Bank of Lithuania publishes Q1 2025 banking sector review showing strong loan and deposit growth as net interest income declines and cyber and fraud risks persist

The Bank of Lithuania published its Banking Activity Review for the first quarter of 2025, reporting that banks continued to expand lending to households and businesses, grew deposits, and remained well capitalised and liquid. Sector profitability stayed high, with net profit rising 2.7% year on year to EUR 267.3 million, but lower interest rates began to reduce net interest income and profitability ratios. Return on assets fell to 1.42% and return on equity to 18.79%, while the cost-to-income ratio increased to 44.90%. Net interest income declined by EUR 24 million to EUR 545.3 million, while net fee and commission income rose to EUR 394 million, largely driven by the Revolut Group. Sector assets increased by EUR 4.2 billion to EUR 77.6 billion, with Revolut Holdings Europe UAB reaching a 30.8% share of banking assets. The loan portfolio grew 4% to EUR 33 billion and non-performing loans fell to 0.84%, while deposits increased to EUR 64.2 billion, including non-resident deposits rising to EUR 23.5 billion; average rates on new euro-denominated term deposits fell from 2.67% in January to 2.18% in March 2025. The review also flags recurring cyberattacks and financial fraud as key challenges. With the Digital Operational Resilience Act applying from 17 January 2025, banks have begun providing updated reporting on major ICT incidents and strengthening ICT risk management, testing and third-party oversight; distributed denial-of-service attacks remained common, alongside more impactful data encryption attacks. Together with the European Central Bank, the Bank of Lithuania is assessing two additional applications for a specialised bank licence.