In the second quarter of 2021, AS LHV Group altogether earned EUR 12.9 million
in consolidated net profit. Within the quarter, the bank earned EUR 16.5 million
in net profit, including EUR 3.1 million from servicing clients related to the
United Kingdom branch. Varahaldus generated EUR 2.3 million in net loss, and
Kindlustus generated EUR 112,000 in net loss. The return on equity (ROE) of the
Group was 19.7% in the second quarter.
Compared to the first quarter of this year, the Group's net profit was EUR 1.5
million higher, i.e., 13% higher. Compared to the second quarter of 2020, net
profit increased by 3.6 times, growing by EUR 9.4 million.
At the end of Q2, the volume of assets of LHV Group was EUR 5.86 billion. Within
the quarter, the Group's consolidated loan portfolio grew by EUR 97 million to
EUR 2.4 billion (+4%; + EUR 96 million in Q1) and consolidated deposits
increased by EUR 188 million to EUR 4.92 billion (+4%; + EUR 614 million in Q1).
The total volume of funds managed by LHV increased by EUR 33 million in Q2, to
EUR 1.62 billion (+2%; + EUR 50 million in Q1). The number of payments processed
reached 16.8 million payments in Q2 (+8% compared to 15.6 million payments in
Q1).
The consolidated net profit of the 6 months of 2021 of AS LHV Group reached EUR
24.3 million, which is EUR 13.3 million, or 121%, higher than in the year
before. Within the 6 months, AS LHV Pank earned EUR 28.3 million in net profit,
including EUR 5.3 million from servicing clients related to the United Kingdom
branch. Within the 6 months, AS LHV Varahaldus generated EUR 2.9 million in net
loss, and AS LHV Kindlustus generated EUR 388,000 in net loss.
Income statement, EUR thousand Q2-2021 Q1-2021 6 months 2021 6 months 2020
-------------------------------------------------------------------------------
Net interest income 22 927 20 372 43 299 31 868
-------------------------------------------------------------------------------
Net fee and commission income 9 098 8 640 17 738 12 696
-------------------------------------------------------------------------------
Net gains from financial assets 292 -375 -83 -68
-------------------------------------------------------------------------------
income from insurance
activities 419 89 508 0
-------------------------------------------------------------------------------
Other income 97 40 137 20
-------------------------------------------------------------------------------
Total revenue 32 834 28 765 61 599 44 516
-------------------------------------------------------------------------------
Staff costs -8 006 -7 253 -15 259 -11 916
-------------------------------------------------------------------------------
Office rent and expenses -384 -463 -847 -514
-------------------------------------------------------------------------------
IT expenses -993 -1 005 -1 998 -1 511
-------------------------------------------------------------------------------
Marketing expenses -549 -532 -1 081 -790
-------------------------------------------------------------------------------
Other operating expenses -7 993 -4 507 -12 500 -7 104
-------------------------------------------------------------------------------
Total operating expenses -17 925 -13 760 -31 685 -21 835
-------------------------------------------------------------------------------
Earnings before impairment losses 14 910 15 005 29 915 22 681
-------------------------------------------------------------------------------
Impairment losses on loans and
advances 791 -1 601 -810 -8 683
-------------------------------------------------------------------------------
Income tax -2 785 -1 988 -4 773 -2 964
-------------------------------------------------------------------------------
Net profit 12 916 11 417 24 332 11 034
-------------------------------------------------------------------------------
Profit attributable to non-
controlling interest 507 373 880 1 019
-------------------------------------------------------------------------------
Profit attributable to share
holders of the parent 12 409 11 043 23 452 10 014
Balance sheet, EUR thousand Jun 2021 Mar 2021 Jun 2020
----------------------------------------------------------------------------
Cash and cash equivalents 3 341 694 3 193 146 1 438 793
----------------------------------------------------------------------------
Financial assets 86 614 149 739 423 117
----------------------------------------------------------------------------
Loans granted 2 418 634 2 322 518 1 818 644
----------------------------------------------------------------------------
Loan impairments -17 298 -18 170 -14 608
----------------------------------------------------------------------------
Receivables from customers 5 319 5 185 3 039
----------------------------------------------------------------------------
Other assets 26 704 30 005 28 527
----------------------------------------------------------------------------
Total assets 5 861 667 5 682 423 3 697 512
----------------------------------------------------------------------------
Demand deposits 4 658 731 4 272 474 2 512 196
----------------------------------------------------------------------------
Term deposits 262 762 461 369 574 739
----------------------------------------------------------------------------
Loans received 505 867 508 801 271 553
----------------------------------------------------------------------------
Loans received and deposits from customers 5 427 361 5 242 644 3 358 488
----------------------------------------------------------------------------
Other liabilities 62 264 74 544 35 702
----------------------------------------------------------------------------
Subordinated loans 110 000 110 000 90 000
----------------------------------------------------------------------------
Total liabilities 5 599 625 5 427 188 3 484 190
----------------------------------------------------------------------------
Equity 262 043 255 235 213 322
----------------------------------------------------------------------------
Minority interest 7 263 6 756 5 243
----------------------------------------------------------------------------
Total liabilities and equity 5 861 667 5 682 423 3 697 512
Profitability ratios Q2-2021 Q1-2021 6 months 2021 6 months 2020
-------------------------------------------------------------------------------
Return on equity 19,7% 18,2% 19,2% 10,4%
-------------------------------------------------------------------------------
Cost / Income ratio 54,6% 47,8% 51,4% 49,0%
-------------------------------------------------------------------------------
Net gains from financial assets -0,1% 0,3% 0,1% 1,1%
In Q2, LHV Group's profits were increased by the higher than usual revenues from
the deposits of financial intermediaries, and the decrease in loan discounts by
EUR 0.8 million. At the same time, net profit of the quarter was negatively
affected by the non-cash flow discount of intangible assets in the amount of EUR
3.1 million, related to clients leaving the II pillar pension funds as a result
of the pension reform.
As at the end of the first half of the year, LHV is ahead of the financial plan
in terms of net profit by EUR 7.6 million. Due to the better-than-expected
results, the company will release its updated financial plan in August 2021.
In the quarterly increase of the LHV loan portfolio, EUR 47 million originated
from retail loans, and EUR 50 million from corporate loans. In terms of growth
of deposits, EUR 306 million originated from financial intermediaries and EUR
32 million from regular clients, the proportion of deposit platforms decreased
by EUR 150 million.
In the year-on-year comparison with June of last year, the volume of deposits
has increased by EUR 1.8 billion (+59%), the volume of loans by EUR 597 million
(yearly increase +33%), funds by EUR 180 million (+12%), and the number of
payments processed by 12 million (+59%). LHV Pank has reached 286,000 clients,
increasing the number of clients by 28% in a year.
At the same time, the credit quality of the bank has remained good. The grace
periods granted last year in the context of the emergency situation have mostly
ended on time, and they have decreased from the original EUR 350 million to EUR
39 million.
The active use on investment services and the increase of investing clients have
continued. During the quarter, nearly 6,600 new investment contracts were
concluded, and over 4,600 clients with assets were added.
Among other important events within the quarter: according to the reputation
survey of Estonian companies, conducted by Kantar Emor, LHV Pank has risen to
5th place on the leaderboard of preference of employment among working people,
and has become the most valued employer among students. In the Estonian
favourite brand survey, conducted by Kantar Emor, LHV reached the top ten for
the first time. In addition to local recognition, the leading international
economic magazine Euromoney declared LHV Pank the best bank in Estonia for the
fourth year in a row.
LHV Pension Funds showed a good rate of return within the quarter, although
actively managed funds were bested by index funds due to a lower equity risk.
One part of this relates to maintaining the necessary liquidity in actively
managed funds for clients leaving in September. Within the quarter, the number
of active clients of pension funds decreased by about 2,000.
In May, LHV Kindlustus introduced its motor own damage insurance and motor third
party liability insurance to the market, and started offering insurance products
to all clients in Estonia. As a new insurance undertaking based on Estonian
capital, LHV Kindlustus wishes to compete strongly on the non-life insurance
market that has so far mostly been occupied by foreign companies.
Comment by Madis Toomsalu, CEO of LHV Group:
"For LHV, the second quarter turned out to be a quarter with some of the best
results. We can clearly see that the Estonian economy is growing, and that the
confidence of companies and consumers is recovering. We are pleased that despite
the situation regarding the economy, we have managed to stand by our clients and
thereby maintain the growth of LHV. For example, the loan portfolio has
increased by EUR 600 million, i.e., by a third, and this despite the
increasingly higher reference framework.
The increase of other business volumes is broad-based, as well. By means of the
most complete product portfolio, wide offering of investment education, the best
broker service in the Baltics, and the most favourable service fees, we have
managed to increase our role as market leader.
Our international business activities deserve special attention. In the course
of applying for the licence of a credit institution in the United Kingdom, we
presented the preliminary regulative business plan to the supervisory
authorities by the end of Q2, and in the next stage, we are focusing on
assessing liquidity and capital adequacy, and on the preparation of other
required documentation.
Since in terms of results, we are already significantly ahead of the financial
plan published in February, we will already be revealing our new financial plan
for 2021 in August."
AS LHV Group reports are available at: https://investor.lhv.ee/en/reports/.
In order to introduce the quarterly results, LHV Group will be organising an
investor meeting via the Zoom webinar environment. The virtual investor meeting
will take place on 20 July at 9:00 before the market opens. The presentation
will be in Estonian. We kindly ask you to register at the address
https://lhvbank.zoom.us/webinar/register/WN_g8hK1ZvvR8Sf_2eAC_PNgw.
LHV Group is the largest domestic financial group and capital provider in
Estonia. LHV Group's key subsidiaries are LHV Pank, LHV Varahaldus, and LHV
Kindlustus. LHV employs over 590 people. LHV's banking services are used by
nearly 286,000 clients, and pension funds managed by LHV have nearly 175,000
active clients. LHV's UK branch offers banking infrastructure to over 150
international financial services companies, via which LHV's payment services
reach clients around the world.
Priit Rum
LHV Communication Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee (mailto:priit.rum@lhv.ee)
|