LHV Group (LHV1T) Q1 2025 earnings summary

Executive summary

• Achieved strong business volume growth and improved efficiency, with home loans surpassing EUR 1.5b and over 30,000 business account users.

• Q1 2025 net profit was EUR 29.2m, down 19% from Q4 2024 and 28% year-over-year; EPS at EUR 0.09.

• Launched LHV Euro Bond Fund and discontinued external pension fund sales.

• Moody's upgraded covered bond rating to Aaa, the highest level.

• Management described the quarter as mediocre, with UK operations outperforming and Estonian banking impacted by increased impairments.

Financial highlights

• Net profit was EUR 29.2m, down EUR 7.2m from Q4 2024; net interest income fell to EUR 62.0m from EUR 66.6m.

• Total net income reached EUR 79.4m; operating expenses at EUR 37.5m.

• Loan portfolio increased by EUR 177m to EUR 4.73b; customer deposits decreased by EUR 306m to EUR 6.6b.

• Cost/income ratio at 47.3%; pre-tax ROE at 17.0%.

• Loan and bond provisions rose sharply to EUR 5.7m, reflecting temporary impairments from a few large clients.

Outlook and guidance

• Financial plan remains on track, with revenues slightly above plan and expenses in line.

• Loan, payment, and fund volumes ahead of plan, though deposits slightly below due to high Q4 base.

• Management expects impairments to decrease in future periods, viewing current increases as temporary.

• Focus remains on maintaining loan portfolio quality and growing based on local deposits.

• Macroeconomic conditions are improving, but lower interest rates are expected to negatively impact banking margins.