Unaudited results of LHV group for the first quarter of 2021 tallinn stock exchange: LHV1T
In the first quarter of 2021, the AS LHV group achieved a total of 11.4 million euros in consolidated net income. During the quarter, the bank achieved a net profit of 11.8 million euros, including 2.2 million euros from customer services related to the UK branch. Varahaldus generated 0.6 million euros in net loss and Kindlustus 0.3 million euros in net loss. The Group’s return on equity for the first quarter was 18.2%.
Year-on-year, LHV Group net profit increased by 3.9 million euros (53%) in the first quarter and 6.6 million euros (37%) lower than at fourth quarter 2020, when the group profit also included the success fees related to the management of pension funds. At the end of the first quarter, LHV is ahead financially for 2021, released in February, by 0.9 million euros.
At the end of March, the asset volume of the consolidation group increased to 5.68 billion euros. During the quarter, the volume of the Group’s consolidated loan portfolio increased from 96 million euros (+ 4%; + 353 million euros in Q4) to 2.3 billion euros, and deposits increased from 614 million euros (+ 15%; + 904 million euros) in Q4) to 4.73 billion euros. In terms of growth in deposits, 595 million euros came from financial intermediaries and 54 million euros from regular customers, the share of deposit platforms fell by 35 million euros. The total volume of funds managed by LHV increased by € 50 million (+ 3%; + € 41 million in Q4) to € 1.59 billion.
| Income statement, thousands of euros | Q1-2021 | Q4-2020 | 3 months 2021 | 3 months 2020 |
| Net interest income | 20,371 | 19,893 | 20,371 | 16,324 |
| Net commission and commission income | 8 640 | 14,183 | 8 640 | 6,508 |
| Net gains on financial assets | -375 | 1316 | -375 | -389 |
| Income from insurance activities | 89 | 0 | 89 | 0 |
| Other income | 40 | 57 | 40 | 36 |
| Total revenue | 28 765 | 35,449 | 28 765 | 22,478 |
| Personnel costs | -7 253 | -6,368 | -7 253 | -5 769 |
| Rent and office expenses | -463 | -239 | -463 | -278 |
| IT expenses | -1,005 | -964 | -1,005 | -729 |
| Marketing costs | -532 | -475 | -532 | -473 |
| Other operating expenses | -4 507 | -3 381 | -4 507 | -3 926 |
| Total operating expenses | -13,760 | -11,427 | -13,760 | -11,175 |
| Profit before impairment losses | 15,005 | 24023 | 15,005 | 11,303 |
| Impairment losses on loans and advances | -1,601 | -2,243 | -1,601 | -1,011 |
| Income tax | -1 988 | -3 741 | -1 988 | -2,809 |
| Net profit | 11,416 | 18,039 | 11,416 | 7 483 |
| Profit attributable to non-controlling interests | 373 | 200 | 373 | 404 |
| Profit attributable to shareholders of the parent company | 11043 | 17 840 | 11043 | 7,079 |
| Balance sheet, thousands of euros | March 2021 | Dec 2020 | March 2020 |
| Cash and cash equivalents | 3,193,146 | 2,393,537 | 1,284,182 |
| Financial assets | 149,739 | 330,055 | 231 321 |
| Loans granted | 2 322 518 | 2,225,681 | 1,746,205 |
| Loan impairments | -18 170 | -16,858 | -7,296 |
| Receivables | 5 185 | 9 388 | 2,780 |
| other assets | 30,005 | 29,604 | 30 148 |
| Total assets | 5 682 423 | 4,971,407 | 3,287,341 |
| Sight deposits | 4,272,474 | 3,635,166 | 2 357 463 |
| Term deposits | 461 369 | 484,604 | 595,948 |
| Loans received | 508,801 | 468,585 | 25,687 |
| Loans received and deposits from customers | 5,242,644 | 4,588,355 | 2 979 098 |
| Other liabilities | 74,544 | 27,776 | 26,093 |
| Subordinated loans | 110,000 | 110,000 | 75,000 |
| Total responsibilities | 5 427 188 | 4 726 131 | 3,080,191 |
| Equity | 255 235 | 245,276 | 207,150 |
| Minority interests | 6,756 | 8 483 | 4 190 |
| Total liabilities and equity | 5 682 423 | 4,971,407 | 3,287,341 |
| Profitability ratios | Q1-2021 | Q4-2020 | 3 months 2021 | 3 months 2020 |
| Return on equity | 18.2% | 31.3% | 18.2% | 14.0% |
| Cost / income ratio | 47.8% | 32.2% | 47.8% | 49.7% |
| Net gains on financial assets | 0.3% | 0.4% | 0.3% | 0.2% |
In the LHV loan portfolio, loans to businesses increased by 68 million euros and loans to individuals by 28 million euros in the first quarter. In one year, the LHV Group’s loan portfolio increased by 565 million euros, or 33%. Regardless of the rapid growth, no compromise has been made on the credit quality which remains good; State wage subsidies and grace periods offered by banks have provided monetary buffers for borrowers. Most of the grace periods granted last year ended on time; the volume of loans subject to grace periods increased from the original 350 million euros to 60 million euros at the end of the first quarter. Also this year, the state established restrictions to prevent the virus; at the same time, since february, customers have only requested new grace periods to the tune of 11 million euros.
LHV is committed to supporting the achievement of climate goals. To make it easier to buy the most climate-friendly vehicles, we lowered the electric vehicle rental interest rate to 1.95% in March. The same interest rate also applies to the green home loan. These are the most favorable interest rates in LHV.
To boost investment activity, LHV reduced service fees for foreign securities in February. First, we have introduced to the market the pension investment account, or PIA, which pension savers can use to make investments themselves in the second pillar system. By mid-April, 2,000 investors had signed up for a PIA.
Among other significant events in the quarter, LHV group subsidiary LHV UK Limited was registered at UK Companies House in February. During the quarter, LHV Kindlustus began to take out the first home insurance contracts and took over extended warranty insurance contracts linked to the sale of technological devices by Euronics. LHV bank cards have been added the possibility of seeing their PIN code digitally, and the possibility for private customers to activate the permanent donation function on the debit card, which allows to contribute to charity with each payment by card .
Pension funds posted a positive rate of return, although actively managed funds were outperformed by index funds due to lower equity risk. Part of this is about maintaining the necessary liquidity in actively managed funds for clients leaving in September. At the end of March, the number of clients leaving Pillar II in September and their volume of assets became clear; these remained below estimates.
Comment from Madis Toomsalu, CEO of LHV Group:
“LHV got off to a strong start this year. We have continued to finance the Estonian economy, have taken the first successful steps of establishing a bank in the UK which requires regulatory licensing; we have vigorously increased our number of customers, strengthened the offerings of our services, and once again received the recognition of being the bank offering the best service.
We have increased our market share in the lending market and increased our role as a market leader in investment services. The key words are activity and willingness to contribute to the growth of Estonian capital. LHV also continued to fund its customers during the restrictions. In January and February, LHV’s market share in providing loans to Estonian companies was over 50%. For mortgage loans, the respective indicator was 12%. Interest in investing continues to grow as clients entered into nearly 16,000 new investment contracts during the quarter and more than 8,000 asset-holding clients were added. In terms of investment services, we have contributed to growth with the most comprehensive product portfolio, widely offering investment education, with the best brokerage service in the Baltic States and with the highest service fees. favorable.
The market value of LHV increased by more than 400 million euros during the year. I am extremely happy that the growth to become the largest listed company in Estonia and the resulting increase in value is distributed among 13,000 shareholders who are Estonian people and companies. “
AS LHV Group reports are available at: https://investor.lhv.ee/en/reports.
In order to present the quarterly results, LHV Group will organize an investor meeting via the Zoom webinar environment. The virtual investor meeting will take place on April 20 at 9:00 a.m. before the market opens. The presentation will be in Estonian. We kindly ask you to register at https://lhvbank.zoom.us/webinar/register/WN_EL2t_a7xSaGyQX9PBfitlw.
LHV Group is the largest domestic financial group and provider of capital in Estonia. The main subsidiaries of the LHV group are LHV Pank, LHV Varahaldus and LHV Kindlustus. LHV employs more than 560 people. LHV banking services are used by nearly 274,000 clients and the pension funds managed by LHV have almost 177,000 active clients. LHV’s UK branch provides banking infrastructure to 150 international financial services companies, through which LHV’s payment services reach customers around the world.
Priit rum
LHV Communication Manager
Telephone: +372 502 0786
Email: [email protected]
