LHV Group (LHV1T) Q4 2025 earnings summary

Executive summary

• Net income reached EUR 305 million and net profit EUR 117 million for 2025, with a 20% year-over-year loan portfolio growth and 18% deposit growth, though both figures fell short of plan by 2.5% and 6.5% respectively.

• Return on equity was 16% for the group, with pre-tax ROE at 20% in Q4, but down from 22% in Q4 2024.

• Subsidiaries in Estonia and the UK saw strong growth, with UK retail banking reaching 5,000 customers and SME lending more than doubling; UK operations expanded rapidly.

• Asset management and insurance businesses delivered strong results, with pension funds leading the Estonian market and insurance net profit doubling.

• Group achieved record highs in loan portfolio, deposits, assets under management, customer numbers, and payment volumes.

Financial highlights

• Net interest income increased 8% quarter-over-quarter in Q4, but fell 10% year-over-year; net income up 20% sequentially.

• Group net income was EUR 304.8 million (-10% YoY), net profit EUR 117.0 million (-22% YoY); Q4 net profit EUR 30.8 million, up 17% QoQ.

• Estonian loan and deposit volumes grew 11% year-over-year; UK loan portfolio more than doubled to EUR 782 million.

• Asset management net profit was EUR 4.1 million, with pension funds reaching EUR 1.5 billion; insurance premiums grew 13% and customer base increased 36% year-over-year.

• Cost/income ratio rose to 52.3% (+8.8pp YoY), NIM at 2.5% (-1.0pp YoY), and Q4 cost/income ratio at 53.9%.

Outlook and guidance

• Funding costs are stabilizing, with room for further improvement in deposit composition and large transaction deals; focus on core customer funding and conservative risk management.

• Defense infrastructure spending expected to boost Estonian lending market and GDP growth; Estonian economy forecast to grow 3.6% in 2026.

• Focus for 2026 includes improving cost efficiency, leveraging AI for scalability, attracting direct UK deposit customers, and reducing platform deposits.