Luminor’s profitability in the Baltics has declined

It has grown in the third quarter of this year Luminor the amount of the bank’s loans to individuals, lower costs and better quality of the loan portfolio, while maintaining a strong transparency and capital position, the bank states.

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 taxes practically did not change and was the same as last year, reaching 67.7 million euros.

The bank’s cost-to-income ratio is 50.0% and its average annual return on equity is 13.1%.

The quality of the bank’s loan portfolio continued to improve. Non-performing loans decreased by 10.1 million euros, reaching a level of 1.9% of total loans, due to loan repayments and cancellations.

“The state of the economy has created challenges in lending to individuals and companies. Companies in Latvia are very cautious when it comes to loans – perhaps business sentiment is still affected by the previous economic problems, so lending is slow. There is a more positive mood in lending to private individuals – in this quarter we have already seen an increase in the number of home loans granted. A gradual reduction in the Euribor rate, which could increase lending activity, thus supporting the development of the national economy, also creates a more optimistic outlook for the future,” says Kerli Vares, CEO of Banca Luminor in Latvia.

Luminor improved its product offering for individuals, which led to an increase in loan volumes. On the other hand, the demand for investments in renewable energy continued among companies, although the demand for new loans was moderate. Luminor continued to promote financing for small and medium-sized companies, which was made possible 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 get support in a targeted way, completing several transactions.

Luminor continued to improve customer experience, service and offers, 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 the first subordinated bonds of capital securities level 2 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 senior unsecured securities to A2.

“Although our local markets in Estonia, Latvia and Lithuania grew moderately in the last quarter, thanks to the work done by our employees in the property, we were able to increase the number of loans to people individually increase and improve the quality of our loan portfolio. We continue to improve our customer offering, improving IT systems to benefit our customers and meet changing regulatory requirements. We will work to improve efficiency and increase loan volumes according to customer demand,” emphasizes Vojceh Sass, Chairman of the Board of Banca Luminor.