Published: 2017-02-07 07:00:00 CET
LHV Group
Quarterly report

LHV Group’s 2016 fourth quarter and 12 months unaudited financial results

LHV earned a yearly net profit of EUR 19.9 million

AS LHV Group earned a consolidated profit of EUR 5.7 million in Q4 of 2016, with the bank posting a profit of EUR 3.2 million, the profit of asset management was EUR 1.8 million and the Lithuanian business unit EUR 1.0 million.

The group’s Q4 profit was EUR 0.1 million lower than in Q3 and EUR 2.5 million higher than in the previous year. LHV Group’s return on equity was 19.6% in Q4.

The group’s consolidated loan portfolio rose by EUR 60 million during the quarter (+13%; +EUR 9 million in Q3) and reached EUR 538 million. The consolidated deposits grew by EUR 36 million (+5%; +EUR 69 million in Q3) reaching EUR 777 million. The volume of funds managed by LHV rose by EUR 37 million during Q4 (+4%; +EUR 46 million in Q3) reaching EUR 974 million.

LHV posted a profit of EUR 19.9 million for the year 2016. That is EUR 5.1 million more than in 2015 and results in the return on equity held by LHV’s shareholders amounting to 20.7% for the year. The bank’s yearly profit rose to EUR 13.2 million, asset management’s profit amounted to EUR 6.1 million and the Lithuanian business unit’s profit to EUR 1.9 million. Regarding business volumes the yearly growth of consolidated loans was 31%, client deposits grew 26% and funds managed by LHV 71%.

Madis Toomsalu, CEO of AS LHV Group said that the last quarter of 2016 was very good for LHV. "The year’s results and profit were supported by strong customer activity, strong credit quality and the extraordinary revenue generated by the acquisition of Danske Capital. Our success relies on our dedicated, professional, visionary staff members. I am more than happy that the overall results of the recent staff satisfaction survey were the highest on record.

The Bank's profit for Q4 was influenced by EUR 0.5 million drop in the value of bond portfolio. On the other hand the results of the bank were influenced by the strong customer activity and a record growth in the loan portfolio. The total number of bank customers exceeded 112,000.

Corporate loans showed the biggest growth among loan portfolios and credit quality remained strong overall, loan losses amounted to EUR 0.7 million in Q4. The home loan product was launched during the quarter – a product, whose existence eliminates the main obstacle for private customers wishing to change their bank.

Customers’ demand deposits grew, while term deposits shrank during the quarter. The significant change in the structure of deposits has dropped the average expense on deposits. Our cost structure has reached a level which allows providing the home loan product on favourable conditions.

Furthermore, we opened a new, spacious office in Tartu. Well-positioned in a prominent location, we also expect to garner further customer attention.

Asset management’s profit was influenced by the partial depreciation of intangible assets generated by the acquisition of Danske Capital. The profit before depreciation was EUR 2.2 million, on par with Q3 results.

The number of active 2nd pillar pension customers grew by 2.9 thousand. We continued to avoid major investment risks in the management of pension funds. Our flagship - LHV Pension Fund L - ranked second in its category in terms of yield as at the end of the year. Among conservative funds, LHV Pension Fund S generated the highest yield for the year. From November, LHV also offers passively managed 2nd and 3rd pillar pension funds, i.e. funds where the investments do not depend on the fund manager's vision of the financial markets. The volume growth of pension funds means that as of February 2017 the management fees have been lowered, by 19% on average.

The group’s Lithuanian business unit Mokilizingas' profit for Q4 was positively affected by the disposal of uncollectable receivables in the amount of EUR 0.9 million. Q4 also witnessed a growth in loan volumes, attributable to the holiday season. The financing portfolio grew by EUR 1 million during the quarter, amounting to EUR 36 million.

LHV’s outlook for the year ahead is good. Opportunities for growth are evident in all key segments. In a few hours we will disclose LHV’s financial plan for 2017. From this year we also plan to publish LHV Group’s and important subsidiaries’ monthly result overviews. We will begin in a week’s time with the January results."

Income statement, EUR t  Q4-2016 Q3-2016 12 months 2016 12 months 2015
   Net interest income 8 262 7 696 29 976 23 232
   Net fee and commission income 5 847 5 375 19 186 14 665
   Net gains from financial assets -485 449 1 309 3 330
   Other income -9 -17 86 38
Total revenue 13 615 13 503 50 558 41 265
   Staff costs -3 198 -3 048 -12 976 -10 976
   Office rent and expenses -398 -120 -1 511 -1 334
   IT expenses -497 -429 -1 783 -1 369
   Marketing expenses -1 456 -1 315 -4 554 -3 905
   Other operating expenses -2 279 -2 244 -8 090 -6 656
Total operating expenses -7 827 -7 156 -28 914 -24 241
EBIT 5 788 6 347 21 644 17 024
Earnings before impairment losses 5 788 6 347 21 644 17 024
   Impairment losses on loans and advances 17 -500 -1 480 -1 367
   Income tax -70 -55 -270 -869
Net profit for the reporting period from continued operations 5 735 5 792 19 893 14 787
Profit/-loss from discontinued operations 0 0 0 0
Net profit 5 735 5 792 19 893 14 787
   Profit attributable to non-controlling interest 838 447 2 078 1 082

 

Balance sheet, EURt  Dec 2016 Sept 16 Dec 2015
   Cash and cash equivalents 306 500 315 315 230 501
   Financial assets 76 140 77 681 110 115
   Loans granted 543 382 483 596 414 676
   Loan impairments -5 741 -5 297 -4 681
   Receivables from customers 3 478 2 739 2 026
   Other assets 11 687 11 852 4 487
Total assets 935 447 885 886 757 125
      Demand deposits 624 219 578 405 432 811
      Term deposits 152 583 162 551 184 412
      Loans received 779 832 15 538
   Loans received and deposits from customers 777 581 741 788 632 760
   Other liabilities 19 241 11 372 20 226
   Subordinated loans 30 900 30 900 30 900
Total liabilities 827 722 784 060 683 886
Equity 107 724 101 826 73 238
   Minority interest 5 319 4 481 3 241
Total liabilities and equity 935 446 885 886 757 125

 

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

To present the results and the 2017 financial plan LHV will hold an investor meeting, that will take place on 7 February 7.00 PM in LHV Tallinn client office, Tartu mnt 2 (CityPlaza building, 1st floor). All participants please register at https://fp.lhv.ee/academy/453.

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 about 300 people and over 110,000 customers use LHV’s banking services. Pension funds managed by LHV have 180,000 customers.

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


LHV Group interim report 2016-Q4.pdf
LHVGroup 2016-Q4 Investor presentation.pdf
Factbook ENG 2016-Q4.pdf