Luminor Estonia, Latvia and Lithuania have all delivered solid profitability in the third quarter (Q3), benefiting from positive developments in the Baltic economy. Luminor’s commercial momentum has remained strong.
During the Q3, Luminor continued to focus on transformation processes, acquiring credit rating and entering into a strategic partnership deal with a private equity firm Blackstone.
“The third quarter for Luminor was marked by many significant events and milestones that gained momentum. Blackstone led consortium to acquire 60% majority stake in Luminor through a corporate partnership, first-time deposit rating Baa1 assigned by Moody´s Investor Service, followed by a senior unsecured inaugural bond issuance in the amount of 350 million EUR. The scale of the investment proves that Luminor’s financial profile is strong and that Luminor is an intriguing investment case for both Baltic and international investors. This all comes close to one year after we kicked off, developed a new strategy and set new priorities for the future,” said Erkki Raasuke, Luminor Group CEO.
The reputation of the financial sector in the Baltics has unfortunately been negatively impacted by the recent anti-money laundering findings and accusations.
“It is crucial that we take a clear stance about our responsibilities and future actions, establish full transparency in everything we do and keep a truly high business conduct in focus. It is also our strategic choice that our customer base is around 98% Nordic and Baltic, and we have tightened the measures to strengthen management of compliance risks and support a stronger risk awareness culture,” explained Raasuke.
In the Q3 2018 Luminor in Latvia demonstrated stable business results in all customer segments, reaching all the planned financial goals. Total income year on year has increased by 6% and now constitute 10.5 million euro. Net interest income increased by 5% if compared to the same period last year, while total commission income has remained at a relatively similar level. Continuing the improvement of the credit portfolio, the total loans portfolio shows a decrease by 4%, while total deposit portfolio remains at the previous level.
“Last quarter we continued to focus on the customer experience and service, as well as worked on the increase of the efficiency of organisational processes, income and increase of the number of active customers. These will be our priorities also further on", explains Kerli Gabrilovica, Country Head in Luminor Latvia. “I am satisfied that next visible steps in the improvement of the customer experience are also seen in the ratings of customer satisfaction - last quarter the general customer satisfaction survey and NPS (net promoter score) demonstrated increasing tendency both in private and in corporate segments.
Continuing the simplification of Luminor business, we have also taken additional steps in the execution of our digitalization plans. In October we opened our first self-service branch in Cesis, which offers our customers more convenient banking services for daily operations, as well as flexible consulting service and an opportunity to use the bank’s premises for business purposes. The biggest changes in the new customer service model lie in the customer’s experience in the bank’s remote channels and formation of the customer service centres based on the customers’ activities. To save the customer’s time, we choose to teach the customer, thus encouraging our customers to use digital channels and remote customer service more.
Moreover, we may be proud that more and more local businesses and entrepreneurs choose our financial services, which will remain our target customer segment also in future", commented Kerli Gabrilovica.
Luminor Latvia Q3 interim report is available here.