LHV Group's first quarter unaudited financial results
OREANDA-NEWS. LHV Groups consolidated profit for Q1 of 2016 amounted to EUR 3.5 million, with the bank earning EUR 2.9 million, asset management EUR 0.6 million and the Lithuanian business unit EUR 0.3 million. LHV Group's return on equity was 16.8% in Q1.
In Q4 of 2014 LHV Group posted a net profit of EUR 3.2 million and in Q1 last year EUR 5.1 million as the company received extraordinary revenue from the sale of the Finnish loan portfolio.
During the first three months of this year the group's consolidated loan portfolio grew by EUR 22 million (+5%) reaching EUR 432 million and deposits grew by EUR 28 million (+ 4%) to EUR 645 million. The volume of funds managed by LHV grew by EUR 27 million (+5%) in the quarter reaching 597 million.
According to Erkki Raasuke, CEO of LHV Group the company had a really good start to the year: „We were standing ready for a spirited start, but the reality has surpassed our expectations. We continue to witness new customer flows that demonstrate the persistent growth in LHV's prominence. The quality of our work has been acknowledged by various organizations engaged in the evaluation of the financial sector. LHV now stands ready to take another step and list its shares on the Tallinn Stock Exchange.
For the Bank the increase in interest income can be attributed to the growth in the loan portfolio. Net fee and commission income remained on par with the previous quarter. Deposit interest expenses are expected to drop, with the interest rates of term deposits lowered in March. Overheads were seasonally lower, but contained higher one-off personnel expenses related to the termination of operations in the Latvian branch.
Credit quality has remained strong, however a separate risk assets department was established in order to prepare for any changes in the credit cycle and take account of the ever-growing loan portfolio.
The first quarter saw a continued growth in the number of new customers with the total reaching 89,000. In January, Nasdaq declared LHV Bank the Baltic Member of the Year. In February, the survey company Dive declared LHV Bank the bank with the best service in Estonia.
As for Asset Management the slight profit decrease can be attributed to the excellent sales results, and the relevant increase in marketing expenses. When it comes to investing, result is all that matters. With the future pensioners now acknowledging LHV Asset Management as the provider of best yields, we are witnessing a record number of new customers. Active customer numbers grew by nearly 5,000 during the quarter reaching 135,000, an all-time high. In January LHV Asset Management signed an agreement to purchase Danske Capital AS. After the transaction LHV Asset Management will be the second-largest pension fund manager in Estonia.
Mokilizingas' profit for Q1 amounted to EUR 0.3 million. The weaker result compared with the last quarter can be attributed to a larger write-down of loans, partially due to technical reasons. The overall loan quality remains strong. The loan portfolio showed no major changes from last quarter. Considering the seasonal nature of consumer financing, this can be considered a good result,” commented Erkki Raasuke.
|Income statement, EURt||Q1-2016||Q4-2015||Q1-2015|
|Net interest income||6 788||6 370||5 222|
|Net fee and commission income||3 654||3 802||3 342|
|Net gains from financial assets||199||189||465|
|Total revenue||10 626||10 382||9 030|
|Staff costs||-3 225||-3 014||-2 585|
|Office rent and expenses||-383||-361||-339|
|Marketing expenses||-1 088||-1 130||-840|
|Other operating expenses||-1 688||-2 101||-1 344|
|Total operating expenses||-6 828||-6 988||-5 448|
|EBIT||3 798||3 394||3 582|
|Earnings before impairment losses||3 798||3 394||3 582|
|Impairment losses on loans and advances||-255||-35||-656|
|Loss from associates accounted for using the equity method||1||-36||0|
|Net profit for the reporting period from continued operations||3 466||3 251||2 857|
|Profit/-loss from discontinued operations||0||-2||2 258|
|Net profit||3 466||3 249||5 115|
|Profit attributable to non-controlling interest||447||422||89|
|Balance sheet, EURt||March 2016||December 2015||March 2015|
|Cash and cash equivalents||249 012||230 501||113 474|
|Financial assets||98 698||110 116||146 752|
|Loans granted||436 673||414 677||331 278|
|Loan impairments||-4 842||-4 680||-4 509|
|Receivables from customers||1 628||2 026||1 448|
|Other assets||3 969||4 487||4 032|
|Total assets||785 139||757 126||592 475|
|Demand deposits||442 243||432 811||275 002|
|Term deposits||202 664||184 411||184 411|
|Loans received||15 228||15 538||15 538|
|Loans received and deposits from customers||660 135||632 760||474 951|
|Other liabilities||16 608||20 227||23 415|
|Subordinated loans||30 900||30 900||30 900|
|Total liabilities||707 643||683 886||529 266|
|Equity||77 496||73 240||63 209|
|Minority interest||3 688||3 241||2 372|
|Total liabilities and equity||785 139||757 126||592 475|
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 over 250 people and about 90,000 customers use LHV’s banking services. LHV's pension funds have over 135,000 customers.