LHV Group — Capital/Financing Update 2024

Dec 19, 2024

Outcome of Supervisory Review and Evaluation Process by the ECB and LHV Group's Internal Capital Targets

In December, the European Central Bank (ECB) presented AS LHV Group with the
outcome of Supervisory Review and Evaluation Process (SREP) for capital adequacy
calculation.

According to the ECB's decision, the Pillar 2 capital requirements for LHV Group
were reduced. An additional requirement for own funds in the amount 3.00%
applies to LHV Group, of which at least 1.69% must be covered by Core Tier 1 own
funds and at least 2.25% by Tier 1 capital.

The countercyclical buffer set by Eesti Pank in the amount of 1.50 percentage
points remains in force. The countercyclical buffer is one of the four regional
buffers that are set for meeting the objectives of macroprudential supervision
and the flexibility of establishing it is left to each member state.

The Supervisory Board of LHV Group, considering the ECB's decision, decided to
increase the internal buffers in the corresponding amount, while maintaining the
total own funds target ratio at 19.70%, Tier 1 ratio at 16.85% and Core Tier 1
ratio at 14.70%.

Underneath is the target split into components:

+------------------------------------------+------+------+---------------------+
|Indicator |CET 1 |Tier 1|Total own funds ratio|
+------------------------------------------+------+------+---------------------+
|Basic requirement |4.50% |6.00% | 8.00% |
+------------------------------------------+------+------+---------------------+
|Pillar 2 capital requirement (P2R) |1.69% |2.25% | 3.00% |
+------------------------------------------+------+------+---------------------+
|Total SREP Capital Requirement (TSCR) |6.19% |8.25% | 11.00% |
+------------------------------------------+------+------+---------------------+
|Capital conservation buffer |2.50% |2.50% | 2.50% |
+------------------------------------------+------+------+---------------------+
|Systemic risk buffer |0.00% |0.00% | 0.00% |
+------------------------------------------+------+------+---------------------+
|Countercyclical buffer |1.50% |1.50% | 1.50% |
+------------------------------------------+------+------+---------------------+
|O-SII buffer |2.00% |2.00% | 2.00% |
+------------------------------------------+------+------+---------------------+
|Total combined buffer |6.00% |6.00% | 6.00% |
+------------------------------------------+------+------+---------------------+
|Total general capital requirement |12.19%|14.25%| 17.00% |
+------------------------------------------+------+------+---------------------+
|Pillar 2 guidance |2.00% |2.00% | 2.00% |
+------------------------------------------+------+------+---------------------+
|Internal buffers |0.51% |0.60% | 0.70% |
+------------------------------------------+------+------+---------------------+
|Total internal capital requirement risk | | | |
|appetite limit |14.70%|16.85%| 19.70% |
+------------------------------------------+------+------+---------------------+

LHV Group is the largest domestic financial group and capital provider in
Estonia. LHV Group's key subsidiaries are LHV Pank, LHV Varahaldus, LHV
Kindlustus, and LHV Bank Limited. The Group employs over 1,200 people. As at the
end of November, LHV's banking services are being used by 452,000 clients, the
pension funds managed by LHV have 114,000 active clients, and LHV Kindlustus
protects a total of 170,000 clients. LHV Bank Limited, a subsidiary of the
Group, holds a banking licence in the United Kingdom and provides banking
services to international financial technology companies, as well as loans to
small and medium-sized enterprises.

Marthi Lepik
Communication Specialist
Phone: +372 5666 2944
Email: [email protected] (mailto:[email protected])