LHV Group Reports Strong August Results Despite Plan Shortfalls

LHV Group, the largest domestic financial group in Estonia, reported strong results for August 2026, marking a significant month for the company. The group's net profit for the month reached EUR 10.7 million, a 21% increase from EUR 8.6 million in July. This growth was driven by a combination of factors, including a continued rise in net interest income, controlled costs, and a strong loan portfolio quality.

At the heart of LHV Group's success is its subsidiary, LHV Pank, which earned a net profit of EUR 10.2 million in August. This is a 10% increase from the previous month. The loan portfolio of LHV Pank grew by EUR 29 million, reaching EUR 4.88 billion. Corporate and retail loans contributed equally to this growth. Despite the increase, the quality of the loan portfolio remains strong, with EUR 0.3 million in impairments released in August.

LHV Pank's customer base also saw a modest increase, with 3,000 new customers joining the bank, bringing the total to 514,000. The number of daily payment customers remained steady at 237,000. Deposits at LHV Pank reached EUR 6.45 billion, up EUR 116 million from the previous month. The bank's focus on demand deposits continued, with regular customer deposits growing while term deposits decreased.

LHV Bank, operating in the United Kingdom, also contributed to the group's overall success. The bank's net profit for August was EUR 0.3 million, with net interest income reaching EUR 3.6 million, exceeding the financial plan. The loan portfolio of LHV Bank grew by EUR 28 million, reaching EUR 1.03 billion, and the number of outstanding loan offers stood at EUR 94 million. Deposits at LHV Bank increased by EUR 106 million, reaching EUR 1.46 billion, in line with the financial plan. The bank's customer base stood at 31,000 at the end of August.

LHV Varahaldus, the group's asset management subsidiary, reported a net profit of EUR 0.3 million for August. This was supported by the positive performance of fund units, particularly the Julge and Ettevõtlik funds, which returned 2.6% and 2.5% respectively. The total volume of funds under management reached EUR 1.85 billion, exceeding the financial plan by EUR 54 million. The number of II pillar customers making active monthly contributions reached nearly 105,000.

LHV Kindlustus, the insurance subsidiary, also delivered a positive result in August, with a net profit of EUR 0.3 million. The company's net earned premiums increased, and the number of claims decreased, leading to a lower gross loss ratio. The gross loss ratio was 64.4% in August, down from 76.1% in July, and the net loss ratio was 66.5%, down from 79.0% in July. At the end of August, the number of active insurance contracts was 333,000, and the number of customers reached 244,000.

Despite these strong results, LHV Group's overall performance for the first eight months of 2026 fell short of the financial plan. The cumulative net profit reached EUR 63.8 million, falling short by EUR 4.6 million. Net interest income remained strong, exceeding the financial plan by EUR 5.9 million. However, net fee and commission income fell short by EUR 6.7 million due to lower-than-expected customer activity. Operating expenses were higher than planned, increasing by EUR 4.4 million and growing by 13% in annual comparison, mainly driven by higher personnel expenses and IT investments.

LHV Group also issued EUR 200 million of MREL bonds and EUR 15 million of AT1 bonds in August. The company remains well-capitalized, meeting all capital targets with a sufficient buffer.

In a related move, LHV Pank announced plans to close its customer offices in Tartu and Pärnu by the end of October 2026. The decision is driven by changing banking habits and a decline in office visits, with a shift towards digital channels. Approximately 13 customer service positions will be made redundant, and the office in Pärnu will close entirely. The Tartu office will retain some staff but reduce its space to accommodate the new headquarters in Tallinn, which is set to be completed in 2028.

Overall, LHV Group's results for August 2026 reflect a strong performance across its subsidiaries, driven by a robust loan portfolio and continued growth in net interest income. However, the company faces challenges in meeting its financial plans, particularly in fee and commission income and operating expenses.