Published: 2019-04-16 07:00:00 CEST
LHV Group
Quarterly report

LHV Group unaudited results for Q1 of 2019

In January, February and March 2019, AS LHV Group altogether earnt EUR 5.0 million in consolidated profit. In Q1, the bank earnt EUR 4.2 million and Varahaldus EUR 1.2 million as net profit. LHV Group paid EUR 2.3 million as income tax in Q1. Group’s equity ratio was 12.2%.

The Q1 net profit of the consolidation group was EUR 1.7 million less than in Q4 of 2018, however it has increased by EUR 0.7 million y-o-y.

During the quarter, the Group’s consolidated net loan portfolio increased by EUR 72 million (+8%; +107 million in Q4 of 2018), to EUR 991 million. Consolidated deposits increased by EUR 145 million (+10%; -215 million in Q4), to EUR 1,567 million. At the same time, the deposits related to payment intermediaries increased by EUR 33 million and those of the regular customers by EUR 112 million.

The volume of funds managed by LHV increased by EUR 43 million over the quarter (+4%; +11 million in Q4), to EUR 1,257 million.

Comment of Madis Toomsalu, the CEO of LHV Group:
"In the first quarter, the growth of our business volumes has been broad-based, while also showing an all-time rapid pace. The number of the bank’s customers grew by 9,500, with more than 3,600 customers joining us in March. The number of salary receipts, customers with assets, payments, use of bankcards, investment contracts is higher than ever. LHV’s loan portfolio reached EUR 1 billion and the customers’ deposits thrived. The total number of LHV’s customers exceeded the threshold of 170,000.

The most important highlights of the quarter were the launch of the entrepreneur account and outgoing instant payments, as well as the acquisition of Verso’s loan portfolio amounting to EUR 13.2 million. In March, we expanded our ATM network, to speak to a growing number of customers all over Estonia.

In January, LHV Group was chosen as the company with the best investor relations on the Nasdaq Baltic Stock Exchange. We are still most happy about the assessment given to our service quality. To be specific, the survey company Dive rated LHV Pank as the bank offering the best service in Estonia.

LHV Group’s profit and profitability were notably influenced by the payment of income tax relating to dividends. All in all, LHV paid EUR 2.3 million as income tax and accordingly, the equity ratio was 12.2% in Q1 of 2019.

By the end of Q1, the consolidated volume of investment funds managed by LHV Varahaldus exceeded the threshold of EUR 1.25 billion; a great part of the growth originated from the recovery of securities markets after the Q4 decline. LHV’s actively managed pension funds still have the lowest price risk related to stock exchanges, as the focus is primarily on making OTC investments. From February, there was an annual decline of 2nd pillar pension fund management fees related to volume growth, as a result of which the operating income decreased. The new management fee rates of 2nd pillar funds range from 0.39% to 1.20%. By the end of the quarter, the number of LHV’s active 2nd pillar customers exceeded 177 thousand.

LHV’s growth trends are supported by the Estonian business environment. The economic growth has been solid and the internal policy risks are managed by the balanced budget, low public sector debt and positive foreign balance.

We expect the slow economic growth to continue; at the same time, forecasting of the surrounding economies has become increasingly complicated. Also, the credit market has remained strong. All of the main credit products, incl. corporate loans and home loans, are growing. The financial health of households is on the strong side, the loan-to-deposit ratio is improving.

Yet, the sector is increasingly influenced by regulatory issues, such as the wish of certain parties to dismantle the 2nd pillar pension. By accusing it of having an insufficient rate of return, productivity is not being improved, but instead, the intention is to destroy the message that we need to save and thus, the development of Estonian capital and capital markets is reversed. The planned changes will be paid by the next generation together with tax increases. This cannot be a goal. We hope that a reasonable dialogue is achieved between the public and those making the decisions."



Income statement, EUR t
Q1-2019Q4-2018Q1-2018
   Net interest income10 94510 28910 195
   Net fee and commission income6 2256 0946 232
   Net gains from financial assets178104-87
   Other income-23108-4
Total revenue17 32416 59516 337
   Staff costs-4 553-4 293-4 142
   Office rent and expenses-229-536-494
   IT expenses-629-735-552
   Marketing expenses-708-599-890
   Other operating expenses-2 987-2 621-2 802
Total operating expenses-9 105-8 783-8 880
EBIT8 2197 8117 457
Earnings before impairment losses8 2197 8117 457
   Impairment losses on loans and advances-951-543-1 186
   Income tax-2 265-544-2 014
Net profit for the reporting period from continued operations5 0026 7254 256
Profit/-loss from discontinued operations000
Net profit5 0026 7254 256
  Profit attributable to non-controlling interest312676306
  Profit attributable to share holders of the parent4 6906 0493 951


Balance sheet, EURt March 2019Dec 2018March 2018
   Cash and cash equivalents764 778682 6581 071 822
   Financial assets26 20547 15357 091
   Loans granted1 001 963929 037774 760
   Loan impairments-11 216-10 276-9 111
   Receivables from customers7 2753 72112 250
   Other assets29 30824 80724 028
Total assets1 818 3131 677 1001 930 839
      Demand deposits1 422 9221 304 2651 598 606
      Term deposits144 082117 933126 749
      Loans received21 63821 5846 018
   Loans received and deposits from customers1 588 6421 443 7821 731 373
   Other liabilities22 32524 65526 796
   Subordinated loans50 90050 90030 900
Total liabilities1 661 8661 519 3371 789 069
Equity156 447157 763141 770
   Minority interest3 2344 1237 027
Total liabilities and equity1 818 3131 677 1001 930 839


AS LHV Group reports are available at https://investor.lhv.ee/en/reports/.

LHV will organize an investor meeting to introduce the quarterly results, to be held on 16 April at 18.00 in LHV Tallinn office (Tartu mnt 2, I floor). The presentation will be made in Estonian. To participate, please register at https://fp.lhv.ee/academy/558. A real-time video broadcast is made of the investor meeting on LHV’s Facebook page www.facebook.com/LHVPank.

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are LHV Pank and LHV Varahaldus. LHV employs about 400 people. More than 171,000 customers use LHV’s banking services. Pension funds managed by LHV have over 177,000 active clients.


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

Attachments


LHV Group Interim Report 2019-Q1.pdf
Factbook EN 2019-Q1.pdf
LHV Group 2019-Q1 Investor presentation EN.pdf