“Financial institutions take the risks of consequences of Russia’s war against Ukraine very seriously. According to respondents, the most likely shocks to the Lithuanian financial system in the next 6 months. there is a slowdown more economic growth, a rise in interest rates and a worsening of the geopolitical situation due to the continuation of Russia’s war against Ukraine,” says Dovydas Poderys, senior economist at the Department of Macroprudential Analysis of the Bank of Lithuania.
During the year, the interest rate environment changed considerably and the sudden and significant increase in interest rates had an impact on the activities and risk assessment of financial institutions. Just over a third of respondents indicated that demand for products offered by financial institutions decreased after interest rates rose. Credit unions particularly stood out, with nearly two-thirds of credit unions surveyed saying demand for their products had declined.
However, profitability increased due to higher interest income. Profitability of banks and credit unions increased most often, with 30% citing increased profitability overall. survey participants. Another effect of rising interest rates is an increase in the number of people who delay paying their debts on time. A fifth of financial institutions surveyed claim to have felt such an influence.
The increase in the assessment of the importance of the risk of cyberattacks by financial institutions compared to the previous half-year is considered significant, i.e. the institutions assessed it as significantly more important than it was. six months ago. On the other hand, financial institutions best assess the possibilities of reducing the risks of cyberattacks. During the reporting period, almost a fifth of survey participants said they had experienced cyberattacks. This roughly matches the level of cyberattacks that preceded Russia’s military invasion of Ukraine.
A significant slowdown in the growth of the Lithuanian economy and a deterioration in the financial situation of households are generally indicated as the most relevant risks for the institutions represented by the respondents over the next six months. These risks were named by 31 and 27%, respectively. respondents. Within six months, the perceived relevance of the deterioration of the financial situation of non-financial corporations has diminished – only 5% of respondents indicated that this risk was the most important for the institution represented. respondents, three times less than in the previous period.
Compared to the previous semester, 10 percent. a one percentage point lower share of financial institutions expect losses from corporate insolvency to increase in the coming years. In the latest survey, 32 percent of institutions surveyed expect their losses from business insolvency to increase over the next 12 months.
Financial institutions that participated in the survey see the greatest risk of bankruptcy in construction and transportation companies. In the space of six months, the perceived risk of bankruptcy of companies engaged in transport, production and trade activities increased the most. This risk decreased the most in accommodation and food services, creative, artistic and entertainment activities. It is in the sectors of information and communication, administration and agriculture that the risk of bankruptcy is lowest.
Source: The Delfi