"The decline in profits was due to two factors. Banks' interest income fell amid persistent low interest rates, and banks set aside extra reserves for potential losses as the condition of some borrowers and loan assessment deteriorated," Vitas Vasiliauskas, the central bank's governor, said in a press release.
Six banks and six foreign bank branches ended the year with a profit, while one bank and two foreign bank branches suffered losses.
The banking system's assets totaled 74.3 billion litas on January 1, 2013, down 0.7 percent from a year earlier. The combined loan portfolio grew by 2 percent over the year to reach 52.9 billion litas at the start of this year.
"A decline in the portfolio of loans to private individuals was more than offset by more active lending to businesses, the public sector and financial institutions. The total loan portfolio is expected to expand somewhat in 2012 as well. The country's growing economy creates the conditions for that," Vasiliauskas said.
Overall deposits rose by 9.6 percent over the year to 43.6 billion litas, due mostly to an increase of 1.6 billion litas in private individuals' deposits.
The Bank of Lithuania said that it did not include the results of Ūkio Bankas, whose operations were suspended on February 12, into the sector's performance figures in order to ensure the comparability of data.
