Representatives of “Luminor Bank” told the LETA group that the number of loans granted to individuals increased in the second quarter, bank costs were reduced and the quality of the loan portfolio improved, while they maintain strong liquidity and capital conditions.
In the second quarter of this year, “Luminor Bank” improved not only the product offer for individuals, but also worked on the efficiency of processes, which led to an increase in loans granted. In the corporate sector, there has been sustained demand for investments in renewable energy solutions, as well as an offer implemented in collaboration with the European Investment Bank to encourage additional lending to Baltic small and medium enterprises (SMEs) and support their development. of the green economy.
“Luminor Bank” explains the decrease in profits in the second quarter with changes to the Corporate Income Tax Law, which determined an increase in tax costs of almost 70%. On the other hand, the bank’s profit before taxes was 60.5 million euros, which is slightly less than last year in this period.
The amount of loans issued by “Luminor Bank” on June 30, 2024 was 10.426 billion euros, which is 0.7% less than on December 31, 2023.
On the other hand, the level of deposits of “Luminor Bank” on June 30, 2024 was 11.189 billion euros, which is 0.9% less than at the end of last year.
Kerli Varesa, head of the “Luminor Bank” branch in Latvia, explains that this year brings a gradual recovery to society from the economic challenges that have affected the world in recent years finally. A gradual increase in loans can be seen, that is, compared to the first three months of this year, the total number of loans issued in the second quarter increased by more than 40 million euros, reaching 2.88 billion euros at the end of June.
Varesa points out that entrepreneurs still maintain a cautious position – this is seen both by the stagnant situation in corporate lending and the mood of SMEs. Entrepreneurs are still concerned about the impact of inflation, price changes and job retention, and these concerns prevent them from actively investing in the development of enterprises. Although the housing market in Latvia lags behind the situation in neighboring countries, people are gradually becoming more active – in the first six months of this year, “Luminor Bank” -out 30% more loans to private individuals than in the same period last year.
In general, the outlook for the future is becoming more positive – inflation has stabilized, while the EURIBOR rate, although slower than expected, is decreasing. This allows us to hope that economic growth will continue in the future not only because of loans to individuals, but also that entrepreneurs will become more secure and start focusing on development and investments. again, noting Varesa.
The bank’s operating income decreased by 7.8 million euros in the second quarter of this year, mainly due to a decrease in other net income, but this was partially offset by a decrease in the administrative costs with 5.6 million euros, which was ensured by providing funds. consulting costs.
With continued investments in the development of information technology systems and processes, costs related to information technology increased by 7.1%. Expected credit losses decreased by EUR 4.4 million, and taxes related to banking activities increased by EUR 3.9 million due to the temporary tax introduced in Latvia.
Luminor Bank improved its net interest margin to 3.56%, reducing its cost-to-income ratio to 54.6%, while its adjusted return on equity was 10.2%. The quality of the bank’s loan portfolio has improved in the second quarter.
The total book value of loans with a significant increase in credit risk from initial recognition, but no reduction in credit value, and loans with a reduction in credit value decreased by EUR 102.1 million in the quarter.
“Luminor Bank” made a profit of 113.4 million euros in the first half of 2023, and a profit of 53.1 million euros in the second quarter of 2023.
Last year, “Luminor Bank” operated in the Baltic States with a profit of 194.7 million euros, which is 56.1% more than in 2022.
A branch of “Luminor Bank” operates in Latvia. In terms of assets, the Latvian branch of “Luminor Bank” is the fourth largest bank in Latvia. The bank is controlled by the US investment company “Blackstone”.
2024-08-08 08:23:33
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