2024-05-08 06:16:38
A high-level international conference of the Vienna Initiative is being held in Vilnius on Monday, where representatives of international banking institutions discuss the development and challenges of the economy and financial sector.
“If in fact, the high concentration of the banking sector of the Baltic States (…) is connected with exceptionally high profitability. The indicators at the beginning of this year are slightly more modest, but still the profit is impressive and one of the best in the region. This means that there is definitely room for competition in the region of Lithuania and the Baltic states”, G. Šimkus told journalists at the press conference organized during the initiative.
LB already announced in October of last year that a new foreign bank could soon come to Lithuania. In January of this year, G. Šimkus also stated that one Taiwanese bank was interested in the possibility of establishing its own branch in Lithuania, but concrete steps have not been taken yet, although “everything starts with interest”. According to G. Šimkaus, there are those who are interested in the Lithuanian market, but for now it would still be difficult to say about specific players.
“Financial stability without competition, which leads forward and strengthens, improves service delivery, they cannot do without each other. (…) New market participants, and here I would like to emphasize – it is not the number of banks that is important here, but also the banks’ activity models, risk appetite, are very important”, emphasized G.Šimkus on Monday.
According to him, half of all international financial groups operating here plan to expand in the Eastern and Central European region, and during the year, according to him, the share of banks in the region planning to expand increased by more than 1.5 times.
LB does not consider the solidarity tax as a sustainable source of defense financing
Speaking about the “exceptionally profitable” Lithuanian banking sector, G. Šimkus adds that in 2025 bank profits will probably decrease, so relying on volatile bank profits as a source of financing defense costs in the long term would be unsustainable.
“Our preliminary calculations show that the profit of the banks next year should be (…) about 700 million. euros. So still big and solid, but smaller than this year and that could be due to a few reasons. One is related to the expected decrease in interest rates, the other is that the structure of the banks’ own liabilities is changing. Little by little, unfortunately, not as fast as we would like, the share of term deposits, which pay higher interest, is growing. Again, with such liquidity as now, banks do not offer deposits for current deposits (…)”, explained G.Šimkus.
According to him, due to the lower profits of banks and the proposed design of the tax, which would not include income from new loans in the contribution base, about 50-70 million could be collected from the solidarity contribution next year. euros.
“The solidarity contribution itself was designed to cover the short-term disproportion that was passed on to interest income when interest rates rose sharply. Unfortunately, it was not possible to transfer the liabilities and deposits quickly, and as a result, let’s call it that, interest and interest income escalated”, – the head of LB described the situation.
Therefore, according to G. Šimkaus, even if the solidarity contribution collection period is changed, it would not be a sustainable source of defense expenditure financing. As a result, in his opinion, other proposed tax changes should be discussed.
“The high (banks’ – ELTA) profit remains. The taxable base, if that taxable period were changed, it would appear. But due to the very structure of the solidarity tax, the taxable base would decrease in the future, so it is not a sustainable source”, said the head of LB.
It is true, when asked whether commercial banks increase rates in order to compensate for the already paid bank solidarity contribution, G. Šimkus emphasized that last year LB submitted a plan of measures to commercial banks that could reduce the price of the basic basket of financial services to approximately 1 euro. However, according to G. Šimkaus, so far only the Government has approved this proposal, and the support of the Seimas is still awaited.
“In fact, the rates have been increased and this raises questions both for us and for the whole society. However (…) financial services are not just another service that you can choose, there is also the user’s attachment to the financial service provider, there are also certain regional issues, certain financial literacy issues that are not resolved so quickly. Therefore, that price increase is both sensitive and painful”, said G. Šimkus.
Also, according to G.Šimkaus, consumers should be more active in choosing those financial service providers that seem more economically beneficial to them.
The development and challenges of the economic and financial sector will be discussed at the high-level international conference of the Vienna Initiative, which will be held in Vilnius on May 6-7, 12 heads of Central and Eastern European central banks and supervisory authorities, as well as the heads of the European Central Bank (ECB), the European Commission (EC), the International Monetary Fund representatives of the Fund (IMF), the World Bank, the European Investment Bank and other global sector institutions.
2024-05-08 06:16:38