The rating agency Moody’s assigned LHV Pank a credit rating of Baa1

19. December 2018

The rating agency Moody’s assigned LHV Pank a credit rating of Baa1

Moody’s Investors Service assigned AS LHV Pank an investment-grade credit rating with a stable outlook. This is the first time LHV has obtained an investment-grade rating from an international rating agency.

Ratings assigned to AS LHV Pank by Moody’s Investors Service:

  • Long- and short-term counterparty risk assessment of A3(cr)/Prime-2(cr)
  • Long- and short-term counterparty risk rating of A3/Prime-2
  • Foreign- and local currency long-term bank deposit rating Baa1
  • Foreign- and local currency short-term bank deposit rating Prime-2
  • Baseline credit assessment (BCA) baa3
  • Adjusted baseline credit assessment baa3
  • The long-term deposit rating carries a stable outlook

When assigning the ratings, Moody’s has assessed the quality and creditworthiness of the obligations of LHV Pank as well as the condition of the Estonian banking sector. With these ratings, Moody’s confirms that the financial profile of LHV is strong, as is its ability to serve the assumed obligations.

According to Erki Kilu, Chairman of the Management Board at LHV Pank, it took LHV only nine years from the application for a banking license to obtaining an investment-grade rating. “An investment-grade rating above all provides assurance to our customers, investors and creditors. The availability of a credit rating contributes to doing international business, facilitating the establishment of correspondent relations with other banks and enabling cooperation with international institutions in order to offer our customers financing solutions or guarantees. The credit rating is also necessary when engaging in trade finance,” Kilu commented.

When assigning the baseline credit assessment, the strong capitalisation and profitability of LHV Pank was considered, which provides a cushion against aggressive growth of the bank and the unseasoned loan portfolio.

The ratings of Moody’s have taken into account the supportive business environment of Estonia. Estonia is characterised by a dynamic economy and higher than the European Union average economic growth.

According to Moody’s Investors Service, the long-term deposits of LHV Pank carry a stable outlook. Moody’s believes that over the next 12-18 months, LHV Pank will maintain a steady performance and credit portfolio in the context of a similar operating environment.

LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group's key subsidiaries are LHV Pank and LHV Varahaldus. There are 380 people working at LHV and more than 159,000 clients are using its banking services. Pension funds managed by LHV have more than 178,000 active clients.

The announcement on the report prepared by Moody’s

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