Luminor announced its 4Q 2022 results, reporting improved business performance and continued robust credit quality. Non-performing loans fell to 1.2% of gross lending, its lowest ever level.
Luminor supported its customers with increased mortgage lending to individuals and was the leading underwriter of Baltic corporate debt. Deposits in the fourth quarter grew by nearly 400 million EUR.
The Baltic countries continued to record the highest inflation rates in the eurozone in the fourth quarter. The economic outlook remains uncertain which led to a reduction in demand for new loans towards the end of the year. 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.
Fourth quarter net profit was 40.3 million EUR. This improvement as compared to the fourth quarter of 2021 was driven principally by a 32 million EUR increase in revenues, while expenses were 2.5 million EUR higher. Return on normalised equity improved to 12.3% (4Q21: 6.9%). 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 19.4%.
The year-on-year profit growth was EUR 50 million, increasing from 74.7 million EUR in 2021 to 124.7 million EUR in 2022, driven principally by an improvement in net interest income due to increased EURIBOR and raise in efficiency.
IT was a key focus area for Luminor as it worked to improve its service stability, fix legacy issues and implement a more resilient IT system. The focus will remain on this area in the period ahead as the bank invests to raise its IT performance. Luminor also took several steps to realise its ESG ambitions and received from Sustainalytics a ‘Low Risk’ ESG rating, the best of its kind among major banks in the Baltic region.
Luminor Bank CEO, Peter Bosek, said: “Looking at the past year, I am proud to say that Luminor helped almost 9,000 households in the Baltics to buy a new home. We increased lending to Baltic companies across sectors and supported our customers in adjusting their businesses to the changing environment. We also took steps to become a more sustainable business and shared this journey with our customers.
Improving our customer experience and offering is a top priority for us this year, and we will continue to invest significantly to support these efforts. This year, we will reinvest the higher revenues we have generated into our IT systems and technology, and we will expand our teams.
Despite high inflation and an uncertain global macroeconomic outlook, we remain confident in the underlying strength of the Baltic region. We will remain committed to supporting our customers – both individuals and companies – to navigate the current environment. And I want to thank our employees who, once again, demonstrated their dedication and resilience throughout the year.”
Luminor’s Q4 2022 interim report can be found here.
Luminor is the leading independent bank in the Baltics and the third-largest provider of financial services in our region. We serve the financial needs of individuals, families, and companies. Just like our home markets of Estonia, Latvia, and Lithuania we are young, dynamic, and forward looking.