"Due to higher net loan losses in 2012, we expect Ūkio to end this year with a net loss of 43 million litas. Profit before loan losses is expected to remain positive and come in at 5.5 million litas," Swedbank said in its equity research report.
The Ūkio Bankas Group reported 1.1 million litas in consolidated net profits for 2011, but the bank alone ended the year with a net loss of 4.588 million litas, based on preliminary data.
Šiaulių Bankas is expected to increase its profit this year.
"We expect Šiaulių to become more profitable in 2012 and report a net profit of 14.2 million. This kind of improvement seems to be in line with market expectations and is supported by a relatively solid economic situation in Lithuania and its positive medium-term outlook, despite slightly falling net interest margins," Swedbank said.
Šiaulių Bankas reported a net profit of 12.8 million litas for 2011. The banking group's consolidated net profits came in at 13 million litas.
Swedbank expects that Lithuania's stable economy will help maintain the banking sector's profitability.
"A relatively stable Lithuanian economy compared to other European countries supports this year's interest income to remain relatively strong, though we will probably see some downside pressure on net interest margins," the bank said in the report.
"Starting from 2013, growing credit demand will push interest rate margins higher, helping banks to boost their earnings," it said.
The bank's analysts expect that credit risk in the banking industry will ease in the coming years and that Lithuania's growing economy will help banks to keep loan losses at relatively low levels.
Swedbank forecasts that deposits in Lithuania will remain on an upward trend this year amid anticipated growth in net real wages and lower consumption.
