LHV Group results for August 2022

AS Group LHV

In August, the AS LHV group generated 3.3 million euros in consolidated net income. In this regard, AS LHV Pank made a net profit of €6.6 million, of which €0.5 million came from servicing customers associated with the UK branch. AS LHV Varahaldus made a net profit of EUR 96,000; AS LHV Kindlustus generated a net loss of EUR 111,000 and LHV UK Limited generated a net loss of EUR 0.9 million.

The month with otherwise strong results was affected by the 2.3 million euro downgrade of the financial investment in the British credit institution Bank North which is applying for an unrestricted banking license. Following the indications of the financing round, the enterprise value decreased. For LHV, the future holds several strategic choices, as the commercial side of the business has exceeded expectations in terms of demand and terms of loans issued.

In August, the LHV Group’s consolidated credit portfolio crossed the €3 billion threshold for the first time, increasing by €53 million during the month; loans to companies represent 24 million euros and loans to individuals 29 million euros. Thus, the mortgage loan portfolio reached a volume of more than one billion euros. Credit quality remains good. Consolidated deposits decreased by €126 million, with payment intermediary deposits decreasing by €230 million, while retail customer deposits increased by €102 million. The volume of funds managed by LHV increased by 4 million euros over the month. In August, 1.9 million payments from financial intermediary customers were processed.

The rise in interest rates is starting to weigh heavily on the outlook for the following quarters for super-trucks. This is why LHV catches up with the financial plan of LHV in terms of profitability, leaving aside the discounting of the financial investment.

The main additional returns for the Group are associated with the general increase in interest rates, the most important of which are the interest on deposits of the European Central Bank which makes it a positive territory. In a negative interest environment, holding the cash portfolio generated a direct cost of €15 million per year for LHV. Following monetary policy decisions by the European Central Bank, LHV no longer has to cover this cost, and following the rise in interest rates in September, the cash portfolio will start generating returns, which are approximately 3 to 4 million euros this year. year. The rise in interest rates also has a positive effect on the income of the loan portfolio, 91% of which is indexed to the 6-month Euribor and which is recalculated at new levels over time.

The number of LHV Pank customers increased by 4,800 during the month, to 359,000 customers; the number of customers using settlements increased by 2,700. The bank’s interest income is growing faster than expected; Fee and commission income is also improving, as the decline in revenue from virtual currency customers is replaced by fee and commission income from other customers. In August, the bank updated the student loan terms and started offering the student loan with the lowest interest rate in the market. This has definitely increased the interest in the student loan.

A weaker month in equity markets impacted Varahaldus’ results. The number of LHV Pillar II customers remained at the level of 132,000 customers. Against the backdrop of the rest of the market, LHV’s pension funds retained value. Large pension funds saw a slight decline in August, with M, L and XL down 0.2%, 0.4% and 0.4% respectively.

Kindlestus’ business volumes continued their rapid growth: 13,600 insurance contracts for a volume of 2.1 million euros were concluded. A total of 378 claims were settled and customer satisfaction with claims handling remained high. Operating expenses remained below estimates. Kindlestus efficiency indicators are improving.

LHV UK Limited is continuing to apply for credit institution approval. The main focus is on organization building, technology development and migration preparation, business transfer preparation and regulatory preparations.

The LHV financial plan is holding up, despite the change in environment.

To access AS LHV Group reports, please visit the website at https://investor.lhv.ee/en/reports/.

LHV Group is the largest domestic financial group and capital provider in Estonia. The main subsidiaries of the LHV group are LHV Pank, LHV Varahaldus and LHV Kindlustus. The Group employs more than 820 people. As of August, LHV’s banking services are used by 359,000 customers, the pension funds managed by LHV have 132,000 active customers and LHV Kindlestus protects a total of 149,000 customers. LHV’s UK branch provides banking infrastructure to 200 international financial services companies, through which LHV’s payment services reach customers worldwide.

Priit Rum
LHV communication officer
Email: priit.rum@lhv.ee
Telephone: +372 502 0786

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