Luminor Bank’s profit last year reached 124.7 million euros, which is 66.9% more than in 2021, bank representatives inform.
The bank explains that the increase in profit was mainly facilitated by the increase in efficiency and the increase in net interest income under the influence of increased “Euribor”.
On the other hand, the net profit of “Luminor Bank” in the fourth quarter of 2022 reached 40.3 million euros, which is almost twice as much as in the fourth quarter of 2021.
The bank’s profit, compared to the fourth quarter of 2021, was mainly contributed by an increase in revenues by 32 million euros, while expenses were 2.5 million euros higher.
The bank’s adjusted return on equity increased to 12.3% in the fourth quarter, compared to 6.9% last year. Luminor Bank maintains a strong liquidity and capital position. At the end of the fourth quarter, the ratio of Tier 1 and total capital, including net income, was 19.4%.
Luminor Bank’s non-performing loans fell to 1.2% of gross loans in the fourth quarter, the lowest level ever.
Luminor Bank’s assets at the end of 2022 amounted to 14.757 billion euros, which is 10.8% or 1.44 billion euros more than at the end of 2021, when the bank’s assets were 13.317 billion euros.
The bank informs that “Luminor Bank” customer deposits increased by almost 400 million euros in the fourth quarter.
Representatives of “Luminor Bank” state that in the fourth quarter, the highest inflation indicators in the Eurozone remained in the Baltic States. The economic outlook in the region remains uncertain, which resulted in lower demand for new loans at the end of the year. Despite the difficult economic conditions, the bank improved its net interest income as it grew after a prolonged period of extremely low interest rates, as well as improved operational efficiency, resulting in an increase in net profit.
The manager of Luminor Bank in Latvia, Kerli Varesa, explains that last year Russia’s war in Ukraine caused an economic recession and had a significant impact on businessmen’s development plans in the near future. The European Central Bank, reacting to the rapid rise in inflation, began to rapidly raise the Euribor rates in the middle of the year.
Varesa points out that the rise in rates increased borrowers’ monthly payments and made new loans more expensive. Banks and borrowers should expect that the rise in rates will likely continue this year as well, and this may affect the lending market as a whole, predicts Varesa, adding that along with the rise in the Euribor rate, interest rates on deposits also rise.
In the past quarter, “Luminor Bank” focused on the field of information technology (IT), working on improving the stability of services, eliminating legacy problems and introducing more flexible operation of IT systems. The focus on improving IT performance will continue as investments will be made in IT performance improvements, and Luminor Bank will continue to take various measures to meet environmental, social and corporate governance (ESG) goals.
“Luminor Bank” chairman of the board Peters Boseks states that last year “Luminor Bank” provided financial support to less than 9,000 households in the Baltic countries for the purchase of a new home. Also, the amount of financing for companies of various sectors in the Baltic States has been increased.
Luminor Bank’s profit in 2021 was EUR 74.7 million.
It has already been announced that in October 2017 Nordea Bank and DNB’s combined bank Luminor Bank started working in the Baltic States, while at the beginning of January 2019, the cross-border merger of Luminor Bank operating in the Baltic States was completed, with the bank continuing its operations with the central office in Estonia and branches in Latvia and Lithuania. The bank’s strategic investor is the US investment company “Blackstone”.
In terms of assets, the Latvian branch of “Luminor Bank” is the fourth largest bank in Latvia.
