The financial services provider reported a net profit of €5.1 million for the first quarter of 2017. Of the group's divisions, the bank reported €4.3 million, asset management €700,000, and the group's Lithuanian business another €300,000 profit.
With these results, the company’s profits were €600,000 behind the last quarter of 2016, but €1.6 million ahead of those of the same period last year.
"The quarter was characterized by strong economic results, a good growth in our client base, a number of new products and recognitions, a productive general meeting of shareholders and the confirmed decision to pay first dividends," LHV Group CEO Madis Toomsalu said in a disclosure to the stock exchange.
"The decline of profit in the first quarter compared with the fourth quarter was caused mainly by the increase of income tax expenditure by €900,000," he explained. "The profit was supported by clients' high activity and strong credit quality. Over the quarter, the number of new clients grew by 5,000 and the total number of clients surpassed 117,000. The loan write-down expenditure in the first quarter was €100,000, which is €600,000 less than in the previous quarter."
The group's consolidated loan portfolio grew by €8 million to €546 million in the first quarter. Deposits grew by €22 million to €798 million. "The modest rise in the volume of the bank's loan portfolio was due to higher than average repayment of loans from real estate development; on the other hand, the sum total of loans not drawn under concluded contracts grew to record high," noted Toomsalu. "This stands for work done in advance."
Consolidated deposits grew by 22 million euros to 798 million euros. "We updated the offer of LHV private banking during the quarter and hope to offer strong competitiveness on the market with this service," said the CEO. "LHV Finance launched the car and home repair loan that offers consumers more favorable conditions than the consumer loan product to finance expenditures with a specific purpose."
According to Toomsalu, the results of asset management were influenced by the income tax expenditure on dividends paid to the group and the average 19 percent decrease in pension fund administration fees in February from the increased volume of mandatory pension funds.
The total consolidated volume of LHV’s funds increased by €46 million and reached €1.02 billion.
"The number of second pillar customers decreased by 1,900," Toomsalu noted. "On the background of high-priced securities markets, the fund manager keeps the investment risks of actively managed pension funds low by looking for alternative investment opportunities, first and foremost among Estonian enterprises outside the stock market. This is how LHV pension funds helped BaltCap finance the purchase of web portals auto24 and Kuldne Börs. It is expected that investments made in Estonia are able to provide pension savers a higher yield, while also enlivening Estonian economy."
According to the CEO, LHV's outlook for the current year is good. "We wish to grow in all business directions but we will not do so at the expense of client satisfaction, credit quality and excessive risks in pension funds," he commented. "LHV's medium-term plans show that we have room for growth multiple times over. We can grow in part with overall market growth, but we also see an opportunity for increasing our market share by offering new and modern financial services. LHV is an organization of bold ideas and this is also reflected in our ambitions."
Editor: Dario Cavegn, Aili Vahtla