LHV Group Sees Remarkable Growth in October Financial Results

Strong Performance of LHV Group in October

LHV Group has showcased an impressive performance in October, with significant growth in various business areas despite experiencing falling interest rates. The solid increase in loan volumes and business activities has helped balance the impact of these declining rates on interest income.

Consolidated Financial Growth

In October, the consolidated loan portfolio of LHV Group surged by EUR 105 million, marking a notable expansion. Additionally, the firm's total deposits increased by EUR 182 million, supplemented by a rise of EUR 13 million in managed funds. The payments made to financial intermediaries stood at EUR 6.4 million for the month.

Profitability and Subsidiary Contributions

LHV Group recorded a consolidated net profit of EUR 10.2 million in October. Among its subsidiaries, AS LHV Pank contributed significantly with a net profit of EUR 10.1 million. Other contributions included AS LHV Varahaldus with EUR 233 thousand and AS LHV Kindlustus at EUR 107 thousand. Meanwhile, LHV Bank Ltd reported a net loss of EUR 326 thousand.

Client Growth and Loan Portfolio Increase

The bank saw a remarkable increase in its clientele, with 3,800 new clients joining in October. This uptick in customer engagement, along with a record number of home loan applications, greatly contributed to the positive results. Specifically, AS LHV Pank's loan portfolio grew by EUR 77 million, with retail loans making up EUR 40 million and corporate loans at EUR 37 million. The credit quality remained robust, allowing the bank to make proactive write-downs.

Deposit Growth and Bond Issuance

During the month, LHV Pank's deposits rose by EUR 192 million, with regular client deposits accounting for an increase of EUR 103 million. To further diversify its financial resources, LHV Pank successfully issued covered bonds valued at EUR 250 million with an annual interest rate of 3.09%. These bonds are now listed on the Dublin Stock Exchange, opening up new avenues for financing.

Challenges at LHV Bank Limited

LHV Bank Limited, operating in the UK, faced challenges in October, leading to a net loss primarily due to IT expenses and decreased deposits from financial intermediaries. Despite these setbacks, the loan portfolio continued to grow, rising by EUR 29 million and reaching a total outstanding loan amount of EUR 180 million. Enhancements in the loan-to-deposit ratio were also noted, primarily from a reduced volume of platform deposits.

Investment and Development Insights

October also saw the initiation of construction for LHV's new headquarters in Tallinn, developed by Estconde Invest and built by Merko Ehitus. This development marks a significant investment in the company's infrastructure and future operational capacity.

Subordinated Bonds for Growth Financing

To support ongoing growth, LHV Group commenced offering subordinated bonds with a 6% interest rate, an initiative that will continue until mid-November. By the end of October, the group found itself EUR 1.4 million shy of the financial goals initially set at the month’s commencement; however, the financial framework remains active.

LHV Group Overview

LHV Group stands as the largest financial group and capital provider in Estonia. Key subsidiaries include LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited, employing over 1,200 people. At the close of October, over 448,000 clients utilized LHV's banking services, while the pension funds managed by LHV catered to 116,000 active clients. LHV Kindlustus also reported a client base of 169,000, demonstrating strong customer trust and demand.

Contact Information

Priit Rum
LHV Head of Communications
Phone: +372 502 0786
Email: priit.rum@lhv.ee

Frequently Asked Questions

What led to the growth in LHV's loan portfolio?

The growth can be attributed to increased client engagement and a record number of home loan applications, indicating strong market demand.

How did LHV Group manage the impact of falling interest rates?

Despite falling interest rates, LHV Group balanced this concern through increased loan volumes and overall business activity in October.

What investments were initiated by LHV Group in October?

LHV Group began the construction of a new main office in Tallinn, reflecting their commitment to growth and modernization.

What were the main challenges faced by LHV Bank Limited?

The bank encountered difficulties like IT costs and lower deposits from intermediaries, which contributed to their reported net loss.

What is the purpose of LHV's subordinated bonds offering?

The offering is aimed at financing growth, providing the company with additional capital to support ongoing operations and initiatives.

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