LHV Group's consolidated net income last year totaled €310.5 million, increasing 79 percent on year, while net interest income nearly doubled to €253.8 million, net fee and commission income went up by a fifth to €54.1 million, and consolidated expenditures totaled €134.3 million, increasing by 50 percent on year, according to a quarterly report published by Nasdaq Tallinn on Tuesday.

The financial group's consolidated net profit in 2023 reached €140.9, increasing by nearly 130 percent on year from €61.4 million.

Of its subsidiaries, AS LHV Pank earned €141.4 million, UK Bank Limited €5.3 million, AS LHV Varahaldus €1.7 million and AS LHV Kindlustus €305,000 in net profit in 2023.

"In 2023, LHV did well," CEO Madis Toomsalu said, commenting on the group's results. "Increasing business volumes and rising interest rates have strengthened the results, but the general economic downturn has made planning difficult. Interest rates are cyclical, and a very rapid rise can be followed by a rapid decline."

According to Toomsalu, in addition to its daily activities, the group has paid particular attention to the successful launch of LHV Bank in the U.K., the growth of its insurance business as well as the transition to the direct supervision of the European Central Bank (ECB).

Nearly €1.5 billion in loans issued

As of the end of last year, the volume of LHV Group's consolidated assets stood at a record €7.13 billion, up by €990 million or 16 percent on year, including an 8-percent increase in the fourth quarter.

The financial group's consolidated deposits increased by a similar 17 percent on year from €830 million to €5.73 billion, including an increase in deposits of €415 million in the fourth quarter.

Last year, LHV's consolidated loan portfolio increased by €353 million, or 11 percent, to €3.56 billion; this included growth of 6 percent, or €186 million in the fourth quarter alone.

The aggregate volume of funds managed by LHV also increased by €187 million or 14 percent on year to €1.52 billion, including €68 million in growth contributed in the fourth quarter.

The number of processed payments related to clients that were financial intermediaries, meanwhile, amounted to 49.5 million in 2023, increasing nearly 90 percent on year from 26.1 million payments in 2022.

Last year, LHV Bank financed the Estonian economy with a total of €1.49 billion in issued loans, including €321 million in loans issued to private customers and €1.169 million issued to companies. In addition to interest income, the bank earned more service fee and commission income in the fourth quarter than before, supported by a couple of larger investment banking transactions.

LHV Group's annual cost/income ratio was a good 43.3 percent, while its return on equity stood at 29 percent. The group's liquidity and capitalization remain strong, but given the macroeconomic situation remains under close monitoring.

U.K. bank now independently financed

LHV Bank Limited, meanwhile, continued to grow its business volumes last year, successfully launching deposit-taking via deposit platforms, increasing the volume of deposits to €239 million as well as increasing its loan portfolio to €79 million. At the same time, the volume of payments in the Banking Services segment was at its highest level ever on a quarterly basis.

As the bank in the U.K. is now independently financed, LHV Bank repaid LHV Pank a previous loan of €71 million. The growth in both interest as well as service fee and commission income was also faster than planned at the end of the year.

In terms of development activities, LHV Bank began preparations for the launch of its mobile bank as well as strengthened its team with leaders of several important divisions. Compared with the financial plan, the bank's expenses were higher than projected due to salary costs and one-time IT and legal costs.

LHV Group is the largest domestic financial group and capital provider in Estonia. It employs more than 1,060 people, and as of the end of December, LHV's banking services were being used by 417,000 clients, LHV-managed pension funds had 123,000 active clients and LHV Kindlustus insured a total of 161,000 clients.

LHV Bank, a subsidiary of the group, holds a banking license in the U.K., where it provides banking services to international financial technology (fintech) companies as well as loans to small and medium-sized enterprises (SMEs).

The listed Estonian financial group will publish its financial plan and five-year forecast for 2024 next week.

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