LHV's loan portfolio and other business volumes continued to grow strongly in October, thereby balancing the impact of faster than planned falling interest rates on interest income.
The LHV Group's consolidated loan portfolio increased by EUR 105 million in October. The total volume of deposits increased by EUR 182 million, and the funds managed by LHV increased by EUR 13 million. Payments related to financial intermediaries amounted to 6.4 million in October.
Furthermore, AS LHV Group earned EUR 10.2 million in consolidated net profit in October. Regarding its subsidiaries, AS LHV Pank earned EUR 10.1 million, AS LHV Varahaldus EUR 233 thousand, AS LHV Kindlustus EUR 107 thousand in net profit. The net loss of LHV Bank Ltd was EUR 326 thousand.
The number of the clients of LHV Pank increased by 3,800 in October. Both client activity and a record number of home loans contributed to good results. The bank's loan portfolio increased by EUR 77 million, with retail loans accounting for EUR 40 million and corporate loans for EUR 37 million. Credit quality is strong, while the bank makes forward-looking write-downs.
Over the month, the deposits of LHV Pank increased by EUR 192 million, while deposits of regular clients grew by EUR 103 million. In order to diversify its sources of financing, LHV Pank issued covered bonds worth EUR 250 million at the annual interest rate of 3.09%. Covered bonds are listed on the Dublin Stock Exchange.
The October net loss of LHV Bank, which operates in the United Kingdom, was due to the IT costs incurred, but also from lower deposits of financial intermediaries and the sharing of costs with LHV Pank. The loan portfolio showed a still strong growth of EUR 29 million, with the outstanding loan amount being EUR 180 million. The loan-to-deposit ratio became more efficient, as the volume of platform deposits was reduced by EUR 11 million in October.
The October result of LHV Varahaldus was influenced by more subdued stock markets. The funds managed by LHV moved in different directions. At the same time, the growth of the benchmark index of the second pillar pension funds reached the lowest level of 4.8% in the last 3.5 years. The net profit of Varahaldus slightly outperformed the financial plan, while business volumes and the number of clients remained at the planned level. The acceptance of applications to increase second pillar payments continued, and by the end of October, 9,000 clients had sent their requests.
For LHV Kindlustus, October was a good month for sales, when 16,800 new insurance agreements worth of EUR 3.8 million were concluded. Damages were indemnified in the amount of EUR 2.1 million in October. The increase in loss events was driven by travel insurance. By the end of October, insurance is ahead of the financial plan in terms of both business volumes and profitability.
In October, the construction of LHV's new main office began in Tallinn. The developer of the building is Estconde Invest, and the builder is Merko Ehitus.
At the end of the month, LHV Group started offering subordinated bonds to finance growth. The offering of subordinated bonds with a 6% interest rate will continue until 12 November.
By the end of October, LHV Group is EUR 1.4 million below the financial plan disclosed at the beginning of October in terms of net profit. The financial plan stands.
To access the reports of AS LHV Group, 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 LHV Group's key subsidiaries are LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs over 1,200 people. As at the end of October, LHV's banking services are being used by 448,000 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
LHV Head of Communications
Phone: +372 502 0786
Email: priit.rum@lhv.ee
