LHV Group: Strong October Performance Amidst Falling Interest Rates

LHV Group, the largest domestic financial group and capital provider in Estonia, reported robust results for October 2024, demonstrating resilience amidst falling interest rates. The Group's strategic initiatives and diversified revenue streams contributed to its resilience, enabling it to maintain profitability and expand its loan portfolio.

LHV Group's loan portfolio and other business volumes grew strongly in October, balancing the impact of faster-than-planned falling interest rates on interest income. The Group's consolidated loan portfolio increased by EUR 105 million, deposits by EUR 182 million, and funds managed by LHV by EUR 13 million. This growth helped offset the impact of lower interest income.

The Group's diversified revenue streams, including net interest income and net fee & commission income, contributed to its resilience. The Group's total revenue increased by EUR 182 million, driven by a EUR 105 million increase in the loan portfolio and a EUR 13 million increase in funds managed. This growth balanced the impact of falling interest rates on interest income.

LHV Group's expansion into the UK market, via LHV Bank Ltd, contributed significantly to its overall performance in October 2024. The UK subsidiary reported a strong loan portfolio growth of EUR 29 million, with an outstanding loan amount of EUR 180 million. Despite incurring IT costs and lower deposits from financial intermediaries, LHV Bank Ltd's loan portfolio growth remained robust. The loan-to-deposit ratio became more efficient as the volume of platform deposits was reduced by EUR 11 million in October. This strategic move into the UK market has proven beneficial for LHV Group, as it continues to grow its loan portfolio and expand its reach.

LHV Group's cost management and operational efficiency played a crucial role in maintaining profitability despite falling interest rates. The Group's cost-to-income ratio improved to 43.3% in 2023, down from 46.4% in the previous plan, indicating enhanced cost control. This was achieved by optimizing expenses, such as reducing the number of employees and IT costs, and improving operational efficiency. Additionally, the Group's return on equity (ROE) increased to 29.2%, up from 20.3% in the previous plan, demonstrating the effectiveness of its cost management strategies.



In conclusion, LHV Group's strong performance in October 2024 reflects its ability to adapt to changing market conditions and maintain profitability. Through strategic initiatives, diversified revenue streams, and effective cost management, the Group has demonstrated resilience amidst falling interest rates. As the Group continues to expand its loan portfolio and explore new markets, it remains a strong investment option for those seeking stable, income-focused portfolios.