LHV Group (LHV1T) Q3 2024 earnings summary

Executive summary

• Achieved historically highest business volumes in Q3 2024, with strong growth in loans and deposits across all segments; loan volume grew 6% quarter-over-quarter and 22% year-over-year, deposit volume increased by €502m.

• Q3 2024 net profit was €34.7m, down €3.9m from Q2 2024 and €4.8m from Q3 2023; 9M 2024 net profit up €5.9m year-over-year.

• Management updated the 2024 financial plan, raising profit expectations by 25–33%, with all business lines expected to meet targets.

• Loan portfolio quality remains good despite rapid growth and negative GDP environment, though economic downturn led to increased impairments.

• Preparations underway for launching a retail bank in the UK, with mobile app testing started.

Financial highlights

• Q3 2024 net interest income: €67.4m (down 4% sequentially, up 1% year-over-year); net fee and commission income: €16.3m (up 20% year-over-year); other income: €1.2m.

• Total net income: €84.9m (down €2.4m sequentially, up €3.4m year-over-year); operating expenses: €37.2m (down €0.3m sequentially, up €4.4m year-over-year); net profit: €34.7m.

• Deposits from customers increased by €502m quarter-over-quarter; loan portfolio up €236m.

• Loan and bond provisions increased to €7.3m from €5.0m in Q2 2024 and €2.9m in Q3 2023.

• 9-month net profit: €114m; pre-tax ROE: 29.6%.

Outlook and guidance

• Updated financial plan in September raised profit expectations by 25–33%.

• Differences with the updated plan are minimal; business volumes and profitability in line with targets.

• Public launch of UK retail bank expected in the coming months, with further product rollouts in Q1 2025.

• Management highlights volatility in profitability due to rapid loan growth and negative GDP growth.