the previous year, the survey questionnaire consisted of 65 questions; the survey was completed by 96% of the Bank’s
employees, i.e., 2% more than in 2020. Throughout the past year, 2021, we have been implementing the activities and initiatives
provided for in the Bank’s action plan; therefore, the results of the survey show that the employees’ trust in the organisation, strategic
coherence and leadership have improved. The results were presented to managers and all employees. In the assessment of the results
of the 2021 survey, the areas of the Bank as an organisation to be developed and its strengths were newly identified. Based on the
survey results, the Bank prepares its action plan for 2022, i.e., what should be changed, developed and how, which traditions should be
maintained in order to further strengthen positive, feedback-based communication and collaboration. The survey will be repeated.
Management of the COVID-19 pandemic
In 2021, we continued our efforts to ensure the smooth work of our employees by providing them with the necessary resources to
ensure their good physical and emotional condition. We worked in very different conditions throughout the year. At the beginning of the
year, during the total quarantine, the main goal was to keep the network employees healthy by regulating the flow of employees,
providing them with all the means of protection and ensuring the regulation of customer flows. Employees whose functions allowed to
do so were working remotely. Over the course of the year, the pandemic situation changed; certain exemptions introduced at state level
allowed workers to return to work, in part at first and later on in full. This could be achieved by rotating teams, maintaining certain
recommended distances, internal, stricter work organisation rules, etc.
We took care of purchasing personal protective equipment throughout the year. We fully provide all employees with face protection
(medical masks, FFP2 respirators), disposable gloves, and disinfectant wipes. At the customer service points, we provided customers
with disposable medical masks as needed, and we also ensured the possibility to disinfect their hands in all places available. Additional
disinfection of frequently touched surfaces was also continued, and all units were equipped with non-contact thermometers to monitor
the health of employees.
The COVID-19 working group continued to be active throughout the year. Its members provided general suggestions, recommendations
on the organisation of work during the pandemic (including, but not limited to security measures, communication, work tools, etc.) to the
relevant decision-making managers and/or bodies, in accordance with the principles of cooperation and the responsibilities of each
member.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
147
In 2021, we focused on constructive and informative communication. Especially on the topic of vaccination. We supported the
Government’s vaccination strategy, provided employees with all available information, and invited them to lectures conducted by
representatives of a health care facility. Also, as the Government added large companies to the list of COVID-19 vaccination priority
groups, we provided municipalities with lists of our employees who wished to be vaccinated. However, to this day, we maintain respect
for personal choice, so we provide the opportunity to work to everyone, both vaccinated and non-vaccinated employees, while
maintaining maximum safety of our employees, as they are allowed to access the workspaces only with the National Certificate or a
negative antigen test result not older than 7–10 days. For a while, the tests were funded by the state. Later, we funded them as the
employer, and now the employees are testing at their own expense. The bank has negotiated competitive testing prices with its
partners.
In the event of a confirmed case of coronavirus in any of the Bank’s employees, all preventive measures to reduce the possible spread
of the disease are taken: the premises visited by the infected employee are disinfected, persons who might have had contact with the
infected employee are identified, and close cooperation with public authorities is ensured. Individual communication is maintained with
each infected employee: all the necessary information is provided on how to proceed in case of a positive test result and the
employee’s condition is constantly monitored.
To ensure business continuity during the pandemic, the rules and instructions have been updated:
•Teleworking rules;
•Rules for organising work at the Bank to reduce the risk of COVID-19 infection;
•Instruction in case of suspicion or detection of COVID-19 virus in Šiaulių Bankas AB;
•the Emergency Management Plan has been updated.
Organizational structure
The Bank and the Group constantly strive to work efficiently, to respond flexibly to regulatory requirements, changes and needs of the
external environment, to achieve the Bank’s strategic goals so that the organisational structure meets business needs as much as
possible, ensures optimal organisation of activities, process efficiency and employee competence.
In 2021, in order to make the Bank’s operations more efficient, structural changes were implemented in the Bank’s divisions:
•taking into account the Bank’s strategic priorities, efforts to streamline the Bank’s activities by concentrating competencies,
growing and tightening legal and regulatory requirements for institutions operating in the financial sector, the activities of the
first and second lines of defence in all structural units were separated, financial and risk management functions were
separated and assigned to separate services, and changes in the subordination of other units have been implemented
accordingly;
•in order to increase the synergy and efficiency of the Bank’s divisions, avoid overlapping of processes and communication,
strengthen the functions of product/service introduction, delivery and sales promotion, two departments – Sales Department
and Marketing and Communication Department – were merged into one department;
•In view of the changing needs and expectations of customers, the functions and responsibilities of the Remote Customer
Service Centre (NCAC) have been expanded, and as the importance and significance of NKAC has increased, it has been
transformed into a separate structural unit.
Employee training
The year 2021 was very active in the field of training at the Bank. As the chaos of the COVID pandemic subsided and we adapted to
the new reality, we organised many new and continued some of the existing training and development programmes in the Bank. We
conducted training using a hybrid model – training took place both live and online.
In 2021, we paid a lot of attention to the development of managers at various levels. Having assessed the data of the engagement
survey and the general trends, and seeking to purposefully direct the training of managers towards the strengthening of leadership,
cooperation, effective communication and other competencies, we returned to the further training model. We chose the Leadership
Academy model proposed by an external partner for executives who already have experience in running a company or its division. All
managers included in the academy are responsible for the implementation of the Bank’s strategy through the employees of their
divisions. The programme consists of 6 topics, such as Collaboration That Generates Maximum Value, Situational Leadership, Public
Speaking and Facilitation, etc. The duration of the academy is 1.5 years, with over 100 executives of various levels participating.
We have also strengthened the leadership and overall competencies of the Bank’s senior management accordingly. To this end, three
sessions on Public Speaking and Presentation, Facilitation and Leadership were planned.
Taking into account the structural changes of the Bank and the expressed needs of the target group for training, in 2021, it was decided
to strengthen the risk management competencies of the members of the Board and the Supervisory Board of the Bank. To this end,
training on the following topics was planned and organised: Non-Financial Risk Management and Innovation and Digitisation.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
148
All new employees of the Bank participate in the two-day event New Employees’ Days, where representatives of the Bank from different
fields share their professional experience, introduce new colleagues to the Bank’s structure, functions of departments, present the
Bank’s services, products, processes and projects. During the New Employees’ Days, we play a game focusing on the Bank’s values
and learn about the Bank’s values in practical situations. More than one hundred employees participated in the New Employees’ Days.
For the purpose of continuing the development of process management in the Bank, a process management and improvement
program was prepared in 2021. It sets out the stages for the implementation of process management and the pursuit of cultural change
through the following principles: customer focus, digital thinking and simplicity. The program was presented to department heads, while
aiming to perform efficiency work in each chain, setting goals accordingly. A complete process and operational efficiency training
strategy has been developed, covering each employee, starting with a general understanding of processes and work efficiency and
deepening specific knowledge in this area for specific positions.
Furthermore, in 2021, the strengthening of project management competencies was continued – a new project preparation and
management procedure that was drawn up in 2020 entered into force, and practical project management training for the Bank’s
employees was carried out based on it.
In 2021, we continued to prioritise regulatory requirements for employee qualifications and experience. We have adhered to the training
plan designed to strengthen knowledge in the field of prevention of money laundering and terrorist financing. We also used an online
training platform to ensure compliance with the GDPR and IT security requirements, which provided mandatory Personal Data
Protection (2 modules) and Digital Security training for each employee. The purpose of this training is to provide a thorough introduction
to personal data protection and digital security requirements and practices.
In order to build the expertise of compliance professionals, personnel in the areas of money laundering prevention, know-your-customer
and financial settlement, and to help them gain relevant knowledge and global best practices in risk management, anti-money
laundering and financial crime prevention, we have secured access for some of them to ICA and CAMS certifications, which are
considered a benchmark of excellence worldwide.
In 2021, the unique program Financing Solutions Forum organised by the Bank was continued, aimed at strengthening the functional
and general competencies of credit specialists. The program’s spring and fall sessions were held online. Because of the topics
presented in the final conference of the forum and its scope, it became the Annual Conference of Šiaulių Bankas. This year, the
conference was held online again. Presentations of the speakers and debates were broadcast live from a specially designed studio,
and the broadcast could be watched by all employees of the Bank. The conference focused on the importance of sustainability in a
global, business and personal context from an environmental, social and governance perspective.
In 2021, we focused on developing the emotional competence of our employees. We organised joint employee initiatives such as
Health Week, Spring Fun (spring initiative for active movement), and gave the employees the opportunity to listen to lectures on topics
such as stress and its management, quality sleep, eye care, our health reserves and more.
By strengthening the motivation and skills development of the Bank’s employees working remotely, we created opportunities for
employees to participate in remote sessions: organisation of remote work, long-term motivation. We organised internal training on the
capabilities and use of MS Teams to perform work functions (in 2020, the Bank started using Microsoft products).
In 2021, the Bank continued the tradition of organising training by internal lecturers on sales and work organisation.
The staff of the Bank’s centre and network units raised their competence by participating in external conferences and seminars.
Internship opportunities
In 2021, the Bank continued to cooperate with Lithuanian higher education institutions, providing opportunities for students to carry out
a wide range of internships at the Bank, even in the context of the pandemic, assessing each case individually.
In 2021, 16 students completed compulsory or voluntary internships in various divisions of the Bank.
Students had the opportunity to carry out internships in various divisions of the Bank, gain practical work experience and establish
professional contacts important for their future careers.
After the internship, the Bank provides opportunities for students to find employment and start a professional career.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
149
Employee motivation
The majority of the Group’s employees may be granted quarterly and/or annual bonuses for achieving the unit’s and/or personal goals.
The employees can also be motivated by one-time bonuses for exceptional results, participation in projects significant to the Bank, etc.
The annual variable remuneration in cash and in the Bank’s shares may be granted only to the Nominated Employees. Nominated
Employees are the managers of the Bank and some of the Group’s companies and members of the Board of the Bank, as well as other
employees of the Bank and the Group whose professional activities have a significant impact on the risk profile of the Bank and the
Group and for which such employees are considered to be recipients of annual variable remuneration in accordance with the applicable
legal acts of the Republic of Lithuania and the European Union. For more information on remuneration of Nominated Employees, see
the Remuneration Policy section of this notice.
In 2021, the Bank, as a socially responsible employer, provided health insurance to all employees who successfully completed the
probationary period and returned after paternity leave. Health insurance is one of the most important additional incentive measures. It
provides faster access to health-related services to the insured employees, for example, receiving treatment in health care institutions
of their choice, visiting specialists, getting various tests done, purchasing medicines, and accessing other health promotion services.
The Group’s employees have the option of accruing additional retirement benefits in exceptional circumstances, with part of the
contribution paid by the employee and part paid by the employer. The long-term incentive programme Kaupkime Kartu has been
developed together with the Bank’s subsidiary SB Draudimas UAB (specialising in life insurance), in which more than 30 per cent of
employees participate.
Other additional benefits provided to the Bank's employees, which are also not based on the employee's performance:
•telework;
•flexible working hours;
•additional leave depending on the position for certain senior positions and for uninterrupted service;
•paid training leave;
•one-time bonuses on personal celebrations and events significant for the Bank;
•new employee’s package, gifts to employees and their children on major holidays;
•one-time payments in the event of death of a family member, major accident, critical illness, etc.;
•payment for the first 2 days of the employee’s incapacity for work;
•free flu vaccines and other discounts provided by the Bank’s partners;
•team building events;
•opportunity to participate in interbank and other tournaments in various sports.
REMUNERATION POLICY
This information has been prepared and is provided in accordance with the Description of the Minimum Requirements for Remuneration
Policy, the provisions of Article 450 of Regulation (EU) No 575/2013 of the European Parliament and of the Council, the Articles of
Association of the Bank, decisions of the Supervisory Council and the Board as well as other laws on the requirements for remuneration
policy of the Bank as a financial institution and a public limited liability company whose shares are admitted to trading on a regulated
market.
Information related to the decision-making process applicable when setting remuneration policy as well as the number of
meetings held by the principal body supervising remuneration during the financial year
The Remuneration Policy review process took place in 2021, in the light of the envisaged changes in the applicable requirements for
the Remuneration Policy of the Bank. It is planned to submit the updated draft of the Remuneration Policy for the approval of the 2022
General Meeting of Shareholders of the Bank. The Remuneration Policy is addressed and applies to the Bank and the Group
companies. The Group companies that are subject to special remuneration requirements under other laws shall draw up and approve
their own remuneration policy that applies jointly with this Remuneration Policy. Once approved, the Remuneration Policy shall be
published on the website of the Bank.
The responsibility for the establishment of the principles of the Remuneration Policy and the models of remuneration system, as well as
for the periodic review of the Remuneration Policy at the Bank shall be with the Supervisory Council, while the responsibility for the
implementation of the Remuneration Policy shall be with the Board. The Internal Audit Service of the Bank shall perform regular
controls by carrying out annual internal audit of the Remuneration Policy in order to verify compliance with the principles of the
Remuneration Policy.
The draft Remuneration Policy to be submitted for approval to the General Meeting of Shareholders has been drawn up in consultation
with external consultants.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
150
The Bank has formed a Remuneration Committee that carries out competent and independent assessments of the variable
remuneration policy and practice, and ensures that the remuneration system takes into account all types of risk, capital and liquidity,
and is compatible with sound and efficient risk management as well as with the business strategy, objectives and the long-term
interests of continuing operations of the Bank or the Group company. The composition of the Remuneration Committee, the procedure
for its formation, its functions, rights and responsibilities are set out in the Rules of Procedure of the Remuneration Committee as
approved by the Supervisory Council of the Bank. The composition of the Remuneration Committee is approved by the Supervisory
Council of the Bank, the list of Committee members is provided and the functions of the Committee are described in the Chapter of the
Annual Report ‘Committees Formed at the Bank and the Spheres of their Activities’. 6 (six) meetings of the Remuneration Committee
were held in 2021.
Information on the correlation between remuneration and performance
The Remuneration System is a complex of remuneration package elements used by the Group to attract, motivate and retain the best
employees who would help implement the long-term objectives and the business strategy of the Group.
The Bank and the companies of the Group use a combination of fixed and variable remuneration.
Fixed remuneration represents the principal part of the Remuneration. The aspects taken into account when setting the official
remuneration of a particular employee shall include his/her competence, experience, qualifications, specific know-how, internal fairness,
market trends, etc. Additional benefits apply regardless of employees’ individual performance, without incentivising risk-taking.
Additional benefits are based on pre-defined criteria.
Variable remuneration is paid in order to link employees’ individual performance targets with the long-term interests of the Group, with
the view of ensuring sustainable business development, encouraging employees to act honestly and in good faith, transparently and
professionally, with due regard to the rights and interests of customers.
The amount of variable remuneration is based on the overall assessment of the performance of the employee, the unit and the Group.
The variable remuneration granted to an employee may depend on the job position of the employee, the importance of his/her
decisions that may have a significant effect on the risk taken by the Group. The assessment of an employee’s individual annual
performance targets and achievements includes not only the his/her personal financial performance, but also his/her non-financial /
non-quantitative input (e.g. relations with customers, colleagues, compliance with standards, implementation of the requirements set
out in internal documents, initiative, responsibility, performance improvement, etc.).
The principles for calculating variable remuneration are drawn up in such a way as to be compatible with the strategy, objectives,
values, the interests of long-term continuing operations of the Group, as well as to promote sound and efficient risk management, help
avoid conflicts of interest, ensure compliance with the codes of ethics, while not encouraging employees to take excessively high risks
that are unacceptable to the Group, and ensure the principles of protection of investors and customers in the process of the Group’s
services as well as act in the best interests of the customers.
The variable remuneration budget shall be formed only after assessing the performance of the Group and after taking into account the
current and future risk exposure, the costs of the capital employed and liquidity support. The variable remuneration budget must not
restrict the Group’s capacity to strengthen its capital base.
The Remuneration Policy seeks to promote responsible business, fair dealing with customers and avoiding conflicts of interest in
relations with customers, so that the monetary / non-monetary rewards do not become an incentive for employees to pursue their own
interests, the interests of the Bank or any other company of the Group to the detriment of customers’ interest.
Essential characteristics of the remuneration system structure, including information on criteria used in performance
assessment, risk exposure adjustment, deferment policy and award criteria. The ratio between fixed and variable
remuneration
The Bank and the Group companies, depending on their size, the nature, scale and complexity of their operations and the risks they
take, are subject to fixed remuneration and variable remuneration (remuneration components):
•Fixed remuneration for employees consists of (i) official remuneration and (ii) additional benefits;
•Fixed remuneration for members of the Supervisory Council of the Bank who are not employees consists of (i) official
remuneration (ii) supplement to the official remuneration;
•Variable remuneration is defined as (i) annual variable remuneration, (ii) supplements, (iii) one-off bonuses.
Detailed information on the remuneration components at the Bank and the Group companies is presented in the Remuneration Policy
of the Bank published on the website of the Bank.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
151
Variable remuneration may be awarded to all employees, by maintaining adequate balance between the fixed and the variable
remuneration components and by preserving the ability to pursue a flexible policy related to the variable components of remuneration,
i.e. the variable remuneration awarded during 1 (one) calendar year must not be more than 100 per cent of the fixed remuneration
component in the same 1 (one) calendar year for which the variable remuneration is awarded, in order to promote sound and efficient
risk management, except where the General Meeting of Shareholders of the Bank increases the maximum ratio between variable and
fixed remuneration to 200 per cent in accordance with the requirements of the law.
The Group does not offer guaranteed variable remuneration.
The actual ratio between variable and fixed remuneration in the Group is calculated by adding up all components of the variable
remuneration awarded over a certain period and dividing their sum by the amount of the components of fixed remuneration awarded
during the same period.
Pursuant to the Remuneration Policy of the Bank, official remuneration and supplements to the official remuneration are paid to the
members of the Supervisory Council of the Bank regardless of the status, age, citizenship and experience of the member:
•Official remuneration for a member of the Supervisory Council of the Bank means an annual monetary remuneration paid to a
member of the Supervisory Council of the Bank for performing the functions of a member of the Supervisory Council that
amounts to EUR 50,000 (before applicable taxes), and is paid on a monthly, quarterly or other basis as agreed between the
Bank and the member of the Supervisory Council;
•Supplement to the official remuneration of a member of the Supervisory Council means an annual monetary supplement paid
for performing additional functions while performing the duties of a member of the Council. The annual supplement to the
official remuneration of a member of the Supervisory Council for the position of the Chairman of the Supervisory Council shall
be 200 per cent of the annual official remuneration. The annual supplement to the official remuneration of a member of the
Supervisory Council for the office of Committee Chairperson shall be 25 per cent of the annual official remuneration. The
annual supplement to the official remuneration of a member of the Supervisory Council for his / her duties as a Committee
member shall be 15 per cent of the annual official remuneration. The annual supplement to the official remuneration of a
member of the Supervisory Council shall be paid proportionately, for the previous month, quarter or any other period as
determined by the agreement between the Bank and the member of the Supervisory Council.
The annual amount of the official remuneration and the percentage of supplements to the official remuneration paid to a member of the
Supervisory Council shall be approved by the General Meeting of Shareholders of the Bank for the whole term of office by approving
the Remuneration Policy of the Bank.
No variable remuneration shall be awarded to members of the Supervisory Council.
Pursuant to the Remuneration Policy of the Bank, annual variable remuneration may only be awarded to Nominated Employees.
Nominated Employees means the managers and members of the Board of the Bank and part of the Group companies, as well as other
employees of the Bank whose professional activities have a material impact on the risk profile of the Bank and the Group, due to which
such employees are considered to be recipients of variable annual remuneration for the purpose of the applicable laws of the Republic
of Lithuanian and the European Union and internal documents of the Bank. The list of Nominated Employees shall be drawn up in
accordance with the qualitative and quantitative criteria set out in the delegated regulation of the European Commission and, where
relevant – additional criteria; the list shall be approved by the Board of the Bank. Group companies, with due regard to the applicable
special regulatory requirements, shall designate the nominated employees of a specific Group company as well as the principles of
variable remuneration applicable to such persons. Such nominated employees shall not be considered to be the nominated employees
of the Group.
The annual variable remuneration may be awarded, paid and/or granted only subject to a sustainable financial position of the Bank and
without prejudice to the requirements of other laws. The annual variable remuneration must be reduced or not paid at all, where the
performance of the Group fails to meet the indicators set out in the strategy, or where losses are recorded, where the Nominated
Employee has acted in bad faith or where his/her actions resulted in a loss to the Bank or the Group. The performance of Nominated
Employees over three years shall be taken into account when determining their annual variable remuneration.
The variable remuneration of employees engaged in risk management, compliance and internal audit functions shall not take into
account the performance of the units they control.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
152
The annual variable remuneration is divided into two equal parts:
•the immediately payable portion amounting to 50 per cent of the total annual variable remuneration awarded, which is paid in
cash;
•the deferred portion amounting to 50 per cent of the total annual variable remuneration is allocated in the Bank's shares. The
award of this portion of the remuneration is deferred for a period of 3 years from the date of award of the annual variable
remuneration until the grant of the deferred portion, taking into account the potential risks related to the results of the annual
assessment of the employee. The deferred portion for the Nominated Employee shall be approved annually, in proportion to
the achievement of his/her targets, or shall not be approved (where the targets are not achieved, i.e. when the qualitative
criterion is not reached), even in the case when the financial indicators of the Bank have been achieved. Where the
Nominated Employee or the Bank exceed the set targets, the deferred portion awarded can’t be increased, except for ex-post
adjustments related to share-related events or changes in taxation. Sufficient grounds for adjusting (reducing or not paying)
the deferred portion awarded to a particular Nominated Employee may include ex-post risk adjustments and ex-post
adjustments related to the activities of the Nominated Employee.
The achievement of annual targets is assessed on the basis of qualitative and quantitative criteria. Account is taken not only of the
employee’s personal financial performance, but also of his/her non-financial/non-quantitative inputs, i.e. relations with customers,
colleagues, compliance with standards, compliance with internal rules of procedure, policies and procedures, compliance with
requirements, initiative, responsibility, his/her following of the values of the Bank, performance improvement, etc. The determined
annual variable remuneration for employees is linked to the risk assumed by the unit / employee and the performance of the Group, the
Group company and the unit / employee. The criteria for calculating annual variable remuneration and target proportions are affected by
position and responsibilities, effect on performance, current and future risk exposure.
In determining / calculating the amount of annual variable remuneration for Nominated Employees, the correlation between the
performance of the Group, the risks taken and the remuneration is ensured through the application of the ex-ante risk assessment
principle, i.e. the assessment covers the current and potential future risks which arise from or are directly related to the payment of the
annual variable remuneration. The ex-ante assessment of annual variable remuneration is based on the assessment of quantitative and
qualitative criteria. Quantitative criteria – means the capital and liquidity ratios set out in the approved Risk Appetite Statement;
qualitative criteria – means business continuity risk management indicators. The determination / calculation of ex-ante annual variable
remuneration amount takes into account the performance and the long-term strategy of the Group and seeks to curb the incentive for
employees to take risks in excess of the level acceptable to the Group. The ex-ante assessment of annual variable remuneration
analyses whether the amount of the annual variable remuneration is compatible with the main strategic priorities of the Group, its
balanced short-term and long-term business objectives and the risk appetite accepted to achieve the objectives. The purpose is to
achieve that the amount of annual variable remuneration is sustainable, taking into account the financial position of the Group.
Variable remuneration payments related to employment termination are determined based on the employee’s performance within a
period established by the Bank or the Group; they are determined in such a way that an employee is not remunerated where his/her
activity resulted in losses to the Bank or the Group, except for statutory payments under the law. No options to recover any variable
remuneration paid to an employee are provided for.
Information on performance assessment criteria that form the basis for entitlement to shares, options or variable
remuneration portions. Main criteria and reasons of the system of variable remuneration elements and other non-monetary
benefits
The payment of deferred annual variable remuneration in the Group applies only to the Nominated Employees whose professional
activity has a significant effect on the nature of the risk profile of the establishment (Group). Annual variable remuneration, including the
immediately payable portion and the deferred portion, may be paid and/or awarded only provided the Bank is in a sound financial
position, after the measures of risk-based ex-ante adjustment of annual variable remuneration have been applied (where applicable)
and without prejudice to the requirements of the law. Annual variable remuneration must be reduced or not paid at all, if the
performance of the Group fails to meet the indicators set out in the strategy, or where losses are recorded, where the Nominated
Employee has acted in bad faith or where his/her actions resulted in a loss to the Bank or the Group. The entitlement to the Bank’s
shares as a portion of variable remuneration shall be based on the same performance assessment criteria as apply to the cash portion.
The deferred portion of annual remuneration in the form of the Bank’s shares shall be awarded and granted upon the expiry of the
deferment period in accordance with the option transaction (option agreement) between the Bank and the Nominated Employee
whereby the Bank grants the Nominated Employee the right to acquire the Bank’s shares free of charge upon the expiry of the
deferment period.
Employees are prohibited from personally ensuring themselves under insurance strategies or by taking out insurance cover against a
decrease of their variable remuneration in order to mitigate the risk determined through the application of the principles for calculating
their variable remuneration.
Amounts of payments related to employment termination / end of term in office and notice periods in the Group are determined based
on the statutory amounts of such payments and / or the duration of such notice periods established in the laws. The Bank has
agreements with most of the Board members (Board members also hold other positions at the Bank under contracts of employment)
that upon termination of an employment relationship with a Board member who also holds another position at the Bank, the Bank shall
pay a one-time compensation in the amount of the monthly official remuneration for 12 months.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
153
GENERAL QUANTITATIVE INFORMATION ON REMUNERATION
Average monthly remuneration of the Bank's and the Group's employees before taxes
Bank
Group
Managing employees
Other employees
Managing employees
Other employees
Average
number of
employees
Average monthly
remuneration,
EUR
Average
number of
employees
Average monthly
remuneration,
EUR
Average
number of
employees
Average monthly
remuneration,
EUR
Average
number of
employees
Average monthly
remuneration,
EUR
2020
81
6,964
609
1,688
103
6,329
699
1,675
2021
74
7,765
643
1,867
89
7,391
725
1,882
Information on the salaries of employees of the Bank and the Group in 2020 and 2021, before taxes
In the tables below:
•Information on Senior Managers; Members of management bodies performing management functions, Persons performing
internal control functions and Persons performing administrative functions is provided separately but is also included under
Area of Business;
•Senior Managers; Members of management bodies performing management functions – means members of the Board of the
Bank and the Head of Administration of the Bank, Board members and the general manager of SB lizingas, UAB, Board
members and the general manager of SB draudimas, UAB Life Insurance, senior managers of other Group companies are
only included under Area of Business;
•Persons performing internal control functions – means the employees accountable to the management body for the activities
carried out in performing the independent risk management function, the compliance control function or the internal audit
function;
•Persons performing administrative functions – means the management staff of a unit in charge of legal matters, finances
(including taxes and budget), human resources, remuneration policy, information technologies or economic analysis;
•Fixed remuneration – calculations include all payments in the given year: basic salary; holiday pay, sick pay, income in kind;
additional benefits (e.g. pension insurance, health insurance contributions, monetary gifts / payments, prizes, funeral
allowances, etc.);
•Variable remuneration – calculations include all payments in the given year: quarterly supplements and bonuses; the portion of
the annual variable remuneration paid in cash (excluding the deferred portion in shares); deferred portions of annual variable
remuneration (in cash and in shares);
•The values of the Total column are calculated by adding up the information under Area of Business.
Managers;
Members of the
management body
performing the
management
function
Persons
performing internal
control functions
Persons
performing
administrative
functions
Business areas
Total
Traditional
banking and
lending
Treasury
and other
activities
Business
managemen
t function
Bank
Number of employees
2020-12-31
7
3
5
398
15
277
690
Fixed remuneration 2020, thous. euros
1,246
259
777
6,272
415
8,833
15,519
Variable remuneration 2020, thous. euros
815
108
443
1,297
110
2,178
3,586
Group
Number of employees
2020-12-31
14
3
7
442
81
277
800
Fixed remuneration 2020, thous. euros
1,783
259
1,003
7,373
1,647
8,833
17,852
Variable remuneration 2020, thous. euros
1,039
108
545
1,644
197
2,178
4,018
Bank
Number of employees
2021-12-31
7
3
4
381
16
320
717
Fixed remuneration 2021, thous. euros
1,482
217
893
6,780
452
10,525
17,757
Variable remuneration 2021, thous. euros
649
71
301
1,385
103
2,061
3,549
Group
Number of employees
2021-12-31
14
3
8
424
70
320
814
Fixed remuneration 2021, thous. euros
2,079
217
1,106
7,983
1,789
10,525
20,297
Variable remuneration 2021, thous. euros
825
71
390
1,454
136
2,061
3,651
No person at the Bank was paid a remuneration of EUR 1 million or more in 2021.
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
154
Information on the Nominated Employees of the Bank and the Group in 2021, before taxes
As of 31 December 2021, the number of Nominated Employees at the Group was 33, including 26 at the Bank, 4 at SB lizingas, UAB, 3
at SB draudimas, UAB Life Insurance holding the positions of the Nominated Employees whose professional activities have a material
impact on the risk profile of the Group, and whose positions have been established by the Board of the Bank in accordance with the
applicable laws of the Republic of Lithuanian and the European Union and internal documents of the Bank.
The tables below show:
•Information on the fixed remuneration for the members of the management body performing the supervisory function of the
Bank (no variable remuneration is awarded for the members of the management body performing the supervisory function of
the Bank);
•Information on the fixed and variable remuneration for the Nominated Employees of the Bank and the Group, classified by
Areas of Business. The Nominated Employees have been identified by their positions held as of 31 December 2021 but the
information on the Nominated Employees who have been made redundant in 2021 is also included into the fixed and annual
variable remuneration data for the period of their employment;
•Information on Persons performing internal control functions and Persons performing administrative functions who are also
Senior Management members; Members of a management body performing management function is repeated in the relevant
columns but is also included under Area of Business;
•Information on Senior Management; Members of management bodies performing management functions, Members of bodies
performing internal control functions and Persons performing administrative functions is provided separately but is also
included under Area of Business;
•The values provided in Total column have been obtained by adding up the information on Members of the management body
with supervisory function and Areas of Business.
Members of
the
management
body
performing
supervisory
function
Employees taking significant risks (Nominated Employees)
Total
Bank
Managers;
Members of
the
management
body
performing the
management
function
Persons
performing
internal
control
functions
Persons
performing
administrative
functions
Business areas
Traditional
banking
and
lending
Treasury
and other
activities
Business
management
function
FIXED REMUNERATION in 2021, thou. EUR
618
1,482
217
893
737
123
2,151
3,629
Number recipients
8
7
3
4
8
2
17
35
ANNUAL VARIABLE REMUNERATION FOR
2020 awarded in 2021, thou. EUR
-
970
102
462
441
83
1,245
1,769
Non-deferred (paid) annual variable remuneration
in cash awarded in 2021 for 2020, thou. EUR
-
485
51
231
220
41
622
883
Deferred (unpaid) annual variable remuneration
in shares awarded in 2021 for 2020, thou. EUR
-
485
51
231
220
41
622
883
Deferred (unpaid) annual variable remuneration
in shares awarded in 2021 for 2020, No. of
shares
-
1,007
106
480
457
86
1,292
1,835
Number of recipients
-
7
2
4
8
2
16
26
Portion of annual variable remuneration in
relation to fixed remuneration, %
-
65%
47%
52%
60%
67%
58%
49%
Payments in 2021 related to employment
contract termination, thou. EUR
-
-
-
-
-
-
-
-
Maximum amount awarded per person, thou.
EUR
-
230
-
230
-
-
230
230
Number of recipients
-
1
1
1
1
Guaranteed variable remuneration in 2021,
thou. EUR
-
-
-
-
-
-
-
-
Number of recipients
-
-
-
-
-
-
-
-
Deferred annual variable remuneration in cash
paid in 2021 for 2017, thou. EUR
-
65
8
41
36
5
93
134
Deferred annual variable remuneration in shares
paid in 2021 for 2017, thou. EUR
-
52
6
33
29
4
75
108
Deferred annual variable remuneration in cash
for 2018 not paid as of 31 December 2021, thou.
EUR
-
-
-
-
-
-
-
-
Deferred annual variable remuneration in shares
for 2018 not paid as of 31 December 2021, thou.
EUR (awarded in 2019, payable in 2022)
-
502
34
270
272
40
658
970
Deferred annual variable remuneration in shares
for 2019 not paid as of 31 December 2021, thou.
EUR (awarded in 2020, payable in 2023)
-
493
40
265
273
42
674
989
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
155
Members of
the
management
body
performing
supervisory
function
Employees taking significant risks
Total
Group
Managers;
Members of
the
management
body
performing the
management
function
Persons
performing
internal
control
functions
Persons
performing
administrative
functions
Business areas
Traditional
banking
and
lending
Treasury
and other
activities
Business
management
function
FIXED REMUNERATION in 2021, thou. EUR
618
2,079
267
1,106
1,080
377
2,151
4,226
Number recipients
8
14
3
6
12
5
17
42
ANNUAL VARIABLE REMUNERATION FOR
2020 awarded in 2021, thou. EUR
-
1,242
102
583
712
108
1,244
2,064
Non-deferred (paid) annual variable
remuneration in cash awarded in 2021 for 2020,
thou. EUR
-
621
51
288
356
54
622
1,032
Deferred (unpaid) annual variable remuneration
in shares awarded in 2021 for 2020, thou. EUR
-
621
51
295
356
54
622
1,032
Deferred (unpaid) annual variable remuneration
in shares awarded in 2021 for 2020, No. of
shares
-
1,184
106
591
634
112
1,292
2,038
Number of recipients
-
12
3
5
12
5
17
34
Portion of annual variable remuneration in
relation to fixed remuneration, %
-
60%
47%
53%
66%
29%
58%
49%
Payments in 2021 related to employment
contract termination, thou. EUR
-
-
-
-
-
-
-
-
Maximum amount awarded per person, thou.
EUR
-
230
-
230
-
-
230
230
Number of recipients
-
1
-
1
-
-
1
1
Guaranteed variable remuneration in 2021,
thou. EUR
-
-
-
-
-
-
-
-
Number of recipients
618
2,079
267
1,106
1,080
377
2,151
4,226
Deferred annual variable remuneration in cash
paid in 2021 for 2017, thou. EUR
8
14
3
6
12
5
17
42
Deferred annual variable remuneration in shares
paid in 2021 for 2017, thou. EUR
-
1,242
102
583
712
108
1,244
2,064
Deferred annual variable remuneration in cash
for 2018 not paid as of 31 December 2021, thou.
EUR
-
621
51
288
356
54
622
1,032
Deferred annual variable remuneration in shares
for 2018 not paid as of 31 December 2021, thou.
EUR (awarded in 2019, payable in 2022)
-
621
51
295
356
54
622
1,032
Deferred annual variable remuneration in shares
for 2019 not paid as of 31 December 2021, thou.
EUR (awarded in 2020, payable in 2023)
-
1,184
106
591
634
112
1,292
2,038
MAIN INVESTMENTS DURING THE REPORTING PERIOD
The table below shows the main investments made by the Bank's group during the reporting period, in EUR thousand:
Acquisition of property, plant and equipment, investment property and intangible assets
1,014
Acquisition of debt securities at amortized cost
100,202
Acquisition of investment securities at fair value
100,447
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
156
COMPANIES COMPRISING GROUP
Nature of activities
Registration
date
Company
code
Address
Tel.
e- mail, website
Šiaulių Bankas AB
commercial banking
04/02/1992
112025254
Tilžės str.149
LT-76348 Šiauliai
+370 41 595
607
info@sb.lt,
www.sb.lt
The Bank directly controls the following subsidiaries
SB Lizingas UAB
finance lease, consumer
credits.
14/07/1997
234995490
Laisvės al. 80, LT-
44249 Kaunas
+370 37 407
200
info@sbl.lt,
www.sblizingas.lt
Šiaulių Banko Lizingas
UAB
finance leases (leasing)
and operating leases.
16/08/1999
145569548
Vilniaus str. 167,
LT-76352 Šiauliai
+370 41 598
010, +370 5
272 3015
lizingas@sb.lt,
www.sb.lt
SB Turto Fondas UAB
real estate management
13/08/2002
145855439
Vilniaus str. 167,
LT-76352 Šiauliai
+370 41 525
322
turtofondas@sb.lt,
www.sbip.lt
Life insurance SB
draudimas UAB
life insurance
31/08/2000
110081788
Laisvės pr. 3,
LT-04215 Vilnius
+370 5 236
2723
info@sbdraudimas.lt,
www.sbdraudimas.lt
The Bank indirectly controls the following subsidiaries:
Šiaulių Banko Investicijų
Valdymas UAB *
Investment managment
31/08/2000
145649065
Šeimyniškių st. 1A,
LT-09312 Vilnius
+370 5 272
2477
sbiv@sb.lt,
www.sbip.lt
Sandworks UAB*
real estate management
10/10/2012
302896357
Skruzdynės str. 1,
LT- 93123 Neringa
+ 370 8 615
34251
*in liquidation
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
157
OTHER INFORMATION, PUBLISHED
INFORMATION AND MAJOR EVENTS
TRANSACTIONS WITH RELATING PARTIES
Information on these transactions with related parties is provided in note 30 to the Bank's financial statements for the year 2021.
INFORMATION ON SANCTIONS IMPOSED
During 2021, neither Šiaulių Bankas nor the Group companies were subject to any sanctions.
INFORMATION ON RESEARCH AND DEVELOPMENT ACTIVITIES
The Bank is constantly investing and looking for ways to ensure expansion and better operational efficiency.
INFORMATION ABOU T HARMFUL TRANSACTIONS
During the reporting period, no harmful transactions that were not in accordance with the Bank's objectives, normal market conditions,
harming the interests of shareholders or other groups of persons and which had or could have a negative impact on the Bank's
activities or results of operations were concluded. There were also no transactions where the Bank's executives, controlling
shareholders or other related parties would have been in a conflict of interest due to their different duties to the Bank and their private
interests and / or duties.
REPORTS ON MATE RAIL EVENTS
In accordance with the procedures set by the Charter of the Bank and the legal acts of the Republic of Lithuania reports on material
events are announced in the Central regulated information base and on the Bank‘s website at:
Homepage › Bank Investors › Reports on Stock Events
Other important events are available on the Bank’s website at:
Homepage › About Us › News
Chief Executive Officer
Vytautas Sinius
2022-03-07
CONSOLIDATED ANNUAL REPORT FOR 2021
(Annex to the consolidated annual report for 2021)
158
REPORT ON THE BANK’S CORPORATE GOVERNANCE
FOR 2021
(Annex to the Consolidated Annual Report for 2021)
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, faks. (8 41) 430 774
El. paštas info@sb.lt
www.sb.lt
Following Article 23 1 s of the Law of the Republic of Lithuania on Financial reporting by Undertakings the Bank discloses its compliance
its specific provisions and recommendations.
Clause 1. Reference (s) to the applicable Corporate Governance Code (Codes) and where it is (they are) published and / or a
reference to all publicly available information on corporate governance practices.
The Bank’s shares are traded on a regulated market and are listed on the Nasdaq Baltic Main List. Following Article 12(3) of the Law on
Securities of the Republic of Lithuania and clause 24.5 of the Listing Rules of Nasdaq Vilnius, the Governance Code for the companies
quoted on the Nasdaq Vilnius applies to the Bank, which has been prepared by Nasdaq Vilnius in accordance with the Commission
recommendation 2014/208/ES dated 09 April 2014 approved by the European Commission regarding quality of governance reporting
provided by undertakings. The Bank follows the Corporate Governance Report form approved by the Board of Nasdaq Vilnius AB on 15
January 2019 which is prepared in accordance with the Governance Code for Listed Companies approved by the Board of Nasdaq
Vilnius on 15 January 2019.
Clause 2. In the event of a deviation from, and / or non-compliance with the applicable provisions of corporate governance code (s), the
provisions being deviated from and / or not complied with and the reasons for it.
Following Article 12(3) of the Law on Securities of the Republic of Lithuania and clause 24.5 of the Listing Rules of Nasdaq Vilnius AB,
the Bank discloses its compliance with the Governance Code for the companies quoted on the Nasdaq Vilnius AB, its specific
provisions and recommendations. Where the Bank does not meet some of its provisions or recommendations, it is indicated which
specific provisions or recommendations are not met and explanatory information is provided.
Free Form Summary of the Corporate Governance Report
According to the Articles of Association, the Bank’s bodies are the General Meeting of Shareholders, the Supervisory Council, the
Management Board and the Chief Executive Officer. The Bank’s Supervisory Council is a collegial eight-member supervisory body with
five independent members. The Management Board of the Bank is a seven-member collegiate executive body of the Bank, consisting
of the Chief Executive Officer, Deputy Chief Executive Officers and Heads of Bank Divisions. The Bank has 6 committees. 4
Committees – Risk, Audit, Nomination, Remuneration – are formed by the decision of the Supervisory Council from the members of the
Supervisory Council, 2 Committees – Loan and Risk Management – by the decision of the Management Board.
The Supervisory Council is elected by the General Meeting of Shareholders for the term of 4 years. The Management Board of the
Bank is also elected by the Supervisory Council for a 4-year term. The Management Board elects and dismisses the Chief Executive
Officer and his/her Deputies, determines the remuneration of the Chief Executive Officer and other conditions of the employment
contract.
More information on the Bank’s corporate governance, shareholders’ rights, activities of the Supervisory Council, Management Board
and Committees, members, internal control and risk management systems is provided in the Bank’s consolidated annual report for the
year ended 31 December 2021.
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Structured table for disclosure
PRINCIPLES/ RECOMMENDATIONS
YES
/NO/NOT
APPLICABLE
I Principle. General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights.
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance
framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access to the information and/or documents established in the
legal acts on equal terms.
COMMENT
The information required by legislation and the Bank’s documents is publicly available on the Bank’s website
in Lithuanian and English.
All shareholders have the same statutory rights to attend general meetings.
Yes
1.2. It is recommended that the company’s capital should consist only of the shares that grant the same
rights to voting, ownership, dividend and other rights to all of their holders.
COMMENT
The Bank’s authorised capital consists of 600,726,263 ordinary registered shares with a par value of EUR
0.29 each. Each share grants one vote at the general meeting. All shares of the Bank entitle the holders to
equal rights.
Yes
1.3. It is recommended that investors should have access to the information concerning the rights attached
to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares.
COMMENT
The Bank’s website contains the Bank’s Articles of Association which establish the rights granted to the
holders of the Bank’s shares.
When new shares are issued, the rights granted by the shares shall be disclosed in the prospectus and in
other publicly available issue documents.
Yes
1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all
assets of the company which in principle would mean the transfer of the company, should be subject to
approval of the general meeting of shareholders.
COMMENT
When approving the Articles of Association of the Bank, the General Meeting of Shareholders transferred the
right to approve the decisions of the Management Board regarding the sale of a significant part of the assets
to the Supervisory Council of the Bank (without prejudice to the requirements of the Law on Companies of
the Republic of Lithuania). It should be noted that in the event of a particularly significant transaction, the
Bank’s bodies, the Management Board or the Supervisory Council, could decide to convene a GMS on this
issue, although such an obligation is not directly enshrined in the Bank’s Articles of Association.
No
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1.5. Procedures for convening and conducting a general meeting of shareholders should provide
shareholders with equal opportunities to participate in the general meeting of shareholders and should not
prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting
of shareholders should not prevent active participation of shareholders at the general meeting. In the notice
of the general meeting of shareholders being convened, the company should specify the last day on which
the proposed draft decisions should be submitted at the latest.
COMMENT
The General Meetings of Shareholders of the Bank are held in Šiauliai at an address and time announced in
advance. Ordinary shareholders’ meetings are held at the end of March extraordinary – when necessary. The
notice convening the General Meeting of Shareholders shall specify that the draft resolutions may be
submitted in writing or by e-mail before the time indicated on the date of the meeting and shall be
communicated to the chairperson after he/she has announced the agenda of the meeting, until the meeting
begins to discuss the agenda items.
In the past two years, the General Meetings of Shareholders were held under the quarantine conditions of the
COVID-19 pandemic. Taking into account the existing restrictions of the quarantine regime, the Bank allowed
the shareholders to express their will on the issues on the agenda of the meetings only by voting in writing
in advance. Despite this limitation, quorums for meetings were customary. The Bank provided additional
technical opportunities for shareholders to complete and submit general ballot papers for the meetings.
Yes
1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended,
where possible, that documents prepared for the general meeting of shareholders in advance should be
announced publicly not only in Lithuanian language but also in English and/or other foreign languages in
advance. It is recommended that the minutes of the general meeting of shareholders after the signing thereof
and/or adopted decisions should be made available publicly not only in Lithuanian language but also in
English and/or other foreign languages. It is recommended that this information should be placed on the
website of the company. Such documents may be published to the extent that their public disclosure is not
detrimental to the company or the company’s commercial secrets are not revealed.
COMMENT
All information and documents of the General Meeting of Shareholders are drafted in Lithuanian and English
and are publicly available on the Bank’s website and through the information delivery system regulated by the
Nasdaq Baltic.
Yes
1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general
meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in
writing in advance by completing the general voting ballot.
COMMENT
The Bank’s shareholders have the right to participate in the shareholders’ meeting both in person and through
a representative, by issuing a duly authorised proxy or concluding a transfer of voting rights in accordance
with the procedure established by legal acts. Shareholders are also be provided with the opportunity to vote in
writing in advance by completing the general ballot paper and submitting it to the Bank prior to the meeting.
Yes
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1.8. With a view to increasing the shareholders’ opportunities to participate effectively at general meetings of
shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus
provide shareholders with the conditions to participate and vote in general meetings of shareholders via
electronic means of communication. In such cases the security of transmitted information must be ensured
and it must be possible to identify the participating and voting person.
COMMENT
The Bank does not comply with this recommendation because it does not have the necessary hardware and
software available. One of the reasons why the equipment is not installed is the risk of information uncertainty
and security of transmission due to the presence of a significant part of the Bank’s shares in nominee
accounts opened in the name of account operators, which means that the Bank does not know the final
beneficiaries of some of the shares until the disclosure at the meeting. Although Commission Implementing
Regulation (EU) 2018/1212 of 3 September 2018 entered into force on 3 September 2020, in implementing the
provisions of the EU Shareholder Rights Directive 2007/36/EC, issuers have the opportunity to obtain their lists
of shareholders up to the final shareholders, not all intermediaries disclose the final shareholders of the Bank.
Once the lists of shareholders received by the Bank through the Nasdaq CSD disclose all shareholders to the
final shareholders in order to enable shareholders to attend and vote at meetings by electronic means,
measures must be put in place to ensure information security and reliably identify participants and voters.
No
1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being
convened should specify new candidatures of members of the collegial body, their proposed remuneration
and the proposed audit company if these issues are included into the agenda of the general meeting of
shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the
information about his/her educational background, work experience and other managerial positions held (or
proposed) should be provided.
COMMENT
The information made public together with the draft resolutions discloses information about the proposed
candidates, as well as data on the candidates’ education, professional experience and other positions held.
Following the approval of the Bank’s remuneration policy by the General Meeting of Shareholders on 31 March
2020, which stipulates the payment of fixed remuneration to the members of the Bank’s Supervisory Council
and the amounts of this fixed remuneration, the information on the candidates for the members of the
Supervisory Council provided to the draft resolutions of the Bank to be held at future shareholders’ meetings
may indicate the remuneration offered to the candidates for their work in the Supervisory Council. In 2021, no
new members were elected to the Supervisory Council. The remuneration policy is published on the Bank’s
website, which is accessible to everyone. The name of the audit company proposed for election to the General
Meeting of Shareholders and the proposed remuneration for audit services are provided in the draft resolution
for the relevant item on the agenda of the meeting.
Yes
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1.10. Members of the company’s collegial management body, heads of the administration or other competent
persons related to the company who can provide information related to the agenda of the general meeting of
shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the
collegial body should also participate in the general meeting of shareholders in case the election of new
members is included into the agenda of the general meeting of shareholders.
COMMENT
General Meetings of Shareholders, which are organised and coordinated in advance, are always attended by
persons who can provide information related to the agenda of the meeting.
Proposed candidates shall always attend the General Meeting of Shareholders who elect the members of the
Supervisory Council except in special cases (e.g., if physical attendance at the meeting is not possible due to
the quarantine regime or other important circumstances).1
Yes
II Principle. Supervisory Council
2.1 Functions and liability of the supervisory council
The supervisory council f the company should ensure representation of the interests of the company and its shareholders,
accountability of this body to the shareholders and objective monitoring of the company’s operations and its management
bodies as well as constantly provide recommendations to the management bodies of the company.
The supervisory council should ensure the integrity and transparency of the company’s financial accounting and control
system.
2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit
and in the interests of the company and its shareholders and represent their interests, having regard to the
interests of employees and public welfare.
COMMENT
The members of the Supervisory Council act in accordance with the principles of good governance and
perform their functions taking into account the interests of the Bank and its shareholders, depositors and other
interested third parties. The obligations specified in the recommendation are enshrined in the agreement on
the activities of a member of the Supervisory Council and in the Rules of Procedure of the Supervisory Council.
Yes
2.1.2. Where decisions of the Supervisory Council may affect the interests of the company's shareholders
differently, the Supervisory Council should treat all shareholders impartially. It should ensure that
shareholders are properly informed about the company's strategy, risk management and control and resolution
of conflicts of interest.
COMMENT
The Supervisory Council follows the recommendations. Before making decisions, the members of the
Supervisory Council assess their influence on the activities of the Bank and the shareholders of the Bank. The
Bank shall comply with the disclosure requirements of listed companies and shall ensure that the Bank’s
shareholders are properly informed about the Bank’s strategy, operations and risk management and control.
Yes
2.1.3. The supervisory council should be impartial in passing decisions that are significant for the company’s
operations and strategy. Members of the supervisory council should act and pass decisions without an
external influence from the persons who elected them.
COMMENT
When making decisions that have a bearing on the Bank’s operations and strategy, the Bank’s Supervisory
Council acts independently and follows the requirements of legal acts. The work and decisions of the members
of the Supervisory Council shall not be influenced by the persons who elected them.
The Rules of Procedure of the Supervisory Council include the provision stating that each member shall be
prepared and able to act objectively, critically and independently and to make informed, objective and
independent decisions.
Yes
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1 For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
2.1.4. Members of the supervisory council should clearly voice their objections in case they believe that a
decision of the supervisory board is against the interests of the company. Independent members of the
supervisory board should: a) maintain independence of their analysis and decision-making; b) not seek or
accept any unjustified privileges that might compromise their independence.
KOMENTARAS
The members of the Supervisory Council have the right to express their opinion on all issues on the agenda of
the meeting, which must be duly reflected in the minutes of the meeting in accordance with the Rules of
Procedure of the Supervisory Council. The Rules of Procedure of the Supervisory Council oblige the members
of the Supervisory Council to constructively and critically evaluate the proposals, explanations and information
submitted to the Supervisory Council. Also, in the event of circumstances that could cause a conflict of
interest between a member of the Supervisory Council and the Bank, the member of the Supervisory Council
must immediately inform the Bank and the Supervisory Council in writing about such new circumstances. The
obligations specified in the recommendation are enshrined in the agreement on the activities of a member of
the Supervisory Council and in the Rules of Procedure of the Supervisory Council.2
Yes
2.1.5. The supervisory council should oversee that the company’s tax planning strategies are designed and
implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long-
term interests of the company and its shareholders, which may give rise to reputational, legal or other risks.
COMMENT
The Bank’s Supervisory Council supervises the activities of the Bank’s bodies in the exercise of its
responsibilities, including that all the Bank’s strategies (as well as the tax planning strategy) are developed and
implemented in accordance with legal acts.
Yes
2.1.6. The company should ensure that the supervisory council is provided with sufficient resources (including
financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek
independent professional advice from external legal, accounting or other experts on matters pertaining to the
competence of the supervisory council and its committees.
COMMENT
The Bank ensures the Supervisory Council is provided with the resources necessary for its activities – it
technically services the meetings of the Supervisory Council and providing all the necessary information. The
clause on the provision of information is enshrined in the agreement on the activities of a member of the
Supervisory Council and in the Rules of Procedure of the Supervisory Council.
The Rules of Procedure of the Supervisory Council also provide for the right of the Supervisory Council to
appoint an expert/group of experts to audit and evaluate the financial accounts of the Bank, considering issues
within the competence of the Supervisory Council.
Yes
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2 For the purposes of this Code, the criteria of independence of members of the supervisory board are interpreted as the criteria of unrelated parties defined in
Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
II Principle. Supervisory Council
2.2 Formation of the Supervisory Council
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and
effective and fair corporate governance.
2.2.1. The members of the supervisory council elected by the general meeting of shareholders should
collectively ensure the diversity of qualifications, professional experience and competences and seek for
gender equality With a view to maintain a proper balance between the qualifications of the members of the
supervisory board, it should be ensured that members of the supervisory council, as a whole, should have
diverse knowledge, opinions and experience to duly perform their tasks.
COMMENT
Shareholders, in assessing the qualifications and professional experience of the members of the Supervisory
Council, shall vote accordingly at the General Meeting of Shareholders in respect of the proposed candidates
to the Supervisory Council.
Before recommending candidates to the Supervisory Council to the General Meeting of Shareholders, the
Nomination Committee evaluates the candidates for the members of the Supervisory Council in accordance
with the applicable legal regulations and the Bank’s internal legal acts. The evaluation also includes a
collective evaluation of the Supervisory Council as a body. The diversity of the qualifications, professional
experience and competences of the members of the Supervisory Council is ensured by the fact that a member
of the Supervisory Council (nominated or already elected at the shareholders meeting) is allowed to start his/
her duties only with the permission of the supervisory authority. The supervisory authority shall also assess
the collective suitability of the members of the Supervisory Council when issuing authorisations.
Yes
2.2.2. Members of the supervisory council should be appointed for a specific term, subject to individual re-
election for a new term in office in order to ensure necessary development of professional experience.
COMMENT
The Supervisory Council of the Bank is elected for four years. The number of terms of office of a person in the
Supervisory Council shall not be limited. The General Meeting of Shareholders may remove the entire
Supervisory Council or its individual members before the end of the term of office and may elect new members
until the end of the term of office of the existing Supervisory Council.
Yes
2.2.3. Chair of the supervisory council should be a person whose current or past positions constituted no
obstacle to carry out impartial activities. A former manager or management board member of the company
should not be immediately appointed as chair of the supervisory council either. Where the company decides to
depart from these recommendations, it should provide information on the measures taken to ensure
impartiality of the supervision.
COMMENT
The other (current and former) duties of the Chair of the Supervisory Council of the Bank do not prevent him/
her from acting impartially as the Chair of the Supervisory Council. The current Chairman of the Supervisory
Council has not been the Chief Executive Officer or a member of the Management Board of the Bank.
Yes
2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the
supervisory board. Each member of the supervisory board should undertake to limit his other professional
obligations (particularly the managing positions in other companies) so that they would not interfere with the
proper performance of the duties of a member of the supervisory board. Should a member of the supervisory
board attend less than a half of the meetings of the supervisory board throughout the financial year of the
company, the shareholders of the company should be notified thereof.
COMMENT
The members of the Supervisory Council shall devote sufficient time and attention to the duties of the member
of the Supervisory Council. In 2021, six (6) meetings of the Supervisory Council were held, four (4) of which
were attended by all members of the Supervisory Council and two (2) (one of which was extraordinary and
convened as a matter of urgency) – by seven (7) members out of eight (8).
Yes
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2.2.5. When it is proposed to appoint a member of the supervisory board, it should be announced which
members of the supervisory board are deemed to be independent. The supervisory board may decide that,
despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered
independent due to special personal or company-related circumstances.
COMMENT
There are five (5) independent members in the current eight (8)-member Supervisory Council, whose term is
until the ordinary General Meeting of Shareholders in 2024. This was announced when these members were
elected by the General Meeting of Shareholders and it is also disclosed in the Bank’s consolidated annual
reports and the information published on the website of the Bank. The Supervisory Council has not decided
that any of the current independent members cannot be considered independent.
Yes
2.2.6. The amount of remuneration to members of the supervisory council for their activity and participation in
meetings of the supervisory board should be approved by the general meeting of shareholders.
COMMENT
For their activities and participation in meetings, the members of the Supervisory Council are paid a fixed
remuneration which consists of a salary and a bonus paid for performing additional functions while holding the
position of a member of the Supervisory Council (Chair of the Supervisory Council, Chair of the Committee,
Committee member).
The annual amount of the official remuneration and the percentage of bonuses to the official remuneration paid
to a member of the Supervisory Council for the entire term of office shall be approved by the General Meeting
of Shareholders of the Bank when approving the Remuneration Policy.
Yes
2.2.7. Every year the supervisory board should carry out an assessment of its activities. It should include
evaluation of the structure of the supervisory board, its work organization and ability to act as a group,
evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation
whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year,
make public respective information about its internal structure and working procedures.
COMMENT
Each year, the members of the Supervisory Council participate in the overall process of assessing the
effectiveness of the Bank’s internal management system, which includes assessing its structure, organisation
and ability to act as a group, as well as assessing whether the Supervisory Council had achieved the set
performance targets. The composition and operating procedures of the Supervisory Council are specified in
the Bank’s Articles of Association and published in the annual reports.
Yes
III Principle. Management Board
3.1 Functions and liability of the management board
The management board should ensure the implementation of the company’s strategy and good corporate governance with
due regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the implementation of the company’s strategy approved by the
supervisory board if the latter has been formed at the company. In such cases where the supervisory board is
not formed, the management board is also responsible for the approval of the company’s strategy.
COMMENT
The Bank’s Management Board ensures the implementation of the Bank’s strategy as approved by the
Supervisory Council.
Yes
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3.1.2. As a collegial management body of the company, the management board performs the functions
assigned to it by the Law and in the articles of association of the company, and in such cases where the
supervisory board is not formed in the company, it performs inter alia the supervisory functions established in
the Law. By performing the functions assigned to it, the management board should take into account the needs
of the company’s shareholders, employees and other interest groups by respectively striving to achieve
sustainable business development.
COMMENT
The Bank has a Supervisory Council, accordingly the Management Council, performs the functions assigned to
it by law and the Bank’s Articles of Association.
The duty to act in good faith, diligently, responsibly and prudently, to make decisions for the benefit of the
Bank and its shareholders and taking into account their legitimate interests is enshrined in the Rules of
Procedure of the Management Board of the Bank.
Yes
3.1.3. The management board should ensure compliance with the laws and the internal policy of the company
applicable to the company or a group of companies to which this company belongs. It should also establish
the respective risk management and control measures aimed at ensuring regular and direct liability of
managers.
COMMENT
The Board of the Bank ensures compliance with laws and internal policies. As set out in the Bank’s Articles of
Association, the Management Board monitors the implementation of the Bank’s risk management policy,
independent risk management and compliance, effective functioning of the Bank’s internal control system, how
appropriate is governance structure, compliance with set principles, values, and code of conduct. The
Management Board monitors and supervises whether the actions of the Bank’s administration are in
accordance with the Bank’s strategy, policies, business plans, budget implementation and, where appropriate,
special external or internal factors (e.g., non-standard financial sector developments, regulatory changes,
supervisory requirements, substantial deviation from business plans, budget) may revoke decisions made by
the Chief Executive Officer of the Bank.
Yes
3.1.4. Moreover, the management board should ensure that the measures included into the HYPERLINK
"https://www.oecd.org/daf/anti-bribery/44884389.pdf" OECD Good Practice Guidance on Internal Controls,
Ethics and Compliance are applied at the company in order to ensure adherence to the applicable laws, rules
and standards.
COMMENT
The Management Board is responsible for enforcing applicable laws, regulations and standards in the areas of
internal control, ethics and compliance, including those included in the OECD Guidelines.
The Bank has various documents in place to ensure internal control, ethics and compliance management
measures, such as: Code of Ethics; Policy for Anti-Corruption and Unacceptable Conduct; Compliance Policy
of the Šiaulių Bankas Group; Conflict of Interest Management Policy; Risk Management Framework; Risk
Management Strategy, etc.3
Yes
3.1.5. On Internal Controls, Ethics and Compliance are applied at the company in order to ensure adherence to
the applicable laws, rules and standards.
COMMENT
When appointing the Bank’s Chief Executive Officer, the Management Board of the Bank takes into account the
balance of his/her qualifications, experience and competence, as well as whether the supervisory authority has
not objected to such appointment.
Yes
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3 Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf
III Principle. Management Board
3.2 Formation of the management board
3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is
not formed, by the general meeting of shareholders should collectively ensure the required diversity of
qualifications, professional experience and competences and seek for gender equality. With a view to maintain
a proper balance in terms of the current qualifications possessed by the members of the management board, it
should be ensured that the members of the management board would have, as a whole, diverse knowledge,
opinions and experience to duly perform their tasks.
COMMENT
The qualifications and professional experience of the members of the Management Board are assessed by the
Supervisory Council by voting in favour of the proposed candidates to the Management Board.
Before recommending candidates to the Management Board to the Supervisory Council, the Nomination
Committee evaluates the candidates to the Management Board in accordance with the applicable legal
regulations and the Bank’s internal legal acts. The evaluation also includes a collective evaluation of the
Management Board as a body. The diversity of the qualifications, professional experience and competences of
the members of the Management Board is ensured by the fact that a member of the Management Board
(nominated or already elected by the Supervisory Council) is allowed to start his/her duties only with the
permission of the supervisory authority. The supervisory authority shall also assess the collective suitability of
the members of the Management Board when issuing authorisations.
Yes
3.2.2. Names and surnames of the candidates to become members of the management board, information on
their educational background, qualifications, professional experience, current positions, other important
professional obligations and potential conflicts of interest should be disclosed without violating the
requirements of the legal acts regulating the handling of personal data at the meeting of the supervisory board
in which the management board or individual members of the management board are elected. In the event that
the supervisory board is not formed, the information specified in this paragraph should be submitted to the
general meeting of shareholders. The management board should, on yearly basis, collect data provided in this
paragraph on its members and disclose it in the company’s annual report.
COMMENT
Information on candidates to the Management Board of the Bank, including their curriculum vitae and
declaration of interests, shall be submitted to the meeting of the Bank’s Supervisory Council at which the
Management Board or its individual members are elected. Information about the positions held by the members
of the Management Board or their participation in the activities of other companies is constantly collected,
stored and presented in the Bank’s consolidated annual report and on the Bank’s website.
Yes
3.2.3. All new members of the management board should be familiarized with their duties and the structure and
operations of the company.
COMMENT
Members of the Management Board are familiarised with their duties, activities, organisational and governance
framework of the Bank, its strategy and operations.
Yes
3.2.4. Members of the management board should be appointed for a specific term, subject to individual re-
election for a new term in office in order to ensure necessary development of professional experience and
frequent reapproval of their status.
COMMENT
According to the Bank’s Articles of Association, the Management Board of the Bank is elected for four years.
The number of terms of office of a person in the Management Board shall not be limited. The Supervisory
Council may remove the entire Management Board or its individual members before the end of the term of
office and may elect new members until the end of the term of office of the existing Management Board. In
2021, in order to strengthen the risk management function in the Bank, one member of the Management Board
was removed, and a new member of the Board was appointed until the end of the term of the current
Management Board.
Yes
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3.2.5. Chair of the management board should be a person whose current or past positions constitute no
obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the
company should not be immediately appointed as chair of the management board. When a company decides to
depart from these recommendations, it should furnish information on the measures it has taken to ensure the
impartiality of supervision.
COMMENT
The other (current and former) duties of the Chair of the Management Board of the Bank do not prevent him/her
from acting impartially as the Chair of the Management Board. The fact that the Chair of the Management Board
is the Deputy Chief Executive Officer of the Bank ensures the compliance with the requirement set forth in
Article 33(2) of the Law on Banks of the Republic of Lithuania.
Yes
3.2.6. Each member should devote sufficient time and attention to the duties of a board member. If a board
member attended less than half of the board meetings during the financial year of the company, the company's
supervisory council should be informed about it, if the supervisory council is not formed in the company – the
general meeting of shareholders.
COMMENT
Members of the Management Board devote sufficient time and attention to the performance of the duties of a
Management Board member.
The minutes of the company record the participation and voting of the members of the Management Board in
making decisions.
In 2021, 56 meetings of the Management Board were held, all of which were attended by at least five
Management Board members (according to the Rules of Procedure of the Management Board, a meeting may
take place and decisions may be taken when at least 2/3 of the members of the Management Board are
present).
Yes
3.2.7. In the event that the management board is elected in the cases established by the Law where the
supervisory council is not formed at the company, and some of its members will be independent, it should be
announced which members of the management board are deemed as independent. The management board
may decide that, despite the fact that a particular member meets all the criteria of independence established by
the Law, he/she cannot be considered independent due to special personal or company-related circumstances.
COMMENT
The Bank has a Supervisory Council.4
Not
applicable
3.2.8. The amount of remuneration to members of the management board for their activity and participation in
meetings of the management board should be approved by the general meeting of shareholders.
COMMENT
The Bank has a Supervisory Council, which is responsible for electing and removing members of the
Management Board. All members of the Management Board also hold other positions in the Bank. In
accordance with the Remuneration Policy approved by the General Meeting of Shareholders, the prior approval
of the Supervisory Council is required when determining the remuneration and other terms of the employment
contract of the members of the Management Board holding other positions in the Bank. The Supervisory
Council also approves the annual variable remuneration of the members of the Management Board holding
other positions in the Bank.
No
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4 For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated
persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.
3.2.9. The members of the management board should act in good faith, with care and responsibility for the
benefit and the interests of the company and its shareholders with due regard to other stakeholders. When
adopting decisions, they should not act in their personal interest; they should be subject to no-compete
agreements and they should not use the business information or opportunities related to the company’s
operations in violation of the company’s interests.
COMMENT
In accordance with the Rules of Procedure of the Management Board, the Management Board acts in good
faith, with care and responsibly, in accordance with the principles of good governance, and performs its
functions in the interests of the Bank’s shareholders, clients and other interested third parties. A member of
the Management Board shall not have the right to vote and attend the Management Board meeting when
dealing with issues related to his/her activities on the Management Board or his/her responsibility, as well as
matters in which the member may have an interest, or where the lack of objectivity of the member of the
Management Board may expose the Bank to other risks.
Yes
3.2.10. Every year the management board should carry out an assessment of its activities. It should include
evaluation of the structure of the management board, its work organization and ability to act as a group,
evaluation of the competence and work efficiency of each member of the management board, and evaluation
whether the management board has achieved its objectives. The management board should, at least once a
year, make public respective information about its internal structure and working procedures in observance of
the legal acts regulating the processing of personal data.
COMMENT
Each year, the members of the Management Board participate in the overall process of assessing the
effectiveness of the Bank’s internal management system, which includes assessing management structure,
organisation and ability to act as a group, as well as assessing whether the Management Board had achieved
the set performance targets. The composition and operating procedures of the Management Board are
specified in the Bank’s Articles of Association and published in the annual reports.
Yes
IV Principle. Rules of procedure of the supervisory board and the management board of the company
The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should
ensure efficient operation and decision-making of these bodies and promote active cooperation between the company’s
management bodies.
4.1. The management board and the supervisory board, if the latter is formed at the company, should act in
close cooperation in order to attain benefit for the company and its shareholders Good corporate governance
requires an open discussion between the management board and the supervisory board. The management
board should regularly and, where necessary, immediately inform the supervisory board about any matters
significant for the company that are related to planning, business development, risk management and control,
and compliance with the obligations at the company. The management board should inform he supervisory
board about any derogations in its business development from the previously formulated plans and objectives
by specifying the reasons for this.
COMMENT
The legal acts regulating the activities of the Supervisory Council and the Management Board, the Articles of
Association and the Rules of Procedure of the Bank, shall establish the principles and procedure of
cooperation between the Supervisory Council and the Management Board and ensure that the supervisory and
management bodies function properly for the maximum benefit of the Bank and its shareholders. Management
Board members are normally invited to attend meetings of the Supervisory Council.
Yes
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4.2. It is recommended that meetings of the company’s collegial bodies should be held at the respective
intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the
collegial bodies should be convened but it is recommended that these meetings should be convened at such
intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings
of the company’s collegial bodies should be convened at least once per quarter.
COMMENT
The Supervisory Council and the Management Board of the Bank act in accordance with the procedures
established in their Rules of Procedure.
Meetings of the Supervisory Council shall be held at least four times a year and at intervals not exceeding four
months. In 2021, 6 meetings of the Supervisory Council were held.
Meetings of the Management Board shall be convened periodically, but at least once a month, in accordance
with the Rules of Procedure of the Management Board. In 2021, 56 meetings of the Management Board were
held.
Yes
4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they
would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful
discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting
being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the
members of the collegial body. The agenda of the meeting should not be changed or supplemented during the
meeting, unless all members of the collegial body present at the meeting agree with such change or
supplement to the agenda, or certain issues that are important to the company require immediate resolution.
COMMENT
The Rules of Procedure of the Supervisory Council and the Management Board provide for a requirement that
the notice of the meetings being convened be given in advance.
Meetings of the Supervisory Council are held in accordance with a schedule agreed in advance with the
Supervisory Council. Extraordinary meetings are convened as necessary. The agenda of the meeting is
prepared by the secretary of the Supervisory Council, approved by the chair and submitted to the members of
the Supervisory Council in advance not later than four working days before the meeting, and in case the issue
should be solved by way of survey – not later than two working days. The meeting may take place and the
resolutions adopted at it will be considered valid even if this procedure is not observed if all members of the
Supervisory Council agree to it and this is indicated in the minutes of the meeting.
The exact place and time of the meeting of the Management Board shall be communicated to the members of
the Management Board at least one working day before the meeting, except in urgent cases. The agenda of the
meeting and the draft resolutions shall be communicated to the members of the Management Board in
advance. The Secretary of the Management Board, in agreement with the Chair of the Management Board, shall
ensure that the agenda, draft resolutions and other information are made available to all Management Board
members at least one working day prior to the meeting. Additional urgent items may be included on the agenda
of a Management Board meeting only with the consent of the Chair of the Management Board.
Yes
4.4. In order to coordinate the activities of the company’s collegial bodies and ensure effective decision-making
process, the chairs of the company’s collegial supervision and management bodies should mutually agree on
the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate
governance. Meetings of the company’s supervisory board should be open to members of the management
board, particularly in such cases where issues concerning the removal of the management board members,
their responsibility or remuneration are discussed.
COMMENT
The dates of all meetings of the Supervisory Council and the Management Board cannot be agreed due to the
different frequency of meetings of these bodies. The members of the Management Board are invited to attend
all meetings of the Supervisory Council, regardless of the issues discussed at the meeting.
Yes
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V Principle. Nomination, remuneration and audit committees
5.1 Purpose and formation of committees
The committees formed at the company should increase the work efficiency of the supervisory board or, where the
supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that
decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free
of material conflicts of interest.
Committees should exercise independent judgment and integrity when performing their functions and provide the collegial
body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted
by the collegial body.
5.1.1. Taking due account of the company-related circumstances and the chosen corporate governance
structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the
management board which performs the supervisory functions, establishes committees. It is recommended
that the collegial body should form the nomination, remuneration and audit committees.
COMMENT
The Bank’s Supervisory Council has formed Audit, Risk, Nomination and Remuneration Committees which
operate in the Bank.5
Yes
5.1.2. Companies may decide to set up less than three committees. In such case companies should explain in
detail why they have chosen the alternative approach, and how the chosen approach corresponds with the
objectives set for the three different committees.
COMMENT
See comment of clause 5.1.1.
Not
applicable
5.1.3. In the cases established by the legal acts the functions assigned to the committees formed at companies
may be performed by the collegial body itself. In such case the provisions of this Code pertaining to the
committees (particularly those related to their role, operation and transparency) should apply, where relevant,
to the collegial body as a whole.
COMMENT
See comment of clause 5.1.1.
Not
applicable
5.1.4. Committees established by the collegial body should normally be composed of at least three members.
Subject to the requirements of the legal acts, committees could be comprised only of two members as well.
Members of each committee should be selected on the basis of their competences by giving priority to
independent members of the collegial body. The chair of the management board should not serve as the chair
of committees.
COMMENT
The Audit, Nomination and Remuneration Committees have three members each, and the Risk Committee has
four members. The committees are composed of members of the Supervisory Council who are appointed to the
committees taking into account their competence. The Remuneration and Nomination Committees have two
independent members of the Supervisory Council, the Risk Committee – three members, and the Audit
Committee is fully comprised of the independent members. Chairs of all committees are independent members
of the Supervisory Council. The Chair of the Supervisory Council shall not be the Chair or member of any
committee.
Yes
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5 The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial Statements of the
Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability companies whose securities are traded on a
regulated market of the Republic of Lithuania and/or of any other Member State) are under the obligation to set up an audit committee (the legal acts
provide for the exemptions where the functions of the audit committee may be carried out by the collegial body performing the supervisory functions).
5.1.5. The authority of each committee formed should be determined by the collegial body itself. Committees
should perform their duties according to the authority delegated to them and regularly inform the collegial
body about their activities and performance on a regular basis. The authority of each committee defining its
role and specifying its rights and duties should be made public at least once a year (as part of the information
disclosed by the company on its governance structure and practice on an annual basis). In compliance with the
legal acts regulating the processing of personal data, companies should also include in their annual reports
the statements of the existing committees on their composition, the number of meetings and attendance over
the year as well as the main directions of their activities and performance.
COMMENT
The recommendation is implemented through the committees of the Supervisory Council formed and operating
in the Bank. The powers (functions, rights and duties) of the committees of the Supervisory Council are
determined by the Supervisory Council by approving the operating regulations of each committee.
The chairs of the committees shall present to the Supervisory Council information on the activities of each
committee between the meetings of the Supervisory Council at the beginning of each meeting of the
Supervisory Council, as well as the annual reports of the committees to the Supervisory Council.
The powers of the committees, their composition and other information are published in the Bank’s annual and
semi-annual reports.
Yes
5.1.6. With a view to ensure the independence and impartiality of the committees, the members of the collegial
body who are not members of the committees should normally have a right to participate in the meetings of the
committee only if invited by the committee. A committee may invite or request that certain employees of the
company or experts would participate in the meeting. Chair of each committee should have the possibility to
maintain direct communication with the shareholders. Cases where such practice is to be applied should be
specified in the rules regulating the activities of the committee.
COMMENT
Only Bank employees or other persons (experts) invited by the committee may attend and participate in the
meetings of the committees. The chairs of the committees are enabled to communicate directly with the
shareholders.
Yes
V Principle. Nomination, remuneration and audit committees
5.2 Nomination committee
5.2.1. The key functions of the nomination committee should be the following:
to select candidates to fill vacancies in the membership of supervisory and management bodies and the
administration and recommend the collegial body to approve them. The nomination committee should evaluate
the balance of skills, knowledge and experience in the management body, prepare a description of the
functions and capabilities required to assume a particular position and assess the time commitment expected;
assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as
well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations
on how the required changes should be sought;
devote the attention necessary to ensure succession planning.
COMMENT
The main functions of the Bank’s Nomination Committee are in line with this recommendation.
Yes
5.2.2. When dealing with issues related to members of the collegial body who have employment relationships
with the company and the heads of the administration, the manager of the company should be consulted by
granting him/her the right to submit proposals to the Nomination Committee.
COMMENT
Consultations between the Nomination Committee and the Chief Executive Officer of the Bank take place
through the information and documents required for the decisions of the Nomination Committee which are
prepared by the Secretary of this Committee – Director of the Bank’s Personnel Department who coordinates
all the issues relating to employment relations with the Chief Executive Officer.
Yes
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V Principle. Nomination, remuneration and audit committees
5.3 Remuneration committee
The main functions of the remuneration committee should be the following:
submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and
management bodies and the heads of the administration for approval. Such policy should include all forms of
remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes,
pension arrangements and termination payments as well as conditions which would allow the company to recover the
amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so;
submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the
heads of the administration in order to ensure that they would be consistent with the company’s remuneration policy and
the evaluation of the performance of the persons concerned;
review, on a regular basis, the remuneration policy and its implementation.
COMMENT
The main functions of the Bank’s Remuneration Committee are in line with this recommendation.
Yes
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V Principle. Nomination, remuneration and audit committees
5.4 Audit committee
5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit
committee.
COMMENT
The key functions of the Bank’s Audit Committee are described in the Regulations of the Audit Committee and
correspond to those specified in legal acts.6
Yes
5.4.2. All members of the committee should be provided with detailed information on specific issues of the
company’s accounting system, finances and operations. The heads of the company’s administration should
inform the audit committee about the methods of accounting for significant and unusual transactions where
the accounting may be subject to different approaches.
COMMENT
As provided for in the Regulations of the Audit Committee, the members of the committee must be provided
with detailed information regarding the specifics of the Bank’s accounting, financial and operational activities.
The Bank’s management staff and persons responsible for accounting and compiling of the financial
statements are required to inform the Audit Committee of the methods of accounting for high-value and non-
standard transactions, if the accounting of these transactions can be managed by different methods as well as
activities in preferential trade zones and/or through specialist entities (enterprises, organisations) in order to
find out whether such activity is justified.
Yes
5.4.3. The audit committee should decide whether the participation of the chair of the management board, the
manager of the company, the chief finance officer (or senior employees responsible for finance and
accounting), the internal and external auditors in its meetings is required (and, if required, when). The
committee should be entitled, when needed, to meet the relevant persons without members of the management
bodies present.
COMMENT
In accordance with the Regulations of the Audit Committee, other employees of the Bank may be invited to
attend the meetings of the Audit Committee (as observers or specialists), but they do not have the right to vote
in decision making. All those present at a meeting of the Audit Committee shall have access to information on
the items on the agenda for which they are invited. Furthermore, in carrying out its duties, the committee shall
be entitled to use the assistance of third parties for the purpose of conducting special investigations or other
tasks and obtaining the necessary funding from the Bank.
Yes
5.4.4. The audit committee should be informed about the internal auditor’s work program and should be
furnished with internal audit reports or periodic summaries. The audit committee should also be informed
about the work program of external auditors and should receive from the audit firm a report describing all
relationships between the independent audit firm and the company and its group.
COMMENT
The Bank’s Audit Committee, ensuring the effectiveness of the internal audit function, coordinates and
periodically assesses the work of internal audit function and discusses the results of inspections, assesses
how the identified deficiencies are being eliminated and internal audit plans are being implemented, and, if
necessary, takes appropriate actions.
In supervising external auditors or audit firms, the committee shall be aware of the auditors’ work programme
including the scope of assignments in the financial statements audit, the materiality level applied, and the
process of identification of significant risks.
Yes
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6 Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the
Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial
Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by the Bank of
Lithuania.
5.4.5. The audit committee should examine whether the company complies with the applicable provisions
regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential
violations committed at the company and should also ensure that there is a procedure in place for
proportionate and independent investigation of such issues and appropriate follow-up actions.
COMMENT
The Audit Committee verifies if the Bank complies with the effective provisions concerning the possibility for
employees to submit complaints or anonymously report suspicions that significant violations are made within
the Bank and aims to ensure that procedures are established for a proportionate and independent investigation
of such issues and for the necessary follow-up. The Audit Committee also may demand information on major
events and non-compliance events, or whether they have been subject to appropriate measures in a timely
manner.
Yes
5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not
formed, to the management board its activity report at least once in every six months, at the time that annual
and half-yearly reports are approved.
COMMENT
The Bank’s Audit Committee reports to the Supervisory Council once a year, when the financial statements are
submitted for approval to the Bank’s General Meeting of Shareholders.
No
VI Principle. Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory and management bodies
to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related
to members of the supervisory and management bodies.
The corporate governance framework should recognize the rights of the stakeholders as established by law and promote
active cooperation between the company and its stakeholders in creating the company's well-being, jobs and financial
stability. In the context of this principle, the term “stakeholders” includes investors, employees, creditors, suppliers,
customers, the local community and others with interests in a particular company.
Any member of the company’s supervisory and management body should avoid a situation where his/her personal
interests are or may be in conflict with the company’s interests. In case such a situation did occur, a member of the
company’s supervisory or management body should, within a reasonable period of time, notify other members of the
same body or the body of the company which elected him/her or the company’s shareholders of such situation of a
conflict of interest, indicate the nature of interests and, where possible, their value.
COMMENT
The recommendations are followed. This is ensured by the provisions of the Rules of Procedure of the Supervisory
Council and the Management Board that a member of the Supervisory Council and the Management Board must avoid
activities that may cause a conflict of interest and that he/she must disclose to the Bank any information that may cause
or has already caused the conflict of interest and keep the information up to date.
The Bank has also approved the Procedure for the Management of Conflicts of Interest, which establishes measures for
the identification, prevention and management of conflicts of interest in the Bank, as well as the rights and duties and
responsibilities of the Bank’s collegial bodies and employees.
Yes
VII Principle. Remuneration policy of the company
The remuneration policy and the procedure for review and disclosure of such policy established at the company should
prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads
of the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and
its long-term strategy.
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7.1. The company should approve and post the remuneration policy on the website of the company; such
policy should be reviewed on a regular basis and be consistent with the company’s long-term strategy.
COMMENT
The Remuneration Policy approved by the General Meeting of Shareholders on 31 March 2020 is published on
the website of the Bank. This policy is in line with the long-term strategy of the Bank and is regularly reviewed
in accordance with the procedure and on terms provided for in the legal acts.
Yes
7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration,
performance-based remuneration, financial incentive schemes, pension arrangements and termination
payments as well as the conditions specifying the cases where the company can recover the disbursed
amounts or suspend the payments.
COMMENT
The Remuneration Policy covers all forms of remuneration applied by the Bank.
Yes
7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of
the collegial bodies which perform the supervisory functions should not receive remuneration based on the
company’s performance.
COMMENT
The applicable Remuneration Policy provides for a fixed remuneration for the members of the Supervisory
Council, independent of the Bank's performance.
Yes
7.4. The remuneration policy should provide sufficient information on the policy regarding termination
payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in
general should not be higher than the non-variable component of remuneration for two years or the equivalent
thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance.
COMMENT
The Remuneration Policy stipulates that the amounts of pay-outs, notice periods related to the termination of
employment or term of office shall be determined in accordance with labour law, except in exceptional cases
when individual conditions are agreed for objective reasons or after evaluating long-term employment in the
Bank or Group companies and decided by the relevant competent body. No prior agreements on severance pay
shall apply, but in exceptional cases and at the discretion of the relevant competent body, such agreements
may occur.
No
7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should
contain sufficient information about the retention of shares after the award thereof. Where remuneration is
based on the award of shares, shares should not be vested at least for three years after the award thereof. After
vesting, members of the collegial bodies and heads of the administration should retain a certain number of
shares until the end of their term in office, subject to the need to compensate for any costs related to the
acquisition of shares.
COMMENT
The Bank has a system of payment of a part of the annual variable remuneration in the Bank’s shares. The
Remuneration Policy and other documents regulating the Bank’s remuneration system provide for the granting
of rights to shares three years after the initial appointment (through the Employee Options). The retention of
shares after the grant is not provided for the members of the Management Board and the Chief Executive
Officer and is in no way linked to the end of their term of office.
No
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7.6. The company should publish information about the implementation of the remuneration policy on its
website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the
next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration
policy was implemented during the previous financial year. The information of such nature should not include
any details having a commercial value. Particular attention should be paid on the major changes in the
company’s remuneration policy, compared to the previous financial year.
COMMENT
The Remuneration Policy approved on 31 March 2020 by the General Meeting of Shareholders of the Bank is in
line with the new provision of the Law on Companies laid down in Article 20(1)(6).
As of 2021, the Bank publishes information on the implementation of the Remuneration Policy.
Yes
7.7. It is recommended that the remuneration policy or any major change of the policy should be included on
the agenda of the general meeting of shareholders. The schemes under which members and employees of a
collegial body receive remuneration in shares or share options should be approved by the general meeting of
shareholders.
COMMENT
In 2019, the General Meeting of Shareholders approved the Rules for Granting Shares in accordance with the
wording of the Law on Companies in force at that time. In 2020, the Ordinary General Meeting of Shareholders
approved the Remuneration Policy. These documents govern the share-based payment option scheme.
Changes in the Rules for Granting Shares and Remuneration Policy are possible only by the decision of the
General Meeting of Shareholders.
Yes
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VIII Principle. Role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual
agreements and encourage active cooperation between companies and stakeholders in creating the company value, jobs
and financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees,
creditors, suppliers, clients, local community and other persons having certain interests in the company concerned.
8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are
protected.
COMMENT
The Bank identifies employees, shareholders, customers, suppliers and partners, regulators, communities and
the public, associates and the media as key stakeholder groups. The rights and legitimate interests of all these
groups are respected, and this is more fully disclosed in the Social Responsibility Report.
Yes
8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate
governance in the manner prescribed by law. Examples of participation by stakeholders in corporate
governance include the participation of employees or their representatives in the adoption of decisions that are
important for the company, consultations with employees or their representatives on corporate governance
and other important matters, participation of employees in the company’s authorized capital, involvement of
creditors in corporate governance in the cases of the company’s insolvency, etc.
COMMENT
Depending on the stakeholder group, participation is made possible. This is explained in more detail in the
Social Responsibility Report.
One of the Bank’s exclusive instruments is employee participation in the share capital through the payment of
part of the annual variable remuneration in the Bank’s shares.
Yes
8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant
information.
COMMENT
Stakeholders are given access to the necessary information, except where the information is confidential.
Yes
8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical
practices to the collegial body performing the supervisory function.
COMMENT
The Bank provides different stakeholder groups with different channels for reporting illegal or unethical
practices. For employees – through the Bank’s internal information system AIS, for shareholders – through
investor relations channels, for customers – through the Remote Call Centre, etc.
Yes
IX Principle. Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues,
including the financial situation, operations and governance of the company.
9.1. In accordance with the company’s procedure on confidential information and commercial secrets and the legal acts
regulating the processing of personal data, the information publicly disclosed by the company should include but not be
limited to the following:
9.1.1. operating and financial results of the company;
COMMENT
Disclosed quarterly in interim and annual financial statements.
Yes
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9.1.2. objectives and non-financial information of the company;
COMMENT
Disclosed in interim and annual financial statements.
Yes
9.1.3. persons holding a stake in the company or controlling it directly and/or indirectly and/or together with
related persons as well as the structure of the group of companies and their relationships by specifying the
final beneficiary.
COMMENT
It is disclosed on the Bank’s website and in its interim and annual statements. The acquisition or disposal of a
stake is also publicly announced when the person or group of persons who have acquired or lost the stake
inform the Bank thereof in accordance with the established procedure.
Yes
9.1.4. members of the company’s supervisory and management bodies who are deemed independent, the
manager of the company, the shares or votes held by them at the company, participation in corporate
governance of other companies, their competence and remuneration;
COMMENT
It is disclosed on the Bank’s website and in its interim and annual statements.
Yes
9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members
during the last year as well as the main directions and results of their activities;
COMMENT
Information on the composition and activities of the Committees is disclosed in an annual report. The number
of committee meetings and attendance by the members shall not be disclosed.
No
9.1.6. potential key risk factors, the company’s risk management and supervision policy;
COMMENT
Information on the Bank’s risk management and supervision is disclosed in the annual financial statements.
Yes
9.1.7. the company’s transactions with related parties;
COMMENT
It is disclosed on the Bank’s website in accordance with the criteria established by legal acts and internal
documents of the Bank.
Yes
9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy,
participation of employees in corporate governance, award of the company’s shares or share options as
incentives, relationships with creditors, suppliers, local community, etc.);
COMMENT
It is disclosed on the Bank’s website in accordance with the criteria established by legal acts and internal
documents of the Bank.
Yes
9.1.9. structure and strategy of corporate governance;
COMMENT
It is disclosed on the Bank’s website and in its interim and annual statements.
Yes
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9.1.10. initiatives and measures of social responsibility policy and anti-corruption fight, significant current or
planned investment projects.This list is deemed minimum and companies are encouraged not to restrict
themselves to the disclosure of information included into this list. This principle of the Code does not exempt
companies from their obligation to disclose information as provided for in the applicable legal acts;
COMMENT
Information on environmental, social and governance (ESG) aspects and the management of these risks is
disclosed in the Social Responsibility Report.
Information on significant investment projects planned and implemented within the scope of the Bank’s
activities is published as essential information of the issuer through the regulated information publication
system administered by Nasdaq.
Yes
9.2. When disclosing the information specified in paragraph 9.1.1 of recommendation 9.1, it is recommended
that the company which is a parent company in respect of other companies should disclose information about
the consolidated results of the whole group of companies.
COMMENT
The Bank discloses consolidated results for the Group as a whole through consolidated interim and annual
statements and consolidated annual report.
Yes
9.3. When disclosing the information specified in paragraph 9.1.4 of recommendation 9.1, it is recommended
that the information on the professional experience and qualifications of members of the company’s
supervisory and management bodies and the manager of the company as well as potential conflicts of interest
which could affect their decisions should be provided. It is further recommended that the remuneration or
other income of members of the company’s supervisory and management bodies and the manager of the
company should be disclosed, as provided for in greater detail in Principle 7.
COMMENT
Information on the professional experience, qualifications and potential conflicts of interest of the Bank’s
Supervisory Council, Management Board and Chief Executive Officer that could affect their decisions is
disclosed.
The Consolidated Annual Report and the Consolidated Financial Statements disclose information on the total
personnel costs, the salaries paid to key executives of the Bank during the year; the Remuneration Report
provides detailed information on the remuneration received by each member of the collegial body.
Yes
9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in
terms of the method of receipt and scope of information. Information should be disclosed to all parties
concerned at the same time.
COMMENT
Information is provided to shareholders and investors to the same extent and simultaneously in the Lithuanian
and English languages and is publicly available on the Bank’s website.
Yes
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X Principle. Selection of the company’s audit firm
The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.
10.1. With a view to obtain an objective opinion on the company’s financial condition and financial results, the
company’s annual financial statements and the financial information provided in its annual report should be
audited by an independent audit firm:
COMMENT
The Bank’s consolidated financial statements are audited, and the financial information presented in the annual
report is audited by an independent firm of auditors in accordance with the International Standards on Auditing
as adopted by the EU.
Yes
10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the
supervisory board or, if the supervisory board is not formed at the company, by the management board of the
company.
COMMENT
The candidate audit firms are selected by the Audit Committee and proposed to the General Meeting of
Shareholders by the Supervisory Council.
Yes
10.3. In the event that the audit firm has received remuneration from the company for the non-audit services
provided, the company should disclose this publicly. This information should also be available to the
supervisory board or, if the supervisory board is not formed at the company, by the management board of the
company when considering which audit firm should be proposed to the general meeting of shareholders.
COMMENT
The fee information for the audit firm for non-audit services (if any) would be disclosed publicly in the Bank’s
consolidated annual reports. The Supervisory Council and the Management Board have this information at
their disposal.
Yes
Clause 3. Information on risk scope and risk management - describes risk management related to financial reporting, risk mitigation
measures and the internal control system in place.
More details are provided in the Financial Risk Management disclosure in notes to the financial statements for the year 2021 and on the
internal control system in the Consolidated Annual Report 2021.
Clause 4. Information on significant direct or indirect holdings.
As of 31 December 2021, the following shareholdings have been declared in accordance with the procedure established in the Law on
Securities of the Republic of Lithuania and the disclosure rules of the Bank of Lithuania:
▪European Bank for Reconstruction and Development (EBRD) holds 21.96% stake, which was reported on 30 December 2021.
▪Algirdas Butkus together with his controlled companies Aiva Trading House UAB and Mintaka UAB holds a stake, the
acquisition of which was reported on 18 September 2019. The size of the stake on the reporting date was 5.59%, it accounted
for 5.28% of the Bank’s shares as at 31 December 2021.
▪Gintaras Kateiva together with his spouse Vilinda Kateiviene own a 5.29% stake, the acquisition of which was reported on 18
September 2019.
▪Invalda INVL AB owns a holding of more than 5 per cent of the shares, the acquisition of which was reported on 17 September
2015. The size of the stake on the reporting date was 6.79%; as of 31 December 2021, the holding of Invalda INVL AB owned
together with subsidiaries INVL Asset Management UAB and INVL Live UAB accounted for 8.10% of the Bank’s shares.
▪ME Investicija UAB holds a 5.71% stake, which was reported on 29 December 2021.
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Clause 5. Information on related party transactions as provided for in Article 372 of the Law on Companies (identifying the parties to
the transaction (legal form, name, code, register of the legal entity, register where the data concerning this entity are collected and
stored; natural person's name, address for correspondence) and transaction value).
Pursuant to the provisions of the Law on Companies of the Republic of Lithuania, the Management Board of the Bank approved the
Procedure for Concluding Transactions with Parties Related with the Bank. This procedure defines transactions that have a significant
impact on the Bank, the Bank’s finances, assets and liabilities. Pursuant to the Articles of Association of the Bank (paragraph 12.3),
transactions are considered significant if their value is equal to or greater than 1/5 of the Bank’s authorised capital.
In 2021, the Bank published on its website one notice regarding a significant transaction with parties related with the Bank:
NOTIFICATION 10/03/2021
Transactions entered with SB Lizingas UAB, subsidiary of Šiaulių Bankas AB
Company code 234995490, address Laisvės al. 80/Maironio str. 26 Kaunas.
Transaction information:
▪credit limit: EUR 110,000,000 (maturity – 30/03/2022, interest rate – 2.6 per cent)
Credit transactions with the party related with Šiaulių Bankas AB were concluded in the ordinary course of business of Šiaulių Bankas
under standard market conditions. According to the assessment of Šiaulių Bankas AB, credit transactions and credit transaction terms
and conditions are fair and reasonable in relation to Šiaulių Bankas AB and its shareholders who are not parties to these credit
transactions.
Clause 6. Information on and description of shareholders having special control rights.
There are no shareholders with special control rights in the Bank.
Clause 7. Details of any existing restrictions on voting rights, such as restrictions on the exercise of voting rights by a certain
percentage or number of persons, the time limits by which voting rights may be exercised or the systems by which ownership of the
securities is separated from the shareholder.
As of 31 December 2021, the Bank was not aware of any restrictions on the voting rights attached to the Bank’s shares, the time limits
for exercising the voting rights, or any voting rights conferred by these shares separated from the shareholder under any systems.
Clause 8. Information on the rules governing the election and replacement of the members of the Board as well as amendments to the
Charter of the Company.
According to the Bank’s Articles of Association, the members of the Management Board are elected, removed and supervised by the
Bank’s Supervisory Council. The selection of the members of the Management Board is carried out in accordance with the Regulations
on the Selection of Management Board Members, and the evaluation of the candidates to the Management Board is carried out in
accordance with the Policy on the Assessment of Members of the Management body and Key Function Holders. In accordance with
this policy, the Nomination Committee evaluates the candidate and recommends that the appointing/electing person/body make a final
decision on the respective position in the Bank. A member of the Management Board must also obtain the permission of the
supervisory authority before taking up his/her duties at the Bank.
The Bank’s Articles of Association are amended by the General Meeting of Shareholders of the Bank. Decisions on the amendment of
the Articles of Association are adopted by a majority of votes, which may not be less than 2/3 of all votes granted by the shares of the
shareholders participating in the meeting.
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Clause 9. Information on the powers of board members.
The Management Board of the Bank is a collegial management body of the Bank consisting of seven (7) members. The term of office
of the Management Board is four years and the number of terms is not limited. If individual members of the Management Board are
elected, they are elected until the end of the term of office of the existing Management Board. The Management Board acts in
accordance with its Rules of Procedure.
The Bank’s Management Board shall consider and approve:
•the Bank's annual report;
•the governance structure of the Bank and positions of employees; positions for which persons are hired by holding
competitions;
•regulations of the branches, representative offices and other separate subdivisions of the Bank;
•the Bank’s lending procedure in accordance with the Lending Policy approved by the Bank’s Supervisory Council;
•the procedure for issuing guarantees, sureties and assuming other obligations;
•the procedure for writing off loans and other debt obligations;
•regulations of the Loan Committee and Risk Management Committee of the Bank;
The Management Board also elects/appoints and removes the Chief Executive Officer of the Bank and his/her deputies, determines the
remuneration of the Chief Executive Officer, other terms and conditions of his/her employment contract, approves his/her job
description, promotes him/her and imposes sanctions, determines which information is considered a trade secret and confidential
information of the Bank.
The Management Board shall adopt:
•decisions on the Bank becoming the promoter and/or participant of other legal entities;
•decisions on opening branches, representative offices and other separate subdivisions of the Bank and on terminating their
activities;
•decisions on the investment, transfer or lease of fixed assets with the book value exceeding 1/20 of the Bank’s authorised
capital (calculated separately for each type of transaction);
•decisions on the pledge and mortgage of fixed assets with the book value exceeding 1/20 of the Bank’s authorised capital (the
total amount of transactions is calculated);
•decisions on the issue of guarantees or sureties to secure obligations of other entities in the amount exceeding 1/20 of the
Bank’s authorised capital;
•decisions on the acquisition of fixed assets for a price exceeding 1/20 of the Bank’s authorised capital;
•decisions to issue non-convertible bonds;
•Rules of Procedure of the Management Board;
•decisions on other matters that are considered or decided by the Management Board under the laws and Articles of
Association of the Bank.
The Management Board shall set forth:
•the terms and conditions of issue of the Bank’s shares;
•the procedure for issuing the Bank’s bonds. When the General Meeting decides on the issue of convertible bonds, the
Management Board shall have the right to determine additional terms and conditions of their issue and approve the
subscription agreements which the Chief Executive Officer or a person authorised by him/her is entitled to sign;
•the recruitment procedure and cases in which employees are hired by the Bank with the approval of the Management Board.
The Management Board shall execute resolutions passed by the General Meeting of Shareholders and the Supervisory Council.
The Management Board shall analyse and evaluate the materials submitted by the Chief Executive Officer of the Bank concerning:
•the strategic business plan of the Bank and information on its implementation;
•organisation of the Bank’s activities;
•the Bank’s financial position;
•results of economic activity, revenue and expenditure estimates, inventory and other records of changes in assets.
The Management Board analyses and evaluates the draft Rules for Granting Shares and submits it to the Supervisory Council and the
General Meeting of Shareholders along with the feedback and proposals. The Management Board, furthermore, analyses and
assesses the set of annual financial statements of the Bank and profit/loss distribution project, and submits them to the Supervisory
Council and the General Meeting of Shareholders together with the annual report of the Bank, and handles other matters related to the
business of the Bank if they do not fall within the competence of other bodies of the Bank under the laws or Articles of Association of
the Bank.
The Management Board is responsible for convening and organising the General Meetings of Shareholders in a timely manner.
Clause 10. Information on the competence of the general meeting of shareholders, rights of shareholders and their implementation, if
not provided by law.
The competence of the General Meeting of Shareholders, the rights of shareholders and exercise thereof do not differ from those
provided by law.
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Clause 11. Information on the composition of the management, supervisory bodies and their committees, areas of their and company
head’s activity.
The Supervisory Council is a collegial body supervising the activities of the Bank. The Supervisory Council is chaired by the
Chairperson. The Bank’s Supervisory Council, consisting of eight (8) members, is elected by the General Meeting of Shareholders for a
period of four years. The members of the Supervisory Council are proposed to the General Meeting by the initiators of the General
Meeting or shareholders holding 1/20 of the Bank’s shares.
Candidates are proposed before or during the meeting. Each candidate to the Supervisory Council shall inform the General Meeting of
his/her duties and responsibilities, as well as his/her other activities related to the Bank and other legal entities related to the Bank.
In the election of the members of the Supervisory Council, each shareholder shall have the number of votes attributable to the shares
he/she holds multiplied by the number of members of the Supervisory Council being elected. These votes are distributed at the
shareholder’s discretion, for one or more candidates. The candidates who receive most votes shall be elected.
Five (5) independent members were elected to the Supervisory Council for this term. The Articles of Association of the Bank provide
that the number of terms of office of a member of the Supervisory Council shall not be limited.
The functions of the Supervisory Council are as follows:
▪considers and approves the Bank’s business strategy, analyses and assesses information on the implementation of the Bank’s
business strategy, provides this information to the Ordinary General Meeting of Shareholders;
▪elects members of the Management Board and removes them from office, submits proposals to the Management Board
regarding the candidacy of the Chairperson of the Management Board. Setting the remuneration and other terms and
conditions of employment contracts of the members of the Management Board who hold other positions in the Bank, the Chief
Executive Officer and his/her deputies requires prior approval of the Supervisory Council. If the Bank is operating at a loss, the
Supervisory Council must consider whether the members of the Management Board are suitable for the position;
▪elects members of the Audit Committee;
▪supervises activities of the Management Board and the Chief Executive Officer of the Bank;
▪supervises the implementation of business plans of the Bank, analyses the Bank’s revenue and expenses, own investments
and capital adequacy issues;
▪adopts the Rules of Procedure of the Supervisory Council of the Bank;
▪approves business plans and annual budget of the Bank;
▪approves any type of policies related to the Bank’s activities including the risk management policy;
▪ensures that the Bank has an efficient internal control system in place;
▪submits to the General Meeting of Shareholders feedback and proposals on the draft Rules for Granting Shares;
▪makes proposals and comments to the General Meeting of Shareholders on the draft set of annual financial statements of the
Bank, profit/loss distribution project and report of the Bank, and the activities of the Management Board and Chief Executive
Officer;
▪makes proposals to the Management Board and Chief Executive Officer to revoke their decisions that contradict the laws and
other legal acts, the Articles of Association of the Bank or decisions of the General Meeting of Shareholders;
▪submits to the General Meeting of Shareholders and the Management Board comments and proposals regarding the draft
remuneration policy of public limited liability companies whose shares are admitted to trading on a regulated market and the
draft remuneration report;
▪approves the lending policy and sets forth the procedure for lending that is subject to the approval of the Supervisory Council;
▪makes proposals to the Management Board and Chief Executive Officer to revoke their decisions that contradict the laws and
other legal acts, Articles of Association of the Bank or decisions of the General Meeting of Shareholders;
▪draws up the list of transactions and decisions of the management bodies of the Bank, the conclusion/adoption or execution of
which requires the approval of the Supervisory Council;
▪passes decisions that fall within the competence of the Supervisory Council under the procedures approved by the
Supervisory Council, which the Supervisory Council is required to adopt in accordance with the laws, Articles of Association of
the Bank and decisions of the General Meeting of Shareholders;
▪considers and decides on other matters that must be considered or decided on by the Supervisory Council under the laws,
Articles of Association of the Bank and decisions of the General Meeting of Shareholders.
Management Board of the Bank – see Clause 9.
Chief Executive Officer (CEO) is a single-person management body of the Bank who organises day-to-day activities of the Bank and
performs other actions necessary to perform his/her functions, implement the decisions of the Bank’s bodies and ensure the Bank’s
activities.
Functions of the Chief Executive Officer of the Bank:
▪to organise day-to-day activities of the Bank;
▪to hire and dismiss employees of the Bank, conclude and terminate employment contracts concluded with them, provide
incentives to them and impose sanctions on them. The CEO is entitled to authorise another Bank employee to perform actions
listed herein;
▪to represent the Bank in dealings with other persons, in a court and arbitral tribunal without a separate authorisation;
▪to issue and revoke authorisations to represent the Bank and powers of procurations;
▪to issue orders;
▪to perform other actions necessary to perform his/her functions, implement decisions of the Bank’s bodies and ensure the
Bank’s activities.
Chief Executive Officer is responsible for:
▪organising the Bank’s activities and achieving its goals;
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▪drawing up a set of financial statements and annual report of the Bank;
▪concluding an agreement with the audit firm;
▪submitting information and documents to the General Meeting of Shareholders, the Supervisory Council and the Management
Board in the cases provided for in the laws or at the request of the respective bodies;
▪submitting documents and data of the Bank to the manager of the Register of Legal Entities;
▪submitting documents to the Bank of Lithuania and Lithuanian Central Securities Depository;
▪publishing information required by laws and other regulations in sources specified in the Articles of Association of the Bank;
▪submitting information to the shareholders;
▪fulfilling other duties provided for in laws and regulations, Articles of Association of the Bank and job description of the Chief
Executive Officer of the Bank.
The Chief Executive Officer of the Bank shall act on behalf of the Bank and shall have the right to conclude transactions unilaterally,
except as otherwise provided for in the Articles of Association of the Bank or decisions of the Bank’s bodies.
More information about the composition of management bodies and committees is provided in the summary to this report and the
consolidated annual report for 2021, section Bank Management.
Clause 12. The selection of the chief executive officer, members of the management body and supervisory bodies shall be subject to a
diversity policy covering aspects such as age, gender, education, professional experience, description, objectives, methods of
implementation and results for the reporting period. If the diversity policy is not applied, the reasons for the exclusion shall be explained.
The Bank does not apply the Diversity Policy, as the Bank is guided by such internal documents as the Code of Ethics which states that
no forms of inequality, violence, psychological or similar pressures or forms of discrimination are tolerated. The requirements set for the
selection of candidates for the position of the CEO, members of management and supervisory bodies of the Bank do not discriminate
against candidates on the basis of age, gender, race, etc. The main criteria for the election of members of the management and
supervisory bodies and the CEO of the Bank are education, professional experience, knowledge, skills and reputation.
Clause 13. Information on all the agreements between the shareholders (their substance, terms).
The Bank does not have any information about any mutual agreements between the shareholders related to the Bank’s shares effective
as of 31 December 2021.
It should be noted that on 22/12/2021, the major shareholder of the Bank, i.e., the European Bank for Reconstruction and Development
(EBRD), announced that it has signed three agreements on the sale of the Bank’s shares: with an asset management group Invalda
INVL, Nord Security (to be renamed as Tesonet Global) which is part of the Tesonet Group, and a holding company ME Investicija
controlled by Girteka Logistics. The EBRD has sold its holdings of 5.87 per cent, 5.87 per cent and 6.29 per cent of shares,
respectively. The transactions are executed in instalments and shall be closed in June 2024.
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SOCIAL RESPONSIBILITY REPORT 2021
Prepared in accordance with the Global Reporting Initiative standard
(Annex to the Consolidated Annual Report for 2021)
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, faks. (8 41) 430 774
El. paštas info@sb.lt
www.sb.lt
ABOUT THE REPORT
This report presents Corporate Social Responsibility Report of Šiaulių bankas for the months of January–December 2021. The report
highlights the Bank’s relationship with its employees, customers and the community in the areas of environment and responsibility.
Since 2010, the Bank has been submitting detailed social responsibility reports every year, which are published and made available to
the public in the Social Responsibility section of the Bank’s website.
Šiaulių bankas has been a member of the Global Compact initiated by the United Nations since 2008. The Bank follows the principles
of the Global Compact in its social reporting and this year for the fifth time is submitting a report based on the recommendations of the
Global Reporting Initiative (GRI).
For questions and comments on the Social Responsibility Report, please contact komunikacija@sb.lt
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CEO’S ADDRESS
GRI 102-14
The year 2021 was a truly memorable year full of global challenges, which highlighted the importance of a clear and consistent
development of social responsibility in Šiaulių bankas. By following its core principles, we were able to maintain a balance between the
implementation of non-routine solutions and stability and to make appropriate business decisions in a pandemic situation.
Last year, we introduced a new three-year strategy for Šiaulių bankas Group, which defined our objectives both at the bank and at the
Group level. Throughout the year, we have kept to our guiding principle and our promise to be closer to our customers, communities
and Lithuania: we have actively developed our digital channels, pursued our strategy of streamlining rather than closing down our
customer service network, and, in line with the new habits formed by the pandemic, we have paid a great deal of attention to remote
customer service. Moreover, while increasing Šiaulių bankas’ reach to our customers throughout Lithuania, we have also expanded our
ATM network.
I am glad that all this has not gone unnoticed and Šiaulių bankas has been recognised for the third time as the best customer-servicing
bank, with a service rating of 100% in 2021, which is the best rating received in the last four years.
In 2021, we paid special attention to the safety and health of Šiaulių bankas’ employees and customers, and we also paid special
attention to the care of those around us or in need of support. We constantly encourage and develop sustainable thinking in our people,
so before making any decisions, we always ask ourselves how it will affect the environment, people and everyone around us.
Working together in 37 cities across Lithuania, we can not only be even closer to our local communities, but also become part of them,
and socially responsible activities give meaning to our work. I invite you to find out what we have focused on in 2021 and how Šiaulių
bankas approaches sustainability.
Šiaulių bankas Chief Executive Officer
Vytautas Sinius
STRATEGY AND ANALYSIS
GRI 102-14, GRI 102-15
Strategy
In 2021, the Bank presented its three-year operational strategy, which will focus on the area of sustainability (ESG). The Bank is
currently in the process of developing its ESG strategy. The process of developing it is one of the key strategic challenges that will
enable the Bank to transform and grow further as an organisation in the area of sustainability. The Bank plans to adopt the ESG
strategy and integrate its elements into the Bank’s business strategy in 2022.
Key impacts, risks and opportunities
The Bank continuously assesses potential risks and opportunities, taking into account the nature of the Group’s businesses and its
long-term strategy. ESG risk was identified as a strategically significant risk for the Bank's future activities.
As the organization we are accountable to supervisory authorities, investors and our customers.
Economy
The Bank contributes to the sustainable growth of the Lithuanian economy every day. By offering a wide range of financing instruments
for small and medium-sized enterprises, the Bank aims to promote the activity, development and growth of these companies. In the
context of the pandemic, we are actively involved in all measures to support businesses, providing risk-sharing loans, in cooperation
with INVEGA and other guarantee funds, and providing loans with portfolio and individual guarantees.
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Social area
Šiaulių bankas contributes to the well-being of society by supporting cultural, financial literacy, sports and social initiatives. It also
promotes entrepreneurship among the population and regularly delivers presentations on business development opportunities, and
increases financial education of the public by initiating media reports.
To help small businesses in Lithuania during the pandemic, Šiaulių bankas has developed the PLANAS A initiative, which has been
running for the second year now and is designed to make them more visible and to take advantage of the offers and experience of large
Lithuanian companies.
Environment
The Bank aims to protect the environment and consistently reduce the amount of resources consumed by digitising processes and
encouraging its employees to sort waste and use reusable tools.
As the main partner in the renovation of apartment buildings in the country, the Bank contributes to energy efficiency improvement
projects.
Metrics and targets
One of the most important steps in the development of the ESG strategy is the definition of objectives and metrics that adequately
reflect the specificities of the Bank’s activities and contribute to the global objectives. The Bank’s targets and metrics are part of the
ESG strategy under development, elements of which will be integrated into the Bank’s business strategy in 2022.
DESCRIPTION OF THE COMPANY
GRI 102-1, GRI 102-2
Established in 1992, Šiaulių bankas is a sustainable and stable growing financial institution with a diversified shareholder base spread
across Lithuanian and foreign shareholders, including the European Bank for Reconstruction and Development (EBRD), which holds
21.96% of the Bank’s shares.
By providing professional financial services to private and corporate clients, the Bank aims to be a reliable, flexible and attentive
financial partner that is committed to the growth of the country’s potential and the prosperity of its population and businesses.
The Bank’s priority areas of activity are:
•Business financing;
•Consumer financing;
•Financing of multi-apartment building modernisation projects.
Services for private and corporate customers:
•Provision of a wide range of short-term and long-term loans to private customers and businesses;
•Banking service plans for a fixed monthly fee (for private customers);
•Opening and administration of bank accounts in euro and foreign currency for Lithuanian and foreign clients;
•Transfer of funds in euro and foreign currency to accounts in banks operating in Lithuania and abroad;
•Collection of utility and other payments;
•Electronic account service, periodic and conditional payments;
•Account management in online banking;
•Mobile banking services;
•Issuance and administration of payment cards;
•Foreign exchange trading;
•Conclusion of various types of deposit agreements;
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•Investment services:
◦Intermediation in transactions on stock exchanges;
◦Off-exchange securities transactions;
◦Advising on the issue, acquisition and transfer of securities;
◦Keeping records of shares issued by companies;
◦Issuance of debt securities;
◦Drafting prospectuses for securities issues;
◦Other investment services.
GRI 102-7, GRI 102-8, GRI 102-11
Information on employees and other workers
On 31 December 2021, the Bank had 789 employees and the Group had 882 employees. Compared to 31 December 2020, the
number of employees in the Bank increased by 4.4% and in the Group by 3.9%.
On 31 December 2021, the Bank's workforce was 80% female and 20% male.
Precautionary principle or approach
See criterion 102-30 of the report.
More: “Financial risk management” in the notes to the 2021 financial statements.
GRI 102-12, GRI 102-13
External initiatives
Šiaulių bankas has been a participant of the United Nations Global Compact initiative since 2010. We also participate in other external
activities/initiatives related to sustainability:
•We are reporting according to the international CDP standard;
•We are members of the Sustainability Committee of the Lithuanian Banks Association.
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Membership in associations
Organisations, associations and associated structures in which the Bank participates:
•Lithuanian Banks Association
•Society for Worldwide Interbank Financial Telecommunications (SWIFT)
•Nasdaq Baltic Stock Exchanges (Nasdaq Vilnius, Nasdaq Riga, Nasdaq Tallinn)
•MasterCard Worldwide International Payment Card Organisation
•Lithuanian Employers’ Confederation
•Šiauliai Chamber of Commerce, Industry and Crafts
•Šiauliai Association of Industrialists
•Kelmė District Entrepreneurs Association
•Klaipėda Chamber of Commerce, Industry and Crafts
•Klaipėda Association of Industrialists
•Mažeikiai Entrepreneurs Association
•Akmenė District Entrepreneurs Association
•Kaunas Chamber of Commerce, Industry and Crafts
•Panevėžys Chamber of Commerce, Industry and Crafts, Utena Branch
•Tauragė County Entrepreneurs Association
•Panevėžys Chamber of Commerce, Industry and Crafts
•Vilnius Chamber of Commerce, Industry and Crafts
•Šilalė District Entrepreneurs Association
•Lithuanian Finance Brokers Association
•Association of Personnel Management Professionals
BNI Recommendation Marketing Service (Rekomendacijos verslui UAB)
ETHICS AND INTEGRITY
GRI 102-16
The Bank’s four sustainable values (Trust, Professionalism, Respect, Responsibility) were articulated by the Bank’s own employees at
the 2014 Global Bank Conference.
To make the Bank’s values and the behaviours that define them easier to understand and accept, the Bank has been playing the values
game since 2015. The aim was to identify the behaviours that most closely match the Bank’s values in everyday situations. The values
game encouraged employees to collaborate, exchange views and reach a common decision. The game was played at the quarterly
Newcomer Days and was played by all new employees. During the pandemic, Newcomer Days are held virtually, so we talk, tell and
play about values and the behaviours that go with them remotely.
The Bank follows a Code of Ethics – no inequality, violence, psychological or other forms of pressure and discrimination are tolerated at
work.
The Bank has a common anonymous reporting section on the intranet for the Compliance Officer, through which any employee can
report a breach of any regulatory requirement enforced by the Bank. When such a report is received, it is investigated and, if suspicions
are confirmed, the necessary action is taken swiftly to remedy the breach.
The Customer Service Standard defines the conduct of employees in serving customers.
The Bank’s employees are guided in their daily activities by three sets of fundamental principles:
•Bank values
•Code of Ethics
•Customer Service Standard
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GRI 102-17, GRI 102-18
Whistleblowing mechanisms and ethical issues
The Bank has mechanisms for anonymous reporting to the Compliance Officer and the Chair of the Bank’s Nomination Committee.
Anonymous reports can be made at any time of the day on the Bank’s intranet. The mechanism for reporting to the Compliance Officer
is designed to report any criminal offences, administrative offences or potentially illegal acts by employees of the Bank Group (including
managers), such as theft of assets of the Bank, its customers, partners, employees, fraud, abuse of office, conflicts of interest,
suspected breach of the provisions of the Bank’s Code of Ethics or non-compliance with the requirements of the legislation governing
the Bank's activities, etc. The Bank’s Compliance Department is responsible for this mechanism.
The mechanism for reporting to the Chair of the Bank’s Nomination Committee enables confidential (and, if desired, anonymous)
reporting of any violation or suspected violation of an opinion of an individual member of the Bank’s organ or of a small group of
members which may be prejudicial to the interests of the Bank.
All reports are confidential and, if the whistleblower so wishes, anonymous. All new Bank employees are introduced to whistleblowing
channels at their induction training.
Information on ethical and unethical behaviour is contained in the Bank’s Code of Ethics.
No whistleblowing reports were received during 2021.
GOVERNANCE OF THE COMPANY
GRI 102-22, GRI 102-23, GRI 102-24, GRI 102-20, GRI 102-26
Governance structure
General Meeting of Shareholders
Supervisory Board – collegial supervisory body
Management Board – collegial management body
Chief Executive Officer – a single-person management body
Committees – the Bank has Risk, Audit, Nomination, Remuneration, Loan, Risk Management and Regional Loan Committees.
For more information, please see the sections “Governance of the Bank” and “Committees of the Bank and their activities”
in the Annual Report.
Identification and management of economic, environmental and social impacts
Oversight of the management of ESG risks (including climate and environmental risks) in the Bank is carried out by several governing
bodies:
•The Bank’s Supervisory Board and the Risk Committee are the highest level governance bodies responsible for overseeing
the management of ESG risks in the Bank.
•At the Bank’s Board level, the Chief Risk Officer (CRO) is responsible for the direct oversight of ESG risk management,
reporting directly to the Bank’s Chief Executive Officer (CEO).
•The Chief Risk Officer (CRO) chairs the Bank’s Risk Management Committee, which takes decisions related to ESG risk
management.
•The Chief Risk Officer chairs the Sustainable Performance Group, which is an advisory body on ESG risk and ESG strategy.
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The ESG strategy is integral to the management of ESG risk in the Bank. The following governance bodies oversee the development
and implementation of the ESG strategy in the Bank:
Composition and selection of the Bank’s supervisory and management bodies
The Supervisory Board is the collegial body supervising the Bank’s activities. The members of the Supervisory Board are elected and
dismissed by the General Meeting of Shareholders. The Supervisory Board is currently composed of 8 (eight) members, 5 (five) of
whom are independent. The Supervisory Board is chaired by its Chairperson. The term of office of the Supervisory Board is four years.
There is no limit to the number of terms of office. If individual members of the Supervisory Board are elected, they hold office until the
end of the term of office of the current Supervisory Board.
The Management Board is the collegial management body of the Bank and ensures the proper conduct of the Bank’s business. The
members of the Management Board are elected, dismissed and supervised by the Supervisory Board of the Bank. The Management
Board is currently composed of 7 (seven) members. The term of office of the Management Board is four years. There is no limit to the
number of terms of office. If individual members of the Management Board are elected, they hold office until the end of the term of office
of the current Management Board.
The Chief Executive Officer of the Bank is the Bank’s single-person governing body. The Chief Executive Officer of the Bank
organises the day-to-day activities of the Bank, takes decisions on the Bank’s activities, acts on behalf of the Bank and ensures the
proper implementation of the Bank’s strategy, objectives, plans and policies. The Bank’s Chief Executive Officer is appointed and
dismissed from office by the Board.
•The Bank’s Management Board is the highest level governance body responsible for the final approval of the ESG strategy
and its integration into the Bank’s strategy.
•The Bank’s Supervisory Board is introduced to the ESG strategy.
•The Sustainability Group, chaired by the Head of Risk Management, is an advisory body on the development and
implementation of the ESG strategy.
For more information, please see the sections “Governance of the Bank” and “Committees of the Bank and their activities” in
the Annual Report.
GRI 102-25, GRI 102-26, GRI 102-27, GRI 102-28, GRI 102-29
Conflicts of interest
Members of the Bank’s Supervisory Board and Management Board act in the best interests of the Bank and its shareholders by
avoiding conflicts of interest. All transactions with the Bank’s management are at arm’s length. The Bank’s Management Board’s Rules
of Procedure stipulate that a member of the Management Board must avoid activities that may give rise to a conflict of interest. A
member of the Board must disclose to the Bank, before taking up his/her duties, any information that may give rise to a conflict of
interest and keep this information up to date. A member of the Board is not entitled to vote or participate in a meeting of the Board when
a matter relating to his/her activities on the Board or his/her responsibilities is being considered, or when matters in which the member
may have an interest are being discussed, or when the lack of objectivity of the member of the Board may put the Bank at risk.
More: Note 30 to the 2021 financial statements.
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The role of the supervisory and management bodies in determining the aim, values and strategy
The Supervisory Board approves the Bank’s strategy. The Management Board analyses and evaluates the material provided by the
Bank’s CEO on the implementation of the Bank’s strategy and the organisation of the Bank’s activities.
Collective knowledge of the supervisory and management bodies
Members of the Management Board regularly participate in the most important economic conferences in the country. Once a year, a
strategic session of the top management takes place, where members of the Management Board and Supervisory Board hear
presentations on topics ranging from global economic trends to the social or demographic environment, innovation, strategic
management, etc.
GRI 102-30, GRI 102-32
Effectiveness of risk management processes
Šiaulių bankas Group conducts an annual self-assessment. During this process, it analyses the types of risks that may arise from
banking activities and have a significant impact on the Bank Group. The most important risks faced by the Group are: credit, market,
liquidity, concentration, operational, IT, model, banking book interest rate, insurance and compliance risks.
More: “Financial risk management” in the notes to the 2021 financial statements.
The role of the supreme governing body in sustainability reporting
The report is reviewed by the Bank’s Chief Executive Officer.
The Bank analyses, assesses, assumes and manages the risks or groups of risks it faces in its operations.
The risk management policy approved by the Bank’s Supervisory Board and the procedures for managing the different types of risks
based on it help to ensure the integrity of the risk management process within the Group.
The objective of the Risk Management Policy is to define the risks and the principles of their management in the Group’s activities. As
the various risks faced by the Group are interlinked, their management is centralised and the Bank has a Risk Management Committee
for this purpose. One of the main objectives of the Bank’s Risk Management Committee is to organise and coordinate the risk
management system. The Group reviews its risk management procedures and systems on a regular basis, at least once a year, taking
into account market developments, new products and emerging best practices.
GRI 102-15, GRI 102-29
Key impacts, risks and opportunities
In 2021, the Bank identified ESG risk as a strategically significant risk to the Bank’s future operations. The current focus is on climate
and environmental risks (the environmental component), of which the most important are transition and physical risks, but the Bank is
not limited to this and will continue to pay appropriate attention to social and governance risks. More detailed information on ESG and
climate and environmental risks is provided in the Consolidated Annual Report.
Climate and environmental risk assessment
In 2021, a project was carried out with external consultants to assess potential climate and environmental risks and their impact on the
Bank’s standard risks – credit, market, liquidity, strategic (business model), compliance, operational and reputational risks. It was
decided to identify ESG risks (together with climate and environmental risks) as a separate category in the Bank’s Risk Appetite
Document and Risk Map and to manage them through the management of credit, market, liquidity, operational and reputational risks.
The impact of climate and environmental risks on these risks may vary over time. The Bank’s assessment of the significance of climate
and environmental risks is made by focusing on these time periods:
Period
Years
Short
<1
Medium
1–5
Long
5–30
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The following transition and physical risk factors have been identified by the project and will be the focus of the Bank’s attention in the
short and medium term:
Risks
Key risk factors
Transition risks
Physical risks
Credit
Regulatory changes related to GHG – manifested through the
impact on the Bank’s clients and collateral
Floods, heavy rains, droughts – manifested through the impact on
the Bank’s clients and collateral
Market
Regulatory changes related to GHG – manifested through
interest rate risk and issuer credit risk
Floods, heavy rains, droughts – potential impact on securities issued
by Lithuanian companies, securities issued by companies or
governments in other EU countries (physical risk specific to that
country). Risk factors manifest themselves through interest rate risk
and issuer credit risk
Liquidity
Regulatory changes related to GHG – manifested through the
impact on cash flows and the exhaustion of the liquidity buffer
due to asset revaluation
Floods, heavy rains, droughts – manifested through the impact on
the Bank’s customers (loan portfolio, bank balances)
Operational and
reputational
Changes in customer preferences, inappropriate Bank
services/products, cooperation with suppliers with high
switching risk – manifested mainly through reputational risk
Floods, heavy rainfall, heavy snow, droughts – manifested through
operational risk events
The significance of transition risk factors was assessed qualitatively through an analysis of the regulatory environment, best practices
and international methods in the financial sector (PACTA, the most emitting sectors according to EBA, the most energy consuming
sectors and ECB‘s pre-defined list of industry sectors exposed to climate risks) and a quantitative assessment of loans and investment
portfolios by sector.
The significance of physical risk factors was also assessed qualitatively - based on historical events and physical phenomena
characteristic of the Lithuanian climate, and a quantitative assessment of the loan and investment portfolio by sectors was performed.
The most significant impacts of climate and environmental risks (transition and physical) have been identified for credit risk.
In the future, the Bank plans to assess the significance of the risks listed below and, if necessary, integrate them into the overall risk
management framework:
•Transition risks arising from technological changes and other potential regulatory changes;
•Transition risks arising from changes in consumer preferences;
•Social risk elements;
•Governance risk elements.
Climate and environmental risk management
Credit risk
Since 2006, the Bank's business lending has been guided by one of the best practices in the international financial sector – the EBRD
Environmental and Social Risk Management Manual (EBRD Environmental and Social Risk Management Manual). The identification,
assessment and management of environmental and social risks are considered as part of credit risk. According to this framework,
environmental and social risk management is carried out in several key steps:
•Due to environmental and social risks, the Bank does not finance projects related to activities included in this EBRD list:
Corporate, SME and Micro Lending, Annex 1: Environmental and Social Exclusion List.
•The Bank identifies whether the project is likely to cause significant future environmental and/or social impacts that cannot be
readily identified or assessed at the time of examination. In such a case, an environmental and social impact assessment is
carried out. The types of projects falling into this category are identified in accordance with this EBRD List: Corporate, SME
and Micro Lending, Annex 2: Category A Projects.
•In order to determine the level of environmental and social risk, the Bank follows the EBRD’s Environmental and Social Risk Categorisation
List (Environmental and Social Risk Categorisation List - Revised 2014), which includes the following types of activities that are
prohibited for financing: Tobacco growing, distillation, rectification and blending of spirits, manufacture of tobacco products, manufacture of
pesticides and other agrochemicals (as per Corporate, SME and Micro Lending, Annex 1: Environmental and Social Exclusion
List), the manufacture of arms and ammunition, the manufacture of military combat vehicles and the activities of gambling and
betting.
•Aspects of these risks are included in the customer monitoring and rating system in order to assess in a timely manner
possible changes in customer risk due to increased climate and environmental risks. Internal documents ensures proper risk
management, internal control measures ensure the implementation of the principles.
Market risk
The Bank has identified market risk as being of low conceptual significance due to the narrow scope of the Bank’s investment products,
but the assessment of climate and environmental risk is included in the Bank’s product governance procedures. In addition, it is
planned that climate and environmental risks will be included in the decision-making process on investment solutions.
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Operational risks
Climate and environmental risks are included in operational risk management. When recording operational risk events they can be
classified as climate and environmental risks. Operational risk events related to climate and environmental risks are included in the
reporting to the relevant governing bodies of the Bank.
The Bank’s updated Emergency Management Plan identifies risk factors arising from physical climate and environmental risks.
The Bank continues its efforts to develop tools and methodologies to properly integrate climate and environmental risks with other
financial risks (market, liquidity, operational and reputational risks) and the processes to manage these risks, and to improve the
EBRD’s current methodology used in the credit risk management component.
Other environmental risks
The Bank's business lending has been guided by the EBRD Environmental and Social Risk Management Manual. The environmental
impact assessment process measures the potential direct and indirect impacts on the environment: landscape, atmosphere, soil, air,
water, plants or animals, material values and cultural heritage, and the interaction of these components.
Opportunities
Bank discloses Green Asset Ratios (GAR) according to the Regulation (EU) 2020/852 of the European Parliament and of the Council
with it‘s further amendments. Taxonomy-eligible economic activities are identified based on this regulation and information currently
available in the Bank. It is planned to fully implement taxonomy during year 2022. Green Asset Ratios are calculated based on Bank‘s
financial data.
Green Asset
Ratio (GAR)
Definition
GAR1 = 5,4%
The proportion in Bank‘s total assets of exposure to Taxonomy-eligible economic activities
GAR2 = 68,2%
The proportion in Bank‘s total assets of exposure to Taxonomy non-eligible economic activities
GAR3 = 8,6%
The proportion in Bank‘s total assets of exposure to Taxonomy-eligible economic activities, excluding from the calculation of the
numerator and denominator exposures to central governments (incl. municipalities), central banks and supranational issuers; and
excluding derivatives from the numerator.
GAR4 = 83,6%
The proportion in Bank‘s total assets of exposure to Taxonomy non-eligible economic activities, excluding from the calculation of
the numerator and denominator exposures to central governments (incl. municipalities), central banks and supranational issuers;
and excluding derivatives from the numerator.
GAR5 = 0,1%
The proportion in Bank‘s total assets of exposure to Taxonomy-eligible economic activities, excluding from the numerator
exposures to undertakings that are not obliged to publish non-financial information (Directive 2013/34/ES Article 19a and 29a)
GAR6 = 6,3%
The proportion in Bank‘s total assets of exposure to Taxonomy non-eligible economic activities, excluding from the numerator
exposures to undertakings that are not obliged to publish non-financial information (Directive 2013/34/ES Article 19a and 29a)
EMPLOYEES
GRI 102-35, GRI 102-36
Remuneration policy
The Bank’s remuneration is governed by the Remuneration Policy, the Annual Variable Remuneration Procedure, the Bonus Procedure,
the Rules for Determining Remuneration, the Rules of Procedure and other internal regulations.
“Remuneration Policy” section of the Annual Report
The process of determining remuneration
The Bank’s process of determining remuneration for employees is guided by the results of the remuneration study conducted by Hay
group UAB (Korn ferry). The Hay group UAB (Korn ferry) methodology is used to determine the job levels. For each level, remuneration
ranges are established, i.e. minimum and maximum remuneration values. The thresholds are set on the basis of the national market as
a whole, taking into account regional differences. For certain levels, the benchmarks are based on banking sector data. The application
of the methodology used by the Hay group UAB (Korn ferry) allows for internal and external fairness of remuneration and competitive
remuneration in the market.
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STAKEHOLDER INVOLVEMENT
GRI 102-40
List of stakeholder groups
Stakeholders
Methods of involvement
Employees
Social initiatives;
Opportunities for suggestions and their implementation; Possibility of reporting to the Compliance Officer;
Annual performance review interview;
Bank’s internal website (intranet);
Events.
Shareholders
Regular reports;
Presentation of performance results to investors;
Shareholder meetings.
Clients
Customer service quality surveys;
Communication on social networks;
Bank’s website;
Customer events.
Suppliers and partners
Participation in meetings.
Regulatory authorities
Regular reports;
Participation in meetings.
Communities, public
Sponsorship and support projects;
Educational activities.
Associated structures
Social responsibility report.
Media
Press releases;
Comments;
Events;
Meetings.
GRI 102-42, GRI 102-43
Identification and selection of stakeholders
Stakeholders were selected by assessing the nature of the organisation’s activities and who the organisation can directly or indirectly
affect and who has an impact on the organisation.
Approach to stakeholder engagement
Customer feedback is sought through surveys such as mystery shopper, the customer referral index (CRI) and the customer service
quality and sales skills of employees in the Lithuanian commercial banking sector.
The mystery shopper survey assesses the quality of customer service in the Bank’s branches. The survey assesses where employees
need to improve their customer service and where they are performing excellently. The survey is used as a basis for the annual training
of customer service managers.
CRI is the Customer Recommendation Index - an indicator by which we aim to find out the satisfaction and loyalty of private and
business customers, i.e. how many customers would be inclined to recommend Šiaulių bankas, the services or products offered. During
the 2021 NPS survey, various channels and individual products of the Bank were evaluated. Research is conducted with the help of
external companies and using the Bank's internal resources.
The aim of the customer service quality and sales skills of employees in the Lithuanian commercial banking sector survey was to
measure and compare the fulfilment of the main customer service quality criteria in the Lithuanian commercial banking sector, to
identify the strongest and weakest areas of service and to assess the trends in customer service quality. The mystery shopper survey
was carried out once in 2021 by an external company.
Other methods of stakeholder engagement are indicated under indicator 102-40.
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GRI 102-44
Main themes and issues raised
Šiaulių bankas was voted the best customer-serving bank in 2018 and 2019 in
an independent mystery shopper survey commissioned by Dive Lietuva. In 2021, Šiaulių bankas again became the best customer
service bank in Lithuania. It should be noted that in 2021, the methodology of the survey was adjusted due to the pandemic and the
survey was conducted remotely (in previous years, a physical visit to a customer service branch was conducted). The overall fulfilment
of the customer service quality criteria in the Lithuanian commercial banking sector is 86.2%, and Šiaulių bankas’ overall rating this year
was 100%, i.e. 13.8% higher than the overall market average in 2021.
The mystery shopper survey assessed 6 main criteria: start of contact, clarification of needs, solution, additional sale, end of contact
and communication skills. In our Bank, all of them met the highest standards and were given the maximum score. Compared to last
year’s assessment, the biggest rise was in additional sales, where we improved by 25%.
REPORTING PARAMETERS
GRI 102-45, GRI 102-46
Definition of the content of the report and the boundaries of the topics
The topics and criteria selected for the report are those for which the Bank has data and can be accurately assessed. New, additional
criteria are measured each year.
Entities included in the consolidated financial statements
Subsidiaries of the Bank
Directly controlled subsidiaries:
•SB Lizingas UAB (finance leases, consumer loans)
•Šiaulių banko lizingas UAB (finance leases and operating leases)
•SB turto fondas UAB (real estate management)
•SB draudimas UAB (life insurance)
Indirectly controlled subsidiaries:
•Sandworks UAB (real estate management)
•Šiaulių banko investicijų valdymas UAB (investment management activities)
For more details, see the section “Bank’s Group” in the Annual Report
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GRI 102-47, GRI 102-50, GRI 102-5, GRI 102-52, GRI 102-53, GRI 102-54, GRI 102-56
List of important topics
The Bank’s socially responsible activities intended to improve the quality of life in Lithuania, promote sustainable economic
development and the environment are focused on areas where the Bank can and aims to have a positive impact, namely:
•Employees;
•Bank’s customers;
•Environment;
•Communities and the general public
This report includes topics related to all of these areas.
Reporting period
The report is for the year 2021.
Date of latest report
Since 2017, the Bank has been reporting according to the Global Reporting Initiative (GRI) standard. This is the fifth report.
Reporting cycle
The Social Responsibility Report is produced annually.
Contact point for questions related to the report
For questions and comments on the Social Responsibility Report, please contact komunikacija@sb.lt.
Notices on reporting according to GRI standards
This report was prepared in accordance with the basic version of the GRI standards.
External audit
This report is not audited - the audit company only has to confirm the fact that the report has been submitted.
ECONOMIC EFFICIENCY
GRI 201-1
Direct economic value created and distributed
Based on performance, the Annual General Meeting of Shareholders decides each year whether to pay dividends to shareholders
when distributing the Bank’s profits.
Data on dividends paid by the Bank:
Years for which dividends have been declared and paid
2018
2019
2020
Percentage of nominal value
10
-
1,90
Dividend amount per share, EUR
0,029
-
0,0055
Dividend amount, EUR
17 421 064
-
3 303 994
Dividend to Group net profit ratio, %
33,0
-
7,7
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GRI 203-2, GRI 204-1
Significant indirect economic impact
Financing of small and medium-sized enterprises
One of the Bank’s priority areas of activity is the financing of small and medium-sized enterprises (SMEs), which the Bank develops in
order to promote the development of SMEs. The Bank actively uses various financial engineering instruments that enable it to finance
businesses that would not be able to access conventional credit, thus contributing to their growth. During the pandemic, we actively
participated in all measures aimed at supporting businesses, and we are the bank which has issued the largest number of such loans in
Lithuania.
Of all the banks operating in Lithuania, Šiaulių bankas has the largest number of products with European Union instruments, which are
administered by Invega UAB: a shared risk facility for SME financing, various portfolio guarantees for SME loans, factoring and leasing.
Multi-apartment building renovation and regional development
The Bank aims to promote the economic development of the country’s regions and reduce disparities between them. One of its
instruments is the financing of the renovation/modernization of multi-apartment buildings. A large part of the renovation projects for
multi-apartment buildings are located outside the major cities. These projects involve management companies and construction
contractors and create jobs in the regions.
Šiaulių bankas is a leader in the financing of multi-apartment building renovation: 2 out of 3 of all multi-apartment buildings renovated in
Lithuania are financed by Šiaulių bankas. At the end of 2018, Šiaulių bankas signed a guarantee agreement with the European
Investment Bank for the implementation of multi-apartment building renovation projects. Under this agreement, Šiaulių bankas has
allocated an additional EUR 150 million for the renovation of multi-apartment buildings. In 2020, Šiaulių bankas was selected as the
successful bidder to set up an Investment Platform in Lithuania to further finance renovation. This is an innovative and promising
instrument that will attract funds from several sources to ensure sufficient financing. The new Investment Platform is expected to be
operational in 2022.
Other modernisation projects
The Bank is also involved in the energy efficiency programme. In 2018, an agreement with the Public Investment Development Agency
(VIPA) was signed and is still ongoing, under which the Bank finances the retrofitting of municipal buildings as a financial intermediary,
contributing with its own funds. The total amount of funds earmarked for the implementation of the financial instrument is EUR 36.16
million. This financial instrument is aimed at improving the energy efficiency of municipal public buildings, reducing greenhouse gas
(CO2) emissions and ensuring that the infrastructure of public buildings complies with the requirements of hygiene standards. The
measure is financed by the European Regional Development Fund.
The Bank is also inviting applications for loans for the renovation of cultural heritage sites from 2019. The loans are invested in the
attractiveness, commercial viability and public accessibility of the objects. The funds are allocated from the Cultural Heritage Fund
established by the Public Investment Development Agency (VIPA), the Ministry of Finance and the Ministry of Culture. Šiaulių bankas
has been selected as the fund manager. The Cultural Heritage Fund has been granted EUR 5 million from the European Regional
Development Fund.
Local procurement
In 2021, over 90% of all purchases were made by local suppliers.
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TRANSPARENCY AND PREVENTION OF CORRUPTION
GRI 205-1
Corruption risk assessment
Prevention of money laundering
The Bank is committed to the prevention of money laundering and terrorist financing by consistently and purposefully implementing
existing and developing new anti-money laundering and counter-terrorist financing measures and by applying them to its operations:
•Identification of customers, customer representatives and beneficiaries
•Collecting and verifying information on the purpose and nature of the business relationship (application of the Know Your
Customer rule)
•Monitoring business relationships and monetary transactions
Identification of suspicious monetary transactions and transmission of information to the Financial Crimes Investigation Service, etc.
Existing and new anti-money laundering measures are being developed taking into account: the legislation governing the prevention of
money laundering and terrorist financing in the Republic of Lithuania, the requirements of the FATF (Financial Action Task Force), the
EU, the UN, and the US legislation.
Prevention of corruption and conflicts of interest
Actions that can be defined as intolerable cases of corruption are defined in the Corruption Prevention and Unacceptable Conduct
Policy adopted by Šiaulių bankas AB. In order to avoid potential conflicts of interest, all employees of the Bank comply with the
provisions of the Code of Ethics of Šiaulių bankas AB and follow the Bank’s Conflict of Interest Management Policy in their activities.
The Bank duly pays all taxes to the State of Lithuania, complies with the applicable legal acts, prepares and participates in tenders in a
transparent manner.
The Bank implements the requirements of the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard
(CRS).
GRI 205-2, GRI 205-3, GRI 206-1
Communication and training on anti-corruption policies and procedures
The Bank’s employees are committed to the Code of Ethics of Šiaulių bankas AB, which highlights the following principles as the most
important:
•Integrity,
•Responsibility and accountability,
•Respect for the law, human beings and their rights,
•Impartiality, objectivity and fairness,
•Exemplary conduct.
The Code of Ethics and the Prevention of Corruption and Unacceptable Conduct Policy regulate what acts may be considered as
intolerable cases of corruption. All new employees of the Bank are made aware of these documents.
Confirmed cases of corruption and actions taken
There were no corruption-related incidents identified in 2021.
Legal actions on restrictive conduct and antitrust practices
No such actions were identified during the reporting period.
NVIRONMENT
GRI 301-1, GRI 302-1
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Energy consumption within the organisation
Greenhouse Gas Protocol The Green House Emission Protocol (GHG Protocol) is a comprehensive standardized system based on
global practice for measuring and managing greenhouse gas (GHG) emissions from private and public sector operations and value
chains to address climate change mitigation. GHG emissions in 2021 were also calculated by Šiaulių bankas.
GRI 203-4, GRI 305-1, GRI 305-2, GRI 307-1, GRI 304-4
Trace of CO2, trace of methane, etc. are calculated by dividing the emission GHG sources into three groups according to scope:
•direct emissions in the territory of Šiaulių bankas or in the facilities belonging to it, caused by energy production or other
activities related to fuel combustion (Scope I);
•indirect emissions from the consumption of energy produced outside the bank (Scope II);
•GHG emissions occurring outside Šiaulių bankas but related to its activities have an indirect impact on the value chain (Scope
III). Scope III emissions include 15 categories of emissions that were not included in Scopes 1 and 2.
Structure and dynamics of the GHG CO 2 footprint by year and assessment area
Activity (scope)
2020*
2021*
Dynamics
Scope I. Direct emissions
30.799
32.156
4,41%
Natural gas (stationary source of pollution)
6.914
8.103
17,20%
Motor transport Petrol (mobile source of pollution)
12.636
13.558
12,64%
Motor transport Diesel (mobile source of pollution)
11.095
10.442
5,89%
For generators Diesel (mobile pollution source)
0.15
0.028
81,33%
Consumption of refrigerants
0.004
0, 025
525,00%
Scope I. indirect emissions
76.332
52.260
31,54%
Green electricity consumption
3.531
5.896
66,98%
Power supply consumption
66.799
38.041
43,05%
Heat supply consumption
6.002
8.323
38,67%
Scope III
130.422
147.001
12,71%
Category 1 Purchased goods and services
14.049
8.693
38,12%
Category 2 Purchased goods for Capital
Not rated
Not rated
-
Category 3 Fuel and energy costs associated with
the activity
96.563
118.973
23,21%
Category 4 Logistics and distribution from
suppliers to the bank
Not rated
Not rated
-
Category 5 Waste generation in operations
7.423
9.076
22,27%
Category 6 Business trips
6.741
0.009
99,87%
Category 7 Mobility of officers (employees)
Not rated
Not rated
-
Category 8 Leased assets
Not rated
Not rated
-
Category 9 Transport and distribution from bank to
customer
Not rated
Not rated
-
Category 10 Processing of sold products
Not applicable
Not applicable
-
Category 11 Use of the product
Not rated
Not rated
-
Category 12 After expiry of product
Not rated
Not rated
-
Category 13 Assets leased to third parties
5.646
4.314
23,59%
Category 14 Franchises
Not applicable
Not applicable
-
Category 15 Investments
Niot rated
Not rated
-
Scope I
30,779-13kat (5,646)= 25,133 t CO2
32.156 – 13 kat (4,314)= 27,842 t CO2
10,78%
Scope II
76,332 t CO2
52,260 t CO2
31,54%
Scope III
130,422 t CO2
141,065 t CO2
8,16%
Scopes I and II, in total t CO2
101,465 t CO2
80,102 t CO2
21,05%
Scopes I, II, III in total t CO2
231,887 t CO2
221,167 t CO2
4,62 %
Number of employees
786
789
0,38%
CO2 content per employee (scopes I, II)
0,129 t CO2
0,102 t CO2
20,93%
CO2 content per employee (scopes I, II, II)
0,295 t CO2
0,280 t CO2
5,08%
* only accounted energy consumption is estimated
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
204
Total GHG emissions of Šiaulių Bankas in 2021: The CO2 footprint from all activities in all assessment areas was 221,167 t CO2.
According to the percentage distribution, the largest part is covered by Scope III - 63.78%, Scope II - 23.63%, the smallest part is
Scope I - 12.59%.
Comparing the total results of the 2021 GHG Emission Scopes with 2020, an increase of 10.78% in CO2 of Scope I can be seen in
2021 due to higher consumption of natural gas and petrol. Scope II shows a significant reduction of as much as 31.54% CO2, as in
September 2021 Šiaulių bankas AB started using 100% green electricity. Scope III shows an increase of 8.16% in CO2 due to higher
electricity consumption compared to 2020. Summarizing all the results (Scopes I, II, III), we conclude that Šiaulių bankas AB reduced
CO2 emissions by 4.62% during 2021 or emitted 10.720 t less CO2 than in 2020.
Reducing energy consumption
In order to reduce fuel consumption and air emissions:
•The Bank uses an electronic booking system for operational cars, allowing business trips to be planned in groups and to be
made in as few cars as possible;
•We have ordered the first plug-in cars and electric cars.
•The Bank’s employees are encouraged to use public transport (e.g. train, bus) for business trips within Lithuania;
•The Bank encourages that meetings involving staff and partners in different cities be held in modern teleconference rooms in
Vilnius, Kaunas, Klaipėda and Šiauliai or remotely using the MS Teams app as well as the use of landline telephones in
workplaces and other communication tools.
In order to reduce paper consumption, the internal and external document management system continued to be actively developed in
2021, reducing the need for printed documents. The digital process of signing and registering employment contracts (and changes) has
also been fully implemented, which has made it possible to refuse printing of paper documents.
The Bank has developed and uses its first robots, which allow automating the manual steps involved in payment card transactions.
The Bank provides employees with the opportunity to sort waste, with periodic communication on correct sorting.
Non-compliance with environmental laws and regulations
No non-compliance with environmental laws and/or regulations has been identified during the reporting period.
Ensuring animal welfare
Šiaulių bankas does not contribute to or support any initiatives that harm the environment or animals. The organisation’s activities do
not pose a threat to endangered species of plants and animals. In 2021, the Bank provided financial support to animal shelters (Šiaulių
letenėlė), thus contributing to the welfare of vulnerable animals.
RELATIONS WITH EMPLOYEES
GRI 401-1, GRI 401-3
Recruitment and staff turnover
The Bank fosters long-term working relationships with its employees. At at 31 December 2021, 24% of the Bank’s employees had been
employed for 10 years or more. During the reporting period, the overall staff turnover rate was 11.2% (2020: 11.0%, 2019: 13.8%, 2018:
13.2%, 2017: 14.5%).
On 31 December 2021, the Bank had 789 employees and the Group had 882 employees. Compared to 31 December 2020, the
number of employees in the Bank increased by 4.4% and in the Group by 3.9%.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
205
New employees in 2021 by gender:
Number of new employees by region in 2021:
Region
Number of new employees
Kaunas region
37
Klaipėda region
5
Šiauliai region
21
Vilnius region
52
Total:
115
GRI 401-3, GRI 404-1, GRI 404-2
Parental leave
All employees are entitled to parental leave, regardless of gender.
For more details, see the “Employees” section of the Annual Report
Employees who have taken parental leave in 2021*
Gender
Number of employees
Male
0
Female
69
Total
69
*This figure includes both parental leave granted in 2021 and parental leave that continues.
Parental leave granted in 2021
Gender
Number of employees
Male
7
Number of employees returning to work after parental leave in 2021, by gender*
Gender
Number of employees
Male
0
Female
23
Total
23
* employees returning to work/dismissed after parental leave.
Average number of trainings per employee per year
The average number of hours of training per year for employees in the Bank’s network and regional offices was 17 hours. The average
number of hours of external and internal training per year for the employees of the Centre’s branches was 18.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
206
GRI 404-1, GRI 404-2
Employee professional training programmes
The employee professional training system includes an adaptation process for new recruits, professional (mandatory training regulated
by Lithuanian legislation and other training required for day-to-day functions), general competency development and leadership training.
All new employees of the Bank take part in a two-day Newcomers Days event, where representatives of different areas of the Bank
share their professional experience, introduce their new colleagues to the Bank’s structure, functions of the departments, present the
Bank’s services, products, processes and ongoing projects. During the Newcomer Days, we play the Bank’s values game and learn
about the Bank’s values in practical situations.
In 2021, we focused on the development of managers at different levels. Taking into account the data from the engagement survey and
the general trends, we have targeted our management development to strengthen leadership, inter-managerial cooperation, effective
communication and other competencies, and we have returned to a continuous development model. We have opted for the Executive
Academy model proposed by an external partner, which is designed for managers who already have experience of managing a
company or a business unit. All managers involved in the Academy are responsible for implementing the Bank’s strategy through their
own departments. The Academy lasts for 1.5 years and is attended by over 100 managers at different levels.
We have also strengthened the leadership and general competences of the Bank’s top management accordingly. To this end, three
sessions on Public Speaking and Presentation, Facilitation and Leadership were planned.
In view of the Bank’s structural changes and the expressed development needs of the target group, the strengthening of the risk
management competences of the members of the Bank’s Management Board and Supervisory Board was planned for 2021. To this
end, training sessions were planned and implemented on the following topics: Non-Financial Risk Management and Innovation and
Digitisation.
As part of the continued development of process management in the Bank, a process management and improvement programme was
developed in 2021. It sets out the phases for the implementation of process management and aims to bring about a cultural change
through the principles of customer orientation, digital thinking and simplicity. The programme was presented to the heads of the
departments, with a view to carrying out efficiency work in each department, setting objectives accordingly.
In 2021, we continued to prioritise regulatory requirements for staff qualifications and experience. We have followed the training plan
aimed at strengthening knowledge in the area of AML/CFT. We also used an online learning platform to ensure maximum compliance
with GDPR and IT security requirements, where we developed mandatory Personal Data Protection (2 modules) and Digital Security
training for each employee. The aim is to provide a comprehensive introduction to personal data protection and digital security
requirements and practices.
In order to raise the competence of compliance officers, AML/CFT, customer insight and financial settlement specialists, and to help
them acquire the appropriate knowledge and global best practices on how to manage risk, combat money laundering and put financial
crime prevention into practice, we have ensured that some of them have the opportunity to obtain ICA and CAMS certifications, which
are considered the benchmark of excellence worldwide. Certification of staff will continue.
In 2021, the Bank’s unique programme Financing Solutions Forum was
continued. The spring and autumn sessions of the programme were held virtually. Because of the topics and scope, the final
conference of the Forum became the Annual Conference of Šiaulių bankas, which this year (just like last year) was held virtually, the
speakers and discussions were live streamed from a specially prepared studio, and the broadcast was available to all the employees of
the Bank. The conference focused on the importance of sustainability in a global, business and personal context in environmental,
social and governance aspects.
In 2021, we focused on the development of employees’ emotional competence, giving employees the opportunity to listen to lectures on
topics such as stress and its management, quality sleep, eye care, our health reserves, etc.
Employees at the Bank Centre and network units have been developing their competences by attending external conferences and
seminars.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
207
GRI 405-2
Work organisation in the context of COVID-19
In 2021, we continued our efforts to ensure the smooth running of our staff by providing them with the necessary tools and making sure
they are in good physical and emotional condition. During the year, we worked in very different conditions. At the beginning of the year,
during a full lockdown, the main objective was to keep the network employees healthy by regulating staff flows, providing them with all
protective equipment and ensuring that customer flows were regulated. Employees worked remotely when their roles allowed. As the
pandemic situation evolved during the year, the exemptions introduced at national level allowed employees to return partially, and later
fully, to their workplaces by rotating teams, maintaining recommended distances, internal, stricter work organisation rules, etc.
Throughout the year, we have been concerned with the acquisition of personal protective equipment. All employees were fully equipped
with face protection (medical masks, FFP2 respirators), disposable gloves, disinfectant wipes. When needed, we provided disposable
medical masks at customer service points and hand disinfection in accessible areas in all units. Additional disinfection of frequently
touched surfaces continued and all units were equipped with non-contact thermometers to monitor employee health.
The coronavirus situation in the Bank and all major developments were continuously communicated on the intranet.
GRI 412-2
Gender equality
The Bank, in accordance with the Code of Ethics and the Rules for the Implementation and Supervision of Equal Opportunities (Non-
Discrimination) Policy, the Labour Code of the Republic of Lithuania, the Law on Equal Opportunities of the Republic of Lithuania, the
Law on Equal Opportunities for Women and Men of the Republic of Lithuania, as well as other normative legal acts establishing equality
of persons and the prohibition of restricting the rights of human beings on the basis of discriminatory grounds, does not tolerate
inequalities, manifestations of violence, psychological or similar pressures, or any form of discrimination at work. The Bank observes
the principle of equal opportunities and the prohibition to restrict or favour the rights of employees on the grounds of sex, race,
nationality, citizenship, language, origin, social status, religion, beliefs or opinions, age, sexual orientation, disability, ethnic origin and
other grounds, both in the recruitment process and during the term of employment and in the course of the termination of the
employment relationship.
In order to actively and responsibly manage the fairness of remuneration, the Bank relies on the approved Remuneration Policy, which
has been prepared in accordance with the Law on Companies of the Republic of Lithuania, the Resolution of the Board of the Bank of
Lithuania On the Approval of the Description of the Minimum Requirements of the Remuneration Policy, and other legal acts. The
Remuneration Policy also declares that employees shall be subject to a uniform remuneration system, without discrimination on the
grounds of sex, age, nationality, race, social status, religion, social orientation, etc.
The Bank’s Remuneration Policy regulates the means of ensuring fair and non-discriminatory remuneration: The Bank shall analyse
and assess the average difference in the level of remuneration received by different genders, analyse which gender is the dominant
gender at a given job level in terms of the higher remuneration received, and, in the event of significant differences and in the absence
of objective reasons to justify the differences, take action to reduce the disparity.
The Bank shall continuously monitor and analyse the ratio of men and women in management positions in the organisation. Currently,
the Bank manages to maintain a very good gender balance, with 53% women and 47% men in management positions (97 employees
in total). The Bank’s governing bodies, the Board of Directors and the Supervisory Board, are 27% female and 73% male.
Human rights
Šiaulių bankas is a member of the United Nations Global Compact. The Bank follows the principles of the Global Compact in its Social
Responsibility Report.
The Bank complies with the laws of the Republic of Lithuania and the employment of children is prohibited.
The Bank conducts recruitment in accordance with the Recruitment and Selection Rules, and recruitment and selection of staff is
carried out in accordance with the principles of the Equal Opportunities (Non-Discrimination) Rules. In 2021, an equal number of
women and men were recruited to management positions, 50% each.
The average salary of the Bank’s employees in 2021 was EUR 2,475.72, which is almost 58% higher than the national average salary
in 2021.
The working time of the Bank’s employees is regulated by the internal Working Time Accounting and Control Rules and complies with
the principles of minimum and maximum working time as laid down in the laws of the Republic of Lithuania. Overtime may be used with
the prior agreement of the employees and with appropriate remuneration, but only in exceptional and emergency cases.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
208
In addition to what is regulated by the Labour Code of the Republic of Lithuania and other occupational safety and health legislation,
the Bank pays great attention to health. Physical and emotional health topics are continuously developed in the Bank, and the
implementation of health promotion projects (health lectures, preventive health check-ups, vaccinations) ensures the practical aspect of
health care. Employees are kept informed and educated through various events, seminars, lectures, dissemination of information
materials and internal training.
The Bank also has an Occupational Health and Safety Committee which regularly proposes and initiates initiatives related to
occupational health and safety.
In order to create a safe working environment, we regularly revise and update our instructions and procedures, and pay attention to the
proper familiarisation of our employees with them. We ensure the provision of safe and ergonomic workplaces, health checks and
regular occupational risk assessments.
Additional attention is paid to civil safety, and employees are familiarised with the Emergency Plan and the steps to be taken in an
emergency. Responsible staff have been trained to ensure a smooth evacuation during an emergency.
Working conditions
Šiaulių bankas adheres to the principles of the International Labour Organisation Declaration and the Labour Code of the Republic of
Lithuania; discrimination during recruitment, employment and after the employment relationship is terminated is not tolerated. The Bank
also has a Labour Council, which represents the interests of employees and assesses whether all employees are provided with equal
working conditions.
The Bank continuously invests in improving the working conditions of its employees and extending the benefits package. Recently, the
Bank has been focusing on the emotional health of its employees, with regular lectures on emotional health and mental health topics. In
addition to fringe benefits, employees are also rewarded with public recognition of their contribution to creating value for the Bank. The
Bank has annual employee awards and a network employee incentive programme.
In order to be a socially responsible organisation, the Bank conducts and initiates volunteering programmes to support various social
groups, where employees are also involved. This enables people to come together and raise their awareness. The Bank continuously
invests in team-building initiatives, allocates additional budgets for team events, initiates Bank-wide winter and summer events, and
supports and financially contributes to employee hobby clubs (kart racing, volleyball, etc.).
The Bank also continuously values flexibility in work organisation, allowing employees to choose the start and end time of work in
consultation with their team leader, and employees work using a hybrid working pattern (partly from home and partly from the office).
All of these and many more measures enable the Bank to maintain a very low staff turnover rate of 11.2%. Compared to the market and
to the financial sector, this percentage is very good. The Bank also measures annually the level of employee engagement and the
employee satisfaction with the organisation score.
The Bank carries out continuous training of managers by involving managers in a Leadership Academy where management and
leadership competencies are strengthened to ensure the development of all managers, as well as the rotation of top management and
the provision of equal career opportunities for all.
COMMUNITIES AND THE GENERAL PUBLIC
GRI 413-1
Cooperation with educational, cultural institutions or organisations
In 2021, the Bank supported and collaborated with:
•The Bank supported cultural centres in Rokiškis, Alytus district municipalities and Šiauliai;
•Visaginas Municipality Administration;
•The Bank’s employees gave lectures to students of various schools remotely.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
209
Reducing social exclusion
Since 2014, in cooperation with Geros valios projektai VšĮ, the Bank has been providing the following opportunities to its clients:
•Donate cash at donation boxes in the Bank’s branches;
•We also provide the Bank link service to the aukok.lt project free of charge.
In 2021, EUR 1237.71, UDS 21.00, NOK 100.00 and GBP 10.00 were collected in the donation boxes. Donated funds have been
transferred to Geros valios projektai VšĮ.
Strengthening communities:
As a Lithuanian-owned bank and having presented its new image strategy to the public in 2019, the Bank aims to be closer to
communities and focuses on fostering the traditions of the country’s towns and cities, supporting the cultural life in Lithuanian regions,
as well as contributing to the promotion of sports and financial literacy.
In 2021, the Bank has allocated a total of EUR 93,579.00 to support various initiatives.
•City festivals;
•Animal shelters;
•Pažaislis Music Festival;
•Šiauliai Aušra Museum;
•Šiauliai Art Gallery;
•Lithuanian Musicians Support Foundation;
•Šiauliai Basketball Club;
•Dakar Rally (V. Žala’s crew);
•Sport clubs (football, tennis, running, volleyball, handball, etc.);
•Educational and cultural institutions and organisations;
•Other projects and communities.
Assistance to victims of COVID-19:
•Successful small businesses are the backbone of the Lithuanian economy. That’s why for the second year in a row we have
supported the initiative PLANAS A.This is our way of helping small businesses become more visible and get support when
they need it most. Find out more about the ongoing project on www.planas-a.lt.
•Christmas gifts for partners were purchased from PLANAS A participants
A pre-Christmas campaign to encourage the purchase of Christmas gifts from PLANAS A participants.
COMPLIANCE
GRI 417-2, GRI 418-1, GRI 419-1
Non-conformities related to information and labelling of products and services
No such cases were identified in the Bank during the reporting period.
The Bank’s Contact Centre registers customer complaints or claims regarding the provision of information on services or products.
In 2021, there were no cases of non-compliance where the Bank or Group companies were fined or warned for inadequate information
on services.
Substantiated complaints about breaches of customer privacy and loss of customer data
The Bank has not received any substantiated complaints regarding breach of customer privacy.
Non-compliance with social and economic laws and regulations:
The Bank has not identified any cases of non-compliance with social or economic laws or regulations.
SOCIAL RESPONSIBILITY REPORT 2021
(Annex to the consolidated annual report for 2021)
210
REMUNERATION REPORT 2021
(Annex to Annual Consolidated Report 2021)
Tilžės 149, LT-76348 Šiauliai
Tel. (8 41) 595 607, faks. (8 41) 430 774
El. paštas info@sb.lt
www.sb.lt
The Remuneration Report of the Bank has been prepared and approved following the procedure set in the Law of the Republic of
Lithuania on Companies and in compliance with the requirements set forth in the Law of the Republic of Lithuania on Financial
Reporting by Undertakings (Article 23 3) for the remuneration report and its content.
When the General Meeting of Shareholders of the Bank approves the set of financial statements of the Bank and the Bank group for
2021, this Remuneration Report will be publicly available for 10 years on the Bank’s website at www.sb.lt as an annex to Consolidated
Annual Report 2021.
This Remuneration Report 2021 of the Bank (reporting period: 01/01/2021 to 31/12/ 2021) discloses information about remuneration to
each member of the Bank’s management and supervisory bodies (the Chief Executive Officer, the Management Board and the
Supervisory Council). Members of management and supervisory bodies were identified by their respective positions held in the Bank on
31 December 2021, also information is given about the members who started/ceased in office in the course of 2021.
On 31 March 2021, the General Meeting of Shareholders of the Bank did not express any disapproval / other observations on
Remuneration Report 2020, which, as an annex to Consolidated Annual Report of the Bank, is publicly available on the Bank’s website,
within the document “Annual Report 2020 of AB Šiaulių bankas and bank group”.
The Remuneration Report does not include personal data of members of the management and supervisory bodies or personal data that
would indicate the marital status of members of the management and supervisory bodies of the Bank. The Remuneration Report
includes personal data of the members of the Bank’s management and supervisory bodies in accordance with the requirements of the
Law of the Republic of Lithuania on Financial Reporting by Undertakings.
Remuneration to the members of the Bank’s management and supervisory bodies is regulated by the Remuneration Policy of the Bank,
approved by the decision of the General Meeting of Shareholders of the Bank held on 31 March 2020 and publicly announced on the
Bank’s website.
The model of the Group’s remuneration system is in line and is aligned with the Bank Group’s business strategy, long-term continuous
business objectives and interests. A system of equal payment for work is applied, not discriminating employees on the grounds of
gender, age, nationality, race, social status, religion, sexual orientation, etc. Remuneration is determined based on employee’s
knowledge, experience, qualification, responsibilities, decisions taken, position held. Successful implementation of the Remuneration
Policy makes it possible for the Bank to attract, motivate, keep the best employees, who contribute to successful implementation of the
Group’s long-term term objectives and business strategy.
According to the Bank’s Remuneration Policy, the members of the Bank’s supervisory bodies are paid a fixed remuneration, whereas
the members of the management bodies are paid a fixed and variable remuneration. The annual variable remuneration fund is formed
based on the Bank’s performance, taking into account current and future risks, capital employed and liquidity maintenance costs. The
principles for calculating variable remuneration are designed to be in line with the Bank Group’s business strategy, objectives, values,
long-term continuous business interests and to promote sound and effective risk management, help to avoid conflicts of interest, ensure
compliance with the Code of Ethics and discourage remuneration recipients from excessive risk-taking.
The annual variable remuneration for the members of the Bank’s management body is allocated only after the annual performance
appraisal and review of the employee’s results for the last three years. The amount of variable remuneration is based on general
assessment of pre-determined objectives and results achieved by the Group, unit/employee. In assessment of individual annual
objectives, achievements of an employee, not only the achieved personal financial performance is taken into account, but also one’s
non-financial/non-quantitative contribution (e.g. respecting values of the Bank, relationships with clients/colleagues, conformity to
standards, performance of requirements set in internal documents, pro-activeness, leadership/participation in project activities,
improvements of processes).
As it is provided for in the Bank’s Remuneration Policy, the annual variable remuneration is given in the form of cash and the Bank’s
shares. Granting of a part of the remuneration to be given in the form of the Bank’s shares is deferred for a period of 3 years from the
date of the allocation of the annual variable remuneration, taking into account the potential risk related to the employee’s annual
evaluation results. The deferred part of the annual variable remuneration is allocated and granted upon the end of the deferral period,
as shares of the Bank. The Bank grants shares to employees by way of exercise of options entered into with employees or in another
form set by the Bank’s Management Board. Also, the allocation of variable remuneration ensures that the variable remuneration
allocated to an employee is not to exceed 100% of the employee’s fixed remuneration during 1 calendar year.
REMUNERATION REPORT
(Annex to the consolidated annual report for 2021)
212
REMUNERATION OF MEMBERS OF THE SUPERVISORY BODY
In accordance with the Bank’s Remuneration Policy, the members of the Bank’s Supervisory Council are granted only a fixed
remuneration, which consists of (i) the official remuneration and (ii) surplus to the official remuneration for performing additional
functions while holding the office of a member of the Supervisory Council. Under the Remuneration Policy, no variable remuneration is
provided for or allocated to the members of the Bank’s Supervisory Council.
Information on remuneration of members of the Supervisory Council (before tax):
Name, Surname
Positions at the Supervisory Council and Committees
Remuneration paid
by the Bank in 2021,
EUR 1
Remuneration paid in 2021 by a
company that is part of Group;
company name
Arvydas Salda
Chairman of the Supervisory Council
150,000
EUR 147,700
SB turto fondas UAB
Gintaras Kateiva
Member of the Supervisory Council, member of the Remuneration
Committee
57,500
-
Darius Šulnis
Member of the Supervisory Council, member of the Risk Committee,
member of the Nomination Committee
65,000
-
Ramunė Vilija Zabulienė
Independent member of the Supervisory Council, Chairman of the Audit
Committee, member of the Remuneration Committee, member of the Risk
Committee
77,500
-
Martynas Česnavičius
Independent member of the Supervisory Council, Chairman of the
Remuneration Committee, Chairman of the Nomination Committee,
member of the Audit Committee
82,500
-
Miha Košak
Independent member of the Supervisory Council, Chairman of the Risk
Committee, member of the Nomination committee
70,000
-
Adriano Arietti
Independent member of the Supervisory Council,
member and Deputy Chairman of the Risk Committee
57,500
-
Susan Gail Buyske
Independent member of the Supervisory Council, member of the Audit
Committee
57,500
-
1 - The members of the Supervisory Council were paid fixed remuneration for their service as provided for in the Remuneration Policy.
Information on the changes in the remuneration of the members of the Bank's Supervisory Council for the period 2017-2021 is provided
below:
Name, Surname
Positions at the Supervisory Council and Committees
Changes in remuneration, %1
In 2017,
compared to
2016
In 2018,
compared to
2017
In 2019,
compared to
2018
In 2020,
compared to
2019
In 2021,
compared to
2020
Arvydas Salda 2
Chairman of the Supervisory Council
11%
13%
-19%
0%
-1%
Gintaras Kateiva
Member of the Supervisory Council, member of the Remuneration
Committee
26%
43%
-2%
-3%
-7%
Darius Šulnis
Member of the Supervisory Council, member of the Risk Committee,
member of the Nomination Committee,
26%
43%
-2%
2%
1%
Ramunė Vilija
Zabulienė 3
Independent member of the Supervisory Council, Chairman of the
Audit Committee, member of the Remuneration Committee, member
of the Risk Committee
29%
46%
2%
4%
-4%
Martynas
Česnavičius
Independent member of the Supervisory Council, Chairman of the
Remuneration Committee, Chairman of the Nomination Committee,
member of the Audit Committee
26%
43%
-9%
30%
8%
Miha Košak 4
Independent member of the Supervisory Council, Chairman of the
Risk Committee, member of the Nomination committee
-
186%
-9%
14%
4%
Adriano Arietti 5
Independent member of the Supervisory Council,
member and Deputy Chairman of the Risk Committee
-
-
-
-
33%
Susan Gail Buyske 6
Independent member of the Supervisory Council, member of the Audit
Committee,
-
-
-
-
87%
1 - Share of profits was paid to the members of the Supervisory Council for their activities until 31 March 2020. After the approval of the Remuneration Policy on 31 March 2020, the fixed remuneration indicated in the Remuneration Policy is paid from 1 April 2020.
Remuneration changes are calculated by adding the remuneration paid for the respective year and comparing to the relevant previous year. Remuneration information used in the calculations is before taxes.
2 - The calculations include remuneration paid for other positions in the Bank’s subsidiaries during the period 2016–2021.
3 - The calculations include additional remuneration paid for participation in the meetings of the committees of AB Šiaulių bankas during the period 2016 – Q1 2020.
4 - Miha Košak was elected an independent member of the Bank’s Supervisory Council in 2017, therefore no changes in remuneration for 2017, compared to 2016, are presented.
5 - Adriano Arietti was elected an independent member of the Bank’s Supervisory Council in 2020, therefore no changes in remuneration for 2017–2020 are presented.
6 - Susan Gail Buyske was elected an independent member of the Bank’s Supervisory Council in 2020, therefore no changes in remuneration for 2017–2020 are presented.
REMUNERATION REPORT
(Annex to the consolidated annual report for 2021)
213
REMUNERATION OF MEMBERS OF THE MANAGEMENT BODY
All members of the Management Board of the Bank are also employees of the Bank acting as the Chief Executive Officer of the Bank or
Deputy Chief Executive Officers and/or Heads of Divisions, respectively, and are, as employees of the Bank, entitled to fixed and
variable remuneration provided for in the Bank’s Remuneration Policy. According to the Bank’s Remuneration Policy, the official
remuneration of the members of the Bank’s Management Board holding other positions in the Bank, of the Chief Executive Officer of
the Bank and his deputies, is determined by the approval of the Bank’s Supervisory Council and the allocation of the annual variable
remuneration to the members of the Bank’s Management Board is approved by the Bank’s Supervisory Council.
The annual variable remuneration of the members of the Bank’s Management Board is linked to the risk assumed by a unit/employee
and the business objectives set for the Bank/Group and unit/employee and success in achieving them. The position held and
responsibilities, influence on business results, current and future risks have an effect on the criteria used for calculation of the annual
variable remuneration, proportions of objectives.
Information on remuneration of members of the Board (before tax):
Name, Surname
Position at the Management Board and other
positions in the Bank
Fixed remuneration for
2021
Annual variable remuneration
allocated in 2021 for 2020
Other variable
remuneration
(surplus pay, one-
off bonuses,
severance pay)
paid in 2021
Deferred annual
variable remuneration
paid in 2021
(for 2017)
Fixed and variable remuneration ratio for 2020 3, %
Fixed remuneration (excluding
income in kind and fringe benefits),
EUR 1
Income in kind and other
fringe benefits, EUR 2
Paid in cash, EUR
Deferred part in the form of shares,
allotment (to be granted in 2024),
units
In cash, EUR
In cash, EUR
In the form of shares, units
Algirdas Butkus
Chairman of the Management Board,
Deputy Chief Executive Officer
311,463
5,027
124,280
258,051
-
18,046
36,031
81%
Vytautas Sinius 4
Deputy Chairman of the Management Board,
Chief Executive Officer
271,200
9,916
110,760
229,979
-
15,468
30,884
76%
Donatas Savickas
Deputy Chairman of the Management Board,
Deputy Chief Executive Officer – Head of
Division
114,054
5,516
47,320
98,254
-
6,393
12,766
76%
Daiva Šorienė
Member of the Management Board,
Deputy Chief Executive Officer – Head of
Division
135,355
6,161
55,120
114,449
-
7,734
15,443
76%
Ilona Baranauskienė 5
Member of the Management Board, Head of
Division
135,029
3,339
55,120
114,449
-
8,349
14,721
78%
Mindaugas Rudys 6
Member of the Management Board, Head of
Division
117,867
6,084
47,320
98,254
-
-
-
-
Algimantas Gaulia 7
Member of the Management Board, Head of
Division
89,673
3,562
-
-
-
-
-
-
Vita Urbonienė 8
Member of the Management Board,
Chief Accountant – Head of Division
169,194 9
2,472
45,240
93,935
125,600 9
6,187
12,353
78%
1 - Fixed remuneration (excluding income in kind and fringe benefits) includes the base salary, vacation pay and payments for sick leave paid in 2021.
2 - Income in kind and fringe benefits mean pension insurance, health insurance contributions, presents in cash, funeral allowances and other benefits payable under the
Bank’s internal legal acts.
3 - Information on the ratio of fixed to variable remuneration is provided only for 2020, as the annual variable remuneration for the results of 2021 has not yet been allocated.
4 - Vytautas Sinius also holds the position of the Chief Executive Officer of the Bank (sole-person management body).
5 - Ilona Baranauskienė’s deferred annual variable remuneration paid in 2021 for 2017 was calculated by including the deferred parts paid for work in the Bank’s subsidiaries.
6 - Mindaugas Rudys took the office of a member of the Bank’s Management Board on 31 March 2020. Annual variable remuneration allocated in 2021 for activities in 2020 is
presented. Deferred annual variable remuneration paid in 2021 for 2017 is not provided.
7 - Algimantas Gaulia took the office of a member of the Bank’s Management Board on 30 July 2021. The fixed remuneration for 2021 was calculated by including the fixed
remuneration paid during the entire 2021. Annual variable remuneration allocated in 2021 for activities in 2020 and deferred annual variable remuneration paid in 2021 for
activities in 2017 are not provided.
8 - Vita Urbonienė held the office of a member of the Bank’s Management Board until 6 May 2021.
9 - Vita Urbonienė, in termination of employment on 31 May 2021, was paid severance pay of EUR 230,000, a part of which, corresponding to the severance pay of 12 base
salaries provided for in the employment contract, is attributed to fixed remuneration, whereas the remaining part – to other variable remuneration (surplus pay, one-off
bonuses, severance pay).
REMUNERATION REPORT
(Annex to the consolidated annual report for 2021)
214
Members of the Bank’s Management Board were not paid remuneration for 2021 from the Bank’s subsidiaries.
According to the Bank’s Remuneration Policy, no possibilities to recover paid variable remuneration exist and no recoveries were
applied in respect of members of the Bank’s management body.
Below is information on the shares granted to members of the Management Board of the Bank in 2021, the rights granted by share
options, prices and dates of those options:
Name, Surname
Position at the Management Board
and other positions in the Bank
Shares granted as Shares
granted as 1/3 of the
deferred part of the
annual variable
remuneration
for 2017, units 1
Share options 2
Option rights granted to
shares for 2020
(exercise of the option in
2024), units
1/3 of options rights to
shares granted in 2020
for 2019 were approved
(exercise of the option in
2023), units
1/3 of options rights to
shares granted in 2019
for 2018 were approved
(exercise of the option in
2022), units
Algirdas Butkus
Chairman of the Board,
Deputy Chief Executive Officer
36,031
258,051
92,980
110,273
Vytautas Sinius 3
Deputy Chairman of the Board, Chief
Executive Officer
30,884
229,979
82,865
98,352
Donatas Savickas
Deputy Chairman of the Board, Deputy
Chief Executive Officer-Head of
Division
12,766
98,254
35,403
41,725
Daiva Šorienė
Member of the Board,
Deputy Chief Executive Officer-Head
of Division
15,443
114,449
41,238
48,878
Ilona
Baranauskienė 4
Member of the Board,
Head of Division
14,721
114,449
41,238
48,878
Mindaugas Rudys 5
Member of the Board,
Head of Division
-
98,254
-
-
Algimantas Gaulia 6
Member of the Board,
Head of Division
-
-
-
-
Vita Urbonienė 7
Member of the Board, Chief
Accountant-Head of Division
12,353
93,935
33,846
39,937
1 - Date of transfer of shares: 13/08/2021, price per share: EUR 0.729 per unit.
2 - Date of granting and approval of options: 09/04/2021. Options entitle to receive the Bank shares free of charge during the exercise of the option (the beneficiary paying
applicable fees according to the share price on the option exercise date), subject to taxation in accordance with the provisions of the laws in force at the time of granting.
3 - Vytautas Sinius also holds the position of the Chief Executive Officer of the Bank (sole-person management body).
4 - Information on shares is provided, including shares for work in the Bank’s subsidiaries.
5 - Mindaugas Rudys took the office of a member of the Bank’s Management Board on 31 March 2020, therefore, information is provided on the granted share options only for
2020.
6 - Algimantas Gaulia took the office of a member of the Bank’s Management Board on 30 July 2021, therefore, information is not provided.
7 - Vita Urbonienė held the office of a member of the Bank’s Management Board until 6 May 2021.
No changes were made to options granted to members of the Bank’s management body.
Below is information on changes in remuneration of members of the Management Board of the Bank during the period 2016–2021:
Name, Surname
Position at the Management Board and other positions in the
Bank
Changes in remuneration, %1
In 2016,
compared to
2015
In 2017,
compared to
2016
In 2018,
compared to
2017
In 2019,
compared to
2018
In 2020,
compared to
2019
Algirdas Butkus
Chairman of the Board, Deputy Chief Executive Officer
22.1%
5.1%
13.4%
-2.0%
-10.0%
Vytautas Sinius 2
Deputy Chairman of the Board, Chief Executive Officer
42.7%
5.7%
10.9%
2.7%
-7.8%
Donatas Savickas
Deputy Chairman of the Board,
Deputy Chief Executive Officer-Head of Division
29.2%
5.0%
9.9%
4.4%
-6.7%
Daiva Šorienė
Member of the Board,
Deputy Chief Executive Officer-Head of Division
23.5%
4.9%
11.2%
1.8%
-8.8%
Ilona Baranauskienė 3
Member of the Board, Head of Division
31.4%
-1.2%
13.3%
-0.3%
-6.5%
Mindaugas Rudys 4
Member of the Board, Head of Division
-
-
-
-
-
Algimantas Gaulia 5
Member of the Board, Head of Division
-
-
-
-
-
Vita Urbonienė 6
Member of the Board, Chief Accountant-Head of Division
27.3%
6.6%
9.7%
2.3%
-8.4%
1 - Remuneration changes are calculated by adding the fixed remuneration (salary, vacation pay, payments for sick leave, income in kind, fringe benefits) paid in the
respective year and the variable remuneration (bonuses and annual variable remuneration in the form of cash and shares allocated for a given year, excluding paid deferred
parts of annual variable remuneration (in the form of cash and shares) for the previous years) and comparing to the corresponding previous years. Remuneration information
used in the calculations is before taxes. No changes in remuneration are provided for 2021, as the annual variable remuneration for 2021 has not yet been allocated.
2 - Vytautas Sinius also holds the position of the Chief Executive Officer of the Bank (sole-person management body).
3 - The calculations include remuneration paid for other positions in the Bank’s subsidiaries during the period 2015–2020.
4 - Mindaugas Rudys took the office of a member of the Bank’s Management Board on 31 March 2020, therefore, no changes in remuneration before 2020 are provided.
5 - Algimantas Gaulia took the office of a member of the Bank’s Management on 30 July 2021, therefore, no changes in remuneration are provided.
6 - Vita Urbonienė held the office of a member of the Bank’s Management Board until 6 May 2021.
REMUNERATION REPORT
(Annex to the consolidated annual report for 2021)
215
CHANGES IN BANK’S PERFORMANCE RESULTS AND AVERAGE
REMUNERATION
Below is information about the Bank’s results and the average monthly remuneration of the Bank’s employees, who are not members of
the Bank’s management and supervisory bodies, for 2017–2021:
Net profit, in thousands EUR
Average monthly remuneration, EUR (before taxes)
2021
56,005
2,251
2020
43,095
2,080
2019
53,103
2,028
2018
53,065
1,860
2017
30,890
1,651
REMUNERATION REPORT
(Annex to the consolidated annual report for 2021)
216
CONFIRMATION FROM THE RESPONSIBLE PERSONS
We, Chief Executive Officer of Šiaulių bankas AB Vytautas Sinius and Chief Financial Officer Donatas
Savickas, confirm hereby that the provided consolidated financial statements of Šiaulių bankas AB for 2021
are compiled in compliance with applicable accounting standards, correspond to the reality and correctly
reveal the assets, liabilities, financial status, activity result and cash flows of Šiaulių bankas AB and its Group
of Companies, moreover, we confirm that the review of the business development and activities, the status of
the Bank and the Group, alongside with the description of the key risks and indeterminacies incurred, are
correctly revealed in the consolidated annual report.
Chief Executive Officer
Vytautas Sinius
Chief Financial Officer
Donatas Savickas
7 March 2022