It has grown in the third quarter of this year Luminor the volume of the bank’s loans to individuals, reduced expenses and improved quality of the loan portfolio, while maintaining strong liquidity and capital positions, the bank informs.
In October, Moody’s upgraded Luminor’s credit rating to A2.
In this quarter, Luminor’s profit in the Baltics after taxes is 55 million euros, which is less than in the same period last year, when it was 64.9 million euros. Profit before tax practically did not change and was equal to last year, reaching 67.7 million euros.
The bank’s expense-to-income ratio is 50.0% and the average annual return on equity is 13.1%.
The quality of the bank’s loan portfolio kept improving. Non-performing loans decreased by 10.1 million euros, reaching the level of 1.9% of gross loans, thanks to loan repayments and cancellations.
“The economic situation created challenges in lending to both individuals and companies. Companies in Latvia are very cautious when it comes to borrowing – perhaps the mood of businessmen is still affected by the economic difficulties experienced previously, so lending is sluggish. There is a more positive mood in lending to private individuals – this quarter we already observed an increase in the volume of home loans issued. The gradual reduction of the Euribor rate, which could increase lending activity, thus supporting the development of the national economy, also creates a more hopeful outlook for the future,” says Kerli Vares, Head of Luminor Bank in Latvia.
Luminor improved its product offering for individuals, which led to an increase in lending volumes. On the other hand, the demand for investments in renewable energy continued among companies, although overall the demand for new loans was moderate. Luminor continued to promote financing for small and medium-sized companies, which was facilitated by cooperation with the European Investment Bank, as part of which the transition of the national economy of the Baltic States to an environmentally friendly economy is supported in a targeted manner, concluding several transactions.
Luminor continued to improve its customer experience, service and offerings, which contributed to the increase in new customers. In the third quarter, customer interest in the Luminor Black Visa bank payment card increased.
Luminor maintains a strong liquidity and capital position. At the end of the quarter, the bank’s liquidity coverage ratio was 192.1%, and the ratio of core capital, equity capital (Tier 1) and total capital was 21.1%, showing an increase of 1.1%.
In October, the bank issued its first subordinated bonds of level 2 capital securities with maturity in 11 years, in the amount of EUR 200 million. Also, in October, the international rating agency Moody’s raised the credit rating of Luminor’s priority unsecured securities to the A2 level.
“Although our local markets in Estonia, Latvia and Lithuania grew moderately in the past quarter, thanks to the work invested by our employees, we were able to increase the volume of lending to individuals and improve the quality of our loan portfolio. We continue to improve our customer offerings, improve IT systems to benefit our customers and meet changing regulatory requirements. We will work on improving efficiency and increasing lending volumes in line with customer demand,” emphasizes Vojceh Sass, Chairman of the Board of Luminor Bank.
Don’t Worry, Be Luminor: A Look at Their Third Quarter Triumphs and Trials
So here we are, gathered to dissect the latest financial folklore from Luminor Bank like a bunch of armchair economists after a few pints. And what a tale it is! In Q3, they’ve not only managed to grow their loan volumes to individuals but also reduced expenses! Clever little foxes, aren’t they? Meanwhile, their loan portfolio is looking classy—sort of like trying to pull off a tuxedo at the bank manager’s Christmas party.
Oh, and in a plot twist that could make M. Night Shyamalan proud, Moody’s gave them an upgrade to A2. A2? I suppose that’s what happens when you get your financial act together. The rating is just one tick below a badge of honor from that very picky aunt who never likes anything you do. We can only imagine the confetti raining down in the Luminor boardroom.
Now, let’s talk profits, shall we? They racked up €55 million after taxes this quarter, which sounds great until you realize it’s a dip from last year’s €64.9 million. Now that’s like attending a party and realizing the cake is a year old—still edible but nowhere near fresh. In terms of profits before tax, they maintained a steady course at €67.7 million. Consistency: it’s like that friend who’s always late but still shows up just in time for the fun part.
But hold your horses! The real hero of this drama is their expense-to-income ratio, which sits snugly at 50%. It’s like saying if half your life’s expenses weren’t on takeout, you might actually be able to afford a vacation. Meanwhile, an average annual return on equity of 13.1% is nothing to sneeze at—unless you’re allergic to good news.
Now, let’s turn our attention to the quality of said loans. They’re coming down like the prices during a Black Friday sale—non-performing loans decreased by a whopping €10.1 million, now swimming at just 1.9% of gross loans. One has to appreciate the meticulous effort that went into that; it’s like organizing your sock drawer after you’ve been told company is coming.
The Head of Luminor Bank in Latvia, Kerli Vares, shared some candid thoughts on consumer sentiment. Turns out, while individuals are warming up to home loans again (probably because everyone’s just spent the lockdown looking at their four walls and wondering why they don’t have a pool), companies are still skittish about borrowing. They’re like a cat being asked to take a bath—plenty of avoidance there!
But don’t fret, dear investors; the mood swings aren’t entirely negative! The gradually dropping Euribor rate could soon light the fire to increased lending activity. Let’s hope it’s not just the temperature rising! On the renewable energy front, Luminor is dipping its toes in the pond of sustainability, cooperating with the European Investment Bank like a couple of eco-friendly matchmakers.
As if that isn’t enough, Luminor’s customer service is leveling up too, welcoming fresh faces like a trendy nightclub opening its doors. As I hear it, their fancy Luminor Black Visa cards are pulling in more interest than a new hair salon in town; it’s like saying “yes” to that wild new hairstyle—you just can’t resist.
Liquidity? Check! Capital position? Also check! With a liquidity coverage ratio at 192.1%, or as I like to call it, “Sip your drink and don’t worry” level, they’re holding the fort quite well. Meanwhile, their core capital ratios positively reflect stability, like a tightrope walker who’s really feeling confident.
And for the grand finale, they’ve issued their first subordinated bonds of level 2 capital—because why not throw an 11-year music festival for €200 million? It sounds like a colorful party in the world of finance!
In conclusion, while Baltic markets have been treading water, Luminor is undeniably paddling in a more lucrative pool. So, here’s to their efforts in keeping the bank’s finances shipshape while we all roll our eyes at the economic rollercoaster! Perhaps they even deserve a cheeky toast—just don’t forget to chase it with something strong!
Luminor Bank: Keeping our finances light and our spirits high, one loan at a time!
In a positive development for Luminor, the bank has reported a robust increase in the volume of loans extended to individuals during the third quarter of this year. This growth occurred alongside a strategic reduction in operational expenses and enhancements in the quality of its loan portfolio. The bank’s solid liquidity and capital positions remain intact, further underscoring its financial stability, as stated in their latest report.
Moody’s, the renowned international credit rating agency, recently upgraded Luminor’s credit rating to the A2 level, reflecting increased confidence in the bank’s financial strength.
During this quarter, Luminor recorded a profit of 55 million euros after tax in the Baltics, a slight decrease from last year’s 64.9 million euros for the same period. Interestingly, the pre-tax profit remained relatively stable compared to the previous year, maintaining a figure of 67.7 million euros.
The bank’s operational efficiency is highlighted by an expense-to-income ratio standing at 50.0%. Additionally, Luminor boasts an impressive average annual return on equity of 13.1%, indicating a healthy performance.
The quality of Luminor’s loan portfolio continues to show significant improvement, with non-performing loans decreasing by 10.1 million euros. This decline resulted in non-performing loans accounting for just 1.9% of gross loans, a positive outcome attributed to effective loan repayments and cancellations.
Luminor has been actively addressing the challenges posed by the current economic environment, particularly concerning lending dynamics for both individuals and businesses. While corporate borrowing in Latvia remains cautious, possibly due to lingering economic apprehensions, the bank has noted a more optimistic trend in lending to private individuals. This quarter saw an encouraging rise in the issuance of home loans. The gradual decline of the Euribor rate could further stimulate lending activities, thereby fostering economic growth, according to Kerli Vares, the Head of Luminor Bank in Latvia.
In its efforts to enhance customer offerings, Luminor has successfully improved its product suite for individuals, which correlated with an increase in lending volumes. Notably, there has also been a sustained interest from companies in investing in renewable energy, despite a general moderation in the demand for new loans. Luminor actively supports financing for small and medium-sized enterprises, aided by a partnership with the European Investment Bank aimed at facilitating the transition of the Baltic States’ economies toward more sustainable practices through targeted funding initiatives.
Luminor has made significant strides in enhancing its customer service experience, which has contributed to an uptick in new customer acquisitions. The third quarter witnessed a notable increase in interest regarding the Luminor Black Visa bank payment card.
At the close of the quarter, Luminor reported a solid liquidity coverage ratio of 192.1%, alongside a core capital ratio of 21.1%—an increase of 1.1%—demonstrating the bank’s robust capital position.
In October, Luminor took a significant step by issuing its inaugural subordinated bonds classified as level 2 capital securities, amounting to 200 million euros with a maturity period of 11 years. Concurrently, Moody’s elevated the credit rating of Luminor’s priority unsecured securities to the A2 level, signaling enhanced market confidence.
Vojceh Sass, Chairman of the Board of Luminor Bank, has pointed out that despite moderate growth within the local markets of Estonia, Latvia, and Lithuania in the past quarter, the dedicated efforts of their employees have allowed the bank to boost lending volumes to individuals while simultaneously enhancing the quality of the loan portfolio. He emphasized the ongoing commitment to refining customer offerings, advancing IT systems to better serve clients, and ensuring compliance with evolving regulatory landscapes. Furthermore, Sass stated that Luminor will focus on improving operational efficiency and meeting increasing lending demand in a manner aligned with customer needs.
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Luminor Bank has demonstrated resilience and adaptability in a fluctuating economic landscape. By enhancing their loan offerings, maintaining solid financial metrics, and focusing on operational efficiency, Luminor is well-positioned to navigate future challenges. As they continue to strengthen their loan portfolio and respond to evolving market demands, it’s clear that Luminor is committed to not only supporting individual borrowers but also facilitating broader economic growth across the Baltic region.
Here’s to Luminor—the bank that’s not just surviving, but thriving amidst the headwinds of the financial tide!
