LHV Group updated its financial plan for the current year
01 October 2024 - 6:00AM
UK Regulatory
LHV Group updated its financial plan for the current year
As the financial results of AS LHV Group are ahead of the
financial plan disclosed in February due to faster than forecast
loan portfolio growth and higher interest levels, the company will
publish an updated financial plan for 2024.
The updated financial plan builds on actual economic performance
and takes into account the gradually falling interest rates and the
slowly improving macroeconomic situation. The quality of the credit
portfolio remains at the projected level, but the formation of
provisions that continue to be forward-looking has been taken into
consideration, primarily due to specific counterparties and changes
in the model. A success fee for LHV Varahaldus has not been
presumed in this year’s plan.
Key indicators |
2023 |
Updated FP 2024 |
Change YoY |
Previous FP 2024 |
Change compared to previous plan |
Financial results, EURt |
|
|
|
|
|
Total revenue |
310,458 |
349,397 |
38,939 |
309,089 |
40,308 |
Total expenses |
134,321 |
150,903 |
16,582 |
143,568 |
7,335 |
Impairment losses on loans |
11,539 |
23,676 |
12,137 |
23,390 |
286 |
Earnings before taxes |
164,598 |
174,818 |
10,220 |
142,131 |
32,687 |
Net profit |
140,938 |
150,304 |
9,366 |
120,081 |
30,223 |
Business volumes, EURm |
|
|
|
|
|
Deposits |
5,731 |
6,667 |
936 |
6,674 |
-7 |
Loans |
3,562 |
4 343 |
781 |
4,037 |
305 |
Assets under management |
1,519 |
1 573 |
54 |
1,668 |
-95 |
Fin. Inter-mediaries’ payments (million pcs) |
49 |
69 |
19 |
62 |
7 |
Key ratios |
|
|
|
|
|
Cost / Income ratio |
43.3% |
43.2% |
-0.1 pp |
46.4% |
-3.3 pp |
ROE |
29.2% |
24.8% |
-4.4 pp |
20.3% |
4.5 pp |
Capital adequacy |
23.5% |
20.5% |
-3.0 pp |
22.5% |
-2.0 pp |
Compared to the financial plan released in February, the new
financial plan forecasts 13% higher revenue, 5% higher expenses,
and 25% higher net profit by the end of 2024. The higher growth in
interest income is thanks to an 8% larger loan portfolio and higher
interest rates than forecast in the previous financial plan. At the
same time, fee and commission income is affected by the slower
growth in the income from financial intermediaries.
Higher operating expenses are affected by the increase in the
number of employees in recent years, one-off salary costs, IT
costs, and the cost of developing the retail business in the United
Kingdom. In addition, unlike what was expected in the previous
plan, the fee of the Deposit Guarantee Fund did not decline this
year.
In terms of business volumes, the increase in the volume of
loans is mainly due to home loans and corporate loans in Estonia.
The volume of the LHV Bank Ltd loans has remained at the same level
as in the previous plan. Consolidated deposits are at the same
level as previously forecast. The volume of funds has been reduced
by 6% compared to the previous financial plan, whereas the number
of payments by financial intermediaries has been increased by
12%.
The business activities of all companies belonging to the LHV
consolidation group are profitable on an annual basis. The lower
profitability of LHV Bank Ltd than previously planned is due, on
the one hand, to the slower growth of the loan portfolio at the
beginning of the year and the lower interest income earned from
financial intermediaries and, on the other hand, developing an
offer aimed at retail clients has been more expensive than
previously planned.
LHV Group invests growing capital in the growth of loan
portfolios at the expense of the profit earned. Capital adequacy
remains at a good level. The updated financial plan forecasts a
return on equity based on net profit of 4.5 percentage points
higher than planned in February.
Comment by Madis Toomsalu, the Chairman of the
Management Board at LHV Group: "The economy of
Estonia and the United Kingdom need investment to grow. LHV is more
profitable than in previous years, but based on the example of the
decrease in our capital rates, the earned profit has gone to the
maximum extent for issuing new loans. Therefore, in the financial
plan for 2024, we have significantly increased loan volumes by more
than 300 million euros. In August, we reached a loan portfolio of 4
billion euros, and by the end of the year we expect the loan
portfolio to grow to 4.3 billion euros, which will translate into
an annual growth of almost 800 million euros. In terms of profits,
the forecast takes into account the 14% profit-based tax rate
applied to banks."
To access the reports of AS LHV Group, please visit the website
at https://investor.lhv.ee/en/reports/.
LHV Group is the largest domestic financial group and
capital provider in Estonia. The LHV Group’s key subsidiaries are
LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The
Group employs over 1,100 people. As at the end of August, LHV’s
banking services are used by 441,000 clients, the pension funds
managed by LHV have 118,000 active clients, and LHV Kindlustus
protects a total of 168,000 clients. LHV Bank Limited, a subsidiary
of the Group, holds a banking licence in the United Kingdom and
provides banking services to international financial technology
companies, as well as loans to small and medium-sized
enterprises.
Priit Rum
LHV Communications Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee
- LHV Group updated financial plan 2024-10-EN