Luminor Estonia, Latvia and Lithuania all delivered good profitability throughout 2018 and kept a good momentum.

“In 2018 we saw Luminor’s financial results remain stable in all three Baltic States and show profitability throughout the year,” said Erkki Raasuke, Luminor Bank CEO. “Overall Luminor’s deposit volumes in 2018 increased by 7.6%, and while customer lending volumes had a minor decrease of 1.7% compared to 2017, our loan to deposit ratio improved.”

During Q4 2018, Luminor continued to focus in all three countries on transformation processes and completing the cross-border merger, whereby starting from 2 January 2019 Luminor continued its operations through a registered entity in Estonia and its branches in Latvia and Lithuania.

According to Raasuke, the economic environment of the Baltic States is currently favourable, with healthy growth rates in GDP, almost full employment, balanced current accounts and healthy levels of saving rates and surplus budgets.

“This positive economic backdrop has supported our decision to accelerate the transformation Luminor is currently undergoing,” he explained. “In 2019 we will be actively implementing our transformation plan and an ambitious programme of upgrading our customers’ online experience, pressing ahead with IT and digital transformation and gaining operating efficiency. We are also adjusting our organisation to changing business needs, take down post-merger duplications and simplifying our operations.”

In 2019 Luminor will also continue with the Know Your Customer (KYC) enhancement programme in all three countries, emphasising regulatory compliance as a key priority and conducting its business with integrity.

The accounts for Q4 2018 of Luminor Estonia show that net interest income remained stable at 16.8 million euros, while total operating expenses increased by 51% in the same period, driven by higher IT development costs. The net profit earned in Q4 2018 was 0.6 million euros, which was 6.5 million euros less than in Q3 2018 mainly due to tax on dividends recorded in Q4 2018.
In Latvia the net interest income in Q4 2018 reached 13.6 million euros and the net interest margin was 1.2%. Operating income for the period was 30 million euros in total, which was one million more than in Q3 2018. The growth in operating income was mostly offset by year-end cost accruals, one-offs resulting from operations with investment property and impairment loss and additionally driven by higher IT investments, resulting in a 0.7 million euros net loss.
The Q4 2018 net profit earned in Luminor Lithuania was 3.1 million euros, which was 16.7 million euros less compared to Q3 2018. This drop was mainly due to impairment losses on loans and higher IT and other administrative expenses during the quarter. Net interest income increased by 0.4% reaching 28.3 million euros and net commission income increased by 0.5% compared to Q3 2018.

The Luminor Estonia 2018 unaudited Q4 report is available here. Consolidated audited results for Estonia, Latvia and Lithuania 2018 will be published by the end of March 2019.