Published: 2018-04-24 07:00:00 CEST
LHV Group
Quarterly report

LHV Group’s 2018 First Quarter Unaudited Financial Results

The first three months of 2018 brought AS LHV Group a net profit of EUR 4.3 million, with the bank posting a profit of EUR 3.6 million, asset management EUR 0.7 million and Lithuanian business unit Mokilizingas EUR 0.2 million. In Q1, LHV Group paid income tax amounting to EUR 2.0 million. LHV Group’s return on equity was 12.4% in Q1.

The profit of the consolidation group was EUR 2.5 million lower than in Q4 of 2017 and EUR 0.8 million less than a year ago, Q1 of 2017.

In the first three months of this year the group’s consolidated loan portfolio grew by EUR 34 million (+12%; +EUR 269 million in Q4) and reached EUR 766 million. The consolidated deposits grew by EUR 188 million (+3%; +EUR 36 million in Q4) reaching EUR 1,725 million. Among this the deposits of financial intermediaries grew by EUR 126 million.

During the quarter the volume of funds managed by LHV rose by EUR 24 million (+2%; EUR 35 million in Q4) and reached EUR 1,127 million.

Comments by Madis Toomsalu, CEO of LHV Group:
"In the first quarter, the trends seen last year have continued. LHV’s solid fundamentals are supported by the Estonian economic environment. Economic growth has accelerated and domestic risks are offset by a balanced budget, low government debt, and a positive balance of trade. The main risk is the high development volume in the real estate sector. The credit market remains strong.

We consider it a strong result that the number of customers is growing: the bank’s customer number increased by 6,000 during the quarter and the number of active pension clients by 1,200. A study conducted by Dive affirmed that the quality of LHV’s service is very high and Euromoney magazine named LHV’s private banking service the best in Estonia.

As to new products, we introduced two new loans: a Health and Beauty Loan and a Home Furnishing Loan. We helped with the market launch of mTasku, a payment solution developed by Telia.
Q1 included the opening of LHV Bank’s United Kingdom branch. The objective of the branch is developing financial intermediaries business line.
In March, we announced the establishment of a new Pillar 2 pension fund that invests into Estonia. Provided suitable investments exist, the fund will actively invest up to 100% of its assets into Estonian stocks, bonds, real estate and other funds.

The group’s consolidated Q1 profit of EUR 4.3 million was influenced by income tax amounting to EUR 2.0 million and greater impairments occasioned by the adoption of the IFRS standard’s impairment model. The payment of dividends by LHV Varahaldus to LHV Group incurred income tax expense of EUR 1.1 million and the income tax expense on the LHV Bank dividend amounted to EUR 0.8 million.

In February, for the first time, we released a long-term, five-year financial forecast in addition to this year’s financial plan. LHV continues to be a rapidly growing company, and to support the growth, we increased LHV Bank’s share capital by EUR 10 million within the group.

The bank’s consolidated profit was EUR 3.6 million in Q1. The first quarter was characterized by the fact that customers remained highly active and growth in loans and deposits. The total number of the bank’s customers approached 140,000.
The bank’s loan portfolio grew by EUR 34 million in Q1. The increase in Q1 loan impairment costs to EUR 0.9 million is largely related to the changeover to IFRS 9 in early 2018.
The profit of LHV Varahaldus was EUR 0.7 million in Q1, being influenced by the income tax expense on payment of dividends.
The Lithuanian business unit Mokilizingas posted a profit of EUR 0.2 million in Q1, which is EUR 1.1 million less than in the last quarter of 2017. The net loan portfolio increased by EUR 10 million during the quarter, standing at EUR 60 million by the end of the quarter. The portfolio’s credit quality remains stable.

Late in the first quarter, we disclosed an offer made by AS Inbank to acquire the shares in "UAB Mokilizingas". By now we have accepted this offer. The value of the shares held by LHV amount to EUR 7.5 million. The sale of our share will earn AS LHV Group an extraordinary profit of EUR 3 million, thus we plan to review our Financial plan for 2018. We will disclose the renewed Financial plan on 17 May."

Income statement, EUR t Q1-2018Q4-2017Q1-2017
   Net interest income10 1959 8688 164
   Net fee and commission income6 2325 9875 285
   Net gains from financial assets-87-421396
   Other income-45-23
Total revenue16 33715 43913 822
   Staff costs-4 142-3 945-3 590
   Office rent and expenses-494-499-437
   IT expenses-552-570-416
   Marketing expenses-890-1 356-1 107
   Other operating expenses-2 802-2 117-2 145
Total operating expenses-8 880-8 486-7 695
EBIT7 4576 9536 127
Earnings before impairment losses7 4576 9536 127
   Impairment losses on loans and advances-1 18640-94
   Income tax-2 014-201-983
Net profit for the reporting period from continued operations4 2566 7915 050
Profit/-loss from discontinued operations000
Net profit4 2566 7915 050
   Profit attributable to non-controlling interest3061 107581
   Profit attributable to share holders of the parent3 9515 6844 469



Balance sheet, EURt March 2018December 2017March 2017
   Cash and cash equivalents1 071 822961 212348 474
   Financial assets57 09156 63468 609
   Loans granted774 760740 169551 233
   Loan impairments-9 111-8 125-5 571
   Receivables from customers12 2509 8022 587
   Other assets24 02813 16511 952
Total assets1 930 8391 772 856977 284
      Demand deposits1 598 6061 409 662668 350
      Term deposits126 749127 267129 863
      Loans received6 0186 00090
   Loans received and deposits from customers1 731 3731 542 929798 303
   Other liabilities26 79671 07335 081
   Subordinated loans30 90030 90030 900
Total liabilities1 789 0691 644 902864 284
Equity141 770127 955113 000
   Minority interest7 0277 8945 900
Total liabilities and equity1 930 8391 772 856977 284

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

To present the results in Q1 interim report LHV will hold an investor meeting, that will take place on 24 April 6.00 p.m in LHV Tallinn client office (Tartu mnt 2, CityPlaza building, 1st floor). The presentation will be made in Estonian. All participants please register at https://fp.lhv.ee/academy/503.

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 380 people and 140,000 customers use LHV’s banking services. Pension funds managed by LHV have over 178,000 active customers.


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

Attachments


LHV Group Interim Report 2018-Q1.pdf
Factbook ENG 2018-Q1.pdf
LHV Group 2018-Q1 Investor Presentation ENG.pdf