VILNIUS, Lithuania–Credit unions in this country are seeing improved performance, but need to build more capital.
According to the Bank of Lithuania, during the first quarter of 2015 most credit unions made a profit to substantially improve their performance year on year.
“However, the quality of loans deteriorated,” Bank of Lithuania said in its analysis, according to Baltic-Course.com. “The ratio of specific provisions against loans, formed by credit unions, to loans increased, while non-performing loans, according to 1 April 2015 data, accounted for more than a fourth of total loans, reported the Bank of Lithuania.
"The most recent performance of credit unions confirms how relevant it is for them to accumulate capital, necessary for amortizing the generated and likely losses on loan impairment and ensuring stability of operations,” said Vytautas Valvonis, Director of the Supervision Service at the Bank of Lithuania, according Baltic-Course.com. “Aiming to form sustainable capital, necessary for the safe and sound provision of services, credit unions must use all measures provided for in legal acts,"
According to Baltic-Course.com, 47 credit unions, whose operations in Q1 2015 were profitable, earned EUR 3.9 million of profit; 27 credit unions operated at a loss, however, incurring EUR 0.3 million of losses, which reduced the credit unions sector's profit to EUR 3.6 million (in Q1 2014 the operations of credit unions were loss-incurring, with EUR 37.2 thousand of losses incurred).