As 2025 progresses, LHV Group is facing mounting pressure on its performance. Although the loan portfolio grew by 5.7% during Q2, the shift in the interest income trajectory observed earlier this year became more pronounced — interest income declined by 7% compared to the same period in 2024. Meanwhile, interest expenses continued to rise, increasing by 13% YoY. As a result, net interest income in the second quarter was 18% lower than a year earlier.

Interest income

Operating expenses (including personnel, administrative, and other costs) increased by 8% YoY in the second quarter (12% based on adjusted data). Combined with weaker net interest income performance, this had a significantly negative impact on the company’s profit. Profit before impairment expenses declined by 33% in the second quarter compared to the same period last year.

Profit before impairment expenses

On a positive note, €4M in loan impairment reversal were recorded in Q2, indicating improved credit quality. The loan loss ratio halved to 0.21%, providing some support against the bottom-line decline. Net profit decreased by 20% YoY, landing at €31M.

Credit quality indicators