The third quarter continued to be affected by the geopolitical and economic impacts of the invasion of Ukraine, with the Baltic region recording the highest inflation rates in the euro-zone. As Luminor adjusted to the new operating environment, the bank grew its customer lending and raised its efficiency once again, which resulted in an increase in net profits. Luminor’s credit quality remains robust. Non-performing loans fell to 1.3% of gross lending, its lowest ever level. The bank confirmed it has no direct exposure to companies domiciled in Russia, Belarus or Ukraine, and next to no exposure to residents of these countries. The bank confirmed that it has no direct, and marginal indirect, exposure to Russia, Belarus or Ukraine.

Despite the challenging environment, the bank supported its customers by increasing loans to individuals and companies, with mortgage balances reaching 5 billion EUR. The bank worked to modernise its core banking system and strengthen further its cyber security and regulatory compliance processes, to enhance its IT stability and improve its services. The bank also took several steps to realise its ESG ambitions and completed the acquisition of Maksekeskus.

Third quarter net profit was 40.0 million EUR, 49.8% higher than in the third quarter of last year. This improvement was driven principally by an increase in revenues, as the bank grew net interest and net fee income, and supported by marginally lower expenses. Return on normalised equity improved to 12.2% (3Q21: 8.5%). The bank’s liquidity and capital positions remain strong. At quarter end Luminor’s Common Equity, Tier 1 and Total Capital Ratios, including net profit for the period, were 18.9%, following payment of a 90 million EUR dividend.

Luminor Bank CEO, Peter Bosek, said:

‘In these uncertain times the dedication and resilience of our employees enabled us to focus on continuing to support our customers – individuals and companies resident in the Baltic countries.
‘The outlook for the Baltic region is strong but the continuing high uncertainty about future growth and high rates of inflation are starting to reduce customer demand for new loans. In these uncertain times, we are here for our customers. I look forward to Luminor doing more business, more effectively, with more individuals and companies across our home markets. In so doing, we will maintain our strong financial standing, exercise prudent risk management, and fulfil our wider obligations.

Luminor’s Q3 2022 interim report can be found here.