Landshypotek Bank (LHB) Q2 2024 earnings summary

Executive summary

• Market leader in agriculture and forestry lending with a 23% share and sustainability at the core of strategy.

• Operating profit for H1 2024 was SEK 243 million, down from SEK 334 million year-over-year, mainly due to lower net interest income from compressed deposit margins.

• Lending to the public grew to SEK 105.6 billion from SEK 104.8 billion, and deposits remained stable at SEK 28.5 billion.

• The bank maintained strong credit quality, with net credit losses positively impacting earnings by SEK 3 million.

• S&P Global Ratings revised the outlook from negative to stable and affirmed the long-term A rating in July.

Financial highlights

• Net interest income for H1 2024 was SEK 548 million, down from SEK 629 million in H1 2023, mainly due to reduced deposit margins.

• Total expenses increased to SEK 310 million YTD 2024 from SEK 301 million YTD 2023, driven by planned investments and personnel.

• Net profit for H1 2024 was SEK 189 million, down from SEK 265 million in H1 2023.

• Interest margin (LTM) declined to 1.09% from 1.17% year-over-year.

• C/I ratio including financial transactions rose to 0.56 from 0.48 year-over-year.

Outlook and guidance

• Profitability in agriculture is under short-term pressure due to high input costs, weak currency, rising rates, and poor harvests.

• The bank expects continued margin pressure and slow market growth, but remains focused on broadening its customer base and digitalization.

• Anticipates at least two further interest rate cuts in the autumn, which may influence market behavior and pricing.

• Housing market shows increased activity and stable to slightly rising prices, but sales volumes remain below historical averages.

• Consumer confidence is improving, reaching its highest level since February 2022.