Margin loan
Loan contract against the collateral of publicly traded securities
- You can take out a loan against the collateral of publicly traded securities across your entire portfolio.
- Loan against the collateral of publicly traded securities can be used for purchasing and subscription of stocks.
- The term of the loan is 1 month, and it is renewed automatically.
- You can also repay a loan early.
- There is no fee for taking out or repaying a loan; nor is there a contract fee.
Examples of using margin loan
Investor buys stocks worth 10 000 € by using 5 000 € of free cash and 5 000 € of margin loan.
| Stock price increases by 10% | |
| Position value | 11 000 € |
| - Outstanding margin loan, incl loan interest cost* | 5 035 € |
| = Position net value | 5 965 € |
| Profit/Loss | 965 € |
| Return | +19,30% |
| Stock price decreases by 10% | |
| Position value | 11 000 € |
| - Outstanding margin loan, incl loan interest cost* | 5 035 € |
| = Position net value | 3 965 € |
| Profit/Loss | -1 035 € |
| Return | -20,70% |
*Presuming a loan period of 30 days with interest rate of 8.5%
Example:
Investor owns Apple shares worth 10 000 $ (market value) and wishes to purchase Facebook shares but lacks free cash.
Calculating the maximum potential Facebook purchase size by using margin loan:
Apple shares have a collateral rate of 50% meaning you can use up to 50% of the position’s market value for increasing your purchasing power for buying new shares.
| Maximum loan for buying new shares using Apple shares as collateral | 5 000 $ |
Facebook shares also have a collateral rate of 50%, meaning 50% of the purchased position can be financed by using the same Facebook shares as collateral. The other 50% of the purchase has to be financed by existing purchasing power (free equity).
| Existing purchasing power (loan against existing Apple shares) | 5 000 $ |
| Margin loan using Facebook shares as collateral | 5 000 $ |
| = Maximum available margin loan for purchasing Facebook shares (maximum amount of free equity divided by 50%) | 10 000 $ |
| Total value of position after the purchase of Facebook shares | 20 000 $ |
| Outstanding margin loan | 10 000 $ |
In current situation the margin loan is fully utilized, purchasing power (free equity) is 0 and net equity ratio is 50%. If the market value of position decreases a margin call (sale of collateral shares) might be executed by bank.
Please note that once the shares decrease in value the collateral value of positions also decreases (collateral value=market value of collateral assets*collateral rate). If collateral value drops below the outstanding margin loan, the bank may liquidate the positions (sell collateral assets) in order to guard against potential loan losses. A thorough explanation is given at Instructions concerning leveraged transactions.
Interest rates
LHV’s annual interest rates for loans and margin loans
| EUR | 8,50% | AUD | 12,00% | HKD | 7,75% | KRW | 10.25% | SEK | 9,25% | ||
| USD | 7,50% | CAD | 8,25% | HRK | 14,25% | MXN | 14,50% | SGD | 8.5% | ||
| CHF | 7,50% | HUF | 13,25% | NOK | 9,50% | RUB | 20,00% | ||||
| CZK | 8,00% | JPY | 7,25% | NZD | 11.5% | GBP | 7,75% | ||||
| DKK | 8,25% | INR | 20.25% | PLN | 11,75% | ||||||
Collateral rates
LHV’s collateral rates for loans and margin loans
| Cash | 75% |
| Deposits | 75% |
| Fund | |
|---|---|
| LHV Varahaldus | 60% |
| JPMorgan Asset Management | 60% |
| East Capital Asset Management | 60% |
| Swedbank Investeerimisfondid | 60% |
| SEB Varahaldus | 60% |
| SEB Fund Management S.A | 60% |
| Trigon Funds | 60% |
| Avaron Asset Management | 60% |
| London, Nasdaq, NYSE, AMEX | |
|---|---|
| SPY, DIA, QQQQ, IVV, MDY, IWM, EFA, TDF, GLD, EWJ, EWZ, EPP, FXI, IEV, RSX, CEE, EWH, EWY, SLV, APB, EFA | 60% |
| > 5 USD | 50% |
| 3—5 USD | 40% |
| GBTC | 40% |
| London | |
|---|---|
| > 5 GBP | 50% |
| 3—5 GBP | 40% |
| XETRA, OMX Helsinki | |
|---|---|
| > 5 EUR | 50% |
| 3—5 EUR | 40% |
| OMX Stockholm | |
|---|---|
| > 40 SEK | 50% |
| 20—40 SEK | 40% |
| COINETHE | 40% |
| COINXBE | 40% |
| COINXBT | 40% |
| Nasdaq Tallinn stock exchange | |
|---|---|
| Arco Vara, ARC1T | 25% |
| Coop Pank, CPA1T | 60% |
| Ekspress Grupp, EEG1T | 50% |
| Enefit Green, EGR1T | 60% |
| Harju Elekter, HAE1T | 60% |
| Hepsor HPR1T | 50% |
| Merko Ehitus, MRK1T | 60% |
| Nordecon, NCN1T | 40% |
| PRFoods, PRF1T | 50% |
| Pro Kapital Grupp, PKG1T | 40% |
| Silvano Fashion Group, SFG1T | 0% |
| Nordic Fibreboard, SKN1T | 40% |
| Tallinna Sadam, TSM1T | 65% |
| Tallink Grupp, TAL1T | 65% |
| Tallinna Kaubamaja, TKM1T | 65% |
| Tallinna Vesi, TVEAT | 65% |
| Baltic Horizon Fund, NHCBHFFT | 50% |
| EfTEN Real Estate Fund III, EFT1T | 65% |
| Nasdaq Riga stock exchange | |
|---|---|
| DelfinGroup DGR1R | 40% |
| Grindeks, GRD1R | 50% |
| Latvijas Gaze, GZE1R | 40% |
| Olainfarm, OLF1R | 50% |
| SAF Tehnika, SAF1R | 45% |
| Valmieras stikla skiedra, VSS1R | 50% |
| Nasdaq Vilnius stock exchange | |
|---|---|
| AUGA Group, AUG1L | 50% |
| Amber Grid, AMG1L | 50% |
| Apranga, APG1L | 65% |
| Energijos Skirstymo Operatorius, ESO1L | 50% |
| Grigeo, GRG1L | 60% |
| Ignitis Grupe, IGN1L | 65% |
| Invalda, IVL1L | 25% |
| INVL Baltic Farmland, INL1L | 25% |
| INVL Baltic Real Estate, INR1L | 25% |
| INVL Technology, INC1L | 25% |
| Klaipedos Nafta, KNF1L | 50% |
| Lietuvos energijos gamyba, LNR1L | 50% |
| Linas Agro Group, LNA1L | 50% |
| Litgrid, LGD1L | 50% |
| Novaturas, NTU1L | 50% |
| OMX Baltic Benchmark Fund, OAMOBBF1L | 50% |
| Panevezio Statybos Trestas, PTR1L | 25% |
| Pieno Zvaigzdes, PZV1L | 50% |
| Rokiskio Suris, RSU1L | 50% |
| Siauliu Bankas, SAB1L | 50% |
| Snaige, SNG1L | 25% |
| Telia Lietuva, TEL1L | 65% |
| Vilkyskiu Pienine, VLP1L | 50% |
| Vilniaus Baldai, VBL1L | 40% |
| Zemaitijos Pienas, ZMP1L | 50% |
| Warsaw Stock Exchange | |
|---|---|
| PGNIG, PGN | 50% |
| ALLEGRO.EU SA, ALE | 50% |
| PGE SA, PGE | 50% |
| PKO BANK POLSKI SA, PKO | 50% |
| Powszechny Zakla, PZU | 50% |
| ORANGE POLSKA SA, OPL | 50% |
| PKN Orlen, PKN | 50% |
| JASTRZEBSKA SPOLKA WEGLOWA SA, JSW | 50% |
| BANK PEKAO SA, PEO | 50% |
| KGHM Polska Miedz S.A., KGH | 50% |
| GRUPA LOTOS SA, LTS | 50% |
| CCC, CCC | 50% |
| Cyfrowy Polsat SA, CPS | 50% |
| CDPROJEKT, CDR | 50% |
| DINOPL, DNP | 50% |
| SANPL, SPL | 50% |
| MBANK SA, MBK | 50% |
| Kernel Holding SA, KER | 50% |
| Asseco Poland SA, ACP | 50% |
| Gornictwo Naftowe, PGNIG | 50% |
| LPP SA, LPP | 50% |
| Pepco Group NV, PEPCO | 50% |
| Copenhagen Stock Exchange | |
|---|---|
| Novo Nordisk A/S, NOVOB | 50% |
| Vestas Wind Systems A/S, VWS | 50% |
| Ørsted A/S, ORSTED | 50% |
| Genmab A/S, GMAB | 50% |
| DSV Panalpina A/S, DSV | 50% |
| A.P. Møller - Mærsk A/S, MAERSKA | 50% |
| Danske Bank A/S, DANSKE | 50% |
| Coloplast A/S, COLOB | 50% |
| Pandora A/S, PNDORA | 50% |
| Ambu A/S, AMBUB | 50% |
| Chr. Hansen Holding A/S, CHR | 50% |
| Novozymes A/S, NZYMB | 50% |
| GN Store Nord A/S, GN | 50% |
| ISS A/S, ISS | 50% |
| Tryg A/S, TRYG | 50% |
| Demant A/S, DEMANT | 50% |
| Bavarian Nordic A/S, BAVA | 50% |
| Royal UNIBREW A/S, RBREW | 50% |
| FLSmidth & Co. A/S, FLS | 50% |
| Netcompany Group A/S, NETC | 50% |
| Dampskibsselskabet Norden A/S, DNORD | 50% |
| NKT Holding A/S, NKT | 50% |
| Jyske Bank A/S, JYSK | 50% |
| Sydbank A/S, SYDB | 50% |
| Carlsberg B, CARLB | 50% |
| A.P. Møller - Mærsk B, MAERSKB | 50% |
| Rockwool Int. B, ROCKB | 50% |
| Oslo Stock Exchange | |
|---|---|
| Equinor, EQNR | 50% |
| NEL, NEL | 50% |
| DNB, DNB | 50% |
| Mowi, MOWI | 50% |
| Telenor, TEL | 50% |
| Yara International, YAR | 50% |
| Aker BP, AKERBP | 50% |
| Norsk Hydro, NHY | 50% |
| Orkla, ORK | 50% |
| Tomra Systems, TOM | 50% |
| Storebrand, STB | 50% |
| SalMar, SALM | 50% |
| Scatec, SCATC | 50% |
| Gjensidige Forsikr, GJF | 50% |
| Schibsted ser. A, SCHA | 50% |
| Aker ASA, AKER | 50% |
| Frontline, FRO | 50% |
| Golden Ocean, GOGL | 50% |
| Kahoot, KAHOT | 50% |
| MPC Container, MPCC | 50% |
| Nordic Semiconductor, NOD | 50% |
| P/f Bakkafrost, BAKKA | 50% |
| REC Silicon, RECSI | 50% |
| Subsea 7, SUBC | 50% |
| Amsterdam Stock Exchange | |
|---|---|
| ASML HOLDING, ASML | 50% |
| ING GROEP N.V., INGA | 50% |
| ADYEN, ADYEN | 50% |
| PROSUS, PRX | 50% |
| Koninklijke DSM NV, DSM | 50% |
| HEINEKEN, HEIA | 50% |
| JUST EAT TAKEAWAY, TKWY | 50% |
| AKZO NOBEL, AKZA | 50% |
| WOLTERS KLUWER, WKL | 50% |
| AEGON, AGN | 50% |
| NN GROUP, NN | 50% |
| ASM INTERNATIONAL, ASM | 50% |
| RANDSTAD NV, RAND | 50% |
| Eurocommercial Properties N.V., ECMPA | 50% |
| Unibail-Rodamco-Westfield, URW | 50% |
| ARCELORMITTAL SA, MT | 50% |
| BE SEMICONDUCTOR, BESI | 50% |
| RELX, REN | 50% |
| SHELL PLC, SHELL | 50% |
| SIGNIFY NV, LIGHT | 50% |
| Universal Music Group N.V., UMG | 50% |
| UNILEVER Plc, UNA | 50% |
If in LHV’s assessment it is more appropriate to use a higher or lower collateral rate in the case of a share due to its risk level, LHV has the right to apply collateral rates that differ from those listed above. Before taking out a loan make sure to review the content of the product and the terms of its contract. Particular attention should be paid to the risks of borrowing. If needed, consult a financial adviser at LHV before taking out a loan. The interest and collateral rates of a loan depend on the interest rates of central banks.
