Luminor third quarter net profits up 49.8 percent on year

Luminor Bank in Tallinn.
Luminor Bank in Tallinn. Source: Siim Lõvi/ERR

Estonian-headquartered Baltic bank Luminor posted a net profit of €40 million in the third quarter of 2022, up 49.8 percent on year. This improvement was driven principally by an increase in revenues, as the bank grew net interest and net fee income, and supported by marginally lower expenses, the bank announced Thursday.

The third quarter continued to be affected by the geopolitical and economic impacts of Russia's full-scale invasion of Ukraine, with the Baltic region recording the highest inflation rates in the eurozone, according to a press release. As Luminor adjusted to the new operating environment, the bank grew its customer lending and increased efficiency again, resulting in an increase in net profits.

"The outlook for the Baltic region is strong, but the continuing high uncertainty about future growth and high inflation rates are starting to reduce customer demand for new loans," said Luminor Bank CEO Peter Bosek.

Luminor's return on normalized equity improved on year to 12.2 percent, up from 8.5 percent in the third quarter of 2021.

The bank's liquidity and capital positions remain strong. As of the end of the quarter, Luminor's Common Equity Tier 1 (CET1) and Total Capital Ratios (TCR), including net profit for the period, stood at 18.9 percent following the payment of a €90 million dividend.

Luminor's credit quality, meanwhile, remains robust as well. Non-performing loans fell to 1.3 percent of gross lending — its lowest level yet. The bank also lacks direct and indirect risk positions in Russia, Belarus or Ukraine.

The bank increased loans to individuals as well as companies in the third quarter of 2022, with mortgage balances reaching €5 billion.

Other efforts last quarter included the further strengthening of the bank's cybersecurity and regulatory compliance processes, enhancement of its IT stability and the completion of the acquisition of Estonian e-commerce payment solutions provider Maksekeskus.


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Editor: Aili Vahtla

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