According to the financial plan for 2024, LHV will respond to falling interest income this year by increasing business volumes, fee and commission income, and efficiency. However, projected write-downs and interest expenses will bring a more modest net profit compared to last year’s record profit.
Key indicators | FP2024 | 2023 | ∆ |
Profit before taxes | 142.1 | 164.6 | -14% |
Net profit | 120.1 | 140.9 | -15% |
Deposits | 6,674 | 5,731 | 16% |
Loans | 4,037 | 3,562 | 13% |
Volume of funds | 1,668 | 1,519 | 10% |
Number of payments related to financial intermediaries (million pcs) | 62 | 47 | 32% |
Cost/income ratio | 46.4% | 43.3% | +3.2 pp |
ROE* (before taxes; owners’ share) | 24.0% | 34.1% | -10.1 pp |
ROE* (on net profit; owners’ share) | 20.3% | 29.2% | -8.9 pp |
Capital adequacy | 22.5% | 21.9% | +0.6 pp |
* Calculated on the basis of the average end-of-month equity volumes for the period
Business volumes have been presented in millions of euros
The financial plan foresees a significant increase in LHV’s business volumes for the current year. According to the plan, the volume of consolidated deposits will increase by
LHV forecasts that the consolidated loan portfolio will increase by
The number of payments by financial intermediaries will continue to grow rapidly this year by 32% to 62 million payments. This year,
The volume of funds managed by LHV will increase by 10% in the financial plan this year to
The gross premiums of LHV Kindlustus will increase by 15% to
In summary, the financial plan foresees a minimal decrease in
LHV Group’s return on equity (ROE) ratio will remain at 20.3% in 2024 and the company forecasts a cost/income ratio of 46.4%. Profitability is affected by the significantly increased interest expense associated with instruments issued to meet capital requirements, the increase in net fee and commission income and loan write-downs due to the economic environment and the growth of the credit portfolio.
Although LHV’s long-term dividend policy will hold, the 2024 financial plan takes into account the group’s management boards proposal to the supervisory board to pay 35 per cent of the
Comment by
"Poorer economic prospects can be improved by investments. We want to contribute here and continue as one of the biggest financial providers of the Estonian economy. We have only just started as a bank in the
Against the background of a general decrease in interest rates, we expect LHV’s interest income to decrease in 2024. We want to respond to interest expenses that have grown with a lag by increasing efficiency and cost discipline. Our capital levels remain strong, but the main focus is on attracting the necessary financing for lending activities, especially in the form of deposits.
In the long term, we continue to define ourselves as a growth company. For the next five years, we have planned an increase of
The main keywords of the long-term plan are increased group-wide activity of the client and the broad-based use of artificial intelligence. There are already significant opportunities to use artificial intelligence in many areas today, and we plan to both search for and use these opportunities. It must keep us effective and efficient in the years to come."
Financial forecast for 2024–2028
Key indicators | FP2024 | FP2025 | FP2026 | FP2027 | FP2028 |
Profit before taxes | 142.1 | 163.6 | 183.0 | 228.0 | 293.9 |
Net profit | 120.1 | 132.3 | 147.5 | 183.0 | 233.8 |
Deposits | 6,674 | 7,681 | 8,723 | 9,747 | 10,902 |
Loans | 4,037 | 4,755 | 5,610 | 6,510 | 7,375 |
Volume of funds | 1,668 | 1,900 | 2,160 | 2,432 | 2,716 |
Number of payments related to financial intermediaries (million pcs) | 62 | 73 | 87 | 103 | 123 |
Cost/income ratio | 46.4% | 45.4% | 44.7% | 41.1% | 36.8% |
ROE (before taxes; owners’ share) | 24.0% | 24.8% | 24.9% | 27.2% | 30.6% |
ROE* (on net profit; owners’ share) | 20.3% | 20.0% | 20.0% | 21.8% | 24.2% |
Capital adequacy | 22.5% | 22.0% | 21.5% | 21.7% | 22.6% |
* Calculated on the basis of the average end-of-month equity volumes for the period
Business volumes have been presented in millions of euros
According to the long-term forecast, all significant business volumes of LHV will grow over the next five years. The volume of deposits will increase by 1.9 times to
With an emphasis on efficiency, it is planned to grow income faster than costs. For income, the company forecasts annual growth of 10%, while expenses will grow by an average of 6% per year. The income side is being affected by the increasing share of the income of the bank in the
According to the forecast, LHV’s consolidated net profit will reach nearly
AS LHV Group’s reports are available at: https://investor.lhv.ee/en/reports.
To introduce the financial plan, LHV will organise an investor meeting (in Estonian) on 13 February at 9.00 via Zoom, the online seminar environment. Investors and interested parties are invited to register at: https://lhvbank.zoom.us/webinar/register/WN_9RW3tbKVTkC9ZSNi4y6mEg.
Communications Manager
Phone: +372 502 786
Email: priit.rum@lhv.ee
Attachment
- LHV Group Financial Plan 2024 EN
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