The first three months of 2017 brought AS LHV Group a net profit of EUR 5.1 million, with the bank posting a profit of EUR 4.3 million, asset management EUR 0.7 million and Lithuanian business unit Mokilizingas 0.3 million. LHV Group’s return on equity was 17.1% in Q1.
The group’s profit was EUR 0.6 million lower than in Q4 of 2016 and EUR 1.6 million higher than a year ago, Q1 of 2016.
In the first three months of this year the group’s consolidated loan portfolio grew by EUR 8 million (+1%; +EUR 60 million in Q4) and reached EUR 546 million. The consolidated deposits grew by EUR 22 million (+3%; +EUR 36 million in Q4) reaching EUR 798 million. During the quarter the volume of funds managed by LHV rose by EUR 46 million (+5%; EUR 37 million in Q4) and reached EUR 1,020 million.
According to Madis Toomsalu, CEO of LHV Group, the company had an active beginning to 2017. "The quarter was characterised by strong economic results, a good growth of the client base, several new products and recognitions, a productive general meeting of shareholders, and the decision for the first payment of dividends being adopted," Toomsalu commented.
"The decline of the first quarter’s profit when compared with the 4th quarter was caused mainly by the increase of income tax expenditure by EUR 0.9 million. The profit was supported by the clients’ high activity and strong credit quality. Over the quarter, the number of new clients for LHV bank grew by 5,000 and the total number of clients surpassed 117,000. The loan write-down expenditure in the first quarter was EUR 0.1 million, which is EUR 0.6 million less than in the previous quarter. The modest rise in the volume of the bank’s loan portfolio was due to higher than average repayment of loans from real estate development; on the other hand, the sum of unbridled loans from concluded contracts grew to record high. This stands for work done in advance.
During the quarter, we updated LHV’s private banking offer and we hope to show strong competitiveness with this service. LHV Finance launched the car- and home repair loan that offer consumers more favorable conditions than the consumer loan product to finance expenditures with specific purpose. It is gratifying to see, that according to surveys by Dive and Kantar Emor, LHV is the bank with best service in Estonia, and we also hold in high regard the third position achieved in the reputation survey of IT employers.
The result of asset management was affected by the income tax expenditure on the dividends paid to the Group, and by the decrease of pension fund administration fees for the average of 19% in February.
The number of 2nd pillar clients decreased by 1,900 during the quarter. On the background of high-priced securities markets, the Fund Manager keeps the investment risks of the actively managed pension funds low by looking for alternative investment opportunities, first and foremost among Estonian enterprises outside the stock market. LHV pension funds helped BaltCap fund the acquisition of the web portals auto24 and Kuldne Börs. It is expected that investments made in Estonia are able to provide pension savers a higher yield, while also enlivening Estonian economy.
LHV’s outlook for the current year is good. We wish to grow in all business directions but we will not do it at the expense of client satisfaction, credit quality and excessive risks in pension funds. The medium-term plans of LHV show that we have room for growth multiple times over. In addition to retail, private and business banking, LHV Pank will start serving the providers of payment services. LHV is an organisation of bold ideas and it is also reflected in our ambitions," Madis Toomsalu commented.
| Income statement, EUR t | Q1-2017 | Q4-2016 | Q1-2016 |
| Net interest income | 8 164 | 8 262 | 6 788 |
| Net fee and commission income | 5 285 | 5 847 | 3 654 |
| Net gains from financial assets | 396 | -485 | 199 |
| Other income | -23 | -9 | -15 |
| Total revenue | 13 822 | 13 615 | 10 626 |
| Staff costs | -3 590 | -3 198 | -3 225 |
| Office rent and expenses | -437 | -398 | -383 |
| IT expenses | -416 | -497 | -443 |
| Marketing expenses | -1 107 | -1 456 | -1 088 |
| Other operating expenses | -2 145 | -2 279 | -1 689 |
| Total operating expenses | -7 695 | -7 827 | -6 828 |
| EBIT | 6 127 | 5 788 | 3 798 |
| Earnings before impairment losses | 6 127 | 5 788 | 3 798 |
| Impairment losses on loans and advances | -94 | 17 | -255 |
| Income tax | -983 | -70 | -77 |
| Net profit for the reporting period from continued operations | 5 050 | 5 735 | 3 466 |
| Profit/-loss from discontinued operations | 0 | 0 | 0 |
| Net profit | 5 050 | 5 735 | 3 466 |
| Profit attributable to non-controlling interest | 581 | 838 | 447 |
| Profit attributable to share holders of the parent | 4 469 | 4 897 | 3 019 |
| Balance sheet, EURt | March 2017 | Dec 2016 | March 2016 |
| Cash and cash equivalents | 348 474 | 306 500 | 249 012 |
| Financial assets | 68 609 | 76 140 | 98 698 |
| Loans granted | 551 233 | 543 382 | 436 673 |
| Loan impairments | -5 571 | -5 741 | -4 842 |
| Receivables from customers | 2 587 | 3 478 | 1 628 |
| Other assets | 11 952 | 11 687 | 3 969 |
| Total assets | 977 284 | 935 447 | 785 138 |
| Demand deposits | 668 350 | 624 219 | 442 243 |
| Term deposits | 129 863 | 152 583 | 202 664 |
| Loans received | 90 | 779 | 15 228 |
| Loans received and deposits from customers | 798 303 | 777 581 | 660 135 |
| Other liabilities | 35 081 | 19 241 | 16 608 |
| Subordinated loans | 30 900 | 30 900 | 30 900 |
| Total liabilities | 864 284 | 827 722 | 707 643 |
| Equity | 113 000 | 107 724 | 77 496 |
| Minority interest | 5 900 | 5 319 | 3 688 |
| Total liabilities and equity | 977 284 | 935 446 | 785 139 |
Reports of AS LHV Group are available at https://investor.lhv.ee/en/reports/.
To present the results in interim report LHV will hold an investor meeting, that will take place on 18 April 6.00 p.m. in LHV Tallinn client office, Tartu mnt 2 (CityPlaza building, 1st floor). All participants please register at https://fp.lhv.ee/academy/455.
LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are AS LHV Pank and AS LHV Varahaldus. LHV employs about 300 people and over 117,000 customers use LHV’s banking services. Pension funds managed by LHV have about 180,000 customers.
Priit Rum
Communication Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee
