Q3 of 2024 for LHV was marked by strong loan portfolio growth and the highest business volumes so far.
AS LHV Group earned EUR 84.9 million in revenue on a consolidated basis in Q3 of this year, which is 3% less than in Q2, but 4% more than at the same time a year ago. Of the revenue, net interest income accounted for EUR 67.4 million, and net fee and commission income for EUR 16.3 million. The Group’s operating expenses amounted to EUR 37.2 million in Q3, which is 1% less than in the previous quarter, but 14% more than a year earlier.
In Q3, AS LHV Group earned EUR 34.7 million in consolidated net profit. It was 10% lower than in Q2 and 12% less than in Q3 of 2023. The return on equity attributable to the Group’s shareholders was 22.4% in Q3.
During the quarter, AS LHV Pank earned EUR 34.1 million euros in net profit, AS LHV Varahaldus EUR 0.6 million, and AS LHV Kindlustus EUR 0.5 million. LHV Bank Limited reported a net loss of EUR 0.6 million in Q3.
By the end of September, the volume of LHV Group’s consolidated assets increased to EUR 7.82 billion. Over the quarter, the volume of assets increased by EUR 491 million, i.e. 7%. Compared to the previous quarter, the Group’s consolidated loan portfolio increased by EUR 236 million to EUR 4.13 billion (+6%; + EUR 246 million in Q2). Consolidated deposits increased by EUR 502 million to EUR 6.29 billion during the quarter (+9%; + EUR 150 million in Q2). The total volume of funds managed by LHV was EUR 1.52 billion at the end of September, which is EUR 8 million less than in the previous quarter (-1%; - EUR 11 million in Q2). The number of processed payments to financial intermediaries’ clients amounted to 18.8 million in Q3 (+3% compared to 18.3 million payments in Q2).
In the nine months of 2024, LHV Group has earned EUR 257.6 million in net income on a consolidated basis (+15% compared to 2023), and the total expenses have been EUR 110.4 million (+14%). This year, LHV’s consolidated loan portfolio has increased by EUR 564 million, i.e. 16%, and deposits (excluding deposits of financial intermediaries) by EUR 659 million (+14%).
The Group’s consolidated net profit for the nine months was EUR 114 million, which is EUR 5.8 million more than a year earlier (+5%). In nine months, AS LHV Pank earned EUR 105.7 million, LHV Bank Limited EUR 5.2 million, AS LHV Varahaldus EUR 1.1 million, and AS LHV Kindlustus EUR 1.1 million in net profit. LHV Group’s nine-month return on equity was 25.6%.
LHV’s nine-month net profit fell EUR 0.4 million short of the financial plan published at the beginning of October.
Income statement, EUR thousand
Q3-2024
Q2-2024
Q3-2023
Net interest income
67 427
70 424
68 141
Net fee and commission income
16 320
16 262
13 617
Net gains from financial assets
798
-37
-589
Other income
355
638
311
Total revenue
84 900
87 287
81 480
Staff costs
-20 166
-21 108
-16 308
Office rent and expenses
-854
-609
-1 085
IT expenses
-3 820
-3 471
-3 379
Marketing expenses
-1 338
-973
-845
Other operating expenses
-11 066
-11 426
-11 190
Total operating expenses
-37 245
-37 587
-32 807
EBIT
47 655
49 700
48 673
Earnings before impairment losses
47 655
49 700
48 673
Impairment losses on loans and advances
-7 276
-5 043
-2 883
Income tax
-5 681
-6 071
-6 314
Net profit
34 697
38 586
39 476
Profit attributable to non-controlling interest
312
300
418
Profit attributable to share holders of the parent
34 385
38 286
39 058
Profit attributable to non-controlling interest
0.11
0.12
0.12
Profit attributable to share holders of the parent
0.10
0.12
0.12
Balance sheet, EUR thousand
Sep 2024
Jun 2024
Sep 2023
Cash and cash equivalents
3 376 016
3 217 448
2 857 964
Financial assets
259 933
157 131
269 828
Loans granted
4 168 778
3 925 877
3 396 048
Loan impairments
-42 543
-35 333
-20 466
Receivables from customers
10 598
15 919
36 873
Other assets
47 567
48 681
50 924
Total assets
7 820 348
7 329 723
6 591 170
Demand deposits
4 160 516
3 882 999
3 814 480
Term deposits
2 125 844
1 900 930
1 501 724
Loans received
679 550
735 281
461 635
Loans received and deposits from customers
6 965 910
6 519 211
5 777 839
Other liabilities
108 605
100 710
124 238
Subordinated loans
106 079
107 521
166 848
Total liabilities
7 180 595
6 727 441
6 068 925
Equity
639 754
602 282
522 245
Minority interest
8 006
7 695
7 706
Total liabilities and equity
7 820 348
7 329 723
6 591 170
Although the business environment is still affected by the economic downturn, both the growth and quality of LHV’s loan portfolio remained at a strong level. In addition to the growing number of clients, the activity of clients was also at a good level. The share of overdue loans remains low, but both model-based discounts and discounts to individual clients have been added.
The number of clients of LHV Pank increased by 11,200 during the quarter, and a total of 37,200 bank clients (+9%) have been added in a year. The activity of clients in terms of settlements and the use of bank cards was good, and the active issuance of home loans continued: one in four home loans in Estonia continued to be taken out with LHV Pank. Retail loans increased by EUR 112 million over the quarter and corporate loans by EUR 47 million. The growth in deposits resulted in EUR 174 million from regular clients and EUR 52 million from financial intermediaries. Platform deposits were added in the amount of EUR 92 million. In a situation where interest rates on fixed-term deposits are falling, the bank’s focus remains on attracting deposits.
During the quarter, the offer of student loans was reopened, and with the help of LHV Pank, both Estonian Treasury Bills and several other securities offers were organised on the Baltic markets. In September, the Instar survey identified LHV Pank as the most preferred employer in Estonia in terms of students, business students, and experienced employees.
For LHV Bank operating in the United Kingdom, Q3 saw record loan growth, as the loan portfolio increased by EUR 76 million. There are EUR 150 million of loans approved by the Credit Committee but not yet issued. The quality of the loan portfolio remains strong, as there are no debtors. The focus on loans will continue to be relevant: to date, LHV Bank has entered into cooperation agreements with more than 50 loan brokers and has assembled the entire team. The deposits included by LHV Bank increased by EUR 189 million over the quarter. The payment volumes of financial intermediaries remained at the same level as in Q2. In September, the results reflected one-off expenses incurred in the previous months, which affected the quarterly profit.
The development of LHV Bank’s retail banking offering, mobile bank, and website continued. At the beginning of October, the mobile bank was opened for testing by own employees, the first accounts were opened and the first payments were made. At the beginning of July, LHV Bank joined the SEPA scheme, and joining the TIPS scheme is scheduled for April 2025.
All pension funds managed by LHV Varahaldus had a positive rate of return in Q3. The quarter was characterised by a more volatile and weaker time in the markets. The volume of the II pillar was affected by the movements of clients at the beginning of September and the exit from the II pillar, which reduced the number of active clients making monthly contributions by 2,000. At the same time, the volume of the III pillar exceeded the level of EUR 100 million. Business results were largely in line with the financial plan revised in October. Approximately 8,000 people had submitted applications for larger contributions to the II pillar by the end of the quarter, and applications for the coming year can be submitted until the end of November.
LHV Kindlustus continued on the path of good sales performance and profitability. For the second quarter in a row, home and travel insurance sales showed excellent growth. At the same time, there were few major loss events. The number of clients continued to grow. Net earned bonuses are outpacing the financial plan, with operating expenses being lower than planned. The decreasing net cost ratio supports the achievement of profitability goals.
As at the end of the quarter, LHV Group is well capitalised and the Group’s internal capital generation capacity exceeds loan growth. If the growth continues, there is a possibility that LHV Group will organise the offering of T2 bonds in Q4.
Comment by Madis Toomsalu, Chairman of the Management Board of the LHV Group: "During Q3, we achieved the highest business volumes in history, both in Estonian home and corporate loans, and in UK corporate loans. The total loan portfolio increased by EUR 236 million, showing a very strong result. To finance loan growth, deposits increased by EUR 502 million. In Estonia, the activity of clients continued to grow, and free euro payments bring in clients who make settlements and receive wages to their account. More and more clients are also using the insurance services of LHV. In the United Kingdom, the focus is on preparing for the launch of mobile banking, payments, and bank cards aimed at retail clients."
In order to present the results of the quarter, LHV Group will organise an investor meeting via the Zoom webinar platform. The virtual investor meeting will take place on 22 October at 9.00, before the market opens. The presentation will be in Estonian. We kindly ask you to register at the following address: https://lhvbank.zoom.us/webinar/register/WN_3bEDDGaqQL-Q3rXLMkk-eA.
LHV Group is the largest domestic financial group and capital provider in Estonia. The LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs nearly 1,200 people. As at the end of September, LHV’s banking services are being used by 445,000 clients, the pension funds managed by LHV have 116,000 active clients, and LHV Kindlustus protects a total of 169,000 clients. LHV Bank Limited, a subsidiary of the Group, holds a banking licence in the United Kingdom and provides banking services to international financial technology companies, as well as loans to small and medium-sized enterprises.
Priit Rum Communications Manager Phone: +372 502 0786 Email: priit.rum@lhv.ee
