Luminor bank has reported a rise in net profit of nearly 50 percent between the the last quarter of 2022, and the first quarter of 2023 (Q1 2023), posted at a time of rising interest rates.
Commenting on the Q1 2023 results, Luminor Bank CEO Peter Bosek: said: "Our solid performance in the first quarter, including growth in revenue and improved liquidity and capital positions, has enabled continued investment in our IT systems and processes to improve our customer experience.
Non-performing loans (bank loans that are subject to late repayment or are unlikely to be repaid by the borrower) remained at 1.2 percent of gross lending, the bank's lowest level ever, it reports.
Q1 2023 net profit stood at €60.3 million, 49.6 percent up on the preceding quarter, Luminor says.
Operating expenses, on the other hand, rose by 37 percent, mainly due to investments in IT systems and processes, the bank said.
Luminor's cost to income ratio improved to 49.9 percent, generating an annualized return on equity of 15.2 percent.
Luminor's liquidity and capital positions remain strong, the bank says, while its Common Equity, Tier 1 and Total Capital Ratios, including net profit for the period, stood at 20.4 percent at the end of the quarter.
Luminor incurred a credit loss allowance, though at a lower level than last year, and retained the net profit it generated.
Bosek added that despite prevailing uncertainty relating to economic growth, the outlook for the Baltic region is strong and the bank is well placed to deliver on its strategy, in all its markets.
Luminor maintained its share of new mortgage lending, increased term deposits and grew its active customer base, while in the corporate sector, Luminor remained the leading underwriter of new debt securities offered by Baltic corporate issuers, the bank says, and experienced strong deposit inflows.
Q1 2023 saw reduced demand for new loans and increased deposit balances in Estonia and the region, as customers responded to less certain economic growth and higher reference interest rates, while Luminor improved net interest income. This occurred against the backdrop of interest rate rises; the bank called the low rates in the preceding years "extraordinary".
Luminor formerly operated under the DNB and Nordea brands and is the third-largest bank in Estonia. Its majority stakeholder is the Blackstone Group.
Editor: Andrew Whyte