A 7.8 million EUR reduction in operating income was offset in part by a 5.6 million EUR reduction in administration expenses following the elimination of consultancy costs.
IT-related expenses increased by 7.1%. Expected credit losses decreased by 4.4 million EUR, while bank taxes and resolution fee increased by 3.9 million EUR, due primarily to the temporary bank tax in Latvia. Profit for the period of 45.1 million EUR was 15.1% lower, following amendments to the Latvian corporate income tax law which drove a nearly 70% increase in tax expense, Luminor reports.
Luminor said it recorded a net interest margin of 3.56%, reduced its cost-to-income ratio to 54.6%, and generated an annualized return on equity of 10.2%.
“This year brings a gradual recovery for society from the economic challenges that have hit the world in recent years. We are seeing a gradual increase in lending – compared to the first three months of this year, total lending in the second quarter increased by more than 40 million EUR to 2.88 billion EUR. However, businesses remain cautious, as reflected by the stagnating corporate lending and the sentiment of SMEs, which we recently measured in the bank’s survey. Businesses remain concerned about the impact of inflation, price changes, and job retention, and these concerns are preventing them from actively investing in business development," Kerli Vares, Head of Luminor Bank in Latvia, was quoted.
Luminor’s Q2 2024 interim report can be found here.
