Luminor announced its 1Q 2023 results, reporting improved business performance and continued robust credit quality, with non‑performing loans remaining at 1.2 % of gross lending, its lowest ever level.
Luminor focused on supporting its customers as it continued to execute its strategy. The bank improved its offering for Retail Banking customers, maintained its share of new mortgage lending, increased term deposits and grew its active customer base. In Corporate Banking, Luminor was once again the leading underwriter of new debt securities offered by Baltic corporate issuers, and saw strong deposit inflows.
The bank continued to strengthen its security and regulatory compliance processes, invested to improve its IT and took several further steps to advance its ESG commitments.
The first quarter saw reduced demand for new loans and increased deposit balances in the Baltic countries, as customers responded to less certain economic growth and higher reference interest rates. Against this environment, the bank improved net interest income, as interest rates increased after years of extraordinary low rates, and raised its efficiency, which resulted in an increase in net profits.
First quarter net profit was 60.3 million EUR, increasing by 49.6 % as compared to the fourth quarter of 2022. As the bank invested in its IT systems and processes, operating expenses increased by 37 %. Luminor incurred a credit loss allowance, albeit at a lower level than last year, and retained the net profit it generated. The bank’s cost to income ratio improved to 49.9 % and it generated an annualised return on equity of 15.2 %. Luminor’s liquidity and capital positions are strong. At quarter end the bank’s Common Equity, Tier 1 and Total Capital Ratios, including net profit for the period, were 20.4 %.
Luminor Bank CEO, Peter Bosek, said:
“Our solid performance in the first quarter, including growth in revenue and improved liquidity and capital positions, has enabled continued investment in our IT systems and processes to improve our customer experience.
Looking forward, we are confident that despite prevailing uncertainty on economic growth, the outlook for the Baltic region is strong. Underpinned by our strong financial standing and commitment to prudent risk management, Luminor is well placed to deliver on our strategy to improve the financial health of our customers, and our home countries.”
Luminor’s Q1 2023 interim report can be found here.
