LHV Group's Strong Loan Growth and Profitability Insights
LHV Group's Financial Performance Overview
In May, LHV Group showcased impressive progress, particularly in its loan portfolio. Their consolidated loan portfolio witnessed a significant increase, growing by EUR 104 million throughout the month. However, the company faced challenges as interest rates continued to decline, impacting profitability amid a partial reversal of prior impairments. Additionally, the total deposit volume saw a decrease of EUR 34 million.
Net Profit and Subsidiary Highlights
The consolidated net profit for LHV Group reached EUR 10.3 million. Among the subsidiaries, AS LHV Pank performed notably well with a net profit of EUR 10.5 million. Other subsidiaries reported varying performances: LHV Bank Ltd generated a net profit of EUR 28 thousand, AS LHV Kindlustus earned EUR 339 thousand, and AS LHV Varahaldus had a net profit of EUR 297 thousand. This resulted in a healthy return on equity of 17.3% solely for May.
Customer Growth and Loan Portfolio Development
Exciting growth was also seen in the customer base of LHV Pank, which gained 2,800 new customers, bringing the total to over 470,000. Loan growth was robust, amounting to EUR 83 million. This growth consisted of EUR 51 million in corporate loans and EUR 32 million in private loans. The quality of the loan portfolio remains stable, and a positive outcome was achieved regarding one of the two most significant non-performing loans, leading to a decrease in prior provisions.
Retail Banking Launch in the UK
May was also a pivotal month for LHV Bank in the United Kingdom. They launched the initial version of a retail banking offer that allows users to access various banking functions through a mobile application. Customers can now enjoy features such as account creation, payment processing, and secure fund deposits. This launch coincided with a marketing campaign to promote the offer, which somewhat affected the monthly profit as the bank invested in its development. Notably, LHV Bank's loan portfolio expanded by EUR 21 million during this period.
Insurance Sector Performance
The solid growth trajectory of LHV Kindlustus continued in May, with new insurance contracts amounting to EUR 3.15 million. By the month’s end, 274,000 valid insurance contracts were active. The recent successful campaign in motor own damage insurance positively influenced overall performance, leading to a reduction in claims costs. Total compensation for various loss events was recorded at EUR 2.2 million, with 12,500 new claims processed in the month.
Pension Fund Performance and Changes
In the pension fund sector, LHV Varahaldus reported positive growth, aligning with the flourishing financial markets. The larger funds managed, L and XL, saw increased values of 1.2% and 2.3%, respectively, while LHV Pensionifond Indeks made a remarkable leap of 5.6%. Although the net profit of LHV Varahaldus surpassed expectations, the number of managed funds and customers remained slightly below the projected goals. Furthermore, LHV Varahaldus has proposed rebranding the names of pension funds to enhance clarity for clients and plans to merge the green pension funds for improved management.
Capital Developments and Strategic Initiatives
After the issuance of AT1 bonds worth EUR 50 million in April, LHV Group managed to call back EUR 15 million of these bonds in May. The company’s share capital was bolstered by EUR 366,721.30 due to share option transactions initiated as per the resolutions from the recent shareholders’ general assembly. This strategic approach ensures that the financial activities of LHV Group continue to stay on track with the outlined financial plans.
About LHV Group
LHV Group stands as the largest domestic financial institution and capital provider in Estonia. Its primary subsidiaries include LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs over 1,150 staff members and serves a vast customer base—471,000 individuals utilizing banking services and 111,000 active customers within its pension funds. Additionally, LHV Kindlustus is committed to providing coverage to approximately 176,000 clients. LHV Bank is expanding its reach by offering retail banking services to individuals within the UK while also supporting small and medium enterprises and fintech companies.
Priit Rum
Communications Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee
Frequently Asked Questions
What financial growth did LHV Group achieve in May?
LHV Group reported a consolidated loan portfolio growth of EUR 104 million and a net profit of EUR 10.3 million.
How many new customers joined LHV Pank in May?
In May, LHV Pank gained 2,800 new customers, surpassing the 470,000 mark.
What was the impact of the declining interest rates on LHV Group?
The declining interest rates have impacted the bank's net interest income, as deposit interest rates are declining slower than loan interest rates.
What new features did LHV Bank launch recently?
LHV Bank launched a new retail banking offer in May, allowing customers to manage accounts online via their mobile app.
What changes are planned for LHV Varahaldus?
LHV Varahaldus plans to rebrand its pension funds for better clarity and merge green funds for improved management.
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