Luminor delivered an enhanced performance in 1Q24, strengthening its liquidity and capital positions. The bank’s credit quality remains robust with non-performing loans at 2% of gross lending. 

Luminor increased profits to 66.8 million EUR in the first quarter, a 10.8% increase compared to the prior year period. At the same time, bank taxes in Latvia and Lithuania and resolution fees increased by 10.3 million EUR to 11.6 million EUR.

“Today, we look forward to a time of gradual stabilisation and recovery in society after the economic challenges over the past few years. Overall, we see that people feel more secure and financially stable. In the first quarter of this year, total deposits amounted to EUR 3.05 billion, a slight increase compared to the end of last year, and savings of our private customers in the first three months of the year increased by 14% compared to the last quarter of last year. This sentiment is also reflected in the financial sector data for last year, with the total deposits of the Latvian population rising to EUR 21 billion,” says Kerli Vares, Head of Luminor Bank in Latvia.

In Retail Banking, Luminor remained focused on building an improved product offering for customers, while maintaining lending volumes and growing term deposits once again. In Corporate Banking, Luminor continued to support the development of Baltic capital markets and the green transition, leading a new issue in the renewable energy sector. The bank also implemented its agreement with the European Investment Bank to facilitate additional lending for Baltic SMEs and support the green transition of the economies.

Last year’s sharp rise in the Euribor rate was certainly one of the most significant events in the sector, affecting both individuals and businesses, and cautiousness remains high among them.

“Although the fall in the Euribor rate was not as expected, the summer outlook is now raising hopes for a more positive future. This could be expected to lead to both stronger business growth and an increase in demand in the housing market. In the first quarter of this year, Luminor’s financing to individuals and businesses in Latvia amounted to EUR 2.84 billion, which is on a par with the previous three quarters,” explains K. Vares.

Luminor improved its net interest margin to 3.64%, reduced its cost to income ratio to 47.5% and generated an annualised return on equity of 14.8%. The bank increased total operating income by 8.4% as it grew net interest income and raised operating expenses by 4.4% as it improved its IT systems and processes.

Luminor’s liquidity and capital positions are strong. At quarter end the bank’s Liquidity Coverage ratio was 207.6% and its Common Equity, Tier 1 and Total Capital Ratios, including net profit for the period, were 25.4. In April, Luminor paid a dividend of 194.5 million EUR. Taking this dividend payment into account, the bank’s pro forma capital ratios at quarter end would have been 22.6%. On 30 April, Moody’s Ratings upgraded Luminor Bank’s long-term senior unsecured rating to A3 from Baa1.

Luminor Bank CEO, Wojciech Sass, said:

‘Since I joined in March, I have been engaged by our customers, impressed by my colleagues, and inspired by the opportunities we have. We have work to do to ensure we are successful together with our customers but start from a strong base because of the character of our employees and their achievements under my predecessor, Peter Bosek. Initially, I am focused on improving our value proposition for our customers, and streamlining our IT for the benefit of our customers – and so be more efficient.’

Luminor’s Q1 2024 interim report can be found here.