Analytics, Banks, Economics, Financial Services, Lithuania

"Both the economic cycle, the financial cycle is on the rise, we are in the stage of growth. (…) But it doesn’t mean we need to be less vigilant. (…) We are still of the opinion that we need to further build financial reserves. If nothing changes over the upcoming month, we plan to make decisions in late June on increasing the countercyclical capital buffer from 0.5 to 1%," Vasiliauskas told a press conference on Thursday.

In his words, the situation in the banking sector is now good.

"Banks' profitability rates are goods, banks operates effectively. Separate revenue types differently react to the existing economic cycle. Capital and liquidity ratios are high, therefore, the situation is good," Vasiliauskas said.

Nevertheless, he paid attention to growing concentration in the banking sector.

"On one hand, effectiveness is not bad in terms of scale economy but, with no doubt, there are also risks to competition becoming reduced, and that's not good," the central banker said.

Commercial banks need to accumulate a countercyclical capital buffer of 0.5% by the end of this year. The rate was increased in December for the first time on