Banks Identify Cyberattacks and Geopolitical Tensions as Biggest Risks to Financial Stability

Cyberattacks and geopolitical tensions now rank as the biggest threats to Lithuania’s financial system in the view of the country’s banks. Concern about a possible correction in real estate prices has eased slightly, although more than half of surveyed banks still see imbalances in the property market.

The Bank of Lithuania’s survey found that household demand for loans continued to grow during the first half of 2026. Demand for housing loans rose alongside stronger consumer confidence and more favorable expectations for the housing market. Demand for consumer and other household loans also increased, helped by lower borrowing costs and changes introduced by some banks.

Business-loan demand, by contrast, stabilized after nearly two years of moderate growth and fell slightly in the second quarter. Most banks expect demand for new business loans to remain stable in the third quarter. Lending standards, loan conditions and the share of rejected business-loan applications changed little in the first half of the year.

Banks generally viewed the financial condition of most sectors as average or good. They gave weaker assessments to transport, manufacturing, hotels and restaurants, and agriculture. A few banks reported restricting lending to companies involved in real estate operations, construction, and hotels and restaurants, citing the broader economic situation, portfolio reallocation and weaker project prospects.

“According to banks, signs of stabilization are emerging in the lending market,” said Viktorija Mingailė, chief economist in the Macroprudential Analysis Unit of the Bank of Lithuania’s Financial Stability Department. She said banks no longer expected business-loan demand to keep growing soon, while housing-loan standards were expected to remain unchanged and consumer-loan standards could continue to ease.

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According to banks, signs of stabilization are emerging in the lending market. Demand for loans to companies stopped growing and even declined slightly in the second quarter, while banks do not expect it to grow further in the near term.