Published: 2018-10-23 07:00:00 CEST
LHV Group
Quarterly report

LHV Group’s third quarter and 9 months unaudited financial results

The three quarters of this year have earned AS LHV Group a net profit of EUR 6.2 million. The bank’s profit shaped to EUR 4.4 million and the asset management’s to EUR 2.1 million.

The return on equity belonging to LHV’s shareholders was 15.9% in Q3. Compared to Q2 of 2018 the consolidated profit declined by EUR 3.9 million. The reason for this was that Q2 results included the sale income of share in Mokilizingas and a larger income from advising an institutional banking transaction. Compared to Q3 2017, the groups net profit increased by EUR 0.7 million. Loan impairments were made in the amount of EUR 1.9 million in Q3 and the payment of advance income tax amounted to EUR 0.5 million.

The group’s consolidated net loan portfolio grew by EUR 35 million (+5%; +EUR 11 million in Q2) and reached EUR 812 million. Consolidated deposits increased by EUR 95 million (+6%; -EUR 183 million in Q2) to EUR 1,638 million. And at that the deposits related to payment intermediates increased by EUR 41 million. During Q3 the volume of funds managed by LHV rose by EUR 37 million (+3%; +EUR 40 million in Q2) and reached EUR 1,204 million.

In the 9 months of 2018, AS LHV Group posted a consolidated net profit of EUR 20.5 million: the bank earned EUR 13.1 million and the asset management EUR 4.9 million. In comparison with 2017, the 9 month net profit this year was EUR 5.1 million higher.

Comments by Madis Toomsalu, CEO of LHV Group:
"In terms of growing activity of customers, but also the activities of LHV itself, the third quarter was significantly strong. Our business is growing. Over the three quarters of the year, more than 20,000 new customers joined LHV Bank. Several activity indicators, including salary receipts, number of customers with assets and payments, use of cards, acceptance of card payments and number of new investment contracts reached record levels in Q3.

The group’s quarterly profit of EUR 6.2 million was positively influenced by income related to transaction advisory services in the amount of EUR 0.7 million and negatively by specific allowances of EUR 1.2 million. The credit portfolio remains strong, and together with growing volumes, interest income is also increasing, all be it the allowance related to one client has influences this year’s profit.

Out of the activities of the bank I would emphasise the launch of Youth Bank offer in the end of August. In addition to young people, our new micro investment offer is also targeted to all other clients, who are looking to start investing and saving without much effort. The launch of micro investment brought an exponential growth of new investment contracts. As a major change, we implemented e-identification at the end of the quarter, which enables one to open a bank account without leaving home.

To improve the financing structure of LHV Bank, we concluded an agreement with the leading European deposit marketplace platform Raisin that now enables the bank to accept new deposits both from the German and Austrian market.

When it comes to our financial intermediates’ business line, we are concentrating on finding new partnerships and developing our service portfolio. The interest of financial service providers in banking services is strong and the number of new clients is expanding continuously.

The total volume of funds managed by LHV grew by EUR 37 million over the quarter, however at the same time the number of active clients of the 2nd pillar decreased by 300.

During the quarter, we focussed more on the long-term strategy of LHV. According to this, our home market is Estonia, where we focus on offering the best banking service and best performance pension funds. We want to address a growing number of clients, who care about increasing the share of Estonian capital in the offering of local financial services. We try to run our business in a way that the ever increasing efficiency is reflected in the declining cost/income ratio and the shareholders are guaranteed a 20% rate of return before taxes. On the other hand, we are also looking for business on foreign markets and have become a company exporting financial services. We have made a very strong start in the UK business line, where our activity has already yielded profit.

In terms of long-term economic outlook, the biggest concern is the variance of speed in different European regions and overregulation causing stagnation. According to the basics of the market economy, there is no income without risk; accordingly, progressive banning of risk-taking and bureaucratisation also decreases potential development and income. The concern will only get worse, if development in the US and China appears to be faster than that of in Europe. Focussing on a period of a couple of years, the main scenario is still growth of the economy in the Eurozone by a couple of percentage points a year. LHV’s growth trends are also supported by the Estonian business environment. The credit market has remained strong. As the main risks, we could point out high dependence on the external environment, rather low private sector investments and labour shortage."

Income statement, EURt Q3-2018Q2-20189 months 20189 months 2017
   Net interest income9 4559 40827 86122 175
   Net fee and commission income6 1477 21518 95215 612
   Net gains from financial assets913353381 400
   Other income7553768-149
Total revenue16 44716 96147 91939 038
   Staff costs-3 779-3 938-11 463-9 486
   Office rent and expenses-430-193-1 294-1 070
   IT expenses-549-507-1 572-1 215
   Marketing expenses-522-385-1 424-2 654
   Other operating expenses -2 638-2 751-7 618-5 788
Total operating expenses-7 918-7 774-23 371-20 213
EBIT8 5299 18724 54818 825
Earnings before impairment losses8 5299 18724 54818 825
   Impairment losses on loans and advances -1 858-1 596-4 337-3 050
   Income tax-501-631-3 070-951
Net profit for the reporting period from continued operations6 1706 96017 14114 824
Profit/-loss from discontinued operations030803 324561
Net profit6 17010 04020 46515 385
   Profit attributable to non-controlling interest4555151 2771 468
   Profit attributable to share holders of the parent5 7149 52519 18813 917

Balance sheet, EURt  September 2018June 2018September 2017
   Cash and cash equivalents965 494879 204696 392
   Financial assets48 82954 08461 583
   Loans granted822 696785 663663 941
   Loan impairments-10 745-9 116-8 409
   Receivables from customers7 3726 4958 745
   Other assets23 77623 45012 933
Total assets1 857 4211 739 7801 435 184
      Demand deposits1 513 1131 427 5691 144 114
      Term deposits124 476115 212124 036
      Loans received12 2896 00016
   Loans received and deposits from customers1 649 8771 548 7811 268 166
   Other liabilities26 02416 66015 214
   Subordinated loans30 90030 90030 900
Total liabilities1 706 8021 596 3411 314 279
Equity150 620143 439120 905
   Minority interest3 4472 9926 787
Total liabilities and equity1 857 4211 739 7801 435 184

Reports of AS LHV Group are available at

To present the interim results LHV will hold an investor meeting, that will take place on 23 October 2018 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 The investor meeting will be live streamed on LHV’s Facebook page

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 about 154,000 customers use LHV’s banking services. Pension funds managed by LHV have about 178,000 customers.


LHVGroup 2018-Q3 Investor Presentation.pdf
Factbook ENG 2018-Q3.pdf
LHV Group Interim Report 2018-Q3.pdf